<PAGE>   1

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

  (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, 2000

                                       OR

[ X ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       FOR THE TRANSITION PERIOD FROM ________________ TO ________________

                         COMMISSION FILE NUMBER 0-22387

                               DCB FINANCIAL CORP
             (Exact name of registrant as specified in its charter)

                    OHIO                                        31-1469837
                    ----                                        ----------
       (State or other jurisdiction of                         (IRS Employer
       incorporation or organization)                       Identification No.)

  41 North Sandusky Street, Delaware, Ohio                         43015
  ----------------------------------------                         -----
  (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code  (740) 363-1133
                                                    --------------

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class                Name of each exchange on which registered
           None
           ----                                   --------------

                                   Securities registered pursuant to Section
12(g) of the Act:

                           Common Shares, No par value
                           ---------------------------
                                (Title of class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of 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 ]

At February 28, 2001, the aggregate market value of the voting stock held by
nonaffiliates of the registrant, based on a share price of $11.25 per share
(such price being the average of the bid and asked prices on such date) was
$43,571,419.

At February 28, 2001, the registrant had 4,273,200 common shares issued and
4,178,200 common shares outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Part III of Form 10-K - Portions of the definitive Proxy Statement for the 2001
                        Annual Meeting of Shareholders of DCB Financial Corp



<PAGE>   2




                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS

GENERAL

DCB Financial Corp (the "Corporation") was incorporated under the laws of the
State of Ohio in 1997, at the direction of management of The Delaware County
Bank and Trust Company (the "Bank") for the purpose of becoming a bank holding
company by acquiring all outstanding shares of the Bank. The Corporation
acquired all such shares of the Bank after an interim bank merger, which
transaction was consummated on March 14, 1997. The Bank is a commercial bank,
chartered under the laws of the State of Ohio, and was organized in 1950. The
Bank is the wholly-owned subsidiary of the Corporation and its only significant
asset.

The Bank provides customary retail and commercial banking services to its
customers, including checking and savings accounts, time deposits, IRAs, safe
deposit facilities, personal loans, commercial loans, real estate mortgage
loans, installment loans, night depository facilities and trust services. The
Bank also provides cash management, bond registrar and paying services. Through
its own computer department, the Bank provides data processing services to other
financial institutions; however, such services are not a significant part of
operations or revenue.

The Corporation, through the Bank, grants residential real estate, commercial
real estate, consumer and commercial loans to customers located primarily in
Delaware, Franklin, Licking, Morrow, Marion and Union Counties, Ohio. General
economic conditions in the Corporation's market area have been sound.
Unemployment statistics have generally been among the lowest in the state of
Ohio and real estate values have been stable to rising.

The Bank is not significantly affected by seasonal activity or large deposits of
any individual depositor. At year-end 2000, deposits of public funds (funds of
governmental agencies and municipalities) were 3.82% of total deposits. This
amount can fluctuate, but generally not by a material amount. No material
industry or group concentrations exist in the loan portfolio.

Certain risks are involved in granting loans, primarily related to the
borrowers' ability and willingness to repay the debt. Before the Bank extends a
new loan to a customer, these risks are assessed through a review of the
borrower's past and current credit history, the collateral being used to secure
the transaction in case the customer does not repay the debt, the borrower's
character and other factors. Once the decision has been made to extend credit,
the Bank's independent loan review function and responsible credit officer
monitors these factors throughout the life of the loan. All credit relationships
of $575,000 or more are reviewed annually, as are 30% of credit relationships
from $250,000 to $575,000, 20% of credit relationships from $100,000 to $250,000
(excluding residential mortgages), and 10% of residential mortgages from
$100,000 to $250,000. In addition, any loan identified as a problem credit by
management or during the loan review is assigned to the Bank's "watch loan
list," and is subject to ongoing monitoring by the loan review function to
ensure appropriate action is taken when deterioration has occurred.

Commercial, industrial and agricultural loans are primarily variable rate and
include operating lines of credit and term loans made to small businesses
primarily based on their ability to repay the loan from the business's cash
flow. Such loans are typically secured by business assets such as equipment and
inventory and, occasionally, by the business owner's principal residence. When
the borrower is not an individual, the Bank generally obtains the personal
guarantee of the business owner. As compared to consumer lending, which includes
single-family residence, personal installment loans and automobile loans,
commercial lending entails significant additional risks. These loans typically
involve larger loan balances and are generally dependent on the business's cash
flow and, thus, may be subject to adverse conditions in the general economy or
in a specific industry. Management reviews the borrower's cash flows when
deciding whether to grant the credit to evaluate whether estimated future cash
flows will be adequate to service principal and interest of the new obligation
in addition to existing obligations.




                                       2
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Commercial real estate and farmland loans are primarily secured by
borrower-occupied business real estate and are dependent on the ability of the
related business to generate adequate cash flow to service the debt. Such loans
primarily carry adjustable interest rates. Commercial real estate loans are
generally originated with a loan-to-value ratio of 80% or less. Management
performs much the same analysis when deciding whether to grant a commercial real
estate loan as a commercial loan.

Residential real estate loans and home equity lines of credit carry primarily
adjustable rates, although fixed-rate loans are originated and are secured by
the borrower's residence. Such loans are made based on the borrower's ability to
make repayment from employment and other income. Management assesses the
borrower's ability to repay the debt through review of credit history and
ratings, verification of employment and other income, review of debt-to-income
ratios and other measures of repayment ability. The Bank generally makes these
loans in amounts of 80% or less of the value of collateral. An appraisal is
obtained from a qualified real estate appraiser for substantially all loans
secured by real estate.

Due to the high level of growth in the Corporation's market area, construction
lending has become a significant part of the Corporation's overall lending
strategy. Construction loans are secured by residential and business real
estate, generally occupied by the borrower on completion. The Bank's
construction lending program is established in a manner to minimize risk of this
type of lending by not making a significant amount of loans on speculative
projects. While not contractually required to do so, the Bank usually makes the
permanent loan at the end of the construction phase. Construction loans also are
generally made in amounts of 80% or less of the value of collateral.

Consumer installment loans to individuals include loans secured by automobiles
and other consumer assets, including second mortgages on personal residences.
Consumer loans for the purchase of new automobiles generally do not exceed 85%
of the purchase price of the car. Loans for used cars generally do not exceed
average wholesale or trade-in value as stipulated in a recent auto industry used
car price guide. Credit card and overdraft protection loans are unsecured
personal lines of credit to individuals of demonstrated good credit character
with reasonably assured sources of income and satisfactory credit histories.
Consumer loans generally involve more risk than residential mortgage loans
because of the type and nature of collateral and, in certain types of consumer
loans, the absence of collateral. Since these loans are generally repaid from
ordinary income of an individual or family unit, repayment may be adversely
affected by job loss, divorce, ill health or by general decline in economic
conditions. The Bank assesses the borrower's ability to make repayment through a
review of credit history, credit ratings, debt-to-income ratios and other
measures of repayment ability.

Another way the Bank meets the needs of its customers is through its
lease-financing program. The Bank's leasing program involves leasing vehicles to
individuals and businesses. The vehicle lease program includes new and late
model automobiles and light trucks with terms from 12 to 60 months. The Bank
also provides lease financing to businesses for commercial equipment. The Bank's
comprehensive program includes leasing new and used equipment with flexible
terms, though generally the term of a given lease is limited to some extent by
the type of equipment and its useful life. Average lease terms for commercial
equipment leases generally range from 3 to 8 years. The Bank sets aside a
reserve to cover potential deficiencies in the residual value of the leased
vehicle or equipment upon the termination of the lease.


EMPLOYEES

At December 31, 2000, the Bank employed 206 employees, 191 of whom were
full-time. The Bank provides a number of benefits such as health, dental and
life insurance for all, as well as education assistance for qualified employees.
A 401(k) retirement plan is in place for eligible employees. No employee is
represented by a union or collective bargaining group. Management considers its
employee relations to be good. The Corporation has no employees not also
employed by the Bank.




                                       3
<PAGE>   4



COMPETITION

The Bank operates in a highly-competitive industry due to statewide and
interstate branching by banks, savings and loan associations and credit unions.
In its primary market area of Delaware and surrounding counties, the Bank
competes for new deposit dollars and loans with several other commercial banks,
both large regional banks and smaller community banks, as well as savings and
loan associations, credit unions, finance companies, insurance companies,
brokerage firms and investment companies. The ability to generate earnings is
impacted in part by competitive pricing on loans and deposits, and by changes in
the rates on various U.S. Treasury, U. S. Government Agency and State and
political subdivision issues which comprise a significant portion of the Bank's
investment portfolio, and which rates are used as indices on various loan
products. The Bank is competitive with interest rates and loan fees that it
charges, in pricing and variety of accounts it offers to the depositor. The
dominant pricing mechanism on loans is the Prime interest rate as published in
the Wall Street Journal. The interest spread more than Prime depends on the
overall account relationship and the creditworthiness of the borrower. Deposit
rates are set weekly by the Asset/Liability Committee. The Bank's primary
objective in setting deposit rates is to remain competitive in the market area
while maintaining an adequate interest spread to meet overhead costs.


SUPERVISION AND REGULATION

The Bank is subject to supervision, regulation and periodic examination by the
State of Ohio Superintendent of Financial Institutions and the Federal Deposit
Insurance Corporation. Earnings of the Bank are affected by state and federal
laws and regulations, and by policies of various regulatory authorities. These
policies include, for example, statutory maximum lending rates, requirements on
maintenance of reserves against deposits, domestic monetary policies of the
Board of Governors of the Federal Reserve System, United States fiscal policy,
international currency regulations and monetary policies, certain restrictions
on banks' relationships with many phases of the securities business and capital
adequacy and liquidity restraints. As a financial holding company, the
Corporation is subject to supervision, regulation and periodic examination by
the Federal Reserve Board.

Financial Modernization

The Gramm-Leach-Bliley Act was signed into law on November 12, 1999 and became
effective March 11, 2000. It permits bank holding companies to become financial
holding companies and thereby affiliate with securities firms and insurance
companies and engage in other activities that are financial in nature. A bank
holding company may become a financial holding company if each of its subsidiary
banks is well capitalized under regulatory prompt corrective action provisions,
is well managed, and has at least a satisfactory rating under the Community
Reinvestment Act (CRA) by filing a declaration that the bank holding company
wishes to become a financial holding company. No regulatory approval will be
required for a financial holding company to acquire a company, other than a bank
or savings association, engaged in activities that are financial in nature or
incidental to activities that are financial in nature, as determined by the
Federal Reserve Board.

The Gramm-Leach-Bliley Act defines "financial in nature" to include securities
underwriting, dealing and market making; sponsoring mutual funds and investment
companies; insurance underwriting and agency; merchant banking activities; and
activities that the Board has determined to be closely related to banking.
Subsidiary banks of a financial holding company must continue to be well
capitalized and well managed in order to continue to engage in activities that
are financial in nature without regulatory actions or restrictions, which could
include divestiture of the financial in nature subsidiary or subsidiaries. In
addition, a financial holding company or a bank may not acquire a company that
is engaged in activities that are financial in nature unless each of the
subsidiary banks of the financial holding company or the bank has CRA rating of
satisfactory or better.


                                       4
<PAGE>   5


STATISTICAL DISCLOSURES

The following schedules present, for the periods indicated, certain financial
and statistical information of the Corporation as required under the Securities
and Exchange Commission's Industry Guide 3, or a specific reference as to the
location of required disclosures included as a part of this Form 10-K as of and
for the year ended December 31, 2000.

     I.   DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST
          RATES AND INTEREST DIFFERENTIAL

          A. & B. Average Balance Sheet and Related Analysis of Net Interest
          Earnings

          This information is included under the heading "Yields Earned and
          Rates Paid" on pages 21 through 24 of this document.

          C. Interest Differential

          This information is included under the heading "Yields Earned and
          Rates Paid" on page 24 of this document.

    II.   SECURITIES PORTFOLIO

          A.   The following is a schedule of the carrying value of securities
               at year-end 2000, 1999 and 1998.

<TABLE>
<CAPTION>
           (In thousands of dollars)                                              2000         1999         1998
                                                                                  ----         ----         ----
<S>                                                                           <C>           <C>          <C>
         Securities available for sale (at fair value)
              U.S. Treasury                                                   $    1,016    $   2,261    $    4,556
              U.S. Government agencies and corporations                           60,683       53,262        50,556
              States and political subdivisions                                    6,071        6,011         6,192
              Mortgage-backed                                                     32,141       28,980        28,908
                                                                              ----------    ---------    ----------
              Total debt securities                                               99,911       90,514        90,212
              Other securities                                                     2,044        1,395         1,187
                                                                              ----------    ---------    ----------
              Total securities available for sale                             $  101,955    $  91,909    $   91,399
                                                                              ==========    =========    ==========

         Securities held to maturity (at amortized cost)
              U.S. Government agencies and corporations                       $       --    $      --   $     1,000
              States and political subdivisions                                    5,727        6,777         7,994
              Corporate                                                               --          995        12,150
              Mortgage-backed                                                     24,116       27,473        28,040
                                                                              ----------    ---------    ----------

              Total securities held to maturity                               $   29,843    $  35,245    $   49,184
                                                                              ==========    =========    ==========
</TABLE>


                                       5
<PAGE>   6



          B.   The following is a schedule of maturities for each category of
               debt securities and the related weighted-average yield of such
               securities as of year-end 2000:


<TABLE>
<CAPTION>
(In thousands of dollars)
                           -----------------------------------------Maturing----------------------------------------
                                                         After One            After Five
                                 One Year              Year Through          Years Through              After
                                  or Less               Five Years             Ten Years              Ten Years
                            Amount       Yield      Amount       Yield     Amount       Yield       Amount      Yield
                            ------       -----      ------       -----     ------       -----       ------      -----
<S>                        <C>         <C>        <C>           <C>       <C>          <C>       <C>          <C>
Available for sale
     U.S. Treasury         $   1,016     6.00%    $       --        --%   $      --        --%    $      --        --%
     U.S. Government
       agencies and
       corporations            3,489     6.65         16,823      6.61       34,268      6.67         6,103      7.31
     States and political
       subdivisions              126     5.30            349      5.63        1,220      4.16         4,376      4.58
     Mortgage-backed              --      --             146      6.22        7,632      6.43        24,363      6.80
                           ---------              ----------              ---------               ---------

         Total             $   4,631     6.47%    $   17,318      6.59%   $  43,120      6.56%    $  34,842      6.61%
                           =========   ======     ==========    ======    =========    ======     =========    ======

Held to maturity
     States and political
       subdivisions        $   1,323     4.82%    $    3,208      5.15%   $     782      5.44%    $     414      6.00%
     Mortgage-backed             495     5.96          3,426      6.53        8,926      6.67        11,269      6.98
                           ---------              ----------              ---------               ---------

         Total             $   1,814     5.13%    $    6,634      5.86%   $   9,708      6.57%    $  11,687      6.94%
                           =========   ======     ==========    ======    =========    ======     =========    ======
</TABLE>

               The weighted-average yields are calculated using amortized cost
               of investments and are based on coupon rates for securities
               purchased at par value and on effective interest rates
               considering amortization or accretion if the securities were
               purchased at a premium or discount. The weighted-average yield on
               tax-exempt obligations is presented on a taxable equivalent basis
               based on the Corporation's marginal federal income tax rate of
               34%. Equity securities consist of Federal Home Loan Bank stock
               and stock of other financial institutions that bear no stated
               maturity or yield and are not included in this analysis.

          C.   Excluding holdings of U.S. Treasury securities and other agencies
               and corporations of the U.S. Government, there were no
               investments in securities of any one issuer exceeding 10% of the
               Corporation's consolidated shareholders' equity at year-end 2000.


    III. LOAN PORTFOLIO

          A.   Types of Loans - Total loans on the balance sheet are comprised
               of the following classifications at December 31:

<TABLE>
<CAPTION>
                (In thousands of dollars)               2000         1999         1998         1997         1996
                                                        ----         ----         ----         ----         ----
<S>                                                 <C>           <C>         <C>           <C>          <C>
                Commercial and industrial           $   48,447    $  39,063   $   39,864    $  37,486    $   36,836
                Commercial real estate                 101,891       82,954       66,501       56,434        45,487
                Residential real estate and
                  home equity                           85,820       69,611       63,140       53,686        52,752
                Real estate construction                32,493       29,723       32,382       29,104        23,489
                Consumer and credit card                52,149       45,977       44,050       42,914        38,269
                Lease financing, net                    10,722       10,140        9,352        9,010         6,759
                                                    ----------   ----------   ----------    ---------    ----------

                    Total loans                     $  331,522   $  277,468   $  255,289    $ 228,634    $  203,592
                                                    ==========   ==========   ==========    =========    ==========
</TABLE>


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<PAGE>   7


          B.   Maturities and Sensitivities of Loans to Changes in Interest
               Rates - The following is a schedule of maturities of loans based
               on contractual terms and assuming no amortization or prepayments,
               excluding residential real estate and home equity loans, consumer
               and credit card loans and leases, as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                 ---------------------Maturing ------------------
                                                                   One Year    One Through   After Five
           (In thousands of dollars)                                or Less    Five Years       Years        Total
                                                                    -------    ----------       -----        -----
<S>                                                              <C>          <C>           <C>          <C>
           Fixed rate
           Commercial and industrial                             $    4,235   $    8,292    $     872    $   13,399
           Commercial real estate                                        85        3,219        8,349        11,653
           Real estate construction and land development              3,448        1,229          350         5,027
                                                                 ----------   ----------    ---------    ----------
                Total                                            $    7,768   $   12,740    $   9,571    $   30,079
                                                                 ==========   ==========    =========    ==========

           Variable rate
           Commercial and industrial                             $   19,772   $    9,660    $   5,616    $   35,048
           Commercial real estate                                     5,951       10,360       73,927        90,238
           Real estate construction and land development             13,210        1,305       12,951        27,466
                                                                 ----------   ----------    ---------    ----------
                Total                                            $   38,933   $   21,325    $  92,494    $  152,752
                                                                 ==========   ==========    =========    ==========
</TABLE>

          C.   Risk Elements

               1.  Nonaccrual, Past Due and Restructured Loans - The following
                   schedule summarizes nonaccrual, past due and restructured
                   loans.

<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                                  ------------
                (In thousands of dollars)                     2000        1999        1998       1997        1996
                                                              ----        ----        ----       ----        ----
<S>                                                        <C>         <C>         <C>         <C>        <C>
              (a) Loans accounted for on a nonaccrual
                    basis                                  $  1,278    $     472   $     753   $  1,188   $     501

              (b) Accruing loans which are
                    contractually past due 90 days or
                    more as to interest or principal
                    payments                                    205          156         325        238         489

              (c) Loans which are "troubled debt
                    restructurings" as defined in
                    Statement of Financial
                    Accounting Standards No. 15
                    (exclusive of loans in
                    (a) or (b) above):                           --           --          --         --         143
                                                           --------    ---------   ---------   --------   ---------
                      Totals                               $  1,483    $     628   $   1,078   $  1,426   $   1,133
                                                           ========    =========   =========   ========   =========
</TABLE>

               The policy for placing loans on nonaccrual status is to cease
               accruing interest on loans when management believes that
               collection of interest is doubtful, when loans are past due as to
               principal and interest 90 days or more, except that in certain
               circumstances interest accruals are continued on loans deemed by
               management to be fully collectible. In such cases, loans are
               individually evaluated in order to determine whether to continue
               income recognition after 90 days beyond the due dates. When loans
               are placed on nonaccrual, any accrued interest is charged against
               interest income.


                                       7
<PAGE>   8



               During 2000, $100,000 would have been recorded on nonaccruing
               loans had such loans been accruing pursuant to contractual terms.

          (d)  Impaired Loans - Information regarding impaired loans at year-end
               2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                                      2000        1999       1998
                                                                                      ----        ----       ----
                    (In thousands of dollars)
<S>                                                                                 <C>         <C>        <C>
                    Year-end impaired loans with no allowance for loan
                      losses allocated                                              $   --      $    --     $    --
                    Year-end impaired loans with allowance for loan
                      losses allocated                                                  --           --          --
                    Amount of the allowance allocated                                   --           --          --
</TABLE>

               Impaired loans are comprised of commercial and commercial real
               estate loans, and are carried at present value of expected cash
               flows, discounted at the loan's effective interest rate or at
               fair value of collateral, if the loan is collateral dependent. A
               portion of the allowance for loan losses is allocated to impaired
               loans.

               Smaller-balance homogeneous loans are evaluated for impairment in
               total. Such loans include residential first mortgage and
               construction loans secured by one- to four-family residences,
               consumer, credit card and home equity loans. Such loans are
               included in nonaccrual and past due disclosures in (a) and (b)
               above, but not in impaired loan totals. Commercial loans and
               mortgage loans secured by other properties are evaluated
               individually for impairment. In addition, loans held for sale and
               leases are excluded from consideration of impairment. When
               analysis of borrower operating results and financial condition
               indicates that borrower's underlying cash flows are not adequate
               to meet its debt service requirements, the loan is evaluated for
               impairment. Impaired loans, or portions thereof, are charged off
               when deemed uncollectible.

          2.   Potential Problem Loans - At year-end 2000, no loans were
               identified which management has serious doubts about the
               borrowers' ability to comply with present loan repayment terms
               and which are not included in item III.C.1. above.

          3.   Foreign Outstandings - There were no foreign outstandings during
               any period presented.

          4.   Loan Concentrations - At year-end 2000, there were no
               concentrations of loans greater than 10% of total loans which are
               not otherwise disclosed as a category of loans in Item III.A.
               above.

     D.   Other Interest-Bearing Assets - At year-end 2000, there were no other
          interest-bearing assets required to be disclosed under Item III.C.1.
          or 2. if such assets were loans.


                                       8
<PAGE>   9


     IV.  SUMMARY OF LOAN LOSS EXPERIENCE

     A.   The following schedule presents an analysis of the allowance for loan
          losses, average loan data and related ratios for the years ended
          December 31:

<TABLE>
<CAPTION>
                (In thousands of dollars)         2000           1999           1998          1997          1996
                                                  ----           ----           ----          ----          ----
<S>                                            <C>           <C>           <C>           <C>            <C>
                  Average loans
                    outstanding during
                    period                     $   312,482   $   264,737   $   238,844   $   215,680    $   188,679
                                               ===========   ===========   ===========   ===========    ===========

               ALLOWANCE FOR LOAN LOSSES

                  Balance at beginning of
                    period                     $     2,793   $     1,948   $     1,842   $     1,923    $     1,940

                  Loans charged off:
                    Commercial                        (115)         (358)         (112)         (263)           (66)
                    Commercial real estate              --            --            --           (15)            --
                    Residential real estate
                          and home equity               --           (27)           --            --             --
                   Real estate construction             --            --            --            --             --
                   Consumer and credit card           (391)         (441)         (443)         (346)          (352)
                   Lease financing                      --            --           (13)          (20)          (110)

                  Total loans charged off             (506)         (826)         (568)         (644)          (528)
                                               -----------   -----------   -----------   -----------    -----------
               Recoveries of loans previously charged off:

                    Commercial                          18            43            40            77             30
                    Commercial real  estate             --            --            --            --             --
                    Residential real estate
                           and home equity              --             1            --            --             --
                    Real estate construction            --            --            --            --             --
                    Consumer and credit card           118           124           141           151            114
                    Lease financing                      3             8            24            15              1
                                               -----------   -----------   -----------   -----------    -----------
                  Total loan recoveries                139           176           205           243            145
                                               -----------   -----------   -----------   -----------    -----------
                  Net loans charged off               (367)         (650)         (363)         (401)          (383)
                  Provision charged to
                    operating expense                  908         1,495           469           320            366
                                               -----------   -----------   -----------   -----------    -----------
                  Balance at end of period     $     3,334   $     2,793   $     1,948   $     1,842    $     1,923
                                               ===========   ===========   ===========   ===========    ===========
               Ratio of net charge-offs to
                 average loans outstanding
                 for period                            .12%          .25%          .15%          .19%           .20%
</TABLE>




                                       9
<PAGE>   10



          The allowance for loan losses balance and provision charged to expense
          are determined by management based on periodic reviews of the loan
          portfolio, past loan loss experience, economic conditions and various
          other circumstances which are subject to change over time. In making
          this judgment, management reviews selected large loans as well as
          impaired loans, other delinquent, nonaccrual and problem loans and
          loans to industries experiencing economic difficulties. The
          collectibility of these loans is evaluated after considering current
          operating results and financial position of the borrower, estimated
          market value of collateral, guarantees and the Corporation's
          collateral position versus other creditors. Judgments, which are
          necessarily subjective, as to probability of loss and amount of such
          loss are formed on these loans, as well as other loans taken together.

     B.   The following schedule is a breakdown of the allowance for loan losses
          allocated by type of loan and related ratios.

          While management's periodic analysis of the adequacy of allowance for
          loan losses may allocate portions of the allowance for specific
          problem-loan situations, the entire allowance is available for any
          loan charge-offs that occur.


                                       10
<PAGE>   11




<TABLE>
<CAPTION>
                               ------------------------------Allocation of the Allowance for Loan Losses ----------------
(In thousands of dollars)                      Percentage of                 Percentage of                  Percentage of
                                               Loans in Each                 Loans in Each                  Loans in Each
                                 Allowance      Category to    Allowance      Category to      Allowance     Category to
                                  Amount        Total Loans      Amount       Total Loans       Amount       Total Loans
                                  ------        -----------      ------       -----------       ------       -----------
                                      December 31, 2000             December 31, 1999             December 31, 1998
                                     -----------------              -----------------             -----------------
<S>                               <C>             <C>            <C>             <C>            <C>             <C>
Commercial and industrial         $1,247          14.61%         $  652          14.08%         $  618          15.62%
Commercial real estate               174          30.73             332          29.90             160          26.05
Residential real estate
  and home equity                     73          25.89             111          25.09              93          24.73
Real estate construction              24           9.80              45          10.71              49          12.68
Consumer and credit card             691          15.73             575          16.57             494          17.26
Lease financing                       76           3.23              57           3.65              74           3.66
Unallocated                        1,049             --           1,021             --             460             --
                                  ------         ------          ------         ------          ------         ------
     Total                        $3,334         100.00%         $2,793         100.00%         $1,948         100.00%
                                  ======         ======          ======         ======          ======         ======
</TABLE>

<TABLE>
<CAPTION>
                                          December 31, 1997                  December 31, 1996
                                          -----------------                  -----------------
<S>                                     <C>             <C>              <C>               <C>
Commercial and industrial               $  516          16.40%           $  519            18.09%
Commercial real estate                     178          24.68               273            22.34
Residential real estate and
  home equity                               63          23.48                71            25.91
Real estate construction                    30          12.73                17            11.54
Installment and credit card                465          18.77               533            18.80
Lease financing                             68           3.94               106             3.32
Unallocated                                522             --               404               --
                                        ------         -------           ------           -------
     Total                              $1,842         100.00%           $1,923           100.00%
                                        ======         ======            ======           ======

</TABLE>



                                       11
<PAGE>   12




     V.   DEPOSITS

     A.   The following is a schedule of average deposit amounts and average
          rates paid on each category for the periods indicated:

<TABLE>
<CAPTION>
                                                         Average                            Average
                                                   Amounts Outstanding                     Rate Paid
                                                 Year ended December 31             Year ended December 31
                                                 ----------------------             ----------------------
                                             2000           1999        1998       2000      1999       1998
                                             ----           ----        ----       ----      ----       ----
     (In thousands of dollars)
<S>                                       <C>           <C>          <C>           <C>        <C>        <C>
     Noninterest-bearing demand           $  62,355     $   60,857   $  53,500      N/A        N/A        N/A
     Interest-bearing demand
       deposits                              29,964         28,858      27,527     1.37%      1.99%      2.41%
     Money market investment                163,735        154,736     131,105     6.16       4.97       5.26
     Savings deposits                        42,950         42,316      38,457     2.72       2.81       3.13
     Time deposits                          108,985         83,571      93,498     5.85       5.18       5.53
                                          ---------     ----------   ---------

         Total deposits                   $ 407,989     $ 370,338    $ 344,087     4.42%      3.72%      4.05%
                                          =========     ==========   =========     ====       ====       ====
</TABLE>

     B.   Other categories - not applicable.

     C.   Foreign deposits - not applicable.

     D.   The following is a schedule of maturities of time certificates of
          deposit in amounts of $100,000 or more as of year-end 2000:

                Three months or less                            $     19,934
                Over three through six months                          5,947
                Over six through twelve months                         6,093
                Over twelve months                                     6,679
                                                                ------------

                   Total                                        $     38,653
                                                                ============

     E.   Time deposits greater than $100,000 issued by foreign offices - not
          applicable.


     VI.  RETURN ON EQUITY AND ASSETS

          This information is included under the heading "ITEM 6 - Selected
          Financial Data" on pages 15 and 16 of this document.


     VII. SHORT-TERM BORROWINGS

          This item is not required for the Corporation because average
          outstanding balances of short-term borrowings for the years ending
          December 31, 2000, 1999 and 1998 were less than 30% of shareholders'
          equity at such dates.


                                       12
<PAGE>   13

ITEM 2 - PROPERTIES

The Bank owns and operates its main office at 41 North Sandusky Street,
Delaware, Ohio 43015. The Bank also operates 16 branches and 4 other properties
that are owned or leased as noted below:

1.   Drive-in Office, 33 W. William St., Delaware, Ohio 43015 (owned)

2.   Delaware Center Branch Office, 199 S. Sandusky Street, Delaware, Ohio 43015
     (owned)

3.   Galena Branch Office, 10 Park Street, Galena, Ohio 43021 (owned)

4.   Ostrander Branch Office, 10 West North Street, Ostrander, Ohio 43061
     (owned)

5.   Green Meadows Branch Office, 9191 Columbus Pike, Lewis Center, Ohio 43035
     (leased)

6.   Ashley Branch Office, 1 West High Street, Ashley, Ohio 43003 (owned)

7.   Buehlers Central Office, 800 West Central Avenue, Delaware, Ohio 43015
     (leased)

8.   Marysville Banking Center, 108 South Main Street, Marysville, Ohio 43040
     (leased)

9.   Marysville Banking Center II, 11069 West Fifth Street, Marysville, Ohio
     43040 (leased)

10.  Powell Office, 22 South Liberty Street, Powell, Ohio 43065 (owned)

11.  Sunbury Office, 492 West Cherry Street, Sunbury, Ohio 43074 (leased)

12.  Highland Lakes Office, 6156 Highland Lakes Avenue, Westerville, Ohio 43085
     (leased)

13.  Sawmill Parkway Office, 10149 Brewster Lane, Powell, Ohio 43065 (leased)

14.  Avery Road Office, 6820 Perimeter Loop Road, Dublin, Ohio 43017 (leased)

15.  ATM Express Bank, W. Central Ave., Delaware, Ohio 43015 (leased)

16.  ATM Express Bank, Ohio Wesleyan University, Delaware, Ohio 43015 (leased)

17.  ATM Express Bank, 8208 Marysville Road West, Ostrander, Ohio 43061 (leased)

18.  Operations Center, 163 N. Sandusky Street, Delaware, Ohio 43015 (leased)

19.  ATM Express Bank, 1123 U.S. Route 23 South, Delaware, Ohio 43015 (leased)

20.  Willowbrook Branch Office, 100 Willowbrook Way South, Delaware, Ohio 43015
     (leased)

The Bank considers its physical properties to be in good operating condition and
suitable for the purposes for which they are being used. All the properties
owned by the Bank are unencumbered by any mortgage or security interest and are,
in management's opinion, adequately insured. A portion of the building that
currently houses the main office is leased to two tenants.

In 2000, the Corporation announced plans to construct a new corporate
headquarters near Delaware, Ohio. As of year end 2000, construction was not yet
completed on the new location.


ITEM 3 - LEGAL PROCEEDINGS

There is no pending litigation, other than routine litigation incidental to the
business of the Corporation and Bank, or of a material nature involving or
naming the Corporation or Bank as a defendant. Further, there are no material
legal proceedings in which any director, executive officer, principal
shareholder or affiliate of the Corporation is a party or has a material
interest, which is adverse to the Corporation or Bank. No routine litigation in
which the Corporation or Bank is involved is expected to have a material adverse
impact on the financial position or results of operations of the Corporation or
Bank.


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

No matter was submitted to a vote of the security holders in the fourth quarter
of 2000.


                                       13
<PAGE>   14


PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Corporation had 4,178,200 common shares outstanding on February 28, 2001,
held of record by approximately 1,541 shareholders. The Corporation's common
stock is not traded on any securities exchange. However, several central Ohio
brokerage firms maintain daily bid and ask prices for the Corporation's common
stock. The range of the average known price per common share by quarter provided
in the chart below is based on information received from such brokers. Dividends
are also shown.

<TABLE>
<CAPTION>
                                 ----------------------Quarter ended--------------------
                                 March 31,       June 30,    September 30,   December 31,
                                   2000           2000           2000           2000
                                 ---------      ---------      ---------      ---------
<S>                              <C>            <C>            <C>            <C>
     High                        $   14.25      $   14.38      $   13.38      $   13.00
     Low                             10.13          10.75          12.13          10.25
     Dividends per share               .07            .07            .07            .07
</TABLE>

<TABLE>
<CAPTION>
                                 ----------------------Quarter ended--------------------
                                 March 31,       June 30,    September 30,   December 31,
                                   1999           1999            1999          1999
                                 ---------      ---------      ---------      ---------
<S>                              <C>            <C>            <C>            <C>
     High                        $   17.75      $   18.00      $   16.63      $   16.50
     Low                             16.00          15.00          13.88          14.13
     Dividends per share               .06            .06            .06            .07
</TABLE>

Income of the Corporation primarily consists of dividends, which were
periodically declared and paid by the Board of Directors of the Bank on common
shares of the Bank held by the Corporation. While management expects to maintain
its policy of paying regular cash dividends in the future, no assurances can be
given that any dividends will be declared or, if declared, what the amount of
any such dividends will be. See Note 13 to the consolidated financial statements
for a description of dividend restrictions.


TRANSFER AGENT

DCB Financial Corp acts as transfer agent for the Corporation's common stock.


ANNUAL AND OTHER REPORTS, SHAREHOLDER AND GENERAL INQUIRIES

DCB Financial Corp is required to file an annual report on Form 10-K, for its
fiscal year ended December 31, 2000, with the Securities and Exchange
Commission. Copies of the Form 10-K annual report and the Corporation's
quarterly reports may be obtained without charge by contacting:

     Mr. Donald R. Blackburn
     DCB Financial Corp
     41 N. Sandusky Street
     Delaware, Ohio  43015
     (740) 363-1133


                                       14
<PAGE>   15


ITEM 6 - SELECTED FINANCIAL DATA

The following tables set forth certain information concerning the consolidated
financial condition, earnings and other data regarding the Corporation at the
dates and for the periods indicated. As the Corporation was formed on March 14,
1997, information before the year ended December 31, 1997 is for the Bank.

<TABLE>
<CAPTION>
Selected financial condition                                          At December 31,
  and other data:                   -------------------------------------------------------------------------
                                      2000            1999            1998            1997            1996
                                    --------        --------        --------        --------        --------
                                                                 (In thousands)
<S>                                 <C>             <C>             <C>             <C>             <C>
Assets                              $497,145        $430,005        $418,540        $367,118        $319,117
Cash and cash equivalents             18,497          16,838          15,492          25,283          32,359
Securities available for sale        101,955          91,909          90,399          53,935          47,174
Securities held to maturity           29,843          35,245          49,184          53,834          31,871
Loans and leases - net               328,188         274,675         253,341         226,792         201,669
Deposits                             418,945         371,799         368,918         322,484         279,091
Borrowed funds                        30,422          16,889           9,450           7,005           6,546
Shareholders' equity                  44,899          40,387          38,309          36,040          32,579
</TABLE>


<TABLE>
<CAPTION>
Summary of earnings:                                         Year ended December 31,
                                    ------------------------------------------------------------------------
                                      2000            1999            1998            1997            1996
                                    --------        --------        --------        --------        --------
                                                         (In thousands, except per share data)
<S>                                 <C>             <C>             <C>             <C>             <C>
Interest and dividend income         $36,067         $30,001         $28,928         $26,409         $23,467
Interest expense                      19,607          14,322          14,323          12,369          10,202
                                     -------         -------         -------         -------         -------
Net interest income                   16,460          15,679          14,605          14,040          13,265
Provision for loan losses                908           1,495             469             320             366
                                     -------         -------         -------         -------         -------
Net interest income after
  provision for loan losses           15,552          14,184          14,136          13,720          12,899
Noninterest income                     4,413           4,683           4,139           3,324           2,890
Noninterest expense                   13,134          11,931          11,373           9,772           8,616
                                     -------         -------         -------         -------         -------
Income before income tax               6,831           6,936           6,902           7,272           7,173
Income tax expense                     2,206           2,154           2,168           2,382           2,293
                                     -------         -------         -------         -------         -------
Net income                           $ 4,625         $ 4,782         $ 4,734         $ 4,890         $ 4,880
                                     =======         =======         =======         =======         =======

Per Share Data:
Earnings per share                   $  1.11         $  1.14         $  1.13         $  1.14         $  1.14
                                     =======         =======         =======         =======         =======
Dividends declared per share         $   .28         $   .25         $   .21         $   .27         $   .22
                                     =======         =======         =======         =======         =======
</TABLE>


                                       15
<PAGE>   16



<TABLE>
<CAPTION>
                                                            At or for the year ended December 31,
                                              -----------------------------------------------------------------
Selected financial ratios:                    2000          1999            1998            1997           1996
                                              ----          ----            ----            ----           ----
<S>                                         <C>            <C>             <C>             <C>           <C>
Interest rate spread
(difference between average yield
  on interest-earning assets and
  average cost of interest-
  bearing liabilities)                         2.77%         3.08%           3.01%           3.42%         3.75%
Net interest margin (net
  interest income as a
  percentage of average
  interest-earning assets)                     3.69          3.95            3.95            4.37          4.67
Return on equity (net income
  divided by average equity)                  11.12         12.18           13.64           14.00         15.99
Return on assets (net income
  divided by average total assets)             0.97          1.13            1.21            1.44          1.63
Equity-to-assets ratio (average equity
  divided by average total assets)             8.74          9.31            8.89           10.29         10.22
Dividend payout ratio                         25.23         21.93           18.58           23.68         19.30
Allowance for loan losses as a
  percentage of nonperforming loans          224.81        444.75          180.71          129.17        194.24
</TABLE>


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION (Dollars in thousands, except per share amounts)

BUSINESS OF DCB FINANCIAL CORP

DCB Financial Corp (the "Corporation") was incorporated under the laws of the
State of Ohio on March 14, 1997, at the direction of management and approval of
the shareholders of The Delaware County Bank and Trust Company (the "Bank") for
the purpose of becoming a bank holding company by acquiring all outstanding
shares of the Bank. The Bank is a commercial bank, chartered under the laws of
the State of Ohio, and was organized in 1950. The Bank is the wholly-owned
subsidiary of the Corporation.

The Bank conducts business from its main office at 41 North Sandusky Street in
Delaware, and from its 16 full-service branch offices located in Delaware and
surrounding communities. The Bank provides customary retail and commercial
banking services to its customers, including checking and savings accounts, time
deposits, IRAs, safe deposit facilities, personal loans, commercial loans, real
estate mortgage loans, installment loans, night depository facilities and trust
services. The Bank also provides cash management, bond registrar and paying
services. Through its information systems department, the Bank provides data
processing services to other financial institutions; however, such services are
not a significant part of operations or revenue.

The Corporation, through the Bank, grants residential real estate, commercial
real estate, consumer and commercial loans to customers located primarily in
Delaware, Franklin, Licking, Morrow, Marion and Union Counties, Ohio. General
economic conditions in the Corporation's market area have been very sound.
Unemployment statistics have generally been among the lowest in the State of
Ohio, and real estate values have been stable to rising. The Corporation also
invests in U.S. Government and agency obligations, obligations of states and
political subdivisions, corporate obligations, mortgage-backed securities,
commercial paper and other investments permitted by applicable law. Funds for
lending and other investment activities come primarily from customer deposits,
borrowed funds, loan and security sales and principal repayments.



                                       16
<PAGE>   17

As a financial holding company, the Corporation is subject to regulation,
supervision and examination by the Federal Reserve Board. As a commercial bank
chartered under the laws of the State of Ohio, the Bank is subject to
regulation, supervision and examination by the State of Ohio Superintendent of
Financial Institutions and the Federal Deposit Insurance Corporation (the
"FDIC"). The FDIC insures deposits in the Bank up to applicable limits. The Bank
is also a member of the Federal Home Loan Bank (the "FHLB") of Cincinnati.


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

INTRODUCTION

In the following pages, management presents an analysis of the Corporation's
financial condition and results of operations as of and for the year ended
December 31, 2000, compared to prior years. This discussion is designed to
provide shareholders with a more comprehensive review of the operating results
and financial position than could be obtained from an examination of the
financial statements alone. This analysis should be read in conjunction with the
financial statements and related footnotes and the selected financial data
included elsewhere in this report.


FORWARD-LOOKING STATEMENTS

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

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


ANALYSIS OF FINANCIAL CONDITION

The Corporation's assets totaled $497,145 at year-end 2000 compared to $430,005
at year-end 1999, an increase of $67,140, or 15.6%. The growth in assets was the
result of the investment of funds provided by borrowings and deposit growth into
loans.



                                       17
<PAGE>   18


Total securities remained relatively stable at $131,798 at year-end 2000
compared to $127,154 at year-end 1999. The stability in securities was the
result of the majority of proceeds from maturities, calls and principal
repayments being reinvested in the portfolio. The Corporation invests primarily
in U.S. Treasury notes, Obligations of U.S. government agencies and
corporations, municipal bonds, corporate obligations and mortgage-backed
securities. Mortgage-backed securities include Federal Home Loan Mortgage
Corporation ("FHLMC"), Government National Mortgage Association ("GNMA"),
Federal National Mortgage Association ("FNMA") participation certificates and
Collateralized Mortgage Obligations ("CMOs"). Securities classified as available
for sale totaled $101,955, or 77.4% of the total securities portfolio, at
year-end 2000. Management classifies securities as available for sale to provide
the Corporation with the flexibility to move funds into loans as demand
warrants. The mortgage-backed securities portfolio, totaling $56,257 at year-end
2000, provides the Corporation with a constant cash flow stream from principal
repayments. The Corporation held no derivative securities or structured notes
during any period presented.

Total loans increased $54,054, or 19.5%, from $277,468 at year-end 1999 to
$331,522 at year-end 2000. Growth was experienced in the majority of loan
categories; however, the largest increases were in real estate-related loans.
Commercial real estate loans increased $18,937, or 22.8%, from $82,954 at
year-end 1999 to $101,891 at year-end 2000. In addition, residential real estate
and home equity loans increased $16,209, or 23.3%, from $69,611 at year-end 1999
to $85,820 at year-end 2000 while construction loans, both residential and
commercial, increased $2,770, or 9.3%. The continued growth in total real estate
loans is related to growth in the Corporation's market area, as the Corporation
has not changed its philosophy regarding pricing or underwriting standards
during the year. Strong population growth in the Corporation's market
contributed to the increase. In addition, the Corporation has been able to take
advantage of a strong local economy and the large number of businesses moving
into the market. Commercial and industrial loans increased $9,384, or 24.0%.
There is no concentration of lending to any one industry.

Due to the strong loan growth, the gross loan to deposit ratio increased to
79.1% at year-end 2000 compared to 74.6% at year-end 1999.

Premises and equipment increased $4,119 in 2000 from $4,384 at year-end 1999 to
$8,503 at year-end 2000. The increase in fixed assets is mostly due to
construction related the new corporate headquarters. The expected costs of the
project are estimated to be approximately $5 million. As of December 31, 2000,
the Corporation had paid costs of $2.7 million related to the new corporate
headquarters.

During 2000, the Corporation purchased a 9% interest in ProFinance Holdings
Corporation ("ProFinance"), the holding company for Century Surety Company, a
property and casualty insurance company based in Columbus, Ohio. The
Corporation's investment, which totaled $1,931, along with the investments of
four other community banks comprises a 50% ownership interest. The remaining 50%
of ProFinance is held by management of the company and a venture capital firm
based in Columbus, Ohio.

Total deposits increased $47,146 or 12.7%, from $371,799 at year-end 1999 to
$418,945 at year-end 2000. Noninterest-bearing deposits increased $5,677, or
10.0%, while interest-bearing deposits increased $41,469, or 13.2%.
Interest-bearing demand and money market deposits decreased from 60.6% of total
interest-bearing deposits at year-end 1999 to 56.1% of total interest-bearing
deposits at year-end 2000 as the Corporation experienced a $9,032, or 4.7%,
increase in volume of such accounts. Growth in such deposits has been primarily
due to growth in the Corporation's market area, as the Corporation has not used
special promotions to attract the increased volume. Management believes the
funds received from this deposit growth are fairly stable based on the growth in
the Corporation's market area. The Corporation experienced a $1,182 decrease in
savings deposits while such accounts decreased from 13.8% of total
interest-bearing deposits at year-end 1999 to 11.8% of total interest-bearing
deposits at year-end 2000. Certificates of deposit increased $33,619, or 41.7%,
comprising 32.1% of total interest-bearing deposits at year-end 2000 compared to
25.6% at year-end 1999. The increase in certificates of deposit was primarily
due to the gain of price-sensitive public funds.


                                       18
<PAGE>   19



Borrowed funds totaled $30,422 at year-end 2000 compared to $16,889 at year-end
1999. The increase resulted as the Corporation borrowed an additional $25,000
from the FHLB through long-term advances in 2000 while repaying its short-term
advances totaling $11,000 at year-end 1999. At year-end 2000, the Corporation
also had a mortgage-matched advance with a remaining balance of $3,535 with an
original term of 10 years and carrying a fixed interest rate of 5.10%. Principal
and interest on the advance are due monthly. Borrowed funds also include a
demand note issued to the U.S. Treasury that totaled $1,887 at year-end 2000 and
$2,000 at year-end 1999.


COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000
AND DECEMBER 31, 1999

NET INCOME. Net income for 2000 totaled $4,625, decreasing slightly compared to
net income for 1999 of $4,782. Earnings per share was $1.14 for 1999 and $1.11
for 2000. Return on average assets was 0.97% and 1.13% for 2000 and 1999, while
return on average shareholders' equity was 11.12% and 12.18% over the same two
years.

NET INTEREST INCOME. Net interest income represents the amount by which interest
income on interest-earning assets exceeds interest paid on interest-bearing
liabilities. Net interest income is the largest component of the Corporation's
income and is affected by the interest rate environment and the volume and
composition of interest-earning assets and interest-bearing liabilities.

Net interest income was $16,460 for 2000 compared to $15,679 for 1999. The $781
increase in 2000 over 1999 was the result of an increase in the average level of
interest-earning assets partially offset by an increase in the average level of
interest-bearing liabilities. Growth in net interest income was also partly
constrained by an increase in the average yield paid on interest-bearing
liabilities from 4.48% in 1999 to 5.30% in 2000, while the average yield earned
on interest-earning assets increased from 7.56% in 1999 to 8.07% in 2000. The
increases in the average yield paid on interest-bearing liabilities and the
average yield earned on interest-earning assets was the result for the most part
of the rising interest rate environment experienced in 2000.

As a result of the aforementioned shifts in the components of interest-earning
assets and interest-bearing liabilities, as well as movements in market interest
rates, the Corporation's net interest margin, which is calculated by dividing
net interest income by average interest-earning assets, decreased from 3.95% in
1999 to 3.68% in 2000.

PROVISION AND ALLOWANCE FOR LOAN AND LEASE LOSSES. The provision for loan and
lease losses represents the charge to income necessary to adjust the allowance
for loan and lease losses to an amount that represents management's assessment
of the losses inherent in the Corporation's loan portfolio. All lending activity
contains associated risks of loan losses and the Corporation recognizes these
credit risks as a necessary element of its business activity. To assist in
identifying and managing potential loan losses, the Corporation maintains a loan
review function that regularly evaluates individual credit relationships as well
as overall loan-portfolio conditions. One of the primary objectives of this loan
review function is to make recommendations to management as to both specific
loss reserves and overall portfolio-loss reserves.

The provision for loan and lease losses totaled $908 in 2000 compared to $1,495
in 1999. The decrease in the provision was due to a decrease in net charge-offs
for 2000 partially offset by continued growth in the loan portfolio. Net
charge-offs for 2000 were $367, which represents .12% of average loans, compared
to net charge-offs of $650, or .25% of average loans in 1999.



                                       19
<PAGE>   20



The allowance for loan losses increased from $2,793 at year-end 1999 to $3,334
at year-end 2000. As a percent of gross loans and leases, the allowance remained
constant at 1.01% at year-end 1999 and 2000. Nonperforming loans, defined as
loans on nonaccrual status plus accruing loans past due 90 days or more, were
$1,483, or 0.45% of gross loans, at year-end 2000 compared to $628, or .23% of
gross loans, at year-end 1999. Such loans have been considered in management's
analysis of the allowance for loan and lease losses. The allowance was 224.81%
of nonperforming loans at year-end 2000, compared to 444.75% at year-end 1999.

NONINTEREST INCOME AND NONINTEREST EXPENSE. Total noninterest income decreased
$270, or 5.8%, in 2000 compared to 1999. The decrease was due primarily to a
decrease in gains from sales of loans and data service fees partially offset by
increased fee income from deposit and cash management accounts and the
Corporation's trust department.

Total noninterest expense increased $1,203, or 10.1%, in 2000 compared to 1999.
The increase was primarily the result of increases in salaries and employee
benefits and other expense, which comprised $1,017 of the total increase. These
were planned increases relating to increased staffing and the full year's effect
of a new branch facility opened in 1999. The new branch is strategically located
in an area of Franklin County currently experiencing strong population growth
rates. With its broad line of products and services, the Corporation expects to
be able to meet the needs of the market and obtain the business needed to
sustain the new branch and contribute to overall profitability. Management
expects noninterest expense to increase in the future due to the depreciation of
the new corporate headquarters once complete.

INCOME TAXES. The change of income tax expense is primarily attributable to the
change in income before income taxes. See Note 11 to the consolidated financial
statements. The provision for income taxes totaled $2,206 in 2000 and $2,154 in
1999 resulting in effective tax rates of 32.3% and 31.1%.


COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1999
AND DECEMBER 31, 1998

NET INCOME. Net income for 1999 totaled $4,782, increasing slightly compared to
net income for 1998 of $4,734. Earnings per share was $1.13 for 1998 and $1.14
for 1999. Return on average assets was 1.13% and 1.21% for 1999 and 1998, while
return on average shareholders' equity was 12.18% and 13.64% over the same two
years.

NET INTEREST INCOME. Net interest income was $15,679 for 1999 compared to
$14,605 for 1998. The $1,074 increase in 1999 over 1998 was the result of an
increase in the average level of interest-earning assets partially offset by an
increase in the average level of interest-bearing liabilities. Growth in net
interest income was also partly constrained by a decrease in the average yield
earned on interest-earning assets from 7.82% in 1998 to 7.56% in 1999, while the
average yield on interest-bearing liabilities decreased from 4.81% in 1998 to
4.48% in 1999. The decrease in the average yield earned on interest-earning
assets was the result of the decrease in the average yield earned on loans and
leases from 8.82% in 1998 to 8.33% in 1999.

PROVISION AND ALLOWANCE FOR LOAN AND LEASE LOSSES. The provision for loan and
lease losses totaled $1,495 in 1999 compared to $469 in 1998. The growth in the
provision is due to the Corporation's belief that it was appropriate to increase
the overall allowance as a percentage of total loans due to changes in loan mix,
portfolio characteristics and regulatory recommendations, as well as continued
growth in the loan portfolio and increased loan charge-offs in 1999. Net
charge-offs for 1999 were $650, which represents .25% of average loans, compared
to net charge-offs of $363, or .15% of average loans in 1998.



                                       20
<PAGE>   21


The allowance for loan losses increased from $1,948 at year-end 1998 to $2,793
at year-end 1999. As a percent of gross loans and leases, the allowance
increased from .76% to 1.01% over the same period. Nonperforming loans, defined
as loans on nonaccrual status plus accruing loans past due 90 days or more, were
$628, or .23% of gross loans, at year-end 1999 compared to $1,078, or .42% of
gross loans, at year-end 1998. Such loans have been considered in management's
analysis of the allowance for loan and lease losses. The allowance was 444.75%
of nonperforming loans at year-end 1999, compared to 180.71% at year-end 1998.

NONINTEREST INCOME AND NONINTEREST EXPENSE. Total noninterest income increased
$544, or 13.1%, in 1999 compared to 1998. The increase was due primarily to
increased fee income from deposit and cash management accounts, the
Corporation's data service center and trust department and income from
bank-owned life insurance, partially offset by decreased gains on loan sales.

Total noninterest expense increased $558, or 4.9%, in 1999 compared to 1998. The
increase was primarily the result of increases in salaries and employee benefits
and equipment expense, which comprised $474 of the total increase. These were
planned increases relating to increased staffing and the addition of a new
branch facility in 1999. The new branch is strategically located in an area of
Franklin County currently experiencing strong population growth rates. With its
broad line of products and services, the Corporation expects to be able to meet
the needs of the market and obtain the business needed to sustain the new branch
and contribute to overall profitability.

INCOME TAXES. The change of income tax expense is primarily attributable to the
change in income before income taxes. See Note 11 to the consolidated financial
statements. The provision for income taxes totaled $2,154 in 1999 and $2,168 in
1998 resulting in effective tax rates of 31.1% and 31.4%.

YIELDS EARNED AND RATES PAID. The following table sets forth certain information
relating to the Corporation's average balance sheet information and reflects the
average yield on interest-earning assets and the average cost of
interest-bearing liabilities for the periods indicated. Such yields and costs
are derived by dividing income or expense by the average monthly balance of
interest-earning assets or interest-bearing liabilities, for the periods
presented. Average balances are derived from daily balances, which include
nonaccruing loans in the loan portfolio.




                                       21
<PAGE>   22

<TABLE>
<CAPTION>
                                                                        Year ended December 31,
                                   ----------------------------------------------------------------------------------------------
                                                2000                             1999                            1998
                                   ------------------------------   ------------------------------  -----------------------------
                                     Average     Interest             Average   Interest              Average   Interest
                                   outstanding    earned/  Yield/   outstanding  earned/    Yield/  outstanding  earned/   Yield/
                                     balance       paid     rate      balance     paid       rate     balance     paid      rate
                                     -------       ----     ----      -------     ----       ----     -------     ----      ----
<S>                                 <C>          <C>       <C>       <C>         <C>        <C>      <C>         <C>       <C>
Interest-earning assets:
    Federal funds sold              $  4,894     $   297    6.07%    $  6,443    $   348     5.40%   $ 14,987    $   802    5.35%
    Securities (1)
       Taxable                        61,146       4,141    6.77       59,146      3,661     6.19      65,968      4,046    6.15
       Tax-exempt (2)                 11,621         557    4.79       12,936        621     4.80       8,416        434    5.17
    Mortgage-backed
       securities (1)                 56,520       3,759    6.65       53,572      3,327     6.21      41,887      2,586    6.19
    Loans and leases (3)             312,482      27,313    8.74      264,737     22,044     8.33     238,844     21,060    8.82
                                    --------     -------             --------    -------             --------    -------

       Total interest-earning
          assets                     446,663      36,067    8.07      396,834     30,001     7.56     370,102     28,928    7.82
                                                 -------                         -------                         -------

Noninterest-earning assets:
    Cash and amounts due
       from banks                     16,806                           15,324                          13,575
    Premises and equipment, net        5,098                            3,849                           3,781
    Other nonearning assets           10,420                            8,113                           4,580
    Allowance for loan losses         (3,084)                          (2,266)                         (1,903)
                                    --------                         --------                        --------

       Total assets                 $475,903                         $421,854                        $390,135
                                    ========                         ========                        ========

Interest-bearing liabilities:
    Demand and money market
       deposits                     $193,699      10,496    5.42%    $183,594      8,262     4.50%   $158,632      7,560    4.77%
    Savings deposits                  42,950       1,168    2.72       42,316      1,190     2.81      38,457      1,203    3.13
    Certificates of deposit          108,985       6,374    5.85       83,571      4,331     5.18      93,498      5,173    5.53
                                    --------     -------             --------    -------             --------    -------
       Total deposits                345,634      18,038    5.22      309,481     13,783     4.45     290,587     13,936    4.80

    Borrowed funds                    24,298       1,569    6.46       10,330        539     5.22       7,061        387    5.48
                                    --------     -------             --------    -------             --------    -------

       Total interest-bearing
          liabilities                369,932      19,607    5.30      319,811     14,322     4.48     297,648     14,323    4.81
                                                 -------                         -------                         -------

</TABLE>

(Continued on next page)


                                       22
<PAGE>   23


<TABLE>
<CAPTION>
                                                                        Year ended December 31,
                                   ----------------------------------------------------------------------------------------------
                                                2000                             1999                            1998
                                   ------------------------------   ------------------------------  -----------------------------
                                     Average     Interest             Average   Interest              Average   Interest
                                   outstanding    earned/  Yield/   outstanding  earned/    Yield/  outstanding  earned/   Yield/
                                     balance       paid     rate      balance     paid       rate     balance     paid      rate
                                     -------       ----     ----      -------     ----       ----     -------     ----      ----
<S>                                 <C>           <C>      <C>       <C>         <C>        <C>      <C>         <C>       <C>
(Continued)
Noninterest-bearing liabilities:
    Demand deposits                 $ 62,355                         $ 60,857                        $ 53,500
    Other liabilities                  2,011                            1,912                           4,291
                                    --------                         --------                        --------

       Total liabilities             434,298                          382,580                         355,439

Shareholders' equity                  41,605                           39,274                          34,696
                                    --------                         --------                        --------

       Total liabilities &
         shareholders' quity        $475,903                         $421,854                        $390,135
                                    ========                         ========                        ========

Net interest income; interest
    rate spread                                  $16,460     2.77%               $15,679      3.08%              $14,605     3.01%
                                                 =======   ======                =======    ======               =======   ======

Net interest margin (net
  interest income as a percent
  of average interest-earning
  assets)                                                    3.69%                            3.95%                          3.95%
                                                           ======                           ======                         --====

Average interest-earning
  assets to average
  interest-bearing liabilities                             120.74%                          124.08%                        124.34%
                                                           ======                           ======                         ======
</TABLE>

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

(1)  Average balance includes unrealized gains and losses while yield is based
     on amortized cost.

(2)  Interest on tax-exempt securities is reported on a historical basis without
     tax-equivalent adjustment. Interest on tax-exempt securities on a tax
     equivalent basis was $844 in 2000, $941 in 1999, and $658 in 1998.

(3)  Calculated net of deferred loan fees, loan discounts, unearned interest and
     loans in process. Includes nonaccrual loans.



                                       23
<PAGE>   24



The table below describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected the Corporation's interest income and expense during the years
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (1) changes in
volume (multiplied by prior year rate); (2) changes in rate (multiplied by prior
year volume); and, (3) total changes in rate and volume. The combined effects of
changes in both volume and rate, that are not separately identified, have been
allocated proportionately to the change due to volume and change due to rate:


<TABLE>
<CAPTION>
                                                                 Year ended December 31,
                                          -----------------------------------------------------------------------
                                                     2000 vs.1999                        1999 vs. 1998
                                          -------------------------------   -------------------------------------
                                               Increase                             Increase
                                              (decrease)                           (decrease)
                                                due to                               due to
                                          ------------------                     ----------------
                                          Volume        Rate        Total        Volume       Rate         Total
                                          ------        ----        -----        ------       ----         -----
<S>                                      <C>          <C>          <C>          <C>          <C>          <C>
Interest income attributable to:
     Federal funds sold                  $   (90)     $    39      $   (51)     $  (461)     $     7      $  (454)
     Securities:
         Taxable                             127          353          480         (422)          37         (385)
         Tax-exempt                          (63)          (1)         (64)         219          (32)         187
     Mortgage-backed securities              189          243          432          726           15          741
     Loans and leases                      4,131        1,138        5,269        2,199       (1,215)         984
                                         -------      -------      -------      -------      -------      -------

              Total interest income        4,294        1,772        6,066        2,261       (1,188)       1,073
                                         -------      -------      -------      -------      -------      -------

Interest expense attributable to:
     Demand deposits                         474        1,760        2,234        1,141         (439)         702
     Savings deposits                         18          (40)         (22)         115         (128)         (13)
     Certificates of deposit               1,436          607        2,043         (527)        (315)        (842)
     Borrowings                              876          154        1,030          171          (19)         152
                                         -------      -------      -------      -------      -------      -------

              Total interest expense       2,804        2,481        5,285          900         (901)          (1)
                                         -------      -------      -------      -------      -------      -------

Increase (decrease) in net
  interest income                        $ 1,490      $  (709)     $   781      $ 1,361      $  (287)     $ 1,074
                                         =======      =======      =======      =======      =======      =======
</TABLE>


ASSET AND LIABILITY MANAGEMENT AND MARKET RISK

The Corporation's primary market risk exposure is interest rate risk and, to a
lesser extent, liquidity risk. Interest rate risk is the risk that the
Corporation's financial condition will be adversely affected due to movements in
interest rates. The income of financial institutions is primarily derived from
the excess of interest earned on interest-earning assets over the interest paid
on interest-bearing liabilities. Accordingly, the Corporation places great
importance on monitoring and controlling interest rate risk.


                                       24
<PAGE>   25



There are several methods employed by the Corporation to monitor and control
interest rate risk. One such method is using a gap analysis. The gap is defined
as the repricing variance between rate sensitive assets and rate sensitive
liabilities within certain periods. The repricing can occur due to changes in
rates on variable rate products as well as maturities of interest-earning assets
and interest-bearing liabilities. A high ratio of interest sensitive
liabilities, generally referred to as a negative gap, tends to benefit net
interest income during periods of falling interest rates as the average rate
paid on interest-bearing liabilities declines faster than the average rate
earned on interest-earning assets. The opposite holds true during periods of
rising interest rates. The Corporation attempts to minimize the interest rate
risk through management of the gap in order to achieve consistent shareholder
return. The Corporation's asset and liability management policy is to maintain a
laddered gap position. One strategy used by the Corporation is to originate
variable rate loans tied to market indices. Such loans reprice on an annual,
quarterly, monthly or daily basis as the underlying market indices change.
Currently, $331,522, or 72.5%, of the Corporation's loan portfolio reprices on a
regular basis. The Corporation also invests excess funds in liquid federal funds
that mature and reprice on a daily basis. The Corporation also maintains most of
its securities in the available for sale portfolio to take advantage of interest
rate swings and to maintain liquidity for loan funding and deposit withdrawals.

The following table provides information about the Corporation's financial
instruments that are sensitive to changes in interest rates as of December 31,
2000, based on information and assumptions set forth in the Notes. The
Corporation believes the assumptions utilized are reasonable. For loans,
securities and liabilities with contractual maturities, the table represents
principal cash flows and the weighted average interest rate. For variable-rate
loans the contractual maturity and weighted-average interest rate was used with
an explanatory footnote as to repricing periods. For liabilities without
contractual maturities such as demand and savings deposit accounts, a decay rate
was utilized to match their most likely withdrawal behavior.

<TABLE>
<CAPTION>
                                                                                                            Estimated
                                                                                                              Fair
                                 2001      2002         2003     2004       2005    Thereafter     Total      Value
                                 ----      ----         ----     ----       ----    ----------     -----      -----
<S>                          <C>         <C>        <C>        <C>        <C>        <C>         <C>         <C>
Rate-sensitive assets:
Fixed-rate loans (1)         $  14,983   $10,562    $ 14,717   $ 19,408   $ 20,580   $ 10,796    $ 91,046    $ 91,123
Average interest rate             8.81%     9.45%       9.47%      8.91%      9.32%      9.17%       8.94%
Variable-rate loans (1) (2)     52,932    10,306       6,714      5,890      9,462    155,172     240,476     240,711
Average interest rate             9.95      9.58        9.35       9.33       9.58       8.73        8.71
Fixed-rate debt securities -
  available for sale (1)         4,631     2,683       6,133      2,184      6,172     45,967      67,770      67,770
Average interest rate             6.47      6.26        6.32       6.61       6.98       6.48        6.51
Fixed-rate debt securities -
  held to maturity (1)           1,323       661       1,113      1,213        221      1,196       5,727       5,794
Average interest rate             4.82      4.98        5.29       5.25       4.48       5.64        5.18
Fixed-rate mortgage-backed
  securities - available
  for sale (3)                   2,379     2,129       1,135      1,022        919      8,276      15,860      15,860
Average interest rate             6.69      6.66        6.69       6.69       6.69       6.69        6.69
Variable-rate mortgage-
  backed securities -
  available for sale (4)           814       773         735        698        663     12,598      16,281      16,281
Average interest rate             6.73      6.73        6.73       6.73       6.73       6.73        6.73
Fixed-rate mortgage-backed
  securities - held to
  maturity (3)                   4,038     3,551       2,273      2,330      1,287     10,637      24,116      24,162
Average interest rate             6.70      6.74        6.72       6.75       6.80       6.84        6.78
Federal funds sold (5)             700         -           -          -          -          -         700         700
Average interest rate             6.00         -           -          -          -          -        6.00

Total rate-sensitive assets     81,800    30,665      32,820     32,745     39,304    244,642     461,976     462,401
Average interest rate             9.14      8.54        7.02       8.43       8.80       8.06        8.14

</TABLE>
(Continued on next page)


                                       25
<PAGE>   26



(Continued)
<TABLE>
<CAPTION>
                                                                                                            Estimated
                                                                                                              Fair
                                 2001      2002         2003     2004       2005    Thereafter     Total      Value
                                 ----      ----         ----     ----       ----    ----------     -----      -----
<S>                          <C>         <C>        <C>        <C>        <C>        <C>         <C>         <C>
Rate-sensitive liabilities:
Noninterest-bearing
  deposits (6)                $ 15,678   $ 12,542    $ 9,406    $ 7,839    $ 7,839   $  9,406    $ 62,710    $ 62,710
Average interest rate                -          -          -          -          -          -           -
Interest-bearing demand
  deposits (7)                  48,380     48,380     36,285     36,285     24,190     48,380     241,900     241,900
Average interest rate             4.95%      4.95%      4.95%      4.95%      4.95%      4.95%       4.95%
Time deposits (8)               92,660     20,350      1,222          3        -          100     114,335     116,502
Average interest rate             5.76       6.40       5.77       4.55          -       6.00        5.87
Fixed-rate borrowings (8)       12,259     15,391        412        433        456      1,471      30,422      30,157
Average interest rate             6.50       6.63       5.10       5.10       5.10       5.10        6.44

Total rate-sensitive
  liabilities                  168,977     96,663     47,325     44,560     32,485     59,357     449,367     451,269
Average interest rate             5.05       4.88       3.99       4.08       3.76       4.17        4.59

</TABLE>

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

(1)  Assumes normal amortization based on contractual maturity and repayment.

(2)  Variable-rate commercial and home-equity loans are based on the prime rate
     of interest as stated in the Wall Street Journal and are subject to
     repricing when the prime rate is adjusted. Variable-rate mortgage loans are
     based on a constant-maturity treasury index and are subject to repricing on
     a 1-, 3- and 5-year basis.

(3)  In addition to amounts contractually due in the periods indicated,
     fixed-rate mortgage-backed securities assume a prepayment rate on the
     remaining balances of 15% for the first two years and 10% for years 3, 4
     and 5 with the remaining 40% being more than 5 years.

(4)  In addition to amounts contractually due in the periods indicated,
     variable-rate mortgage-backed securities assume a prepayment rate on the
     remaining balances of 5% for each year with the remaining 75% being more
     than 5 years.

(5)  The interest rate on federal funds is subject to daily repricing and is
     that which is currently offered by the correspondent banks buying these
     short-term, overnight funds.

(6)  Noninterest-bearing checking accounts assume a decay rate of 25% for year
     1, 20% for year 2, 15% for year 3 and 12.5% for each of years 4 and 5 with
     the remaining 15% being more than 5 years.

(7)  Savings, NOW and money market accounts assume a decay rate of 20% for each
     of years 1 and 2, 15% for each of years 3 and 4 and 10% for year 5 with the
     remaining 20% being more than 5 years.

(8)  Based on contractual maturity as management believes expected maturity is
     not significantly different from contractual maturity.

The principal cash flows and the weighted-average interest rates of
rate-sensitive assets and liabilities expected at year-end 2000 did not
significantly change from year-end 1999. The following table provides summary
information about the Corporation's financial instruments that were sensitive to
changes in interest rates as of year-end 1999 and was prepared using assumptions
similar to that of the above table.


<TABLE>
<CAPTION>
                                                                                                            Estimated
                                                                                                              Fair
                                 2001      2002         2003     2004       2005    Thereafter     Total      Value
                                 ----      ----         ----     ----       ----    ----------     -----      -----
<S>                          <C>         <C>        <C>        <C>        <C>        <C>         <C>         <C>
Total rate-sensitive assets   $ 75,110   $ 26,257    $ 29,131   $ 30,022   $ 32,257   $217,443    $410,220    $409,595
Average interest rate             8.39%      7.98%       8.46%      7.92%      7.89%      7.72%       7.92%

Total rate-sensitive
  liabilities                 $118,275   $ 94,001    $ 45,504   $ 42,649   $ 30,967   $ 57,292    $388,688    $388,747
Average interest rate             4.27%      4.32%       3.65%      3.72%      3.44%      3.82%       4.02%
</TABLE>


                                       26
<PAGE>   27


LIQUIDITY

Liquidity is the ability of the Corporation to fund customers' needs for
borrowing and deposit withdrawals. The purpose of liquidity management is to
assure sufficient cash flow to meet all of the financial commitments and to
capitalize on opportunities for business expansion. This ability depends on the
institution's financial strength, asset quality and types of deposit and
investment instruments offered by the Corporation to its customers. The
Corporation's principal sources of funds are deposits, loan and securities
repayments, maturities of securities, sales of securities available for sale and
other funds provided by operations. The Bank also has the ability to borrow from
the FHLB. While scheduled loan repayments and maturing investments are
relatively predictable, deposit flows and early loan and mortgage-backed
security prepayments are more influenced by interest rates, general economic
conditions and competition. The Corporation maintains investments in liquid
assets based upon management's assessment of (1) need for funds, (2) expected
deposit flows, (3) yields available on short-term liquid assets and (4)
objectives of the asset/liability management program.

Cash and cash equivalents increased $1,659, or 9.9%, from $16,838 at year-end
1999 to $18,497 at year-end 2000. Cash and cash equivalents at year-end 2000
represented 3.7% of total assets compared to 3.9% of total assets at year-end
1999. The Corporation has the ability to borrow funds from the Federal Home Loan
Bank and has various federal fund sources from correspondent banks, should the
Corporation need to supplement its future liquidity needs in order to meet loan
demand or to fund investment opportunities. Management believes the
Corporation's liquidity position is strong based on its high level of cash, cash
equivalents, core deposits, the stability of its other funding sources and the
support provided by its capital base.

As summarized in the Consolidated Statements of Cash Flows, the most significant
transactions which affected the Corporation's level of cash and cash
equivalents, cash flows and liquidity during 2000 were securities purchases of
$60,954; the net increase in loans of $53,802; the net increase in deposits of
$47,146; securities sales of $31,765; the proceeds from long-term debt of
$25,000; the receipt of proceeds from maturities and repayments of securities of
$26,474; and the net decrease in short-term borrowings of $11,113.


CAPITAL RESOURCES

Total shareholders' equity increased $4,512, primarily due to earnings retained
and the $1,057 after-tax increase in the fair value of securities available for
sale. The increase is net of cash dividends paid of $1,170. The Corporation did
not purchase any shares of treasury stock during 2000. However, management may
purchase shares in the future, as opportunities arise. The number of shares to
be purchased and the price to be paid will depend upon the availability of
shares, the prevailing market prices and any other considerations that may, in
the opinion of the Corporation's Board of Directors or management, affect the
advisability of purchasing shares.

Tier 1 capital is shareholders' equity excluding the unrealized gain or loss on
securities classified as available for sale and intangible assets. Tier 2
capital, or total capital, includes Tier 1 capital plus the allowance for loan
losses not to exceed 1.25% of risk weighted assets. Risk weighted assets are the
Corporation's total assets after such assets are assessed for risk and assigned
a weighting factor based on their inherent risk.

The Corporation and its subsidiaries meet all regulatory capital requirements.
The ratio of total capital to risk-weighted assets was 13.7% at year-end 2000,
while the Tier 1 risk-based capital ratio was 12.8%. Regulatory minimums call
for a total risk-based capital ratio of 8%, at least half of which must be Tier
1 capital. The Corporation's leverage ratio, defined as Tier 1 capital divided
by average assets, of 9.5% at year-end 2000 exceeded the regulatory minimum for
capital adequacy purposes of 4.0%.




                                       27
<PAGE>   28




In 2000, the Corporation announced plans to construct a new corporate
headquarters near Delaware, Ohio. The expected costs of the project are
estimated to be approximately $5 million. As of December 31, 2000, the
Corporation had paid costs of $2.7 million related to the new corporate
headquarters.


IMPACT OF NEW ACCOUNTING STANDARDS

Beginning January 1, 2001 a new accounting standard will require all derivatives
to be recorded at fair value. Unless designated as hedges, changes in these fair
values will be recorded in the income statement. Fair value changes involving
hedges will generally be recorded by offsetting gains and losses on the hedge
and on the hedged item, even if the fair value of the hedged item is not
otherwise recorded. This did not affect the Corporation's financial statements,
as it had no derivative holdings.


IMPACT OF INFLATION AND CHANGING PRICES

The Consolidated Financial Statements and Notes included herein have been
prepared in accordance with generally accepted accounting principles ("GAAP").
Presently, GAAP requires the Corporation to measure financial position and
operating results primarily in terms of historic dollars. Changes in the
relative value of money due to inflation or recession are generally not
considered.

In management's opinion, changes in interest rates affect the financial
condition of a financial institution to a far greater degree than changes in the
inflation rate. While interest rates are greatly 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, as well as on changes in monetary and fiscal
policies.


ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This information is included under the heading "Asset and Liability Management
and Market Risk" on pages 24 through 26 of this document.




                                       28
<PAGE>   29



ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA









                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Shareholders
DCB Financial Corp
Delaware, Ohio


We have audited the accompanying consolidated balance sheets of DCB Financial
Corp (the "Corporation") as of December 31, 2000 and 1999, and related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe 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 consolidated financial position of DCB
Financial Corp as of December 31, 2000 and 1999, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2000, in conformity with generally accepted accounting
principles.



                                             /s/ CROWE, CHIZEK AND COMPANY LLP
                                             -----------------------------------
                                             Crowe, Chizek and Company LLP
Columbus, Ohio
February 15, 2001



                                       29
<PAGE>   30



                               DCB FINANCIAL CORP
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2000 and 1999
                (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                                 2000                1999
                                                                              ---------           ---------
<S>                                                                           <C>                 <C>
ASSETS
Cash and due from banks                                                       $  17,797           $  12,038
Federal funds sold                                                                  700               4,800
                                                                              ---------           ---------
     Total cash and cash equivalents                                             18,497              16,838
Securities available for sale, at fair value                                    101,955              91,909
Securities held to maturity (estimated fair value of $29,956 in 2000
  and $34,837 in 1999)                                                           29,843              35,245
Loans and leases                                                                331,522             277,468
Less allowance for loan and lease losses                                         (3,334)             (2,793)
                                                                              ---------           ---------
     Net loans and leases                                                       328,188             274,675
Premises and equipment, net                                                       8,503               4,384
Investment in unconsolidated affiliate                                            1,931                  --
Accrued interest receivable and other assets                                      8,228               6,954
                                                                              ---------           ---------

              Total assets                                                    $ 497,145           $ 430,005
                                                                              =========           =========

LIABILITIES
Deposits
     Noninterest-bearing                                                      $  62,710           $  57,033
     Interest-bearing                                                           356,235             314,766
                                                                              ---------           ---------
         Total deposits                                                         418,945             371,799
Borrowed funds                                                                   30,422              16,889
Accrued interest payable and other liabilities                                    2,879                 930
                                                                              ---------           ---------
     Total liabilities                                                          452,246             389,618

SHAREHOLDERS' EQUITY
Common stock, no par value, 7,500,000 shares authorized,
  4,273,200 issued                                                                3,779               3,779
Retained earnings                                                                43,475              40,020
Treasury stock, 95,000 shares, at cost                                           (1,978)             (1,978)
Accumulated other comprehensive income (loss)                                      (377)             (1,434)
                                                                              ---------           ---------
     Total shareholders' equity                                                  44,899              40,387
                                                                              ---------           ---------

              Total liabilities and shareholders' equity                      $ 497,145           $ 430,005
                                                                              =========           =========
</TABLE>


                 See accompanying notes to financial statements.


                                       30
<PAGE>   31


                               DCB FINANCIAL CORP
                        CONSOLIDATED STATEMENTS OF INCOME
              For the years ended December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                            2000           1999          1998
                                                           -------        -------       -------
<S>                                                       <C>             <C>           <C>
INTEREST INCOME
     Loans, including fees                                 $27,313        $22,044       $21,060
     Securities
         Taxable                                             7,900          6,988         6,632
         Tax-exempt                                            557            621           434
     Federal funds sold and other                              297            348           802
                                                           -------        -------       -------
              Total interest income                         36,067         30,001        28,928

INTEREST EXPENSE
     Deposits                                               18,038         13,783        13,936
     Borrowings                                              1,569            539           387
                                                           -------        -------       -------
              Total interest expense                        19,607         14,322        14,323
                                                           -------        -------       -------

NET INTEREST INCOME                                         16,460         15,679        14,605

Provision for loan and leases losses                           908          1,495           469
                                                           -------        -------       -------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         15,552         14,184        14,136

NONINTEREST INCOME
     Service charges on deposit accounts                     2,074          1,887         1,487
     Trust department income                                   383            306           231
     Securities gains (losses)                                 (19)            21            --
     Net gains from sales of loans                             266            535           752
     Data service fees                                         267            443           367
     Other                                                   1,442          1,491         1,302
                                                           -------        -------       -------
              Total noninterest income                       4,413          4,683         4,139

NONINTEREST EXPENSE
     Salaries and other employee benefits                    6,646          6,274         5,866
     Equipment                                               1,329          1,318         1,252
     Occupancy                                               1,136            965           991
     State franchise taxes                                     514            510           516
     Other                                                   3,509          2,864         2,748
                                                           -------        -------       -------
              Total noninterest expense                     13,134         11,931        11,373
                                                           -------        -------       -------

INCOME BEFORE INCOME TAXES                                   6,831          6,936         6,902

Provision for income taxes                                   2,206          2,154         2,168
                                                           -------        -------       -------

NET INCOME                                                 $ 4,625        $ 4,782       $ 4,734
                                                           =======        =======       =======

EARNINGS PER COMMON SHARE                                  $  1.11        $  1.14       $  1.13
                                                           =======        =======       =======
</TABLE>


          See accompanying noted to consolidated financial statements.


                                       31
<PAGE>   32

                               DCB FINANCIAL CORP
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
              For the years ended December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                                  Accumulated
                                                                                     Other           Total
                                         Common      Retained          Treasury  Comprehensive    Shareholders'
                                         Stock        Earnings          Stock        Income          Equity
                                         -----        --------          -----        ------          ------

<S>                                      <C>          <C>             <C>            <C>            <C>
Balance, January 1, 1998                 $3,779       $ 32,432        $  (416)       $   245        $ 36,040

Comprehensive income:
  Net income                                 --          4,734             --             --           4,734
  Other comprehensive income
    (loss), net of tax                       --             --             --            (20)            (20)
                                                                                                    --------
      Total comprehensive income                                                                       4,714

Cash dividends ($.21 per share)              --           (883)            --             --            (883)

Purchase of 75,000 treasury shares           --             --         (1,562)            --          (1,562)
                                         ------       --------        -------        -------        --------

Balance, December 31, 1998                3,779         36,283         (1,978)           225          38,309

Comprehensive income:
  Net income                                 --          4,782             --             --           4,782
  Other comprehensive income
    (loss), net of tax                       --             --             --         (1,659)         (1,659)
                                                                                                    --------
      Total comprehensive income                                                                       3,123

Cash dividends ($.25 per share)              --         (1,045)            --             --          (1,045)
                                         ------       --------        -------        -------        --------

Balance, December 31, 1999                3,779         40,020         (1,978)        (1,434)         40,387

Comprehensive income:
  Net income                                 --          4,625             --             --           4,625
  Other comprehensive income
    (loss), net of tax                       --             --             --          1,057           1,057
                                                                                                    --------
      Total comprehensive income                                                                       5,682

Cash dividends ($.28 per share)              --         (1,170)            --             --          (1,170)
                                         ------       --------        -------        -------        --------

Balance, December 31, 2000               $3,779       $ 43,475        $(1,978)       $  (377)       $ 44,899
                                         ======       ========        =======        =======        ========
</TABLE>


          See accompanying noted to consolidated financial statements.



                                       32
<PAGE>   33


                               DCB FINANCIAL CORP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the years ended December 31, 2000, 1999 and 1998
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                     2000             1999             1998
                                                                   --------         --------         --------
<S>                                                                <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                    $  4,625         $  4,782         $  4,734
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                   912              741              677
         Provision for loan losses                                      908            1,495              469
         Deferred tax expense (benefit)                                 (51)            (106)             339
         Securities (gains) losses                                       19              (21)              --
         Net securities amortization (accretion)                       (226)              59             (428)
         Federal Home Loan Bank stock dividends                        (117)             (85)             (58)
         Change in loans held for sale                                 (619)           6,411           (4,481)
         Changes in other assets and other liabilities, net             178           (1,767)            (282)
                                                                   --------         --------         --------
              Net cash from operating activities                      5,629           11,509              970

CASH FLOWS FROM INVESTING ACTIVITIES
     Securities available for sale
         Purchases                                                  (58,108)         (44,335)         (62,406)
         Maturities and repayments                                   18,297           27,977           24,821
         Proceeds from sales                                         31,765           13,342               --
     Securities held to maturity
         Purchases                                                   (2,846)         (21,256)         (76,207)
         Maturities and repayments                                    8,177           35,234           81,434
     Net change in loans                                            (53,802)         (29,240)         (22,537)
     Premises and equipment expenditures                             (5,031)          (1,160)            (886)
     Purchase life insurance policies                                    --               --           (1,414)
     Purchase of investment in unconsolidated affiliate              (1,931)              --               --
                                                                   --------         --------         --------
              Net cash from investing activities                    (63,479)         (19,438)         (57,195)

CASH FLOWS FROM FINANCING ACTIVITIES
     Net change in deposits                                          47,146            2,881           46,434
     Net change in short-term borrowings                            (11,113)           7,775           (1,780)
     Proceeds from long-term debt                                    25,000               --            9,252
     Repayment of long-term debt                                       (354)            (336)          (5,027)
     Purchases of treasury stock                                         --               --           (1,562)
     Cash dividends paid                                             (1,170)          (1,045)            (883)
                                                                   --------         --------         --------
              Net cash from financing activities                     59,509            9,275           46,434
                                                                   --------         --------         --------

NET CHANGE IN CASH AND CASH EQUIVALENTS                               1,659            1,346           (9,791)
Cash and cash equivalents at beginning of year                       16,838           15,492           25,283
                                                                   --------         --------         --------

CASH AND CASH EQUIVALENTS AT END OF YEAR                           $ 18,497         $ 16,838         $ 15,492
                                                                   ========         ========         ========
</TABLE>


          See accompanying noted to consolidated financial statements.



                                       33
<PAGE>   34



                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying consolidated financial statements
include the accounts of DCB Financial Corp (the "Corporation") and its
wholly-owned subsidiary, The Delaware County Bank and Trust Company (the
"Bank"). The financial statements of the Bank include accounts of its
wholly-owned subsidiaries, D.C.B. Corporation and 362 Corp. All significant
intercompany accounts and transactions have been eliminated in consolidation.

During 2000, the Corporation purchased a 9% interest in ProFinance Holdings
Corporation, the holding company for Century Surety Company, a property and
casualty insurance company. Accordingly, the investment is being carried at cost
and is shown as investment in unconsolidated affiliate on the consolidated
balance sheet. The investment will be reviewed for impairment when events
indicate the carrying amount may not be recoverable from future undiscounted
cash flows. If impaired, the investment will be recorded at a discounted amount.

Nature of Operations: The Corporation's revenues, operating income and assets
are primarily from the banking industry. The Corporation operates 16 offices in
Delaware, Franklin and Union Counties, Ohio. Loan customers include a wide range
of individuals, businesses and other organizations. Major portions of loans are
secured by various forms of collateral including real estate, business assets,
consumer property and other items. The Corporation's primary funding source is
deposits from customers in its market area. The Corporation also purchases
investments, operates a trust department and engages in mortgage banking
operations.

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

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

Cash Flow Reporting: Cash and cash equivalents include cash and due from banks
and federal funds sold. Cash flows are reported net for customer loan and
deposit transactions, short-term bankers' acceptances and short-term borrowings.
The Corporation paid interest of $18,702, $14,312 and $14,220 for 2000, 1999 and
1998. Cash paid for income taxes was $2,032, $2,295 and $2,072 for 2000, 1999
and 1998. There were no significant noncash transactions.

Securities: Securities are classified as held to maturity and carried at
amortized cost when management has positive intent and ability to hold them to
maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported separately in other
comprehensive income, net of tax. Securities are classified as trading when held
for short-term periods in anticipation of market gains, and are carried at fair
value. Other securities, such as Federal Home Loan Bank stock, are carried at
cost.


                                  (Continued)



                                       34
<PAGE>   35

                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Securities are written down to fair value when a decline in fair value is not
temporary. The Corporation held no trading securities during any period
presented.

Realized gains and losses on sales are determined using the amortized cost of
the specific security sold. Interest income includes amortization of purchase
premiums and discounts.

Loans Held for Sale: Certain residential mortgage loans are originated for sale
in the secondary mortgage-loan market. These loans are included in real estate
mortgage loans and are carried at the lower of cost or estimated fair value
taken together. Net unrealized losses are recognized through a valuation
allowance by charges to income. To mitigate the interest rate risk, fixed
commitments may be obtained at the time loans are originated or identified for
sale. Loans originated and held for sale totaled $1,105 and $486 at year-end
2000 and 1999.

Loans Receivable: Loans are reported at the principal balance outstanding, net
of deferred loan fees and costs. Interest income is reported on the interest
method and includes amortization of net deferred loan fees and costs over the
loan term.

Interest income is not recognized when management believes the collection of
interest is doubtful, typically when payments are past due over 90 days.
Payments received on such loans are reported as principal reductions.

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

Loan impairment is reported when full payment under the loan terms is not
expected. Impairment is evaluated in total for smaller-balance loans of similar
nature such as residential mortgage, consumer and credit card loans and on an
individual loan basis for other loans. Loans held for sale and leases are
excluded from consideration of impairment. If a loan is impaired, a portion of
the allowance is allocated so that the loan is reported, net, at the present
value of estimated future cash flows using the loan's existing rate or at the
fair value of collateral if repayment is expected solely from the collateral.
Loans are evaluated for impairment when payments are delayed, typically 90 days
or more, or when it is probable that not all principal and interest amounts will
be collected according to the original terms of the loan.

Concentrations of Credit Risk: The Corporation grants commercial, real estate
and consumer loans primarily in Delaware County, Ohio, and surrounding areas.
Loans for commercial real estate, farmland, construction and land development
purposes comprise 40.5% of loans. Loans for commercial purposes comprise 14.6%
of loans, and include loans secured by business assets and agricultural loans.
Loans for residential real estate purposes, including home equity loans,
aggregate 25.9% of loans. Loans and leases for consumer purposes are primarily
secured by consumer assets and represent 19.0% of total loans. The borrowers'
ability to honor their contracts is not dependent on the economic status of any
single industry.


                                  (Continued)


                                       35
<PAGE>   36

                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Premises and Equipment: Asset cost is reported net of accumulated depreciation.
Depreciation expense is calculated using the straight-line method based on the
estimated useful lives of assets. These assets are reviewed for impairment when
events indicate the carrying amount may not be recoverable.

Foreclosed Assets: Assets acquired in settlement of loans is initially reported
at estimated fair value at acquisition. After acquisition, a valuation allowance
reduces the reported amount to the lower of initial amount or fair value less
costs to sell. Expenses are charged to operations as incurred. Gains and losses
on disposition and changes in the valuation allowance are reported in other
income.

Loan Servicing: The Corporation has sold various mortgage loans to the Federal
Home Loan Mortgage Corporation ("FHLMC"), while retaining servicing rights.
Gains and losses on loan sales are recorded at the time of the sale. Mortgage
servicing rights are recorded as assets when the related loan is sold. These
assets are amortized in proportion to, and over the period of, estimated net
servicing income and are evaluated periodically for impairment. Impairment is
evaluated based on the fair value of the rights using groupings of underlying
loans with similar characteristics. Mortgage servicing rights totaled $192 and
$224 at year-end 2000 and 1999.

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

Fair Values of Financial Instruments: Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed separately. Fair value estimates involve uncertainties and matters of
significant judgment regarding interest rates, credit risk, prepayments and
other factors, especially in the absence of broad markets for particular items.
Changes in assumptions or 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 value of assets and liabilities not considered financial instruments.

New Accounting Pronouncements: Beginning January 1, 2001, a new accounting
standard will require all derivatives to be recorded at fair value. Unless
designated as hedges, changes in these fair values will be recorded in the
income statement. Fair value changes involving hedges will generally be recorded
by offsetting gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not otherwise recorded. This is not expected to
have a material effect but the effect will depend on derivative holdings when
this standard applies.

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

Earnings Per Common Share: Earnings per share computations are based on the
weighted average number of shares of common stock outstanding during the year.
The weighted average number of shares outstanding was 4,178,200 for 2000 and
1999 and 4,197,077 for 1998.



                                  (Continued)


                                       36
<PAGE>   37
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income: Comprehensive income includes both net income and other
comprehensive income, which includes the change in unrealized gains and losses
on securities available for sale.

Financial Statement Presentation: Some items in prior financial statements have
been reclassified to conform to the current presentation.


NOTE 2 - SECURITIES

Year-end securities were as follows:

<TABLE>
<CAPTION>
                                                                Gross        Gross          Estimated
                                                 Amortized   Unrealized    Unrealized          Fair
                                                   Cost         Gains        Losses            Value

                                                 ------------------------2000-------------------------
<S>                                              <C>             <C>         <C>           <C>
SECURITIES AVAILABLE FOR SALE
U.S. Treasury                                    $  1,012        $  4        $    --         $  1,016
U.S. government agencies and corporations          60,958         205           (480)          60,683
States and political subdivisions                   6,175           2           (106)           6,071
Mortgage-backed                                    32,339         128           (326)          32,141
                                                 --------        ----        -------         --------
   Total debt securities                          100,484         339           (912)          99,911
Other securities                                    2,038           6             --            2,044
                                                 --------        ----        -------         --------
   Total securities available for sale           $102,522        $345        $  (912)        $101,955
                                                 ========        ====        =======         ========

SECURITIES HELD TO MATURITY
States and political subdivisions                $  5,727        $103        $   (36)        $  5,794
Mortgage-backed                                    24,116         138            (92)          24,162
                                                 --------        ----        -------         --------
   Total securities held to maturity             $ 29,843        $241        $  (128)        $ 29,956
                                                 ========        ====        =======         ========

                                                 ------------------------1999-------------------------
SECURITIES AVAILABLE FOR SALE
U.S. Treasury                                    $  2,264        $  1        $    (4)        $  2,261
U.S. government agencies and corporations          54,451           7         (1,196)          53,262
States and political subdivisions                   6,535           2           (526)           6,011
Mortgage-backed                                    29,457          26           (503)          28,980
                                                 --------        ----        -------         --------
   Total debt securities                           92,707          36         (2,229)          90,514
Other securities                                    1,374          21             --            1,395
                                                 --------        ----        -------         --------
   Total securities available for sale           $ 94,081        $ 57        $(2,229)        $ 91,909
                                                 ========        ====        =======         ========

SECURITIES HELD TO MATURITY
States and political subdivisions                $  6,777        $ 68        $  (104)        $  6,741
Corporate                                             995           5             --            1,000
Mortgage-backed                                    27,473          24           (401)          27,096
                                                 --------        ----        -------         --------
   Total securities held to maturity             $ 35,245        $ 97        $  (505)        $ 34,837
                                                 ========        ====        =======         ========
</TABLE>


                                  (Continued)


                                       37
<PAGE>   38

                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 2 - SECURITIES (Continued)

Substantially all mortgage-backed securities are backed by pools of mortgages
that are insured or guaranteed by the Federal National Mortgage Association
("FNMA"), the Government National Mortgage Association ("GNMA") and the Federal
Home Loan Mortgage Corporation ("FHLMC").

The amortized cost and estimated fair value of debt securities at year-end 2000,
by contractual maturity, are shown below. Expected maturities may differ from
contractual maturities because issuers may have the right to call or prepay
obligations. Mortgage-backed securities are shown separately since they are not
due at a single maturity date.

<TABLE>
<CAPTION>
                                    Available for sale             Held to maturity
                                 ------------------------       -----------------------
                                  Amortized        Fair         Amortized        Fair
                                    Cost           Value          Cost           Value
<S>                               <C>             <C>            <C>            <C>
Due in one year or less           $  4,622        $ 4,631        $ 1,323        $ 1,327
Due from one to five years          17,091         17,172          3,208          3,225
Due from five to ten years          35,567         35,489            782            797
Due after ten years                 10,865         10,478            414            445
Mortgage-backed securities          32,339         32,141         24,116         24,162
                                  --------        -------        -------        -------
                                  $100,484        $99,911        $29,843        $29,956
                                  ========        =======        =======        =======
</TABLE>

Proceeds from the sales of securities available for sale totaled $31,765 for
2000 and $13,342 for 1999. Gross gains of $22 and $32 and gross losses of $41
and $11 were realized on those sales in 2000 and 1999, respectively. There were
no sales of securities in 1998.

At year-end 2000, there were no holdings of securities of any one issuer, other
than the U.S. government and its agencies and corporations, in an amount greater
than 10% of shareholders' equity.

Investments with a carrying value of approximately $46,038 and $21,032 as of
year-end 2000 and 1999 were pledged to secure public funds and other
obligations.


NOTE 3 - LOANS AND LEASES

Year-end loans and leases were as follows:

                                                       2000             1999
                                                       ----             ----

Commercial and industrial                            $ 48,447        $ 39,063
Commercial real estate                                101,891          82,954
Residential real estate and home equity                85,820          69,611
Real estate construction and land development          32,493          29,723
Consumer and credit card                               52,149          45,977
Lease financing, net                                   10,722          10,140
                                                     --------        --------

                                                     $331,522        $277,468
                                                     ========        ========




                                  (Continued)



                                       38
<PAGE>   39
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 3 - LOANS AND LEASES (Continued)

Certain directors, executive officers and principal shareholders of the
Corporation, including their immediate families and companies in which they are
principal owners, were loan customers during 2000. A summary of activity on
these borrower relationships with aggregate debt greater than $60,000 is as
follows:

         Beginning balance              $ 8,056
         New loans and advances           1,602
         Payments                        (1,434)
                                        -------

         Ending balance                 $ 8,224
                                        =======

The following is a summary of the components of the Corporation's net investment
in direct financing equipment and vehicle leases at year-end:

                                                   2000       1999
                                                  -------   -------

         Minimum lease payments receivable        $ 6,736   $ 6,160
         Lease residuals (unguaranteed)             5,944     5,892
                                                  -------   -------
                                                   12,680    12,052
         Unearned income                            1,958     1,912
                                                  -------   -------

                                                  $10,722   $10,140
                                                  =======   =======


NOTE 4 - ALLOWANCE FOR LOAN AND LEASE LOSSES

Activity in the allowance for loan and lease losses was as follows:

                                                   2000     1999     1998
                                                  ------   ------   ------

         Balance at beginning of year             $2,793   $1,948   $1,842
         Provision for loan and lease losses         908    1,495      469
         Loans charged off                          (506)    (826)    (568)
         Recoveries                                  139      176      205
                                                  ------   ------   ------

              Balance at end of year              $3,334   $2,793   $1,948
                                                  ======   ======   ======

Nonaccrual loans totaled approximately $1,278 and $472 at December 31, 2000 and
1999. Loans past due 90 days or more and still accruing interest totaled
approximately $205 and $156 at December 31, 2000 and 1999. The Corporation had
no impaired loans at December 31, 2000 or 1999 or during the years then ended.



                                  (Continued)



                                       39
<PAGE>   40
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 5 - PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows:

                                                       2000      1999
                                                      -------   ------

         Land                                         $ 1,226   $  552
         Buildings                                      3,940    2,805
         Furniture and equipment                        5,920    4,711
         Construction in progress                       2,015        -
                                                      -------   ------
                                                       13,101    8,068
         Accumulated depreciation and amortization      4,598    3,684
                                                      -------   ------

                                                      $ 8,503   $4,384
                                                      =======   ======


NOTE 6 - LEASE COMMITMENTS

The Corporation has long-term operating leases for branch offices and equipment,
which expire at various dates through 2019. Rental expense on lease commitments
for 2000, 1999 and 1998 amounted to $771, $678 and $686. The Corporation has
entered into three leases for branch facilities with a partnership in which a
director of the Corporation holds a controlling interest. The leases commenced
on April 1, 1997, September 1, 1997 and May 24, 1999 and have a term of 20 years
each with annual rental payments of $84, $71 and $94, respectively. The
following is a summary of the future minimum-lease payments on the Corporation's
lease obligations:

                           2001              $  989
                           2002                 940
                           2003                 658
                           2004                 377
                           2005                 377
                           Thereafter         4,537
                                             ------

                                             $7,878


NOTE 7 - INTEREST-BEARING DEPOSITS

Year-end interest-bearing deposits were as follows:

                                                           2000       1999

         Interest-bearing demand and money
           market deposits                               $199,736   $190,704
         Savings deposits                                  42,164     43,347
         Certificates of deposit
              In denominations under $100,000              75,682     72,136
              In denominations of $100,000 or more         38,653      8,579
                                                         --------   --------

                                                         $356,235   $314,766
                                                         ========   ========



                                  (Continued)



                                       40
<PAGE>   41

                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 7 - INTEREST-BEARING DEPOSITS (Continued)

At year-end 2000, the scheduled maturities of certificates of deposit were as
follows:

                           2001                $ 92,660
                           2002                  20,350
                           2003                   1,222
                           2004                       3
                           2005                       -
                           Thereafter               100
                                               --------

                                               $114,335


NOTE 8 - BORROWED FUNDS

The following table is a summary of year-end borrowings:

                                                               2000       1999
                                                               ----       ----

         Fixed-rate FHLB advance, 6.10%, due January 2000     $    --   $ 6,000
         Fixed-rate FHLB advance, 5.93%, due May 2000              --     5,000
         Fixed-rate FHLB advance, 6.72%, due December 2001     10,000         -
         Fixed-rate FHLB advance, 6,67%, due February 2002     15,000         -
         Fixed-rate FHLB advance, 5.10%, due October, 2008      3,535     3,889
         Demand note issued to the U.S. Treasury                1,887     2,000
                                                              -------   -------

                                                              $30,422   $16,889

As a member of the Federal Home Loan Bank of Cincinnati ("FHLB"), the Bank has
the ability to obtain additional borrowings up to a maximum total of 50% of Bank
assets, subject to the level of qualified one- to four-family residential real
estate loans to pledge and FHLB stock owned.

FHLB advances are collateralized by a blanket pledge of the Bank's residential
mortgage loan portfolio totaling $38,522 and the Bank's FHLB stock.

At year-end 2000, required annual principal payments on borrowed funds were as
follows:

                           2001                 $12,259
                           2002                  15,391
                           2003                     412
                           2004                     433
                           2005                     456
                           Thereafter             1,471
                                                -------

                                                $30,422
                                                =======



                                  (Continued)


                                       41
<PAGE>   42

                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)


NOTE 9 - RETIREMENT PLANS

The Corporation provides a 401(k) savings plan for all eligible employees. To be
eligible, an individual must have at least 1,000 hours of service during a
12-consecutive-month period and must be 20 or more years of age. Participants
are permitted to make voluntary contributions to the Plan of up to 10% of
individual compensation. The Corporation matches 50% of those contributions up
to a maximum match of 3% of the participant's compensation. The Corporation may
also provide an additional discretionary contribution. Employee voluntary
contributions are vested at all times and Corporation contributions are fully
vested after three years. The 2000, 1999 and 1998 expense related to this plan
was $174, $192 and $175.

In 1998, the Corporation implemented a supplemental post-retirement benefit plan
for the benefit of certain officers. The plan is designed to provide
post-retirement benefits to supplement other sources of retirement income such
as social security and 401(k) benefits. The benefits will be paid for a period
of 15 years after retirement. The amount of each officer's benefit will depend
on their salary at retirement as well as their other sources of retirement
income. The Corporation accrues the cost of these post-retirement benefits
during the working careers of the officers. Expense under this plan was $108 and
$100 in 2000 and 1999 and immaterial in 1998.

The Corporation has purchased insurance contracts on the lives of the
participants in the supplemental post-retirement benefit plan and has named the
Corporation as the beneficiary. While no direct connection exists between the
supplemental post-retirement benefit plan and the life insurance contracts, it
is management's current intent that the revenue from the insurance contracts be
used as a funding source for the plan.


NOTE 10 - OTHER NONINTEREST EXPENSE

Other noninterest expense consisted of the following:

                                          2000     1999     1998
                                          ----     ----     ----

         Advertising and marketing       $  415   $  344   $  285
         Postage, freight and courier       367      326      292
         Office supplies                    320      264      324
         Other expenses                   2,407    1,930    1,847
                                         ------   ------   ------

                                         $3,509   $2,864   $2,748
                                         ======   ======   ======


NOTE 11 - INCOME TAXES

The provision for income taxes consists of the following:

                                              2000     1999     1998
                                              ----     ----     ----

         Current tax expense                 $2,257   $2,260   $1,829
         Deferred tax expense (benefit)         (51)    (106)     339
                                             ------   ------   ------

                                             $2,206   $2,154   $2,168
                                             ======   ======   ======




                                  (Continued)


                                       42
<PAGE>   43
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 11 - INCOME TAXES (Continued)

Year-end deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
                                                                           2000            1999
                                                                         -------         -------
<S>                                                                      <C>             <C>
          Deferred tax assets:
               Allowance for loan losses in excess of tax reserve        $   948         $   764
               Unrealized loss on securities available for sale              194             739
               Other                                                          78              45
                                                                         -------         -------
                                                                           1,220           1,548
          Deferred tax liabilities:
               Investment accretion                                          (16)            (15)
               Federal Home Loan Bank stock dividends                       (133)            (94)
               Deferred loan fees and costs                                 (159)            (97)
               Leases                                                     (1,111)         (1,106)
               Depreciation                                                 (193)           (123)
               Mortgage servicing rights                                     (65)            (76)
                                                                         -------         -------
                                                                          (1,677)         (1,511)
                                                                         -------         -------

          Net deferred tax asset (liability)                             $  (457)        $    37
                                                                         =======         =======
</TABLE>

The difference between financial statement tax provision and amounts computed by
applying the statutory federal income tax rate of 34.0% to income before income
taxes was as follows:

<TABLE>
<CAPTION>
                                                          2000            1999             1998
                                                          ----            ----             ----
<S>                                                     <C>              <C>              <C>
          Income taxes computed at the statutory
            federal tax rate on pre-tax income          $ 2,322          $ 2,358          $ 2,347
          Tax effect of
               Tax exempt income                           (171)            (210)            (168)
               Other                                         55                6              (11)
                                                        -------          -------          -------

                                                        $ 2,206          $ 2,154          $ 2,168
                                                        =======          =======          =======

          Effective tax rate                               32.3%            31.1%            31.4%
                                                        =======          =======          =======
</TABLE>

NOTE 12 - COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS
WITH OFF-BALANCE-SHEET RISK

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


                                  (Continued)



                                       43
<PAGE>   44
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 12 - COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS
  WITH OFF-BALANCE-SHEET RISK (Continued)

Reserve Requirements: The Corporation was required to have $6,490 and $6,185 of
cash on hand or on deposit with the Federal Reserve to meet regulatory reserve
requirements at year-end 2000 and 1999. These balances do not earn interest.

Financial Instruments with Off-Balance-Sheet Risk: Some financial instruments
are used in the normal course of business to meet financing needs of customers.
These financial instruments include commitments to extend credit, standby
letters of credit and other financial guarantees. These involve, to varying
degrees, credit and interest-rate risk more than the amount reported in the
financial statements.

Exposure to credit loss if the other party does not perform is represented by
the contractual amount for commitments to extend credit, standby letters of
credit and financial guarantees written. Each customer's creditworthiness is
evaluated on a case-by-case basis. The same credit policies are used for
commitments and conditional obligations as are used for loans. The amount of
collateral obtained, if deemed necessary, on extension of credit is based on
management's credit evaluation. Collateral varies, but may include accounts
receivable, inventory, property, equipment, income-producing commercial
properties, residential real estate and consumer assets.

Commitments to extend credit are agreements to lend to a customer, as long as
there is no violation of any condition established in the commitment.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many commitments are expected to expire
without being used, total commitments do not necessarily represent future cash
requirements. Standby letters of credit and financial guarantees written are
conditional commitments to guarantee a customer's performance to a third party.

Financial instruments with off-balance-sheet risk at year-end were as follows:

                                            2000          1999
                                            ----          ----
         Commitments to extend credit     $71,214       $76,918
         Standby letters of credit            671           809

At year-end 2000 and 1999, and included above, commitments to make fixed-rate
loans at current market rates totaled $4,049 and $10,094. There were no
fixed-rate standby letters of credit at year-end 2000 or 1999. The interest
rates on fixed-rate commitments ranged from 4.96% to 12.50% for 2000 and 6.88%
to 10.50% for 1999.

Employment Agreements: The Bank has employment agreements with certain officers
of the Bank. The agreements provide for terms of one year that renew
automatically unless prior written notice is provided to the officer.



                                  (Continued)



                                       44
<PAGE>   45
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)


NOTE 13 - REGULATORY MATTERS

The Corporation and the Bank are subject to regulatory capital requirements
administered by federal banking 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 regulators can lower classifications in certain cases. Failure to
meet various capital requirements can initiate regulatory action having 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.

The minimum capital requirements are as follows:

                                    Capital to risk
                                     weighted assets
                                   -------------------     Tier 1 capital
                                    Total       Tier 1    to average assets
                                    -----       ------    -----------------
     Well capitalized                10%         6%              5%
     Adequately capitalized          8           4               4
     Undercapitalized                6           3               3

At year-end, actual capital levels and minimum required levels were:

<TABLE>
<CAPTION>
                                                                                                     Minimum Required
                                                                                                        To Be Well
                                                                             Minimum Required           Capitalized
                                                                               For Capital         Under Prompt Corrective
                                                        Actual              Adequacy Purposes        Action Regulations
                                                        ------              -----------------        ------------------
                                                 Amount         Ratio       Amount      Ratio       Amount          Ratio
                                                 ------         -----       ------      -----       ------          -----
<S>                                             <C>             <C>        <C>          <C>       <C>              <C>
2000
Total capital (to risk-weighted assets)
   Corporation                                  $48,718          13.7%      $28,477      8.0%      $35,596          10.0%
   Bank                                          44,786          12.7        28,310      8.0        35,387          10.0
Tier 1 capital (to risk-weighted assets)
   Corporation                                   45,381          12.8        14,238      4.0        21,357           6.0
   Bank                                          41,449          11.7        14,155      4.0        21,232           6.0
Tier 1 capital (to average assets)
   Corporation                                   45,381           9.5        19,035      4.0        23,794           5.0
   Bank                                          41,449           8.8        18,932      4.0        23,665           5.0
</TABLE>





                                  (Continued)



                                       45
<PAGE>   46
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)


NOTE 13 - REGULATORY MATTERS (Continued)

<TABLE>
<CAPTION>
                                                                                                    Minimum Required
                                                                                                       To Be Well
                                                                           Minimum Required            Capitalized
                                                                              For Capital          Under Prompt Corrective
                                                      Actual                Adequacy Purposes        Action Regulations
                                                      ------                -----------------        ------------------
                                                Amount       Ratio          Amount     Ratio         Amount      Ratio
                                                ------       -----          ------     -----         ------      -----
<S>                                             <C>          <C>          <C>           <C>         <C>           <C>
1999
Total capital (to risk-weighted assets)
   Corporation                                  $44,602       14.7%        $24,211       8.0%        $30,264       10.0%
   Bank                                          42,562       14.1          24,218       8.0          30,272       10.0
Tier 1 capital (to risk-weighted assets)
   Corporation                                   41,800       13.8          12,106       4.0          18,158        6.0
   Bank                                          39,760       13.1          12,109       4.0          18,163        6.0
Tier 1 capital (to average assets)
   Corporation                                   41,800        9.7          17,232       4.0          21,540        5.0
   Bank                                          39,760        9.2          17,232       4.0          21,540        5.0
</TABLE>

As of the latest regulatory examinations, the Corporation and the Bank were
categorized as well capitalized. Management is not aware of any matters
subsequent to these examinations that would cause the Corporation's or the
Bank's regulatory capital category to change.

Dividends are paid by the Corporation from its assets, which are mainly provided
by dividends from the Bank. Restrictions by banking regulations limit the amount
of funds the Bank can transfer to the Corporation in the form of dividends. The
most restrictive provision requires approval by regulatory authorities if
dividends declared in any year exceed the year's net income, as defined, plus
retained net profits of the two preceding years. The amount of the Bank's
retained earnings available for dividends without approval from its supervising
regulator was $7,712 at December 31, 2000.


NOTE 14 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value approximates carrying value for financial instruments
except those described below:

Securities: For debt and marketable equity securities, fair values are based on
quoted market prices or dealer quotes. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
instruments.

Loans: The fair value of most types of loans is estimated by discounting future
cash flows using current rates at which similar loans would be made to
borrowers. Leases are not considered financial instruments under generally
accepted accounting principles and are therefore not included in the following
schedule.

Deposits: The fair value of deposit liabilities with defined maturities is
estimated by discounting future cash flows using the rates currently offered for
deposits of similar remaining maturities.

                                  (Continued)



                                       46
<PAGE>   47
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 14 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Long-term Debt: The fair value of long-term debt is estimated by discounting
future cash flows using currently available rates for similar financing.

Commitments to Extend Credit and Standby Letters of Credit: The fair values of
these items are not material and are therefore not included on the following
schedule.

The estimated year-end fair values of financial instruments were as follows:

<TABLE>
<CAPTION>
                                              -----------2000----------           ------------1999----------
                                               Carrying           Fair             Carrying           Fair
                                                Value            Value               Value            Value
                                                -----            -----               -----            -----
<S>                                           <C>               <C>               <C>               <C>
Financial assets:
         Cash and cash equivalents            $  18,497         $  18,497         $  16,838         $  16,838
         Securities available for sale          101,955           101,955            91,909            91,909
         Securities held to maturity             29,843            29,956            35,245            34,837
         Loans (excluding leases)               317,466           317,778           264,535           266,159
         Accrued interest receivable              3,620             3,620             2,816             2,816

Financial liabilities:
         Noninterest-bearing deposits           (62,710)          (62,710)          (57,033)          (57,033)
         Interest-bearing deposits             (356,235)         (358,403)         (314,766)         (315,495)
         Borrowings                             (30,422)          (30,157)          (16,889)          (16,219)
         Accrued interest payable                (1,947)           (1,947)           (1,042)           (1,042)
</TABLE>


NOTE 15 - OTHER COMPREHENSIVE INCOME

Other comprehensive income components were as follows:

<TABLE>
<CAPTION>
                                                                2000             1999          1998
                                                                ----             ----          ----
<S>                                                            <C>             <C>             <C>
      Unrealized holding gains and losses on
        available-for-sale securities                          $ 1,586         $(2,493)        $(30)
      Reclassification adjustments for gains and losses
        later recognized in income                                  19             (21)          --
                                                               -------         -------         ----
      Net unrealized gains and losses                            1,605          (2,514)         (30)
      Tax effect                                                  (548)            855           10
                                                               -------         -------         ----

      Other comprehensive income (loss)                        $ 1,057         $(1,659)        $(20)
                                                               =======         =======         ====
</TABLE>


                                  (Continued)



                                       47
<PAGE>   48
                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)



NOTE 16 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of DCB Financial Corp is as follows:

                            CONDENSED BALANCE SHEETS
                           December 31, 2000 and 1999


<TABLE>
<CAPTION>
                                                                   2000             1999
                                                                   ----             ----
<S>                                                              <C>              <C>
          ASSETS
          Cash and cash equivalents                              $  1,965         $  1,955
          Investment in subsidiary                                 40,941           38,348
          Investment in unconsolidated affiliate                    1,931               --
          Other assets                                                 51               --
                                                                 --------         --------

               Total assets                                      $ 44,888         $ 40,303
                                                                 ========         ========

          LIABILITIES
          Other liabilities                                      $    (11)        $    (84)

          SHAREHOLDERS' EQUITY                                     44,899           40,387
                                                                 --------         --------

               Total liabilities and shareholders' equity        $ 44,888         $ 40,303
                                                                 ========         ========
</TABLE>


                         CONDENSED STATEMENTS OF INCOME
                  Years ended December 31, 2000, 1999 and 1998


<TABLE>
<CAPTION>
                                                                 2000            1999             1998
                                                                 ----            ----             ----
<S>                                                             <C>             <C>             <C>
          INTEREST AND DIVIDEND INCOME
          Dividends from subsidiary                             $ 3,101         $ 1,045         $ 2,416
          Other                                                      42              --               6
                                                                -------         -------         -------
              Total interest and dividend income                  3,143           1,045           2,422

          Operating expenses                                         64             136              53
                                                                -------         -------         -------

          Income before income taxes and equity in
            undistributed earnings of subsidiary                  3,079             909           2,369
          Income tax benefit                                        (11)            (45)            (16)
                                                                -------         -------         -------
          Income before equity in undistributed
            earnings of subsidiary                                3,090             954           2,385
          Equity in undistributed earnings of subsidiary          1,535           3,828           2,349
                                                                -------         -------         -------

          NET INCOME                                            $ 4,625         $ 4,782         $ 4,734
                                                                =======         =======         =======
</TABLE>


                                  (Continued)


                                       48
<PAGE>   49


                               DCB FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)


NOTE 16 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Continued)

                          CONDENSED STATEMENTS OF CASH
               FLOWS Years ended December 31, 2000, 1999 and 1998


<TABLE>
<CAPTION>
                                                                     2000           1999           1998
                                                                     ----           ----           ----
<S>                                                                <C>            <C>            <C>
          CASH FLOWS FROM OPERATING ACTIVITIES
          Net income                                               $ 4,625        $ 4,782        $ 4,734
          Adjustments to reconcile net income
            to cash provided by operations:
               Equity in undistributed income of subsidiary         (1,535)        (3,828)        (2,349)
               Net change in other assets/other liabilities             21             11              3
                                                                   -------        -------        -------
                   Net cash from operating activities                3,111            965          2,388

          CASH FLOWS FROM INVESTING ACTIVITIES
          Purchase of investment in unconsolidated affiliate        (1,931)            --             --
          Principal payments received on loan to subsidiary             --             --          2,000
                                                                   -------        -------        -------
                   Net cash from investing activities               (1,931)            --          2,000

          CASH FLOWS FROM FINANCING ACTIVITIES
          Purchases of treasury stock                                   --             --         (1,562)
          Cash dividends paid                                       (1,170)        (1,045)          (883)
                                                                   -------        -------        -------
                   Net cash from financing activities               (1,170)        (1,045)        (2,445)
                                                                   -------        -------        -------

          Net change in cash and cash equivalents                       10            (80)         1,943
          Cash and cash equivalents at beginning of period           1,955          2,035             92
                                                                   -------        -------        -------

          CASH AT END OF YEAR                                      $ 1,965        $ 1,955        $ 2,035
                                                                   =======        =======        =======
</TABLE>


NOTE 17 - QUARTERLY FINANCIAL DATA (UNAUDITED)


<TABLE>
<CAPTION>
                                 Interest    Net Interest     Net         Earnings
                                  Income        Income       Income      Per Share
<S>                             <C>          <C>            <C>         <C>
2000
         First quarter            $8,143        $3,980       $1,062        $0.25
         Second quarter            8,724         4,130        1,220         0.30
         Third quarter             9,338         4,057        1,228         0.30
         Fourth quarter            9,862         4,293        1,115         0.26

1999
         First quarter            $7,330        $3,836       $1,225        $0.29
         Second quarter            7,267         3,931        1,309         0.32
         Third quarter             7,516         3,847        1,128         0.27
         Fourth quarter            7,888         4,065        1,120         0.26
</TABLE>




                                       49
<PAGE>   50



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

No changes in or disagreements with the independent accountants on accounting
and financial disclosure have occurred.


PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

This information is included in the definitive Proxy Statement for the 2000
Annual Meeting of Shareholders of DCB Financial Corp (the "Proxy Statement")
under the captions "Election of Directors and Information with Respect to
Directors and Officers", "Security Ownership of Certain Beneficial Owners and
Management" and "Compliance with Section 16(A) of the Securities Exchange Act of
1934" and is incorporated herein by reference.


ITEM 11 - EXECUTIVE COMPENSATION

This information is included in the section captioned "Executive Compensation
and Other Information" of the Proxy Statement and is incorporated herein by
reference.


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This information is included in the section captioned "Security Ownership of
Certain Beneficial Owners and Management" of the Proxy Statement and is
incorporated herein by reference.


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information is included in the section captioned "Certain Relationships and
Related Transactions" of the Proxy Statement and is incorporated herein by
reference.




                                       50
<PAGE>   51



PART IV

ITEM 14 - EXHIBITS AND REPORTS ON FORM 8-K


<TABLE>
<CAPTION>
            Exhibit
             Number                   Description of Document
             ------                   -----------------------
<S>                      <C>
              3.1        Articles of Incorporation of DCB Financial Corp
                         (incorporated by reference to Registrant's Form S-4,
                         File No. 333-15579, effective January 10, 1997)

              3.2        Code of Regulations of DCB Financial Corp (incorporated
                         by reference to Registrant's Form S-4, File No.
                         333-15579, effective January 10, 1997)

             10.1        Employment agreement with Mr. Coburn (incorporated by
                         reference to Registrant's Form 8-B, File No. 000-22387,
                         effective April 15, 1997)

             10.2        Employment agreement with Mr. Westbrook (incorporated
                         by reference to Registrant's Form 8-B, File No.
                         000-22387, effective April 15, 1997)

             10.3        Employment agreement with Mr. Whitney (incorporated by
                         reference to Registrant's Form 10-K, File No. 0-22387,
                         effective March 25, 1998)

             10.4        Employment agreement with Mr. Bernon (incorporated by
                         reference to Registrant's Form 10-K, File No. 0-22387,
                         effective March 27, 2000)

             11          Statement Regarding Computation of Per Share Earnings

             21          Subsidiaries of DCB Financial Corp

             23          Consent of Independent Auditors
</TABLE>


No reports on Form 8-K were filed during the last quarter of the period covered
by this report.




                                       51
<PAGE>   52



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 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.


                                          DCB FINANCIAL CORP

                                          By: /s/ LARRY D. COBURN
                                             --------------------------------
                                             Larry D. Coburn, President & CEO


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on March 28, 2001.

<TABLE>
<CAPTION>
              Signatures                                                      Title
              ----------                                                      -----
<S>                                                                <C>
/s/ LARRY D. COBURN                                                President (Principal Executive Officer),
--------------------------------------------                       CEO and Director
Larry D. Coburn


/s/ JEROME J. HARMEYER                                             Director, Chairman of the Board
--------------------------------------------
Jerome J. Harmeyer


/s/ CHARLES W. BONNER                                              Director
--------------------------------------------
Charles W. Bonner


/s/ WILLIAM R. OBERFIELD                                           Director
--------------------------------------------
William R. Oberfield


/s/ RODNEY B. HURL, M.D.                                           Director
--------------------------------------------
Rodney B. Hurl, M.D.


/s/ THOMAS T. PORTER                                               Director
--------------------------------------------
Thomas T. Porter


/s/ EDWARD A. POWERS                                               Director
--------------------------------------------
Edward A. Powers


/s/ MERRILL KAUFMAN                                                Director
--------------------------------------------
Merrill Kaufman


/s/ GARY M. SKINNER                                                Director
--------------------------------------------
Gary M. Skinner
</TABLE>



                                       52
<PAGE>   53

<TABLE>
<CAPTION>
              Signatures                                             Title
              ----------                                             -----
<S>                                                                <C>
/s/ TERRY M. KRAMER                                                Director
--------------------------------------------
Terry M. Kramer


/s/ G. EDWIN JOHNSON                                               Director
--------------------------------------------
G. Edwin Johnson


/s/ VICKIE J. LEWIS                                                Director
--------------------------------------------
Vickie J. Lewis


/s/ RICHARD L. BUMP                                                Director
--------------------------------------------
Richard L. Bump
</TABLE>






                                       53
<PAGE>   54



                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
   EXHIBIT                                                                                  SEQUENTIAL
   NUMBER                       DESCRIPTION OF DOCUMENT                                       PAGE
   ------                       -----------------------                                       ----
<S>             <C>                                                                         <C>
     3.1        Amended Articles of Incorporation of DCB Financial Corp
                (incorporated by reference to Registrant's Form S-4,
                File No. 333-15579, effective January 10, 1997)                                N/A

     3.2        Code of Regulations of DCB Financial Corp (incorporated
                by reference to Registrant's Form S-4, File No.
                333-15579, effective January 10, 1997)                                         N/A

    10.1        Employment agreement with Mr. Coburn (incorporated by
                reference to Registrant's Form 8-B, File No. 000-22387,
                effective April 15, 1997)                                                      N/A

    10.2        Employment agreement with Mr. Westbrook (incorporated
                by reference to Registrant's Form 8-B, File No.
                000-22387, effective April 15, 1997)                                           N/A

    10.3        Employment agreement with Mr. Whitney (incorporated by
                reference to Registrant's 1997 Form 10-K, File No.
                0-22387, effective March 25, 1998)                                             N/A

    10.4        Employment agreement with Mr. Bernon (incorporated by
                reference to Registrant's 1997 Form 10-K, File No.
                0-22387, effective March 27, 2000)                                             N/A

    11          Statement Regarding Computation of Per Share Earnings                           55

    21          Subsidiaries of DCB Financial Corp                                              56

    23          Consent of Independent Auditors                                                 57
</TABLE>



                                       54