<PAGE>
                                                                               .
                                                                               .
                                                                               .
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-K
<TABLE>
<S>        <C>                                     <C>
(Mark One)

[X]  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                             000-21553
                            --------------------------------

                          METROPOLITAN FINANCIAL CORP.
               -------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                 Ohio                                       34-1109469
   --------------------------------         -----------------------------------------
   (State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
    Incorporation or Organization)

                22901 Millcreek Blvd. Highland Hills, Ohio 44122
--------------------------------------------------------------------------------------
              (Address of Principal Executive Offices) (Zip Code)

                                 (216) 206-6000
--------------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12 (b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: Common Stock, without par value
                                                            -------------------------------
                                                                   (Title of Class)
</TABLE>


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
                                             ---

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes     No  X
                                                                   ---    ---

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrants most recently completed second quarter.
The aggregate market value at June 30, 2002 was $57,953,323.

As of March 12, 2003, there were 16,151,450 shares of the Registrant's Common
Stock issued and outstanding.

Documents incorporated by reference:
Portions of the Proxy Statement for the 2003 Annual Meeting - Part III


                                                                               1

<PAGE>


                          METROPOLITAN FINANCIAL CORP.

                                 2002 FORM 10-K
                                TABLE OF CONTENTS
                                     PART I
<TABLE>
<S>                                                                                                     <C>
Item 1.  Business........................................................................................  3

Item 2.  Properties...................................................................................... 29

Item 3.  Legal Proceedings............................................................................... 29

Item 4.  Submission of Matters to a Vote of Security Holders............................................. 29

                                     PART II

Item 5.  Market For Registrant's Common Equity and Related Stockholder Matters........................... 30

Item 6.  Selected Financial Data......................................................................... 31

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations........... 33

Item 7A. Quantitative and Qualitative Disclosures about Market Risk...................................... 48

Item 8.  Financial Statements and Supplementary Data..................................................... 51

Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure............ 91

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.............................................. 91

Item 11. Executive Compensation.......................................................................... 91

Item 12. Security Ownership of Certain Beneficial Owners and Management.................................. 91

Item 13. Certain Relationships and Related Transactions.................................................. 91

                                     PART IV

Item 14. Controls and Procedures......................................................................... 92

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ............................... 92
</TABLE>


                                                                               2

<PAGE>


                                     PART I

ITEM 1.  BUSINESS

                                    BUSINESS

GENERAL

            Metropolitan Financial Corp., (the "Company") is a savings and loan
holding company that was incorporated in 1972. We are engaged in the principal
business of originating and purchasing mortgage and other loans through our
wholly-owned subsidiary, Metropolitan Bank and Trust Company ("the Bank"). The
Bank is an Ohio chartered stock savings association established in 1958. We
obtain funds for lending and other investment activities primarily from savings
deposits, wholesale borrowings, principal repayments on loans, and the sale of
loans. The activities of the Company are limited and impact the results of
operations primarily through interest expense on a consolidated basis. Unless
otherwise noted, all of the activities discussed below are of the Bank.

            Robert M. Kaye is the Company's current majority shareholder. Mr.
Kaye acquired the Company in 1987 and remained its sole shareholder until our
initial public offering of common stock in October 1996. Currently, Mr. Kaye
owns approximately 67% of the Company's outstanding common stock. Mr. Kaye
currently has the ability to decide the outcome of matters submitted to the
shareholders for approval, the ability to elect or remove all the directors of
the Company and the ultimate control of the Company and the Bank.

            At December 31, 2002, we operated 24 full service retail sales
offices in Northeastern Ohio. As of December 31, 2002, we also maintained 6 loan
origination offices throughout Ohio and in Western Pennsylvania. We also service
mortgage loans for various investors.

            At December 31, 2002, we had total assets of $1.5 billion, total
deposits of $1.1 billion and shareholders' equity of $55.2 million. The Federal
Deposit Insurance Corporation insures the deposits of the Bank up to applicable
limits.

            At December 31, 2002, we directly or indirectly owned the following
wholly-owned subsidiaries:

<TABLE>
<CAPTION>
                        ACTIVE SUBSIDIARIES                                   INACTIVE SUBSIDIARIES
                        -------------------                                   ---------------------
<S>         <C>                                              <C>         <C>
-           Metropolitan Bank and Trust Company              -           MetroCapital Corporation
-           Kimberly Construction Company                    -           Metropolitan Securities Corporation
-           Metropolitan Capital Trust I                     -           Metropolitan II Corporation
-           Metropolitan Capital Trust II                    -           Metropolitan III Corporation
-           Metropolitan I Corporation
-           Metropolitan Savings Service Corporation
-           Progressive Land Title Agency, Inc.
-           Venice Inn LLC
</TABLE>


            The Bank changed its name from Metropolitan Savings Bank of
Cleveland to Metropolitan Bank and Trust Company in April 1998. We formed
Metropolitan Capital Trust I during 1998 to facilitate the issuance of
cumulative trust preferred securities. We formed Metropolitan Capital Trust II
in 1999 to facilitate the issuance of additional trust preferred securities.
Metropolitan I Corporation was formed in 2000 as a holding company for its
subsidiary, Progressive Land Title Agency, Inc, which operates as a title agency
in Ohio. Kimberly Construction Company's sole business function is to serve as a
principal party to various construction contracts entered into in connection
with the construction of bank premises. Metropolitan Savings Service Corporation
currently holds and manages real estate which the Bank has acquired by
foreclosure. The Venice Inn LLC was formed to hold title to and operate a hotel
that the Bank acquired through foreclosure as servicer for a pool of commercial
real estate loans.


                                                                               3
<PAGE>



SUPERVISORY DIRECTIVE/SUPERVISORY AGREEMENTS

            On July 26, 2001, the Company entered into a Supervisory Agreement
with the Office of Thrift Supervision ("OTS") (the "Company Supervisory
Agreement"), which required the Company to prepare and adopt a plan for raising
capital that uses sources other than increased debt or additional dividends from
the Bank. On January 31, 2002, the Company initiated an offer of common stock
for sale under a rights offering and a concurrent offering to the public.
Management used the net proceeds of the 2002 offerings to raise the capital
required by the Company Supervisory Agreement.

            Additionally, the Bank entered into a separate Supervisory Agreement
(the "Supervisory Agreement") between the Bank, the OTS and the Ohio Division of
Financial Institutions ("ODFI"), which requires the Bank to do the following:

            1.    Develop a capital improvement and risk reduction plan by
                  September 28, 2001, which date was extended to December 28,
                  2001;

            2.    Achieve or maintain compliance with core and risk-based
                  capital standards at the "well-capitalized" level, including a
                  risk-based capital ratio of 10% by December 31, 2001, which
                  date was extended to March 31, 2002. The Bank had achieved a
                  "well capitalized" level at March 31, 2002, and has maintained
                  that level through December 31, 2002;

            3.    Reduce investment in fixed assets (other than artwork) to no
                  more than 25% of core capital by December 31, 2002. The Bank
                  has received an extension until June 30, 2003 from the OTS
                  regarding this requirement;

            4.    Reduce investment in artwork by $1.3 million by December 31,
                  2001 (later modified to March 31, 2002), and by an additional
                  $2.0 million by no later than December 31, 2002;

            5.    Attain compliance with board approved interest rate risk
                  policy requirements;

            6.    Reduce volatile funding sources, such as brokered and
                  out-of-state deposits;

            7.    Increase earnings;

            8.    Improve controls related to credit risk; and

            9.    Restrict total assets to not more than $1.7 billion.

            Any major deviations from the plan require prior OTS approval. Both
supervisory agreements also contain restrictions on adding, entering into
employment contracts with, or making golden parachute payments to directors and
senior executive officers and in changing responsibilities of senior officers.

            During January 2002, the regulatory authorities approved the capital
and risk reduction plan submitted by the Company.

            On July 8, 2002, the OTS issued a Supervisory Directive (the
"Supervisory Directive") to the Company and the Bank. The Supervisory Directive
requires the Boards of Directors of the Bank and the Company to act immediately
to take corrective action to address certain weaknesses and to halt certain
unsafe and unsound practices, regulatory violations, and violations of the
Supervisory Agreement, dated July 26, 2001, between the Bank, the OTS, and the
ODFI.

The Supervisory Directive includes the following provisions:

            1.    The Bank is prohibited from making Unauthorized Payments, as
                  defined in the Supervisory Directive, that directly or
                  indirectly benefit Robert M. Kaye, a director and the former
                  Chairman and Chief Executive Officer of the Company and the
                  Bank. "Unauthorized Payments" are defined by the Supervisory
                  Directive as any payment by the Bank: (a) that contravenes the
                  Bank's established written procedures for expense
                  reimbursement; (b) where the Bank lacks documentation
                  demonstrating that the payment related to a proper business
                  purpose of the Bank; or (c) where the recipient is not an
                  employee of the Bank.


                                                                               4

<PAGE>

            2.    The Bank must obtain reimbursement for Unauthorized Payments
                  made to or for the benefit of Mr. Kaye and related parties
                  since January 1, 1992, and suspend all future payments to Mr.
                  Kaye and related parties of any kind until such time as there
                  has been a full accounting of such payments and the Bank has
                  been fully reimbursed, if appropriate.

            3.    The Bank must retain an independent certified public
                  accounting firm acceptable to the OTS to conduct a review and
                  accounting of all payments that the Bank has made since
                  January 1, 1992, to or for the direct or indirect benefit of
                  Robert M. Kaye and related parties. The accounting firm must
                  submit to the Audit Committee of the Bank's Board and to the
                  OTS a written report relating to its review identifying, among
                  other things, any payments that are suspected of being
                  Unauthorized Payments. Based on the information in the report,
                  the Audit Committee of the Bank's Board must determine the
                  amount of any Unauthorized Payments, subject to the review and
                  concurrence of the OTS. The Bank must then submit to Mr. Kaye
                  a written demand for repayment of any Unauthorized Payments.

                  The Supervisory Directive sets various deadlines for
                  completion of the foregoing matters.

            4.    To facilitate compliance with the targets and deadlines
                  specified in the Supervisory Agreement, the Bank must retain a
                  qualified marketing agent, acceptable to the OTS, to manage
                  the Bank's efforts to sell its artwork collection. The OTS
                  noted that the Supervisory Agreement (as modified) required
                  the Bank to reduce its investment in artwork by $1.3 million
                  by March 31, 2002, and that the Bank had failed to meet the
                  March 31, 2002 requirement.

            5.    The Bank must take appropriate actions to reduce its
                  investment in fixed assets so that the Bank's investment in
                  fixed assets (other than artwork) is no more than 25% of core
                  capital by December 31, 2002, as required by the Supervisory
                  Agreement. The Bank has received an extension until June 30,
                  2003 from the OTS regarding this requirement.

            6.    The Bank is prohibited from engaging in any transactions with
                  a particular out-of-state bank on whose board Mr. Kaye sits.

            7.    The Bank is prohibited from originating and purchasing
                  commercial real estate loans secured by property in California
                  until the Bank adopts and implements a written plan for
                  diversification of credit risk that is acceptable to the OTS.

            8.    The Bank is prohibited from engaging in any transactions with
                  the Company or any of its affiliates without prior approval of
                  the OTS.

            9.    Without prior OTS approval, the Company is prohibited from
                  paying any dividends, or making any other payments except
                  those that it was obligated to make pursuant to written
                  contracts in effect on July 5, 2002, and payment of expenses
                  incurred in the ordinary course of business.

            10.   The Company is prohibited from making any payment or engaging
                  in any transaction that would have the effect of circumventing
                  any of the restrictions imposed on the Bank in the Supervisory
                  Directive.

            The Company has engaged, with OTS approval, an independent audit
firm, which has concluded its review of the payments specified above in
accordance with the Supervisory Directive. On September 26, 2002, the Audit
Committee of the Bank filed its report with the OTS concluding that total
Unauthorized Payments to Mr. Kaye are $4.8 million. On October 2, 2002, the OTS
stated that it had no objection to the Bank's seeking reimbursement of the $4.8
million from Mr. Kaye. On October 7, 2002, the Bank made a written request to
Mr. Kaye seeking reimbursement of the $4.8 million of Unauthorized Payments by
October 25, 2002, which date was extended until December 12, 2002 and further
extended to December 23, 2002. On December 23, 2002, the Bank and Mr. Kaye
entered into a final settlement of the amount owed to the Bank, and pursuant to
such settlement, the Bank received reimbursements from Mr. Kaye of $3.5 million
($2.5 million, net of taxes). The amount net of taxes was applied directly to
the Bank's capital and not reflected in the Bank's statement of operations for
2002.


                                                                               5

<PAGE>

            The Company and the Bank have commenced taking actions to comply
with the remainder of the Supervisory Directive, including the sale of artwork,
and expect to comply with the Supervisory Agreement and the Supervisory
Directive, except for the timing requirements for the sale of fixed assets
(other than artwork). As of December 31, 2002, the Bank had achieved the $3.3
million reduction in artwork required by that date under the Supervisory
Agreement and the Supervisory Directive through sales of approximately $2.8
million to third parties and sales of approximately $540,000 to Mr. Kaye. On
December 18, 2002, the Bank was granted an extension until June 30, 2003 of the
deadline by which it must reduce its investments in fixed assets to no more than
25% of core capital.

            The provisions of the Supervisory Directive do not prohibit the
Company from using its unconsolidated resources to make scheduled contractual
payments to Metropolitan Capital Trust I ("Trust I") and Metropolitan Capital
Trust II ("Trust II"). Payments by the Company to Trust I and Trust II are used
by the trusts to pay dividends on the cumulative trust preferred securities of
Trust I and Trust II. The Supervisory Directive does not prohibit Trust I and
Trust II from paying dividends on their respective cumulative trust preferred
securities.

            If the Company or the Bank is unable to comply with the terms and
conditions of the Supervisory Directive or the supervisory agreements, the OTS
and the ODFI could take additional regulatory action, including the issuance of
a cease and desist order requiring further corrective action such as raising
additional capital, obtaining additional or new management, requiring the sale
of assets and a reduction in the overall size of the Company, imposing operating
restrictions on the Bank and restricting dividends from the Bank to the Company.
These additional restrictions could make it impossible to service existing debt
of the Company.

            As of December 31, 2002, the Company has met all requirements of the
supervisory directive and the supervisory agreements, except as noted above.

MERGER AGREEMENT

            On October 23, 2002, the Company and Sky Financial Group, Inc. ("Sky
Financial") executed a definitive agreement for Sky Financial to acquire all the
stock of the Company and merge the Company into Sky Financial.

            Pursuant to the definitive agreement, stockholders of the Company
will be entitled to elect to receive, in exchange for each share of the
Company's common stock held, either $4.70 in cash or .2554 shares of Sky
Financial, or a combination thereof, subject to certain adjustments. The
election process, however, is subject to certain allocation mechanisms that are
reflected in the S-4/A and proxy statement filed on January 30, 2003, which
provides that no more than 70% and no less than 55% of the Company's shares will
be exchanged for Sky Financial common stock.

            The transaction provides for the merger of the Company into Sky
Financial, and the subsequent merger of the Bank into Sky Bank, Sky Financial's
commercial banking affiliate.

            All required regulatory and shareholder approvals have been
obtained. The acquisition is expected to close on April 30, 2003. For
information surrounding the acquisition, refer to the Form S-4/A filed by Sky
Financial with the Securities and Exchange Commission on January 30, 2003.


                                                                               6

<PAGE>


LENDING ACTIVITIES

            General. Our primary lending activities consist of residential
mortgage banking, multifamily loans, construction and land loans, commercial
real estate loans, consumer loans and commercial business loans.

            Loan Portfolio Composition. The following table presents the
composition of our loan portfolio, including loans held for sale, in dollar
amounts and as a percentage of all loans before deductions for loans in process,
deferred fees and discounts and allowance for losses on loans.

<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                           ------------
                                                   2002                       2001                         2000
                                                   ----                       ----                         ----
                                            AMOUNT      PERCENT       AMOUNT        PERCENT        AMOUNT        PERCENT
                                            ------      -------       ------        -------        ------        -------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                     <C>              <C>       <C>               <C>       <C>              <C>
REAL ESTATE LOANS:
  One- to four-family                   $   153,114       13.2%     $   171,813       13.9%     $   288,352       21.1%
  Multifamily                               310,340       26.7          224,542       18.2          273,358       20.0
  Commercial                                163,259       14.1          164,786       13.3          254,824       18.6
  Construction and land                     264,064       22.7          233,504       18.9          193,464       14.1
  Held for sale                              48,136        4.1          169,320       13.7           51,382        3.8
                                        -----------      -----      -----------      -----      -----------      -----
            Total real estate loans         938,913       80.8          963,965       78.0        1,061,380       77.6
CONSUMER LOANS                              101,627        8.8          138,698       11.2          163,019       11.9
CONSUMER HELD FOR SALE                           --         --               --         --               --         --
BUSINESS AND OTHER LOANS                    121,299       10.4          133,684       10.8          143,329       10.5
                                        -----------      -----      -----------      -----      -----------      -----
            Total loans                 $ 1,161,839      100.0%     $ 1,236,347      100.0%       1,367,728      100.0%
LESS:
Loans in process                             90,628                      80,214                      72,156
Deferred fees, net                            1,951                       2,080                       2,191
Discount (premium) on loans, net             (4,895)                     (6,969)                     (7,393)
Allowance for losses on loans                17,103                      17,250                      13,951
                                        -----------                 -----------                 -----------
            TOTAL LOANS
              RECEIVABLE, NET           $ 1,057,052                 $ 1,143,772                 $ 1,286,823
                                        ===========                 ===========                 ===========
</TABLE>

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                             ------------
                                                  1999                        1998
                                                  ----                        ----
                                           AMOUNT       PERCENT       AMOUNT        PERCENT
                                           ------       -------       ------        -------
                                                        (DOLLARS IN THOUSANDS)
<S>                                     <C>              <C>        <C>           <C>
REAL ESTATE LOANS:
  One- to four-family                   $   295,061       23.5%     $   189,182       17.4%
  Multifamily                               292,015       23.3          337,412       31.1
  Commercial                                247,455       19.7          228,825       21.1
  Construction and land                     156,112       12.4          137,023       12.6
  Held for sale                               5,866        0.5            9,416        0.9
                                        -----------      -----      -----------      -----
            Total real estate loans         996,509       79.4          901,858       83.1
CONSUMER LOANS                              143,585       11.4           96,115        8.8
CONSUMER HELD FOR SALE                          852        0.1            5,601        0.5
BUSINESS AND OTHER LOANS                    114,333        9.1           82,317        7.6
                                        -----------      -----      -----------      -----
            Total loans                   1,255,279      100.0%       1,085,891      100.0%
LESS:
Loans in process                             56,212                      46,001
Deferred fees, net                            4,548                       5,013
Discount (premium) on loans, net             (7,178)                     (5,320)
Allowance for losses on loans                11,025                       6,909
                                        -----------                 -----------
            TOTAL LOANS
              RECEIVABLE, NET           $ 1,190,672                 $ 1,033,288
                                        ===========                 ===========
</TABLE>

            We had commitments to originate or purchase $86.1 million of fixed
rate loans and $65.1 million of adjustable rate loans at December 31, 2002. In
addition, we had firm commitments to sell loans of $73.0 million at December 31,
2002.


                                                                               7

<PAGE>


            The following table presents the composition of our loan portfolio,
by fixed and adjustable rates, including loans held for sale, in dollar amounts
and as a percentage of all loans before deductions for loans in process,
deferred fees and discounts and allowance for losses on loans.

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,
                                                                                         ------------
                                                                    2002                     2001                       2000
                                                                    ----                     ----                       ----
                                                            AMOUNT       PERCENT     AMOUNT        PERCENT        AMOUNT     PERCENT
                                                            ------       -------     ------        -------        ------     -------
                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                     <C>               <C>      <C>               <C>      <C>              <C>
FIXED RATE LOANS:
Real estate:
  One- to four-family                                   $    74,709       6.3%     $   102,836       8.3%     $   112,535       8.2%
  Multifamily                                                72,671       6.3          116,981       9.5          163,726      12.0
  Commercial                                                 76,155       6.6           89,526       7.2          106,771       7.8
  Construction and land                                      33,712       2.9           15,239       1.2           10,411       0.8
  Held for sale                                              38,106       3.3           76,602       6.2           39,903       2.9
                                                        -----------      ----      -----------      ----      -----------      ----
            Total fixed rate real estate loans              295,353      25.4          401,184      32.4          433,346      31.7
Consumer                                                     62,418       5.4          110,978       9.0          149,957      11.0
Consumer held for sale                                           --                                   --               --        --
Business and other                                           29,580       2.5           39,736       3.2           54,576       4.0
                                                        -----------      ----      -----------      ----      -----------      ----
            Total fixed rate loans                          387,351      33.3%         551,898      44.6%         637,879      46.7%
                                                        -----------      ----      -----------      ----      -----------      ====
ADJUSTABLE RATE LOANS:
Real estate:
One- to four-family                                          78,405       6.7%          68,977       5.6%         175,817      12.9%
Multifamily                                                 237,669      20.5          107,561       8.7          109,632       8.0
Commercial                                                   87,104       7.5           75,260       6.1          148,053      10.8
Construction and land                                       230,352      19.8          218,265      17.7          183,053      13.3
Held for sale                                                10,030       0.9           92,718       7.5           11,479       0.8
                                                        -----------      ----      -----------      ----      -----------      ----
            Total adjustable rate real estate loans         643,560      55.4          562,781      45.6          628,034      45.8
Consumer                                                     39,209       3.4           27,720       2.2           13,062       1.0
Business and other                                           91,719       7.9           93,948       7.6           88,753       6.5
                                                        -----------      ----      -----------      ----      -----------      ----
            Total adjustable rate loans                     774,488      66.7%         684,449      55.4%         729,849      53.3%
                                                        -----------      ----      -----------      ----      -----------      ====
LESS:
Loans in process                                             90,628                     80,214                     72,156
Deferred fees, net                                            1,951                      2,080                      2,191
Discount (premium) on loans, net                             (4,895)                    (6,969)                    (7,393)
Allowance for losses on loans                                17,103                     17,250                     13,951

            TOTAL LOANS RECEIVABLE, NET                 $ 1,057,052                $ 1,143,772                $ 1,286,823
                                                        ===========                ===========                ===========


</TABLE>

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                                               ------------
                                                                     1999                      1998
                                                                     ----                      ----
                                                              AMOUNT      PERCENT       AMOUNT      PERCENT
                                                              ------      -------       ------      -------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                      <C>              <C>       <C>              <C>
FIXED RATE LOANS:
Real estate:
  One- to four-family                                     $   112,627       9.0%     $    76,566       7.1%
  Multifamily                                                 147,820      11.8          194,521      17.9
  Commercial                                                  129,865      10.3          147,860      13.6
  Construction and land                                        16,394       1.3           27,849       2.6
  Held for sale                                                 5,866       0.5            8,920       0.8
                                                          -----------      ----      -----------      ----
            Total fixed rate real estate loans                412,572      32.9          455,716      42.0
Consumer                                                      137,678      10.9           93,689       8.6
Consumer held for sale                                            852       0.1            5,601       0.5
Business and other                                             46,849       3.7           25,526       2.4
                                                          -----------      ----      -----------      ----
            Total fixed rate loans                            597,951      47.6%         580,532      53.5%
                                                          -----------      ====      -----------      ====
ADJUSTABLE RATE LOANS:
Real estate:
One- to four-family                                           182,434      14.5%         112,616      10.4%
Multifamily                                                   144,195      11.5          142,891      13.2
Commercial                                                    117,590       9.4           80,965       7.5
Construction and land                                         139,718      11.1          109,174      10.0
Held for sale                                                      --        --              496       0.0
                                                          -----------      ----      -----------      ----
            Total adjustable rate real estate loans           583,937      46.5          446,142      41.1
Consumer                                                        5,907       0.5            2,426       0.2
Business and other                                             67,484       5.4           56,791       5.2
                                                          -----------      ----      -----------      ----
            Total adjustable rate loans                       657,328      52.4%         505,359      46.5%
                                                          -----------      ====      -----------      ====
LESS:
Loans in process                                               56,212                     46,001
Deferred fees, net                                              4,548                      5,013
Discount (premium) on loans, net                               (7,178)                    (5,320)
Allowance for losses on loans                                  11,025                      6,909
                                                          -----------                -----------
            TOTAL LOANS RECEIVABLE, NET                   $ 1,190,672                $ 1,033,288
                                                          ===========                ===========

</TABLE>

                                                                               8

<PAGE>



            The following table illustrates the contractual maturity of our loan
portfolio at December 31, 2002. The table shows loans that have adjustable or
renegotiable interest rates as maturing in the period during which the contract
is due. The table does not reflect the effects of possible prepayments,
enforcement of due-on-sale clauses, or amortization of premium, discounts, or
deferred loan fees. The table includes demand loans, loans having no stated
maturity and overdraft loans in the due in one year or less category.

<TABLE>
<CAPTION>

                                                               DUE AFTER
                                                                ONE YEAR
                                      DUE IN ONE                THROUGH                     DUE AFTER
                                    YEAR OR LESS              FIVE YEARS                    FIVE YEARS           TOTAL
                                    ------------              ----------                    ----------           -----
                                           WEIGHTED                 WEIGHTED                 WEIGHTED                 WEIGHTED
                                           AVERAGE                  AVERAGE                   AVERAGE                 AVERAGE
                                AMOUNT      RATE        AMOUNT       RATE        AMOUNT        RATE       AMOUNT       RATE
                                ------      ----        ------       ----        ------        ----       ------       ----
                                                                     (DOLLARS IN THOUSANDS)
REAL ESTATE:
<S>                         <C>            <C>       <C>             <C>      <C>             <C>      <C>             <C>
  One- to four-family       $      110      6.56%     $    6,353      6.48%    $  146,651      6.08%    $  153,114      6.09%
  Multifamily                    2,189      6.18          39,735      7.24        268,416      7.01        310,340      7.03
  Commercial                     6,109      8.15          25,991      7.52        131,159      7.91        163,259      7.86
  Construction and land        186,034      5.24          69,238      4.81          8,792      7.88        264,064      5.25
CONSUMER                         1,390     10.30           8,936      9.73         91,301      7.94        101,627      8.07
BUSINESS                        50,278      6.24          18,451      7.45         52,570      7.80        121,299      7.14
                            ----------                ----------               ----------               ----------
    Total                   $  246,110      5.55%     $  168,704      6.41%    $  698,889      7.11%    $1,113,703      6.69%
                            ==========                ==========               ==========               ==========
</TABLE>


            Multifamily Lending. We originate loans from our present customers,
contacts within the investor community, and referrals from mortgage brokers. We
have become known for originating multifamily loans primarily in the state of
Ohio, and to some extent in Pennsylvania. We originate multifamily loans
primarily for investment. At December 31, 2002, we are not holding any
multifamily loans for sale.

            At December 31, 2002, the multifamily loans held for investment
totaled $310.3 million or 26.7% of total loans. The average size of these loans
was approximately $665,000. Currently, we emphasize the origination of
multifamily fixed and adjustable loans with principal amounts of $175,000 to
$6.0 million. Adjustable loans are priced on one-, three- or five-year treasury
rates with typical amortization periods of 25 or 30 years. The loans are subject
to a maximum individual aggregate interest rate adjustment as well as a maximum
aggregate adjustment over the life of the loan (generally 6%). Generally, the
maximum loan to value ratio of multifamily residential loans is 75% or less.

            Our underwriting process includes a site evaluation and involves an
evaluation of the borrower, whether the borrower is an individual or a group of
individuals acting as a separate entity. We review the financial statements of
each of the individual borrowers and typically obtain personal guarantees in an
amount equal to the original principal amount of the loan. In addition, we
complete an analysis of debt service coverage of the property. Debt service
coverage requirements are determined based upon the individual characteristics
of each loan. Typically, these requirements range from a ratio of 1.15:1 to
1.30:1.

            At December 31, 2002, real estate in Ohio secures 45.2% of our
multifamily loan portfolio as compared to 43.4% at December 31, 2001. Underlying
real estate for the remaining loans is located primarily in California and
Pennsylvania. The Bank no longer originates loans in California. The Bank's
exposure with California loans continues to decrease with normal payoffs and
amortization.

            We recognize that multifamily loans generally involve a higher
degree of risk than one- to four-family residential real estate loans.
Multifamily loans involve more risk because they typically involve larger loan
balances to single borrowers or groups of related borrowers. The payment
experience on these loans typically depends upon the successful operation of the
related real estate project and is subject to risks such as excessive vacancy
rates or inadequate rental income levels.

            Commercial Real Estate Lending. At December 31, 2002, permanent
loans held for investment, secured by commercial real estate, totaled $163.3
million or 14.1% of our total portfolio. The average size of these loans was
approximately $716,000.


                                                                               9

<PAGE>

            We originate loans secured by commercial real estate generally when
these loans are secured by retail strip shopping centers or office buildings and
the loan yields and other terms meet our requirements. We originate commercial
real estate loans primarily for investment. At December 31, 2002, the Bank held
no commercial real estate loans for sale.

            We recognize that commercial real estate loans generally involve a
higher degree of risk than the financing of one- to four-family residential real
estate. These loans typically involve larger loan balances to single borrowers
or groups of related borrowers. The payment experience on these loans is
typically dependent upon the successful operation of the related real estate
project and is subject to certain risks including excessive vacancy due to
tenant turnover and inadequate rental income levels. In addition, the
profitability of the business operating in the property may affect the
borrower's ability to make timely payments. In order to manage and reduce these
risks, we focus our commercial real estate lending on existing properties with a
record of satisfactory performance and target retail strip centers and office
buildings with multiple tenants.

            The following table presents information as to the locations and
types of properties securing the multifamily and commercial real estate
portfolio as of December 31, 2002. As of that date, we had loans in 36 states.
Properties securing loans in 32 states are aggregated in the table because none
of those states exceed 5.0% of the outstanding principal balance of the total
multifamily and commercial real estate portfolio.

<TABLE>
<CAPTION>
                           NUMBER
                          OF LOANS       PERCENT     PRINCIPAL       PERCENT
                          --------       -------     ---------       -------
                                        (DOLLARS IN THOUSANDS)
<S>                           <C>            <C>     <C>                 <C>
Ohio:
  Apartments                  159            23%     $140,106            30%
  Office buildings             28             4        14,412             3
  Retail centers               23             3        17,899             4
  Other                        16             2         9,931             2
                         --------      --------      --------      --------
            Total             226            32       197,369            39
California:
  Apartments                  152            22        76,511            16
  Office buildings             15             2         4,736             1
  Retail centers               51             7        21,095             4
  Other                        12             2         4,888             1
                         --------      --------      --------      --------
            Total             230            33       107,230            22
Pennsylvania:
  Apartments                   25             4        16,077             3
  Office buildings             10             1        18,590             4
  Retail centers                5             1        10,882             2
  Other                         4             1        11,259             2
                         --------      --------      --------      --------
            Total              44             7        56,808            11

New York:
  Apartments                    7             1         2,958             1
  Office buildings              4             1         4,868             1
  Retail centers                7             1        10,184             2
  Other                         3             0           891             0
                         --------      --------      --------      --------
            Total              21             3        18,901             4

Other states:
  Apartments                  124            18        74,688            16
  Office Buildings             14             2        18,503             4
  Retail centers               24             3        12,146             2
  Other                        12             2         2,975             1
                         --------      --------      --------      --------
            Total             174            25       108,312            24
                         --------      --------      --------      --------
                              695           100%     $473,599           100%
                         ========      ========      ========      ========
</TABLE>


                                                                              10


<PAGE>

            The following table presents aggregate information as to the type of
security as of December 31, 2002:

<TABLE>
<CAPTION>
                                    AVERAGE
                         NUMBER     BALANCE
                         OF LOANS   PER LOAN    PRINCIPAL      PERCENT
                         --------   --------    ---------      -------
                                    (DOLLARS IN THOUSANDS)
<S>                    <C>         <C>          <C>           <C>
Apartments                 467     $    665     $310,340           66%
Office buildings            71          861       61,109           13
Retail centers             110          656       72,206           15
Other                       47          637       29,944            6
                        ------                  --------     --------
            Total          695     $    681     $473,599          100%
                        ======                  ========     ========
</TABLE>

            One- to four-family lending. We originate one- to four-family
residential loans for sale and for the Bank's portfolio. While the mix of loans
originated for sale versus originated for portfolio vary over time, currently
the Bank anticipates that, for the foreseeable future, the majority of one- to
four-family loans will be originated for sale.

            Our portfolio of one- to four-family loans at December 31, 2002
totaled $153.1 million or 13.2% of our total loan portfolio. These loans are
primarily first mortgages on owner occupied residences. Substantially all loans
with loan to values greater than 85% carry private mortgage insurance. These
loans are concentrated in Ohio and include both fixed and variable rate loans.
Many of the fixed rate loans were originally construction loans where we offered
the borrower fixed rate permanent financing commitments to commence after the
construction period was over. We limit the amount of this fixed rate end loan
financing retained in our portfolio to limit interest rate risk associated with
long-term fixed-rate loans.

            Construction Lending and Land Development. At December 31, 2002, we
had $264.1 million of construction and land development loans outstanding. We
originate construction loans on single family homes to local builders in our
primary lending market and to individual borrowers on owner-occupied properties.
We also make loans to builders for the purchase of fully-improved single family
lots and to developers for the purpose of developing land into single family
lots. Our primary market areas for construction lending are in Northeastern
Ohio, in the counties of Cuyahoga, Lake, Geauga, Summit, Medina, Portage, and
Lorain and the greater Columbus, Ohio market.

            The following table presents the number, amount, and type of
properties securing construction and land development loans at December 31,
2002:

<TABLE>
<CAPTION>
                                                        NUMBER OF   PRINCIPAL
                                                          LOANS      BALANCE
                                                          -----      -------
                                                        (DOLLARS IN THOUSANDS)
<S>                                                          <C>     <C>
RESIDENTIAL CONSTRUCTION LOANS:
  Owner-occupied                                             171     $ 39,510
  Builder presold                                             88       20,589
  Builder model homes                                        241       59,771
  Builder lines of credit                                     30       55,117
                                                        --------     --------
            Total residential construction loans             530      174,987
NONRESIDENTIAL CONSTRUCTION LOANS:
  Multifamily                                                  5        6,009
  Commercial                                                   4        9,044
                                                        --------     --------
            Total nonresidential construction loans            9       15,053
OTHER LOANS
Land loans                                                    15        8,302
Development loans                                            147       65,722
                                                        --------     --------
            Total other loans                                162       74,024
                                                        --------     --------
            Total                                            701     $264,064
                                                        ========     ========
</TABLE>

            The risk of loss on a construction loan largely depends upon the
accuracy of the initial estimate of the property's value upon completion of the
project, the estimated cost of the project, and the proper control over
disbursements during construction. We review the borrower's financial position
and require a personal guarantee on builder loans. We base all loans upon the
appraised value of the underlying collateral, as completed. Construction
inspections are required to support the percentage of completion during
construction.


                                                                              11
<PAGE>

            We establish a maximum loan to value ratio for each type of loan
based upon the contract price, cost estimate or appraised value, whichever is
less. The maximum loan to value ratio by type of construction loan is as
follows:

            -     owner-occupied homes--80%;

            -     builder presold homes--80%;

            -     builder models or speculative homes--75%;

            -     lot loans--75%;

            -     development loans--75% (development of single-family home lots
                  for resale to builders); and

            -     builder lines of credit--75% (development of land for cluster
                  or condominium projects which will be part of builder line of
                  credit).

            Construction loans that we make to builders are for relatively short
terms (6 to 24 months) and are at an adjustable rate of interest. Owner-occupied
loans are generally fixed rate.

            We offer builders lines of credit to build single-family homes. We
secure all lines of credit by the homes that are built with the draws under such
credit agreements. Most of the homes built with the line of credit funds are
presold homes. We base draws upon the percentage of completion.

            We also originate construction loans on multifamily and commercial
real estate projects where we intend to provide the financing once construction
is complete. We underwrite these loans in a manner similar to our originated and
purchased multifamily residential and commercial real estate loans described
above.

            Consumer Lending. The underwriting standards we employ for consumer
loans include a determination of the applicant's payment history on other debts
and an assessment of the applicant's ability to meet existing obligations and
payments on the proposed loan. Although creditworthiness of the applicant is a
primary consideration, the underwriting process also includes a comparison of
the value of the security, if any, in relation to the proposed loan amount.

            Consumer loans entail greater risk than residential mortgage loans,
particularly in the case of consumer loans which are unsecured or are secured by
rapidly depreciable assets, such as automobiles. At December 31, 2002, secured
loans comprised $95.8 million or 94.3% of the $101.6 million consumer loan
portfolio. However, even in the case of secured loans, repossessed collateral
for a defaulted consumer loan may not provide an adequate source of repayment of
the outstanding loan balance due to the higher likelihood of damage, loss or
depreciation. In addition, consumer loan collections depend upon the borrower's
continuing financial stability. The application of various federal and state
laws, including bankruptcy and insolvency laws, may limit the amount recovered
on such loans in the event of default.

            In the past, we have purchased loans through correspondent lenders
and bulk portfolios offered for sale. In 1997, we acquired two packages of
subprime loans totaling $6.3 million. Subprime loans are loans where the
borrower's credit rating is below an A grade. In 1998, we acquired an additional
loan package of $5.0 million of subprime loans secured by manufactured housing.
Total subprime loans were $3.9 million, or 3.9% of total consumer loans at
December 31, 2002. We no longer engage in subprime lending.

            During 2002, we sold our credit card portfolio and exited the credit
card business.

            Business Lending. At December 31, 2002, we had $121.3 million of
business loans outstanding. Our business lending activities encompass loans with
a variety of purposes and security, including loans to finance accounts
receivable, inventory and equipment. Generally, our business lending has been
limited to borrowers headquartered, or doing business in, our retail market
area. These loans are generally adjustable interest rate loans at some margin
over the prime interest rate and some are guaranteed by the Small Business
Administration.

                                                                              12

<PAGE>

            The following table sets forth information regarding the number and
amount of our business loans as of December 31, 2002:

<TABLE>
<CAPTION>
                                                                             OUTSTANDING
                                                    NUMBER      TOTAL LOAN    PRINCIPAL
                                                    OF LOANS    COMMITMENT     BALANCE
                                                    --------    ----------     -------
                                                         (DOLLARS IN THOUSANDS)
<S>                                                 <C>       <C>          <C>
LOANS SECURED BY:
  Accounts receivable, inventory and equipment           78     $ 14,217     $ 10,193
  Second lien on real estate                             67       25,271       23,443
  First lien on real estate                             130       86,061       75,948
  Specific equipment and machinery                       11        6,228        4,479
  Titled vehicles                                        26        1,260          830
  Stocks and bonds                                        5        1,358        1,137
  Certificates of deposit                                 7          525          484
UNSECURED LOANS                                          56        6,290        4,785
                                                   --------     --------     --------
  Total                                                 380     $141,210     $121,299
                                                   ========     ========     ========
</TABLE>

            Business loans differ from residential mortgage loans. Residential
mortgage loans generally are made on the basis of the borrower's ability to make
repayment from his or her employment and other income and are secured by real
property whose value is more easily ascertainable. Business loans are of higher
risk and typically are made on the basis of the borrower's ability to make
repayment from the cash flow of the borrower's business. As a result, the
availability of funds for the repayment of business loans may depend
substantially upon the success of the business. Furthermore, the collateral
securing the loans may depreciate over time, may be difficult to appraise, and
may fluctuate in value based on the success of the business. We work to reduce
this risk by carefully underwriting business loans and by taking real estate as
collateral whenever possible.

SECONDARY MARKET ACTIVITIES

            Mortgage Banking. We originate one- to four-family loans for sale
through our retail sales office network and through loan origination offices
throughout Ohio and in Western Pennsylvania. In addition we purchase loans for
sale from a number of correspondent lenders. These loans are sold to Freddie
Mac, Fannie Mae and private buyers. Mortgage banking allows us to generate
revenue from loan sales continuously in spite of the level of cash flows from
deposits or other sources. It also allows us to make long-term fixed rate loans
desired by our customers without absorbing the interest rate risk that can be
associated with those loans. The principal balance of one- to four-family loans
and securitized loans sold during 2002 was $964.1 million, which generated gains
of $12.2 million.

            The secondary market for mortgage loans is comprised of
institutional investors who purchase loans meeting certain underwriting
specifications with respect to loan-to-value ratios, maturities and yields.
Subject to market conditions, we tailor some of our real estate loan programs to
meet the specifications of Freddie Mac and Fannie Mae, two of the largest
institutional investors. We generally retain a portion of the loan origination
fee paid by the borrower and receive annual servicing fees as compensation for
retaining responsibility for and performing the servicing of all loans sold to
institutional investors. See "Loan Servicing Activities."

            The terms and conditions under which such sales are made depend
upon, among other things, the specific requirements of each institutional
investor, the type of loan, the interest rate environment and our relationship
with the institutional investor. We periodically obtain formal commitments to
sell loans, primarily with Freddie Mac and Fannie Mae. Based on these
commitments, Freddie Mac or Fannie Mae is obligated to purchase a specific
dollar amount of whole loans over a specified period. The terms of the
commitments range from ten to sixty days. The pricing varies depending upon the
length of each commitment. We classify loans as held for sale while we are
negotiating the sale of specific loans which meet selected criteria to a
specific investor or after a sale is negotiated but before it is settled. Sales
of loans can take the form of cash sales of loans or sales of mortgage-backed
securities. At times we form a mortgage-backed security and immediately sell the
security rather than the loans. This increases the potential number of buyers
since there is an established market for mortgage-backed securities with
numerous buyers, sellers and brokers.

            Commercial. Since the first quarter of 2002, the Company has chosen
to no longer sell its commercial real estate and multifamily loans in the
secondary market, except where the Company may choose to reduce exposure with
certain existing relationships, or to allow the Company to grant additional
loans to an existing borrower without increasing its overall exposure to

                                                                              13

<PAGE>

any such individual borrower. During 2002, we sold $6.5 million of commercial
real estate and multifamily loans, which generated gains of $51,000.

LOAN SERVICING ACTIVITIES

            At December 31, 2002, our overall servicing portfolio had a
principal balance of $3.0 billion. Of that amount, loans serviced for others
totaled $2.2 billion. The following table summarizes the portfolio by investor
and source:


<TABLE>
<CAPTION>
                                           ORIGINATED    PURCHASED      PORTFOLIO
                                           SERVICING     SERVICING      SERVICING        TOTAL
                                           ---------     ---------      ---------        -----
                                                          (DOLLARS IN THOUSANDS)
<S>                                       <C>           <C>            <C>             <C>
One- to Four-family:
  Held for investment                             --             --     $  372,979     $  372,979
  Freddie Mac                             $  879,420     $  746,952             --      1,626,372
  Fannie Mae                                  18,032        281,715             --        299,747
  Private investors                           32,704         15,899             --         48,603
                                          ----------     ----------     ----------     ----------
            Total One- to Four-family        930,156      1,044,566        372,979      2,347,701
Multifamily and Commercial:
  Held for investment                             --             --        411,312        411,312
  Fannie Mae                                  57,469         39,206             --         96,675
  Private investors                          142,148         23,913             --        166,061
                                          ----------     ----------     ----------     ----------
            Total Multifamily and
              Commercial                     199,617         63,119        411,312        674,048
                                          ----------     ----------     ----------     ----------
              Total                       $1,129,773     $1,107,685     $  784,291     $3,021,749
                                          ==========     ==========     ==========     ==========
</TABLE>


            Generally, we service the loans we originate. When we sell loans to
an investor, such as Freddie Mac or Fannie Mae, we normally retain the servicing
rights for the loans. We receive fee income for servicing these sold loans at
various percentages based upon the unpaid principal balances of the loans
serviced. We collect and retain service fees out of monthly mortgage payments.
At December 31, 2002, the unpaid principal balance of our originated servicing
rights was $1.1 billion. The related net book value of originated mortgage
servicing rights was $7.0 million. Occasionally during 2000 and prior years, the
Bank pursued bulk purchases of servicing portfolios from other originating
institutions to further increase our servicing fee income. These purchased
servicing portfolios are primarily Freddie Mac and Fannie Mae single-family
loans that are secured by homes located within the eastern half of the nation.
At December 31, 2002, the unpaid principal balance of our purchased servicing
portfolio was $1.1 billion. The related net book value of purchased mortgage
servicing rights was $6.1 million.

            Loan servicing functions include collecting and remitting loan
payments, accounting for principal and interest, holding escrow (impound) funds
for payment of taxes and insurance, making rate and payment changes to
contractually adjustable loans, managing loans in payment default, processing
foreclosure and other litigation activities to recover mortgage debts,
conducting property inspections and risk assessment for investment loans and
general administration of loans for the investors to whom they are sold.

            We estimate the market value of mortgage servicing rights using a
valuation model. The model uses a number of variables and estimates the market
value of the servicing on a loan-by-loan basis. Some of the significant
variables are prepayment speeds, delinquency rates, servicing costs, periods to
hold idle cash and an estimated rate of return on idle cash. In general, the
market value of purchased or originated servicing rights increases as interest
rates rise and decreases as interest rates fall. This is because the estimated
life of the loan and the estimated income from idle funds both increase as
interest rates increase and decrease as interest rates decrease. Because there
are a number of estimates involved, the end product is necessarily an estimate
and is very sensitive to changes in interest rates. Projecting changes in
servicing values is difficult because it involves estimating how rates will
change at a number of points along the yield curve. During 2001 and 2002, market
interest rates have fallen primarily due to reductions in short-term rates by
the Federal Reserve Board and other economic factors. As a result, the market
values and book values of the Bank's servicing rights have decreased rapidly.
Interest rates continued to fall during 2002 and as a result the Bank recorded
additional impairment of loan servicing rights of $4.5 million during the year.
Future changes in the market value of loan servicing rights depend on a number
of variables, but are primarily dependent on future changes in interest rates.
Alternatively, the fair value of servicing rights may be determined by obtaining
an independent third party appraisal.


                                                                              14

<PAGE>

LOAN DELINQUENCIES AND NONPERFORMING ASSETS

            Collection procedures vary by type of loan but generally consist of
efforts to collect delinquent balances and if collection efforts fail to
liquidate the collateral securing the loan to satisfy the obligation. Collection
efforts for one- to four-family loans generally conform to the servicing
requirements of Fannie Mae and Freddie Mac. Notices are sent by mail when the
loan reaches 15 days past due. Generally, within the following 5 days contact is
made by telephone. When a loan reaches 90 days past due we generally begin
foreclosure proceedings. Foreclosure culminates with the sale of property at
public auction where we may be the acquirer. Foreclosed real estate is recorded
at the lesser of fair value less selling costs or the loan balance and marketed
for sale.

            While each delinquent multifamily or commercial real estate loan
receives individual attention due to the larger size of these loans, certain
standard procedures are followed. First, annual financial statements and rent
rolls are requested from each borrower and are analyzed. Borrowers with debt
service ratios of less than 1:1 or with high vacancy rates are contacted and
monitored. When a loan reaches 20 days past due, contact is made by mail and by
telephone and is documented. If the delinquency continues we send a default
letter to the borrower as soon as we determine that the loan is in default. That
letter indicates what steps the borrower will have to take to cure the default
and what we will do next if the default is not cured. If the default is not
cured by the target date, we notify the borrower in writing that the entire
balance of the loan is due and payable and we begin foreclosure proceedings.
Foreclosure may end in auction, acquisition and marketing of the real estate.
Where possible, further collection actions are taken for deficiencies not
satisfied by the sale of the real estate.

            The steps we take to collect delinquent business loans are even more
diverse because the types of collateral taken vary significantly. Collections
are monitored regularly. We make telephone contact with customers who do not pay
by their due date. If a delay in payment continues we meet with the borrower.
The borrower's cash flow situation is evaluated and a repayment plan instituted.
In some cases we exercise our right to collateral or assignment of receivables
to satisfy the debt.

            We initiate contact with delinquent consumer loan customers even
sooner making contact when a payment is 10 days past due since the financial
condition of an individual can change quickly due to a change in employment or
marital status. We bring an action to collect any loan payment that is
delinquent more than 30 days. Our procedures for collection efforts,
repossession and sale of consumer collateral must comply with various
requirements under state and federal consumer protection laws.

            On a monthly basis the credit department classifies loans into a
number of credit risk categories and a management committee monitors and directs
collection efforts for the loans that are large and are classified as having
high credit risk. Also monthly, delinquency statistics are reported to
management and the Board of Directors.

            The following table sets forth information concerning delinquent
loans at December 31, 2002, in dollar amounts and as a percentage of each
category of the loan portfolio. The amounts presented represent the total
remaining principal balances of the related loans, rather than the actual
payment amounts that are overdue.

<TABLE>
<CAPTION>

                                         60-89 DAYS                   90 DAYS AND OVER             TOTAL DELINQUENT LOANS
                                         ----------                   ----------------             ----------------------
                                                     PERCENT                         PERCENT                         PERCENT
                                                     OF LOAN                         OF LOAN                         OF LOAN
                              NUMBER      AMOUNT    CATEGORY   NUMBER      AMOUNT    CATEGORY    NUMBER    AMOUNT   CATEGORY
                              ------      ------    --------   ------      ------    --------    ------    ------   --------
                                                                    (DOLLARS IN THOUSANDS)
<S>                           <C>       <C>         <C>       <C>        <C>        <C>        <C>        <C>         <C>
REAL ESTATE
  One- to four-family              2     $   465     0.2%          15     $ 2,352     1.2%          17     $ 2,817     1.4%
  Multifamily                      3       1,037     0.3            2         507     0.2            5       1,544     0.5
  Commercial real estate          --          --      --            3       1,795     1.1            3       1,795     1.1
  Construction and land           --          --      --            2         143     0.1            2         143     0.1
Consumer                         150         759     0.7          181       3,213     3.2          331       3,972     3.9
Business                           1           1     0.0            8       3,952     3.3            9       3,953     3.3
                             -------     -------              -------     -------              -------     -------
    Total                        156     $ 2,262     0.2%         211     $11,962     1.0%         367     $14,224     1.2%
                             =======     =======     ===      =======     =======     ===      =======     =======     ===
</TABLE>


            In addition to the loans included above we have $15.1 million in
business loans to a group of borrowers who are related to each other that are
current but are a credit concern. On March 26, 2001, based on financial
projections provided by the borrowers on March 12, 2001, $14.7 million of
business loans to the previously mentioned borrowers were placed on nonaccrual
status and were calculated to be impaired in the amount of $3.5 million. These
loans are business loans secured by junior liens on several nursing homes and
assisted living centers. The borrowers did not make any payments on these loans
during the first quarter of 2001. The estimate of the impairment was the result
of comparing the book value of the loans to the present value of


                                                                              15

<PAGE>

cash flows expected to be received based on the most likely workout scenario. In
May 2001, the borrowers began making interest payments on these loans. These
loans were brought current as of September 30, 2002 through payments by the
borrowers and a reduction in the rates charged on these loans. However, due to
the continuing weakness of the borrowers, these loans are still considered
impaired, nonperforming and a troubled debt restructuring at December 31, 2002.
As of December 31, 2002, the borrowers were performing per their restructured
lending agreements. Management determined the amount of the impairment of these
loans to have remained $3.5 million as of December 31, 2002.

            Nonperforming assets include all nonaccrual loans, loans past due
greater than 90 days still accruing, and real estate owned. Generally, interest
is not accrued on loans contractually past due 90 days or more as to interest or
principal payments. In addition, interest is not accrued on loans as to which
payment of principal and interest in full is not expected unless, in our
judgment, the loan is well secured, and we expect no loss in principal or
interest.

            When a loan reaches nonaccrual status, we discontinue interest
accruals and reverse prior accruals. The classification of a loan on nonaccrual
status does not necessarily indicate that the principal is uncollectible in
whole or in part. We consider both the adequacy of the collateral and the other
resources of the borrower in determining the steps to take to collect nonaccrual
loans. The final determination as to these steps is made on a case-by-case
basis. Alternatives we consider are commencing foreclosure, collecting on
guarantees, restructuring the loan, or instituting collection lawsuits.

ALLOCATION OF ALLOWANCE FOR LOSSES ON LOANS

            We maintain an allowance for losses on loans because some loans may
not be repaid in full. We maintain the allowance at a level we consider adequate
to cover probable incurred losses that are currently anticipated based on past
loss experience, general economic conditions, information about specific
borrower situations, including their financial position and collateral values,
and other factors and estimates which are subject to change over time. The
allowance is broken down into two categories, specific and general. Either
duration of delinquency or an impairment calculation under Statement of
Financial Accounting Standards No. 114 determines the specific allowance. The
remainder of the loans not covered by the specific allowance are determined to
be either classified or nonclassified. Those loans that are classified are
determined to be substandard, doubtful or special mention. Individual general
allowance factors based on risk are then applied to the various categories by
loan type. Those loans that are nonclassified are grouped by loan type and
individual general allowance factors based on risk are then applied. Management
has reviewed Staff Accounting Bulletin No. 102 and believes that the Bank is in
compliance with that pronouncement. We charge a loan against the allowance as a
loss when, in our opinion, it is uncollectible. Despite the charge-off, we
continue collection efforts. As a result, future recoveries may occur.

            The following table sets forth an allocation (by total amount and
percentage of loans in each category) of the allowance for losses on loans among
categories as of the dates indicated based on our estimate of probable losses
that were currently anticipated based largely on past loss experience. Since the
factors influencing such estimates are subject to change over time, we believe
that any allocation of the allowance for losses on loans into specific
categories lends an appearance of precision which does not exist. In practice,
we use the allowance as a single unallocated allowance available for all loans.
The allowance can also be reallocated among different loan categories if actual
losses differ from expected losses and based upon changes in our expectation of
future losses.

                                                                              16

<PAGE>

            The following allocation table should not be interpreted as an
indication of the actual amounts or the relative proportion of future charges to
the allowance.

<TABLE>
<CAPTION>
                                                      DECEMBER 31,
                                                      ------------
                                        2002                   2001                    2000
                                        ----                   ----                    ----
                                     PERCENT OF             PERCENT OF              PERCENT OF
                                      LOANS IN               LOANS IN                LOANS IN
                                        EACH                   EACH                    EACH
                                     CATEGORY TO            CATEGORY TO             CATEGORY TO
                                        TOTAL                 TOTAL                   TOTAL
                            AMOUNT      LOANS      AMOUNT     LOANS        AMOUNT     LOANS
                            ------      -----      ------     -----        ------     -----
                                                (DOLLARS IN THOUSANDS)
<S>                        <C>        <C>        <C>         <C>         <C>         <C>
One-to four-family         $   338      17.3%     $   323      22.0%     $ 1,759      24.8%
Multifamily                  1,150      26.7          981      20.4        1,962      20.5
Commercial real estate       1,612      14.1        1,785      16.7        1,956      18.7
Construction and land        1,710      22.7          946      18.9        1,296      13.6
Consumer                     3,233       8.8        5,341      11.2        3,631      11.9
Business                     8,920      10.4        7,874      10.8        1,952      10.5
Unallocated                    140        --           --        --        1,395        --
                           -------     -----      -------     -----      -------     -----
            Total          $17,103     100.0%     $17,250     100.0%     $13,951     100.0%
                           =======     =====      =======     =====      =======     =====
</TABLE>

<TABLE>
<CAPTION>
                                            DECEMBER 31,
                                            ------------
                                        1999                   1998
                                        ----                   ----
                                     PERCENT OF             PERCENT OF
                                      LOANS IN               LOANS IN
                                        EACH                   EACH
                                     CATEGORY TO            CATEGORY TO
                                       TOTAL                  TOTAL
                             AMOUNT    LOANS     AMOUNT       LOANS
                             ------    -----     ------       -----
                                     (DOLLARS IN THOUSANDS)
<S>                        <C>        <C>        <C>         <C>
One-to four-family         $   778      24.0%     $   304      18.3%
Multifamily                    904      23.3          648      31.1
Commercial real estate       1,281      19.7        1,019      21.1
Construction and land          550      12.4          237      12.6
Consumer                     3,947      11.5        2,335       9.3
Business                     2,462       9.1        1,675       7.6
Unallocated                  1,103        --          691        --
                           -------     -----      -------     -----
            Total          $11,025     100.0%     $ 6,909     100.0%
                           =======     =====      =======     =====
</TABLE>

            The risks associated with off-balance sheet commitments are
insignificant. Therefore, we have not provided an allowance for those
commitments.

INVESTMENT PORTFOLIO

            We maintain our investment portfolio in accordance with policies
adopted by the Board of Directors that consider the regulatory requirements and
restrictions which dictate the type of securities that we can hold. As a member
of the Federal Home Loan Bank System, the Bank is required to hold a minimum
amount of Federal Home Loan Bank stock based upon asset size and outstanding
borrowings.

            The following table summarizes the amounts and the distribution of
securities held as of the dates indicated:

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                        ------------
                                               2002         2001          2000
                                               ----         ----          ----
                                                   (DOLLARS IN THOUSANDS)
<S>                                          <C>         <C>          <C>
SECURITIES:
    Mutual funds                             $  1,196     $  5,784     $    889
    Tax-exempt bond                            13,755       14,349       14,705
    Revenue bond                                  165          480          775
    Freddie Mac preferred stock                 2,832        6,750        6,150
    Freddie Mac note                               --           --        9,986
    Fannie Mae note                                --        4,931       19,920
    Federal Home Loan Bank notes                   --        4,943           --
    Federal Home Loan Bank stock               13,823       16,889       20,624
    Treasury notes and bills                   95,463       71,946        2,361
                                             --------     --------     --------
        Total                                $127,234     $126,072     $ 75,410
                                             ========     ========     ========
OTHER INTEREST-EARNING ASSETS:
    Interest-bearing deposits with banks     $  4,323     $    577     $  2,727
                                             ========     ========     ========
</TABLE>

            The tax-exempt municipal bond represents a single issue secured by a
multifamily property. The bond was reclassified to available for sale as of June
30, 2002, due to a decrease in the cash flow generated by the multifamily
property to make required debt service payments on the bond and management's
decision to market this security when the property, which serves as collateral
for the bond, becomes fully occupied. In conjunction with this reclassification,
it was determined that there was a permanent impairment to the bond's fair value
and a realized loss of $550,000 was recorded in the second quarter of 2002.
Since December 31, 2002, there has been further deterioration in this bond and a
further impairment of $909,000 was recorded in the first quarter of 2003.

                                                                              17

<PAGE>

The following table sets forth the contractual maturities and approximate
weighted average yields of debt securities at December 31, 2002.

<TABLE>
<CAPTION>
                                                                       DUE IN
                                          -----------------------------------------------------------------
                                           ONE MONTH    TWO MONTHS      ONE YEAR     MORE THAN
                                            OR LESS    TO ONE YEAR   TO FIVE YEARS  FIVE YEARS     TOTAL
                                          ---------    -----------   -------------  ----------     -----
                                                          (DOLLARS IN THOUSANDS)
<S>                                       <C>          <C>           <C>            <C>          <C>
Tax-exempt bond                                 --      $    295      $  1,715      $ 11,745      $ 13,755
Revenue bond                                    --           165            --            --           165
U.S. Treasury Notes and Bills             $ 42,006        53,457            --            --        95,463
                                          --------      --------      --------      --------      --------
    Total                                 $ 42,006      $ 53,917      $  1,715      $ 11,745      $109,383
                                          ========      ========      ========      ========      ========
Weighted average tax-equivalent yield         1.01%         2.57%        10.61%        10.61%         2.96%
</TABLE>

MORTGAGE-BACKED SECURITIES PORTFOLIO

            Mortgage-backed securities offer higher rates than treasury or
agency securities with similar maturities because the timing of the repayment of
principal can vary based on the level of prepayments of the underlying loans.
However, they offer lower yields than similar loans because the risk of loss of
principal is often guaranteed by the issuing entity or through mortgage
insurance. We acquire mortgage-backed securities through purchases and
securitization of loans from our portfolio. We classify all mortgage-backed
securities as available for sale. The following table sets forth the fair market
value of the mortgage-backed securities portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                      DECEMBER 31,
                                                      ------------
                                             2002         2001          2000
                                             ----         ----          ----
                                                (DOLLARS IN THOUSANDS)
<S>                                       <C>          <C>          <C>
Fannie Mae pass-through certificates       $ 45,510     $ 54,319     $ 74,412
GNMA pass-through certificates               29,893       28,830       27,249
Freddie Mac participation certificates       16,835        1,462        2,948
BPA Commercial Capital L.L.C
    mortgage-backed security                 52,449       70,244       77,162
Freddie Mac Collateralized Mortgage
    Obligation                                8,185        8,577        8,192
Fannie Mae Collateralized Mortgage
    Obligation                                   --        3,690        5,666
Other                                           111          191          200
                                           --------     --------     --------
    Total                                  $152,983     $167,313     $195,829
                                           ========     ========     ========
</TABLE>


            The following table sets forth the final maturities and approximate
weighted average yields of mortgage-backed securities at December 31, 2002.


<TABLE>
<CAPTION>
                                                         DUE IN
                                          -----------------------------------
                                          ONE YEAR
                                          TO FIVE        OVER
                                           YEARS       FIVE YEARS      TOTAL
                                           -----       ----------      -----
                                                 (DOLLARS IN THOUSANDS)
<S>                                      <C>           <C>           <C>
Fannie Mae pass-through
    certificates                         $ 12,976      $ 32,534      $ 45,510
GNMA pass-through certificates                 --        29,893        29,983
Freddie Mac participation
  certificates                                 --        16,835        16,385
BPA Commercial Capital L.L.C
    Mortgage-backed security                   --        52,449        52,449
Freddie Mac Collateralized
    Mortgage Obligation                        --         8,185         8,185
Other                                          --           111           111
                                         --------      --------      --------
    Total mortgage-backed securities     $ 12,976      $140,007      $152,983
                                         ========      ========      ========
Weighted average yield                       6.52%         6.01%         6.11%
</TABLE>


The actual timing of the payment of principal on mortgage-backed securities is
dependent on principal payments on the underlying loans which may or may not
carry prepayment penalties for the borrowers. Therefore, the table above is not
necessarily representative of actual or expected cash flows from these
securities.


                                                                              18

<PAGE>

SOURCES OF FUNDS

            The Bank's primary sources of funds are deposits, amortization and
repayment of loan principal, borrowings, sales of mortgage loans, sales or
maturities of mortgage-backed securities, securities, and short-term
investments. Deposits are the principal source of funds for lending and
investment purposes. We offer the following types of deposit accounts:

            Statement and Checking Accounts. We offer a statement savings
account, two types of passbook savings accounts, an investment sweep account,
two interest-bearing checking, and one noninterest-bearing checking account for
consumers. We offer three noninterest-bearing checking accounts and an
investment sweep for business and commercial customers. The Bank also offers
both checking and savings accounts for public funds customers. As of December
31, 2002, the Bank's total core deposits, as a percentage of total deposits
increased to 37.3% from 31.8% as of December 31, 2001. Core deposits are defined
as the Bank's checking and savings deposits less public funds and custodial
accounts.

            In connection with loan servicing activities, we maintain custodial
checking accounts for principal and interest payments collected for investors
monthly and for tax and insurance escrow balances.

            Certificates of Deposit. We offer fixed rate, fixed term
certificates of deposit. Terms are from seven days to five years. These accounts
generally bear the highest interest rates of any deposit product offered. We
review interest rates offered on certificates of deposit weekly and adjust them
based on cash flow projections and market interest rates. In conjunction with
certificates of deposit, we also offer Individual Retirement Accounts.

            From time to time, we have accepted certificates of deposit through
brokers or from out-of-state individuals and entities, predominantly financial
institutions. These deposits typically have balances of $90,000 to $100,000 and
have a term of three months to two years. At December 31, 2002, these
individuals and entities held approximately $74.8 million of certificates of
deposits, or 7.12% of total deposits. Subsequent to June 30, 2001, the Bank has
reduced its dependency on brokered and out-of-state deposits as required by the
Supervisory Agreement. During 2002, the Bank reduced brokered and out-of-state
deposits by $53.0 million.

            The following table provides information regarding trends in average
deposits for the periods indicated. The noninterest bearing demand deposit
category includes principal and interest custodial accounts and taxes and
insurance custodial accounts for loans serviced for Freddie Mac, Fannie Mae and
private investors.



<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                                ------------
                                            2002                                      2001
                                            ----                                      ----
                                               PERCENT                              PERCENT
                                     AVERAGE     OF         RATE        AVERAGE        OF        RATE
                                     AMOUNT     TOTAL       PAID        AMOUNT        TOTAL      PAID
                                     ------     -----       ----        ------        -----      ----
                                                          (DOLLARS IN THOUSANDS)
<S>                              <C>            <C>        <C>       <C>            <C>         <C>
Noninterest-bearing
  demand deposits                $  137,840      12.6%                $  105,535       9.2%
Interest bearing deposits:
   Demand deposits                  207,540      19.1       2.39%        158,881      13.8       3.63%
   Savings deposits                  88,786       8.2       1.58          95,038       8.3       2.50
   Time deposits                    654,431      60.1       4.53         788,172      68.7       5.89
                                 ----------     -----                 ----------     -----
   Total interest-bearing
        deposits                    950,757      87.4       3.31%      1,042,091      90.8       5.23
                                 ----------     -----                 ----------     -----
      Total average deposits     $1,088,597     100.0%                $1,147,626     100.0%
                                 ==========     =====                 ==========     =====
</TABLE>

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                                ------------
                                                   2000
                                                   ----
                                                  PERCENT
                                       AVERAGE       OF        RATE
                                       AMOUNT      TOTAL       PAID
                                       ------     ------       ----

<S>                                <C>           <C>         <C>
Noninterest-bearing
  demand deposits                   $   71,714       6.3%
Interest bearing deposits:
   Demand deposits                      99,142       8.7       4.15%
   Savings deposits                    146,635      12.9       3.82
   Time deposits                       818,062      72.1       6.11
                                    ----------     -----
   Total interest-bearing
        deposits                     1,063,839      93.7       5.60
                                    ----------     -----
      Total average deposits        $1,135,553     100.0%
                                    ==========     =====
</TABLE>


                                                                              19

<PAGE>



            The following table shows rate and maturity information for
certificates of deposit as of December 31, 2002.

<TABLE>
<CAPTION>
                                                                                                    PERCENT OF
                                  0.00-1.99%    2.00-3.99%    4.00-5.99%   6.00-7.99%       TOTAL      TOTAL
                                  ----------    ----------    ----------   ----------       -----      -----
                                                              (DOLLARS IN THOUSANDS)
<S>                              <C>            <C>          <C>           <C>           <C>          <C>
CERTIFICATE ACCOUNTS
  MATURING IN QUARTER ENDING:
March 31, 2003                    $ 16,661      $ 49,578      $ 71,506      $ 11,433      $149,178      25.2%
June 30, 2003                       18,873        46,777        19,736        15,553       100,939      17.0
September 30, 2003                   3,010        38,367        20,442         3,838        65,657      11.1
December 31, 2003                    4,275        32,189         9,651           600        46,715       7.9
March 31, 2004                       5,577        37,957        19,173            76        62,783      10.6
June 30, 2004                            2         8,872         9,149           572        18,595       3.1
September 30, 2004                      --         3,245         4,759           806         8,810       1.5
December 31, 2004                       --         6,135         4,353         4,557        15,045       2.5
March 31, 2005                          --         2,282         4,748         1,685         8,715       1.5
June 30, 2005                           --         3,637         3,279           925         7,841       1.3
September 30, 2005                      --         8,783        15,217           959        24,959       4.2
December 31, 2005                       --         1,752           679         1,944         4,375       0.7
Thereafter                              --         5,379        70,391         3,652        79,422      13.4
                                  --------      --------      --------      --------      --------     -----
    Total                         $ 48,398      $244,953      $253,083      $ 46,600      $593,034     100.0%
                                  ========      ========      ========      ========      ========     =====
Percent of total                       8.2%         41.3%         42.6%          7.9%
</TABLE>


            The following table shows the remaining maturity for time deposits
of $100,000 or more as of December 31, 2002.

<TABLE>
<CAPTION>
                                              DECEMBER 31, 2002
                                              -----------------
                                            (DOLLARS IN THOUSANDS)
<S>                                              <C>
Three months or less                              $ 81,184
Over three through six months                       42,108
Over six through twelve months                      31,131
Over twelve months                                  89,741
                                                  --------
    Total                                         $244,164
                                                  ========
</TABLE>


            In addition to deposits, we rely on borrowed funds. The discussion
below describes our current borrowings.

            Subordinated Note Offering. In December 1995, we issued subordinated
notes due January 1, 2005 with an aggregate principal balance of $14.0 million
through a public offering. The current balance outstanding is $13.96 million.
The interest rate on the notes is 9.625%.

            Commercial Bank Line of Credit. The Company has a line of credit
with a commercial bank ("line of credit"). The line of credit is $5.0 million
and currently has a balance of $2.9 million. This line of credit matures on
December 31, 2003.

            Federal Home Loan Bank Advances. The Federal Home Loan Bank makes
funds available for housing finance to eligible financial institutions like the
Bank. We collateralize advances by any combination of the following assets: one-
to four-family first mortgage loans, multifamily loans, home equity loans,
commercial real estate loans, investment securities, mortgage-backed securities,
Federal Home Loan Bank deposits, and Federal Home Loan Bank stock. The aggregate
balance of assets pledged as collateral for Federal Home Loan Bank advances at
December 31, 2002 was $595 million.

            Repurchase Agreements. From time to time, the Bank borrows funds by
using its investment or mortgage-backed securities to issue reverse repurchase
agreements. A reverse repurchase agreement is a transaction where we borrow
money from a brokerage firm or bank and deliver securities to them as collateral
for the borrowing. When the loan is paid off we receive back or repurchase the
securities. The aggregate balance of mortgage-backed securities and cash pledged
as collateral for reverse repurchase agreements at December 31, 2002, was
approximately $49 million.

            The following table shows the maximum month-end balance, the average
balance, and the ending balance of borrowings during the periods indicated.

                                                                              20

<PAGE>

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                               -----------------------
                                           2002          2001         2000
                                           ----          ----         ----
                                                (DOLLARS IN THOUSANDS)
<S>                                     <C>            <C>         <C>
MAXIMUM MONTH-END BALANCE:
Federal Home Loan Bank advances          $278,339      $378,143      $365,094
1995 subordinated notes                    13,985        13,985        14,000
Commercial bank repurchase agreement           --            --        50,000
Commercial bank line of credit              4,007         6,000         7,000
Commercial bank note payable                5,000         5,000            --
Loan from majority shareholder              2,000         2,000            --
Repurchase agreements                      49,508        41,000        80,166

AVERAGE BALANCE:
Federal Home Loan Bank advances          $253,107      $313,908      $290,369
1995 subordinated notes                    13,968        13,985        13,987
Commercial bank repurchase agreement           --            --        25,250
Commercial bank line of credit                855         2,482         6,083
Commercial bank note payable                3,348         3,507            --
Loan from majority shareholder                466            22            --
Repurchase agreements                      44,531        41,000        70,595

ENDING BALANCE:
Federal Home Loan Bank advances          $225,280      $278,912      $365,094
1995 subordinated notes                    13,960        13,985        13,985
Commercial bank repurchase agreement           --            --            --
Commercial bank line of credit              2,907            --         6,000
Commercial bank note payable                   --         5,000            --
Loan from majority shareholder                 --         2,000            --
Repurchase agreements                      49,140        41,000        41,000
</TABLE>



The following table provides the interest rates, which include amortization of
issuance costs of borrowings during the periods indicated.

<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,
                                                  -----------------------
                                             2002          2001          2000
                                             ----          ----          ----
<S>                                     <C>            <C>         <C>
WEIGHTED AVERAGE INTEREST RATE:
Federal Home Loan Bank advances              5.54%         5.94%         6.15%
1995 subordinated notes                      9.63          9.63          9.63
Commercial bank repurchase agreement           --            --          8.25
Commercial bank line of credit               3.05          8.10          8.80
Commercial bank note payable                 4.66          5.67            --
Loan from majority shareholder               0.00          0.00            --
Repurchase agreements                        5.52          5.98          6.06
</TABLE>

GUARANTEED PREFERRED BENEFICIAL INTERESTS IN THE CORPORATION'S JUNIOR
SUBORDINATED DEBENTURES

            The Company has two issues of cumulative trust preferred securities
outstanding through wholly-owned subsidiaries. Each issuing entity has invested
the total proceeds from the sale of the securities in junior subordinated
deferrable interest debentures issued by the Company. The securities are listed
on the NASDAQ Stock Market's National Market.

COMPETITION

            The Bank faces strong competition both in originating real estate
and other loans and in attracting deposits. Competition in originating real
estate loans comes primarily from other savings institutions, commercial banks,
mortgage companies, credit unions, finance companies, and insurance companies.

            The Bank attracts its deposits through its retail sales offices,
primarily from the communities in which those retail sales offices are located.
Therefore, competition for those deposits is principally from other savings
institutions, commercial banks, credit unions, mutual funds, and brokerage
companies located in the same communities.

                                                                              21


<PAGE>


EMPLOYEES

            At December 31, 2002, we had a total of 391 employees, including
part-time and seasonal employees. Our employees are not represented by any
collective bargaining group. Management considers its employee relations to be
excellent.

REGULATION AND SUPERVISION

INTRODUCTION

            The Company is a savings and loan holding company within the meaning
of the Home Owners' Loan Act. As a savings and loan holding company, we are
subject to the regulations, examination, supervision, and reporting requirements
of the OTS. The Bank, an Ohio-chartered savings and loan association, is a
member of the Federal Home Loan Bank System. The Federal Deposit Insurance
Corporation ("FDIC"), through the Savings Association Insurance Fund, insures
the Bank's deposits. The Bank is subject to examination and regulation by the
OTS, the FDIC, and the ODFI. The Bank must comply with regulations regarding
matters such as capital standards, mergers, establishment of branch offices,
subsidiary investments and activities, and general investment authority.

METROPOLITAN FINANCIAL CORP.

            As a savings and loan holding company, we are subject to
restrictions relating to our activities and investments. Among other things, we
are generally prohibited, either directly or indirectly, from acquiring control
of any other savings association or savings and loan holding company, without
prior approval of the OTS, and from acquiring more than 5% of the voting stock
of any savings association or savings and loan holding company which is not a
subsidiary. Similarly, a person must obtain OTS approval prior to that person's
acquiring control of the Company or the Bank.

METROPOLITAN BANK AND TRUST COMPANY

            General. The enforcement authority of the OTS includes the ability
to impose penalties for and to seek correction of violations of laws and
regulations and unsafe or unsound practices. This authority includes the power
to assess civil money penalties, issue cease and desist orders against an
institution, its directors, officers or employees and other persons or initiate
legal action.

            On July 26, 2001 the Bank signed a supervisory agreement with the
OTS and the ODFI. This document acknowledges that these two regulatory
authorities are of the opinion that we have engaged in acts and practices that
are unsafe and unsound. We have agreed to take a number of steps to improve our
safety and soundness without admitting or denying any unsafe or unsound
practices. The Company also signed a supervisory agreement with the OTS on July
26, 2001.

            On July 8, 2002, the Bank was placed under a supervisory directive
by the OTS. This document states that the Bank did not meet all of the
requirements of the supervisory agreements signed in July 2001.

            As of December 31, 2002, the Company has met all requirements of the
supervisory directive and the supervisory agreements, except for the sale of its
fixed assets. The Company has received an extension on this requirement until
June 30, 2003.

            As a lender and a financial institution, the Bank is subject to
various regulations promulgated by the Federal Reserve Board including, without
limitation, Regulation B (Equal Credit Opportunity), Regulation D (Reserves),
Regulation E (Electronic Fund Transfers), Regulation F (Interbank Liabilities),
Regulation Z (Truth in Lending), Regulation CC (Availability of Funds), and
Regulation DD (Truth in Savings). As lenders of loans secured by real property,
and as owners of real property, financial institutions, including the Bank, are
subject to compliance with various statutes and regulations applicable to
property owners generally, including environmental laws and regulations.

            Insurance of Accounts and Regulation by the Federal Deposit
Insurance Corporation. The Bank is a member of the Savings Association Insurance
Fund, which is administered by the FDIC. The FDIC insures deposits up to
applicable limits and


                                                                              22

<PAGE>

the full faith and credit of the United States Government backs such insurance.
As insurer, the FDIC imposes deposit insurance premiums and conducts
examinations of and requires reporting by FDIC-insured institutions. The FDIC
also has the authority to initiate enforcement actions against savings
associations after giving the OTS an opportunity to take such action. It may
terminate the deposit insurance if it determines that the institution has
engaged or is engaging in unsafe or unsound practices or is in an unsafe or
unsound condition.

            Regulatory Capital Requirements. The capital regulations of the OTS
establish a "leverage limit," a "tangible capital requirement," and a
"risk-based capital requirement." The leverage limit currently requires a
savings association to maintain "core capital" of not less than 3% of adjusted
total assets. The OTS has taken the position, however, that the prompt
corrective action regulation has effectively raised the leverage ratio
requirement for all but the most highly-rated institutions. The leverage ratio
has in effect increased to 4% since an institution is "undercapitalized" if,
among other things, its leverage ratio is less than 4%. The tangible capital
requirement requires a savings association to maintain "tangible capital" in an
amount not less than 1.5% of adjusted total assets. The risk-based capital
requirement generally provides that a savings association must maintain total
capital in an amount at least equal to 8.0% of its risk-weighted assets. The
risk-based capital regulations are similar to those applicable to national
banks. The regulations assign each asset and certain off-balance sheet assets
held by a savings association to one of four risk-weighting categories, based
upon the degree of credit risk associated with the particular type of asset.

            The Bank is also subject to the capital adequacy requirements under
the Federal Deposit Insurance Corporation Investment Act of 1991. The additional
capital adequacy ratio imposed under Federal Deposit Insurance Corporation
Investment Act is the Tier 1 capital to risk adjusted assets ratio. This ratio
must be at least 6.0% for a "well capitalized" institution.

            Banks and savings associations are classified into one of five
categories based upon capital adequacy, ranging from "well-capitalized" to
"critically undercapitalized." Generally, the regulations require the
appropriate federal banking agency to take prompt corrective action with respect
to an institution which becomes "undercapitalized" and to take additional
actions if the institution becomes "significantly undercapitalized" or
"critically undercapitalized." Based on these requirements, the Bank is a "well
capitalized" institution, as of December 31, 2002.

            The appropriate federal banking agency has the authority to
reclassify a well-capitalized institution as adequately capitalized. In
addition, the agency may treat an adequately capitalized or undercapitalized
institution as if it were in the next lower capital category, if the agency
determines, after notice and an opportunity for a hearing, that the institution
is in an unsafe or unsound condition or that the institution has received and
not corrected a less-than-satisfactory rating for any of the categories of asset
quality, management, earnings, or liquidity in its most recent examination. As a
result of such reclassification or determination, the appropriate federal
banking agency may require an adequately capitalized or under-capitalized
institution to comply with mandatory and discretionary supervisory actions.

            The following table indicates our capital position compared to the
requirements for an adequately capitalized institution and a well-capitalized
institution as of December 31, 2002.

<TABLE>
<CAPTION>

                                            ADEQUATELY CAPITALIZED            WELL CAPITALIZED
                                            ----------------------            ----------------
                                                          PERCENT OF                    PERCENT OF
                                            AMOUNT         ASSETS          AMOUNT        ASSETS
                                            ------         ------          ------        ------
<S>                                      <C>               <C>          <C>             <C>
Tangible Capital:
    Actual                                 $110,111         7.50%        $110,111         7.50%
    Requirement                              22,032         1.50           29,376         2.00
    Excess (Deficiency)                      88,079         6.00           80,375         5.50
Core Capital:
    Actual                                 $110,111         7.50%        $110,111         7.50%
    Requirement                              58,751         4.00           73,439         5.00
    Excess (Deficiency)                      51,360         3.50           36,672         2.50
Risk-based Capital:
    Actual                                 $120,416        10.80%        $120,416        10.80%
    Requirement                              89,188         8.00          111,485        10.00
    Excess (Deficiency)                      31,228         2.80            8,931         0.80
Tier 1 Capital to Risk-adjusted Assets
    Actual                                 $109,472         9.82%        $109,472         9.82%
    Requirement                              44,594         4.00           66,891         6.00
    Excess (Deficiency)                      64,878         5.82           42,581         3.82
</TABLE>


                                                                              23

<PAGE>

            Restrictions on Dividends and Other Capital Distributions. Savings
association subsidiaries of holding companies generally are required to provide
their OTS regional director with not less than thirty days' advance notice of
any proposed declaration of a dividend on the association's stock. Any dividend
declared within the notice period, or without giving the prescribed notice, is
invalid. In some circumstances, an association may be required to provide their
OTS regional director with an application for a proposed declaration of a
dividend on the association's stock.

            The OTS regulations impose limitations upon certain "capital
distributions" by savings associations. These distributions include cash
dividends, payments to repurchase or otherwise acquire an association's shares,
payments to shareholders of another institution in a cash-out merger, and other
distributions charged against capital.

            In addition, the OTS retains the authority to prohibit any capital
distribution otherwise authorized under the regulation if the OTS determines
that the capital distribution would constitute an unsafe or unsound practice.
Due to the regulatory classification of the Bank, it is not permitted to make
any dividend payments to Metropolitan Financial Corp., its parent company,
without prior OTS approval.

            The Gramm-Leach Bliley Act, or Financial Services Modernization Act,
became law in November of 1999. This law includes significant changes in the way
financial institutions are regulated and types of financial business they may
engage in. Among other things the law provides for:

            -     facilitation of affiliations among banks, securities firms,
                  and insurance companies;

            -     changes in the regulation of securities activities by banks;

            -     changes in the regulation of insurance activities by banks;

            -     elimination of the creation of new unitary thrift holding
                  companies;

            -     new regulation of the use and privacy of customer information
                  by banks; and

            -     modernization of the Federal Home Loan Bank System.


            Qualified Thrift Lender Test. Pursuant to the Qualified Thrift
Lender test, a savings institution must invest at least 65% of its portfolio
assets in qualified thrift investments on a monthly average basis on a rolling
12-month look-back basis. Portfolio assets are an institution's total assets
less goodwill and other intangible assets, the institution's business property,
and a limited amount of the institution's liquid assets.

            A savings association's failure to remain a Qualified Thrift Lender
may result in: a) limitations on new investments and activities; b) imposition
of branching restrictions; c) loss of Federal Home Loan Bank borrowing
privileges; and d) limitations on the payment of dividends. The qualified thrift
investments of the Bank were in excess of 79.9% of its portfolio assets as of
December 31, 2002.

            Ohio Regulation. As a savings and loan association organized under
the laws of the State of Ohio, the Bank is subject to regulation by the ODFI.
Regulation by the ODFI affects the internal organization of the Bank as well as
its savings, mortgage lending, and other investment activities. Periodic
examinations by the ODFI are usually conducted on a joint basis with the OTS.
Ohio law requires the Bank to maintain federal deposit insurance as a condition
of doing business.

            Ohio has adopted a statutory limitation on the acquisition of
control of an Ohio savings and loan association which requires the written
approval of the ODFI prior to the acquisition by any person or entity of a
controlling interest in an Ohio association. In addition, Ohio law requires
prior written approval of the ODFI of a merger of an Ohio association with
another savings and loan association or a holding company affiliate.

         USA PATRIOT Act of 2001. In response to the events of September 11,
2001, the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT
Act, was signed into law on October 26, 2001. The USA PATRIOT Act gives the
federal government new powers to address terrorist threats through enhanced
domestic security measures, expanded surveillance powers, increased information
sharing, and broadened anti-money laundering requirements. By way of amendments
to the Bank Secrecy Act, Title III of the USA PATRIOT Act takes measures
intended to encourage information sharing among bank regulatory agencies and law
enforcement bodies. Further, certain provisions of Title III impose affirmative
obligations on a broad range of financial institutions, including banks,
thrifts, brokers, dealers, credit unions, money transfer agents and parties
registered under the Commodity Exchange Act.

         Among other requirements, Title III of the USA PATRIOT Act imposes the
following requirements with respect to financial institutions:

         -     Pursuant to Section 352, all financial institutions must
               establish anti-money laundering programs that include, at
               minimum: (i) internal policies, procedures, and controls; (ii)
               specific designation of an anti-money laundering compliance
               officer; (iii) ongoing employee training programs; and (iv) an
               independent audit function to test the anti-money laundering
               program.

         -     Section 326 of the Act authorizes the Secretary of the Department
               of Treasury, in conjunction with other bank regulators, to issue
               regulations that provide for minimum standards with respect to
               customer identification at the time new accounts are opened.

         -     Section 312 of the Act requires financial institutions that
               establish, maintain, administer, or manage private banking
               accounts or correspondence accounts in the United States for
               non-United States persons or their representatives (including
               foreign individuals visiting the United States) to establish
               appropriate, specific, and, where necessary, enhanced due
               diligence policies, procedures, and controls designed to detect
               and report money laundering.

         -     Effective December 25, 2001, financial institutions are
               prohibited from establishing, maintaining, administering or
               managing correspondent accounts for foreign shell banks (foreign
               banks that do not have a physical presence in any country), and
               will be subject to certain record keeping obligations with
               respect to correspondent accounts of foreign banks.

         -     Bank regulators are directed to consider a holding company's
               effectiveness in combating money laundering when ruling on
               Federal Reserve Act and Bank Merger Act applications.

         The federal banking agencies have begun to propose and implement
regulations pursuant to the USA PATRIOT Act. These proposed and interim
regulations would require financial institutions to adopt the policies and
procedures contemplated by the USA PATRIOT Act.

         Sarbanes-Oxley Act of 2002. On July 30, 2002, the President signed into
law the Sarbanes-Oxley Act of 2002 implementing legislative reforms intended to
address corporate and accounting irregularities. In addition to the
establishment of a new accounting oversight board which will enforce auditing,
quality control and independence standards and will be funded by fees from all
publicly traded companies, the Act restricts accounting companies from providing
both auditing and consulting services. To ensure auditor independence, any
non-audit services being provided to an audit client will require preapproval by
the company's audit committee members. In addition, the audit partners must be
rotated. The Act requires chief executive officers and chief financial officers,
or their equivalent, to certify to the accuracy of periodic reports filed with
the SEC, subject to civil and criminal penalties if they knowingly or willfully
violate this certification requirement. In addition, under the Act, counsel will
be required to report evidence of a material violation of the securities laws or
a breach of fiduciary duty by a company to its chief executive officer or its
chief legal officer, and, if such officer does not appropriately respond, to
report such evidence to the audit committee or other similar committee of the
board of directors or the board itself.

         The legislation accelerates the time frame for disclosures by public
companies, as they must immediately disclose any material changes in their
financial condition or operations. Directors and executive officers must also
provide information for most changes in ownership in a company's securities
within two business days of the change. The period during which certain types of
law suits can be instituted against a company or its officers has been extended,
and bonuses issued to top executives prior to restatement of a company's
financial statements are now subject to disgorgement if such restatement was due
to corporate misconduct. Executives are also prohibited from insider trading
during retirement plan "blackout" periods, and loans to company executives are
restricted. In addition, civil and criminal penalties have been enhanced.

         The Act also increases the oversight of, and codifies certain
requirements relating to, audit committees of public companies and how they
interact with the company's "registered public accounting firm" (RPAF). Audit
Committee members must be independent and are barred from accepting consulting,
advisory or other compensatory fees from the issuer. In addition, companies must
disclose whether at least one member of the committee is a "financial expert"
(as such term will be defined by the SEC) and if not, why not. Under the Act, a
RPAF is prohibited from performing statutorily mandated audit services for a
company if such company's chief executive officer, chief financial officer,
comptroller, chief accounting officer or any person serving in equivalent
positions has been employed by such firm and participated in the audit of such
company during the one-year period preceding the audit initiation date. The Act
also prohibits any officer or director of a company or any other person acting
under their direction from taking any action to fraudulently influence, coerce,
manipulate or mislead any independent public or certified accountant engaged in
the audit of the company's financial statements for the purpose of rendering the
financial statement's materially misleading. In accordance with the Act, the SEC
proposed rules requiring inclusion of an internal control report and assessment
by management in the annual report to shareholders. The Act requires the RPAF
that issues the audit report to attest to and report on management's assessment
of the company's internal controls. In addition, the Act requires that each
financial report required to be prepared in accordance with (or reconciled to)
generally accepted accounting principles and filed with the SEC reflect all
material correcting adjustments that are identified by a RPAF in accordance with
generally accepted accounting principles and the rules and regulations of the
SEC.






                                                                              24

<PAGE>



FEDERAL AND STATE TAXATION

            The Company, the Bank and other includable subsidiaries file
consolidated federal income tax returns on a December 31 calendar year basis
using the accrual method of accounting. The Internal Revenue Service has audited
the Company, the Bank and other includable subsidiaries through December 31,
1994.

            In addition to the regular income tax, corporations, including
savings associations such as the Bank, generally are subject to an alternative
minimum tax. An alternative minimum tax is imposed at a tax rate of 20% on
alternative minimum taxable income ("AMTI"), which is the sum of a corporation's
regular taxable income with certain adjustments and tax preference items, less
any available exemption. Adjustments and preferences include depreciation
deductions in excess of those allowable for alternative minimum tax purposes,
tax-exempt interest on most private activity bonds issued after August 7, 1986
(reduced by any related interest expense disallowed for regular tax purposes),
and, for 1990 and succeeding years, 75% of the difference (positive or negative)
between adjusted current earnings ("ACE") and AMTI. Any ACE reductions to AMTI
are limited to prior aggregate ACE increases to AMTI. ACE equals pre-adjustment
AMTI increased or decreased by certain ACE adjustments and determined without
regard to the ACE adjustment and the alternative tax net operating loss. The
alternative minimum tax is imposed to the extent it exceeds the corporation's
regular income tax, and alternative tax net operating losses can offset no more
than 90% of AMTI. The payment of alternative minimum tax will give rise to a
minimum tax credit which will be available with an indefinite carry forward
period to reduce federal income taxes in future years (but not below the level
of alternative minimum tax arising in each of the carry forward years).

            The Bank is subject to the Ohio corporate franchise tax. As a
financial institution, the Bank computes its franchise tax based on its net
worth. Under this method, the Bank will compute its Ohio corporate franchise tax
by multiplying its net worth attributable to Ohio under Ohio law, by the
applicable tax rate, which is currently 1.3%. As an Ohio-chartered savings and
loan association, the Bank also receives a credit against the franchise tax for
a portion of the state supervisory fees it pays.

            At the present time, the Company does not have a liability for the
net worth portion of the franchise tax as it satisfies the requirements to be
treated as a qualified holding company. In addition, there is no liability on
the net income portion of the tax as the holding company has historically
operated at a net loss on a stand-alone basis.

                                                                              25

<PAGE>

EXECUTIVE OFFICE OF THE REGISTRANT

(Included pursuant to Instruction 3 to paragraph (b) of Item 401 of Regulation
S-K)

The executive officers of the Company as of March 12, 2003, unless otherwise
indicated, were as follows:

<TABLE>
<CAPTION>
                     NAME                         BUSINESS EXPERIENCE
<S>                          <C>
  Positions held with the
     Company and the Bank

           MALVIN E. BANK   Mr. Bank has been the Secretary, Assistant Treasurer and a Director of the
                   Age 72   Company and Secretary and Director of the Bank for more than six years and
                            Chairman since June 2002. Mr. Bank is General Counsel of the Cleveland
   Chairman and Director,   Foundation, a community foundation.  Mr. Bank also serves as a Director of
           of the Company   Oglebay Norton Company.  Mr. Bank also serves as a Trustee of Case Western
                            Reserve University, The Holden Arboretum, Chagrin River Land Conservancy,
   Chairman and Director,   Cleveland Center for Research in Child Development, Hanna Perkins School, and
              of the Bank   numerous other civic and charitable organizations and foundations.


       KENNETH T. KOEHLER   Mr. Koehler joined the Company in January 1999 as Executive Vice President. He
                   Age 57   has served as President since October 1999 and Chief Executive Officer since
                            June 2002. Previously, Mr. Koehler served as President and Chief Executive
     President, Director,   Officer of United Heritage Bank, Edison, NJ, a community Bank (1998-1999);
 Chief Executive Officer,   and President and Chief Executive Officer of Golden City Commercial Bank, New
  Assistant Treasurer and   York, NY, a community bank (1994-1998). He has also served as a director of
      Assistant Secretary   Cumberland Farms/Gulf Oil Company, and as a trustee of Providence Performing
           of the Company   Arts Association and Catholic Charities Annual Appeal, Diocese of RI. He is
                            currently a trustee of the Great Lakes Theater Festival, Catholic Charities
     President, Director,   Corporation of the Diocese of Greater Cleveland, and Diabetes Association of
 Chief Executive Officer,   Greater Cleveland.
  Assistant Treasurer and
      Assistant Secretary
              of the Bank
</TABLE>



                                                                              26



<PAGE>


<TABLE>
<CAPTION>
                        NAME                            BUSINESS EXPERIENCE
<S>                            <C>
     Positions held with the
        Company and the Bank

           KENNETH R. LEHMAN   Mr. Lehman has served as Vice Chairman and a Director of the Company and the
                      Age 44   Bank since June 2002.  Mr. Lehman is retired from the law firm of Luse Gorman
                               Pomerenk & Schick in Washington DC.  He was a partner with the firm for more
 Director and Vice Chairman,   than five years.  Mr. Lehman also served for several years as an Attorney
              of the Company   Advisor with the Securities and Exchange Commission in Washington DC.

 Director and Vice Chairman,
                 of the Bank

             DAVID P. MILLER   Mr. Miller has served as a Director of the Company and the Bank since 1992.
                      Age 70   Mr. Miller has also held the positions of Treasurer and Assistant Secretary of
                               the Company for more than five years. Since 1986, Mr. Miller has been the
         Director, Treasurer   President and Chief Executive Officer of Columbia National Group, Inc., a
               and Assistant   Cleveland-based scrap and waste materials wholesaler and steel manufacturer.
                Secretary of   He is currently a commissioner of the Ohio Lottery.
                 the Company

        Director of the Bank

                MARCUS FAUST   Mr. Faust became Executive Vice President and Chief Financial Officer of the
                      Age 39   Company and the Bank June 2002. Mr. Faust was previously the Executive Vice
                               President and Chief Financial Officer at Union Bank of Florida (1999-2001).
Executive Vice President and   Previous to that he also served as Chief Operating Officer of American Bank in
     Chief Financial Officer   Florida  (1996-1998) and a Senior Vice President at Home Savings Bank in
              of the Company   Hollywood, Florida prior to that.  Earlier in his career, Mr. Faust spent six
                               years with the OTS.
Executive Vice President and
  Chief Financial Officer of
                    the Bank

             LEONARD KICHLER   Mr. Kichler became Executive Vice President-Relationship Banking in July,
                      Age 45   2000. Mr. Kichler was previously Senior Vice President of National City Bank
                               for more than five years.
    Executive Vice President
                 of the Bank

</TABLE>



                                                                              27



<PAGE>


ITEM 2.  PROPERTIES

            Our executive office is located at 22901 Millcreek Blvd., Highland
Hills, Ohio 44122. We operate twenty-four retail sales offices. We lease ten of
these locations under long-term lease agreements with various parties. We own
the other fourteen retail sales offices, located in Aurora, Beachwood,
Brunswick, Euclid, Hudson, Macedonia, Mayfield Heights, Medina, Montrose, Solon,
Stow, Twinsburg, Willoughby Hills, and Willoughby, Ohio. Our executive office
and a majority of our retail sales offices include space beyond what is required
for the conduct of our business. That space is rented to nonaffiliated entities
under long term leases. In addition, we own land in Auburn, Brecksville,
Broadview Heights, and Strongsville, Ohio. The Bank currently leases office
space for its residential and construction loan production offices in Akron,
Cincinnati, Columbus, Dayton and Toledo, Ohio. We also have a commercial real
estate loan origination office in Pittsburgh, Pennsylvania.

            The Supervisory Directive and Supervisory Agreement with the Bank
requires that we reduce our investment in premises and equipment by December 31,
2002. This deadline was extended by the OTS until June 30, 2003. Therefore, the
Bank may sell some of its existing real estate to comply with this requirement.
Assets that management currently intends to sell are classified as held for sale
in the financial statements.

ITEM 3.  LEGAL PROCEEDINGS

            The Company is involved in various legal proceedings incidental to
the conduct of its business. We do not expect that any of these proceedings will
have a material adverse effect on our financial position or results of
operations. As noted in Item 1. Business - Supervisory Directive/Supervisory
Agreements, the Bank is operating under the Supervisory Directive and
Supervisory Agreement from the OTS and ODFI. Please refer to this section for
further details regarding these items.

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

            No matter was submitted to a vote of shareholders of the Company
during the fourth quarter of the fiscal year covered by this Report, through the
solicitation of proxies or otherwise.



                                                                              28

<PAGE>



                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

            The Company's common stock, no par value, the only outstanding class
of equity securities of the Company, is traded on the Nasdaq National Market
System. As of December 31, 2002, there are 30,000,000 shares of common stock
authorized and 16,151,450 shares issued and outstanding. The first day of
trading in the Company's common stock was October 29, 1996. Detailed in the
following table is the quarterly high and low price for the Company's common
stock during 2001 and 2002:

<TABLE>
<CAPTION>
                                        High      Low
                                        ----      ---
<S>                                <C>       <C>
            First quarter 2001      $   4.50  $   2.88
            Second quarter 2001         4.00      3.39
            Third quarter 2001          3.74      2.45
            Fourth quarter 2001         3.69      2.75
            First quarter 2002          3.30      2.70
            Second quarter 2002         4.50      3.00
            Third quarter 2002          3.85      2.80
            Fourth quarter 2002         4.85      2.75
</TABLE>

            The Company paid no dividends during the past three years and has no
intention of paying dividends in the foreseeable future. The Indenture dated as
of December 1, 1995 covering the 1995 Subordinated Notes prohibits the Company
from paying a dividend or other distribution on its equity securities unless the
Company's ratio of tangible equity to total assets exceeds 7%.

            At March 12, 2003, there were approximately 291 record holders of
common stock. Robert M. Kaye, previously the sole shareholder, controlled
10,769,215 shares or 66.7% of the amount outstanding on this date. The closing
market price of our common stock on March 12, 2003 was $4.85.



                                                                              29

<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

                       FIVE YEAR SUMMARY OF SELECTED DATA

<TABLE>
<CAPTION>
                                                                 AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                                                 ----------------------------------------

                                                 2002              2001            2000            1999            1998
                                                 ----              ----            ----            ----            ----
                                                                              (IN THOUSANDS)
<S>                                          <C>              <C>              <C>             <C>             <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets                                 $ 1,477,499      $ 1,608,420      $ 1,695,279     $ 1,608,119     $ 1,363,434
Loans receivable, net                          1,008,916          974,452        1,235,441       1,183,954       1,018,271
Loans held for sale                               48,136          169,320           51,382           6,718          15,017
Mortgage-backed securities                       152,983          167,313          195,829         255,727         198,295
Securities                                       113,411          109,183           54,786          51,708          35,660
Intangible assets                                  2,630            2,512            2,602           2,461           2,724
Loan servicing rights                             13,104           22,951           20,597          10,374          13,412
Deposits                                       1,050,223        1,142,394        1,146,267       1,136,630       1,051,357
Borrowings                                       291,287          340,897          426,079         360,396         215,486
Preferred securities(1)                           43,750           43,750           43,750          43,750          27,750
Shareholders' equity                              55,201           45,517           49,459          44,868          42,644

SELECTED OPERATIONS DATA:
Total interest income                        $    92,188      $   114,841      $   127,787     $   111,921     $    85,728
Total interest expense                            60,061           81,962           88,673          73,644          53,784
                                             -----------      -----------      -----------     -----------     -----------
  Net interest income                             32,127           32,879           39,114          38,277          31,944
Provision for loan losses                          5,720            6,505            6,350           6,310           2,650
                                             -----------      -----------      -----------     -----------     -----------
  Net interest income after provision
    for loan losses                               26,407           26,374           32,764          31,967          29,294
Loan servicing income, net                       (13,640)          (3,986)           1,148           1,358             788
Net gain on sale of loans and securities          11,981            9,567            3,573           1,781           3,523
Other noninterest income                          11,204            8,181            4,834           4,016           3,006
Noninterest expense                               56,332           46,142           40,160          32,591          25,523
                                             -----------      -----------      -----------     -----------     -----------
  Income (loss) before income taxes
    and extraordinary item                       (20,380)          (6,006)           2,159           6,531          11,088
Income tax expense (benefit)                      (6,990)          (2,438)             662           2,020           4,049
Extraordinary item(2)                                 --               --               --              --             245
                                             -----------      -----------      -----------     -----------     -----------
Net income (loss)                            $   (13,390)     $    (3,568)     $     1,497     $     4,511     $     6,794
                                             ===========      ===========      ===========     ===========     ===========
</TABLE>


(1)         Consists of 9.50% preferred securities sold during the second
            quarter of 1999 by Metropolitan Capital Trust II and 8.60% preferred
            securities sold during the second quarter of 1998 by Metropolitan
            Capital Trust I.

(2)         The extraordinary item represents expenses associated with the early
            retirement of the outstanding 10% subordinated notes.



                                                                              30
<PAGE>


<TABLE>
<CAPTION>
                                                                       AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                                                       ----------------------------------------

                                                    2002               2001              2000             1999             1998
                                                    ----               ----              ----             ----             ----
<S>                                          <C>              <C>               <C>              <C>              <C>
PER SHARE DATA, RESTATED
  FOR STOCK SPLITS:
Basic net (loss) income per share           $       (0.94)    $       (0.44)    $        0.19    $        0.57    $        0.88
Diluted net (loss) income per share                 (0.94)            (0.44)             0.19             0.57             0.87
Book value per share                                 3.42              5.60              6.11             5.56             5.50
Tangible book value per share                        3.25              5.29              5.79             5.26             5.15

PERFORMANCE RATIOS:
Return on average assets                            (0.88)%           (0.24)%            0.09%            0.30%            0.64%
Return on average equity                           (23.97)            (8.40)             3.30            10.09            17.16
Interest rate spread                                 2.01              1.93              2.31             2.52             2.90
Net interest margin                                  2.31              2.19              2.56             2.73             3.16
Average interest-earning
  assets to average
  interest-bearing liabilities                     107.76            104.37            103.09           103.73           104.96
Noninterest expense to
  average assets  3.70                               2.82              2.45              2.17             2.39
Efficiency ratio(1)                                135.16            103.59             83.21            71.05            64.45

ASSET QUALITY RATIOS:(2)
Nonperforming loans to total loans                   2.52%             2.68%             1.15%            0.79%            1.23%
Nonperforming assets to total assets                 2.10              2.09              1.12             0.91             1.34
Allowance for losses on loans to
 total loans                                         1.59              1.49              1.07             0.92             0.66
Allowance for losses on loans to
 nonperforming total loans                          63.13             56.21             94.65           117.52            54.44
Net charge-offs to average loans                     0.54              0.26              0.27             0.19             0.16

CAPITAL RATIOS:
Shareholders' equity to total assets                 3.74%             2.83%             2.92%            2.79%            3.13%
Average shareholders' equity
  to average assets                                  3.68              2.88              2.77             2.97             3.70
Tier 1 capital to total assets(3)                    7.50              6.45              6.31             6.57             6.27
Tier 1 capital to risk-weighted assets(3)            9.82              8.39              8.45             8.58             7.85

OTHER DATA:
Loans serviced for others (000's)           $   2,237,458     $   2,203,873     $   1,937,499    $   1,653,065    $   1,496,347
Number of full service offices                         24                24                23               20               17
Number of loan production offices                       6                 9                10                8                5
</TABLE>


(1)         Equals noninterest expense less amortization of intangible assets
            divided by net interest income plus noninterest income (excluding
            gains or losses on securities transactions).

(2)         Ratios are calculated on end of period balances except net
            charge-offs to average loans.

(3)         Ratios are for the Bank only.


                                                                              31
<PAGE>


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

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

         The reported results of the Company primarily reflect the operations of
the Bank and the financing activities of the Company. Our results of operations
are dependent on a variety of factors, including the general interest rate
environment, competitive conditions in the industry, governmental policies and
regulations and conditions in the markets for financial assets. Like most
financial institutions, the primary contributor to our income is net interest
income, the difference between the interest we earn on interest-earning assets,
such as loans and securities, and the interest we pay on interest-bearing
liabilities, such as deposits and borrowings. Our operations are also affected
by noninterest income, such as loan servicing fees, servicing charges on deposit
accounts, and gains or losses on the sales of loans and securities. Our
principal operating expenses, aside from interest expense, consist of
compensation and employee benefits, occupancy costs, and general and
administrative expenses.

         On July 26, 2001, the Company entered into a supervisory agreement with
the OTS, which required us to prepare and adopt a plan for raising capital that
uses sources other than increased debt or which requires additional dividends
from the Bank. Additionally, the Bank entered into a separate supervisory
agreement with the OTS and the ODFI on July 26, 2001. We, as well as the Bank,
are working to comply with all of the provisions of the Supervisory Agreement.
See Item 1. Business - Supervisory Directive/Supervisory Agreements on page 3
for details of the agreements and a discussion progress to date on the
requirements of the plans.

        On July 8, 2002, the OTS issued the Supervisory Directive to the Company
and the Bank. The Supervisory Directive, requires the Boards of Directors of the
Bank and the Company to act immediately to take corrective action to address
certain weaknesses and to halt certain unsafe and unsound practices, regulatory
violations, and violations the Supervisory Agreement, dated July 26, 2001,
between the Bank, the OTS, and the ODFI.

         On October 23, 2002, the Company and Sky Financial executed a
definitive agreement for Sky Financial to acquire all the stock of the Company
and merge the Company into Sky Financial.

         Pursuant to the definitive agreement, stockholders of the Company will
be entitled to elect to receive, in exchange for each share of the Company's
common stock held, either $4.70 in cash or .2554 shares of Sky Financial, or a
combination thereof, subject to certain adjustments. The election process,
however, is subject to certain allocation and adjustment mechanisms that are
reflected in the definitive agreement, which provides that no more than 70% and
no less than 55% of the Company's shares will be exchanged for Sky Financial
common stock.

         The transaction provides for the merger of the Company into Sky
Financial, and the subsequent merger of the Bank into Sky Bank, Sky Financial's
commercial banking affiliate.

         The acquisition is expected to close on April 30, 2003. For information
surrounding the acquisition, refer to the Form S-4/A filed by Sky Financial with
the Securities and Exchange Commission on January 30, 2003.


APPLICATION OF CRITICAL ACCOUNTING POLICIES

         The Company's consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States
and follow general practices within the industries in which it operates.
Application of these principles requires management to make estimates,
assumptions and judgments that affect the amounts reported in the financial
statements and accompanying notes. These estimates, assumptions and judgments
are based information available as of the date of the financial statements;
accordingly, as this information changes, the financial statements could reflect
different estimates, assumptions and judgments. Certain policies inherently have
a greater reliance on the use of estimates, assumptions and judgments and as
such have a greater possibility of producing results that could be materially
different than originally reported. Estimates, assumptions and judgments are
necessary when assets and liabilities are required to be recorded at fair value,
when a decline in the value of an asset not carried on the financial statements
at fair value warrants an impairment write-down or valuation allowance to be
established, or when an asset or liability needs to be recorded contingent upon
a future event. Carrying


                                                                              32
<PAGE>


assets and liabilities at fair value inherently results in more financial
statement volatility. The fair values and the information used to record
valuation adjustments for certain assets and liabilities are based either on
quoted market prices or are provided by other third-party sources, when
available. When third-party information is not available, valuation adjustments
are estimated in good faith by management primarily through the use of
discounted cash flow modeling techniques.

         The most significant accounting policies followed by the Company are
presented in Note 1 to the consolidated financial statements. These policies,
along with the disclosures presented in the other financial statement notes and
in this Management's Discussion and Analysis, provide information on how
significant assets and liabilities are valued in the financial statements and
how those values are determined. Based on the valuation techniques used and the
sensitivity of financial statement amounts to the methods, assumptions and
estimates underlying those amounts, management has identified the determination
of the allowance for loan losses and the valuation of mortgage and other
servicing assets to be the accounting areas that require the most subjective or
complex judgments, and as such could be most subject to revision as new
information becomes available.

         The allowance for loan losses represents management's estimate of
probable credit losses inherent in the loan portfolio. Determining the amount of
the allowance for loan losses is considered a critical accounting estimate
because it requires significant judgment and the use of estimates related to the
amount and timing of future cash flows on impaired loans, estimated losses on
pools of homogeneous loans based on historical loss experience and consideration
of current economic trends and conditions, all of which may be susceptible to
significant change. The loan portfolio also represents the largest asset type on
the consolidated balance sheet. Note 1 to the consolidated financial statements
describes the methodology used to determine the allowance for loan losses and a
discussion of the factors driving changes in the amount of the allowance for
loan losses is discussed in the Asset Quality section of this Management's
Discussion and Analysis.

         Mortgage and other servicing assets are established and accounted for
based on discounted cash flow modeling techniques which require management to
make estimates regarding the amount and timing of expected future cash flows on
a loan-by-loan basis. Some of the significant variables are prepayment speeds,
delinquency rates, servicing costs, periods to hold idle cash and an estimated
rate of return on idle cash. In general, the market value of purchased or
originated servicing rights increases as interest rates rise and decreases as
interest rates fall. This is because the estimated life of the loan and the
estimated income from idle funds both increase as interest rates increase and
decrease as interest rates decrease. Because there are a number of estimates
involved, the end product is necessarily an estimate and is very sensitive to
changes in interest rates. Projecting changes in servicing values is difficult
because it involves estimating how rates will change at a number of points along
the yield curve. Alternatively, the fair value of servicing rights may be
determined by obtaining an independent third party appraisal.

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

         Net Income. The Company reported a net loss of $13.4 million, or $0.94
per share, for the year ended December 31, 2002, an increase of $9.8 million
from the net loss of $3.6 million, or $0.44 per share, for the year ended
December 31, 2001. For the year ended December 31, 2002, net interest income
decreased $0.8 million and provision for loan losses decreased $0.8 million from
the prior year. Noninterest income decreased $4.2 million for the year ended
December 31, 2002, over the same period in the prior year and noninterest
expense increased $10.2 million compared to the same period in the prior year.
Noninterest income and expense were $9.5 million and $56.3 million,
respectively, for the year ended December 31, 2002, as compared to $13.8 million
and $46.1 million, respectively, for the year ended December 31, 2001.

         The primary reasons for the increase in the net loss for the year ended
December 31, 2002, are a permanent impairment charge of $9.6 million taken
against the Company's premises and equipment and a net loss from loan servicing
of $13.6 million for the year ended December 31, 2002, due to increased
amortization and increased impairment of loan servicing rights in a declining
interest rate environment.

         Interest Income. Total interest income for the year ended December 31,
2002, decreased $22.6 million, or 19.8%, from $114.8 million for the year ended
December 31, 2001 to $92.2 million for the year ended December 31, 2002. There
are two primary reasons for the decline in interest income over 2001. First,
yields on interest-earning assets declined to 6.57% for the year ended December
31, 2002, from 7.57% for the same period in 2001. Secondly, average-earning
assets declined 7.0% to $1.418 billion at December 31, 2002, from $1.525 billion
at December 31, 2001. The decrease in average earning assets contributed $12.3
million to the decrease in interest income for the year ended December 31, 2002.
The decline in the yield on earning assets for the year ended December 31, 2002,
compared to the same period in the prior year was primarily due to declines


                                                                              33
<PAGE>


in the level of short term interest rates from 2001 to 2002. The decline in
yield contributed $10.3 million to the decrease in interest income for the year
ended December 31, 2002.

         Interest Expense. Total interest expense decreased $21.9 million, or
26.7%, from $82.0 million for the year ended December 31, 2001 to $60.1 million
for the year ended December 31, 2002. Interest expense for the year ended
December 31, 2002, decreased generally due to a lower average balance of
interest-bearing liabilities outstanding and a lower cost of funds compared to
the prior year. The average balance of interest-bearing deposits decreased 9.9%
to $1.316 billion at December 31, 2002, from $1.461 billion at December 31,
2001. This decrease includes a significant decrease in out of state and brokered
certificates of deposit, which generally carry a higher interest rate than local
deposits of the Bank. Average borrowings decreased $53.7 million, or 14.3%, as
compared to the same periods in 2001. The decrease in average interest-bearing
liabilities contributed $7.8 million to the decrease in interest expense for the
year ended December 31, 2002. The Company's cost of funds decreased to 4.56% for
the year ended December 31, 2002, as compared to 5.64% for the same period in
2001. The lower cost of funds contributed $14.4 million to the decrease in
interest expense for the year ended December 31, 2002.


         Average Balances and Yields. The following tables present the total
dollar amount of interest income from average interest-earning assets and the
resulting yields, as well as the interest expense on average interest-bearing
liabilities, expressed both in dollars and rates, and the net interest margin.
Net interest margin is influenced by the level and relative mix of
interest-earning assets and interest-bearing liabilities. All average balances
are daily average balances. Assets that earn interest free of federal income
taxes are included at their tax-equivalent yield. Nonaccruing loans are
considered in average loan balances. The average balances of mortgage-backed
securities and securities are presented at historical cost.

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                          2002                           2001                             2000
                                          ----                           ----                             ----
                                AVERAGE             AVERAGE    AVERAGE                 AVERAGE    AVERAGE            AVERAGE
                                BALANCE   INTEREST   RATE      BALANCE    INTEREST      RATE      BALANCE  INTEREST    RATE
                                -------   --------   ----      -------    --------      ----      -------  --------    ----
                                                                    (DOLLARS IN THOUSANDS)

<S>                             <C>         <C>       <C>    <C>           <C>           <C>   <C>         <C>          <C>
INTEREST-EARNING ASSETS:
Loans receivable                $1,091,457  $77,779   7.13%  $1,237,551    $97,518       7.88% $1,257,530  $107,504     8.55%
Mortgage-backed securities         162,254    9,348   5.76      191,142     12,422       6.50     221,645    15,353     6.93
Other                              164,110    5,061   3.70       95,880      4,901       5.63      72,846     4,930     7.33
                                ----------  -------          ----------     ------             ----------  --------
  Total interest-earning assets  1,417,821   92,188   6.57    1,524,573    114,841       7.57   1,552,021   127,787     8.26
                                            -------                         ------                         --------
Nonearning assets                  105,206                      112,272                            90,200
                                ----------                   ----------                        ----------
         Total assets           $1,523,027                   $1,636,845                        $1,642,221
                                ==========                   ==========                        ==========

INTEREST-BEARING LIABILITIES:
Deposits                        $  950,757  $36,001   3.79%  $1,042,091    $54,545       5.23% $1,063,839   $59,565     5.60%
Borrowings                         321,203   20,080   6.25      374,899     23,781       6.34     397,979    26,071     6.55
Junior subordinated debentures      43,750    3,980   9.10       43,750      3,993       9.13      43,750     3,993     9.13
                                ----------  -------          ----------     ------             ----------  --------
  Total interest-bearing
    liabilities                  1,315,710   60,061   4.56    1,460,740     82,319       5.64   1,505,568    89,629     5.95
                                            -------                         ------       ----              --------     ----
Noninterest-bearing liabilities    151,452                      128,958                            91,221
Shareholders' equity                55,865                       47,147                            45,432
                                ----------                   ----------                        ----------
  Total liabilities and
    shareholders' equity        $1,523,027                   $1,636,845                        $1,642,221
                                ==========                   ==========                        ==========
Net interest income before
  capitalized interest and
  interest rate spread                       32,127   2.01%                 32,522       1.93%               38,158     2.31%
                                            =======   ====                  ======       ====              ========     ====

Net interest margin                                   2.31%                              2.19%                          2.56%
Interest expense capitalized                     --                            357                              956
                                            -------                         ------                         --------
Net interest income                         $32,127                       $ 32,879                          $39,114
                                            =======                         ======                         ========
Average interest-earning assets
  to average interest bearing
     liabilities                                    107.76%                            104.37%                        103.09%

</TABLE>





                                                                              34
<PAGE>

         Rate and Volume Variances. Net interest income is affected by changes
in the level of interest-earning assets and interest-bearing liabilities and
changes in yields earned on assets and rates paid on liabilities. The following
table sets forth, for the periods indicated, a summary of the changes in
interest earned and interest paid resulting from changes in average asset and
liability balances and changes in average rates. Changes attributable to the
combined impact of volume and rate have been allocated proportionately to change
due to volume and change due to rate.

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                                                         ------------------------
                                                      2002 VS. 2001                             2001 VS. 2000
                                                   INCREASE (DECREASE)                       INCREASE (DECREASE)
                                                   -------------------                       -------------------
                                                         CHANGE        CHANGE                      CHANGE        CHANGE
                                             TOTAL       DUE TO        DUE TO          TOTAL       DUE TO        DUE TO
                                            CHANGE       VOLUME         RATE          CHANGE       VOLUME         RATE
                                            ------       ------         ----          ------       ------         ----
                                                                          (IN THOUSANDS)

<S>                                         <C>          <C>           <C>           <C>            <C>         <C>
INTEREST INCOME ON:
Loans receivable                            $(19,739)    $(10,904)     $ (8,835)      $(9,986)      $(1,685)     $(8,301)
Mortgage-backed securities                    (3,074)      (1,756)       (1,318)       (2,931)       (2,023)        (908)
Other                                            160          308          (148)          (29)         (109)           80
                                             -------      -------       -------       --------       -------      -------
  Total interest income                      (22,653)    $(12,352)     $(10,301)      (12,946)      $(3,817)     $ (9,129)
                                             -------      =======       =======       --------       =======      ========

INTEREST EXPENSE ON:
Deposits                                    $(18,544)    $ (4,462)     $(14,082)      $(5,020)      $(1,199)     $ (3,821)
Borrowings                                    (3,701)      (3,362)         (349)       (2,290)       (1,481)         (809)
Junior Subordinated Debentures                   (13)          --           (13)           --            --            --
                                             -------      -------       -------       --------       -------      -------
  Total interest expense                     (22,258)    $ (7,824)     $(14,434)       (7,310)      $(2,680)     $ (4,630)
                                             -------      =======       ========       -------        ======      ========
   Interest expense capitalized                 (357)                                    (599)
                                             --------                                  -------
    Increase (decrease) in net
      interest income                       $   (752)                                 $(6,235)
                                            ========                                  =======
</TABLE>

         Provision for Loan Losses. The provision for loan losses decreased $0.8
million to $5.7 million for the year ended December 31, 2002. Management
decreased the provision for loan losses during the year primarily due to the
decrease of $3.6 million in nonperforming loans from December 31, 2001 and the
aggressive position the Bank took during 2002 to charge off loans that had
deteriorating credit. As a result, the allowance for losses on loans at December
31, 2002, was $17.1 million, or 1.59% of total loans, as compared to $17.3
million, or 1.49% of total loans, at December 31, 2001.

         Noninterest Income. Total noninterest income decreased 30.6%, or $4.2
million to $9.5 million for the year ended December 31, 2002, as compared to
$13.8 million for the prior year.

         Gain on sale of loans was $8.0 million for the year ended December 31,
2002, as compared to $7.2 million for the year ended December 31, 2001. The
primary reason for the slight increase in the gain on sale of loans is the
significant increase in the amount of residential loans that were sold in 2002
as compared to 2001. This increase was partially offset by a decline in the
number of multifamily and commercial real estate loans that the Company has
sold. Since the first quarter of 2002, the Company has chosen to no longer sell
its commercial real estate and multifamily loans in the secondary market, except
where the Company may choose to reduce exposure with certain existing
relationships, or to allow the Company to grant additional loans to an existing
borrower without increasing its overall exposure to any such individual
borrower. The decision to keep these loans in the Company's portfolio was based
on the Company's improved capital position after its stock offerings during the
first quarter of 2002. Additionally, in the current interest rate environment,
the loan servicing portion of the gain on sale of loans has decreased
significantly due to increased prepayment speeds and the shorter expected
average life of the portfolio. The proceeds from sales of residential loans held
for sale and related sales of securitized residential loans in 2002 were $976.3
million as compared to $808.1 million in fiscal 2001. Proceeds from the sale of
multifamily and commercial real estate loans were $6.5 million for the year
ended December 31, 2002, as compared to $99.6 million for fiscal 2001.

         There were losses from net loan servicing of $13.6 million for the year
ended December 31, 2002, a $9.6 million increase from 2001. The primary reason
for the higher losses was the increased amortization and impairment of servicing
rights due to an increase in loan prepayments in 2002 compared to the same
period in 2001. The portfolio of loans serviced for others stayed flat as
compared to December 31, 2001, at $2.2 billion at December 31, 2002. If interest
rates level off and potentially increase, prepayment speeds will decrease which
should decrease amortization expense and impairment of the loan servicing rights
and which will decrease losses from loans servicing during 2003.


                                                                              35
<PAGE>


         Service charges on deposit accounts increased 94.2% to $3.2 million for
the year ended December 31, 2002, as compared to $1.6 million for 2001. The
primary reason for the significant increase is due to new fee-generating
programs that the Company implemented during 2002.

         The Company had $4.0 million in gains on the sale of securities, an
increase of $1.6 million from the same period in 2001. In both periods the
majority of the gains were the result of securitizing one-to-four family loans
and simultaneously selling those securities. During 2002, these gains from
securitizing one-to-four family loans were partially offset by losses from
selling the Company's Freddie Mac Preferred Stock.

         Other operating income increased to $8.0 million for the year ended
December 31, 2002, as compared to $6.5 million for the same period in the prior
year. The majority of the gain came from an increase of $703,000 in rental
income as compared to 2001. The Company has leased out more of its space in 2002
than it did in 2001. A significant portion of the Company's rental property is
held for sale. Should these properties be sold, the Company would have a
significant decline in its rental income. Gains from the sale of the Company's
artwork increased $177,000. Additionally, included in other operating income is
a one-time gain of $203,000 recorded on the sale of our credit card portfolio
and a gain of $43,000 on the transfer of the majority of the Bank's trust
assets.

         Noninterest Expense. Total noninterest expense increased to $56.3
million in the year ended December 31, 2002, compared to $46.1 million for
fiscal 2001. The majority of the increase is due to an impairment charge of $9.6
million taken against premises and equipment.

         Salaries and related personnel costs decreased $1.1 million for the
year ended December 31, 2002, as compared to 2001. The Company announced an
efficiency program during the second quarter of 2002 that has reduced total
employees and the Company's personnel related expenses.

         Occupancy costs decreased $379,000 for the year ended December 31,
2002, over 2001. The primary reason that occupancy costs have decreased is that
the Company is holding a significant amount of premises and equipment for sale
in June 2002. This has caused a significant decrease in depreciation expense,
since premises and equipment held for sale is not depreciated. Since no new
offices have been opened in 2002, the Company's occupancy costs have stabilized
over the last 12 months. The Company is not planning to open any new facilities
in the near future, which will allow occupancy costs to remain stable.

         Data processing expense increased $129,000 for the year ended December
31, 2002, as compared to 2001. Data processing costs have stabilized in 2002
after seeing significant growth in 2001 due to the Bank's systems conversion in
September 2000.

         Marketing expense decreased $177,000 for the year ended December 31,
2002, as compared to the prior year. Marketing costs in 2002 were limited to
more routine activities as compared to prior years. This is part of an ongoing
effort to reduce marketing expenses.

         State franchise taxes increased $81,000 for the year ended December 31,
2002, as compared to 2001. The primary reason for the increase was a benefit of
approximately $500,000 from utilizing holding company rules in 2001 which were
not available in 2002. This increase was partially offset by a $426,000 refund
received in May 2002 from amending prior year returns to reflect a refinement of
the allocation of taxes among the various states where the Bank conducts
business.

         At December 31, 2002, premises and equipment held for sale included
certain parcels of land and buildings and all works of art owned by the Company.
During June 2002, the Company reclassified these properties as held for sale.
Previously, the Company had planned to sell other properties whose fair value
met or exceeded carrying value. However, after reevaluating the strategic
options available to the Company and the Supervisory Directive, management
decided to revise its plan to sell properties and, therefore, moved certain
additional properties into held for sale and removed other properties from held
for sale. In conjunction with the reclassification of these properties, the
Company determined that the carrying value of certain properties was less than
the estimated net proceeds expected from the sale of these properties.
Accordingly, the Company recognized an $8.8 million loss on the valuation
impairment of these properties in the second quarter. The fair value of these
properties was estimated based on either a present value analysis of the current
and expected revenues and expenses based on the properties being considered as
income producing or on third party purchase offers for the properties.
Management obtained an appraisal in


                                                                              36
<PAGE>


the third quarter to determine the fair value of one of these properties. As a
result of this appraisal, the Company lowered their carrying values by an
additional $803,000. Any future valuation of these assets may result in
additional adjustment to their carrying values.

         Real estate owned ("REO") expense decreased $371,000 for the year ended
December 31, 2002, as compared to the same period in 2001. The reason for this
decrease is that the Company is receiving a steady stream of income from an REO
property.

         Legal expenses have increased $630,000 for the year ended December 31,
2002, as compared to the same period in 2001. The primary reason for this
increase was the legal fees incurred by the Company in conjunction with the
Supervisory Directive and the pending merger with Sky Financial.

         Other operating expenses, which include miscellaneous general and
administrative costs such as loan servicing, loan processing costs, business
development, check processing, ATM expenses, and professional expenses, other
than legal, increased $2.5 million for the year ended December 31, 2002, as
compared to 2001. These increases were generally the result of increases in loan
processing costs and various miscellaneous expenses.

         On June 6, 2002, the Company announced that it was undergoing a
restructuring plan that would be concluded by year-end. The Company currently
projects annualized cost savings of $3.0 million as a result of improved process
efficiencies and personnel reductions. The Company originally expected to incur
costs in connection with the restructuring, primarily personnel related, of $0.5
million to $1.0 million, to be taken in the third quarter of 2002. Since most of
the personnel reductions were the result of attrition, the Company's
restructuring costs were $39,000 for 2002. No further restructuring expense is
anticipated.

         Provision(benefit) for Income Taxes. The Company's income tax benefit
increased to $7.0 million for the year ended December 31, 2002, as compared to
the prior year period. The primary reason for the increase in the benefit was
due to the fact that the Company had a larger pre-tax loss during the year ended
December 31, 2002, as compared to the same period in the prior year. The
effective tax rate for 2002 was 34.3% compared to 40.6% for 2001. The rate was
much nearer to the 34.0% statutory rate in 2002 than 2001 because of the
magnitude of the pretax loss larger while the permanent differences between book
income and taxable income were comparable.





COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

         Net Income. Net income for the year ended December 31, 2001 decreased
$5.1 million to a net loss of $3.6 million as compared to net income of $1.5
million for the year ended December 31, 2000. For the year ended December 31,
2001, net interest income decreased $6.4 million and the provision for loan
losses for the year ended December 31, 2001 increased $0.1 million from the same
period in the prior year. Noninterest income increased $4.2 million for the year
ended December 31, 2001 over the same period in the prior year and noninterest
expense increased $6.0 million compared to the same period in the prior year.
Noninterest expense amounted to $46.1 million for the year ended December 31,
2001 up from $40.2 million from the same period in the prior year.

         The loss for the year 2001 was primarily due to an increase in
amortization and impairment of loan servicing rights, a compression of the
interest rate spread, costs associated with a computer conversion, an increased
provision for losses on real estate owned, and compensation and occupancy
expenses relating to new facilities opened during 2000 and 2001. These items
were partially offset by an increase in noninterest income for the year,
particularly the gain on sale of loans. The interest rate compression was caused
by the Bank's assets repricing downward or prepaying faster than the Bank's
liabilities repriced or matured.

         Interest Income. Interest income for the year ended December 31, 2001
totaled $114.8 million, a decrease of 10.1% from $127.8 million for the same
period in 2000. These results were primarily due to declining yields on
interest-earning assets from 8.26% to 7.57% in the year ended December 31, 2001.
Decreases in average earning assets compared to the same period in


                                                                              37
<PAGE>


the prior year also contributed to the decline in interest income. The decline
in the yield on earning assets for the year ended December 31, 2001 compared to
the prior year was primarily due to general declines in the level of interest
rates from 2000 to 2001. An increase in the level of nonperforming loans during
2001 also contributed to the decrease in interest income.

         Interest Expense. Total interest expense decreased 7.6% to $82.0
million for the year ended December 31, 2001 from $88.7 million for the year
2000. Interest expense for the year ending December 31, 2001 decreased generally
due to a lower average balance of interest-bearing liabilities outstanding and a
lower cost of funds as opposed to the prior year. The average balance of
interest-bearing deposits decreased $21.7 million, or 2.0%, for the year ended
December 31, 2001 as compared to the year 2000. Average borrowings decreased
$23.1 million, or 5.8%, for the year ended December 31, 2001 as compared to the
year 2000. The Company's cost of funds decreased to 5.64% for the year 2001 as
compared to 5.95% for the year 2000. In the year ended December 31, 2001, the
Company experienced a lower cost on both deposits and borrowings compared to
2000.


         Net Interest Margin. The Company's net interest margin decreased 37
basis points to 2.19% for the year ended December 31, 2001 as compared to 2.56%
for the comparable period in 2000. While interest rates in general and
especially short-term interest rates were lower in 2001 than in 2000, net
interest margin was negatively impacted because yields on assets fell more
quickly than costs of interest-bearing liabilities. The greater impact on asset
yields was due to the falling interest rates and the options that borrowers have
to prepay loans. As rates decline, most borrowers have the option to prepay
loans but the Bank does not have the option to call high cost certificates of
deposit. The net interest margin was also negatively impacted by a conscious
decision by management to lengthen the average remaining term of borrowings and
certificates of deposit during 2000 and 2001 in order to reduce the Company's
interest rate risk.

         Provision for Loan Losses. The provision for loan losses increased to
$6.5 million for the year ended December 31, 2001 as compared to $6.4 million
for the same period in 2000. Management increased the provision for loan losses
during 2001 as compared to 2000 based on a problem noted with a specific group
of borrowers who are related to each other. As a result, the allowance for
losses on loans at December 31, 2001 was $17.3 million or 1.49% of total loans,
as compared to $14.0 million, or 1.07% of total loans at December 31, 2000.

         Noninterest Income. Total noninterest income increased 44.0% to $13.8
million for the year ended December 31, 2001 as compared to $9.6 million for the
year 2000.

         Gain on sale of loans was $7.2 million for the year ended December 31,
2001, as compared to $2.8 million during the same period in 2000. The primary
reason for the increase in the year 2001 compared with the same period in 2000
was a decrease in interest rates in 2001 which caused an increase in refinance
activity resulting in increased origination volumes and, therefore, an increase
in loans available to sell. The proceeds from sales of residential loans held
for sale in the year 2001 were $543.1 million as compared to $120.3 million in
the same period in 2000. Proceeds from the sale of multifamily and commercial
real estate loans were $97.8 million for the year 2001 as compared to $92.6
million for the same period in 2000.

         Gains on sale of securities was $2.3 million for the year ended
December 31, 2001 as compared to $0.7 million for the year 2000. The gains in
the year 2001 were primarily the result of the sales of loans originated,
securitized, and sold by the Bank to Freddie Mac. The gains in the year 2000
were the result of the sale of Fannie Mae securities which were part of the 1999
multifamily securitization and Freddie Mac securities comprised of residential
loans. The higher level of gains in 2001 was due primarily to a higher volume of
single-family loans that were originated, securitized and sold in 2001 compared
to 2000.

         There were losses from net loan servicing of $4.0 million in the year
ended December 31, 2001 as compared to income of $1.1 million for the year 2000.
The primary reason for the decreased income was the increased amortization of
servicing rights due to an increase in paid off loans in 2001 compared to the
prior year. In addition, the Bank recorded an allowance of $0.8 million for loss
due to impairment in 2001 compared to none in 2000. The portfolio of loans
serviced for others increased to $2.2 billion at December 31, 2001 as compared
to $1.9 billion at December 31, 2000. Origination of loan servicing partially
offset payoffs and the amortization of existing loans serviced.

         Service charges on deposit accounts increased to $1.6 million for the
year ended December 31, 2001 as compared to $1.5 million for the same period in
the prior year. The reasons for the increases were the overall growth in the
number of checking accounts and increases in deposit fees in 2001 as compared to
prior year periods.


                                                                              38
<PAGE>


         Other noninterest income increased to $6.5 million for the year 2001
compared to $3.3 million for the same period in the previous year. These
increases were primarily due to increased trust fee income, increased rental
income from the new corporate headquarters building, and the operations of our
title insurance agency for a full year in 2001 as compared to three months in
2000.

         Noninterest Expense. Total noninterest expense increased to $46.1
million, or 14.9%, in the year ended December 31, 2001 as compared to $40.2
million for the year 2000.

         Personnel related expenses increased $2.5 million in the year ended
December 31, 2001 as compared to the same period in 2000. These increases were
primarily a result of increased staffing levels to support expanded activities
such as new retail sales offices locations, new mortgage origination offices and
temporary employees used to transition to a new computer system. In addition, we
operated our title insurance agency for a full year in 2001 as compared to three
months in 2000.

         Occupancy costs increased $0.6 million in the twelve-month period ended
December 31, 2001, over the same period in 2000. This increase was generally the
result of occupancy costs for the new corporate headquarters, three additional
retail sales offices and six residential mortgage origination offices.

         Data processing expense increased $444,000 in the year ended December
31, 2001 as compared to the same period in 2000. The primary reason for the
increase was greater costs incurred for data processing following the systems
conversion in September, 2000.

         Marketing expense decreased $275,000 in the year ended December 31,
2001 compared to the same period in the prior year. This was primarily due to
management's efforts to reduce costs in 2001.

         State franchise taxes decreased $918,000 in the year ended December 31,
2001 as compared to the same period in 2000. The primary reason for the decrease
were a refinement of the allocation of income among the various states where we
have loans and the impact of debt at the holding company on the franchise tax
calculation.

         Real estate owned expense was $1.6 million up from $0.4 million in the
prior year. The increase was primarily due to a provision for loss on the sale
of two commercial real estate properties. While these properties had been valued
at fair value based on appraisals, a lack of qualified buyers over an extended
period of time caused the Bank to reassess the fair values resulting in the
provision.

         Other operating expenses, which include miscellaneous general and
administrative costs such as loan servicing, loan processing costs, business
development, check processing, ATM expenses, and professional expenses,
increased $2.5 million for the year ended December 31, 2001 as compared to the
same periods in 2000. These increases were generally the result of increases in
expenses pertaining to professional services, and increased business activities.
In addition, we operated our title insurance agency for a full year in 2001 as
compared to three months in 2000.

         Provision (benefit) for Income Taxes. Income taxes were a benefit of
$2.4 million for the year ended December 31, 2001 as compared to an expense of
$662,000 in the prior year period. The primary reason for the change was the net
loss recorded for the year 2001.




ASSET QUALITY

         We undertake detailed reviews of the loan portfolio regularly to
identify potential problem loans or trends early and to provide for adequate
estimates of probable losses. In performing these reviews, management considers,
among other things, current economic conditions, portfolio characteristics,
delinquency trends, and historical loss experiences. We normally consider loans
to be nonperforming when payments are 90 days or more past due or when the loan
review analysis indicates that repossession of the collateral may be necessary
to satisfy the loan. In addition, a loan is considered impaired when, in
management's opinion, it is probable that the borrower will be unable to meet
the contractual terms of the loan. When loans are classified as nonperforming,
we assess the collectibility of the unpaid interest. Interest determined to be
uncollectible is reversed


                                                                              39
<PAGE>

from interest income. Future interest income is recorded only if the loan
principal and interest due is considered collectible and is less than the
estimated fair value of the underlying collateral.

         The table below provides information concerning the Bank's
nonperforming assets and the allowance for losses on loans as of the dates
indicated. All loans classified by management as impaired were also classified
as nonperforming.

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                       ------------
                                                             2002           2001           2000         1999       1998
                                                             ----           ----           ----         ----       ----
                                                                                  (DOLLARS IN THOUSANDS)

<S>                                                       <C>             <C>            <C>      <C>          <C>
Nonaccrual loans
   One-to-four family                                     $  2,378        $    394        $  484  $     1,183   $    512
   Multifamily                                                 507             758            --           --         --
   Commercial real estate                                    1,795           5,898           468        1,696      6,123
   Construction and land                                       143           1,489         1,133           42      1,824
   Consumer                                                  3,217           4,064         4,574        3,755      2,038
   Business                                                 19,051          17,999         1,646        2,257      1,734
                                                            ------          ------       -------      -------   --------
         Total nonaccrual loans                             27,091          30,602         8,305        8,933     12,231
Loans past due 90 days or more, still accruing                  --              85         6,434          448        460
                                                           -------         -------       -------      -------      -----
         Total nonperforming loans                          27,091          30,687        14,739        9,381     12,691
Real estate owned                                            3,876           2,791         4,262        5,263      5,534
                                                           -------         -------       -------      -------      -----
         Total nonperforming assets                        $30,967         $33,478       $19,001      $14,644    $18,225
                                                            ======          ======        ======       ======     ======

Nonperforming loans to total loans                           2.52%          2.68%          1.15%        0.79%      1.23%

Nonperforming assets to total assets                         2.10%          2.09%          1.12%        0.91%      1.34%
</TABLE>

         Nonperforming loans at December 31, 2002 decreased $3.6 million to
$27.1 million as compared to $30.7 million at December 31, 2001. Real estate
owned increased $1.1 million over the same period. On March 26, 2001, based on
financial projections provided by the borrowers on March 12, 2001, $14.7 million
of business loans to several entities affiliated with each other were placed on
nonaccrual status and were calculated to be impaired in the amount of $3.5
million. These loans are business loans secured by junior liens on several
nursing homes and assisted living centers. The borrowers did not make any
payments on these loans during the first quarter of 2001. The estimate of the
impairment was the result of comparing the book value of the loans to the
present value of cash flows expected to be received based on the most likely
workout scenario. In May 2001, the borrowers began making interest payments on
these loans. These loans were brought current as of September 30, 2002, through
payments by the borrowers and a reduction in the rates charged on these loans.
However, due to the continuing weakness of the borrowers, these loans are still
considered impaired and nonperforming at December 31, 2002. The total of the
loans was $15.1 million at December 31, 2002, and management determined the
amount of the impairment of these loans to have remained $3.5 million.

         The Company also holds a tax-exempt municipal bond in its investment
portfolio that it considers as impaired. However, since it is not a loan it is
not included as nonperforming in the above table. The tax-exempt municipal bond
represents a single issue secured by a multifamily property. The bond was
reclassified to available for sale as of June 30, 2002, due to a decrease in the
cash flow generated by the multifamily property to make required debt service
payments on the bond and management's decision to market this security when the
property, which serves as collateral for the bond, becomes fully occupied. In
conjunction with this reclassification, it was determined that there was a
permanent impairment to the bond's fair value and a realized loss of $550,000
was recorded in the second quarter of 2002. Since December 31, 2002, there has
been further deterioration in this bond and a further impairment of $909,000 was
recorded in the first quarter of 2003.

         The provision for loan losses decreased for the year ended December 31,
2002, as compared to the prior year period. The primary reason for the decrease
in provision was the $3.6 million decrease in nonperforming loans as well as the
$6.1 million of charge-offs the Bank took during 2002 to reduce its portfolio of
loans with deteriorating credit.

         In addition to the nonperforming assets included in the table above, we
identify potential problem loans which are still performing but have a weakness
which causes us to classify those loans as substandard for regulatory purposes.
There was $4.7 million of loans in this category at December 31, 2002, compared
to $1.3 million of such loans at December 31, 2001.



                                                                              40
<PAGE>


         Allowance for Losses on Loans. The provision for loan losses and
allowance for losses on loans is based on an analysis of individual loans, prior
loss experience, growth in the loan portfolio, changes in the mix of the loan
portfolio and other factors including current economic conditions. The following
table provides an analysis of the allowance for losses on loans at the dates
indicated.

<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31,
                                                                           -----------------------
                                                           2002         2001            2000         1999          1998
                                                           ----         ----            ----         ----          ----
                                                                               (DOLLARS IN THOUSANDS)

<S>                                                   <C>            <C>             <C>          <C>           <C>
BALANCE AT BEGINNING OF PERIOD                         $17,250        $13,951         $11,025       $6,909        $5,622
Charge-offs:
  One- to four-family                                       16             --              23           12             5
  Multifamily                                              271             --              --           31            39
  Commercial real estate                                   932             48              --          104            --
  Consumer                                               3,864          3,388           3,448        1,944           809
  Business                                               1,044             --             358          148           565
                                                     ---------      ---------        --------       ------         -----
         Total charge-offs                               6,127          3,436           3,829        2,239         1,418
Recoveries:                                                260            230             405           45            55
                                                     ---------       --------      ----------      -------        ------
Net charge-offs                                          5,867          3,206           3,424        2,194         1,363
Provision for loan losses                                5,720          6,505           6,350        6,310         2,650
                                                       -------        -------         -------        -----         -----
BALANCE AT END OF PERIOD                               $17,103        $17,250         $13,951      $11,025        $6,909
                                                        ======         ======          ======       ======         =====

Net charge-offs to average loans                         0.54%          0.26%           0.27%        0.19%         0.16%
Provision for loan losses to average loans               0.52%          0.53%           0.50%        0.54%         0.31%
Allowance for losses on loans to total
  nonperforming loans at end of period                  63.13%         56.21%          94.65%      117.52%        54.44%
Allowance for losses on loans to total
  loans at end of period                                 1.59%          1.49%           1.07%        0.92%         0.66%
</TABLE>

         Loans decreased 7.6% in 2002 to $1.057 billion while the allowance for
losses on loans decreased 0.9% to $17.1 million. Management decreased the
allowance due to the ongoing analysis of the appropriate allowance for loan
losses. We expect to continue to monitor the allowance for loan losses and, when
necessary, change the allowance as the loan portfolio mix changes. We considered
the following factors in determining that this decreased level of allowance for
loan losses was adequate.

         -        Total nonperforming loans at December 31, 2002 decreased 11.7%
                  from a year earlier as compared to a 108.2% increase for the
                  prior year.

         -        Consumer loan charge-offs remain high. This rate was due
                  primarily to manufactured housing loans. We are not currently
                  increasing our portfolio in this lending area. Substantially
                  all recoveries detailed above are in the consumer loan
                  category.

         -        We separately evaluated individual nonperforming loans for the
                  adequacy of collateral values. We consider several of these
                  loans to be large because they each exceed $1 million. While
                  in most instances, we were able to determine that our
                  principal balance is well secured, we have provided specific
                  allowances in those instances where it was deemed necessary.
                  We reached this determination by reviewing current or updated
                  appraisals, brokers' price opinions, and other market surveys.

         -        The impact of the economic slowdown.

         -        Increase in allocation percentage in commercial real estate
                  and business loans to reflect higher risk factors than had
                  previously been utilized by the Bank.

         After careful consideration of all of these factors, we concluded that
the Bank could decrease the allowance for loan losses again in 2002. Therefore,
the provision for loan losses was $5.7 million in 2002 which resulted in an
decrease in the allowance for loan losses to $17.1 million.



                                                                              41
<PAGE>


COMPARISON OF DECEMBER 31, 2002 AND DECEMBER 31, 2001 FINANCIAL CONDITION

         Total assets were $1.477 billion at December 31, 2002, as compared to
$1.608 billion at December 31, 2001, a decrease of $131 million. The decrease in
assets was concentrated in mortgage backed securities available for sale, loans
held for sale, premises and equipment and mortgage loan servicing rights. Under
the Supervisory Agreement, the Bank has committed that quarter end assets will
not exceed $1.702 billion during the term of the agreement. At December 31,
2002, assets for the Bank were $1.472 billion.

         Securities available for sale increased $18.9 million to $113.2 million
at December 31, 2002, as compared to $94.4 million at December 31, 2001. The
primary reasons for the increase were the transfer of $13.8 million in
tax-exempt bonds to available for sale from held to maturity and the purchase of
$199.3 million of U.S. agency notes and bills which was partially offset by
$190.1 million of maturities of U.S. agency notes and bills and the sale of $4.6
million of Freddie Mac Preferred Stock.

         Loans receivable, net increased $34.5 million, or 3.6%, to $1.009
billion at December 31, 2002, from $974.5 million at December 31, 2001. This
increase was due to transfers of commercial and multi-family loans of $81.5
million from held for sale to loans receivable. This was partially offset by
decreases due to loan sales and repayments during 2002.

         Loans held for sale decreased $121.2 million to $48.1 million at
December 31, 2002, from $169.3 million at December 31, 2001. The primary reasons
for the decrease in this category are the loan sales that have occurred during
2002 and the decision to transfer all multi-family and commercial real estate
loans from the loans held for sale category back into the loan portfolio, due to
an improvement in the Bank's capital position.

         Federal Home Loan Bank stock decreased $3.1 million to $13.8 million at
December 31, 2002, as compared to the December 31, 2001 balance. The reason for
the decrease was the redemption of $5.1 million of Federal Home Loan Bank stock
due to the decreased risk based capital position of the Bank as well as the
decreased borrowings with the Federal Home Loan Bank. This decrease was
partially offset by purchases of stock and the payment of stock dividends to the
Bank from the Federal Home Loan Bank.

         Loan servicing rights, net, decreased $9.8 million to $13.1 million at
December 31, 2002, as compared to $23.0 million at December 31, 2001. The
primary reason for the decrease was the continuing decrease in interest rates
through December 2002. The resulting increase in prepayment speeds has caused
increased amortization and impairment of the servicing rights. This has
increased the impairment of the value of the servicing rights to $5.4 million as
well as accelerated the amortization of the servicing rights to $15.1 million in
2002, further decreasing the balance of loan servicing rights.. These decreases
to the servicing rights more than offset the $10.7 million of servicing rights
that were originated or acquired during 2002.

         Real estate owned increased $1.1 million, or 38.9%, to $3.9 million at
December 31, 2002. The primary reason for the increase was the $4.2 million
transfer into real estate owned of two properties in the first quarter of 2002
and a third property in the third quarter. This was partially offset by $1.2
million in additional provision taken during the year and $2.7 million in sales
of real estate owned.

         Total deposits were $1.050 billion at December 31, 2002, a decrease of
$92.2 million from the balance of $1.142 billion at December 31, 2001. The
decrease resulted principally from decreased certificates of deposit balances of
$122.3 million, including a decrease of $53.0 million in out of state and
brokered certificates of deposit, which were partially offset by an increase in
non-interest bearing checking accounts of $6.9 million and an increase of $23.2
million in interest-bearing checking and savings accounts.

         Borrowings decreased $49.6 million, or 14.6%, from December 31, 2001 to
December 31, 2002. The decrease was the result of the paydown of Federal Home
Loan Bank advances as well as the repayment of the $5.0 million commercial bank
loan, which was replaced by a $5.0 million line of credit, which had a $2.7
million balance at December 31, 2002, and the $2.0 million repayment of the loan
to the Company's majority shareholder.



                                                                              42
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         Liquidity. The term "liquidity" refers to our ability to generate
adequate amounts of cash for funding loan originations, loan purchases, deposit
withdrawals, maturities of borrowings, and operating expenses. Our primary
sources of internally generated funds are principal repayments and payoffs of
loans, cash flows from operations, and proceeds from sales of assets. External
sources of funds include increases in deposits and borrowings, and public or
private securities offerings by the Company.

         The Company's primary sources of funds currently are dividends from the
Bank, which are subject to restrictions imposed by federal bank regulatory
agencies and debt and equity offerings. Under the Supervisory Directive, the
Bank is not currently permitted to pay dividends to the Company without prior
OTS approval. The Company's primary use of funds is for interest payments on its
existing debt. At December 31, 2002, the Company, excluding the Bank, had cash
and readily convertible investments of $0.8 million. This includes $0.7 million
the Company holds in liquid assets as a requirement of the subordinated notes
due January 1, 2005. The Company also has $2.3 million available to borrow on a
commercial bank line of credit.

         The Bank's liquidity ratio (average daily balance of liquid assets to
average daily balance of net withdrawable accounts and short-term borrowings) at
December 31, 2002, was 5.38%. At December 31, 2002, the Bank had approximately
$34.8 million in cash and $40.6 million in short-term U.S. Treasury securities,
which were available to sell or to pledge to meet liquidity needs.

         While principal repayments and Federal Home Loan Bank advances have
been fairly stable sources of funds, deposit flows and loan prepayments are
greatly influenced by prevailing interest rates, economic conditions, and
competition. The Bank regularly reviews cash flow needed to fund its operations
and adjusts loan and deposit rates as needed to balance cash available with cash
needs.

         We have access to wholesale borrowings based on the availability of
eligible collateral. The Federal Home Loan Bank makes funds available for
housing finance based upon the blanket or specific pledge of certain one- to
four-family and multifamily loans and various types of investment and
mortgage-backed securities. The Bank had remaining borrowing capacity at the
Federal Home Loan Bank of approximately $40 million at December 31, 2002.

         At December 31, 2002, $244.2 million, or 23.3%, of the Bank's deposits
were in the form of certificates of deposit of $100,000 and over. The Bank has
also accepted out-of-state time deposits from individuals and entities,
predominantly credit unions. These deposits typically have balances of $90,000
to $100,000 and have a term of one year or more. At December 31, 2002,
approximately $12.8 million, or 1.2% of our deposits were held by these
individuals and entities. Of these out-of-state time deposits, $6.5 million were
also included in the $100,000 and over time deposits discussed above. During
2000, the Bank received regulatory approval and began accepting brokered
deposits. At December 31, 2002, brokered deposits totaled $62.0 million. The
total of all certificates of deposits from brokers, out-of-state sources, and
other certificates of deposit of $100,000 and over was $251.5 million at
December 31, 2002, or 23.95%, of total deposits compared to $305.1 million, or
26.7% of total deposits, at December 31, 2001. This decrease shows that the Bank
is reducing its reliance on riskier wholesale deposits. The supervisory
agreement requires that the Bank reduce its reliance on volatile funding
sources, including but not limited to, brokered and out-of-state deposits.
Brokered and out-of-state deposits have decreased from $127.8 million at
December 31, 2001 or 11.1% to $74.8 million, or 7.1% of total deposits, at
December 31, 2002. The Supervisory Agreement does not call for a specific amount
of reduction or a specific time frame in which to make the reduction. Since many
of these depositors are not located near our retail sales offices these deposits
tend to be less stable and less likely to renew if our rates are not competitive
with national rates. Our dependence on these wholesale types of deposits creates
the risk that we might experience a liquidity shortage if we stopped issuing or
renewing these types of certificates of deposit or that we would have to pay
high rates to renew or replace these funds which would negatively impact our
profitability. In order to minimize these risks, we monitor the maturity of
these types of funds so their maturities are staggered. We also deal with
several brokers and compare rates among them to be sure we are paying
competitive rates. If a liquidity shortage occurs, we have the ability to
generate additional liquidity beyond the cash and securities mentioned above by
stopping the issuance of commitments to make new loans and selling some or all
of the $48.1 million of loans we own that are classified as held for sale at
December 31, 2002. Such a liquidation of loans held for sale could have a
negative impact on net interest income.


                                                                              43
<PAGE>

         The financial market makes funds available through reverse repurchase
agreements by accepting various investment and mortgage-backed securities as
collateral. The Bank had borrowings through reverse repurchase agreements of
$49.9 million at December 31, 2002.

         Contractual Obligations, Commitments, Contingent Liabilities and
Off-balance Sheet Arrangements. The following table presents. as of December 31,
2002, the Company's significant fixed and determinable contractual obligations
by payment date. The payment amounts represent those amounts contractually due
to the recipient and do not include any unamortized premiums or discounts, hedge
basis adjustments or other similar carrying value adjustments. Further
discussion of the nature of each obligation is included in the notes to the
consolidated financial statements.

<TABLE>
<CAPTION>
                                                                             DUE IN
                                      --------------------------------------------------------------------------------
                                       ONE YEAR           ONE TO            THREE TO         MORE THAN
                                        OR LESS         THREE YEARS        FIVE YEARS       THREE YEARS         TOTAL
                                        -------         -----------        ----------       -----------         -----
                                                                        (DOLLARS IN THOUSANDS)

<S>                                  <C>             <C>                  <C>              <C>               <C>
Deposits without a stated maturity    $ 457,189                                                                $457,189
Certificates of deposit                 362,489         $ 151,123            $78,149          $ 1,273           593,034
Borrowed funds and long term debt        91,024           166,926             17,900           15,437           291,287
Trust preferred securities                   --                --                 --           43,750            43,750
Operating leases                            889             1,369                915            1,894             5,067
                                      ---------         ---------           --------          -------          --------
   Total                               $911,591          $319,418            $96,964          $62,354        $1,390,327
                                        =======           =======             ======           ======         =========
</TABLE>

         A schedule of significant commitments at December 31, 2002, follows:

<TABLE>
<CAPTION>
                                                                                                     (DOLLARS IN THOUSANDS)

<S>                                                                                                     <C>
Commitments to extend credit:
   Fixed loans                                                                                               $86,087
   Variable loans                                                                                             65,058
Standby letters of credit                                                                                      5,301
Net commitments to sell mortgage loans or mortgage-backed securities                                          72,979
</TABLE>

         Further discussion of these commitments is included in Note 17 of the
Company's consolidated financial statements. Additionally. the Company has
multifamily loans that it securitized with limited recourse. The buyer has
contracted with an insurance company to provide mortgage insurance covering the
first $5 million of losses. The Bank is contingently liable for the next $8.7
million of losses. The buyer has accepted financial responsibility for all
losses in excess of $13.7 million. There have been no losses to date on any of
the multifamily loans securitized by the Bank.

         Capital. The OTS imposes capital requirements on savings associations.
Savings associations are required to meet three minimum capital standards: (i) a
leverage requirement, (ii) a tangible capital requirement, and (iii) a
risk-based capital requirement. Such standards must be no less stringent than
those applicable to national banks. In addition, the OTS is authorized to impose
capital requirements in excess of these standards on individual associations on
a case-by-case basis. The Bank's regulatory capital ratios at December 31, 2002,
were in excess of the requirements to be categorized as "well capitalized"
specified by OTS regulations as shown by the following table:

<TABLE>
<CAPTION>
                                        TANGIBLE CAPITAL            CORE CAPITAL            RISK-BASED CAPITAL
                                        ----------------            ------------            ------------------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                 <C>             <C>       <C>             <C>        <C>             <C>
Capital amount
Actual                                $   110,111     7.50%     $   110,111      7.50%    $   120,416     10.80%
Required                                   29,376     2.00           73,439      5.00         111,485     10.00
                                      -----------  -------      -----------  --------     -----------   -------
Excess (Deficiency)                   $    80,375     5.50%     $    36,672      2.50%    $     8,931      0.80%
                                      ===========  =======      ===========  ========     ===========   =======
</TABLE>





                                                                              44
<PAGE>



RECENT ACCOUNTING DEVELOPMENTS

         In July 2002, SFAS 146, Accounting for Costs Associated with Exit or
Disposal Activities was issued and it became effective beginning January 1,
2003. This statement requires a cost associated with an exit or disposal
activity, such as the sale or termination of a line of business, the closure of
business activities in a particular location, or a change in management
structure, to be recorded as a liability at fair value when it becomes probable
the cost will be incurred and no future economic benefit will be gained by the
company for such cost. The adoption of this standard is not expected to have a
material impact on the Company.

         In October 2002, SFAS 147, Acquisitions of Certain Financial
Institutions was issued. This statement provides guidance on the accounting for
the acquisition of a financial institution and supersedes SFAS 72. SFAS 147
became effective upon issuance and requires companies to cease amortization of
unidentified intangible assets associated with certain branch acquisitions and
reclassify these assets to goodwill. This statement also modifies SFAS 144 to
include in its scope long-term customer-relationship intangible assets and thus
subject those intangible assets to the same undiscounted cash flow
recoverability test and impairment loss recognition and measurement provisions
required for other long-lived assets. The issuance of the new guidance is not
expected to have a material effect on the Company.

         In December 2002, SFAS 148, Accounting for Stock-Based
Compensation-Transition and Disclosure was issued. This statement provides
guidance on how to transition from the intrinsic value method of accounting for
stock-based employee compensation under APB 25 to SFAS 123's fair value method
of accounting, if a company so elects. The Company has elected not to report
stock-based compensation under the fair value method of accounting.


IMPACT OF INFLATION AND CHANGING PRICES

         The consolidated financial statements and notes included in this annual
report have been prepared in accordance with generally accepted accounting
principles. These principles require the measurement of financial position and
operating results in terms of historical dollars without consideration of
changes in relative purchasing power of money over time due to inflation. The
impact of inflation is reflected in the increased cost of our operations.

         In management's opinion, changes in interest rates affect the financial
condition of a financial institution to a far greater degree than changes in the
inflation rate. While interest rates are influenced by changes in the inflation
rate, they do not change at the same rate or in the same magnitude as the
inflation rate. Rather, interest rate volatility is based on changes in the
expected rate of inflation and in monetary and fiscal policies. Our ability to
match the interest rate sensitivity of our financial assets to the interest
sensitivity of our financial liabilities in our asset/liability management may
tend to minimize the effect of changes in interest rates on our financial
performance.


FORWARD-LOOKING STATEMENTS

         Certain statements contained in this report that are not historical
facts are forward-looking statements, as defined in the Private Securities
Litigation Reform Act of 1995, that are subject to assumptions, risks and
uncertainties. Forward-looking statements can be identified by the fact that
they do not relate strictly to historical or current facts. They often include
the words "believe," "expect," "anticipate," "likely," "intend," "plan,"
"estimate" or words of similar meaning, or future or conditional verbs such as
"will," "would," "should," "could" or "may." Actual results could differ
materially from those contained in or implied by such forward-looking statements
for a variety of factors including:

         -        changes in interest rates;

         -        continued weakening in the economy and other factors that
                  would materially impact credit quality trends, real estate
                  lending and the ability of the Bank to generate loans;

         -        business and other factors affecting the economic outlook of
                  individual borrowers of the Bank and their ability to repay
                  loans as agreed;


                                                                              45
<PAGE>


         -        the ability of the Company and the Bank to timely meet their
                  obligations under their respective supervisory agreements and
                  directive;

         -        the status of the relevant markets in which the Company and
                  the Bank may sell various assets;

         -        increase in the dollar amount of nonperforming loans held by
                  the Bank;

         -        increased competition, which raises rates paid on demand and
                  time deposits offered by the Bank;

         -        adverse developments of a material nature in collection and
                  other lawsuits involving the Bank;

         -        delay in or inability to execute strategic initiatives
                  designed to grow revenues and/or manage expenses;

         -        changes in law imposing new legal obligations or restrictions
                  or unfavorable resolution of litigation;

         -        the ability of the Bank to continue to use the Federal Home
                  Loan Bank as a source of liquidity; and

         -        changes in accounting, tax, or regulatory practices or
                  requirements.

         Management decisions are subjective in many respects and susceptible to
interpretations and periodic revisions based on actual experience and business
developments, the impact of which may cause the Company to alter business
strategy or capital expenditure plans that may, in turn, affect the results of
operations. In light of the significant uncertainties inherent in the
forward-looking information included in this prospectus, you should not regard
the inclusion of such information as the Company's representation that it will
achieve any strategy, objectives or other plans. The forward-looking statements
contained in this prospectus speak only as of the date of this prospectus as
stated on the front cover, and the Company has no obligation to update publicly
or revise any of these forward-looking statements.







                                                                              46
<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company, like other financial institutions, is subject to market
risk. Market risk is the risk that a company can suffer economic loss due to
changes in the market values of various types of assets or liabilities. As a
financial institution, a profit is made by accepting and managing various types
of risks. The most significant of these risks are credit risk and interest rate
risk. The principal market risk for the Company is interest rate risk. Interest
rate risk is the risk that changes in market interest rates will cause
significant changes in net interest income because interest-earning assets and
interest-bearing liabilities mature at different intervals and reprice at
different times.

         The OTS currently looks to the Thrift Bulletin 13a, issued December 1,
1998, to evaluate interest rate risk at institutions they supervise. The OTS
categorizes interest rate risk as minimal, moderate, significant, or high based
on a combination of the projected Net Portfolio Value ("NPV") after a 200 basis
point change in interest rates and the size of that change in NPV due to a 200
basis point change in interest rates.

         The Company manages interest rate risk in a number of ways. Some of the
tools used to monitor and quantify interest rate risk include:

         -        annual budgeting process;

         -        monthly forecasting process;

         -        monthly review of listing of liability rates and maturities by
                  month;

         -        quarterly shock report of effect of sudden interest rate
                  changes on net interest income;

         -        quarterly shock report of effect of sudden interest rate
                  changes on net value of portfolio equity;

         -        monthly analysis of rate and volume changes in historic net
                  interest income;

         -        monthly forecast of balance sheet activity; and

         -        weekly review of deposit offering rates and maturities.

         The Bank has established an asset and liability committee to monitor
interest rate risk. This committee has representation from finance, lending and
deposit operations. This committee meets at least twice a month, reviews the
current interest rate risk position, and determines both long- and short-term
strategies. The activities of this committee are reported to the Board of
Directors of the Bank. Between meetings the members of this committee are
involved in setting rates on deposits, setting rates on loans and serving on
loan committees where they work on implementing the established strategies.

         One of the ways we monitor interest rate risk quantitatively is to
measure the potential change in net interest income based on various immediate
changes in market interest rates. The following table shows the expected change
in net interest income for immediate sustained parallel shifts of 1% and 2% in
market interest rates as of the end of the last two years. The results for a
downward parallel shift of 2% at December 31, 2002 and 2001 are not meaningful
because some rates such as Federal Funds are already less than 2%.



                                                                              47
<PAGE>



<TABLE>
<CAPTION>
                                                                EXPECTED CHANGE IN NET INTEREST INCOME
                                                                --------------------------------------
CHANGE IN INTEREST RATE                                   DECEMBER 31, 2002                  DECEMBER 31, 2001
-----------------------                                   -----------------                  -----------------

<S>                                                            <C>                                <C>
          +2%                                                    +9%                                +7%
          +1%                                                    +5%                                +3%
          -1%                                                    +2%                                -1%
          -2%                                                    N/A                                N/A
</TABLE>

        The change in net interest income from a change in market rates is a
short-term measure of interest rate risk. The results above indicate that at
December 31, 2001 the Company had exposure to falling rates but would benefit
from rising rates. The expected change in net interest income at December 31,
2002 was impacted by a shift in the balance sheet towards short-term
liabilities. During the year, short-term interest-earning assets increased in
dollar amount to a greater extent than short-term interest-bearing liabilities.
The net result was an increase in the benefit in 200 and 100 basis point rising
rate scenarios. The Company now has a benefit in a falling rate scenario.

         Another quantitative measure of interest rate risk is the change in the
market value of all financial assets and liabilities based on various immediate
sustained shifts in market interest rates. This concept is also known as net
portfolio value and is the methodology used by the Office of Thrift Supervision
in measuring interest rate risk. The following table shows the expected change
in net portfolio value for immediate sustained parallel shifts of 1% and 2% in
market interest rates as of the end of the last two years. The results for a
downward parallel shift of 2% at December 31, 2002 and 2001 are not meaningful
because some rates such as Federal Funds are already less than 2%.


<TABLE>
<CAPTION>
                                                                 EXPECTED CHANGE IN NET PORTFOLIO VALUE
                                                                 --------------------------------------
CHANGE IN INTEREST RATE                                   DECEMBER 31, 2002                  DECEMBER 31, 2001
-----------------------                                   -----------------                  -----------------

<S>                                                              <C>                               <C>
            +2%                                                    +13%                              -4%
            +1%                                                     +8%                              -2%
            -1%                                                     -5%                              -3%
            -2%                                                     N/A                              N/A
</TABLE>

         The change in net portfolio value is a long-term measure of interest
rate risk. It assumes that no significant changes in assets or liabilities held
would take place if there were a sudden change in interest rates. Because
interest rate risk is monitored regularly and the Company actively manages that
risk, these projections serve as a worst-case scenario assuming no reaction to
changing rates. The results above indicate that a rising rate environment, as
measured by post-shock NPV, is now beneficial to the Company. The reason is that
the Company's assets have a shorter repricing or maturity duration than the
Company's liabilities. This duration scenario has changed significantly since
December 31, 2001. For comparability purposes, the numbers previously reported
at December 31, 2001 have changed due to a refinement during 2002 of the
assumptions used in 2001. Under Thrift Bulletin 13a, the Company falls in the
minimal interest rate risk category as December 31, 2002, based upon current
sensitivity to interest rate changes and the current level of regulatory
capital.



         The Company's strategies to limit interest rate risk from rising
interest rates are as follows:

         -        originate one- to four-family loans primarily for sale;

         -        originate the majority of business loans to float with prime
                  rates;

         -        increase core deposits, which have low interest rate
                  sensitivity;


                                                                              48
<PAGE>


         -        borrow funds with maturities greater than a year;

         -        borrow funds with maturities matched to new long-term assets
                  acquired; and

         -        consider the use of derivatives to reduce interest rate risk
                  when economically practical.


         The Company also follows strategies that increase interest rate risk in
limited ways including:

         -        originating and purchasing fixed rate multifamily and
                  commercial real estate loans limited to five year maturities
                  or five year terms to repricing; and

         -        originating and purchasing fixed rate consumer loans with
                  terms from two to fifteen years.

The Company is also aware that any method of measuring interest rate risk,
including the two used above, has certain shortcomings. For example, certain
assets and liabilities may have similar maturities or repricing dates but their
repricing rates may not follow the general trend in market interest rates. Also,
as a result of competition, the interest rates on certain assets and liabilities
may fluctuate in advance of changes in market interest rates while rates on
other assets and liabilities may lag market rates. In addition, any projection
of a change in market rates requires that prepayment rates on loans and early
withdrawal of certificates of deposits be projected and those projections may be
inaccurate. The Company focuses on the change in net interest income and the
change in net portfolio value as a result of immediate and sustained parallel
shifts in interest rates as a balanced approach to monitoring interest rate risk
when used with budgeting and the other tools noted above.

         At the present time we do not hold any trading positions, foreign
currency positions, or commodity positions. Equity investments are approximately
1.1% of assets and 83.0% of that amount is held in Federal Home Loan Bank stock
which can be sold to the Federal Home Loan Bank of Cincinnati at par. Therefore,
we do not consider any of these areas to be a source of significant market risk.



                                                                              49
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Board of Directors and Shareholders
Metropolitan Financial Corp.
Highland Hills, Ohio

         We have audited the accompanying consolidated statements of financial
condition of Metropolitan Financial Corp. and subsidiaries as of December 31,
2002 and 2001, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2002. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance with 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.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Metropolitan
Financial Corp. and subsidiaries as of December 31, 2002 and 2001, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.

         In 2001, the Company changed its method of accounting for derivative
instruments and hedging activities to comply with newly issued guidelines.



                                          Crowe, Chizek and Company LLP


Cleveland, Ohio
February 21, 2003




                                                                              50
<PAGE>


                  METROPOLITAN FINANCIAL CORP. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                           DECEMBER 31, 2002 AND 2001

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                     2002                        2001
                                                                                     ----                        ----

<S>                                                                            <C>                         <C>
ASSETS
Cash and due from banks                                                        $     30,469                $     46,699
Interest-bearing deposits in other banks                                              4,323                         577
Securities available for sale                                                       113,246                      94,354
Securities held to maturity (fair value: 2002-$167, 2001-$12,107)                       165                      14,829
Mortgage-backed securities available for sale                                       152,983                     167,313
Loans held for sale                                                                  48,136                     169,320
Loans receivable (net of allowance of $17,103 and $17,250)                        1,008,916                     974,452
Federal Home Loan Bank stock available for sale                                      13,823                      16,889
Premises and equipment, net                                                          22,493                      62,831
Premises and equipment held for sale                                                 34,534                       8,669
Loan servicing rights, net                                                           13,104                      22,951
Accrued income, prepaid expenses and other assets                                    28,801                      24,233
Real estate owned, net                                                                3,876                       2,791
Goodwill and other intangible assets                                                  2,630                       2,512
                                                                                  ---------                   ---------
         Total assets                                                            $1,477,499                  $1,608,420
                                                                                  =========                   =========

LIABILITIES
Noninterest-bearing deposits                                                    $   152,997               $     146,055
Interest-bearing deposits                                                           897,226                     996,339
                                                                                  ---------                   ---------
         Total deposits                                                           1,050,223                   1,142,394
Borrowings                                                                          291,287                     340,897
Other liabilities                                                                    37,038                      35,862
Guaranteed preferred beneficial interests in the
 corporation's junior subordinated debentures                                        43,750                      43,750
                                                                                  ---------                   ---------
         Total liabilities                                                        1,422,298                   1,562,903

SHAREHOLDERS' EQUITY
Preferred stock, 10,000,000 shares authorized, none issued                               --                          --
Common stock, no par value, 30,000,000 and 10,000,000 shares authorized,
16,151,450 and 8,128,663 shares issued and outstanding in 2002 and 2001,
 respectively                                                                            --                          --
Additional paid-in-capital                                                           44,561                      20,978
Retained earnings                                                                    12,710                      26,100
Accumulated other comprehensive loss                                                 (2,070)                     (1,561)
                                                                                  ---------                   ---------
         Total shareholders' equity                                                  55,201                      45,517
                                                                                  ---------                   ---------
           Total liabilities and shareholders' equity                            $1,477,499                  $1,608,420
                                                                                 ==========                   =========
</TABLE>


          See accompanying notes to consolidated financial statements.




                                                                              51
<PAGE>



                  METROPOLITAN FINANCIAL CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                      2002                  2001                   2000
                                                                      ----                  ----                   ----
<S>                                                                <C>                    <C>                   <C>
INTEREST INCOME
Interest and fees on loans                                         $ 77,779               $  97,518             $107,504
Interest on mortgage-backed securities                                9,348                  12,422               15,353
Interest and dividends on other securities                            5,061                   4,901                4,930
                                                                    -------               ---------            ---------
         Total interest income                                       92,188                 114,841              127,787
INTEREST EXPENSE
Interest on deposits                                                 36,001                  54,545               59,565
Interest on borrowings                                               20,080                  23,424               25,115
Interest on junior subordinated debentures                            3,980                   3,993                3,993
                                                                    -------                 -------              -------
         Total interest expense                                      60,061                  81,962               88,673
                                                                     ------                  ------               ------
NET INTEREST INCOME                                                  32,127                  32,879               39,114
Provision for loan losses                                             5,720                   6,505                6,350
                                                                    -------                 -------              -------
Net interest income after
   provision for loan losses                                         26,407                  26,374               32,764

NONINTEREST INCOME
Net gain on sale of loans                                             8,031                   7,224                2,849
Net gain on sale of securities                                        3,950                   2,343                  724
Loan servicing income (loss), net                                   (13,640)                 (3,986)               1,148
Service charges on deposit accounts                                   3,181                   1,638                1,517
Other operating income                                                8,023                   6,543                3,317
                                                                     ------                --------             --------
         Total noninterest income                                     9,545                  13,762                9,555

NONINTEREST EXPENSE
Salaries and related personnel costs                                 22,591                  23,719               21,247
Occupancy and equipment expense                                       6,026                   6,405                5,798
Data processing expense                                               1,912                   1,783                1,339
Legal expense                                                         1,318                     688                  781
Real estate owned expense, net                                        1,225                   1,596                  400
Federal deposit insurance premiums                                      913                   1,384                1,369
Marketing expense                                                       747                     924                1,199
State franchise taxes                                                   165                      84                1,002
Amortization of intangibles                                              10                     256                  265
Loss on impairment of premises and equipment held for sale            9,603                      --                   --
Other operating expenses                                             11,822                   9,303                6,760
                                                                     ------                  ------              -------
         Total noninterest expense                                   56,332                  46,142               40,160
INCOME (LOSS) BEFORE INCOME TAXES                                   (20,380)                 (6,006)               2,159
Provision (benefit) for income taxes                                 (6,990)                 (2,438)                 662
                                                                    --------               --------              -------
NET INCOME (LOSS)                                                  $(13,390)              $  (3,568)             $ 1,497
                                                                    ========               =========              ======

Basic and diluted earnings per share                                 $(0.94)                $(0.44)                $0.19


Weighted average shares for basic earnings per share             14,279,441               8,114,206            8,081,820
   Effect of dilutive stock options                                      --                      --                   --
                                                                   --------                --------              -------
Weighted average shares for diluted earnings per share           14,279,441               8,114,206            8,081,820
                                                                 ==========               =========            =========
</TABLE>

          See accompanying notes to consolidated financial statements.



                                                                              52
<PAGE>


                  METROPOLITAN FINANCIAL CORP. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                          ACCUMULATED
                                                          ADDITIONAL                         OTHER             TOTAL
                                            COMMON          PAID-IN        RETAINED      COMPREHENSIVE     SHAREHOLDERS'
                                             STOCK          CAPITAL        EARNINGS      INCOME (LOSS)        EQUITY
                                             -----          -------        --------      -------------        ------

<S>                                       <C>             <C>               <C>            <C>                <C>
BALANCE JANUARY 1, 2000                         --           $20,744           $28,171        $(4,047)           $44,868
Comprehensive income:
   Net income                                                                    1,497                             1,497
   Change in other comprehensive
     income (loss)                                                                              2,956              2,956
                                                                                                                 -------
         Total comprehensive income                                                                                4,453
   Stock purchase plan-36,108 shares                             138                                                 138
                                          --------        ----------      ------------     ----------        -----------
BALANCE DECEMBER 31, 2000                       --            20,882            29,668         (1,091)            49,459

Comprehensive income:
   Net loss                                                                     (3,568)                           (3,568)
Change in other comprehensive
      income (loss)                                                                               385                385
                                                                                                                     ---
         Total comprehensive income (loss)
               before cumulative effect of
               accounting change                                                                                  (3,183)
Cumulative effect of adopting a new
      method of accounting for
       derivatives and hedges                                                                    (855)              (855)
         Total comprehensive income (loss)                                                                        (4,038)
Stock purchase plan-28,811 shares                                 96                                                  96
                                          --------         ---------        ----------        -------            -------
BALANCE DECEMBER 31, 2001                       --            20,978            26,100         (1,561)            45,517

Comprehensive income:
   Net loss                                                                    (13,390)                          (13,390)
Change in other comprehensive
      income (loss)                                                                              (509)              (509)
                                                                                                                 --------
Total comprehensive income (loss)                                                                                (13,899)
Net proceeds from issuance of
   shares of common stock:
   Stock offering - 8,000,000 shares                          21,050                                              21,050
   Stock purchase plan-22,787 shares                              73                                                  73
Majority shareholder contribution                              2,460                                               2,460
                                           -------           -------         ---------      ---------            -------
BALANCE DECEMBER 31, 2002                  $    --           $44,561           $12,710        $(2,070)           $55,201
                                            ======            ======            ======         ======             ======
</TABLE>



          See accompanying notes to consolidated financial statements.




                                                                              53


<PAGE>


                  METROPOLITAN FINANCIAL CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                    2002                    2001                   2000
                                                                    ----                    ----                   ----

<S>                                                             <C>                   <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                               $(13,390)             $   (3,568)            $    1,497
Adjustments to reconcile net income (loss)
   to net cash from operating activities:
   Net amortization and depreciation                              16,842                  12,553                  6,123
   (Gain)/Loss on sale of securities                              (3,950)                 (2,343)                  (724)
   Provision for loan and REO losses                               6,650                   7,656                  6,700
   Provision for impairment of mortgage servicing                  5,410                      --                     --
   Deferred tax provision                                         (3,414)                 (2,310)                  (896)
   Loans originated for sale                                    (435,952)               (486,027)              (222,337)
   Loans purchased for sale                                     (467,632)               (313,426)               (31,496)
   Proceeds from sale of securitized loans held for sale         296,799                 220,353                 61,892
   Proceeds from sale of loans held for sale                     679,469                 587,697                120,300
   Repayments on loans held for sale                                 264                     664                     87
   (Gain)/Loss on sale of commercial loans                           (51)                     --                     --
   (Gain)/Loss on sale of credit card portfolio                     (203)                     --                     --
   (Gain )/Loss on sale of premises, equipment
      and real estate owned                                        1,356                   1,150                    433
   Loss on impairment of premises and equipment
      held for sale                                                9,603                      --                     --
   FHLB stock dividend                                              (713)                 (1,265)                (1,073)
   Changes in other assets                                        (1,154)                 (5,268)                (4,278)
   Changes in other liabilities                                    1,176                  (3,224)                 5,391
                                                               ---------              ----------                -------
      Net cash from operating activities                          91,110                  12,642                (58,381)

CASH FLOWS FROM INVESTING ACTIVITIES
Disbursement of loan proceeds                                   (523,093)               (287,368)              (419,130)
Purchases of:
   Loans                                                            (212)               (117,009)              (104,618)
   Mortgage-backed securities                                    (52,222)                (19,395)                (3,065)
   Securities available for sale                                (195,010)               (210,331)                (2,415)
   Mortgage servicing rights                                      (5,109)                 (5,364)               (10,804)
   FHLB stock                                                     (1,325)                     --                 (8,603)
   Premises and equipment                                         (1,988)                 (9,202)               (36,997)
   Interest bearing deposits in other banks                       (3,746)                     --                     --
Proceeds from maturities and repayments of:
   Loans                                                         513,345                 439,667                405,435
   Mortgage-backed securities                                     65,802                  48,983                 30,926
   Securities available for sale                                 182,739                 158,363                     --
   Securities held to maturity                                       315                     651                    405
   Interest-bearing deposits in other banks                           --                   2,150                     --
Proceeds from sale of:
   Loans                                                          11,459                  99,553                 93,171
   Mortgage-backed securities                                         --                      --                 35,489
   FHLB stock                                                      5,104                   5,000                     --
   Securities available for sale                                   7,326                      --                     --
   Premises, equipment and
      real estate owned                                            7,473                     348                  1,275
Additional investment in real estate owned                            --                     (40)                  (137)
                                                                   -----                --------             ----------
      Net cash from investing activities                          10,858                 106,006                (19,068)
</TABLE>


                                    Continued


                                                                              54
<PAGE>


                  METROPOLITAN FINANCIAL CORP. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF CASH FLOWS-CONTINUED

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                    2002                    2001                   2000
                                                                    ----                    ----                   ----

<S>                                                           <C>                   <C>                        <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposit accounts                                $  (92,171)           $     (3,873)              $  9,637
Proceeds from borrowings                                          65,138                  22,000                334,401
Repayment of borrowings                                         (115,655)                (60,182)              (201,618)
Net activity on short-term borrowings                              2,907                 (47,000)               (67,100)
Proceeds from majority shareholder contribution                    2,460                      --                     --
Proceeds from issuance of common stock                            19,123                      96                    138
                                                                --------            ------------             ----------
   Net cash provided by financing activities                    (118,198)                (88,959)                75,458
Net change in cash and cash equivalents                          (16,230)                 29,689                 (1,991)
Cash and cash equivalents at beginning of year                    46,699                  17,010                 19,001
                                                                                        --------               --------
Cash and cash equivalents at end of year                      $   30,469             $    46,699              $  17,010
                                                               =========                ========               ========

Supplemental disclosures of cash flow information:
   Cash paid during the period for:
      Interest                                                $   62,018              $   83,851             $   87,353
      Income taxes                                                 2,232                   1,418                  1,447
   Transfer from loans receivable to real estate owned             5,123                     607                  1,150
   Transfer from loans receivable to loans held for sale          27,823                 116,372                 26,890
   Transfer from loans held for sale to loans receivable          80,754                      --                     --
   Transfer from premises and equipment to premises
      and equipment held for sale, net                            25,865                   8,669                     --
   Exchange of loan payable for common stock                       2,000                      --                     --
   Loans securitized                                             264,493                 236,868                 60,652
</TABLE>


          See accompanying notes to consolidated financial statements.






                                                                              55
<PAGE>


                  METROPOLITAN FINANCIAL CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Unless otherwise indicated, dollar amounts are in thousands, except per
share data.

         Metropolitan Financial Corp. (the "Company") is a savings and loan
holding company and an Ohio corporation. The Company is engaged in the business
of originating one-to-four-family, multifamily and commercial real estate loans
primarily in Ohio and Pennsylvania. The Company offers full service banking
services to communities in Northeast Ohio where its additional lending
activities include originating construction, business and consumer loans. The
accounting policies of the Company conform to generally accepted accounting
principles and prevailing practices within the financial services industry. A
summary of significant accounting policies follows:

         CONSOLIDATION POLICY: The Company and its wholly-owned subsidiaries,
MetroCapital Corporation, Metropolitan Capital Trust I, Metropolitan Capital
Trust II, Metropolitan I Corporation and its subsidiary, and Metropolitan Bank
and Trust Company (the "Bank") and its subsidiaries, are included in the
accompanying consolidated financial statements. All significant intercompany
balances have been eliminated.

         USE OF ESTIMATES: In preparing financial statements, management must
make estimates and assumptions based on available information. These estimates
and assumptions affect the amounts reported for assets, liabilities, revenues,
and expenses as well as affecting the disclosures provided. Future results could
differ from current estimates. Areas involving the use of Management's estimates
and assumptions primarily include the allowance for losses on loans, the
valuation of loan servicing rights, the value of loans held for sale, fixed
assets held for sale, fair value of certain securities, the carrying value and
amortization of intangibles, the value of real estate owned, the determination
and carrying value of impaired loans, and the fair value of financial
instruments. Estimates that are more susceptible to change in the near term
include the allowance for loan losses, the valuation of loan servicing rights,
the value of loans and fixed assets held for sale, the value of real estate
owned, and the fair value of certain securities.

         FAIR VALUES OF FINANCIAL INSTRUMENTS: Fair values of financial
instruments are estimated using relevant market information and other
assumptions, as more fully disclosed in Note 18. Fair value estimates involve
uncertainties and matters of significant judgment regarding appropriate interest
rates, credit risk, prepayments, and other factors, especially in the absence of
broad markets for particular items. Changes in assumptions or in market
conditions could significantly affect the estimates. The fair value estimates of
existing on- and off-balance sheet financial instruments do not include the
value of anticipated future business or the values of assets and liabilities not
considered financial instruments.

         STATEMENT OF CASH FLOWS: For purposes of reporting cash flows, cash and
cash equivalents include cash on hand and due from banks, overnight repurchase
agreements and federal funds sold. Generally, federal funds and overnight
repurchase agreements are sold for one-day periods. The Company reports net cash
flows for customer deposit transactions and activity on line of credit
borrowings.

         SECURITIES: The Company classifies debt and mortgage-backed securities
as held to maturity or available for sale. The Company classifies marketable
equity securities as available for sale.

         Securities classified as held to maturity are those that management has
the positive intent and ability to hold to maturity. Securities held to maturity
are stated at cost, adjusted for amortization of premiums and accretion of
discounts.

         Securities classified as available for sale are those which management
could sell or that could be sold for liquidity, investment management or similar
reasons, even if there is not a present intention for such a sale. Securities
available for sale are carried at fair value with unrealized gains and losses
included as a separate component of shareholders' equity, net of tax and
recognized as part of comprehensive income. Gains or losses on dispositions are
based on net proceeds and the adjusted historic cost of securities sold, using
the specific identification method. Interest income includes amortization of
purchase premium or


                                                                              56
<PAGE>


discount. Securities are written down to fair value when a decline in fair value
is not temporary. Federal Home Loan Bank stock is sold and redeemed at par so
fair value is equal to historic cost.

         LOANS: All loans are held for investment unless specifically designated
as held for sale. When the Bank originates or purchases loans, it makes a
determination whether or not to classify loans as held for sale. Sales of loans
are dependent upon various factors including interest rate movements, deposit
flows, the availability and attractiveness of other sources of funds, loan
demand by borrowers and liquidity and capital needs.

         Loans held for investment are stated at the principal amount
outstanding adjusted for amortization of premiums and deferred costs and
accretion of discounts and deferred fees using the interest method. At December
31, 2002 and 2001, management had the intent and the Company had the ability to
hold all loans being held for investment for the foreseeable future.

         Loans held for sale are recorded at the lower of cost or market. This
determination is made in the aggregate. Gains and losses on the sale of loans
are determined by the identified loan method and are reflected in operations at
the time of the settlement of the sale.

         Interest on loans is accrued over the term of the loans based upon the
principal outstanding. Management reviews loans that are delinquent 90 days or
more to determine if interest accrual should be discontinued based on the
estimated fair market value of the collateral. When a loan is placed on
nonaccrual status, accrued and unpaid interest is charged against income.
Payments received on nonaccrual loans are applied against principal until the
recovery of the remaining balance is reasonably assured. Loans are returned to
accrual status when all the principal and interest amounts contractually due are
brought current and future payments are reasonably assured.

         ALLOWANCE FOR LOSSES ON LOANS: The allowance for losses on loans is
established by a provision for loan losses charged against income. Estimating
the risk of loss and the amount of loss on any loan is necessarily subjective.
Accordingly, the allowance is maintained by management at a level considered
adequate to cover probable losses based on past loss experience, general
economic conditions, information about specific borrower situations including
their financial position and collateral values, and other factors and estimates,
which are subject to change over time. While management may periodically
allocate portions of the allowance for specific problem loans, the whole
allowance is available for any loan charge-offs that occur. A loan is charged
off against the allowance by management as a loss when deemed uncollectible,
although collection efforts often continue and future recoveries may occur.
There can be no assurance that future losses will not exceed the existing
allowance or that additional provisions will not be required in future periods
as conditions change. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the adequacy of the
allowance for loss and such agencies may require the company to make additions
to the allowance for losses on loans based on judgments that differ from those
of management.

         Management analyzes loans on an individual basis and considers a loan
to be impaired when it is probable that all principal and interest amounts will
not be collected according to the loan contract based on current information and
events. Loans which are past due two payments or less and that management feels
are probable of being restored to current status within 90 days are not
considered to be impaired loans. All impaired loans are included in
nonperforming loans.

         Loans considered to be impaired are reduced to the present value of
expected future cash flows or to the fair value of collateral, by allocating a
portion of the allowance for losses on loans to such loans. If these allocations
require an increase in the allowance for losses on loans, that increase is
reported as a provision for loan losses. The carrying values of impaired loans
are periodically adjusted to reflect cash payments, revised estimates of future
cash flows and increases in the present value of expected cash flows due to the
passage of time. Management does not separately identify all consumer loans in
the review for impaired loans. However, consumer loans are considered in
determining the appropriate level of the allowance for loss on loans. All
impaired loans are placed on nonaccrual status.

         LOAN FEES AND COSTS: Origination and commitment fees received for
loans, net of direct origination costs, are deferred and amortized to interest
income over the contractual life of the loan using the level yield method. The
net amount deferred is reported in the consolidated statements of financial
condition as a reduction of loans.

         LOAN SERVICING RIGHTS: Purchased mortgage servicing rights are
initially valued at cost. When originated loans are sold or securitized and
servicing rights are retained, those rights are valued by allocating the book
value of the loans between the loans


                                                                              57
<PAGE>


or securities and the servicing rights based on the relative fair value of each.
Servicing assets are expensed in proportion to, and over the period of,
estimated net servicing revenues. The fair value of originated servicing rights
for one- to four-family loans is determined by using a model to calculate
standard fair market values based on loan size, loan term, interest rate, and
market estimates for prepayments. These standards are updated monthly. The fair
value of originated servicing rights for multifamily and commercial real estate
loans is determined by using a model to calculate fair value for each sale which
includes consideration of number of loans, interest rate, average loan size and
estimates of market prepayment rates. Servicing rights are amortized in
proportion to and over the period of estimated servicing income. Servicing
rights are assessed for impairment periodically. Fair values at the end of each
period are also computed using a model which calculates fair value based on loan
balance, interest rate, terms of the remittance program, and an estimate of
market prepayment rates. This computation is made for each loan and then
aggregated. Alternatively, the fair value of servicing rights may be determined
by obtaining an independent third party appraisal. For purposes of measuring
impairment, management stratifies loans by loan type, interest rate and
investor.

         REAL ESTATE OWNED: Real estate owned is comprised of properties
acquired through a foreclosure proceeding or acceptance of a deed in lieu of
foreclosure. These properties are recorded at the lower of fair value, less
estimated selling costs or cost at the date of foreclosure, establishing a new
cost basis. Any reduction from the carrying value of the related loan to fair
value at the time of acquisition is accounted for as a charge-off. Any
subsequent reduction in fair value is reflected in a valuation allowance account
through a charge to income. Expenses to carry real estate owned are charged to
operations as incurred.

         PREMISES AND EQUIPMENT: Premises and equipment, including leasehold
improvements and software, are recorded at cost less accumulated depreciation
and amortization. Depreciation is computed using the straight-line method over
the estimated useful lives of the related assets, ranging from 3 to 40 years,
for financial reporting purposes. For tax purposes, depreciation on certain
assets is computed using accelerated methods. Maintenance and repairs are
charged to expense as incurred and improvements are capitalized. Long-term
assets are reviewed for impairment when events indicate their carrying amount
may not be recoverable from future undiscounted cash flows. If impaired, the
assets are recorded at fair value based on discounted cash flows. At December
31, 2002 and 2001, fixed assets held for sale, as part of the supervisory
agreement, are carried at the lower of cost or estimated value and are
classified separately in the balance sheet.

         INTANGIBLE ASSETS: Intangible assets resulting from the acquisition of
the Bank, a title company and a mortgage company were amortized to expense on a
straight-line basis over periods of 25 and 40 years, respectively. This amount
is a reduction from the Bank's shareholder's equity in calculating tangible
capital for regulatory purposes. Identifiable intangible assets are amortized
over the estimated periods of benefit. Beginning in 2002, goodwill is no longer
being amortized under a new accounting standard. Periodic impairment testing is
required for goodwill with impairment being recorded if the carrying amount of
goodwill exceeds its implied fair value. The Company performed impairment
testing during 2002 and found no impairment of the Company's goodwill. The
effect on net income of ceasing goodwill amortization in 2002 was $246,000.

         INCOME TAXES: The Company and its subsidiaries, excluding Metropolitan
Capital Trust I and Metropolitan Capital Trust II, are included in the
consolidated federal income tax return of the Company. Income taxes are provided
on a consolidated basis and allocated to each entity based on its proportionate
share of consolidated income. Income tax expense is the total of the current
year income tax due or refundable and the change in deferred tax assets and
liabilities. Deferred income taxes are provided on items of income or expense
that are recognized for financial reporting purposes in one period and
recognized for income tax purposes in a different period. A valuation allowance,
if needed, would reduce deferred tax assets to the amount expected to be
realized.

         STOCK OPTIONS: Employee compensation expense under stock options is
reported using the intrinsic value method. No stock-based compensation cost is
reflected in net income, as all options granted had an exercise price equal to
or greater than the market price of the underlying common stock at date of
grant. The following table illustrates the effect on net income and earnings per
share if expense was measured using the fair value recognition provisions of
FASB Statement 123, Accounting for Stock-Based Compensation.





                                                                              58
<PAGE>


<TABLE>
<CAPTION>
                                                                          2002                 2001                2000
                                                                          ----                 ----                ----

<S>                                                                     <C>                  <C>                  <C>
Net income (loss)--as reported (In thousands)                           $(13,390)            $(3,568)             $1,497
Deduct: Stock-based compensation expense determined
         under fair value based method                                       457                 206                 276
Net income (loss)--pro forma (In thousands)                              (13,847)             (3,864)              1,221
Earnings per share--as reported                                           $(0.94)            $(0.44)               $0.19
Earnings per share--pro forma                                              (0.97)             (0.48)                0.15
</TABLE>

         The proforma effects are computed using option models, using the
following weighted-average assumptions as of grant date:

<TABLE>
<CAPTION>
                                                                               INCENTIVE                       NONQUALIFIED
                                                                             STOCK OPTIONS                       OPTIONS
                                                                             -------------                       -------

<S>                                                                          <C>                              <C>
  Expected option life                                                         10 years                         10 years
  Risk-free interest rate - 2000                                                  5.12%                            5.12%
  Risk-free interest rate - 2001                                                  5.01%
  Risk-free interest rate - 2002                                                  5.28%                            5.25%
  Expected stock price volatility--2000                                          57.20%
  Expected stock price volatility--2001                                          58.29%
  Expected stock price volatility--2002                                          57.52%                           57.52%
  Dividend yield                                                                     --                               --
</TABLE>

         TRUST DEPARTMENT ASSETS AND INCOME: Property held by the Bank in a
fiduciary or other capacity for its trust customers is not included in the
accompanying consolidated financial statements since such items are not assets
of the Bank. The Bank has transferred substantially all assets to a third party
and no longer acts as a fiduciary for trust customers as of December 31, 2002.
The Bank recorded a gain on the transfer of these trust assets of $43.

         OFF-BALANCE SHEET FINANCIAL INSTRUMENTS: Financial instruments include
off-balance sheet credit instruments, such as commitments to make loans and
standby letters of credit, issued to meet customer financing needs. The face
amount for these items represents the exposure to loss, before considering
customer collateral or ability to repay. Such financial instruments are recorded
when they are funded.

         EARNINGS PER SHARE: Basic and diluted earnings per share are computed
based on weighted average shares outstanding during the period. Basic earnings
per share has been computed by dividing net income or loss by the weighted
average shares outstanding. Diluted earnings per share has been computed by
dividing net income or loss by the diluted weighted average shares outstanding.
Diluted weighted average shares were calculated assuming the exercise of stock
options less the treasury shares assumed to be purchased from the proceeds using
the average market price of the Company's stock. Stock options were not
considered in computing diluted earnings per common share for 2002 or 2001
because they were antidilutive.

         COMPREHENSIVE INCOME: Comprehensive income consists of net income or
loss and other comprehensive income. Other comprehensive income includes
unrealized gains and losses on securities available for sale and unrealized
gains and losses on cash flow hedges which are also recognized as separate
components of equity.

         DERIVATIVES: Prior to January 1, 2001 derivatives were recorded at fair
value unless they were used as hedges. On January 1, 2001 the Company adopted
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities." Under
this pronouncement all derivative instruments are recorded at fair value. The
change in fair value of the derivative is recorded as an increase (decrease) to
accumulated other comprehensive income (loss) if the derivative represents an
effective hedge. Ineffective portions of hedges and changes in the fair value of
derivatives that are not hedges are reflected in earnings as they occur. Current
cash flow from derivative instruments such as interest rate swaps is recorded as
income or expense on the accrual basis.


                                                                              59
<PAGE>


         LOSS CONTINGENCIES: Loss contingencies, including claims and legal
actions arising in the ordinary course of business, are recorded as liabilities
when the likelihood of loss is probable and an amount or range of loss can be
reasonably estimated. Management does not believe there now are such matters
that will have a material effect on the financial statements.

         LONG-TERM ASSETS: Premises and equipment and other long-term assets are
reviewed for impairment when events indicate their carrying amount may not be
recoverable from future undiscounted cash flows. If impaired, the assets are
recorded at fair value.

         REPURCHASE AGREEMENTS: All repurchase agreement liabilities represent
amounts advanced by one counterparty. Securities are pledged to cover these
liabilities, which are not covered by federal deposit insurance.

         SECURITIZATIONS: From time to time loans are transferred to a third
party in exchange for ownership of a security based on those loans. The cost
basis of the loans is allocated to the security and to any servicing rights
retained based on the relative fair value of each one. Gain or loss is
recognized if or when the securities or the servicing rights are sold in a
transaction where control has been relinquished and the risk of ownership has
substantially been transferred to an unrelated party. The gain or loss is
calculated on the cash received versus the carrying value of the assets
transferred. Fair values are based on market quotes or on the present value of
future expected cash flows using estimates of credit losses, prepayment rates,
interest rates and discount rates.

         NEW ACCOUNTING PRONOUNCEMENTS: New accounting standards on asset
retirement obligations, restructuring activities and exit costs, operating
leases, and early extinguishment of debt were issued in 2002. Management
determined that when the new accounting standards are adopted in 2003 they are
not expected to have a material impact on the Company's financial condition or
results of operations.

         In December 2002, SFAS 148, Accounting for Stock-Based
Compensation-Transition and Disclosure was issued. This statement provides
guidance on how to transition from the intrinsic value method of accounting for
stock-based employee compensation under APB 25 to SFAS 123's fair value method
of accounting, if a company so elects. The Company has not elected to report
stock-based compensation under the fair value method of accounting.


         INDUSTRY SEGMENT: Internal financial information is primarily reported
and aggregated in two lines of business, "mortgage banking" and "retail and
commercial banking".

         FINANCIAL STATEMENT PRESENTATION: Certain previously reported
consolidated financial statement amounts have been reclassified to conform to
the 2002 presentation.


NOTE 2. SUPERVISORY AGREEMENTS/DIRECTIVE

         On July 26, 2001, the Company entered into a Supervisory Agreement (the
"Company Supervisory Agreement") with the Office of Thrift Supervision (the
"OTS"), which required the Company to prepare and adopt a plan for raising
capital that uses sources other than increased debt or additional dividends from
the Bank. On January 31, 2002, the Company initiated an offer of common stock
for sale under a rights offering and a concurrent offering to the public.
Management used the net proceeds of the 2002 offerings to raise the capital
required by the Company Supervisory Agreement.

         Additionally, the Bank entered into a separate Supervisory Agreement
(the "Supervisory Agreement") between the Bank, the OTS and the Ohio Department
of Financial Institutions (the "ODFI"), which requires the Bank to do the
following:

         1.       Develop a capital improvement and risk reduction plan by
                  September 28, 2001, which date was extended to December 28,
                  2001;

         2.       Achieve or maintain compliance with core and risk-based
                  capital standards at the "well-capitalized" level, including a
                  risk-based capital ratio of 10% by December 31, 2001, which
                  date was extended to March 31, 2002. The Bank had achieved a
                  "well capitalized" level at March 31, 2002, and has maintained
                  that level through December 31, 2002;


                                                                              60
<PAGE>


         3.       Reduce investment in fixed assets (other than artwork) to no
                  more than 25% of core capital by December 31, 2002. The Bank
                  has received an extension until June 30, 2003 from the OTS
                  regarding this requirement;

         4.       Reduce investment in artwork by $1.3 million by December 31,
                  2001 (later modified to March 31, 2002), and by an additional
                  $2.0 million by no later than December 31, 2002;

         5.       Attain compliance with board approved interest rate risk
                  policy requirements;

         6.       Reduce volatile funding sources, such as brokered and
                  out-of-state deposits;

         7.       Increase earnings;

         8.       Improve controls related to credit risk; and

         9.       Restrict total assets to not more than $1.7 billion.

         Any major deviations from the plan requires prior OTS approval. Both
supervisory agreements also contain restrictions on adding, entering into
employment contracts with, or making golden parachute payments to directors and
senior executive officers and in changing responsibilities of senior officers.

         During January 2002, the regulatory authorities approved the capital
and risk reduction plan submitted by the Company.

         On July 8, 2002, the OTS issued a Supervisory Directive (the
"Supervisory Directive") to the Company and the Bank. The Supervisory Directive,
requires the Boards of Directors of the Bank and the Company to act immediately
to take corrective action to address certain weaknesses and to halt certain
unsafe and unsound practices, regulatory violations, and violations of the
Supervisory Agreement, dated July 26, 2001, between the Bank, the OTS, and the
ODFI.

The Supervisory Directive includes the following provisions:

         1.       The Bank is prohibited from making Unauthorized Payments, as
                  defined in the Supervisory Directive, that directly or
                  indirectly benefit Robert M. Kaye, a director and the former
                  Chairman and Chief Executive Officer of the Company and the
                  Bank. "Unauthorized Payments" are defined by the Supervisory
                  Directive as any payment by the Bank: (a) that contravenes the
                  Bank's established written procedures for expense
                  reimbursement; (b) where the Bank lacks documentation
                  demonstrating that the payment related to a proper business
                  purpose of the Bank; or (c) where the recipient is not an
                  employee of the Bank.

         2.       The Bank must obtain reimbursement for Unauthorized Payments
                  made to or for the benefit of Mr. Kaye and related parties
                  since January 1, 1992, and suspend all future payments to Mr.
                  Kaye and related parties of any kind until such time as there
                  has been a full accounting of such payments and the Bank has
                  been fully reimbursed, if appropriate.

         3.       The Bank must retain an independent certified public
                  accounting firm acceptable to the OTS to conduct a review and
                  accounting of all payments that the Bank has made since
                  January 1, 1992, to or for the direct or indirect benefit of
                  Robert M. Kaye and related parties. The accounting firm must
                  submit to the Audit Committee of the Bank's Board and to the
                  OTS a written report relating to its review identifying, among
                  other things, any payments that are suspected of being
                  Unauthorized Payments. Based on the information in the report,
                  the Audit Committee of the Bank's Board must determine the
                  amount of any Unauthorized Payments, subject to the review and
                  concurrence of the OTS. The Bank must then submit to Mr. Kaye
                  a written demand for repayment of any Unauthorized Payments.

                  The Supervisory Directive sets various deadlines for
                  completion of the foregoing matters.

         4.       To facilitate compliance with the targets and deadlines
                  specified in the Supervisory Agreement, the Bank must retain a
                  qualified marketing agent, acceptable to the OTS, to manage
                  the Bank's efforts to sell its artwork collection. The OTS
                  noted that the Supervisory Agreement (as modified) required
                  the Bank to


                                                                              61
<PAGE>


                  reduce its investment in artwork by $1.3 million by March 31,
                  2002, and that the Bank had failed to meet the March 31, 2002
                  requirement.

         5.       The Bank must take appropriate actions to reduce its
                  investment in fixed assets so that the Bank's investment in
                  fixed assets (other than artwork) is no more than 25% of core
                  capital by December 31, 2002, as required by the Supervisory
                  Agreement.

         6.       The Bank is prohibited from engaging in any transactions with
                  a particular out-of-state bank on whose board Mr. Kaye sits.

         7.       The Bank is prohibited from originating and purchasing
                  commercial real estate loans secured by property in California
                  until the Bank adopts and implements a written plan for
                  diversification of credit risk that is acceptable to the OTS.

         8.       The Bank is prohibited from engaging in any transactions with
                  the Company or any of its affiliates without prior approval of
                  the OTS.

         9.       Without prior OTS approval, the Company is prohibited from
                  paying any dividends, or making any other payments except
                  those that it was obligated to make pursuant to written
                  contracts in effect on July 5, 2002, and payment of expenses
                  incurred in the ordinary course of business.

         10.      The Company is prohibited from making any payment or engaging
                  in any transaction that would have the effect of circumventing
                  any of the restrictions imposed on the Bank in the Supervisory
                  Directive.

The Company has engaged, with OTS approval, an independent audit firm, which has
concluded its review of the payments specified above in accordance with the
Supervisory Directive. On September 26, 2002, the Audit Committee of the Bank
filed its report with the OTS concluding that total Unauthorized Payments to Mr.
Kaye are $4.8 million. On October 2, 2002, the OTS stated that it had no
objection to the Bank's seeking reimbursement of the $4.8 million from Mr. Kaye.
On October 7, 2002, the Bank made a written request to Mr. Kaye seeking
reimbursement of the $4.8 million of Unauthorized Payments by October 25, 2002,
which date was extended until December 12, 2002 and further extended to December
23, 2002. On December 23, 2002, the Bank and Mr. Kaye entered into a final
settlement of the amount owed to the Bank, and pursuant to such settlement, the
Bank received reimbursements from Mr. Kaye of $3.5 million ($2.5 million, net of
taxes). The amount net of taxes was applied directly to the Bank's capital and
not reflected in the Bank's statement of operations for 2002.

         As of December 31, 2002. the Company and the Bank have met all
requirements under the Supervisory Directive and Supervisory Agreement and
received an extension from the OTS until June 30, 2003 regarding the sale of
fixed assets..

         The provisions of the Supervisory Directive do not prohibit the Company
from using its unconsolidated resources to make scheduled contractual payments
to Metropolitan Capital Trust I ("Trust I") and Metropolitan Capital Trust II
("Trust II"). Payments by the Company to Trust I and Trust II are used by the
trusts to pay dividends on the cumulative trust preferred securities of Trust I
and Trust II. The Supervisory Directive does not prohibit Trust I and Trust II
from paying dividends on their respective cumulative trust preferred securities.

         If the Company or the Bank is unable to comply with the terms and
conditions of the Supervisory Directive or the supervisory agreements, the OTS
and the ODFI could take additional regulatory action, including the issuance of
a cease and desist order requiring further corrective action such as raising
additional capital, obtaining additional or new management, requiring the sale
of assets and a reduction in the overall size of the Company, imposing operating
restrictions on the Bank and restricting dividends from the Bank to the Company.
These additional restrictions could make it impossible to service existing debt
of the Company.





                                                                              62
<PAGE>



NOTE 3. MERGER AGREEMENT

         On October 23, 2002, the Company and Sky Financial Group, Inc. ("Sky
Financial") executed a definitive agreement for Sky Financial to acquire all the
stock of the Company and merge the Company into Sky Financial.

         Pursuant to the definitive agreement, stockholders of the Company will
be entitled to elect to receive, in exchange for each share of the Company's
common stock held, either $4.70 in cash or .2554 shares of Sky Financial, or a
combination thereof. The election process, however, is subject to certain
allocation mechanisms that are reflected in the definitive agreement, which
provides that no more than 70% and no less than 55% of the Company's shares will
be exchanged for Sky Financial common stock.

         The transaction provides for the merger of the Company into Sky
Financial, and the subsequent merger of the Bank into Sky Bank, Sky Financial's
commercial banking affiliate.

         The acquisition is expected to close on April 30, 2003. For information
surrounding the acquisition, refer to the Form S-4/A filed by Sky Financial with
the Securities and Exchange Commission on January 30, 2003.

         Concurrent with the above merger agreement, the Company and its
majority shareholder, Robert M. Kaye, reached an agreement, whereby the majority
shareholder, on or before March 15, 2003, shall purchase all of the artwork
collection from the Company at a price equal to the greater of the book value or
appraised value of each item of artwork that has not been sold previously, by
the Company. The Company is in the process of selling some of the artwork in
accordance with the Supervisory Directive dated July 8, 2002, and intends to
sell all of the artwork on or before March 15, 2003.

         Furthermore, the majority shareholder reimbursed the Company for
Unauthorized Payments on December 23, 2002, in the amount of $3.5 million ($2.5
million, net of taxes). This reimbursement will result in an adjustment to the
merger consideration by the $2.5 million, or $0.143 per share.

         Additionally, the majority shareholder entered into an agreement with
Sky Financial to vote his control shares in favor of the merger and merger
agreement and against any proposal for any recapitalization, merger, sale of
assets or other business combination between the Company and any person or
entity other than Sky Financial.

         In addition, the merger consideration will be adjusted downward if the
aggregate book value of certain assets, calculated in accordance with GAAP, on
the month-end date immediately preceding the closing date of the merger of the
Company into Sky Financial has declined by more than $4.0 million, net of tax,
compared to the aggregate book value of such assets, calculated in accordance
with GAAP, as of September 30, 2002 (less specific valuation or impairment
allowances). The book value of these assets at September 30, 2002 was $46.0
million. The assets (at net book value) that affect the merger consideration are
as follows: mortgage loan servicing rights totaling $13.8 million; an $11.9
million commercial loan relationship; a $13.9 million municipal bond; and a $6.3
million portion of a securitized loan portfolio. Any adjustment to the merger
consideration related to these assets is to be calculated as described in the
merger agreement.






                                                                              63
<PAGE>



NOTE 4. SECURITIES

         The amortized cost, gross unrealized gains and losses, and fair values
of investment securities at December 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                                 2002
                                                                                 ----
                                                                          GROSS             GROSS
                                                     AMORTIZED         UNREALIZED         UNREALIZED             FAIR
                                                       COST               GAINS             LOSSES               VALUE
                                                       ----               -----             ------               -----
<S>                                                   <C>               <C>               <C>                 <C>
AVAILABLE FOR SALE
Mutual funds                                          $1,196                                                     $1,196
Freddie Mac preferred stock                            2,950                                $(118)                2,832
Treasury notes and bills                              95,304            $    160               (1)               95,463
Tax-exempt municipal bond                             13,562                 193                                 13,755
Mortgage-backed securities                           151,643               1,515             (175)              152,983
                                                     -------               -----              ---               -------
                                                     264,655               1,868             (294)              266,229
HELD TO MATURITY
Revenue bond                                             165                   2                                    167
                                                     -------               -----              ---               -------
                                                         165                   2                                    167
                                                     -------               -----              ---               -------
   Total securities                                 $264,820              $1,870            $(294)             $266,396
                                                     =======               =====              ===               =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                 2001
                                                                                 ----
                                                                          GROSS             GROSS
                                                     AMORTIZED         UNREALIZED         UNREALIZED             FAIR
                                                       COST               GAINS             LOSSES               VALUE
                                                       ----               -----             ------               -----
<S>                                                   <C>               <C>               <C>                 <C>
AVAILABLE FOR SALE
Mutual funds                                      $    5,784                                                $     5,784
Freddie Mac preferred stock                            7,500                                $(750)                6,750
Fannie Mae notes                                      10,003                                 (129)                9,874
Treasury notes and bills                              72,056            $     74             (184)               71,946
Mortgage-backed securities                           165,508               1,895              (90)              167,313
                                                     -------               -----           ------               -------
                                                     260,851               1,969           (1,153)              261,667
HELD TO MATURITY
Tax-exempt municipal bond                             14,349                               (2,737)               11,612
Revenue bond                                             480                  15                                    495
                                                     -------               -----           ------               -------
                                                      14,829                  15           (2,737)               12,107
                                                     -------               -----           ------               -------
   Total securities                                 $275,680              $1,984          $(3,890)             $273,774
                                                     =======               =====           ======               =======
</TABLE>

         The tax-exempt municipal bond represents a single issue secured by a
multifamily property. The bond was reclassified to available for sale as of June
30, 2002, due to a decrease in the cash flow generated by the multifamily
property to make required debt service payments on the bond and management's
decision to market this security when the property, which serves as collateral
for the bond, becomes fully occupied. In conjunction with this reclassification,
it was determined that there was a permanent impairment to the bond's fair value
and a realized loss of $550 was recorded in the second quarter of 2002. . Since
December 31, 2002, there has been further deterioration in this bond and a
further impairment of $909 was recorded in the first quarter of 2003.







                                                                              64
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                       AMORTIZED                 FAIR
                                                                                         COST                    VALUE
                                                                                         ----                    -----
<S>                                                                                     <C>                      <C>
Securities available for sale:
   Due less than one year                                                               $ 95,599                 $95,762
   Due one through five years                                                              1,715                   1,739
   Due after five years through ten years                                                  3,050                   3,093
   Due after ten years                                                                     8,502                   8,624
   Mortgage-backed securities available for sale                                         151,643                 152,983
                                                                                         -------                 -------
      Total securities available for sale                                                260,509                 262,201
Securities held to maturity:
   Due one through five years                                                                165                     167
                                                                                         -------                 -------
      Total securities held to maturity                                                      165                     167
                                                                                         -------                 -------
         Total debt securities                                                          $260,674                $262,368
                                                                                         =======                 =======
</TABLE>

         Proceeds from the sale of mortgage-backed securities available for sale
were $296,799 in 2002, $220,353 in 2001 and $35,489 in 2000. Proceeds from the
sale of securities available for sale were $7,326 in 2002, $0 in 2001 and $0 in
2000. Gross gains realized on those sales were $4,177 in 2002, $2,343 in 2001,
and $1,246 in 2000. Gross losses of $225, $0, and $522 were realized in 2002,
2001 and 2000, respectively.

         Securities with an amortized cost of $128,748 and a market value of
$127,046 at December 31, 2002, were pledged to secure FHLB advances. Securities
with an amortized cost of $16,490 and a market value of $16,883 at December 31,
2002, were pledged to secure public fund deposits. Securities with an amortized
cost of $49,559 and a market value of $50,334 at December 31, 2002, were pledged
to secure reverse repurchase agreements. Securities with an amortized cost of
$25,505 and a market value of $27,561 were pledged to various parties to
facilitate a number of business activities including trust operations, liability
hedging, processing of treasury, tax, and loan payments and credit card
operations.

NOTE 5. LOANS RECEIVABLE

         The composition of the loan portfolio at December 31, 2002 and 2001 is
as follows:

<TABLE>
<CAPTION>
                                                                                        2002                       2001
                                                                                        ----                       ----
<S>                                                                                <C>                       <C>
Real estate loans
  Construction loans
    One- to four-family                                                            $   173,830               $   150,705
    Multifamily                                                                          6,009                     6,360
    Commercial                                                                           9,044                     2,134
    Land                                                                                75,181                    74,305
    Loans in process                                                                   (90,628)                  (80,214)
                                                                                     ---------                   -------
         Construction loans, net                                                       173,436                   153,290
  Permanent loans
    One- to four-family                                                                153,114                   171,813
    Multifamily                                                                        310,340                   224,542
    Commercial                                                                         163,259                   164,786
                                                                                     ---------                   -------
         Total real estate loans                                                       800,149                   714,431
Consumer loans                                                                         101,627                   138,698
 Business loans and other loans                                                        121,299                   133,684
                                                                                     ---------                   -------
         Total loans                                                                 1,023,075                   986,813
Premium on loans, net                                                                    4,895                     6,969
Deferred loan fees, net                                                                 (1,951)                   (2,080)
Allowance for losses on loans                                                          (17,103)                  (17,250)
                                                                                     ---------                   -------
         Total loans receivable                                                     $1,008,916                  $974,452
                                                                                     =========                   =======
</TABLE>


                                                                              65
<PAGE>


         The Company's real estate loans are secured by property in the
following states:

<TABLE>
<CAPTION>
                                                                                                   2002           2001
                                                                                                   ----           ----

<S>                                                                                                 <C>            <C>
Ohio                                                                                                  66%            58%
California                                                                                             8             15
Pennsylvania                                                                                           2              8
New York                                                                                               1              2
Other                                                                                                 23             17
                                                                                                     ---            ---
                                                                                                     100%           100%
                                                                                                     ===            ===
</TABLE>

         Activity in the allowance for losses on loans is as follows:

<TABLE>
<CAPTION>
                                                                                       YEAR ENDED DECEMBER 31,
                                                                                       -----------------------
                                                                                2002             2001              2000
                                                                                ----             ----              ----

<S>                                                                           <C>               <C>             <C>
Balance at beginning of year                                                  $17,250           $13,951         $ 11,025
Provision for loan losses                                                       5,720             6,505            6,350
Charge-offs                                                                    (6,127)           (3,436)          (3,829)
Recoveries                                                                        260               230              405
                                                                               ------            ------           ------
                                                                              $17,103           $17,250          $13,951
                                                                               ======            ======           ======
</TABLE>


         Nonperforming loans were as follows:

<TABLE>
<CAPTION>
                                                                                           2002                    2001
                                                                                           ----                    ----

<S>                                                                                   <C>                      <C>
Loans past due over 90 days still on accrual                                          $        --              $      85

Nonaccrual loans                                                                           27,091                 30,602
</TABLE>


         Information regarding impaired loans is as follows at December 31:

<TABLE>
<CAPTION>
                                                                                           2002                    2001
                                                                                           ----                    ----

<S>                                                                                       <C>                    <C>
Balance of impaired loans                                                                 $13,205                $15,260
Less portion for which no allowance for losses
  on loans is allocated                                                                     1,544                  3,147
                                                                                            -----                  -----
Portion of impaired loan balance for which an
  allowance for losses on loans is allocated                                              $11,661                $12,113
                                                                                           ------                 ------

Portion of allowance for losses on loans allocated to the impaired loan balance          $  3,480               $  3,476
                                                                                          =======                =======
</TABLE>

Information regarding impaired loans is as follows for the year ended December
31:

<TABLE>
<CAPTION>
                                                                                2002             2001               2000
                                                                                ----             ----               ----
<S>                                                                          <C>              <C>                 <C>
Average investment in impaired loans during the year                         $13,940          $13,261             $5,505
Interest income recognized during impairment                                     970              983                184
Interest income recognized on cash basis during the year                         970              983                 84
</TABLE>





                                                                              66
<PAGE>


NOTE 6. PREMISES AND EQUIPMENT

Premises and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                                                    DECEMBER 31,
                                                                                                    ------------
                                                                                             2002                   2001
                                                                                             ----                   ----
<S>                                                                                      <C>                    <C>
Land                                                                                     $  6,291               $  7,944
Office buildings                                                                           11,371                 38,466
Leasehold improvements                                                                      3,161                  5,355
Furniture, fixtures and equipment                                                          12,660                 20,355
Construction in progress                                                                      181                    647
                                                                                           ------                -------
  Total                                                                                    33,664                 72,767
Accumulated depreciation                                                                   11,171                  9,936
                                                                                           ------                -------
  Total premises and equipment                                                            $22,493                $62,831
                                                                                           ======                 ======
</TABLE>


Premises and equipment held for sale consists of the following:

<TABLE>
<CAPTION>
                                                                                                    DECEMBER 31,
                                                                                             2002                   2001
                                                                                             ----                   ----
<S>                                                                                      <C>                      <C>
Land                                                                                     $  3,710                 $2,700
Office buildings                                                                           26,860                  6,471
Leasehold improvements                                                                         --                     72
Furniture, fixtures, equipment and artwork                                                  5,696                    285
Construction in progress                                                                      416                     --
                                                                                         --------               --------
  Total                                                                                    36,682                  9,528
Accumulated depreciation                                                                    2,148                    859
                                                                                          -------                 ------
  Total premises and equipment                                                            $34,534                 $8,669
                                                                                           ======                  =====
</TABLE>

         Depreciation expense was $3,042, $3,625, and $2,363 for the years ended
December 31, 2002, 2001, and 2000 respectively.


         At December 31, 2002 premises and equipment held for sale included
certain parcels of land and buildings and all works of art owned by the Company.
During June 2002, the Company reclassified these properties as held for sale.
Previously, the Company had planned to sell other properties whose fair value
met or exceeded carrying value. However, after reevaluating the strategic
options available to the Company and the Supervisory Directive, management
decided to revise its plan to sell properties and, therefore, moved certain
additional properties into held for sale and removed other properties from held
for sale. In conjunction with the reclassification of these properties, the
Company determined that the carrying value of certain properties was less than
the estimated net proceeds expected from the sale of these properties.
Accordingly, the Company recognized an $8,800 loss on the valuation impairment
of these properties. The fair value of these properties was estimated based on
either a present value analysis of the current and expected revenues and
expenses based on the properties being considered as income producing or third
party purchase offers. In September 2002, management ordered an independent
appraisal on one of these assets. As a result, the Company revised the carrying
value of the property downward by an additional $803. Any future valuation of
these assets may result in additional adjustment in their carrying values.

         The Bank leases certain of its branch space under operating lease
agreements whose lease terms are renewable periodically. Rent expense for the
years ended December 31, 2002, 2001, and 2000 was $1,371, $1,375, and $1,599
respectively. This expense for 2000 included rental expense for the corporate
headquarters.




                                                                              67
<PAGE>


         The future minimum annual rental commitments as of December 31, 2002
for all noncancelable leases are as follows:

<TABLE>
<S>                                                                                                              <C>
2003                                                                                                             $   889
2004                                                                                                                 723
2005                                                                                                                 646
2006                                                                                                                 513
2007                                                                                                                 402
Thereafter                                                                                                         1,894
                                                                                                                  ------
  Total rental commitments                                                                                        $5,067
                                                                                                                   =====
</TABLE>

         In the second quarter 1999, the Company started the construction of a
new corporate headquarters building a portion of which the Bank now occupies. As
a result, interest expenses were incurred to finance construction. These costs,
along with those related to the construction of retail sales offices, were
capitalized as incurred while the building was under construction and are
included as a portion of the historical cost depreciated over the useful life of
the buildings. Interest expense capitalized for the years ended December 31,
2001 and 2000 was $357 and $957, respectively.


NOTE 7. LOAN SERVICING RIGHTS

         Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition. The unpaid principal balances of
these loans are summarized as follows:

<TABLE>
<CAPTION>
                                                                                                    DECEMBER 31,
                                                                                                    ------------
                                                                                             2002                   2001
                                                                                             ----                   ----

<S>                                                                                    <C>                    <C>
Mortgage loan portfolios serviced for:
  Freddie Mac                                                                          $1,626,372             $1,292,009
  Fannie Mae                                                                              396,422                617,305
  Others                                                                                  214,664                294,559
                                                                                        ---------              ---------
    Total loans serviced for others                                                    $2,237,458             $2,203,873
                                                                                        =========              =========
</TABLE>

         Custodial balances maintained in noninterest-bearing deposit accounts
with the Bank in connection with the foregoing loan servicing were approximately
$50,439 and $48,505 at December 31, 2002 and 2001, respectively.

         Following is an analysis of the changes in loan servicing rights
acquired and originated for the years ended December 31:

<TABLE>
<CAPTION>
                                                                                             2002                   2001
                                                                                             ----                   ----

<S>                                                                                       <C>                    <C>
Balance at beginning of year                                                              $22,951                $20,597
Additions                                                                                  10,704                 12,161
Amortization                                                                              (15,141)                (8,944)
Valuation allowance for impairment                                                         (5,410)                  (863)
                                                                                          -------                -------
Balance at end of year                                                                    $13,104                $22,951
                                                                                           ======                 ======
</TABLE>

         Following is an analysis of the changes in the valuation allowance for
impairment of loan servicing rights for the years ended December 31:

<TABLE>
<CAPTION>
                                                                                 2002              2001              2000
                                                                                 ----              ----              ----
<S>                                                                            <C>               <C>                 <C>
Balance at beginning of year                                                   $ (863)           $   --              $--
Write-offs of impaired rights                                                                        --               --
Provision for impairment                                                       (4,547)             (863)              --
                                                                               ------             -----            -----
Balance at end of year                                                        $(5,410)            $(863)             $--
                                                                               ======             =====            =====
</TABLE>




                                                                              68
<PAGE>


NOTE 8. REAL ESTATE OWNED

         Activity in the allowance for loss on real estate owned is as follows:

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED DECEMBER 31,
                                                                                           -----------------------
                                                                                 2002              2001              2000
                                                                                 ----              ----              ----
<S>                                                                         <C>                <C>                <C>
Balance at beginning of year                                                  $ 1,365            $1,106             $956
Provision for loss                                                                930             1,151              350
Charge-offs                                                                    (1,897)             (892)            (200)
                                                                               ------            ------             -----
Balance at end of year                                                       $    398            $1,365           $1,106
                                                                              =======             =====            =====
</TABLE>


NOTE 9. GOODWILL AND INTANGIBLE ASSETS

GOODWILL

The change in carrying amount of goodwill for the year is as follows:

<TABLE>
<S>                                                                         <C>
Balance at January 1, 2002                                                     $2,627
Goodwill acquired during the period                                                --
                                                                                -----
Balance at December 31, 2002                                                   $2,627
                                                                                =====
</TABLE>

         Goodwill is no longer amortized starting in 2002. The effect of not
amortizing goodwill is summarized as follows:

<TABLE>
<CAPTION>
                                                                                 2002             2001              2000
                                                                                 ----             ----              ----
<S>                                                                         <C>                 <C>               <C>
Reported net (loss) income                                                  $ (13,390)          $(3,568)          $1,497
Add back: goodwill amortization                                                    --               228              190
                                                                              -------            ------            -----
Adjusted net (loss) income                                                   $(13,390)          $(3,340)          $1,687
                                                                              =======            ======            =====

Basic (loss) earnings per share:
    Reported net (loss) income                                                 $(0.94)          $(0.44)            $0.19
    Goodwill amortization                                                          --               .03              .02
                                                                              -------            ------            -----
    Adjusted net (loss) income                                                  $0.94)          $(0.41)            $0.21
                                                                                 ====            =====              ====

Diluted (loss) earnings per share:
    Reported net (loss) income                                                 $(0.94)          $(0.44)            $0.19
    Goodwill amortization                                                          --               .03              .02
                                                                              -------            ------            -----
    Adjusted net (loss) income                                                 $(0.94)          $(0.41)            $0.21
                                                                                =====            =====              ====
</TABLE>

ACQUIRED INTANGIBLE ASSETS:

The net carrying value of other intangible assets was $3 as of December 31,
2002. The amortization expense related to this intangible asset for the year
ended December 31, 2002 was $10. The amortization for this intangible is
expected to be $2 in 2003 with no further amortization of intangibles beyond
2003




                                                                              69
<PAGE>


NOTE 10. DEPOSITS

         Deposits consist of the following:

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                                   ------------
                                                                      2002                                2001
                                                                      ----                                ----
                                                             AMOUNT          PERCENT             AMOUNT            PERCENT
                                                             ------          -------             ------            -------
<S>                                                        <C>             <C>                <C>                <C>
Noninterest-bearing deposits                               $  152,997          15%            $  146,055             13%
Interest-bearing checking
  accounts                                                    214,513          20                198,414             17
Passbook savings and statement
  Savings                                                      89,679           9                 82,619              7
Certificates of deposit                                       593,034          56                715,306             63
                                                            ---------         ---              ---------           ----
         Total interest-bearing deposits                      897,226          85               996,339              87
                                                            ---------         ---              ---------            ----
         Total deposits                                    $1,050,223         100%            $1,142,394            100%
                                                            =========         ===              =========            ===
</TABLE>


         At December 31, 2002, scheduled maturities of certificates of deposit
are as follows:

<TABLE>
<CAPTION>
                                                                                                                WEIGHTED
                                                                                                                 AVERAGE
YEAR                                                                                                            INTEREST
ENDED                                                                                     AMOUNT                  RATE
-----                                                                                     ------                  ----
<S>                                                                                      <C>                      <C>
2003                                                                                      362,489                  3.02%
2004                                                                                      105,233                  3.62%
2005                                                                                       45,890                  4.27%
2006                                                                                       28,538                  5.25%
2007                                                                                       49,611                  4.78%
Thereafter                                                                                  1,273                  5.40%
                                                                                          -------
                                                                                         $593,034                  3.40%
                                                                                          =======
</TABLE>

         The aggregate amount of certificates of deposit with balances of $100
or more was approximately $244,164 and $283,591 at December 31, 2002 and 2001,
respectively. In the past, but to a much lesser degree in 2002, the Bank has
accepted brokered deposits and out-of-state time deposits from individuals and
corporations, predominantly credit unions. The Bank is making a conscious effort
to reduce its reliance on these types of deposits. The balance of these deposits
at December 31, 2002 and 2001 was $74,784 and $127,800, respectively. At
December 31, 2002, brokered deposits totaled $61,995, all of which were
certificate of deposits of $100 or more.


NOTE 11. BORROWINGS

         Borrowings consisted of the following:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                       ------------
                                                                            2002                        2001
                                                                            ----                        ----
                                                                AMOUNT         RATE               AMOUNT           RATE
                                                                ------         ----               ------           ----

<S>                                                         <C>               <C>              <C>                <C>
Federal Home Loan Bank advances                              $225,280          5.2%             $278,912           6.2%
Repurchase agreements                                          49,140          4.7                41,000           5.9
Commercial bank line of credit                                  2,907          4.5                    --           --
Commercial bank note payable                                       --          --                  5,000           4.8
Loan from majority shareholder                                     --          --                  2,000           0.0
1995 Subordinated Notes                                        13,960          9.6                13,985           9.6
                                                            ---------                           --------
                                                             $291,287                           $340,897
                                                              =======                            =======
</TABLE>





                                                                              70
<PAGE>


         At December 31, 2002, scheduled payments on borrowings are as follows:

<TABLE>
<CAPTION>
                                                                                                                 WEIGHTED
                                                                                                                  AVERAGE
YEAR                                                                                                             INTEREST
ENDED                                                                                     AMOUNT                   RATE
-----                                                                                     ------                   ----
<S>                                                                                     <C>                        <C>
2003                                                                                    $  91,024                  4.93%
2004                                                                                       69,102                  5.98%
2005                                                                                       97,824                  4.88%
2006                                                                                        4,284                  6.61%
2007                                                                                       13,616                  6.45%
Thereafter                                                                                 15,437                  6.45%
                                                                                          -------
                                                                                         $291,287                  5.58%
                                                                                          =======
</TABLE>

         At December 31, 2002, Federal Home Loan Bank advances are
collateralized by all of our FHLB stock, one-to-four family first mortgage
loans, multifamily loans, and securities with aggregate carrying values of
approximately $13.8 million, $161.4 million, $255.1 million and $165.1 million,
respectively.

         The Company obtained a $5.0 million line of credit from a commercial
bank ("line of credit") in September 2002. The proceeds from the line of credit
were used to pay off the Company's commercial bank note that was scheduled to
mature on December 31, 2002. The line of credit matures on December 31, 2003. As
collateral for the loan, the Company's largest shareholder has agreed to pledge
a portion of his common stock of the Company, which exceeds 50% of the
outstanding stock of the Company. The interest rate for the line of credit
varies at prime rate.

         In December 2001, the Company entered into a loan agreement with Robert
Kaye, its majority shareholder, for a non-interest bearing loan in the principal
amount of $2.0 million. The Company repaid the loan to Mr. Kaye with proceeds
from the stock offerings in March 2002.

         During 1995, the Company issued subordinated notes ("1995 Subordinated
Notes") totaling $14,000. Interest on the notes is paid quarterly and principal
will be repaid when the notes mature January 1, 2005. Total issuance costs of
approximately $1,170 are being amortized on a straight line basis over the life
of the notes. The notes are unsecured. Effective November 30, 2000, the notes
may be redeemed at par at any time.

         The following tables set forth certain information about borrowings
during the periods indicated.

<TABLE>
<CAPTION>
                                                                                              YEAR ENDED DECEMBER 31,
                                                                                             2002                  2001
                                                                                             ----                  ----
<S>                                                                                      <C>                    <C>
MAXIMUM MONTH-END BALANCES:
Federal Home Loan Bank advances                                                          $278,339               $378,143
1995 subordinated notes                                                                    13,985                 13,985
Commercial bank line of credit                                                              4,007                  6,000
Commercial bank note payable                                                                5,000                  5,000
Loan from majority shareholder                                                              2,000                  2,000
Repurchase agreements                                                                      49,508                 41,000
</TABLE>

<TABLE>
<CAPTION>
                                                                                              YEAR ENDED DECEMBER 31,
                                                                                             2002                   2001
                                                                                             ----                   ----
<S>                                                                                      <C>                    <C>
AVERAGE BALANCE:
Federal Home Loan Bank advances                                                          $253,107               $313,908
1995 subordinated notes                                                                    13,968                 13,985
Commercial bank line of credit                                                                855                  2,482
Commercial bank note payable                                                                3,348                  3,507
Loan from majority shareholder                                                                466                     22
Repurchase agreements                                                                      44,531                 41,000
</TABLE>




                                                                              71
<PAGE>


<TABLE>
<CAPTION>
                                                                                             YEAR ENDED  DECEMBER 31,
                                                                                           2002                    2001
                                                                                           ----                    ----
<S>                                                                                        <C>                     <C>
WEIGHTED AVERAGE INTEREST RATE:
Federal Home Loan advances                                                                 5.54%                   5.94%
1995 subordinated notes                                                                    9.63                    9.63
Commercial bank line of credit                                                             3.05                    8.10
Commercial bank note payable                                                               4.66                    5.67
Loan from majority shareholder                                                             0.00                    0.00
Repurchase agreements                                                                      5.52                    5.98
</TABLE>


NOTE 12. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN THE CORPORATION'S JUNIOR
SUBORDINATED DEBENTURES

         The Company has two issues of cumulative trust preferred securities
(the "Trust Preferred") outstanding through wholly owned subsidiaries. The Trust
Issuer has invested the total proceeds from the sale of the Trust Preferred in
the Junior Subordinated Deferrable Interest Debentures (the "Junior Subordinated
Debentures") issued by the Company. The Trust Preferred securities are listed on
the NASDAQ Stock Market's National Market.

A description of the Trust Preferred securities currently outstanding is
presented below:

<TABLE>
<CAPTION>
          Issuing              NASDAQ       Date of       Shares      Interest      Maturity     Principal Amount December 31,
          Entity               Symbol      Issuance       Issued        Rate          Date             2002          2001
          ------               ------      --------       ------        ----          ----             ----          ----

<S>                             <C>      <C>             <C>           <C>       <C>               <C>            <C>
Metropolitan Capital Trust I    METFP    April 27, 1998  2,775,000     8.60%     June 30, 2028      $27,750        $27,750
Metropolitan Capital Trust II   METFO     May 14, 1999   1,600,000     9.50%     June 30, 2029       16,000         16,000
                                                                                                     ------         ------
                                                                                                    $43,750        $43,750
                                                                                                     ======         ======
</TABLE>


NOTE 13. INCOME TAXES

         The provision for income taxes consists of the following components:

<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31,
                                                                                      -----------------------
                                                                              2002             2001                2000
                                                                              ----             ----                ----

<S>                                                                        <C>                  <C>               <C>
Current tax provision:
  Federal expense                                                          $(3,576)             $(143)            $1,496
  State expense                                                                 --                 15                 62
                                                                            ------             ------              -----
         Total current expense (benefit)                                    (3,576)              (128)             1,558
  Deferred federal benefit                                                  (3,414)            (2,310)              (896)
                                                                            ------             ------                ---
                                                                           $(6,990)           $(2,438)              $662
                                                                            ======             ======                ===
</TABLE>






                                                                              72
<PAGE>


         Deferred income taxes are provided for temporary differences. The
components of the Company's net deferred tax asset (liability) consist of the
following:

<TABLE>
<CAPTION>
                                                                                            YEAR ENDED DECEMBER 31,
                                                                                            -----------------------
                                                                                        2002                     2001
                                                                                        ----                     ----

<S>                                                                                   <C>                      <C>
Deferred tax assets
  Provision for loan losses                                                             $  6,125                 $6,830
  Provision for loss on interest on loans                                                    547                    378
  Provision for loss on security                                                             900                     75
  Allowance for loss on premises and equipment                                             3,360                     --
  Mark-to-market on financial derivative                                                   1,632                  1,050
  Mortgage servicing rights                                                                1,324                     29
 Charitable deduction carryforward                                                           117                    245
  Depreciation                                                                                --                    160
  Other                                                                                       14                    222
                                                                                          ------                  -----
                                                                                          14,019                  8,989
                                                                                          ------                  -----
Deferred tax liabilities
  Deferred loan fees                                                                        (492)                  (697)
  Employment contract                                                                        (66)                   (73)
  Stock dividends on FHLB stock                                                           (1,129)                (1,258)
  Other                                                                                     (120)                   (41)
                                                                                          ------                  -----
                                                                                          (1,807)                (2,069)
                                                                                          ------                  -----
         Net deferred tax asset                                                          $12,212                 $6,920
                                                                                          ======                  =====
</TABLE>


         A reconciliation from income taxes at the statutory rate to the
effective provision for income taxes is as follows:

<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31,
                                                                                      -----------------------
                                                                            2002               2001                2000
                                                                            ----               ----                ----

<S>                                                                     <C>                <C>                   <C>
Income taxes at statutory rate of 34%                                      $(6,929)           $(2,042)              $734
Amortization of purchased intangibles                                            6                 68                 71
Stock dividend exclusion                                                       (70)               (89)               (92)
Tax exempt income                                                             (314)              (319)              (322)
State taxes, net of federal impact                                              --                  5                 41
Business expense limitation                                                     75                 83                 80
Other                                                                          242               (144)               150
                                                                            ------             -------               ---
Provision for income taxes                                                 $(6,990)           $(2,438)              $662
                                                                            ======             =======               ===
</TABLE>

         Taxes attributable to securities gains and (losses) totaled $1,343,
$797, and $253 for the years ended December 31, 2002, 2001 and 2000,
respectively.

         Prior to 1996, the Bank was permitted, under the Internal Revenue Code,
to determine taxable income after deducting a provision for loan losses in
excess of the provision recorded in the financial statements. Accordingly,
retained earnings at December 31, 2002 includes approximately $2,883 for which
no provision for federal income taxes has been made. If this portion of retained
earnings is used in the future for any purpose other than to absorb loan losses,
it will be added to future taxable income. The unrecorded deferred tax liability
on the above amount at December 31, 2002 was approximately $980.




                                                                              73
<PAGE>


NOTE 14. SALARY DEFERRAL--401(k) PLAN

         The Company maintains a 401(k) plan covering substantially all
employees who have attained the age of 21 and have completed thirty days of
service with the Company. This is a salary deferral plan, which calls for
matching contributions by the Company based on a percentage (50%) of each
participant's voluntary contribution (limited to a maximum of six percent (6%)
of a covered employee's annual compensation). The matching contributions by the
Company commence after one year of service. In addition to the Company's
required matching contribution, a contribution to the plan may be made at the
discretion of the Board of Directors. Employee voluntary contributions are
vested at all times, whereas employer contributions vest 20% per year through
year five at which time employer contributions are fully vested. The Company's
matching contributions were $315, $280, and $231 for the years ended December
31, 2002, 2001 and 2000, respectively. The Company has made no discretionary
contributions for the periods presented.


NOTE 15. STOCK PURCHASE AND STOCK OPTION PLANS (SHARES AND OPTION PRICES NOT IN
THOUSANDS)

         In July 1999, the Board of Directors of the Company authorized the
adoption of a Stock Purchase Plan permitting directors, officers, and employees
of the Company and its subsidiaries and certain affiliated companies to make
purchases of the Company's common shares at 95% of the fair market value. If the
director, officer, or employee subsequently sells the stock before waiting a
one-year holding period, they are required to repay the Company an amount equal
to the discount received at the time of purchase. The plan authorized the
issuance of an additional 160,000 common shares for purchases made under the
plan. The purchases under the plan commenced in the fourth quarter, 1999. To
date, 95,097 shares have been issued under the plan. Effective November 1, 2002,
the Stock Purchase Plan was terminated

         On October 28, 1997, the Board of Directors of the Company adopted the
Metropolitan Financial Corp. 1997 Stock Option Plan for key employees and
officers of the Company. The plan is intended to encourage their continued
employment with the Company and to provide them with additional incentives to
promote the development and long-term financial success of the Company.

         Subject to adjustment under certain circumstances, the maximum number
of common shares that may be issued under the plan is 915,000, which reflects
stock splits and stock dividends and the addition of 200,000 shares in 1999. The
plan provides for the grant of options, which may qualify as either incentive
stock options or nonqualified options. Grants of options are made by the
Compensation and Organization Committee of the Board of Directors.


         Under the terms of the plan, the exercise price of an option, whether
an incentive stock option or a nonqualified option, will not be less than the
fair market value of the common shares on the date of grant. An option may be
exercised in one or more installments at the time or times provided in the
option instrument. One-half of the options granted to employees will become
exercisable on the third anniversary, and one-fourth of the common shares
covered by the option on the fourth and fifth anniversary of the date of grant.
Currently outstanding options began to be exercisable in 2000 and will continue
to become exercisable in future years through 2005. Options granted under the
plan will expire no later than ten years after grant in the case of an incentive
stock option and ten years and one month after grant in the case of a
nonqualified option. The options become fully exercisable upon the shareholder
approval of the merger agreement with Sky Financial.






                                                                              74
<PAGE>


         A summary of option activity is presented below (number of shares has
been retroactively restated for stock rights offering in March 2002):

STOCK OPTION ACTIVITY:

<TABLE>
<CAPTION>
                                                      INCENTIVE STOCK OPTIONS                 NONQUALIFIED OPTIONS
                                                      -----------------------                 --------------------
                                                    SHARES         EXERCISE PRICE         SHARES         EXERCISE PRICE
                                                    ------         --------------         ------         --------------
<S>                                              <C>            <C>                     <C>             <C>
Outstanding at January 1, 2000                      334,726        $5.38 - $15.88        854,174          $9.21 - $14.44
Granted                                              76,698        $4.24 -  $4.89             --
Exercised                                                --                                   --
Forfeited                                          (134,827)       $6.18 - $14.44       (103,342)         $9.21 - $14.44
                                                   --------                             --------

Outstanding at December 31, 2000                    276,597        $4.24 - $15.88        750,832          $9.21 - $14.44
Granted                                             171,158                 $3.88             --                      --
Exercised                                                --                                   --
Forfeited                                           (29,710)       $6.18 - $14.44             --                      --
                                                    -------                              -------

Outstanding at December 31, 2001                    418,045        $3.88 - $15.88        750,832          $9.21 - $14.44
Granted                                             257,780        $2.90 -  $3.99         48,130                   $3.63
Exercised                                                --                                   --
Forfeited                                           (62,073)       $2.90 -  $4.89             --                      --
                                                    -------                              -------
Outstanding at December 31, 2002                    613,752        $2.90 - $15.88        798,962          $3.63 - $14.44
                                                    =======                              =======
</TABLE>

         Options outstanding at December 31, 2002 were as follows:

<TABLE>
<CAPTION>
                                                    WEIGHTED           WEIGHTED
                                                     AVERAGE            AVERAGE
                                                    EXERCISE          REMAINING              SHARES                SHARES
RANGE OF EXERCISE PRICE                                PRICE               LIFE         OUTSTANDING           EXERCISABLE
-----------------------                                -----               ----         -----------           -----------

<S>                                                   <C>            <C>                 <C>                     <C>
$2.90-$4.99                                            $3.57          8.6 years             492,499                    --
$5.00-$6.99                                             5.99          6.9                    67,010                33,504
$9.00-10.99                                             9.29          4.8                   593,239               593,239
$11.00-12.99                                           11.09          6.1                   153,396                76,699
$14.00-15.99                                           14.58          5.4                   106,570                79,927
                                                                                          ---------               -------
         Total                                                                            1,412,714               783,369
                                                                                          =========               =======
</TABLE>


         The estimated fair value of options granted was as follows:

<TABLE>
<CAPTION>
                                                                                INCENTIVE                    NONQUALIFIED
                                                                              STOCK OPTIONS                     OPTIONS
                                                                              -------------                     -------
<S>                                                                          <C>                            <C>
2000:
  24,220 shares granted at $4.89                                                  $1.97
  32,294 shares granted at $4.89                                                  $1.97
  20,184 shares granted at $4.24                                                  $1.71

2001:
  171,158 shares granted at $3.88                                                 $1.55

2002:
  190,500 shares granted at $2.90                                                 $1.20
    70,895 shares granted at $3.63                                                $1.66                           $1.66
      9,515 shares granted at $3.99                                               $1.45
     35,000 shares granted at $3.61                                               $1.44

  Weighted average life of options                                            6.4 years                        6.0 years
</TABLE>



                                                                              75
<PAGE>


NOTE 16. CAPITAL AND EXTERNAL REQUIREMENTS

         On March 22, 2002, the Company closed its offering to current
shareholders of non-transferable rights to purchase shares of Company common
stock and also a concurrent offering of shares of common stock in a public
offering. The purpose of these offerings was to raise funds to increase the
equity capital of the Bank as required under the July 26, 2001 supervisory
agreements signed with the OTS and ODFI, and to repay the note payable from the
majority shareholder which was used to make the December 2001 principal payment
on a commercial bank note. These offerings generated gross proceeds of $22.0
million, substantially exceeding the $13.0 million minimum established for the
offerings. As a result of the offerings, the Bank's regulatory capital ratios
are now in excess of the "well-capitalized" capital requirements as of December
31, 2002.

         In September, 2000, the Board of Directors approved a resolution
authorizing management to repurchase securities issued by Metropolitan Financial
Corp., Metropolitan Capital Trust I, and Metropolitan Capital Trust II. No
shares have been repurchased under this resolution in 2000, 2001 or 2002.

         The Bank is subject to regulatory capital requirements administered by
federal regulatory agencies. Capital adequacy guidelines and prompt corrective
action regulations involve quantitative measures of assets, liabilities, and
certain off-balance-sheet items calculated under regulatory accounting
practices. Capital amounts and classifications are also subject to qualitative
judgments by regulators about components, risk weightings, and other factors,
and the regulators can lower classifications in certain cases. Failure to meet
various capital requirements can initiate regulatory action that could have a
direct material effect on the financial statements.

         The prompt corrective action regulations provide five classifications,
including well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized, although these
terms are not used to represent overall financial condition. If adequately
capitalized, regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required.

         While the OTS and ODFI have not established individual minimum capital
requirements for the Bank, they entered into the Supervisory Agreement with the
Bank. Under that agreement the Bank was required to achieve well-capitalized
status for core capital (5%) and risk-based capital (10%) by March 31, 2002,
which it did. At December 31, 2002 we complied with all requirements for a well
capitalized institution. The following table indicates our capital position
compared to the requirements for an adequately capitalized institution and a
well-capitalized institution as of December 31, 2002.


<TABLE>
<CAPTION>
                                                          ADEQUATELY CAPITALIZED            WELL CAPITALIZED
                                                          ----------------------            ----------------
                                                                     PERCENT OF                       PERCENT OF
                                                         AMOUNT        ASSETS          AMOUNT           ASSETS
                                                         ------        ------          ------           ------
<S>                                                 <C>                <C>           <C>                <C>
Tangible Capital:
   Actual                                            $   110,111        7.50%         $   110,111        7.50%
   Requirement                                            22,032        1.50               29,376        2.00
   Excess (Deficiency)                                    88,079        6.00               80,375        5.50
Core Capital:
   Actual                                            $   110,111        7.50%         $   110,111        7.50%
   Requirement                                            58,751        4.00               73,439        5.00
   Excess (Deficiency)                                    51,360        3.50               36,672        2.50
Risk-based Capital:
   Actual                                            $   120,416       10.80%         $   120,416       10.80%
   Requirement                                            89,188        8.00              111,485       10.00
   Excess (Deficiency)                                    31,228        2.80                8,931        0.80
Tier 1 Capital to Risk-adjusted Assets
   Actual                                            $   109,472        9.82%         $   109,472        9.82%
   Requirement                                            44,594        4.00               66,891        6.00
   Excess (Deficiency)                                    64,878        5.82               42,581        3.82
</TABLE>

         The following table indicates our capital position compared to the
requirements for an adequately capitalized institution and a well-capitalized
institution as of December 31, 2001.


                                                                              76
<PAGE>


<TABLE>
<CAPTION>
                                                          ADEQUATELY CAPITALIZED            WELL CAPITALIZED
                                                          ----------------------            ----------------
                                                                     PERCENT OF                       PERCENT OF
                                                         AMOUNT        ASSETS          AMOUNT           ASSETS
                                                         ------        ------          ------           ------
<S>                                                <C>                <C>           <C>                <C>
Tangible Capital:
   Actual                                            $   103,151        6.45%         $   103,151        6.45%
   Requirement                                            24,006        1.50               32,008        2.00
   Excess (Deficiency)                                    79,145        4.95               71,143        4.45
Core Capital:
   Actual                                            $   103,151        6.45          $   103,151        6.45
   Requirement                                            64,088        4.00               80,110        5.00
   Excess (Deficiency)                                    39,063        2.45               23,041        1.45
</TABLE>

<TABLE>
<CAPTION>
                                                          ADEQUATELY CAPITALIZED            WELL CAPITALIZED
                                                          ----------------------            ----------------
                                                                     PERCENT OF                       PERCENT OF
                                                         AMOUNT        ASSETS          AMOUNT           ASSETS
                                                         ------        ------          ------           ------
<S>                                                <C>                <C>           <C>                <C>
Risk-based Capital:
   Actual                                            $   113,621        9.26          $   113,621        9.26
   Requirement                                            98,170        8.00              122,712       10.00
   Excess (Deficiency)                                    15,451        1.26               (9,091)      (0.74)
Tier 1 Capital to Risk-adjusted Assets
   Actual                                            $   102,835        8.38          $   102,835        8.38
   Requirement                                            49,086        4.00               73,589        6.00
   Excess (Deficiency)                                    53,749        4.38               29,246        2.38
</TABLE>

         The Bank at year-end 2002 was categorized as well capitalized. At
December 31, 2002, the most restrictive regulatory consideration of the payment
of dividends from the Bank to the holding company and the retention of the
adequately capitalized status was the total capital (to risk weighted capital)
ratio. Management is not aware of any event or circumstances after December 31,
2002 that would change the capital category.

         A savings association which fails to meet one or more of the applicable
capital requirements is subject to various regulatory limitations and sanctions,
including issuance of a cease and desist order requiring further corrective
actions, a prohibition on growth and the issuance of a capital directive by the
Office of Thrift Supervision requiring the following: an increase in capital;
reduction of rates paid on savings accounts; cessation of or limitations on
deposit-taking and lending; limitations on operational expenditures; an increase
in liquidity; obtaining additional or new management; require the sale of assets
and overall reduction in the size of the Company; restricting dividends from the
Bank to the Company; and such other actions deemed necessary or appropriate by
the Office of Thrift Supervision. In addition, a conservator or receiver may be
appointed under certain circumstances.

         The appropriate federal banking agency has the authority to reclassify
a well-capitalized institution as adequately capitalized, and to treat an
adequately capitalized or undercapitalized institution as if it were in the next
lower capital category, if it is determined, after notice and an opportunity for
a hearing, to be in an unsafe or unsound condition or to have received and not
corrected a less-than-satisfactory rating for any of the categories of asset
quality, management, earnings or liquidity in its most recent examination. As a
result of such classification or determination, the appropriate federal banking
agency may require an adequately capitalized or under-capitalized institution to
comply with certain mandatory and discretionary supervisory actions. A
significantly undercapitalized savings association may not be reclassified,
however, as critically undercapitalized.

         The terms of the 1995 subordinated notes and related indenture
agreement prohibit the Company from paying cash dividends unless the Company's
ratio of tangible equity to total assets exceeds 7.0%. As a result, the Company
is currently prohibited from paying dividends to its shareholders.


NOTE 17. COMMITMENTS AND CONTINGENCIES

         FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK. The Bank can be a
party to financial instruments with off-balance sheet risk in the normal course
of business to meet financing needs of its customers. These financial
instruments include commitments to make loans. The Bank's exposure to credit
loss in the event of nonperformance by the other party to the


                                       77
<PAGE>


financial instrument for commitments to make loans is represented by the
contractual amount of those instruments. The Bank follows the same credit policy
to make such commitments as is followed for those loans recorded in the
financial statements.

         As of December 31, 2002, the Bank had fixed and variable rate
commitments to originate and/or purchase loans (at market rates) of
approximately $86,087 and $65,058, respectively. In addition, the Bank had firm
commitments to sell loans totaling $72,979 at December 31, 2002. The Bank's
commitments to originate and purchase loans are for loans at rates ranging from
4.25% to 19.9% and commitment periods up to one year. In addition the Bank has
standby letters of credit of $5,301.

         RESERVE REQUIREMENTS. The Bank's requirement to maintain cash on hand
or on deposit with the Federal Reserve Bank to meet regulatory reserve
requirements at December 31, 2002 was satisfied by the balance of cash on hand.

         LIQUIDITY REQUIREMENT. The Company is required to maintain cash or
short-term investments equal to six months interest on the 1995 subordinated
notes, or approximately $672, as a condition of the indenture agreement related
to the 1995 subordinated notes.


NOTE 18. RELATED PARTY TRANSACTIONS

         In the years ended December 31, 2002, 2001, and 2000 the Company
expensed $8, $78, and $96 for management fees relating to services provided by
companies with the same majority shareholder as the Company.

         The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with the Company's and the
Bank's directors, officers, significant shareholders and associates. Loans to
such related parties totaled $2,064 and $1,587 at December 31, 2002 and 2001,
respectively.

         Related party deposits totaled $656 and $715 at December 31, 2002 and
2001, respectively.

         In December 2001, the Company entered into a loan agreement under which
it borrowed $2,000 from Robert M. Kaye, their majority shareholder. The loan
bore no interest and was repaid with the proceeds from the stock offering
completed in March 2002.

         Mr. Kaye reimbursed the Company for Unauthorized Payments on December
23, 2002, in the amount of $3.5 million ($2.5 million, net of taxes) as required
by the Supervisory Directive.


NOTE 19. FAIR VALUES OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standard No. 107, "Disclosures about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized on the
balance sheet, for which it is practicable to estimate that value. Statement of
Financial Accounting Standards No. 107 excludes certain financial instruments
and all nonfinancial instruments from its disclosure requirements. Accordingly,
the aggregate fair value estimates presented do not reflect the underlying fair
value of the Company. While these estimates are based on management's judgment
of the most appropriate factors, there is no assurance that the estimated fair
values would necessarily have been achieved at that date, since market values
may differ depending on various circumstances. As such, the estimated fair
values of these financial instruments subsequent to the respective reporting
dates may be different than the amounts reported at year end. The following
table shows those financial instruments and the related carrying values.


                                                                              78
<PAGE>


<TABLE>
<CAPTION>
                                                  DECEMBER 31, 2002                            DECEMBER 31, 2001
                                                  -----------------                            -----------------
                                            CARRYING             ESTIMATED               CARRYING             ESTIMATED
                                              AMOUNT             FAIR VALUE               AMOUNT              FAIR VALUE
                                              ------             ----------               ------              ----------

<S>                                      <C>                 <C>                     <C>                   <C>
Financial assets:
   Cash and cash equivalents             $     30,469        $       30,469          $     46,699          $     46,699
   Interest-bearing deposits in other
     banks                                      4,323                 4,323                   577                   577
   Securities                                 113,411               113,413               109,183               106,461
   Mortgage-backed securities                 152,983               152,983               167,313               167,313
   Loans, net                               1,057,052             1,077,387             1,143,772             1,142,727
   Federal Home Loan Bank stock                13,823                13,823                16,889                16,889
   Loan servicing rights                       13,104                14,802                22,951                23,828
   Accrued interest receivable                  6,131                 6,131                 7,531                 7,531
</TABLE>


<TABLE>
<CAPTION>
                                                  DECEMBER 31, 2002                            DECEMBER 31, 2001
                                                  -----------------                            -----------------
                                             CARRYING            ESTIMATED               CARRYING             ESTIMATED
                                              AMOUNT             FAIR VALUE               AMOUNT              FAIR VALUE
                                              ------             ----------               ------              ----------

<S>                                          <C>                   <C>                   <C>                   <C>
Financial liabilities:
   Demand and savings deposits               (457,189)             (457,189)             (427,088)             (427,088)
   Time deposits                             (593,034)             (598,995)             (715,306)             (728,000)
   Borrowings                                (291,287)             (307,274)             (340,897)             (346,137)
   Accrued interest payable                    (3,141)               (3,141)               (5,083)               (5,083)
   Trust Preferred securities                 (43,750)              (44,142)              (43,750)              (31,996)
   Interest rate swaps                         (4,660)               (4,660)               (3,103)               (3,103)
</TABLE>

         The following methods and assumptions were used to estimate the fair
value of financial instruments:

                  CASH AND EQUIVALENTS--The carrying amount of these items is a
                  reasonable estimate of the fair value.

                  INTEREST-BEARING DEPOSITS IN OTHER BANKS--The carrying amount
                  of these items is a reasonable estimate of the fair value.

                  SECURITIES AND MORTGAGE-BACKED SECURITIES--The estimated fair
                  value is based on quoted market prices or dealer estimates.

                  LOANS, NET--For loans held for sale, the fair value was
                  estimated based on quoted market prices. The fair value of
                  other loans is estimated by discounting the future cash flows
                  and estimated prepayments using the current rates at which
                  similar loans would be made to borrowers with similar credit
                  ratings for the same remaining term. Some loan types were
                  valued at carrying value because of their floating rate or
                  expected maturity characteristics.

                  FEDERAL HOME LOAN BANK STOCK--The fair value is based upon the
                  redemption value of the stock which equates to its carrying
                  value.

                  ACCRUED INTEREST RECEIVABLE--The carrying amount and fair
                  value are equal.

                  LOAN SERVICING RIGHTS--The fair value is based upon the
                  discounted cash flow analysis.

                  DEMAND AND SAVINGS DEPOSITS--The fair value is the amount
                  payable on demand at the reporting date.

                  TIME DEPOSITS--the fair value of fixed maturity certificates
                  of deposit is estimated by discounting the estimated future
                  cash flows using the rates offered at year end for similar
                  remaining maturities.


                                                                              79
<PAGE>


                  BORROWINGS--The fair value of borrowings is estimated by
                  discounting the estimated future cash flows using the rates
                  offered at year-end for similar remaining maturities.

                  ACCRUED INTEREST PAYABLE--The carrying amount and fair value
                  are equal.

                  COMMITMENTS--The estimated fair value is not materially
                  different from the nominal value.

                  TRUST PREFERRED SECURITIES--The estimated fair value is based
                  upon quoted market prices.

                  INTEREST RATE SWAPS - The estimated fair value and carrying
                  value is based upon quoted market rates from a third party

NOTE 20.  SEGMENT REPORTING

         The Company's operations include two major operating segments. A
description of those segments follows:

                  RETAIL AND COMMERCIAL BANKING--Retail and commercial banking
         is the segment of the business that brings in deposits and lends those
         funds out to businesses and consumers. The local market for deposits is
         the consumers and businesses in the neighborhoods surrounding our 24
         retail sales offices in Northeastern Ohio. The market for lending is
         Ohio and the surrounding states for originations and throughout the
         United States for purchases. The majority of loans are secured by
         multifamily and commercial real estate. Loans are also made to
         businesses secured by business assets and consumers secured by real or
         personal property. Business loans are concentrated in Northeastern
         Ohio.

                  MORTGAGE BANKING--Mortgage banking is the segment of our
         business that originates, sells and services permanent or construction
         loans secured by one- to four-family residential properties. These
         loans are primarily originated through commissioned loan officers
         located in Ohio and Western Pennsylvania. In general, fixed rate loans
         are originated for sale and adjustable rate loans may be originated for
         sale or be retained in the portfolio. Loans being serviced include
         loans originated and still owned by the Bank, loans originated by the
         Bank but sold to others with servicing rights retained by the Bank, and
         servicing rights to loans originated by others but purchased by the
         Bank. The servicing rights the Bank purchases may be located in a
         variety of states and are typically being serviced for Fannie Mae or
         Freddie Mac.

                  PARENT AND OTHER--The category below labeled Parent and Other
         consists of the remaining segments of the Company's business. It
         includes corporate treasury, interest rate risk, and financing
         operations, which do not generate revenue from outside customers. The
         net interest income that results from investing in assets and
         liabilities with different terms to maturity or repricing has been
         eliminated from the two major operating segments and is included in
         this category.

         Operating results and other financial data for the current year and
preceding two years are as follows:





                                                                              80
<PAGE>



         As of or for the year ended December 31, 2002

<TABLE>
<CAPTION>
                                                     RETAIL AND
                                                     COMMERCIAL        MORTGAGE             PARENT
                                                     BANKING            BANKING            AND OTHER              TOTAL
                                                     -------            -------            ---------              -----
<S>                                                   <C>               <C>                <C>                 <C>
OPERATING RESULTS:
Net interest income                                     $25,523           $15,940            $(9,336)            $32,127
Provision for losses on loans                             4,878               842                 --               5,720
                                                       --------          --------           --------            --------
Net interest income after
  provision for loan losses                              20,645            15,098             (9,336)             26,407
Noninterest income                                        6,323              (136)             3,358               9,545
Direct noninterest expense                               18,402            10,073              3,203              31,678
Allocation of overhead                                   15,933             8,721                 --              24,654
                                                         ------           -------           --------            --------
Income before income taxes                              $(7,367)          $(3,832)           $(9,181)           $(20,380)
                                                         ======            ======             ======             =======
FINANCIAL DATA:
Segment assets                                         $861,303          $390,995           $225,201          $1,477,499
Depreciation and amortization                             7,872             8,148                822              16,842
Expenditures for additions
  to premises and equipment                               1,593               395                                  1,988
</TABLE>


         As of or for the year ended December 31, 2001

<TABLE>
<CAPTION>
                                                       RETAIL AND
                                                       COMMERCIAL        MORTGAGE            PARENT
                                                        BANKING           BANKING           AND OTHER              TOTAL
                                                        -------           -------           ---------              -----
<S>                                                    <C>               <C>                <C>                 <C>
OPERATING RESULTS:
Net interest income                                     $23,128           $15,022            $(5,271)            $32,879
Provision for losses on loans                             5,974               531                 --               6,505
                                                        -------          --------         ----------             -------
Net interest income after
  provision for loan losses                              17,154            14,491             (5,271)             26,374
Noninterest income                                        7,315             4,949              1,498              13,762
Direct noninterest expense                               20,251             8,489              1,996              30,736
Allocation of overhead                                   10,856             4,550                 --              15,406
                                                       --------             -----           --------              ------
Income before income taxes                             $(6,638)           $ 6,401            $(5,769)         $  (6,006)
                                                        ======             ======              ======          =========
FINANCIAL DATA:
Segment assets                                         $961,746          $450,763           $195,911          $1,608,420
Depreciation and amortization                             5,572             6,517                464              12,553
Expenditures for additions
  to premises and equipment                               8,428               774                                  9,202
</TABLE>




                                                                           81
<PAGE>


         As of or for the year ended December 31, 2000

<TABLE>
<CAPTION>
                                                     RETAIL AND
                                                     COMMERCIAL        MORTGAGE            PARENT
                                                     BANKING            BANKING           AND OTHER              TOTAL
                                                     -------            -------           ---------              -----
<S>                                                <C>               <C>                <C>                 <C>
OPERATING RESULTS:
Net interest income                                     $25,901            $8,148             $5,065             $39,114
Provision for losses on loans                             5,594               756                 --               6,350
                                                        -------            ------         ----------             -------
Net interest income after
  provision for loan losses                              20,307             7,392              5,065              32,764
Noninterest income                                        5,666             3,539                350               9,555
Direct noninterest expense                               19,651             7,081                666              27,398
Allocation of overhead                                    9,382             3,380                 --              12,762
                                                        -------             -----          ---------            --------
Income before income taxes                           $  (3,060)           $   470             $4,749            $  2,159
                                                      =========            ======              =====             =======
FINANCIAL DATA:
Segment assets                                       $1,059,436          $475,283           $160,560          $1,695,279
Depreciation and amortization                             2,337             3,272                514               6,123
Expenditures for additions
  to premises and equipment                              36,032               965                                 36,997
</TABLE>


         The financial information provided for each major operating segment has
been derived from the internal profitability system used to monitor and manage
financial performance and allocate resources. The measurement of performance for
the operating segments is based on the organizational structure of the Company
and is not necessarily comparable with similar information for any other
financial institution. The information presented is also not indicative of the
segments' financial condition and results of operations if they were independent
entities.

         The Company evaluates segment performance based on contribution to
income before income taxes. Certain indirect expenses have been allocated based
on various criteria considered by management to best reflect benefits derived.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Indirect expense allocations and
accounting policies have been consistently applied for the periods presented.
There are no differences between segment profits and assets and the consolidated
profits and assets of the Company.


NOTE 21. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

         Below is condensed financial information of Metropolitan Financial
Corp. (parent company only). In this information, the parent's investment in
subsidiaries is stated at cost plus equity in undistributed earnings of the
subsidiaries since acquisition. This information should be read in conjunction
with the consolidated financial statements.





                                                                              82
<PAGE>


                   CONDENSED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                                   DECEMBER 31,
                                                                                                   ------------
                                                                                          2002                   2001
                                                                                          ----                   ----

<S>                                                                                 <C>                     <C>
ASSETS
Cash and due from banks                                                             $         96            $       169
Securities available for sale                                                                689                    679
Loans receivable                                                                              --                     50
Investment in Metropolitan Bank and Trust Company                                        110,316                105,661
Investment in nonbank subsidiaries                                                         2,321                  2,165
Intangible assets                                                                             37                     37
Prepaid expenses and other assets                                                          4,615                  3,183
                                                                                         -------                -------
   Total assets                                                                         $118,074               $111,944
                                                                                         =======                =======

LIABILITIES
Borrowings                                                                             $  16,867              $  20,985
Other liabilities                                                                          2,256                  1,692
Guaranteed preferred beneficial
   interests in the corporation's
   junior subordinated debentures                                                         43,750                 43,750
                                                                                         -------                -------
     Total liabilities                                                                    62,873                 66,427


SHAREHOLDERS' EQUITY
   Total shareholders' equity                                                             55,201                 45,517
                                                                                         -------                -------
     Total liabilities and shareholders' equity                                         $118,074               $111,944
                                                                                         =======                =======
</TABLE>

                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                  YEARS ENDED DECEMBER 31,
                                                                          2002                2001                 2000
                                                                          ----                ----                 ----

<S>                                                                 <C>                  <C>                    <C>
Interest on loans and securities                                    $      205           $    208               $   222
Interest on borrowings                                                  (1,651)            (1,865)               (2,001)
Interest on junior subordinated debentures                              (4,143)            (4,156)               (4,156)
                                                                        ------             ------                 -----
Net interest expense                                                    (5,589)            (5,813)               (5,935)
Noninterest income
   Dividends from Metropolitan Bank and Trust Company                       --              2,750                 4,000
   Other operating income                                                   28                 10                    (3)
                                                                       -------             ------                 -----
                                                                            28              2,760                 3,997
Noninterest expense
   Amortization of intangibles                                              --                  4                     4
   Other operating expenses                                                873                285                   332
                                                                        ------            -------                ------
                                                                           873                289                   336
                                                                        ------             ------                ------
Income (loss) before income taxes                                       (6,434)            (3,342)               (2,274)
   Federal income tax benefit                                           (2,183)            (2,122)               (2,118)
                                                                        ------             ------                 -----
Income (loss) before equity in undistributed net
   income of subsidiaries                                               (4,251)            (1,220)                 (156)
Equity in undistributed net income (loss) of Metropolitan
   Bank and Trust Company                                               (9,295)            (2,423)                1,653
Equity in undistributed net income of nonbank subsidiaries                 156                 75                    --
                                                                       -------             ------                 -----
Net income (loss)                                                     $(13,390)           $(3,568)               $1,497
                                                                       =======             ======                 =====
</TABLE>


                                                                              83
<PAGE>


                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                YEARS ENDED DECEMBER 31,
                                                                        2002                2001                  2000
                                                                        ----                ----                  ----

<S>                                                               <C>                   <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                     $(13,390)           $(3,568)             $  1,497
Adjustments to reconcile net income to net cash provided
   by operating activities:
Equity in net income of Metropolitan
   Bank and Trust Company                                                9,295              2,423                (1,653)
Equity in net income of nonbank subsidiaries                              (156)               (75)                   12
Amortization                                                                --                  4                     4
Change in other assets and liabilities                                    (817)              (899)                1,079
                                                                        ------             -------              -------
      Net cash from operating activities                                (5,068)            (2,115)                  939
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities                                           --                244                    --
Purchase of securities available for sale                                  (10)               (34)                  (54)
Capital contributions to Metropolitan Bank and Trust Company           (12,000)                --                    --
Capital contributions to nonbank subsidiaries                               --                 --                  (275)
                                                                   -----------           --------            ----------
Net cash from investing activities                                     (12,010)               210                  (329)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan received from majority stockholder                                     --              2,000                    --
Repayment of borrowings                                                 (5,025)                --                   (15)
Net activity on lines of credit                                          2,907             (1,000)                   --
Proceeds from issuance of common stock                                  19,123                 96                   138
                                                                        ------            -------                 -----
Net cash from financing activities                                      17,005              1,096                   123
                                                                        ------              -----                   ---
      Net change in cash and cash equivalents                              (73)              (809)                  733
Cash and cash equivalents
   at beginning of year                                                    169                978                   245
                                                                      --------              -----               -------
Cash and cash equivalents
   at end of year                                                  $        96             $  169              $    978
                                                                    ==========              =====               =======

Supplemental disclosures of cash flow information:
   Exchange of loan payable for common stock                            $2,000                 --                    --
</TABLE>


NOTE 22. LOAN SECURITIZATIONS

During 2002 and 2001, the Bank securitized one- to four-family loans and sold
all of these securities while retaining the rights to service those loans. In
prior years, the Bank securitized one- to four-family, multifamily, and
commercial real estate loans. Those securities may have been sold or retained.
All of the rights to service those loans were retained. An analysis of the
activity in securitizations serviced by the Bank during 2002 and 2001 follows:



                                                                              84
<PAGE>

<TABLE>
<CAPTION>
                                                                    1-4 Family         Multifamily        Commercial Real
                                                                      Loans               Loans             Estate Loans
                                                                      -----               -----             ------------
<S>                                                                 <C>                 <C>                   <C>
Balance at December 31, 2001
     Principal balance of loans                                            220,656             115,429                69,097
     Amortized cost of servicing rights                                      2,712                 558                   128
     Servicing rights as a % of principal                                     1.23                0.48                  0.18

New securitizations during the year
     Principal balance of loans                                            264,493                  --                    --
     Fair value of servicing rights                                          2,674                  --                    --
     Servicing rights as a % of principal                                     1.01                  --                    --

Principal payments received on securitized loans                           222,534              24,502                16,537

Balance at December 31, 2002
     Principal balance of loans                                            262,615              90,927                52,560
     Amortized cost of servicing rights                                      2,505                 266                    42
     Servicing rights as a % of principal                                     0.95                0.29                  0.08

Other information at end of period
     Securitized assets still owned                                            577              43,754                52,560
     Delinquencies - past due 30 or more days                                2,449               1,437                 5,873
     Weighted average rate                                                   5.95%               7.97%                 8.18%
     Weighted average maturity in months                                       337                  65                    52
     Fair value of servicing rights                                          2,030               1,140                   168
     Fair value assumptions
          Discount rate                                                      8.00%              12.00%                12.00%
          Weighted average prepayment assumption                           551 PSA           18.0% CPR             18.0% CPR
          Anticipated delinquency                                            1.01%               4.00%                10.00%
          Anticipated foreclosure rate                                          --                  --                    --

Other information for the year
     Securitized assets sold                                               264,493                  --                    --
     Gain on securitized assets sold                                         4,175                  --                    --
     Credit losses net of recoveries                                            --                  --                    --
     Range of fair value assumptions used
          Discount rate                                                 8.00-8.50%        12.00-12.50%          12.00-12.50%
          Prepayment assumption                                        131-997 PSA          15-19% CPR            15-19% CPR
          Anticipated delinquency                                        .91-2.50%          2.50-5.00%          10.00-12.00%
          Anticipated foreclosure rate                                          --                  --                    --

</TABLE>


The fair value of servicing rights remaining after loans are securitized is
based on the assumptions utilized in calculating fair value. The following table
indicates how fair value might decline if the assumptions changed unfavorably in
two different magnitudes:


<TABLE>
<CAPTION>
                                                               1-4 Family       Multifamily      Commercial Real
                                                                 Loans             Loans           Estate Loans
                                                                 -----             -----           ------------

<S>                                                                <C>              <C>                     <C>
              Fair value at December 31, 2002                         $2,030           $1,140                  $168

              Projected fair value based on
                 1% added to discount rate                             1,880            1,117                   164
                 2% added to discount rate                             1,836            1,096                   161

                 10% increase in prepayment speed                      1,775            1,120                   165
                 20% increase in prepayment speed                      1,648            1,100                   162

                 25% increase in delinquency rate                      1,914            1,156                   180
                 50% increase in delinquency rate                      1,911            1,151                   177

                 Foreclosure rate of 0.25%                             1,896            1,143                   175
                 Foreclosure rate of 0.50%                             1,883            1,070                   156
</TABLE>


                                                                              85
<PAGE>


<TABLE>
<CAPTION>
                                                                    1-4 Family         Multifamily       Commercial Real
                                                                      Loans               Loans           Estate Loans
                                                                      -----               -----           ------------
<S>                                                                 <C>                <C>                <C>
Balance at December 31, 2000
     Principal balance of loans                                            $71,967            $137,971            $77,125
     Amortized cost of servicing rights                                        988                 772                194
     Servicing rights as a % of principal                                     1.37                0.56               0.25

New securitizations during the year
     Principal balance of loans                                            218,008                  --                 --
     Fair value of servicing rights                                          3,445                  --                 --
     Servicing rights as a % of principal                                     1.58                  --                 --

Principal payments received on securitized loans                            69,320              22,542              8,028

Balance at December 31, 2001
     Principal balance of loans                                            220,656             115,429             69,097
     Amortized cost of servicing rights                                      2,712                 558                128
     Servicing rights as a % of principal                                     1.23                0.48               0.18

Other information at end of period
     Securitized assets still owned                                          1,552              53,547             69,097
     Delinquencies - past due 30 or more days                                1,786               3,512              5,873
     Weighted average rate                                                    6.84                8.17               8.35
     Weighted average maturity in months                                       341                  73                 65
     Fair value of servicing rights                                          2,907               1,302                211
     Fair value assumptions
          Discount rate                                                         9%                 11%                11%
          Weighted average prepayment assumption                           176 PSA             14% CPR            15% CPR
          Anticipated delinquency                                            1.02%                4.0%             18.00%
          Anticipated foreclosure rate                                          --                  --                 --
Other information for the year
     Securitized assets sold                                               218,008                  --                 --
     Gain on securitized assets sold                                         2,345                  --                 --
     Credit losses net of recoveries                                            --                  --                 --
     Range of fair value assumptions used
          Discount rate                                                   9 - 9.5%          11 - 11.5%         11 - 11.5%
          Prepayment assumption                                      150 - 757 PSA      12.0-14.0% CPR     11.0-15.0% CPR
          Anticipated delinquency                                     0.90 - 2.00%        1.69 - 4.40%       9.5 - 11.03%
          Anticipated foreclosure rate                                          --                  --                 --
</TABLE>


                                                                              86
<PAGE>


<TABLE>
<CAPTION>
                                                               1-4 Family       Multifamily      Commercial Real
                                                                 Loans             Loans           Estate Loans
                                                                 -----             -----           ------------

<S>                                                               <C>              <C>                     <C>
              Fair value at December 31, 2001                         $2,907           $1,302                  $211

              Projected fair value based on
                 1% added to discount rate                             2,726            1,253                   207
                 2% added to discount rate                             2,622            1,229                   203

                 10% increase in prepayment speed                      2,717            1,245                   206
                 20% increase in prepayment speed                      2,605            1,214                   201

                 25% increase in delinquency rate                      2,858            1,276                   224
                 50% increase in delinquency rate                      2,748            1,280                   226

                 Foreclosure rate of 0.25%                             2,834            1,267                   220
                 Foreclosure rate of 0.50%                             2,808            1,262                   219
</TABLE>

These projections are hypothetical and should be used with caution. They only
project changes based on a change in one variable at a time. All variables are
dynamic, are subject to change at any time, and may interrelate so that movement
in one causes movement in another.

All loans securitized were transferred without recourse with the exception of
the multifamily loans. They were securitized with limited recourse. The buyer
has contracted with an insurance company to provide mortgage insurance covering
the first $5 million of losses. The Bank is contingently liable for the next
$8.7 million of losses. The buyer has accepted financial responsibility for all
losses in excess of $13.7 million. There have been no losses to date on any of
the multifamily loans secured by the Bank.


NOTE 23.  OFF-BALANCE SHEET ACTIVITIES

          The Bank maintains two standby letters of credit at the Federal Home
Loan Bank of Cincinnati for the benefit of Fannie Mae as secondary security for
credit risk on multifamily loans securitized in prior years. These standby
letters of credit, aggregating approximately $8.6 million, do not accrue
interest and are renewed on an annual basis.

          Derivatives, such as interest rate swaps, futures and forwards, and
interest rate options, are used for asset liability management. These
instruments involve underlying items, such as interest rates, and are designed
to transfer risk. Notional amounts are amounts on which calculations and
payments are based, but which do not represent credit exposures as credit
exposure is limited to the amounts required to be received and paid. Derivatives
may be exchanged-traded contracts or may be contracts between two parties.
Collateral, obtained or given, is recorded at fair value.


                                                                              87
<PAGE>


          These interest rate swaps have been designated as cash flow hedges of
certain FHLB advances and were determined to be fully effective during the year
ended December 31, 2002. As such, the aggregate fair value of the swaps are
recorded in other liabilities with changes in fair value recorded in other
comprehensive income and no amount of ineffectiveness was included in net
income. The amount included in accumulated other comprehensive income would be
reclassified to current earnings should the hedge no longer be considered
effective. The Company expects the hedge to remain fully effective during the
remaining term of the swaps. The loss recorded in other comprehensive income for
the years ended December 31, 2002 and 2001 totaled $1,023 and $2,173 and
represented the decline in fair value of the swaps during the periods.

Information about notional amounts at year-end is as follows:

<TABLE>
<CAPTION>
                                                            2002                           2001
                                                            ----                           ----
<S>                                                       <C>                             <C>
              Interest rate swaps                         $40,000                         $40,000

</TABLE>

          The Bank has entered into two interest rate swap contracts, with each
having a notional amount of $20,000. Both contracts mature in 2005 and have the
same counterparty. The Bank receives from the respective contracts variable
interest based on one-month or three-month LIBOR. The Bank in turn pays to the
counterparty interest at fixed rates of 6.450% and 6.275%, respectively. The
counterparty has the option to terminate the interest rate swap in the event
LIBOR exceeds 8.00% and 8.76% respectively on repricing dates per the terms of
the contract.

          The Bank has used the interest rate swap position to hedge variable
rate advances with the Federal Home Loan Bank of Cincinnati. The principal
amount of the borrowings matches the notional amount of the counterparty's
position, thereby creating a fixed rate instrument. The variable interest rates
paid to the Federal Home Loan Bank of Cincinnati are one-month LIBOR plus two
basis points and three-month LIBOR less two basis points.

NOTE 24. OTHER COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                                                        2002           2001           2000
                                                                                        ----           ----           ----
<S>                                                                                 <C>           <C>            <C>
Accumulated other comprehensive loss beginning of year                               $(1,561)      $(1,091)       $(4,047)
Change in unrealized gain (loss) on securities                                          (455)           90          5,014
Reclassification of securities held to maturity to available for sale                 (2,737)           --             --
Reclassification of gain (loss) realized on securities sales                           3,950         2,343           (471)
                                                                                      ------        ------          ------
Total change in unrealized gain (loss) on securities                                     758         2,433           4,543
Tax effect of change in unrealized gain (loss) on securities                            (244)         (730)         (1,587)
Cumulative effect of recording derivative hedge at fair value                             --        (1,374)             --
Change in unrealized loss on qualifying cash flow hedge                               (1,557)       (1,729)             --
Tax effect of change in unrealized loss on qualifying cash flow hedge                    534           930              --
                                                                                      ------        ------          ------
Total change in other comprehensive income (loss) for the year                          (509)         (470)          2,956
Accumulated other comprehensive income (loss) end of year                            $(2,070)      $(1,561)        $(1,091)
                                                                                      ======        ======          ======
</TABLE>





                                                                              88
<PAGE>



NOTE 25. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             FOR THE THREE MONTHS ENDED:
                                                            MARCH 31           JUNE 30      SEPTEMBER 30        DECEMBER 31
                                                            --------           -------      ------------        -----------
                                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                        <C>              <C>               <C>              <C>
2002
Interest income                                              $23,768          $23,097           $23,144          $22,179
Interest expense                                              16,437           15,632            14,602           13,390
Net interest income                                            7,331            7,465             8,542            8,789
Provision for loan losses(1)                                     100            6,185              (565)              --
Noninterest income                                             4,600           (1,717)              963            5,699
Noninterest expense(2)                                        11,613           21,887            11,358           11,474
Income tax expense (benefit)                                      57           (7,834)             (368)           1,155
Net income (loss)                                                161          (14,490)             (920)           1,859
Basic earnings per share                                       $0.02          $(0.90)           $(0.06)            $0.12
Diluted earnings per share                                     $0.02          $(0.90)           $(0.06)            $0.11

2001
Interest income                                              $31,635          $30,070           $28,149          $24,987
Interest expense                                              22,546           21,666            19,976           17,774
Net interest income                                            9,089            8,404             8,173            7,213
Provision for loan losses                                      1,055            3,145             1,150            1,155
Noninterest income                                             2,420            4,311             4,633            2,398
Noninterest expense                                           11,218           12,553            11,058           11,313
Income tax expense (benefit)                                    (341)            (905)               60           (1,252)
Net income (loss)                                               (423)          (2,078)              538           (1,605)
Basic and diluted earnings per share                         $(0.05)          $(0.26)            $ 0.07          $(0.20)
</TABLE>

(1) Provision increased due to significant credit quality deterioration in the
commercial business portfolio and commercial real estate loan portfolio at June
30, 2002.

(2) Increase in noninterest expense primarily due to $8.8 million write-down
taken against premises and equipment during the second quarter. of 2002.





                                                                              89
<PAGE>




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

         None


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this item is incorporated herein by reference to the
information contained in the Company's Proxy Statement in connection with the
Company's 2003 Annual Meeting of Shareholders. Information concerning executive
officers of the Company also required by this item is contained in Part I of
this Repot under the heading "Executive Officers of the Company".

ITEM 11. EXECUTIVE COMPENSATION

Information required by this item is incorporated herein by reference to the
information contained in the Company's Proxy Statement in connection with the
Company's 2003 Annual Meeting of Shareholders.

ITEM 12. OWNERSHIP OF THE COMPANY'S COMMON SHARES BY CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this item is incorporated herein by reference to the
information contained in the Company's Proxy Statement in connection with the
Company's 2003 Annual Meeting of Shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this item is incorporated herein by reference to the
information contained in the Company's Proxy Statement in connection with the
Company's 2003 Annual Meeting of Shareholders.






                                                                              90
<PAGE>


                                     PART IV

ITEM 14. CONTROLS AND PROCEDURES

         Within the 90-day period prior to the filing date of this report, an
evaluation was carried out under the supervision and with the participation of
Metropolitan Financial Corp.'s management, including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the Company's disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934). Based on their evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that the
Company's disclosure controls and procedures are, to the best of their
knowledge, effective to ensure that information required to be disclosed by
Metropolitan Financial Corp. in reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.
Subsequent to the date of their evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that there were no significant changes in
the Company's internal controls or in other factors that could significantly
affect its internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.


ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K

(a) Exhibits, financial statements, and financial statement schedules.

<TABLE>
<S>                                                                            <C>
1.Financial statements                                                          Page No.
  --------------------                                                          --------

                  Report of Independent Auditors                                    51

                  Consolidated Statements of Financial Condition                    52

                  Consolidated Statements of Operations                             53

                  Consolidated Statements of Changes in Shareholders' Equity        54

                  Consolidated Statements of Cash Flows                             55

                  Notes to Consolidated Financial Statements                        57

2. Financial Statement Schedules
   -----------------------------

                  Parent Company Financial Statements                               83
</TABLE>





                                                                              91
<PAGE>


3. Exhibits

EXHIBIT
   NO.                                   DESCRIPTION
   ---                                   -----------

2.1         Agreement and Plan of Merger dated October 23, 2002, by and between
            the Company and Sky Financial Group, Inc. (filed as Exhibit 2.1 to
            the Company's Form 8-K filed on October 24, 2002 and incorporated
            herein by reference).

3.1         Amended and Restated Articles of Incorporation of the Company (filed
            as Exhibit 3.1 to the Company's Form 10-K, filed on March 26, 2002
            and incorporated herein by reference).

3.2         Amended and Restated Code of Regulations of the Company (filed as
            Exhibit 3.2 to the Company's Registration Statement on Form S-1,
            filed February 26, 1999 and incorporated herein by reference).

3.3         Certificate of Amendment by Shareholders to the Amended and Restated
            Articles of Incorporation of Metropolitan Financial Corp. dated
            September 26, 2001 (filed as Exhibit 3.3 on Form 10-Q filed November
            13, 2001).

4.1         Indenture, dated as of April 30, 1998, of the Company relating to
            the 8.60% Junior Subordinated Debentures due June 30, 2028 (filed as
            Exhibit 4.1 to the Company's Form 10-Q, filed May 15, 1998 and
            incorporated herein by reference).

4.2         Amended and Restated Trust Agreement, dated as of April 30, 1998, of
            Metropolitan Capital Trust I (filed as Exhibit 4.2 to the Company's
            Form 10-Q, filed May 15, 1998 and incorporated herein by reference).

4.3         Guarantee of the Company relating to the Trust Preferred Securities
            dated April 30, 1998 (filed as Exhibit 4.3 to the Company's Form
            10-Q, filed May 15, 1998 and incorporated herein by reference).

4.4         Agreement as to Expenses and Liabilities, dated as of April 30, 1998
            (filed as Exhibit 4.4 to the Company's Form 10-Q, filed May 15, 1998
            and incorporated herein by reference).

4.5         Indenture, dated as of May 14, 1999, of the Company relating to the
            9.50% Junior Subordinated Debentures due June 30, 2029 (filed as
            Exhibit 4.1 to the Company's Form S-1, filed May 11, 1999 and
            incorporated herein by reference).

4.6         Amended and Restated Trust Agreement, dated as of May 14, 1999, of
            Metropolitan Capital Trust II (filed as Exhibit 4.4 to the Company's
            Form S-1, filed May 11, 1999 and incorporated herein by reference).

4.7         Guarantee of the Company relating to the Trust Preferred Securities
            dated May 14, 1999 (filed as Exhibit 4.6 to the Company's Form S-1,
            filed May 11, 1999 and incorporated herein by reference).

4.8         Agreement as to Expenses and Liabilities, dated as of May 14, 1999
            (filed as Exhibit D to Exhibit 4.4 to the Company's Form S-1, filed
            May 11, 1999 and incorporated herein by reference).

4.9         Specimen Subordinated Note relating to the 9 5/8% Subordinated Notes
            due January 1, 2005 (filed as Exhibit 4.1 to the Company's Amendment
            1 to the Registration Statement on Form S-1, filed on November 13,
            1995 and incorporated herein by reference).

4.10        Form of Indenture entered into December 1, 1995 between the Company
            and Boatmen's Trust Company (filed as Exhibit 4.1 to the Company's
            Amendment 1 to the Registration Statement on Form S-1, filed on
            November 13, 1995 and incorporated herein by reference).

10.1        Supervisory Agreement dated July 26, 2001 between Metropolitan
            Financial Corp. and the Office of Thrift Supervision (filed as
            Exhibit 10.2 to the Company's Form 10-Q dated August 14, 2001 and
            incorporated herein by reference).


                                                                              92
<PAGE>


10.2        Supervisory Agreement dated July 26, 2001 between Metropolitan Bank
            and Trust Company, the State of Ohio, Division of Financial
            Institutions, and the Office of Thrift Supervision (filed as Exhibit
            10.3 to the Company's Form 10-Q dated August 14, 2001 and
            incorporated herein by reference).

10.3        December 31, 2001 letter from the State of Ohio Division of
            Financial Institutions and Office of Thrift Supervision to
            Metropolitan Bank and Trust Company (filed as Exhibit 99.1 to the
            Company's Form 8-K dated December 31, 2001 and incorporated herein
            by reference).

10.4        December 27, 2001 letter from the Office of Thrift Supervision to
            the Company (filed as Exhibit 99.2 to the Company's Form 8-K dated
            December 31, 2001 and incorporated herein by reference).

10.5        Employment Agreement by and between the Company and Marcus Faust,
            Executive Vice President and Chief Financial Officer dated as of
            June 5, 2002 (filed as Exhibit 10.3 to the Company's Form 10-Q/A
            filed on October 22, 2002 and incorporated herein by reference).

10.6        Loan Agreement by and between Sky Bank and the Company dated
            September 12, 2002 (filed as Exhibit 10.4 to the Company's Form 10-Q
            filed on November 14, 2002 and incorporated herein).

10.7        First Amendment to the Loan Agreement by and between Sky Bank, the
            Company and Robert M. Kaye as guarantor, dated September 20, 2002
            (filed as Exhibit 10.5 to the Company's Form 10-Q filed on November
            14, 2002 and incorporated herein by reference).

10.8        Escrow Agreement by and between the Company and Robert M. Kaye dated
            October 23, 2002 (filed as Exhibit 10.6 to the Company's Form 10-Q
            filed on November 14, 2002 and incorporated herein).

10.9        Retention Pay Plan Agreement by and between the Company and certain
            key employees dated September 24, 2002 (filed as Exhibit 10.7 to the
            Company's Form 10-Q filed on November 14, 2002 and incorporated
            herein).

10.10       Voting Agreement by and between Sky Financial and Robert M. Kaye, as
            Majority Shareholder dated October 23, 2002 (filed as Exhibit 10.8
            to the Company's Form 10-Q filed on November 14, 2002 and
            incorporated herein).

10.11       Artwork Agreement by and between Robert M. Kaye and the Bank and the
            Company dated October 23, 2002.

11          Statement regarding computation of per share earnings (included in
            Note 1 to Consolidated Financial Statements) of this Annual Report
            on Form 10-K.

21          List of subsidiaries of the Company.

23          Consent of Independent Accountants.

24          Power of Attorney.

99.1        Certification of Chief Executive Officer Pursuant to Section 906 of
            the Sarbanes-Oxley Act of 2002.

99.2        Certification of Chief Financial Officer Pursuant to Section 906 of
            the Sarbanes-Oxley Act of 2002.

99.3        Certification of Chief Executive Officer Regarding Disclosure
            Controls and Procedures

99.4        Certification of Chief Financial Officer Regarding Disclosure
            Controls and Procedures




                                                                              93
<PAGE>


Reports on Form 8-K.

         On October 23, 2002, the Company filed an 8-K announcing that it had
released its third quarter and nine months ending September 30, 2002 results and
restated results for the second quarter and six months ended June 30, 2002.

         On October 24, 2002, the Company filed an 8-K announcing that it had
entered into an Agreement and Plan of Merger with Sky Financial Group on October
23, 2002.



                                                                              94
<PAGE>


                                   SIGNATURES

                  Pursuant to the requirements of Sections 13 and 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                         METROPOLITAN FINANCIAL CORP.



                                           By:  /s/ Kenneth T. Koehler
                                           ----------------------------------
                                           Kenneth T. Koehler,
                                           Chief Executive Officer
                                           President, Assistant Secretary,
                                           Assistant Treasurer, and Director
                                           (Principal Executive Officer)

                                           Date:  March 25, 2003
                                                ----------------

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



                                           By:  /s/ Marcus Faust
                                              ------------------
                                           Marcus Faust,
                                           Executive Vice President,
                                           Chief Financial Officer,
                                           (Principal Financial and Accounting
                                           Officer)

                                           Date:  March 25, 2003
                                                ----------------


Malvin E. Bank, Chairman of the Board and Director; Kenneth R. Lehman, Vice
Chairman and Director David P. Miller, Treasurer, Assistant Secretary and
Director; Robert R. Broadbent, Director; Marjorie M. Carlson, Director; Lois K.
Goodman, Director; James A. Karman, Director; Ralph D. Ketchum, Director and
Alfonse M. Mattia, Director.



                                           By:  /s/ Kenneth T. Koehler
                                              ------------------------
                                                    Kenneth T. Koehler
                                                    Attorney-in-Fact


                                           Date:    March 25, 2003
                                                ------------------



                                                                            95