TABLE OF CONTENTS

Message to Shareholders....................................................    2
Selected Consolidated Financial Data.......................................    3
Management's Discussion and Analysis.......................................    4
Independent Auditor's Report...............................................   18
Consolidated Balance Sheet.................................................   19
Consolidated Statement of Income...........................................   20
Consolidated Statement of Shareholders' Equity.............................   21
Consolidated Statement of Cash Flows.......................................   22
Notes to Consolidated Financial Statements.................................   23
Directors and Officers.....................................................   39
Shareholder Information....................................................   41

DESCRIPTION OF BUSINESS

         Citizens Bancorp (the "Holding  Company" and together with the Bank, as
defined below, the "Company") is an Indiana corporation organized in June, 1997,
to become a savings and loan  holding  company upon its  acquisition  of all the
issued and  outstanding  capital  stock of Citizens  Savings  Bank of  Frankfort
("Citizens" or the "Bank") in connection with the Bank's  conversion from mutual
to stock  form.  The  Holding  Company  became  the  Bank's  holding  company on
September 18, 1997; therefore, all historical financial and other data contained
for periods  prior to September  18, 1997 herein relate solely to the Bank while
historical  financial  and other data  contained  herein  for the  period  after
September  18, 1997 relate to the Company.  The  principal  asset of the Holding
Company  currently  consists  of 100% of the  issued and  outstanding  shares of
capital stock, $.01 par value per share, of the Bank.

         The Bank is a federal  savings bank which  conducts its business from a
full-service office located in Frankfort,  Indiana. The Bank offers a variety of
lending,  deposit  and other  financial  services  to its retail and  commercial
customers.  The Bank's principal  business consists of attracting  deposits from
the general public and originating  mortgage loans, most of which are secured by
one- to four-family  residential real property in Clinton County,  Indiana.  The
Bank also offers multi-family loans,  construction loans,  non-residential  real
estate loans, home equity loans and consumer loans,  including single-pay loans,
loans secured by deposits,  and installment  loans. The Bank derives most of its
funds for lending from deposits of its  customers,  which  consist  primarily of
certificates of deposit, demand accounts and savings accounts.

<PAGE>


TO OUR SHAREHOLDERS:

On behalf of the Board of  Directors,  it is my  pleasure  to  present  the 1999
Fiscal Year Report of Citizens Bancorp and its subsidiary, Citizens Savings Bank
of Frankfort, Indiana. This report presents the results of our first full fiscal
year as a public company.

Our net income  for the  fiscal  year  ended  June 30,  1999 of  $832,000  was a
decrease of $42,000  from the  $874,000  earned  during the same period in 1998.
This decrease is due  primarily to the one time pre-tax gain of $172,000  during
1998 on the sale of a parcel of real estate.

During  fiscal  year 1999,  we  initiated  two  separate  5.0% stock  repurchase
programs under which Citizens Bancorp  repurchased an aggregate amount of 92,246
shares of its common  stock at a cost of $1.1  million,  or an average of $11.97
per share.  These share  repurchases  are  intended  to further  our  continuing
long-term  goal of  enhancing  shareholder  value.  As the  result  of the share
repurchase  programs and our earnings during the period,  our earnings per share
for the 1999 fiscal year  increased to $0.87 from $0.80 reported for fiscal year
1998. Our total shareholders'  equity at year-end was $14.6 million,  which is a
$400,000 decrease from $15.0 million at June 30, 1998.

During the  period,  our  assets  increased  $6.1  million,  or 11.3%,  to $59.5
million.  Our deposits  increased $2.9 million,  or 8.5%, to $37.0 million,  and
total loans increased $6.2 million,  or 13.1%,  to $53.1 million.  Our Return on
Assets was 1.43% and our Return on Equity was 5.53%.

The Year 2000 computer date change problem, now known as "Y2K," has been a major
topic of the media and you will  continue to hear about it during the  remainder
of 1999. We believe that we have taken the necessary  precautions to address any
foreseeable complications that may arise in connection with the date change from
the year 1999 to the year 2000.  Citizens  Savings Bank's Y2K Committee has been
working  on this  project  for over 18  months.  Earlier  this year we  replaced
virtually all of our computer  equipment with new Y2K compliant  equipment.  The
equipment  that we did not  replace  was  upgraded  and has been  tested for Y2K
compliance.  We have made hundreds of test transactions with our data processing
firm, BISYS,  Inc., to confirm that their systems will  successfully  handle the
transition to the year 2000. We also intend to send additional communications to
our customers to give them additional information on Y2K issues at various times
during the remainder of 1999. As a result of these steps that we have taken,  we
believe that our systems are Year 2000 compliant.

In 1999, we again  received the Bauer  Financial  Reports  "Five Star  Superior"
rating for the 44th consecutive quarter, and the Sheshunoff "Highest Rated Bank"
designation.  The  success  of  Citizens  Bancorp  is the  direct  result of our
dedicated Board of Directors,  Officers and Staff working  together to serve our
customers' needs in a courteous and professional  manner. I sincerely thank them
for their continuing loyalty and dedication.

To our Shareholders, we thank you for your continued confidence and we encourage
you to mention Citizens Savings Bank to your friends and associates.

                                           Sincerely,



                                           /s/ Fred W. Carter
                                           Fred W. Carter
                                           President, Chief Executive Officer

<PAGE>


                     SELECTED CONSOLIDATED FINANCIAL DATA OF
                        CITIZENS BANCORP AND SUBSIDIARIES


     The  following  selected  consolidated  financial  data of the  Company  is
qualified  in its  entirety  by, and  should be read in  conjunction  with,  the
consolidated financial statements,  including notes thereto,  included elsewhere
in this  Annual  Report.  In the  opinion  of  management  of the  Company,  all
adjustments necessary for a fair presentation of results for such periods, which
consisted only of normal, recurring adjustments, have been included.
<TABLE>
<CAPTION>


                                                                                At  June 30,
                                                      ---------------------------------------------------------------
                                                          1999         1998         1997         1996         1995
                                                      ---------------------------------------------------------------
                                                                           (Dollars in thousands)
Summary of Selected Consolidated
Financial Condition Data:
<S>                                                   <C>           <C>          <C>          <C>           <C>
Total assets.......................................   $59,470       $53,442      $46,353      $44,235       $39,727
Loans receivable, net (1)..........................    53,104        46,936       38,435       34,391        29,275
Cash on hand and in other institutions (2).........     2,082         2,533        4,125        3,308         4,310
Investment securities available for sale...........       388           315          161        3,003         2,832
Cash surrender value of life insurance contract....     1,162         1,119        1,076        1,035           991
FHLB advances......................................     7,000         3,500        4,000        3,000         1,500
Deposits...........................................    36,976        34,067       36,355       35,600        33,175
Total shareholders' equity.........................    14,640        15,046        5,691        5,320         4,841


                                                                            Year Ended  June 30,
                                                      ---------------------------------------------------------------
                                                          1999         1998         1997         1996         1995
                                                      ---------------------------------------------------------------
                                                                           (Dollars in thousands)
Summary of Selected Consolidated Operating Data:
Total interest income.............................. $   4,439      $  4,052       $3,509       $3,186        $2,742
Total interest expense.............................     1,919         1,738        1,814        1,653         1,370
                                                    ---------      --------       ------       ------        ------
   Net interest income.............................     2,520         2,314        1,695        1,533         1,372
Provision for loan losses..........................        65            72           83           80            32
                                                    ---------      --------       ------       ------        ------
   Net interest income after
     provision for loan losses.....................     2,455         2,242        1,612        1,453         1,340
Other income:
   Fees and service charges........................       136           142          138          152           151
   Loss on sale of investments.....................       ---           ---          (60)         ---           ---
   Gain on sale of real estate.....................        16           180           17           33             2
   Other...........................................        58            62           64           61            68
                                                    ---------      --------       ------       ------        ------
     Total other income............................       210           384          159          246           221
Other expense:
   Salaries and employee benefits..................       669           558          479          412           402
   Net occupancy expenses..........................        71            67           65           65            68
   Equipment expenses..............................        94            82           81           81            63
   Data processing fees............................       141           122          108          101           105
   Deposit insurance expense.......................        23            23          259           77            75
   Legal and professional fees.....................        74            96           32           32            28
   Other expenses..................................       240           224          193          199           183
                                                    ---------      --------       ------       ------        ------
     Total other expense...........................     1,312         1,172        1,217          967           924
                                                    ---------      --------       ------       ------        ------
Income before income taxes.........................     1,353         1,454          554          732           637
     Income taxes..................................       521           580          183          253           231
                                                    ---------      --------       ------       ------        ------
Net income.........................................$      832      $    874      $   371      $   479       $   406
                                                    =========      ========       ======       ======        ======

</TABLE>
Table continued on following page
<PAGE>
<TABLE>
<CAPTION>

                                                                               Year Ended  June 30,
                                                           ----------------------------------------------------------
                                                           1999          1998          1997         1996         1995
                                                           ----------------------------------------------------------
Supplemental Data:
<S>                                                         <C>           <C>          <C>          <C>           <C>
Interest rate spread during period.................         3.58%         3.77%        3.75%        3.75%         3.69%
Net yield on interest-earning assets (3)...........         4.60          4.78         4.02         3.99          3.92
Return on assets (4)...............................         1.43          1.69          .82         1.15          1.07
Return on equity (5)...............................         5.53          6.67         6.81         9.52          8.89
Net income per share of Common Stock ..............    $     .87           ---          ---          ---           ---
Equity to assets (6)...............................        24.62%        28.15%       12.28%       11.91%        12.06%
Average interest-earning assets to average
   interest-bearing liabilities....................       129.16        127.93       106.31       105.61        105.84
Non-performing assets to total assets (6)..........          .33           .32          .74          .50           .35
Allowance for loan losses to total loans
   outstanding (6).................................          .61           .57          .55          .40           .16
Allowance for loan losses to
   non-performing loans (6)........................       165.36        158.53        61.57        62.51         33.19
Net (charge-offs) recoveries to average
   total loans outstanding ........................         (.02)         (.03)        (.03)         .04          (.12)
Other expenses to  average assets (7)..............         2.25          2.27         2.67         2.32          2.44
Number of full service offices (6).................         1             1            1            1             1
</TABLE>


(1) Net of allowance for loan losses and deferred fees.
(2) Includes certificates of deposit in other financial institutions.
(3) Net interest income divided by average interest-earning assets.
(4) Net income divided by average total assets.
(5) Net income divided by average total equity.
(6) At end of period.
(7) Other expenses divided by average total assets.

<PAGE>


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

         The Holding Company was  incorporated  for the purpose of owning all of
the  outstanding  shares of Citizens.  The following  discussion and analysis of
Citizens'  financial condition as of June 30, 1999 and results of operations for
periods prior to that date should be read in conjunction with and with reference
to the consolidated financial statements and the notes thereto included herein.

         In  addition  to  the  historical  information  contained  herein,  the
following discussion contains forward-looking  statements that involve risks and
uncertainties.  The Holding Company's operations and actual results could differ
significantly from those discussed in the  forward-looking  statements.  Some of
the factors that could cause or  contribute  to such  differences  are discussed
herein but also include  changes in the economy and interest rates in the nation
and the Holding  Company's general market area. The  forward-looking  statements
contained  herein  include,  but are not limited to,  those with  respect to the
following matters:

     1.   Management's determination of the amount of loan loss allowance;

     2.   The effect of changes in interest rates;

     3.   Changes in deposit insurance premiums; and

     4.   Proposed  legislation  that would eliminate the federal thrift charter
          and the separate federal regulation of


<PAGE>

Average Balances and Interest Rates and Yields

         The following  tables  present at the fiscal years ended June 30, 1999,
1998 and  1997,  the  average  daily  balances  of each  category  of  Citizens'
interest-earning  assets  and  interest-bearing  liabilities,  and the  interest
earned or paid on such amounts.

                      AVERAGE BALANCE SHEET/YIELD ANALYSIS
<TABLE>
<CAPTION>

                                                                    Year Ended June 30,
                                    -------------------------------------------------------------------------------------
                                               1999                        1998                          1997
                                    ---------------------------  ---------------------------  ---------------------------
                                    Average             Average   Average           Average   Average            Average
                                    Balance  Interest Yield/Cost  Balance InterestYield/Cost  Balance Interest Yield/Cost
                                    -------------------------------------------------------------------------------------
                                                                  (Dollars in thousands)
Assets:
<S>                                <C>        <C>      <C>   <C>          <C>      <C>    <C>        <C>          <C>
Interest-earning assets:
   Interest-bearing deposits.......$ 3,286      $168     5.12% $  4,557     $292     6.40%  $  3,446   $   179      5.21%
   FHLB stock......................    367        29     8.03       336       27     8.07        332        26      7.84
   Investment securities
     available for sale (1)........    340        13     3.94       232       10     4.23      1,527        94      6.14
   Loans receivable (2)............ 50,746     4,229     8.33    43,318    3,723     8.60     36,843     3,210      8.71
                                   -------     -----            -------    -----            --------     -----
       Total interest-
          earning assets........... 54,739     4,439     8.11    48,443    4,052     8.36     42,148     3,509      8.33
                                               -----                       -----                         -----
Noninterest-earning assets.........  3,583                        3,165                        3,343
                                   -------                      -------                     --------
       Total assets................$58,322                      $51,608                     $ 45,491
                                   =======                      =======                     ========
Liabilities and shareholders' equity:
Interest-bearing liabilities:
   Deposits........................$36,573     1,589     4.35   $36,137    1,653     4.57   $ 36,436     1,641      4.50
   FHLB advances...................  5,808       330     5.68     1,731       86     4.96      3,212       173      5.41
       Total interest-
          bearing liabilities...... 42,381     1,919     4.53    37,868    1,739     4.59     39,648     1,814      4.58
Noninterest-bearing liabilities....    893                          640                          395
                                   -------                      -------                     --------
       Total liabilities........... 43,274                       38,508                       40,043
Shareholders' equity............... 15,048                       13,100                        5,448
                                   -------                      -------                     --------
       Total liabilities and
         shareholders' equity......$58,322                      $51,608                     $ 45,491
                                   =======                      =======                    =========
Net interest-earning assets........$12,358                      $10,575                    $   2,500
                                   =======                      =======                    =========
Net interest income................           $2,520                      $2,313                        $1,695
                                              ======                      ======                        ======
Interest rate spread (3)...........                      3.58%                       3.77%                          3.75%
                                                         ====                        ====                           ====
Net yield on weighted average
   interest-earning assets (4).....                      4.60%                       4.78%                          4.02%
                                                         ====                        ====                           ====
Average interest-earning assets
   to average interest-
   bearing liabilities............. 129.16%                      127.93%                      106.31%
                                    ======                       ======                       ======
</TABLE>


(1)  Includes securities  available for sale at amortized cost prior to SFAS No.
     115 adjustments.

(2)  Total loans less loans in process.  Average  balances  include  non-accrual
     loans.

(3)  Interest rate spread is calculated by subtracting weighted average interest
     rate  cost  from  weighted  average  interest  rate  yield  for the  period
     indicated.

(4)  The net yield on weighted average  interest-earning assets is calculated by
     dividing net interest income by weighted  average  interest-earning  assets
     for the period indicated.

Interest Rate Spread

         Citizens'  results of operations have been determined  primarily by net
interest income and, to a lesser extent,  fee income,  miscellaneous  income and
general and administrative expenses. Citizens' net interest income is determined
by the  interest  rate spread  between  the yields it earns on  interest-earning
assets and the rates paid on interest-bearing  liabilities,  and by the relative
amounts of interest-earning assets and interest-bearing liabilities.

      The following  table sets forth the weighted  average  effective  interest
rate that Citizens  earned on its loan and investment  portfolios,  the weighted
average  effective cost of its deposits and advances,  the interest rate spread,
and net yield on weighted average interest-earning assets for the periods and as
of the dates  shown.  Average  balances are based on average  monthly  balances.
Management  believes that the use of month-end average balances instead of daily
average  balances  has not caused any  material  difference  in the  information
presented.
<TABLE>
<CAPTION>


                                                                                Year Ended June 30,
                                                             ----------------------------------------------------------
                                                             1999                      1998                       1997
                                                             ----                      ----                       ----
Weighted average interest rate earned on:
<S>                                                          <C>                        <C>                       <C>
   Interest-bearing deposits.........................        5.12%                      6.40%                     5.21%
   FHLB stock........................................        8.03                       8.07                      7.84
   Investment securities.............................        3.94                       4.23                      6.14
   Loans receivable..................................        8.33                       8.60                      8.71
     Total interest-earning assets...................        8.11                       8.36                      8.33
Weighted average interest rate cost of:
   Deposits..........................................        4.35                       4.57                      4.50
   FHLB advances.....................................        5.68                       4.96                      5.41
     Total interest-bearing liabilities..............        4.53                       4.59                      4.58
Interest rate spread (1).............................        3.58%                      3.77%                     3.75%
                                                             ====                       ====                      ====
Net yield on weighted average
   interest-earning assets (2).......................        4.60%                      4.78%                     4.02%
                                                             ====                       ====                      ====
</TABLE>


(1)    Interest  rate spread is  calculated  by  subtracting  combined  weighted
       average  interest rate cost from combined  weighted average interest rate
       earned for the period  indicated.  Interest  rate spread  figures must be
       considered  in  light  of  the   relationship   between  the  amounts  of
       interest-earning assets and interest-bearing liabilities.

(2)    The net yield on weighted average  interest-earning  assets is calculated
       by dividing  net  interest  income by weighted  average  interest-earning
       assets for the period indicated.

         The following  table  describes the extent to which changes in interest
rates and  changes in volume of  interest-related  assets and  liabilities  have
affected Citizens' interest income and expense during the periods indicated. For
each  category  of  interest-earning   asset  and  interest-bearing   liability,
information is provided on changes  attributable to (1) changes in rate (changes
in rate  multiplied by old volume) and (2) changes in volume  (changes in volume
multiplied  by old rate).  Changes  attributable  to both rate and volume  which
cannot be segregated  have been  allocated  proportionally  to the change due to
volume and the change due to rate.

<TABLE>
<CAPTION>


                                                                     Increase  (Decrease)  in Net  Interest Income
                                                                     ---------------------------------------------
                                                                                                                 Total
                                                                    Due to                Due to                  Net
                                                                     Rate                 Volume                Change
                                                                     ----                 ------                ------
                                                                                      (In thousands)
Year ended June 30, 1999 compared
to year ended June 30, 1998
   Interest-earning assets:
<S>                                                                <C>                     <C>                    <C>
     Interest-bearing deposits..................................   $   (52)                $  (72)                $(124)
     FHLB stock.................................................        (1)                     3                     2
     Investment securities......................................        (1)                     4                     3
     Loans receivable...........................................      (119)                   625                   506
                                                                   -------                   ----                  ----
       Total....................................................      (173)                   560                   387
                                                                   -------                   ----                  ----
   Interest-bearing liabilities:
     Deposits...................................................       (83)                    19                   (64)
     FHLB advances..............................................        14                    230                   244
                                                                   -------                   ----                  ----
       Total....................................................       (69)                   249                   180
                                                                   -------                   ----                  ----
   Net change in net interest income............................     $(104)                 $ 311                $  207
                                                                   =======                   ====                  ====

Year ended June 30, 1998 compared
to year ended June 30, 1997
   Interest-earning assets:
     Interest-bearing deposits..................................   $    46                 $   66                  $112
     FHLB stock.................................................         1                    ---                     1
     Investment securities......................................       (22)                   (62)                  (84)
     Loans receivable...........................................       (41)                   555                   514
                                                                   -------                   ----                  ----
       Total....................................................       (16)                   559                   543
                                                                   -------                   ----                  ----
   Interest-bearing liabilities:
     Deposits...................................................        25                    (13)                   12
     FHLB advances..............................................       (13)                   (75)                  (88)
                                                                   -------                   ----                  ----
       Total....................................................        12                    (88)                  (76)
                                                                   -------                   ----                  ----
   Net change in net interest income............................   $   (28)                $  647                $  619
                                                                   =======                   ====                  ====

Year ended June 30, 1997 compared
to year ended June 30, 1996
   Interest-earning assets:
     Interest-bearing deposits..................................     $ (21)                $   19                $   (2)
     FHLB stock.................................................        (1)                   ---                    (1)
     Investment securities......................................        10                    (90)                  (80)
     Loans receivable...........................................       (19)                   425                   406
                                                                   -------                   ----                  ----
       Total....................................................       (31)                   354                   323
                                                                   -------                   ----                  ----
   Interest-bearing liabilities:
     Deposits...................................................        10                     92                   102
     FHLB advances..............................................       (11)                    70                    59
                                                                   -------                   ----                  ----
       Total....................................................        (1)                   162                   161
                                                                   -------                   ----                  ----
   Net change in net interest income............................   $   (30)                  $192                  $162
                                                                   =======                   ====                  ====
</TABLE>



<PAGE>

Financial Condition at June 30, 1999 Compared to Financial Condition at June 30,
1998

Total  consolidated  assets of the Company increased $6.1 million,  or 11.3%, to
$59.5  million at June 30,  1999,  from $53.4  million  at June 30,  1998.  Cash
increased $138,000 to $444,000 at June 30, 1999, from $306,000 at June 30, 1998,
while interest-bearing  deposits,  consisting primarily of overnight deposits at
the Federal Home Loan Bank ("FHLB") of Indianapolis  and certificates of deposit
at other FDIC insured financial institutions,  decreased to $1.6 million at June
30, 1999,  from $2.2 million at June 30, 1998.  Net loans  receivable  increased
$6.2 million, or 13.1%, to $53.1 million at June 30, 1999. The increase in loans
was funded by an increase in deposits and borrowings during the year.

Deposits  increased  $2.9  million  primarily  as a result of an increase in the
amount  of  public  funds on  deposit.  Borrowings  at the FHLB of  Indianapolis
increased $3.5 million to $7.0 million as of June 30, 1999, from $3.5 million at
June 30, 1998.

Shareholders'  equity  decreased  $406,000  during the year ended June 30, 1999.
This was  primarily  a result of the  profit  of  $832,000  for the year,  which
increased  shareholders'  equity,  less the cost of the Company's  repurchase of
$1.1 million of its common stock at various  times and market  prices during the
year.   Shareholders'  equity  also  decreased  $215,000  as  a  result  of  the
declaration of dividends on the Holding Company's common stock during the year.

Financial Condition at June 30, 1998 Compared to Financial Condition at June 30,
1997

Total consolidated assets of the Company increased by $7.0 million, or 15.3%, to
$53.4  million at June 30, 1998 from $46.4  million at June 30, 1997.  Net loans
receivable  increased $8.5 million, or 22.1%, to $46.9 million at June 30, 1998.
The increase in loans was funded  primarily  with the net proceeds from the sale
of the Holding  Company's  common stock on September 18, 1997. Cash decreased by
$555,000,  while interest-bearing  deposits decreased by $1.0 million during the
year.

Deposits  decreased by $2.3  million  primarily as a result of a decrease in the
amount of public  funds on deposit.  Borrowings  at the  Federal  Home Loan Bank
decreased by $500,000 as a result of net repayments during the period.

Shareholders'  equity  increased  $9.4  million  primarily  as a result of stock
issued by the Holding  Company in the conversion,  less the conversion  expenses
and the ESOP  shares,  plus the net  profit for the year.  Shareholders'  equity
decreased by $667,000 as a result of Citizens' purchase of shares of the Holding
Company's  common stock for the Recognition  and Retention  Plan.  Shareholders'
equity also decreased by $97,000 as a result of the  declaration of dividends on
the Holding Company's common stock during the year.

Comparison of Operating Results For Fiscal Years Ended June 30, 1999 and 1998

Net Income.  Net income  decreased  $42,000,  or 4.8%,  to $832,000 in 1999 from
$874,000 in 1998.  The decrease  primarily  resulted from the sale of a tract of
real estate for a profit of  $172,000  ($103,000  net of tax)  included in 1998.
There was an increase of $207,000 in net interest  income in 1999,  offset by an
increase in other expenses of $140,000 during the year.

Net Interest Income.  Net interest income increased  $207,000,  or 8.9%, to $2.5
million in 1999 from $2.3 million in 1998. The increase resulted  primarily from
an increase in earnings assets during 1999.

Provision  for Loan Losses.  The provision for loan losses was $65,000 for 1999,
compared to $72,000 for 1998. Citizens had charge-offs of $12,000 and recoveries
of $5,000 in 1999,  compared to  charge-offs of $17,000 and recoveries of $2,000
in 1998. At June 30, 1999, the allowance for loan losses was $326,000,  or 0.61%
of total loans, compared to $269,000, or 0.57% of total loans at June 30, 1998.

Other  income.  Total  non-interest  income  decreased  $174,000,  or 45.5%,  to
$210,000 in 1999 from $385,000 in 1998. The decrease  resulted  primarily from a
decrease in the gain on the sale of real  estate of  $164,000 in 1999.  Fees and
service charges decreased by $6,000 in 1999 and  miscellaneous  income decreased
by $4,000.

Other Expenses. Total non-interest expense increased $140,000, or 12.0%, to $1.3
million in 1999 from $1.2 million in 1998.  The increase was primarily due to an
increase in  salaries  and  benefits  of  $111,000  in 1999 due to  compensation
expense  related to the ESOP and the RRP. Office  occupancy,  equipment and data
processing  expenses  increased  $35,000 in 1999,  due  primarily  to  increased
expenses related to the Year 2000 computer issue.  Legal and  professional  fees
decreased  $22,000 in 1999 due to fees  incurred in 1998  related to the special
meeting of  shareholders  held in March of 1998.  Miscellaneous  other  expenses
increased $16,000 in 1999.

Income Tax Expense.  Income tax expense decreased $59,000, or 10.3%, to $521,000
in 1999 from $580,000 in 1998.  This  primarily  resulted from a decrease in net
income  before  income taxes in 1999 as a result of the gain on the sale of real
estate that increased non-interest income in 1998.

Comparison of Operating Results For Fiscal Years Ended June 30, 1998 and 1997

Net Income. Net income increased  $503,000,  or 135.6%, to $874,000 in 1998 from
$371,000 in 1997. The increase primarily resulted from Citizens'  recognition of
the one-time, non-recurring SAIF special assessment of $211,000 ($127,000 net of
tax) and the sale of an investment  at a loss of  approximately  $60,000  during
1997,  as well as the sale of a tract of real  estate  for a profit of  $172,000
($103,000 net of tax) during 1998. There was also an increase of $619,000 in net
interest income for 1998, offset by an increase in other expenses, excluding the
SAIF assessment, of $167,000. Excluding the gain on the sale of real estate, the
SAIF  assessment  and the loss on the sale of the  investment,  net income would
have increased $236,000,  or 44.2%, to $770,000 for the year ended June 30, 1998
from $534,000 in 1997.

Net Interest Income. Net interest income increased  $619,000,  or 36.5%, to $2.3
million in 1998 from $1.7 million in 1997. The increase resulted  primarily from
an increase in earning assets and a decrease in costing  liabilities in 1998 due
to the sale of the Holding Company's common stock.

 Provisions  for Loan Losses.  Provisions for loan losses for 1998 and 1997 were
$72,000 and  $83,000,  respectively.  Citizens  had  charge-offs  of $12,000 and
recoveries of $2,000 in 1997. Citizens had charge-offs of $17,000 and recoveries
of  $2,000  in 1998  and its  allowance  for loan  loss as of June 30,  1998 was
$269,000.

Other Income. Other income increased  approximately $226,000, or 142.1%, in 1998
as compared to 1997. This increase  resulted from an increase in the gain on the
sale of real estate of  $163,000 in 1998 and the $60,000  loss on the sale of an
investment  in 1997,  plus an  increase  of $3,000  in 1998 in fees and  service
charges and miscellaneous income.

Other Expense.  Other expenses decreased $44,000, or 3.7%, in 1998. The decrease
was primarily due to a $236,000 decrease in SAIF insurance  premiums offset by a
$79,000 increase in salaries and benefits due to compensation expense related to
the ESOP and the RRP. Office occupancy,  equipment and data processing  expenses
increased by $17,000 during 1998 and other expenses increased by $31,000.  Legal
and professional  expenses  increased by $64,000 due to the increased  reporting
requirements of public companies.

Income Tax  Expense.  Income  tax  expense  increased  $397,000,  or 216.6%,  to
$580,000 in 1998 from $183,000 in 1997. This primarily resulted from the gain on
the sale of real estate,  which increased  non-interest income in 1998, and from
the FDIC special  assessment,  which decreased  non-interest  income in 1997, as
well as the increase in net interest income for 1998.

Liquidity and Capital Resources

      Citizens'  primary  sources  of funds  are  deposits,  borrowings  and the
proceeds from  principal and interest  payments on loans.  While  maturities and
scheduled amortization of loans are a predictable source of funds, deposit flows
and mortgage  prepayments  are greatly  influenced  by general  interest  rates,
economic conditions and competition.

      Citizens' primary investing  activity is the origination of loans.  During
the years ended June 30, 1999,  1998 and 1997, it originated  total loans in the
amounts  of $29.7  million,  $25.8  million  and  $17.5  million,  respectively.
Citizens  purchased  loans  totaling  $61,000 in the fiscal  year ended June 30,
1999. Loan principal  repayments totaled $23.6 million,  $19.7 million and $13.3
million during the respective periods.

      During the years ended June 30, 1999,  1998 and 1997,  Citizens  purchased
securities  in the amounts of  $109,000,  $148,000  and  $65,000,  respectively.
Citizens did not receive any proceeds for the sale of securities  during 1999 or
1998. During the year ended June 30, 1997, however,  Citizens sold approximately
$2.9 million of securities for a loss of approximately $60,000.

      Citizens had outstanding  loan commitments of $607,000 and unused lines of
credit of  approximately  $2.98  million  at June 30,  1999.  The  unused  lines
primarily  represent  available  borrowings  under existing home equity lines of
credit.  Citizens  anticipates  that it will  have  sufficient  funds  from loan
repayments  and from its  ability  to borrow  additional  funds from the FHLB of
Indianapolis to meet its current commitments.  Certificates of deposit scheduled
to mature in one year or less at June 30, 1999 totaled $11.5 million. Management
believes that a  significant  portion of such deposits will remain with Citizens
based upon historical deposit flow data and Citizens' competitive pricing in its
market area.

      Liquidity  management is both a daily and long-term  function of Citizens'
management strategy.  In the event that Citizens should require funds beyond its
ability to generate them internally,  additional funds are available through the
use of FHLB advances.  Citizens had  outstanding  FHLB advances in the amount of
$7.0 million at June 30, 1999.
<PAGE>


      The  following  is a summary of Citizens'  cash flows,  which are of three
major  types.  Cash flows from  operating  activities  consist  primarily of net
income generated by cash.  Investing  activities generate cash flows through the
origination and principal  collection on loans as well as purchases and sales of
securities.  Investing  activities will generally  result in negative cash flows
when Citizens  experiences  loan growth.  Cash flows from  financing  activities
include savings deposits,  withdrawals and maturities and changes in borrowings.
The following table summarizes cash flows for each year in the three-year period
ended June 30, 1999.
<TABLE>
<CAPTION>


                                                                               Year Ended June 30,
                                                          -------------------------------------------------------------
                                                            1999                      1998                       1997
                                                          --------                   ------                      ----
                                                                                  (In thousands)
<S>                                                       <C>                        <C>                       <C>
Operating activities.............................         $    866                   $  1,522                  $    266
                                                          --------                     ------                      ----

Investing activities:
   Net change in interest-bearing deposits.......              297                        693                      (695)
   Purchases of  investment securities...........             (109)                      (148)                      (65)
   Sales of investment securities................              ---                        ---                     2,932
   Net change in loans...........................           (6,232)                    (8,655)                   (4,223)
   Loans sold....................................              ---                        ---                        91
   Purchases of equipment........................              (55)                       (30)                      (16)
   Change in land held for development...........               52                         31                        77
   Purchases of FHLB stock.......................              (67)                       (20)                      ---
                                                          --------                     ------                      ----
Total from investing activities..................           (6,114)                    (8,129)                   (1,899)
                                                          --------                     ------                      ----

Financing activities:
   Increase/(decrease) in NOW,
     MMDA and passbook deposits..................                3                       (258)                      305
   Increase/(decrease) in certificates
     of deposit..................................            2,905                     (2,030)                      450
   Advances from FHLB............................            7,000                      3,500                    14,500
   Payments to FHLB..............................           (3,500)                    (4,000)                  (13,500)
   Dividends paid on common stock................             (210)                       (53)                      ---
   Repurchase of common stock....................           (1,104)                       ---                       ---
   Sale of common stock, net of costs............              ---                      9,216                       ---
   Purchase of RRP shares........................              ---                       (667)                      ---
                                                          --------                     ------                      ----
Total from financing activities..................            5,094                      5,708                     1,755
                                                          --------                     ------                      ----

Net increase/(decrease) in cash
   and cash equivalents..........................         $   (154)                    $ (899)                     $122
                                                          ========                     ======                      ====
</TABLE>


<PAGE>


         Federal  law  requires  that  savings  associations  maintain a minimum
average  daily  balance  of liquid  assets in an amount not less than 4% or more
than 10% of their  withdrawable  accounts  plus  short-term  borrowings.  Liquid
assets  include  cash,  certain time  deposits,  certain  bankers'  acceptances,
specified  U.S.  government,  state  or  federal  agency  obligations,   certain
corporate debt  securities,  commercial  paper,  certain  mutual funds,  certain
mortgage-related  securities, and certain first-lien residential mortgage loans.
The OTS regulation that implements this statutory liquidity requirement provides
that a savings association must hold liquid assets in an amount not less than 4%
of the association's net withdrawable  accounts and short-term  borrowings.  The
OTS no longer requires savings associations to maintain short-term liquid assets
constituting  at least 1% of their  average  daily  balance of net  withdrawable
deposit accounts and current  borrowings.  In determining  their compliance with
this liquidity  requirement,savings  associations  may calculate their liquidity
requirement  based upon their average daily balance of liquid assets during each
quarter rather than during each month. The OTS may impose monetary  penalties on
savings associations that fail to meet these liquidity requirements.  As of June
30, 1999, Citizens had liquid assets of $3.0 million, and a regulatory liquidity
ratio of 7.5%.

      Pursuant to OTS capital  regulations,  savings associations must currently
meet a 1.5% tangible capital requirement,  a 3% leverage ratio (or core capital)
requirement, and a total risk-based capital to risk-weighted assets ratio of 8%.
At June 30, 1999,  Citizens'  tangible capital ratio was 17.8%, its core capital
ratio was 17.8%, and its total risk-based capital to risk-weighted  assets ratio
was 29.0%.  Therefore,  at June 30, 1999,  Citizens' capital levels exceeded all
applicable regulatory capital requirements currently in effect.

      The following table provides the minimum regulatory  capital  requirements
and Citizens' capital ratios as of June 30, 1999:
<TABLE>
<CAPTION>


                                                                       At June 30, 1999
                                             OTS Requirement                          Citizens' Capital Level
                                             ---------------                          -----------------------
                                          % of                                % of                           Amount
Capital Standard                         Assets        Amount               Assets(1)     Amount            of Excess
----------------                         ------        ------               ---------     ------            ---------
                                                                     (Dollars in thousands)
<S>                                        <C>         <C>                   <C>         <C>                  <C>
Tangible capital........................   1.5%        $  876                17.8%       $10,388              $9,512
Core capital (2)........................   3.0          1,751                17.8         10,388               8,637
Risk-based capital......................   8.0          2,957                29.0         10,714               7,757
</TABLE>


(1)  Tangible and core capital levels are shown as a percentage of total assets;
     risk-based  capital  levels  are  shown as a  percentage  of  risk-weighted
     assets.

(2)  The  OTS  recently   adopted  a  core  capital   requirement   for  savings
     associations  comparable to that adopted by the OCC for national banks. The
     new  regulation  requires  core  capital  of at least 3% of total  adjusted
     assets for savings  associations  that  received  the  highest  supervisory
     rating  for  safety  and  soundness,  and 4% to 5% for  all  other  savings
     associations. Citizens is in compliance with these new requirements.

     As of June 30, 1999, management is not aware of any current recommendations
by regulatory authorities which, if they were to be implemented,  would have, or
are reasonably likely to have, a material adverse effect on Citizens' liquidity,
capital resources or results of operations.

Current Accounting Issues

     Accounting for Derivative Instruments and Hedging Activities.  Statement of
Financial  Accounting  Standards  ("SFAS") No. 133 requires  companies to record
derivatives  on the  balance  sheet  at their  fair  value.  SFAS  No.  133 also
acknowledges  that the method of  recording a gain or loss depends on the use of
the derivative.  If certain conditions are met, a derivative may be specifically
designated  as (a) a hedge of the  exposure  to  changes  in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (b) a hedge of
the exposure to variable cash flows of a forecasted transaction,  or (c) a hedge
of the foreign currency exposure of a net investment in a foreign operation,  an
unrecognized   firm   commitment,   an   available-for-sale   security,   or   a
foreign-currency-denominated forecasted transaction.

     o    For a derivative  designated as hedging the exposure to changes in the
          fair value of a recognized  asset or  liability  or a firm  commitment
          (referred to as a fair value hedge), the gain or loss is recognized in
          earnings in the period of change  together with the offsetting loss or
          gain on the hedged item  attributable  to the risk being  hedged.  The
          effect of that  accounting  is to  reflect in  earnings  the extent to
          which the hedge is not  effective in achieving  offsetting  changes in
          fair value.

     o    For a derivative  designated  as hedging the exposure to variable cash
          flows of a forecasted  transaction (referred to as a cash flow hedge),
          the effective  portion of the  derivative's  gain or loss is initially
          reported  as  a  component  of  other  comprehensive  income  (outside
          earnings)  and  subsequently   reclassified  into  earnings  when  the
          forecasted  transaction  affects earnings.  The ineffective portion of
          the gain or loss is reported in earnings immediately.

     o    For a derivative  designated as hedging the foreign currency  exposure
          of a net  investment  in a  foreign  operation,  the  gain  or loss is
          reported in other  comprehensive  income (outside earnings) as part of
          the cumulative translation adjustment. The accounting for a fair value
          hedge described above applies to a derivative designated as a hedge of
          the foreign currency exposure of an unrecognized firm commitment or an
          available-for-sale security. Similarly, the accounting for a cash flow
          hedge described above applies to a derivative designated as a hedge of
          the  foreign  currency  exposure  of  a   foreign-currency-denominated
          forecasted transaction.

     o    For a derivative not designated as a hedging  instrument,  the gain or
          loss is recognized in earnings in the period of change.

     The new Statement  applies to all entities.  If hedge accounting is elected
by the  entity,  the  method  of  assessing  the  effectiveness  of the  hedging
derivative   and  the   measurement   approach   of   determining   the  hedge's
ineffectiveness must be established at the inception of the hedge.

     SFAS No. 133 amends SFAS No. 52 and supercedes  SFAS Nos. 80, 105, and 119.
SFAS  No.  107 is  amended  to  include  the  disclosure  provisions  about  the
concentrations  of credit risk from SFAS No. 105.  Several  Emerging Issues Task
Force  consensuses  are also changed or nullified by the  provisions of SFAS No.
133.

     SFAS No. 133 was to be effective for all fiscal years  beginning after June
15, 1999.  The  implementation  date was deferred,  and SFAS No. 133 will now be
effective for all fiscal  quarters of all fiscal years  beginning after June 15,
2000.

     Accounting for Mortgage-Backed Securities Retained after the Securitization
of Mortgage Loans Held for Sale by a Mortgage Banking  Enterprise.  SFAS No. 134
establishes  accounting  standards for certain  activities  of mortgage  banking
enterprises and for other  enterprises  with similar mortgage  operations.  This
Statement amends SFAS No. 65.

     SFAS No. 65, as  previously  amended by SFAS Nos.  115 and 125,  required a
mortgage banking enterprise to classify a mortgage-backed  security as a trading
security  following the  securitization of the mortgage loan held for sale. This
Statement further amends SFAS No. 65 to require that after the securitization of
mortgage loans held for sale, an entity engaged in mortgage  banking  activities
must classify the resulting mortgage-backed security or other retained interests
based on the entity's ability and intent to sell or hold those investments.

     The determination of the appropriate classification for securities retained
after the  securitization of mortgage loans by a mortgage banking enterprise now
conforms to SFAS No. 115. The only requirement the new SFAS No. 134 adds is that
if an entity has a sales  commitment  in place,  the security must be classified
into trading.

     This  Statement is effective for the first fiscal quarter  beginning  after
December 15, 1998. On the date this  Statement is initially  applied,  an entity
may reclassify mortgage-backed securities and other beneficial interest retained
after the  securitization  of  mortgage  loans  held for sale  from the  trading
category, except for those with sales commitments in place. Those securities and
other interest  shall be classified  based on the entity's  present  ability and
intent to hold the investments.

Impact of Inflation

     The consolidated  financial  statements presented herein have been prepared
in accordance with generally accepted  accounting  principles.  These principles
require the measurement of financial  position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.

     Citizens'  primary  assets and  liabilities  are  monetary in nature.  As a
result,  interest rates have a more significant impact on Citizens'  performance
than the effects of general levels of inflation. Interest rates, however, do not
necessarily  move in the same  direction or with the same magnitude as the price
of goods and services,  since such prices are affected by inflation. In a period
of rapidly rising  interest  rates,  the liquidity and maturities  structures of
Citizens'  assets and  liabilities are critical to the maintenance of acceptable
performance levels.

     The  principal  effect of  inflation,  as distinct  from levels of interest
rates, on earnings is in the area of noninterest expense.  Such expense items as
employee  compensation,  employee benefits and occupancy and equipment costs may
be  subject to  increases  as a result of  inflation.  An  additional  effect of
inflation  is the  possible  increase  in the  dollar  value  of the  collateral
securing  loans that  Citizens has made.  Management  is unable to determine the
extent, if any, to which properties securing Citizens' loans have appreciated in
dollar value due to inflation.

Year 2000 Compliance

      The Company's lending and deposit activities, like those of most financial
institutions,  depend  significantly  upon  computer  systems.  The  Company  is
addressing  the potential  problems  associated  with the  possibility  that the
computers which control its operating systems, facilities and infrastructure may
not be programmed to read four-digit date codes.  This could cause some computer
applications to be unable to recognize the change from the year 1999 to the year
2000, which could cause computer systems to generate erroneous data or to fail.

     The  Company is  working  with the  companies  that  supply or service  its
systems  that rely on  computers  to identify  and remedy any Year 2000  related
problems.  As of June 30, 1999,  the Company has completed the renovation of all
systems that could be  significantly  affected by Year 2000 related problems and
has begun testing its renovated  systems.  The Company expects to  substantially
complete testing of all systems by September 30, 1999. The bulk of the Company's
computer processing is provided under contract by BISYS, Inc. in Houston,  Texas
("BISYS"). BISYS has completed the renovation phase of its Year 2000 efforts and
has tested its upgraded  systems and  interfaces  with the  Company.  BISYS will
assist the Company  with other  phases of Year 2000  compliance  throughout  the
remainder of 1999.  Banker's  Systems,  which  provides  Citizens' loan document
preparation system, has certified that its systems are Year 2000 compliant as of
June 30, 1999. Testing of the system is expected to be complete by September 30,
1999.

     The Company has contacted the  approximately  twenty other  companies  that
supply or service its material operations requesting that they certify that they
have plans to make their respective computer systems Year 2000 compliant.  As of
June 30, 1999,  the Company has received such  certification  from nearly all of
these  companies.  Once  the  Company  receives  certification  from  a  service
provider,  it  continuously  monitors the progress  that it makes in meeting its
targeted schedule for becoming Year 2000 compliant. Should the Company find that
a  provider  is not making  satisfactory  progress  in its Year 2000  compliance
efforts,  the  Company  intends to identify  and  contract  with an  alternative
service  provider.  The Company  does not expect the expense of such  changes in
suppliers or servicers to be material to its operations,  financial condition or
results.  Notwithstanding the efforts the Company has made, no assurances can be
given that the  systems of its service  providers  will be timely  renovated  to
address the Year 2000 issue.

     The  Company's  Board of Directors  reviews on a monthly basis the progress
made in addressing  Year 2000 issues.  Management  estimates  that the Company's
expenses  related to upgrading its systems and software for Year 2000 compliance
will not exceed $80,000.  At June 30, 1999, the Company had spent  approximately
$55,000 in connection with Year 2000 compliance. Although management believes it
is taking the  necessary  steps to address the Year 2000  compliance  issue,  no
assurances  can be given that some  problems  will not occur or that the Company
will not incur significant  additional  expenses in future periods. In the event
that the  Company  is  ultimately  required  to  purchase  replacement  computer
systems,  programs and equipment,  or to incur substantial  expenses to make its
current systems,  programs and equipment Year 2000 compliant, its net income and
financial condition could be adversely affected.

     In addition to possible  expenses  related to the Company's own systems and
those of its  service  providers,  the Company  could incur  losses if Year 2000
problems affect any of its depositers or borrowers.  Such problems could include
delayed loan payments due to Year 2000  problems  affecting any of the Company's
significant borrowers or impairing the payroll systems of large employers in its
market area.  Because the Company's  loan  portfolio to individual  borrowers is
diversified and its market area does not depend significantly on one employer or
industry,  management  does not expect any such Year 2000  related  difficulties
that may affect the Company's  depositors and borrowers to significantly  affect
net earnings or cash flows.

     Because the Company has only two  commercial  borrowers and neither loan is
of a material  amount,  the Company has not requested  certification  from those
borrowers that their computer systems are Year 2000 compliant.  The Company will
require  borrowers  under new  commercial  loans in excess  of  $50,000  that it
originates  to certify  that they are aware of the Year 2000 issue and will give
all necessary attention to insure that their information technology will be Year
2000 compliant.

     The Company has developed  contingency plans to be implemented in the event
of the  failure  of all or part of its Year  2000  program  or of the Year  2000
programs of any of its service providers. These contingency plans involve, among
other actions, manual workarounds, adjusting staffing strategies and temporarily
discontinuing  services or products which are not considered by management to be
critical to the Company's  operations.  The contingency  plans include  business
resumption procedures, event planning and a strategy for managing cash reserves.
Additionally,  management has assessed  employee training needs and determined a
method for testing the viability of business resumption procedures. This testing
is  expected  to be  completed  by  September  30,  1999.  The  Company has also
broadened  its customer  awareness  campaign to keep  customers  informed of the
progress of its Year 2000 efforts.

Asset/Liability Management

     An  important  component  of Citizens'  asset/liability  management  policy
includes  examining the interest rate  sensitivity of its assets and liabilities
and  monitoring  the  expected  effects  of  interest  rate  changes  on its net
portfolio value.

     An asset or liability is interest  rate  sensitive  within a specific  time
period if it will mature or reprice within that time period. If Citizens' assets
mature or reprice  more  quickly or to a greater  extent  than its  liabilities,
Citizens'  net  portfolio  value and net interest  income would tend to increase
during periods of rising  interest rates but decrease  during periods of falling
interest rates. Conversely, if Citizens' assets mature or reprice more slowly or
to a lesser  extent  than  its  liabilities,  its net  portfolio  value  and net
interest  income would tend to decrease  during periods of rising interest rates
but increase during periods of falling interest rates. Citizens' policy has been
to  mitigate  the  interest  rate risk  inherent in the  historical  business of
savings  associations,  the  origination of long-term loans funded by short-term
deposits,  by pursuing certain strategies designed to decrease the vulnerability
of its earnings to material and prolonged changes in interest rates.

     Because of the lack of  customer  demand for  adjustable  rate loans in its
market area, Citizens primarily  originates  fixed-rate real estate loans, which
accounted  for  approximately  65% of its loan  portfolio at June 30,  1999.  To
manage the interest rate risk of this type of loan  portfolio,  Citizens  limits
maturities of fixed-rate  loans to no more than 20 years. In addition,  Citizens
continues to offer and attempts to increase its volume of adjustable  rate loans
when market interest rates make these loans more attractive to customers.

     Management  believes  it is  critical  to manage the  relationship  between
interest  rates and the effect on Citizens' net portfolio  value  ("NPV").  This
approach  calculates the  difference  between the present value of expected cash
flows from assets and the present value of expected cash flows from liabilities,
as well as cash flows from off-balance sheet contracts.  Citizens manages assets
and liabilities  within the context of the marketplace,  regulatory  limitations
and within limits  established by its Board of Directors on the amount of change
in NPV which is acceptable given certain interest rate changes.

         Interest  risk  exposure  is  monitored  monthly by an  Asset/Liability
Management  Committee which considers  various factors such as current local and
national economic conditions and interest rate outlook as well as Citizens' loan
and deposit demand, pricing and maturity structure.  This Committee periodically
updates Citizens' interest rate risk strategy which primarily involves modifying
asset/liability terms and mix as considered  appropriate.  An increased emphasis
on  consumer  loans,  which  generally  have  shorter  terms  to  maturity  than
residential  mortgage  loans,  in  addition  to an  increase  in the  volume  of
adjustable-rate loans, including multi-family and non-residential mortgage loans
and home  equity  lines of  credit,  have  been the major  strategies  for asset
management.  Citizens has also attempted to lengthen the average maturity of its
liabilities by offering  special rates on longer term  certificates  of deposit.
Long term advances from the FHLB of Indianapolis are also an available source of
funds which could help Citizens with future liability management.

           The  OTS  issued  a  regulation,   which  uses  a  net  market  value
methodology to measure the interest rate risk exposure of savings  associations.
Under this OTS regulation, an institution's "normal" level of interest rate risk
in the  event of an  assumed  change  in  interest  rates is a  decrease  in the
institution's  NPV in an amount not  exceeding  2% of the  present  value of its
assets. Savings associations with over $300 million in assets or less than a 12%
risk-based  capital  ratio are  required  to file OTS  Schedule  CMR.  Data from
Schedule  CMR is used by the OTS to  calculate  changes in NPV (and the  related
"normal"  level of interest rate risk) based upon certain  interest rate changes
(discussed  below).  Associations  which  do  not  meet  either  of  the  filing
requirements  are  not  required  to  file  OTS  Schedule  CMR,  but  may  do so
voluntarily.  As Citizens does not meet either of these requirements,  it is not
required  to file  Schedule  CMR,  although  it does so  voluntarily.  Under the
regulation,  associations  which must file are required to take a deduction (the
interest  rate risk capital  component)  from their total  capital  available to
calculate  their risk based capital  requirement if their interest rate exposure
is greater  than  "normal."  The amount of that  deduction  is  one-half  of the
difference  between (a) the institution's  actual  calculated  exposure to a 200
basis point interest rate increase or decrease (whichever results in the greater
pro forma decrease in NPV) and (b) its "normal" level of exposure which is 2% of
the present value of its assets.

         It is estimated  that at June 30, 1999,  NPV would decrease 9.0% in the
event of a 200 basis point increase in market interest  rates,  compared to 9.8%
for the same  increase at June 30,  1998.  Citizens'  NPV at June 30, 1999 would
increase 0.5% in the event of a 200 basis point decrease in market rates. A year
earlier,  a 200 basis point  decrease in market rates would have  increased  NPV
3.1%.

         Presented below, as of June 30, 1999 and 1998, is an analysis performed
by the OTS of  Citizens'  interest  rate risk as  measured by changes in NPV for
instantaneous  and sustained  parallel shifts in the yield curve up and down 200
basis points.
<TABLE>
<CAPTION>


                                  June 30, 1999
                     Net Portfolio Value Summary Performance

                                                                                                     NPV as % of
                                                                                                    Present Value
      Change                                Net Portfolio Value                                       of Assets
     In Rates              $ Amount              $ Change              % Change              NPV Ratio              Change
--------------------------------------------------------------------------------------------------------------------------
                                                 (Dollars in thousands)
<S>   <C>                   <C>                 <C>                      <C>                  <C>              <C>
    + 200 bp*               $11,973             $(1,183)                 (8.99)%              20.53%           (115)  bp
        0 bp                 13,156                 ---                     ---               21.68%            ---   bp
    - 200 bp                 13,215                  59                   0.45%               21.28%            (40)  bp
</TABLE>


             Interest Rate Risk Measures: 200 Basis Point Rate Shock

  Pre-Shock NPV Ratio: NPV as % of PV of Assets................         21.68%
  Exposure Measure: Post-Shock NPV Ratio.......................         20.53%
  Sensitivity Measure: Change in NPV Ratio.....................         115 bp
  Change in NPV as % of PV of Assets...........................         5.3%

<TABLE>
<CAPTION>

                                  June 30, 1998
                     Net Portfolio Value Summary Performance

                                                                                                     NPV as % of
                                                                                                    Present Value
      Change                                Net Portfolio Value                                       of Assets
     In Rates              $ Amount              $ Change              % Change              NPV Ratio              Change
--------------------------------------------------------------------------------------------------------------------------
                                                 (Dollars in thousands)
<S>   <C>                   <C>                 <C>                      <C>                  <C>              <C>
    + 200 bp*               $10,725             $(1,158)                 (9.79)%              20.03%           (151)  bp
        0 bp                 11,883                 ---                      ---              21.54%            ---   bp
    - 200 bp                 12,251                 368                   3.10%               21.86%             32   bp
</TABLE>


             Interest Rate Risk Measures: 200 Basis Point Rate Shock

       Pre-Shock NPV Ratio: NPV as % of PV of Assets............         21.54%
       Exposure Measure: Post-Shock NPV Ratio...................         20.03%
       Sensitivity Measure: Change in NPV Ratio.................         151 bp
       Change in NPV as % of PV of Assets.......................         7.0%

* Basis points

<PAGE>


                          Independent Auditor's Report



To the Shareholders and
Board of Directors
Citizens Bancorp


We  have  audited  the  consolidated  balance  sheet  of  Citizens  Bancorp  and
subsidiaries  as of June 30, 1999,  and the related  consolidated  statements of
income,  shareholders'  equity,  and cash flows for the year then  ended.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit. The financial statements as of June 30,
1998,  and for the years  ended June 30,  1998 and 1997,  were  audited by other
auditors whose report dated August 19, 1998, expressed an unqualified opinion on
those statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the consolidated  financial  statements described above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Citizens  Bancorp and subsidiaries as of June 30, 1999, and the results of their
operations  and their  cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles.


Olive LLP


/s/ Olive LLP
Indianapolis, Indiana
July 23, 1999

<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET



<TABLE>
<CAPTION>
June 30                                                                         1999               1998
-----------------------------------------------------------------------------------------------------------
Assets
<S>                                                                         <C>                 <C>
     Cash and due from banks                                                $    443,757        $    305,908
     Interest-bearing demand deposits                                            152,289             443,673
                                                                            ------------        ------------
          Cash and cash equivalents                                              596,046             749,581
     Interest-bearing time deposits                                            1,485,972           1,782,985
     Investment securities--available for sale                                   388,362             315,041
     Loans, net of allowance for loan losses of $326,249 and $268,837         53,103,518          46,936,403
     Land held for development                                                   912,542             964,582
     Cash surrender value of life insurance contracts                          1,161,519           1,118,883
     Premises and equipment                                                      567,486             564,638
     Federal Home Loan Bank stock                                                419,100             351,600
     Other assets                                                                835,264             657,956
                                                                            ------------        ------------

              Total assets                                                  $ 59,469,809        $ 53,441,669
                                                                            ============        ============

Liabilities
     Interest bearing deposits                                              $ 36,976,322        $ 34,067,481
     Federal Home Loan Bank advances                                           7,000,000           3,500,000
     Other liabilities                                                           604,632             706,162
                                                                            ------------        ------------
              Total liabilities                                               44,580,954          38,273,643
                                                                            ------------        ------------

Equity Received From Contributions to the ESOP                                   248,891             122,440
                                                                            ------------        ------------

Shareholders' Equity
     Preferred stock, no par value
        Authorized and unissued--2,000,000 shares
     Common stock, no par value
        Authorized--5,000,000 shares
        Issued and outstanding--881,114 and 973,360 shares                     8,293,509           9,215,969
     Unearned Recognition and Retention Plan ("RRP")                            (537,762)           (641,117)
     Retained earnings                                                         6,902,537           6,467,337
     Accumulated other comprehensive income                                      (18,320)              3,397
                                                                            ------------        ------------

              Total shareholders' equity                                      14,639,964          15,045,586
                                                                            ------------        ------------

              Total liabilities and shareholders' equity                    $ 59,469,809        $ 53,441,669
                                                                            ============        ============
</TABLE>


See notes to consolidated financial statements.

<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>



Year Ended June 30                                                          1999              1998             1997
----------------------------------------------------------------------------------------------------------------------
Interest Income
<S>                                                                     <C>               <C>              <C>
     Loans receivable                                                   $ 4,228,607       $ 3,723,529      $ 3,210,018
     Investment securities                                                   42,868            36,918          119,730
     Deposits with financial institutions                                   168,158           291,674          179,640
                                                                        -----------       -----------      -----------
          Total interest income                                           4,439,633         4,052,121        3,509,388
                                                                        -----------       -----------      -----------

Interest Expense
     Deposits                                                             1,589,279         1,652,668        1,640,868
     Borrowings                                                             329,982            85,921          173,668
                                                                        -----------       -----------      -----------
          Total interest expense                                          1,919,261         1,738,589        1,814,536
                                                                        -----------       -----------      -----------
Net Interest Income                                                       2,520,372         2,313,532        1,694,852
     Provision for loan losses                                               65,000            72,000           83,000
                                                                        -----------       -----------      -----------
Net Interest Income After Provision for Loan Losses                       2,455,372         2,241,532        1,611,852
                                                                        -----------       -----------      -----------

Other Income
     Service charges on deposit accounts and other                          135,542           141,983          138,342
     Net realized losses on sales of available-for-sale securities          (60,243)
     Gain on sales of land held for development                              15,747           180,174           17,307
     Other income                                                            58,498            62,443           63,426
                                                                        -----------       -----------      -----------
          Total other income                                                209,787           384,600          158,832
                                                                        -----------       -----------      -----------

Other Expenses
     Salaries and employee benefits                                         668,818           557,509          478,566
     Net occupancy expenses                                                  70,780            66,509           65,112
     Equipment expenses                                                      93,951            82,305           81,512
     Data processing fees                                                   140,865           122,584          107,764
     Deposit insurance expense                                               23,685            23,115          258,685
     Legal and professional fees                                             73,751            95,839           32,197
     Other expenses                                                         240,347           224,214          192,681
                                                                        -----------       -----------      -----------
          Total other expenses                                            1,312,197         1,172,075        1,216,517
                                                                        -----------       -----------      -----------

Income Before Income Tax                                                  1,352,962         1,454,057          554,167
     Income tax expense                                                     520,704           580,179          183,225
                                                                        -----------       -----------      -----------

Net Income                                                              $   832,258       $   873,878      $   370,942
                                                                        ===========       ===========      ===========

Basic Earnings per Share                                                $       .87
                                                                        ===========

Diluted Earnings per Share                                              $       .87
                                                                        ===========

Weighted Average Shares Outstanding                                         957,389
</TABLE>




See notes to consolidated financial statements.


<PAGE>

<TABLE>
<CAPTION>

                                                                                            Unearned     Accumulated
                                             Common Stock                                  Recognition      Other
                                         Shares                Comprehensive   Retained        and      Comprehensive
                                       Outstanding   Amount       Income       Earnings  Retention Plan    Income        Total
                                       -----------   ------       ------       --------  --------------    ------        -----

<S>                                      <C>      <C>           <C>          <C>           <C>            <C>       <C>
Balances, July 1, 1996                                                       $5,319,852                   $(50,853)$  5,268,999
   Comprehensive income
     Net income                                                 $370,942        370,942                                 370,942
     Other comprehensive income, net of tax
       Unrealized gains on securities                             50,853                                    50,853       50,853
                                                               ---------
   Comprehensive income                                         $421,795
                                                               =========
                                         -------    --------                   --------                              ----------
Balances, June 30, 1997                                                       5,690,794                               5,690,794
   Comprehensive income
     Net income                                                 $873,878        873,878                                 873,878
     Other comprehensive income, net of tax
       Unrealized gains on securities                              3,397                                     3,397        3,397
                                                               ---------
   Comprehensive income                                         $877,275
                                                               =========

   Sale of common stock                  973,360  $9,215,969                                                          9,215,969
   Cash dividends ($.10 per share)                                              (97,335)                                (97,335)
   Purchase of shares for RRP                                                              $(666,957)                  (666,957)
   RRP shares earned                                                                          25,840                     25,840
                                         -------    --------                   --------                              ----------


Balances, June 30, 1998                  973,360   9,215,969                  6,467,337     (641,117)        3,397   15,045,586
   Comprehensive income
     Net income                                                 $832,258        832,258                                 832,258
     Other comprehensive income, net of tax
       Unrealized losses on securities                           (21,717)                                  (21,717)     (21,717)
                                                               ---------
   Comprehensive income                                         $810,541
                                                               =========
   Cash dividends ($.23 per share)                                             (215,140)                               (215,140)
   RRP shares earned                                                                         103,355                    103,355
   Purchase of stock                     (92,246)   (922,460)                  (181,918)                             (1,104,378)
                                         -------    --------                   --------                              ----------


Balances, June 30, 1999                  881,114  $8,293,509                 $6,902,537    $(537,762)     $(18,320) $14,639,964
                                         =======  ==========                 ==========    =========      ========  ===========
</TABLE>


See notes to consolidated financial statements.
<PAGE>

                        CITIZENS BANCORP AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>



Year Ended June 30                                                     1999             1998              1997
-------------------------------------------------------------------------------------------------------------------
Operating Activities
<S>                                                              <C>                <C>                <C>
     Net income                                                  $    832,258       $    873,878       $    370,942
     Adjustments to reconcile net income to net cash
       provided by operating activities
          Provision for loan losses                                    65,000             72,000             83,000
          Depreciation and amortization                                51,762             30,519             45,587
          Deferred income tax                                         (63,588)          (101,594)           (76,326)
          Investment securities losses                                 60,243
          ESOP and RRP shares earned                                  229,806            148,280
          Net change in
               Other assets and cash surrender value                 (142,110)            63,236           (158,418)
               Other liabilities                                     (106,575)           435,290            (58,854)
                                                                 ------------       ------------       ------------
                  Net cash provided by operating activities           866,553          1,521,609            266,174
                                                                 ------------       ------------       ------------
Investing Activities
     Net change in interest-bearing deposits                          297,013            693,015           (695,000)
     Purchases of securities available for sale                      (109,284)          (148,420)           (65,481)
     Proceeds from sales of securities available for sale           2,931,693
     Net change in loans                                           (6,232,115)        (8,655,543)        (4,222,435)
     Proceeds from sale of loans                                       91,455
     Purchases of premises and equipment                              (54,610)           (29,833)           (16,498)
     Net change in land held for development                           52,040             31,326             76,892
     Purchase of FHLB stock                                           (67,500)           (20,000)
                                                                 ------------       ------------       ------------
               Net cash used by investing activities               (6,114,456)        (8,129,455)        (1,899,374)
                                                                 ------------       ------------       ------------
Financing Activities
     Net change in
          Interest-bearing demand and savings deposits                  3,308           (257,971)           304,545
          Certificates of deposit                                   2,905,533         (2,029,761)           450,528
     Proceeds from borrowings                                       7,000,000          3,500,000         14,500,000
     Repayment of borrowings                                       (3,500,000)        (4,000,000)       (13,500,000)
     Cash dividends                                                  (210,095)           (52,900)
     Purchase of stock                                             (1,104,378)
     Sale of stock                                                                     9,215,969
     Purchase of RRP shares                                                             (666,957)
                                                                 ------------       ------------       ------------
               Net cash provided by financing activities            5,094,368          5,708,380          1,755,073
                                                                 ------------       ------------       ------------
Net Change in Cash and Cash Equivalents                              (153,535)          (899,466)           121,873
Cash and Cash Equivalents, Beginning of Year                          749,581          1,649,047          1,527,174
                                                                 ------------       ------------       ------------
Cash and Cash Equivalents, End of Year                           $    596,046       $    749,581       $  1,649,047
                                                                 ============       ============       ============
Additional Cash Flows Information
     Interest paid                                               $  1,891,000       $  1,781,000       $  1,784,000
     Income tax paid                                                  910,097            262,538            431,009
</TABLE>


See notes to consolidated financial statements.
<PAGE>

                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 --   Nature of Operations and Summary of Significant Accounting Policies

The  accounting  and reporting  policies of Citizens  Bancorp  ("Company"),  its
wholly owned  subsidiary,  Citizens  Savings Bank of Frankfort  ("Bank") and the
Bank's wholly owned subsidiary,  Citizens Loan and Service Corporation ("Service
Corp"),  conform to  generally  accepted  accounting  principles  and  reporting
practices followed by the thrift industry.  The more significant of the policies
are described below.

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

The  Company  is a  thrift  holding  company  whose  principal  activity  is the
ownership and  management of the Bank.  The Bank operates under a federal thrift
charter and provides full banking services. As a federally chartered thrift, the
Bank is  subject to  regulation  by the  Office of Thrift  Supervision,  and the
Federal Deposit Insurance Corporation.

The Bank generates commercial mortgage,  residential mortgage and consumer loans
and receives  deposits  from  customers  located  primarily  in Clinton  County,
Indiana and  surrounding  counties.  The Bank's loans are  generally  secured by
specific items of collateral including real property and consumer assets.

The Service Corp develops land for residential housing.

The Company was formed in June 1997 and  purchased  all of the stock of the Bank
with the proceeds of a subscription  stock offering completed in September 1997.
Simultaneous  to the  stock  offering,  the  Bank  converted  from  a  federally
chartered  mutual  savings bank to a federally  chartered  capital stock savings
bank.  Prior to June  1997,  the  Company  had no  assets  or  liabilities.  All
financial  information  prior to fiscal year 1998 relate to the Bank and Service
Corp only.

The Company issued  1,058,000  shares of common stock following the subscription
stock offering.  Net proceeds to the Company were $9,215,969 of which $5,031,185
was paid to the  Bank in  exchange  for all of the  common  stock  of the  Bank.
Expenses  related to the offering totaled  $517,631,  and $846,400 was loaned by
the Company to the Employee Stock Ownership Plan ("ESOP").

Consolidation--The consolidated financial statements include the accounts of the
Company  and  subsidiaries  after  elimination  of  all  material   intercompany
transactions.

Investment  Securities--Debt  securities are classified as held to maturity when
the  Company  has the  positive  intent and  ability to hold the  securities  to
maturity.  Securities  held to maturity  are  carried at  amortized  cost.  Debt
securities not classified as held to maturity or included in the trading account
and  marketable   equity  securities  are  classified  as  available  for  sale.
Securities  available for sale are carried at fair value with  unrealized  gains
and losses reported separately in accumulated other comprehensive income, net of
tax.

Amortization  of premiums and  accretion  of discounts  are recorded as interest
income from  securities.  Realized gains and losses are recorded as net security
gains  (losses).  Gains and losses on sales of securities  are determined on the
specific-identification method.
<PAGE>

                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans are carried at the principal amount outstanding.  A loan is impaired when,
based on current  information  or events,  it is probable  that the Bank will be
unable to collect all amounts due  (principal  and  interest)  according  to the
contractual terms of the loan agreement. Loans where payments have insignificant
delays not exceeding 90 days  outstanding are not considered  impaired.  Certain
nonaccrual and substantially  delinquent loans may be considered to be impaired.
The Bank considers its investment in one-to-four  family  residential  loans and
consumer  loans  to  be  homogeneous  and  therefore,   excluded  from  separate
identification  for evaluation of impairment.  Interest income is accrued on the
principal  balances of loans. The accrual of interest on impaired and nonaccrual
loans is discontinued when, in management's  opinion, the borrower may be unable
to meet  payments as they become due.  Mortgage  loans are placed on  nonaccrual
status  when  they  become  90  days   delinquent.   When  interest  accrual  is
discontinued,   all  unpaid  accrued   interest  is  reversed  when   considered
uncollectible.  Interest  income is  subsequently  recognized only to the extent
cash  payments  are  received.  Certain  loan  fees and  direct  costs are being
deferred  and  amortized  as an  adjustment  of  yield  on the  loans  over  the
contractual lives of the loans. When a loan is paid off or sold, any unamortized
loan origination fee balance is credited to income.

Allowance  for  loan  losses  is  maintained  to  absorb  loan  losses  based on
management's  continuing  review and  evaluation  of the loan  portfolio and its
judgment  as to  the  impact  of  economic  conditions  on  the  portfolio.  The
evaluation by management includes consideration of past loss experience, changes
in the composition of the portfolio,  the current  condition and amount of loans
outstanding,  and the probability of collecting all amounts due.  Impaired loans
are  measured by the present  value of expected  future cash flows,  or the fair
value of the collateral of the loan, if collateral dependent.

The  determination  of the adequacy of the allowance for loan losses is based on
estimates  that are  particularly  susceptible  to  significant  changes  in the
economic environment and market conditions.  Management believes that as of June
30,  1999 the  allowance  for  loan  losses  is  adequate  based on  information
currently  available.  A worsening or protracted  economic  decline in the areas
within which the Bank  operates  would  increase the  likelihood  of  additional
losses due to credit and market risks and could  create the need for  additional
loss reserves.

Premises  and  equipment  are carried at cost net of  accumulated  depreciation.
Depreciation is principally computed using both the straight-line method and the
declining  balance  method  based on the  estimated  useful lives of the assets.
Maintenance  and repairs are  expensed as  incurred  while major  additions  and
improvements are  capitalized.  Gains and losses on dispositions are included in
current operations.

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

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

Income tax in the consolidated  statement of income includes deferred income tax
provisions or benefits for all significant  temporary differences in recognizing
income and expenses for financial reporting and income tax purposes.

Earnings per share have been  computed  based upon the weighted  average  common
shares  outstanding  during the year ended June 30, 1999.  Unearned  ESOP shares
have been excluded from the  computation of average  common shares  outstanding.
Historical  earnings per share information is not presented on the 1998 and 1997
consolidated  statements of income because it is not meaningful due to the stock
offering occurring in September 1997.


<PAGE>

                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications of certain amounts in the 1998 and 1997 consolidated financial
statements have been made to conform to the 1999 presentation.

Note 2 --      Investment Securities Available for Sale

Investment  securities  available  for sale at June 30, 1999 and 1998 consist of
marketable equity  securities.  At June 30, 1999 and 1998, the securities have a
fair value of $388,362  and  $315,041,  and an  amortized  cost of $418,699  and
$309,416,  respectively.  The gross  unrealized  gain (loss) was  $(30,337)  and
$5,625 at June 30, 1999 and 1998, respectively.



Note 3 --      Loans and Allowance

June 30                                        1999               1998
--------------------------------------------------------------------------------
Commercial real estate                    $  3,341,351       $  3,656,862
Real estate loans                           41,663,334         35,928,334
Construction loans                           1,383,500            611,000
Individuals' loans for household
     and other personal expenditures         7,764,172          7,064,802
Other loans                                    149,313            149,973
                                          ------------       ------------
                                            54,301,670         47,410,971
Allowance for loan losses                     (326,249)          (268,837)
Deferred loan fees and costs, net             (125,608)          (109,376)
Undisbursed portion of loans                  (746,295)           (96,355)
                                          ------------       ------------
     Total loans                          $ 53,103,518       $ 46,936,403
                                          ============       ============


Year Ended June 30                       1999            1998            1997
--------------------------------------------------------------------------------
Allowance for loan losses
     Balances, beginning of year      $ 268,837       $ 211,635       $ 138,606
     Provision for losses                65,000          72,000          83,000
     Recoveries on loans                  4,910           1,645           1,626
     Loans charged off                  (12,498)        (16,443)        (11,597)
                                      ---------       ---------       ---------
     Balances, end of year            $ 326,249       $ 268,837       $ 211,635
                                      =========       =========       =========

Note 4 --  Land Held for Development

The Company,  through the Service Corp,  has been  developing  approximately  59
acres of land for a three  phase  residential  housing  addition  in  Frankfort,
Indiana.  In January 1992,  the Bank received  regulatory  approval of a plan to
develop  this  land.  During  the  years  ended  June 30,  1999,  1998 and 1997,
approximately  $30,600,  $34,000 and  $68,000,  respectively,  were  expended to
create the infrastructure for the development,  to provide further  improvements
to the first and second phase of the project, and to capitalize interest. During
the years ended June 30, 1999, 1998 and 1997,  approximately  $98,000,  $69,000,
and  $166,000,  respectively,  was  received  from  the  sale  of  lots  in  the
development resulting in gains from sale of these lots of approximately $16,000,
$9,000,  and  $17,000,  for each year,  respectively.  The Service  Corp owns an
additional 45 acres of land for future development.
<PAGE>

                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended June 30, 1998, land not included in the above  development
was sold for  proceeds  equaling  $177,000  resulting in a gain from the sale of
$172,000.


Note 5 --      Premises and Equipment

June 30                                      1999                   1998
--------------------------------------------------------------------------------
Land                                    $   137,307            $   137,307
Buildings                                   647,154                647,154
Equipment                                   329,406                274,796
     Total cost                           1,113,867              1,059,257
Accumulated depreciation                   (546,381)              (494,619)
                                        -----------            -----------
     Net                                $   567,486            $   564,638
                                        ===========            ===========


Note 6 --  Deposits

June 30                                           1999                 1998
--------------------------------------------------------------------------------
Demand deposits                               $ 4,714,398          $ 4,569,764
Savings deposits                                9,361,971            9,503,297
Certificates of $100,000 or more                4,973,049            2,314,074
Other certificates                             17,926,904           17,680,346
                                              -----------          -----------
     Total deposits                           $36,976,322          $34,067,481
                                              ===========          ===========

Certificates maturing in years ending June 30
   2000                                                             $11,489,597
   2001                                                               7,415,908
   2002                                                               2,892,761
   2003                                                                 262,288
   2004                                                                 352,339
   Thereafter                                                           487,060
                                                                    -----------
                                                                    $22,899,953
                                                                    ===========

<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 --      Borrowings

June 30                                               1999             1998
--------------------------------------------------------------------------------
Federal Home Loan Bank advances, at fixed
     and variable rates ranging
     from 4.90% to 6.06%, due at various
     dates through October 7, 2008                 $7,000,000        $3,500,000
                                                   ==========        ==========

The Federal Home Loan Bank advances are secured by first-mortgage loans totaling
$42,274,000. The Company is required to maintain eligible loans in its portfolio
of at least 170% of  outstanding  advances as  collateral  for advances from the
FHLB.  Advances  are  subject  to  restrictions  or  penalties  in the  event of
prepayment.


Maturities in years ending June 30
--------------------------------------------------------------------------------
2000                                                                $1,000,000
2008                                                                 6,000,000
                                                                    ----------
                                                                    $7,000,000
                                                                    ==========


<TABLE>
<CAPTION>
Note 8 --  Income Tax

Year Ended June 30                                                1999           1998            1997
--------------------------------------------------------------------------------------------------------
<S>                                                            <C>             <C>             <C>
Income tax expense
     Currently payable
          Federal                                              $ 460,153       $ 550,558       $ 204,275
          State                                                  124,139         131,215          55,276
     Deferred
          Federal                                                (52,331)        (80,259)        (62,054)
          State                                                  (11,257)        (21,335)        (14,272)
                                                               ---------       ---------       ---------
               Total income tax expense                        $ 520,704       $ 580,179       $ 183,225
                                                               =========       =========       =========

Reconciliation of federal statutory to actual tax expense
     Federal statutory income tax at 34%                       $ 460,007       $ 494,379       $ 188,417
     Effect of state income taxes                                 74,502          72,521          27,063
     Other                                                       (13,805)         13,279         (32,255)
                                                               ---------       ---------       ---------
          Actual tax expense                                   $ 520,704       $ 580,179       $ 183,225
                                                               =========       =========       =========
</TABLE>



<PAGE>

                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A cumulative net deferred tax asset is included in other assets.  The components
of the asset are as follows:

June 30                                             1999                1998
--------------------------------------------------------------------------------
Assets
     Allowance for loan losses                    $107,796            $114,256
     Loan fees                                     151,136             137,596
     Pensions and employee benefits                193,807             151,592
     Other                                          16,103              24,336
     Capital loss carryover                         25,604              25,604
                                                  --------            --------
          Total assets                             494,446             453,384
                                                  --------            --------
Liabilities
     Loan costs                                     97,753              91,112
     FHLB stock dividend                            27,132              27,132
     Other                                          28,184              29,189
                                                  --------            --------
          Total liabilities                        153,069             147,433
                                                  --------            --------
                                                  $341,377            $305,951
                                                  ========            ========

Retained earnings include approximately  $1,349,000 for which no deferred income
tax  liability  has been  recognized.  This amount  represents  an allocation of
income  to bad debt  deductions  as of June  30,  1988  for tax  purposes  only.
Reduction  of amounts so allocated  for purposes  other than tax bad debt losses
including  redemption  of bank  stock or  excess  dividends,  or loss of  "bank"
status, would create income for tax purposes only, which income would be subject
to the then-current  corporate  income tax rate. The unrecorded  deferred income
tax liability on the above amounts was approximately $459,000.

Note 9 -- Other Comprehensive Income
<TABLE>
<CAPTION>
                                                                                  1999
                                                       ---------------------------------------------------------
                                                         Before-Tax                Tax               Net-of-Tax
Year Ended June 30                                         Amount                Benefit               Amount
----------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                    <C>                  <C>
Unrealized losses on securities
   Unrealized holding losses arising during the year      $(35,961)              $14,244              $(21,717)
                                                          ========               =======              ========




                                                                                  1998
                                                       ---------------------------------------------------------
                                                         Before-Tax                Tax               Net-of-Tax
Year Ended June 30                                         Amount                Expense               Amount
----------------------------------------------------------------------------------------------------------------
Unrealized gains on securities
   Unrealized holding gains arising during the year         $5,625               $(2,228)               $3,397
                                                            ======               =======                ======
</TABLE>

<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>



                                                                                  1997
                                                       ---------------------------------------------------------
                                                         Before-Tax           Tax (Expense)          Net-of-Tax
Year Ended June 30                                         Amount                Benefit               Amount
----------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                 <C>                     <C>
Unrealized gains on securities
     Unrealized holding gains arising during the year      $23,964             $  (9,492)              $14,472
     Less: reclassification adjustment for losses
         realized in net income                            (60,243)               23,862               (36,381)
                                                           -------              --------               -------
     Net unrealized gains                                  $84,207              $(33,354)              $50,853
                                                           =======              ========               =======
</TABLE>


Note 10 --   Commitments and Contingent Liabilities

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

Financial  instruments  whose  contract  amount  represents  credit risk consist
solely  of  commitments  to  extend  credit,  and  these  commitments   totalled
$3,565,000 and $2,959,000 as of June 30, 1999 and 1998, respectively.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash  requirements.  The Bank evaluates each customer's  credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management's  credit
evaluation.   Collateral  held  varies  but  may  include  accounts  receivable,
inventory, property and equipment, and income-producing commercial properties.

The Company and subsidiaries are also subject to claims and lawsuits which arise
primarily in the ordinary  course of business.  It is the opinion of  management
that the disposition or ultimate resolution of such claims and lawsuits will not
have a material  adverse effect on the  consolidated  financial  position of the
Company.

Note 11 --   Year 2000

Like all entities,  the Company and subsidiaries are exposed to risks associated
with  the Year  2000  Issue,  which  affects  computer  software  and  hardware;
transactions  with  customers,   vendors,  and  other  entities;  and  equipment
dependent upon  microchips.  The Company has begun and is continuing its efforts
to identify and remediate  potential Year 2000 problems.  It is not possible for
any  entity to  guarantee  the  results  of its own  remediation  efforts  or to
accurately predict the impact of the Year 2000 Issue on third parties with which
the Company and subsidiaries do business.  If remediation efforts of the Company
or third  parties  with which the Company and  subsidiaries  do business are not
successful,  the Year 2000 Issue could have  negative  effects on the  Company's
financial condition and results of operations in the near term.




<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 12 --     Dividend and Capital Restrictions

Without prior approval,  current  regulations allow the Bank to pay dividends to
the Company not exceeding net profits (as defined) for the current calendar year
to date plus those for the previous two years which amounts to  $1,994,000.  The
Bank  normally  restricts  dividends to a lessor  amount  because of the need to
maintain an adequate capital structure.

At the time of conversion,  a liquidation  account was  established in an amount
equal to the Bank's net worth as reflected in the latest  statement of condition
used in its final  conversion  offering  circular.  The  liquidation  account is
maintained  for the benefit of eligible  deposit  account  holders who  maintain
their deposit account in the Bank after  conversion.  In the event of a complete
liquidation,  and only in such event,  each eligible deposit account holder will
be entitled to receive a liquidation  distribution from the liquidation  account
in the  amount of the then  current  adjusted  subaccount  balance  for  deposit
accounts  then  held,  before  any  liquidation  distribution  may  be  made  to
shareholders.  Except for the repurchase of stock and payment of dividends,  the
existence of the liquidation account will not restrict the use or application of
net worth.  The initial  balance of the  liquidation  account was  approximately
$5,691,000.  At June  30,  1999,  total  shareholder's  equity  of the  Bank was
$11,300,845.


Note 13 --  Stock Transactions

During the year ended June 30, 1999, the Company's  Board of Directors  approved
the  repurchase of 52,900 of the Company's  shares of common stock  outstanding.
The Company repurchased 52,900 shares under this plan during the year ended June
30, 1999. Additionally, the Company's Board of Directors approved the repurchase
of an additional  50,255 shares of the  Company's  outstanding  shares of common
stock.  These  purchases  will be made subject to market  conditions in the open
market or block  transactions.  At June 30,  1999,  the Company has  repurchased
39,346 shares under this plan.


Note 14 -- Regulatory Capital

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies and is assigned to a capital category. The assigned
capital category is largely  determined by ratios that are calculated  according
to the  regulations.  The ratios are  intended  to measure  capital  relative to
assets and  credit  risk  associated  with those  assets and  off-balance  sheet
exposures of the entity.  The capital category assigned to an entity can also be
affected by  qualitative  judgments  made by regulatory  agencies about the risk
inherent in the entity's activities that are not part of the calculated ratios.

There are five capital categories defined in the regulations,  ranging from well
capitalized to critically  undercapitalized.  Classification of a bank in any of
the  undercapitalized  categories can result in actions by regulators that could
have a material  effect on a bank's  operations.  At June 30, 1999 and 1998, the
Bank is categorized as well  capitalized  and met all subject  capital  adequacy
requirements.  There  are no  conditions  or  events  since  June 30,  1999 that
management believes have changed the Bank's classification.

<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Bank's actual and required capital amounts and ratios are as follows:

<TABLE>
<CAPTION>


                                                                   Required
                                                                 for Adequate                 To Be Well
                                         Actual                    Capital 1                 Capitalized 1
                                ------------------------------------------------------------------------------
                                   Amount        Ratio       Amount        Ratio          Amount        Ratio
--------------------------------------------------------------------------------------------------------------
<S>                             <C>              <C>       <C>             <C>          <C>             <C>
As of June 30, 1999
Total risk-based capital 1
   (to risk-weighted assets)    $10,714,000      29.0%     $2,957,000      8.0%         $3,696,000      10.0%
Tier 1 risk-based capital 1
   (to risk-weighted assets)     10,388,000      28.1%      2,957,000      8.0%          3,696,000      10.0%
Core capital 1
   (to adjusted tangible assets) 10,388,000      17.8%      1,751,000      3.0%          3,502,000       6.0%
Core capital 1
   (to adjusted total assets)    10,388,000      17.8%      1,751,000      3.0%          2,919,000       5.0%

As of June 30, 1998
Total risk-based capital 1
   (to risk-weighted assets)     $9,554,000      29.2%     $2,614,000      8.0%         $3,267,000      10.0%
Tier 1 risk-based capital 1
   (to risk-weighted assets)      9,285,000      28.4%      2,614,000      8.0%          3,267,000      10.0%
Core capital 1
   (to adjusted tangible assets)  9,285,000      17.7%      1,574,000      3.0%          3,149,000       6.0%
Core capital 1
   (to adjusted total assets)     9,285,000      17.7%      1,574,000      3.0%          2,624,000       5.0%
</TABLE>

1 As defined by regulatory agencies



<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15 --  Employee Benefit Plans

The Bank provides pension benefits for substantially all of the Bank's employees
and is a participant in a pension fund known as the Pentegra Group.  The plan is
a multi-employer  plan; separate actuarial  valuations are not made with respect
to each participating employer.  Pension expense was $1,708; $1,649; and $20,556
for 1999, 1998 and 1997.

The Bank has purchased life insurance on certain officers, which insurance had a
cash value of $1,161,519  and $1,118,883 at June 30, 1999 and 1998. The Bank has
also  approved  arrangements  that  provide  additional  retirement  benefits to
certain officers covered by the keyman policies. The benefits to be paid will be
funded primarily by the keyman policies and are being accrued over the period of
active service to eligibility  dates.  The accrual of benefits  totaled  $7,079,
$16,700, and $74,300 for 1999, 1998 and 1997.

The Bank has a Recognition  and Retention  Plan ("RRP").  Effective on March 24,
1998,  awards of grants for 32,798  shares were issued to various  directors and
officers of the Bank.  These awards  generally  are to vest and be earned by the
recipient  at a rate of 20 percent  per year,  commencing  March 24,  1999.  The
expense under the RRP was $103,355 and $26,000 for the years ended June 30, 1999
and 1998.

An ESOP covers substantially all employees of the Bank. The ESOP acquired 84,640
shares at $10.00 per share in the conversion  with funds provided by a loan from
the Company.  The ESOP provides for the Company to issue a put option ("option")
to any  participant  who receives a distribution  of Company  stock.  The option
permits the  participant to sell the stock to the Company at any time during two
option  periods,  as defined in the plan, at the fair market value of the stock.
Accordingly,  the  $846,400  of stock  acquired by the ESOP was  reflected  as a
reduction to the ESOP equity  accounts.  Unearned ESOP shares totaled 66,192 and
76,506 at June 30,  1999 and 1998 and had a fair value of  $835,674  at June 30,
1999 and  $1,099,774  at June 30,  1998.  Shares are  released  to  participants
proportionately  as the  loan is  repaid.  Dividends  on  allocated  shares  are
recorded as  dividends  and  charged to retained  earnings.  Cash  dividends  on
unallocated  shares will be applied to  principal  and interest due on the loan.
Compensation  expense is recorded  equal to the fair  market  value of the stock
when  contributions,  which are determined annually by the Board of Directors of
the Bank,  are made to the ESOP.  The expense  under the ESOP was  $126,451  and
$122,440 for the years ended June 30, 1999 and 1998.  At June 30, 1999 and 1998,
the ESOP had 13,414 and 2,855  allocated  shares and 71,226 and 81,785  suspense
shares.

Below are the transactions affecting the ESOP equity accounts:
<TABLE>
<CAPTION>

                                                      Additional     Unearned
                                        Common          Paid-in        ESOP
                                         Stock          Capital       Shares           Total
                                         -----          -------       ------           -----
<S>                                    <C>             <C>          <C>              <C>
Common stock acquired by ESOP          $846,400                     $(846,400)
ESOP shares earned                                     $41,100         81,340        $122,440
                                       --------        -------      ---------        --------

Balance, June 30, 1998                  846,400         41,100       (765,060)        122,440
ESOP shares earned                                      23,311        103,140         126,451
                                       --------        -------      ---------        --------

Balance, June 30, 1999                 $846,400        $64,411      $(661,920)       $248,891
                                       ========        =======      =========        ========
</TABLE>


<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16 --  Related Party Transactions

The Bank  has  entered  into  transactions  with  certain  directors,  executive
officers,  significant  shareholders and their affiliates or associates (related
parties).  Such  transactions  were made in the  ordinary  course of business on
substantially  the same  terms  and  conditions,  including  interest  rates and
collateral,  as those  prevailing at the same time for  comparable  transactions
with other  customers,  and did not, in the opinion of management,  involve more
than normal credit risk or present  other  unfavorable  features.  The aggregate
amount of loans, as defined, to such related parties were as follows:


--------------------------------------------------------------------------------
Balances, July 1, 1998                                          $ 2,766,000

New loans, including renewals                                       710,000
Payments, etc., including renewals                                 (382,000)
                                                                -----------
Balances, June 30, 1999                                         $ 3,094,000
                                                                ===========


Deposits  from  related  parties  held  by the  Bank at June  30,  1999  totaled
$1,206,000.


Note 17 --     Stock Option Plan

Under the Company's  stock option plan approved in 1998,  which is accounted for
in accordance with Accounting  Principles Board Opinion (APB) No. 25, Accounting
for Stock Issued to Employees, and related  interpretations,  the Company grants
key  employees  and  directors  stock option  awards which vest and become fully
exercisable  at the end of five years of continued  employment.  During the year
ended June 30,  1998,  the  Company  authorized  the grant of options  for up to
105,800 shares of the Company's common stock. The exercise price of each option,
which has a ten-year  life,  must be equal to the market price of the  Company's
stock on the date of grant; therefore, no compensation expense is recognized.

Although  the Company has elected to follow APB No. 25,  Statement  of Financial
Accounting Standards (SFAS) No. 123 requires pro forma disclosures of net income
and earnings per share as if the Company had  accounted  for its employee  stock
options  under that  Statement.  The fair value of each option grant in 1998 was
estimated  on the grant date using an  option-pricing  model with the  following
assumptions:

                                                                       1998
--------------------------------------------------------------------------------
Risk-free interest rates                                               5.38%
Dividend yields                                                        1.31%
Volatility factors of expected market price of common stock            19.9%
Weighted-average expected life of the options                       8 years


<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Under  SFAS No.  123,  compensation  cost is  recognized  in the  amount  of the
estimated  fair value of the options and  amortized to expense over the options'
vesting  period.  The pro forma  effect on net income and  earnings per share of
this statement are as follows:

                                                          1999         1998
--------------------------------------------------------------------------------
Net income                        As reported           $832,258     $873,878
                                  Pro forma              764,779      860,909
Basic earnings per share          As reported                .87
                                  Pro forma                  .80
Diluted earnings per share        As reported                .87
                                  Pro forma                  .80

The following is a summary of the status of the Company's  stock option plan and
changes in that plan as of and for the years ended June 30, 1999 and 1998.
<TABLE>
<CAPTION>


Year Ended June 30                                        1999                                  1998
--------------------------------------------------------------------------------------------------------------------
                                                                   Weighted-                            Weighted-
                                                                    Average                              Average
    Options                                       Shares        Exercise Price            Shares     Exercise Price
--------------------------------------------------------------------------------------------------------------------
<S>                                                <C>             <C>                     <C>           <C>
Outstanding, beginning of year                     81,995          $15.25
Granted                                                                                    81,995        $15.25
                                                  -------                                 -------
Outstanding, end of year                           81,995          $15.25                  81,995        $15.25
                                                  =======                                 =======
Options exercisable at year end                    16,399
Weighted-average fair value of
options granted during the year                                                                           $4.86
</TABLE>


As of June 30, 1999,  the options  outstanding  have an exercise price of $15.25
and a weighted-average remaining contractual life of nine years.


<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 18 --     Earnings Per Share

Earnings per share (EPS) were computed as follows:
<TABLE>
<CAPTION>


                                                                        Year Ended June 30, 1999
                                                       ----------------------------------------------------------
                                                                                Weighted-
                                                             Net                 Average              Per-Share
                                                           Income                Shares                Amount
-----------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share
<S>                                                       <C>                    <C>                    <C>
   Income available to common shareholders                $832,258               957,389                $.87

Effect of Dilutive Securities
   Stock options                                                                   ---
                                                          ------------------------------
Diluted Earnings Per Share

   Income available to common shareholders
     and assumed conversions                              $832,258               957,389                $.87
                                                          ========               =======               =====

</TABLE>
Options  to  purchase  81,995  shares of common  stock at $15.25  per share were
outstanding  at June 30,  1999,  but were not  included  in the  computation  of
diluted EPS because the  options'  exercise  price was greater  than the average
market price of the common shares.


Note 19 --     Fair Values of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instrument:

Cash  and  Cash  Equivalents--The  fair  value  of  cash  and  cash  equivalents
approximates carrying value.

Interest-bearing Time Deposits--The fair value of interest-bearing time deposits
approximates carrying value.

Securities--Fair values are based on quoted market prices.

Loans--For both short-term loans and variable-rate loans that reprice frequently
and with no significant change in credit risk, fair values are based on carrying
values.  The fair value for other loans is estimated using  discounted cash flow
analyses  using interest  rates  currently  being offered for loans with similar
terms to borrowers of similar credit quality.

Cash  Surrender  Value  Of Life  Insurance  Contracts--The  fair  value  of cash
surrender value of life insurance contracts approximates carrying value.

FHLB  Stock--Fair  value of FHLB  stock is based on the price at which it may be
resold to the FHLB.


<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deposits--The fair values of  noninterest-bearing,  interest-bearing  demand and
savings  accounts are equal to the amount payable on demand at the balance sheet
date.  Fair values for fixed-rate  certificates of deposit are estimated using a
discounted  cash flow  calculation  that applies  interest rates currently being
offered on certificates to a schedule of aggregated  expected monthly maturities
on such time deposits.

Federal  Home  Loan  Bank  Advances--The  fair  value  of these  borrowings  are
estimated using a discounted cash flow  calculation,  based on current rates for
similar debt.

The estimated fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>


                                                                     1999                          1998
                                                          ---------------------------------------------------------
                                                            Carrying          Fair        Carrying          Fair
June 30                                                      Amount           Value        Amount           Value
-------------------------------------------------------------------------------------------------------------------
Assets
<S>                                                         <C>            <C>            <C>             <C>
   Cash and due from banks                                  $443,757       $443,757       $305,908        $305,908
   Interest-bearing demand deposits                          152,289        152,289        443,673         443,673
   Interest-bearing time deposits                          1,485,972      1,482,703      1,782,985       1,782,985
   Investment securities available for sale                  388,362        388,362        315,041         315,041
   Loans                                                  53,103,518     53,256,987     46,936,403      49,410,000
   Cash surrender value of life insurance                  1,161,519      1,161,519      1,118,883       1,118,883
   Stock in FHLB                                             419,100        419,100        351,600         351,600

Liabilities
   Deposits                                               36,976,322     36,891,592     34,067,481      34,219,000
   FHLB advances                                           7,000,000      6,633,200      3,500,000       3,500,000
</TABLE>


Note 20 --     Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>


                                                                              1999
                                            --------------------------------------------------------------------------
                                               First            Second                 Third                 Fourth
June 30                                       Quarter           Quarter               Quarter                Quarter
----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>                     <C>                   <C>
Interest income                             $1,081,463       $1,142,129              $1,100,223            $1,115,818
Interest expense                               456,555          513,181                 472,086               477,439
     Net interest income                       624,908          628,948                 628,137               638,379
Provision for loan losses                       15,000           20,000                  15,000                15,000
Net income                                     186,190          194,103                 227,273               224,692
Basic earnings per share                          0.19             0.20                    0.24                  0.24
Diluted earnings per share                        0.19             0.20                    0.24                  0.24


                                                                              1998
                                            --------------------------------------------------------------------------
                                               First            Second                 Third                 Fourth
June 30                                       Quarter           Quarter               Quarter                Quarter
----------------------------------------------------------------------------------------------------------------------
Interest income                            $  940,672        $1,016,436              $1,030,593            $1,064,419
Interest expense                              466,234           412,866                 422,213               437,276
     Net interest income                      474,438           603,570                 608,380               627,143
Provision for loan losses                      12,000            28,000                  17,000                15,000
Net income                                    266,888           197,795                 217,512               191,683
</TABLE>


<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 21 --     Condensed Financial Information (Parent Company Only)

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

                             Condensed Balance Sheet
<TABLE>
<CAPTION>

June 30                                                               1999               1998
------------------------------------------------------------------------------------------------
Assets
<S>                                                             <C>                <C>
     Cash and due from banks                                    $  2,648,829       $  4,014,235
     Investment securities available for sale                        209,706            145,000
     ESOP loan receivable                                            740,600            825,240
     Investment in common stock of subsidiaries                   11,300,845         10,237,433
     Other assets                                                     57,321             43,248
                                                                ------------       ------------
              Total assets                                      $ 14,957,301       $ 15,265,156
                                                                ============       ============
Liabilities                                                     $     68,446       $     97,130
Equity Received from ESOP                                            248,891            122,440
Shareholders' Equity                                              14,639,964         15,045,586
                                                                ------------       ------------
              Total liabilities and shareholders' equity        $ 14,957,301       $ 15,265,156
                                                                ============       ============



                          Condensed Statement of Income

Year Ended June 30                                                    1999               1998
------------------------------------------------------------------------------------------------
Income--interest and dividends                                  $    107,342       $    109,164
Expenses                                                             108,692            115,814
                                                                ------------       ------------
Loss before income tax and equity in undistributed
   income of subsidiaries                                             (1,350)            (6,650)
Income tax expense                                                        --                 --
                                                                ------------       ------------
Loss before equity in undistributed income of subsidiaries            (1,350)            (6,650)
Equity in undistributed income of subsidiaries                       833,608            880,528
                                                                ------------       ------------
Net Income                                                      $    832,258       $    873,878
                                                                ============       ============
</TABLE>



<PAGE>



                        CITIZENS BANCORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                        Condensed Statement of Cash Flows

<TABLE>
<CAPTION>


Year Ended June 30                                                      1999               1998
---------------------------------------------------------------------------------------------------
<S>                                                                <C>                <C>
Operating Activities
     Net income                                                    $    832,258       $    873,878
     Adjustments to reconcile net income to net cash provided
       by operating activities                                         (862,117)          (873,312)
                                                                   ------------       ------------
          Net cash provided (used) by operating activities              (29,859)               566
                                                                   ------------       ------------
Investing Activities
     Purchase of securities available for sale                         (100,669)          (139,375)
     Loan to ESOP                                                      (846,400)
     ESOP loan repayment                                                 84,640             21,160
                                                                   ------------       ------------
          Net cash used by investing activities                         (16,029)          (964,615)
                                                                   ------------       ------------
Financing Activities
     Cash dividends                                                    (215,140)           (52,900)
     Sale of stock                                                                      10,062,369
     Purchase of stock                                               (1,104,378)
     Acquisition of subsidiary stock                                                    (5,031,185)
                                                                   ------------       ------------

          Net cash provided (used) by financing activities           (1,319,518)         4,978,284
                                                                   ------------       ------------

Net Change in Cash and Cash Equivalents                              (1,365,406)         4,014,235

Cash and Cash Equivalents at Beginning of Year                        4,014,235
                                                                   ------------       ------------
Cash and Cash Equivalents at End of Year                           $  2,648,829       $  4,014,235
                                                                   ============       ============
</TABLE>






<PAGE>

DIRECTORS AND OFFICERS

                               BOARD OF DIRECTORS

Fred W. Carter                                      Robert F. Ayres
Chairman of the Board                               Retired Educator
President and Chief Executive Officer
Citizens Savings Bank of Frankfort

Perry W. Lewis                                      John J. Miller
Former Chairman, Lewis Ford                         President, Goodwin
Sales, Inc. (Retired)                               Funeral Homes, Inc.

Billy J. Wray
Co-Owner, Premium Auto
Center, Inc.


================================================================================

                          OFFICERS OF CITIZENS BANCORP

Fred W. Carter                    Cindy S. Chambers         Stephen D. Davis
Chairman of the Board             Secretary                 Treasurer
President and
Chief Executive Officer


================================================================================

                 OFFICERS OF CITIZENS SAVINGS BANK OF FRANKFORT

     Fred W. Carter                             Cindy S. Chambers
     President and                              Secretary, Customer
     Chief Executive Officer                    Service Manager


     Stephen D. Davis                           Ralph C. Peterson, II
     Controller                                 Senior Loan Officer






<PAGE>
                             DIRECTORS AND OFFICERS

     Fred W.  Carter,  (age 67) has served as a director of the Holding  Company
since its  formation  and of the Bank since 1972.  Mr. Carter has also served as
President and Chief  Executive  Officer of the Bank and CLSC since 1972, and has
been an employee of the Bank since  1966.  Mr.  Carter is the father of Cindy S.
Chambers, the Bank's Secretary and Customer Service Manager.

     Robert F. Ayres (age 74) has served as a director  of the  Holding  Company
since  its  formation  and  of  the  Bank  since  1979.   Mr.  Ayres  served  as
Superintendent  of Community Schools of Frankfort from 1965 until his retirement
in 1989. He previously served as a high school  principal,  teacher and coach at
Frankfort Senior High School, in Frankfort.

     Cindy S. Chambers,  (age 44) has served as the Bank's  Corporate  Secretary
since 1988 and Customer Service Manager since 1982.

     Stephen D. Davis (age 43) has served as the Bank's Controller since 1989.

     Perry W. Lewis (age 78) has served as a  director  of the  Holding  Company
since its formation and of the Bank since 1975. Mr. Lewis served as the Chairman
of Lewis Ford Sales, Inc. in Frankfort from 1984 until his retirement in 1997.

     John J. Miller  (age 60) has served as a director  of the  Holding  Company
since its  formation  and of the Bank  since  1995.  Mr.  Miller  has  served as
President of Goodwin Funeral Home, Inc. in Frankfort since 1979.

     Ralph C. Peterson, II (age 50) has served as the Bank's senior Loan Officer
since 1989.

     Billy J. Wray (age 67) has  served as a  director  of the  Holding  Company
since its  formation  and of the Bank  since  1992.  Mr.  Wray is part  owner of
Premium Auto Center, Inc., a used car dealership located in Lebanon, Indiana. He
also owns interests in various real estate developments around Frankfort.








<PAGE>
                             SHAREHOLDER INFORMATION

MARKET INFORMATION

         The Bank  converted  from a federal  mutual  savings  bank to a federal
stock savings bank  effective  September 18, 1997, and  simultaneously  formed a
savings and loan holding  company,  the Holding Company.  The Holding  Company's
Common Stock, is quoted on the OTC "Electronic  Bulletin Board" under the symbol
"CIBC." As of June 30, 1999, there were  approximately 604 record holders of the
Holding Company's Common Stock including shares held in broker accounts.

         Any  dividends  paid  by  the  Holding   Company  will  be  subject  to
determination  and declaration by the Board of Directors in its  discretion.  In
determining  the level of any  future  dividends,  the Board of  Directors  will
consider,  among other factors,  the  following:  tax  considerations;  industry
standards;  economic  conditions;  capital  levels;  regulatory  restrictions on
dividend  payments by the Bank to the Holding  Company;  and,  general  business
practices.

         The Holding  Company is not subject to OTS regulatory  restrictions  on
the  payment  of  dividends  to its  shareholders  although  the  source of such
dividends  will depend in part upon the receipt of dividends  from the Bank. The
Holding Company is subject,  however,  to the requirements of Indiana law, which
generally  limit the payment of  dividends  to amounts  that will not affect the
ability of the Holding Company, after the dividend has been distributed,  to pay
its debts in the ordinary  course of business and will not exceed the difference
between  the  Holding   Company's  total  assets  and  total   liabilities  plus
preferential  amounts payable to  shareholders  with rights superior to those of
the holders of the Holding Company's common stock.

         In addition to the foregoing,  the portion of the Bank's earnings which
has been  appropriated for bad debt reserves and deducted for federal income tax
purposes cannot be used by the Bank to pay cash dividends to the Holding Company
without  the  payment of federal  income  taxes by the Bank at the then  current
income  tax rate on the amount  deemed  distributed,  which  would  include  any
federal income taxes attributable to the distribution.  The Holding Company does
not contemplate any distribution by the Bank that would result in a recapture of
the Bank's bad debt reserve or otherwise create federal tax liabilities.

                           Stock Price*      Dividends
Quarter Ended             High       Low     Per Share
September 30, 1997      $14 1/4   $13  7/8       $ ---
December 31, 1997        15 1/2    14  1/4         ---
March 31, 1998           16        14  7/8        .05
June 30, 1998            16        14             .05

September 30, 1998       14 3/4    11  1/8        .05
December 31, 1998        13        11  1/2        .06
March 31, 1999           12        11             .06
June 30, 1999            12 5/8    11  5/8        .06

*  Based upon high and low daily closing prices for the Holding Company's Common
   Stock as reported on the OTC Electronic  Bulletin Board during each indicated
   quarter.


TRANSFER AGENT AND REGISTRAR
The Fifth Third Bank
Corporate Trust Operations
38 Fountain Square Plaza, MD - 1090F5
Cincinnati, Ohio 45202
(513) 579-5320 or (800) 837-2755

GENERAL COUNSEL
Barnes & Thornburg
11 South Meridian Street
Indianapolis, Indiana  46204

INDEPENDENT AUDITORS
Olive LLP
201 North Illinois Street
Indianapolis, Indiana  46204

SHAREHOLDERS AND GENERAL INQUIRIES
     On or before  September 28, 1999, the Company will file an Annual Report on
Form 10-K for its  fiscal  year  ended  June 30,  1999 with the  Securities  and
Exchange Commission. Copies of this annual report may be obtained without charge
upon written request to:

     Fred W. Carter
     President and Chief Executive Officer
     Citizens Bancorp
     60 South Main Street
     Frankfort, Indiana 46041