Message to Shareholders..................................................    1
Selected Consolidated Financial Data.....................................    2
Management's Discussion and Analysis.....................................    3
Report of Independent Auditors...........................................   16
Consolidated Statements of Condition.....................................   17
Consolidated Statements of Income........................................   18
Consolidated Statements of Changes in
     Shareholders' Equity................................................   19
Consolidated Statements of Cash Flows....................................   20
Notes to Consolidated Financial Statements...............................   21
Directors and Officers...................................................   39
Shareholder Information..................................................   41

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

         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:

         It gives me great  pleasure  to present  the 1998 Fiscal Year Report of
Citizens  Bancorp  and its  subsidiary,  Citizens  Savings  Bank  of  Frankfort,
Indiana.  This report also  presents our first  nine-months  of  experience as a
public company.

         The past twelve months have certainly been a busy time for all of us at
Citizens.  On September 18, 1997, we converted  from a mutual to a stock savings
bank, and our stock began trading on the OTC Electronic Bulletin Board under the
ticker symbol "CIBC." In the initial public  offering,  we sold 1,058,000 shares
of common stock at $10 per share.

         We  reported  net  income for the  fiscal  year ended June 30,  1998 of
$874,000,  which is an increase of $503,000 over the $371,000  earned during the
same period last year. This increase in earnings is attributable,  in part, to a
net pre-tax gain of $172,000  during 1998 on the sale of a parcel of real estate
owned and to increased  interest  income from loans and investments we made with
the proceeds  from the sale of common  stock.  Net income during the 1997 fiscal
year  was  reduced  as  the  result  of  the  one-time  assessment  of  $127,000
(after-tax) by the Federal Deposit Insurance  Corporation in connection with the
replenishment  of the Savings  Association  Insurance  Fund,  and from a loss of
$60,000 from our sale of investment securities during that period.

         During fiscal year 1998, our total assets  increased from $46.4 million
to $53.4 million,  an increase of 15.3%, and our net loans receivable  increased
from $38.4 million to $46.9  million,  an increase of 22.1%.  Also during fiscal
year 1998, our deposits  decreased by 6.3%, from $36.4 million to $34.1 million.
As of June 30,  1998,  our total  shareholders'  equity  was $15.2  million,  an
increase of $9.5 million from $5.7  million at June 30, 1997.  This  increase is
attributable  to our receipt of the net  proceeds  from the sale of common stock
and from our net income of $874,000 for the year. Our Return on Assets (ROA) for
the twelve  months  ended June 30, 1998 was 1.69% and our Return on Equity (ROE)
was 6.65%. The Board of Directors of Citizens Bancorp declared a $0.05 per share
dividend  for each of the March  and June,  1998  quarters,  amounting  to total
dividend of $105,800 paid to our shareholders for the two quarters.

         Again this year,  Citizens  Savings Bank  received the Bauer  Financial
Reports "Five Star  Superior"  rating for the 39th  consecutive  quarter and the
Sheshunoff  "Highest  Rated  Bank"  designation.  Both  Bauer &  Sheshunoff  are
independent  rating  companies.  The  success  of  our  conversion  to  a  stock
institution  and of our  performance  during  the past  year was the  result  of
dedicated and  knowledgeable  Directors,  Officers and Staff working together to
serve our customers' needs in a courteous and professional manner.

         We thank you for your  business,  your support and your  confidence  in
Citizens  Savings Bank, and encourage you to recommend  Citizens 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,
                                                      -------------------------------------------------------------
                                                        1998         1997         1996         1995         1994
--------------------------------------------------------------------------------------------------------------------
                                                                           (Dollars in thousands)
<S>                                                   <C>           <C>          <C>          <C>           <C>
Summary of Selected Consolidated
Financial Condition Data:
Total assets.......................................   $53,442       $46,353      $44,235      $39,727       $38,523
Loans receivable, net (1)..........................    46,936        38,435       34,391       29,275        26,141
Cash on hand and in other institutions (2).........     2,533         4,125        3,308        4,310         7,210
Investment securities available for sale...........       315           161        3,003        2,832         2,677
Cash surrender value of life insurance contract....     1,119         1,076        1,035          991           943
FHLB advances......................................     3,500         4,000        3,000        1,500           ---
Deposits...........................................    34,067        36,355       35,600       33,175        34,037
Total shareholders equity..........................    15,168         5,691        5,320        4,841         4,435
Unrealized gain (loss) on investment securities
   available for sale (net)........................         3           ---          (51)         (49)          (50)

                                                                          Year Ended  June 30,
                                                      -------------------------------------------------------------
                                                       1998         1997         1996         1995         1994
----------------------------------------------------------------------------------------------------------------
                                                                           (Dollars in thousands)
Summary of Selected Consolidated Operating Data:
Total interest income..............................  $  4,052        $3,509       $3,186       $2,742        $2,424
Total interest expense.............................     1,738         1,814        1,653        1,370         1,273
                                                     --------       -------      -------      -------      --------
   Net interest income.............................     2,314         1,695        1,533        1,372         1,151
Provision for loan losses..........................        72            83           80           32            12
                                                     --------       -------      -------      -------      --------
   Net interest income after
     provision for loan losses.....................     2,242         1,612        1,453        1,340         1,139
Other income:
   Fees and service charges........................       142           138          152          151           120
   Loss on sale of investments.....................       ---           (60)         ---          ---           ---
   Gain on sale of real estate.....................       180            17           33            2           ---
   Other...........................................        62            64           61           68            77
                                                     --------       -------      -------      -------      --------
     Total other income............................       384           159          246          221           197
Other expense:
   Salaries and employee benefits..................       565           485          415          387           331
   Occupancy expense...............................       119           114          118          109           105
   Data processing expense.........................       122           108          101          105            98
   Federal insurance premiums......................        23           259           77           75            71
   Other...........................................       343           251          256          248           258
                                                     --------       -------      -------      -------      --------
     Total other expense...........................     1,172         1,217          967          924           863
                                                     --------       -------      -------      -------      --------
Income before income taxes.........................     1,454           554          732          637           473
Income taxes.......................................       580           183          253          231           166
                                                     --------       -------      -------      -------      --------
Income before cumulative effect of
   change in accounting principle..................       874           371          479          406           307
Cumulative effect of change in
   accounting for income taxes.....................       ---           ---          ---          ---           (26)
                                                     --------       -------      -------      -------      --------
   Net income......................................  $    874       $   371      $   479      $   406      $    281
                                                     ========       =======      =======      =======      ========
</TABLE>

Table continued on following page
<PAGE>

<TABLE>
<CAPTION>

                                                                            Year Ended  June 30,
                                                      -------------------------------------------------------------
                                                           1998          1997          1996         1995         1994
-----------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>          <C>          <C>           <C>
Supplemental Data:
Interest rate spread during period.................         3.77%         3.75%        3.75%        3.69%         3.14%
Net yield on interest-earning assets (3)...........         4.78          4.02         3.99         3.92          3.38
Return on assets (4)...............................         1.69           .82         1.15         1.07           .77
Return on equity (5)...............................         6.65          6.81         9.52         8.89          6.58
Net income per share of Common Stock (6)...........      $   .94            ---          ---          ---           ---
Equity to assets (7)...............................        28.38%        12.28        11.91        12.06         11.38
Average interest-earning assets to average
   interest-bearing liabilities....................       127.93        106.31       105.61       105.84        106.54
Non-performing assets to total assets (7)..........          .32           .74          .50          .35           .61
Allowance for loan losses to total loans
   outstanding (7).................................          .57           .55          .40          .16           .19
Allowance for loan losses to
   non-performing loans (7)........................       158.53         61.57        62.51        33.19         20.89
Net (charge-offs) recoveries to average
   total loans outstanding ........................         (.03)         (.03)         .04         (.12)        (.004)
Other expenses to  average assets (8)..............         2.27          2.67         2.32         2.44          2.38
Number of full service offices (7).................         1             1            1            1             1
</TABLE>
----------------
(1) Net of allowance for loan losses, deferred fees and escrow.
(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) Pro forma earnings per share.  See Note 1 to the Consolidated
    Financial Statements.
(7) At end of period.
(8) 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, 1998 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

Average Balances and Interest Rates and Yields

         The following  tables  present at the fiscal years ended June 30, 1998,
1997 and  1996,  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,
                                    -----------------------------------------------------------------------------------------------
                                               1998                             1997                          1996
                                    ------------------------------   -----------------------------  -------------------------------
                                    Average               Average    Average             Average    Average              Average
                                    Balance  Interest   Yield/Cost   Balance  Interest  Yield/Cost  Balance  Interest   Yield/Cost
                                    -------  --------  -----------   -------  --------  ----------  -------  --------  ------------
                                                                               (Dollars in thousands)
Interest-earning assets:
<S>                                 <C>         <C>        <C>     <C>       <C>          <C>    <C>         <C>          <C>
   Interest-bearing deposits....... $4,557      $292       6.40%   $ 3,446   $   179      5.21%  $  3,109    $   182      5.85%
   FHLB stock......................    336        27       8.07        332        26      7.84        332         26      7.91
   Investment securities
     available for sale (1)........    232        10       4.23      1,527        94      6.14      3,001        174      5.81
   Loans receivable (2)............ 43,318     3,723       8.60     36,843     3,210      8.71     31,980      2,804      8.77
                                   -------     -----               -------    ------              -------     ------
     Total interest-earning assets. 48,443     4,052       8.36     42,148     3,509      8.33     38,422      3,186      8.29
                                   =======     =====               =======    ======              =======     ======
Interest-bearing liabilities:
   Deposits........................ 36,137     1,653       4.57     36,436     1,641      4.50     34,456      1,539      4.47
   FHLB advances...................  1,731        86       4.96      3,212       173      5.41      1,923        114      5.94
                                   -------     -----               -------    ------              -------     ------
     Total interest-bearing
          liabilities.............. 37,868     1,739       4.59     39,648     1,814      4.58     36,379      1,653      4.54
                                   -------     -----               -------    ------              -------     ------
Net interest-earning assets........$10,575                         $ 2,500                        $ 2,043
                                   =======                         =======                        =======
Net interest income................           $2,313                          $1,695                          $1,533
                                              ======                          ======                          ======
Interest rate spread (3)...........                        3.77%                          3.75%                           3.75%
                                                           ====                           ====                            ====
Net yield on weighted average
   interest-earning assets (4).....                        4.78%                          4.02%                           3.99%
                                                           ====                           ====                            ====
Average interest-earning assets
   to average interest-
   bearing liabilities............. 127.93%                         106.31%                        105.61%
                                    ======                          ======                         ======
</TABLE>
<PAGE>

(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.

                                                     Year Ended June 30,
                                                 -------------------------
                                                 1998      1997       1996
                                                 ----      ----       ----
Weighted average interest rate earned on:
   Interest-bearing deposits...................  6.40%      5.21%     5.85%
   FHLB stock..................................  8.07       7.84      7.91
   Investment securities.......................  4.23       6.14      5.81
   Loans receivable............................  8.60       8.71      8.77
     Total interest-earning assets.............  8.36       8.33      8.29
Weighted average interest rate cost of:
   Deposits....................................  4.57       4.50      4.47
   FHLB advances...............................  4.96       5.41      5.94
     Total interest-bearing liabilities........  4.59       4.58      4.54
Interest rate spread (1).......................  3.77%      3.75%     3.75%
                                                 ====       ====      ====
Net yield on weighted average
   interest-earning assets (2).................  4.78%      4.02%     3.99%
                                                 ====       ====      ====

(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.


<PAGE>

         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.


                                                    Increase (Decrease) in
                                                      Net Interest Income
                                                --------------------------------
                                                                          Total
                                                 Due to       Due to       Net
                                                  Rate        Volume      Change
                                                  ----        ------      ------
                                                          (In thousands)
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
                                                  =====       =====       =====
Year ended June 30, 1996 compared
to year ended June 30, 1995
--------------------------------------------------------------------------------
   Interest-earning assets:
     Interest-bearing deposits .............      $  32       $ (32)      $  --
     FHLB stock ............................          3          --           3
     Investment securities .................         11          10          21
     Loans receivable ......................         84         336         420
                                                  -----       -----       -----
       Total ...............................        130         314         444
                                                  -----       -----       -----
   Interest-bearing liabilities:
     Deposits ..............................        118          79         197
     FHLB advances .........................         (2)         87          85
                                                  -----       -----       -----
       Total ...............................        116         166         282
                                                  -----       -----       -----
   Net change in net interest income .......      $  14       $ 148       $ 162
                                                  =====       =====       =====



<PAGE>

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  $9.5  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.


Financial Condition at June 30, 1997 Compared to Financial Condition at June 30,
1996

Citizens' total consolidated assets increased by $2.2 million, or 4.8%, to $46.4
million  at June 30,  1997  from  $44.2  million  at June 30,  1996.  Net  loans
receivable  increased  $4.0  million,  or  11.8%,  while  investment  securities
decreased $2.8 million and FHLB advances increased $1.0 million. Citizens funded
the increased loans primarily with the increase in interest-bearing  deposits of
$755,000,  the  sale of  investment  securities  and with  the  additional  FHLB
advance.  Capital increased $371,000, or 7.0%, to $5.7 million in 1997 from $5.3
million in 1996.

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 an
$80,000 increase in salaries and benefits due to compensation expense related to
the ESOP and the RRP. Office occupancy and data processing expenses increased by
$19,000  during  1998 and  other  expenses,  consisting  primarily  of legal and
accounting  expenses,  increased  by  $93,000  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.

Comparison of Operating Results For Fiscal Years Ended June 30, 1997 and 1996

      Net Income. Net income decreased  $108,000,  or 22.5%, to $371,000 in 1997
from  $479,000  for  1996.  This  decrease  primarily  resulted  from  Citizens'
recognition of the one-time, non-recurring SAIF special assessment in the amount
of $211,000,  ($127,000  net of tax) and the sale of an  investment at a loss of
approximately $60,000. Citizens chose to sell the investment in order to use the
proceeds to pay down FHLB  advances  and to increase  overall  liquidity.  These
expenses  were offset by an increase of $162,000 in net interest  income to $1.7
million for 1997 from $1.5 million for 1996.  Excluding the SAIF  assessment and
the loss on the sale of investments, net income would have increased $55,000, or
11.5%,  to $534,000 for the twelve  months ended June 30, 1997 from  $479,000 in
1996.

      Net Interest Income. Net interest income increased $162,000,  or 10.6%, to
$1.7 million in 1997 from $1.5 million in 1996. This increase primarily resulted
from the growth in net loans  receivable  of $4.0  million,  or 11.6%,  to $38.4
million in 1997 from $34.4 million in 1996.

      Provisions  for Loan Losses.  Provisions for loan losses for 1997 and 1996
were $83,000 and $80,000,  respectively.  Citizens  increased  its provision for
1997 to recognize  the increase in consumer  loan losses  being  experienced  by
financial institutions  nationally,  regionally and locally as well as the risks
associated with individually large  multi-family and nonresidential  real estate
loans. Citizens had no chargeoffs in fiscal year 1996 and experienced $12,000 in
recoveries.  Citizens  had  chargeoffs  of $12,000  in fiscal  year 1997 and its
allowance for loan loss as of June 30, 1997 was $212,000.

      Other Income. Other income decreased  approximately  $87,000, or 35.4%, in
1997 as compared to 1996. This decrease  resulted from the sale of an investment
security  at a loss of  approximately  $60,000,  a decrease  in fees and service
charges and decreased gains on sales of real estate.

      Other  Expense.  Other  expenses  increased  $250,000,  or 25.9%,  to $1.2
million in 1997 from $967,000 in 1996.  The increase was primarily  attributable
to an increase of $47,000 in salaries and  benefits,  an increase of $196,000 in
SAIF insurance  premiums and a $9,000 increase in occupancy  expense relating to
the  installation  of new computers,  a "Loan Doc Prep"  software  package and a
Local Area Network (LAN).

      Income Tax Expense.  Income tax expense  decreased  $70,000,  or 27.7%, to
$183,000 in 1997 from $253,000 in 1996.  The decrease  resulted  primarily  from
Citizens'  reduced  profits  in 1997  caused  by  recognition  of the  one-time,
non-recurring SAIF special assessment in the amount of $211,000 ($127,000 net of
tax) and the sale of an investment at a loss of approximately $60,000.

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, 1998,  1997 and 1996, it originated  total loans in the
amounts  of $25.8  million,  $17.5  million  and  $15.4  million,  respectively.
Citizens purchased loans totaling $2.5 million in the fiscal year ended June 30,
1998. Loan principal  repayments totaled $19.7 million,  $13.3 million and $10.3
million during the respective periods.

      During the years ended June 30, 1998, 1997, and 1996,  Citizens  purchased
securities  in the  amounts of  $148,000,  $65,000 and  $169,000,  respectively.
Citizens did not receive any proceeds for the sale of securities  during 1998 or
1996. 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 $309,000 and unused lines of
credit of  approximately  $2.65  million  at June 30,  1998.  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, 1998 totaled $10.6 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
$3.5 million at June 30, 1998.

      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, 1998.

                                                     Year Ended June 30,
                                             --------------------------------
                                               1998        1997        1996
                                             --------    --------    --------
                                                  (Dollars in thousands)

Operating activities ........................$  1,427    $    266    $    518
Investing activities:
   Purchases of FHLB stock ..................     (20)         --          --
   Purchases of
     investment securities ..................    (148)        (65)       (169)
   Sales of investment securities ...........      --       2,932          --
   Principal collected on loans .............  19,696      13,251      10,279
   Loans originated ......................... (25,763)    (17,474)    (15,419)
   Loans sold ...............................      --          91          --
   Loans purchased ..........................  (2,494)         --         (64)
   Change in land held
     for development ........................      31          77          (3)
   Purchases of equipment ...................     (30)        (16)        (69)
                                             --------    --------    --------
Total from investing activities .............  (8,728)     (1,204)     (5,445)
Financing activities:
   Increase/(decrease) in NOW,
     MMDA and passbook deposits .............    (258)        305         460
   Increase/(decrease) in certificates
     of deposit .............................  (2,030)        450       1,965
   Advances from FHLB .......................   3,500      14,500       4,500
   Payments to FHLB .........................  (4,000)    (13,500)     (3,000)
   Sale of common stock, net of costs .......   9,216          --          --
   Purchase of RRP shares ...................    (667)         --          --
   Dividend paid on common stock ............     (53)         --          --
                                             --------    --------    --------
Total from financing activities .............   5,708       1,755       3,925
                                             --------    --------    --------
Net increase/(decrease) in cash
   and cash equivalents .....................$ (1,593)   $    817    $ (1,002)
                                             ========    ========    ========


         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 recently amended its regulation that implements this statutory liquidity
requirement  to reduce the amount of liquid  assets a savings  association  must
hold from 5% of net withdrawable  accounts and short-term  borrowings to 4%. The
OTS  also  eliminated  the  requirement  that  savings   associations   maintain
short-term liquid assets constituting at least 1% of their average daily balance
of net  withdrawable  deposit accounts and current  borrowings.  The revised OTS
rule  also  permits  savings  associations  to  calculate  compliance  with  the
liquidity  requirement  based upon their  average daily balance of liquid assets
during each quarter  rather than during each month,  as was  required  under the
prior rule. The OTS may impose monetary  penalties on savings  associations that
fail to meet these  liquidity  requirements.  As of June 30, 1998,  Citizens had
liquid assets of $4.4 million, and a regulatory liquidity ratio of 10.2%.

      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, 1998,  Citizens'  tangible capital ratio was 17.7%, its core capital
ratio was 17.7%, and its risk-based  capital to  risk-weighted  assets ratio was
29.2%.  Therefore,  at June 30,  1998,  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, 1998:

<TABLE>
<CAPTION>

                                                At June 30, 1998
                            ----------------------------------------------------------------------------
                                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%        $  787                17.7%        $9,285              $8,498
Core capital (2)...........   3.0          1,574                17.7          9,285               7,711
Risk-based capital.........   8.0          2,614                29.2          9,554               6,940
</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 has proposed  and is expected to adopt a core  capital  requirement
     for savings associations comparable to that adopted by the OCC for national
     banks. The new regulation,  as proposed, would require 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.  The  final  form  of  such  new  OTS  core  capital
     requirement may differ from that which has been proposed.  Citizens expects
     to be in compliance with such new requirements.

     As of June 30, 1998, 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

         In June 1997, the Financial Accounting Standards Board issued Statement
No.  130,  "Reporting   Comprehensive   Income"  ("SFAS  130").  This  Statement
establishes standards for reporting and displaying  comprehensive income and its
components in the financial statements. Comprehensive income consists of the net
income or loss of the  entity,  plus or minus the change in equity of the entity
during the period from transactions,  other events, and circumstances  resulting
from nonowner sources.  SFAS 130 is effective for years beginning after December
15, 1997,  and will require  financial  statements  of earlier  periods that are
presented for comparative purposes to be reclassified.  The adoption of SFAS 130
is not expected to have a material effect on the Company's financial condition.

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards No. 131,  "Disclosures  about Segments of an
Enterprise  and  Related   Information"   ("SFAS  131").  SFAS  131  established
information about operating  segments of their business in both their annual and
interim  financial  reports provided to shareholders.  SFAS 131 is effective for
financial  statement  periods  beginning after December 15, 1997. In the initial
year  of  application,  comparative  information  for  earlier  years  is  to be
restated, unless impracticable. In addition, the provisions of SFAS 131 need not
be  applied  to  interim  financial  statements  issued in the  initial  year of
application.  The adoption of SFAS 131 is not expected to have a material effect
on the Company's financial condition.

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

       Because  computer memory was so expensive on early  mainframe  computers,
some  computer  programs used only the final two digits for the year in the date
field while maintaining the first two digits of each year constant. As a result,
some computer  applications may be unable to interpret the change from year 1999
to year 2000. The Holding Company is actively  monitoring its year 2000 computer
compliance  issues.  The bulk of the Holding  Company's  computer  processing is
provided  under  contract  by BISYS,  Inc. in Houston,  Texas  ("BISYS").  BISYS
expects to be in year 2000  compliance  by June,  1999.  BISYS  will  assist the
Holding  Company  with  other  phases of year  2000  compliance  throughout  the
remainder of 1998 and 1999.

     Citizens' loan documentation  system is provided by Banker's Systems and is
also expected to be in year 2000  compliance  within the next year.  The Holding
Company has also appointed one of its executive  officers to address all aspects
of year 2000 compliance.  The Holding  Company's expense in connection with year
2000 compliance is not expected to exceed $50,000.

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  59% of its loan  portfolio at June 30,  1998.  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,  1998,  NPV would  decrease  9.8% and
22.6% in the  event of 200 and 400 basis  point  increases  in  market  interest
rates, respectively,  compared to 14.9% and 32.6% for the same increases at June
30, 1997.  Citizens'  NPV at June 30, 1998 would  increase  3.1% and 8.2% in the
event of 200 and 400 basis point decreases in market rates respectively.  A year
earlier,  200 and 400 basis point decreases in market rates would have increased
NPV 2.5% and 3.1%, respectively.

         Presented below, as of June 30, 1998 and 1997, 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,  in 200 basis
point increments, up and down 400 basis points.

<TABLE>
<CAPTION>

                                  June 30, 1998
                     Net Portfolio Value Summary Performance

                                                                                                     NPV as % of
                                                                                                    Present Value
                                            Net Portfolio Value                                       of Assets
      Change               -----------------------------------------------------            ------------------------------
     In Rates              $ Amount              $ Change              % Change              NPV Ratio              Change
--------------------------------------------------------------------------------------------------------------------------
                                                 (Dollars in thousands)
<S>                          <C>                <C>                     <C>                   <C>              <C>
    + 400 bp*                $9,193             $(2,690)                (22.64)%              17.82%           (371)  bp
    + 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
    - 400 bp                 12,859                 976                   8.21%               22.49%             95   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%


<TABLE>
<CAPTION>
                                  June 30, 1997
                     Net Portfolio Value Summary Performance

                                                                                                     NPV as % of
                                                                                                    Present Value
                                            Net Portfolio Value                                       of Assets
      Change               -----------------------------------------------------            ------------------------------
     In Rates              $ Amount              $ Change              % Change              NPV Ratio              Change
--------------------------------------------------------------------------------------------------------------------------
                                                 (Dollars in thousands)
<S>                          <C>                <C>                     <C>                   <C>              <C>
       +400 bp*              $4,933             $(2,387)                (32.61)%              11.02%           (422)  bp
       +200 bp                6,232              (1,088)                (14.86)%              13.40%           (184)  bp
          0 bp                7,320                 ---                     ---%              15.24%            ---   bp
       -200 bp                7,504                 184                   2.51%               15.40%             16   bp
       -400 bp                7,543                 223                   3.05%               15.30%              6   bp
</TABLE>


             Interest Rate Risk Measures: 200 Basis Point Rate Shock

    Pre-Shock NPV Ratio: NPV as % of PV of Assets..................... 15.24%
    Exposure Measure: Post-Shock NPV Ratio............................ 13.40%
    Sensitivity Measure: Change in NPV Ratio..........................   184 bp
    Change in NPV as % of PV of Assets................................ 12.07%

* Basis points


<PAGE>

                         Report of Independent Auditors



To the Board of Directors and Shareholders
Citizens Bancorp


We have  audited  the  accompanying  consolidated  statements  of  condition  of
Citizens  Bancorp and subsidiaries as of June 30, 1998 and 1997, and the related
consolidated  statements of income,  changes in shareholders'  equity,  and cash
flows for each of the three  years in the  period  ended  June 30,  1998.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  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 audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Citizens Bancorp
and  subsidiaries  at June 30, 1998 and 1997,  and the  consolidated  results of
their  operations and their cash flows for each of the three years in the period
ended  June  30,  1998,  in  conformity  with  generally   accepted   accounting
principles.



/s/ Ernst & Young LLP
Indianapolis, Indiana
August 19, 1998, except for Note 14,
     as to which the date is September 3, 1998

<PAGE>


                        CITIZENS BANCORP AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>


                                                                      June 30,
                                                           ------------------------------
                                                               1998              1997
                                                           ------------------------------
Assets
<S>                                                        <C>               <C>
Cash on hand and in other institutions                     $    305,908      $    861,360
Interest-bearing deposits                                     2,226,658         3,263,687
Investment securities available for sale                        315,041           160,995
Stock in Federal Home Loan Bank of Indianapolis                 351,600           331,600
Loans receivable, net                                        46,936,403        38,435,416
Land held for development                                       964,582           995,908
Cash surrender value of life insurance contracts              1,118,883         1,075,840
Property and equipment                                          564,638           578,343
Other assets                                                    657,956           650,161
                                                           ------------------------------
Total assets                                               $ 53,441,669      $ 46,353,310
                                                           ==============================
Liabilities and Shareholders' Equity
Liabilities
Deposits                                                   $ 34,067,481      $ 36,355,213
Federal Home Loan Bank advances                               3,500,000         4,000,000
Other liabilities                                               706,162           307,303
                                                           ------------------------------
Total liabilities                                            38,273,643        40,662,516

Shareholders' Equity
Preferred stock (no par value);
     2,000,000 shares authorized, no shares issued                   --                --
Common stock (no par value); 5,000,000 shares
     authorized;1,058,000shares outstanding                  10,062,369                --
Additional paid-in capital                                       41,100                --
Unearned Employee Stock Ownership Plan ("ESOP") shares         (765,060)               --
Unearned Recognition and Retention Plan ("RRP")                (641,117)               --
Retained income - substantially restricted                    6,467,337         5,690,794
Unrealized gain on investment
     securities available for sale, net of tax                    3,397                --
                                                           ------------------------------
                                                             15,168,026         5,690,794
                                                           ------------------------------
Total liabilities and shareholders' equity                 $ 53,441,669      $ 46,353,310
                                                           ==============================
</TABLE>

See accompanying notes.



<PAGE>


                        CITIZENS BANCORP AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                              Years ended June 30,
                                        --------------------------------------------
                                            1998            1997             1996
                                        --------------------------------------------
Interest income:
<S>                                     <C>             <C>              <C>
     Interest and fees on loans         $ 3,723,529     $ 3,210,018      $ 2,803,774
     Other interest income                  328,592         299,370          382,453
                                        --------------------------------------------
                                          4,052,121       3,509,388        3,186,227
Interest expense:
     Interest on deposits                 1,652,668       1,640,868        1,538,886
     Interest on borrowings                  85,921         173,668          114,253
                                        --------------------------------------------
                                          1,738,589       1,814,536        1,653,139
                                        --------------------------------------------
Net interest income                       2,313,532       1,694,852        1,533,088

Provision for loan losses                    72,000          83,000           80,000
                                        --------------------------------------------
Net interest income after provision
     for loan losses                      2,241,532       1,611,852        1,453,088
Other income:
     Fees and service charges               141,983         138,342          152,379
     Loss on sale of investments                 --         (60,243)              --
     Gain on sale of real estate            180,174          17,307           32,941
     Other                                   62,443          63,426           61,156
                                        --------------------------------------------
                                            384,600         158,832          246,476
Other expense:
     Salaries and employee benefits         564,693         485,151          414,730
     Occupancy expense                      118,646         114,449          117,967
     Data processing expense                122,584         107,764          101,675
     Federal insurance premium               23,115         258,685           76,868
     Other                                  343,037         250,468          256,137
                                        --------------------------------------------
                                          1,172,075       1,216,517          967,377
                                        --------------------------------------------
Income before income taxes                1,454,057         554,167          732,187

Income taxes                                580,179         183,225          253,257
                                        --------------------------------------------
Net income                              $   873,878     $   370,942      $   478,930
                                        ============================================
</TABLE>


See accompanying notes.


<PAGE>

<TABLE>
<CAPTION>


                                                                                      Unrealized
                                                                                      Gain/(Loss)
                                                                   Retained           Investment
                                                      Additional    Income            Securities         Unearned
                                            Common      Paid-In  Substantially    Available for Sale,      ESOP
                                             Stock      Capital   Restricted           Net of Tax         Shares
--------------------------------------------------------------------------------------------------------------------
<S>                                  <C>               <C>         <C>                <C>              <C>
Balance as of June 30, 1995         $         ---   $      ---      $4,840,922         $(48,962)       $      ---
Net income                                    ---          ---         478,930              ---               ---
Net change in unrealized gain/
  (loss) on investment securities
  available for sale, net of tax              ---          ---             ---           (1,891)              ---
                                     -------------------------------------------------------------------------------
Balance as of June 30, 1996                   ---          ---       5,319,852          (50,853)              ---
Net income                                    ---          ---         370,942              ---               ---
Net change in unrealized gain/
   (loss) on investment securities
   available for sale, net of tax             ---          ---             ---           50,853               ---
--------------------------------------------------------------------------------------------------------------------


Balance as of June 30, 1997                   ---          ---       5,690,794              ---               ---
Net income                                    ---          ---         873,878              ---               ---
Net change in unrealized gain/
    (loss) on investment securities
    available for sale, net of tax            ---          ---             ---            3,397               ---
Dividends declared
    ($.10 per share)                          ---          ---         (97,335)             ---               ---
Sale of common stock                    9,215,969          ---             ---              ---               ---
Common stock acquired by ESOP             846,400          ---             ---              ---          (846,400)
Release of ESOP shares                        ---       41,100             ---              ---            81,340
Purchase of 42,320 shares for RRP             ---          ---             ---              ---               ---
Allocation of RRP shares                      ---          ---             ---              ---               ---
--------------------------------------------------------------------------------------------------------------------
Balance as of June 30, 1998          $ 10,062,369      $41,100     $ 6,467,337        $   3,397        $ (765,060)
====================================================================================================================
</TABLE>


                                       Unearned
                                      Recognition             Total
                                     and Retention        Shareholders'
                                         Plan                Equity
---------------------------------------------------------------------
Balance as of June 30, 1995          $      ---            $4,791,960
Net income                                  ---               478,930
Net change in unrealized gain/
  (loss) on investment securities
  available for sale, net of tax            ---                (1,891)
                                        -----------------------------

Balance as of June 30, 1996                 ---             5,268,999
Net income                                  ---               370,942
Net change in unrealized gain/
   (loss) on investment securities
 available for sale, net of tax             ---                50,853
---------------------------------------------------------------------


Balance as of June 30, 1997                 ---             5,690,794
Net income                                  ---               873,878
Net change in unrealized gain/
    (loss) on investment securities
    available for sale, net of tax          ---                 3,397
Dividends declared
   ($0.10 per share)                        ---               (97,335)
Sale of common stock                        ---             9,215,969
Common stock acquired by ESOP               ---                   ---
Release of ESOP shares                      ---               122,440
Purchase of 42,320 shares for RRP      (666,957)             (666,957)
Allocation of RRP shares                 25,840                25,840
----------------------------------------------------------------------
Balance as of June 30, 1998          $ (641,117)         $ 15,168,026
======================================================================


See accompanying notes.

<PAGE>

                        CITIZENS BANCORP AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        Years ended June 30,
                                                           ------------------------------------------------
                                                                1998              1997              1996
-----------------------------------------------------------------------------------------------------------
Operating activities
<S>                                                        <C>               <C>               <C>
Net income                                                 $    873,878      $    370,942      $    478,930
Adjustments  to  reconcile   net  income  to  net  cash  provided  by  operating
     activities:
          Loss on sale of investments                                --            60,243                --
          Provision for loan losses                              72,000            83,000            80,000
          Depreciation and amortization                          30,519            45,587            48,055
          Deferred federal income tax credit                   (101,594)          (76,326)          (74,473)
          Increase (decrease) in other assets and cash
            surrender value of life insurance contract           59,219          (158,418)         (140,525)
          Increase (decrease) in other liabilities              344,731           (58,854)          126,311
          Release of ESOP/RRP shares                            148,280                --                --
                                                           ------------------------------------------------
Net cash provided by operating activities                     1,427,033           266,174           518,298

Investing activities
Purchase of stock in Federal Home Loan Bank                     (20,000)               --                --
Purchases of investment securities                             (148,420)          (65,481)         (169,304)
Proceeds from sale of investment securities                          --         2,931,693                --
Principal collected on loans                                 19,696,267        13,251,130        10,279,567
Loans originated                                            (25,762,982)      (17,473,565)      (15,419,000)
Loans purchased                                              (2,494,252)               --           (64,000)
Proceeds from sale of loans                                          --            91,455                --
(Increase) decrease in land held for development                 31,326            76,892            (3,342)
Purchases of property and equipment                             (29,833)          (16,498)          (69,117)
                                                           ------------------------------------------------
Net cash used by investing activities                        (8,727,894)       (1,204,374)       (5,445,196)

Financing activities
Increase (decrease) in NOW, MMDA and
     passbook deposits                                         (257,971)          304,545           460,126
Increase (decrease) in certificates of deposit               (2,029,761)          450,528         1,965,007
Advances from Federal Home Loan Bank                          3,500,000        14,500,000         4,500,000
Payments to Federal Home Loan Bank                           (4,000,000)      (13,500,000)       (3,000,000)
Sale of common stock, net of costs                            9,215,969                --                --
Purchase of RRP shares                                         (666,957)               --                --
Dividend paid on common stock                                   (52,900)               --                --
                                                           ------------------------------------------------
Net cash provided by financing activities                     5,708,380         1,755,073         3,925,133
                                                           ------------------------------------------------

Increase (decrease) in cash and cash equivalents             (1,592,481)          816,873        (1,001,765)

Cash and cash equivalents at beginning of year                4,125,047         3,308,174         4,309,939
                                                           ------------------------------------------------
Cash and cash equivalents at end of year                   $  2,532,566      $  4,125,047      $  3,308,174
                                                           ================================================
</TABLE>


See accompanying notes.

<PAGE>

1. Significant Accounting Policies

Organization

Citizens Bancorp  ("Citizens") was formed in June, 1997 and purchased all of the
stock of Citizens  Savings  Bank of  Frankfort  ("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,
Citizens had no assets or liabilities. All financial information prior to fiscal
year 1998 related to the Bank only.

Citizens  issued  1,058,000  shares of common stock  following the  subscription
stock offering. Net proceeds to Citizens 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 Citizens to
the Employee Stock Ownership Plan.

The significant  accounting and reporting  policies for Citizens Bancorp and its
subsidiaries (collectively, the "Company") follow:

Principles of Consolidation

The  consolidated  financial  statements  include the accounts of Citizens,  its
wholly-owned  subsidiary,  the  Bank  and  the  Bank's  wholly-owned  subsidiary
Citizens Loan and Service Corporation  ("Service Corp.").  Citizens is a unitary
savings  and loan  holding  company  engaged in the  business  of  managing  its
investments and directing, planning, and coordinating the business activities of
the Bank. The Bank operates as a traditional savings bank in Clinton County, IN.
The  Service  Corp.  develops  land for  residential  housing.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents  consist of cash on hand and in other institutions and
interest-bearing deposits. Interest-bearing deposits are available on demand.

Investment Securities

At June 30,  1998 and  1997,  investment  securities,  which  consist  of equity
securities,  are classified as available-for-sale and carried at fair value with
the unrealized gain as a separate  component of equity,  net of tax. At June 30,
1998, 1997, and 1996, the cost basis of investment securities available for sale
was $309,416,  $160,995 and $3,087,450,  respectively  and the gross  unrealized
gain (loss) was $5,625, $0, and ($84,208) respectively.  Gains and losses on the
sale of these  securities  are  based  on the  specific  cost of the  individual
security being sold.

Management determines the appropriate classification of investment securities at
the time of purchase.  Securities classified as held to maturity are those which
management  has the  positive  intent and  ability  to hold until the  scheduled
maturity.  Securities  classified  as held to maturity  are stated at  amortized
cost.  Securities  classified  as available for sale are those which may be sold
for liquidity purposes, or other reasons, prior to reaching scheduled maturity.

Stock in Federal Home Loan Bank of Indianapolis

Stock in the Federal  Home Loan Bank of  Indianapolis  is stated at cost and the
amount of stock held is determined by regulation.

1. Significant Accounting Policies (continued)

Loans Receivable

The Company has a first mortgage lien on all property  securing loans classified
as residential and commercial real estate mortgage loans.  Further, a portion of
certain  mortgage  loan  balances is insured by private or  government  guaranty
insurance policies. Interest income is computed monthly based upon the principal
amount of the  loans  outstanding.  The  Company  discontinues  the  accrual  of
interest on loans when,  in  management's  opinion,  the  collection of all or a
portion  of  interest  has  become  doubtful.   Mortgage  loans  are  placed  on
non-accrual status when they become 90 days delinquent. When a loan is placed on
nonaccrual,  the Company  charges  all  previously  accrued and unpaid  interest
against  income.  Loan  origination  and commitment fees and certain direct loan
origination  costs are deferred and amortized as an adjustment of yield over the
contractual life of the related loans.

Allowance for Loan Losses

The  allowance for loan losses is  maintained  at a level  believed  adequate by
management to absorb losses in the loan portfolio. Management's determination of
the  adequacy  of the  allowance  is based  on an  evaluation  of the  portfolio
including   consideration  of  past  loan  loss  experience,   current  economic
conditions,  volume,  growth and  composition of the loan  portfolio,  and other
relevant  factors.  The  allowance is increased  by  provisions  for loan losses
charged against income and reduced by net charge-offs.

In 1995,  Statement of Financial  Accounting  Standards No. 114,  "Accounting by
Creditors  for  Impairment  of a Loan" ("SFAS  114") and  Statement of Financial
Accounting  Standards No. 118, "Accounting by Creditors for Impairment of a Loan
- Income  Recognition and  Disclosures"  ("SFAS 118"), an amendment to SFAS 114,
were adopted. Any allowance for loan losses related to troubled loans identified
for evaluation in accordance with SFAS 114 is based on estimated discounted cash
flows using the loan's initial effective  interest rate or the fair value of the
collateral  for  certain   collateral   dependent  loans.   Consumer  loans  and
one-to-four family  residential loans are collectively  evaluated for impairment
as  homogeneous  loan groups which are outside the scope of SFAS 114. Under SFAS
118, no interest income on loans determined to be impaired is accrued.  Interest
income on such loans is recognized only upon cash receipt. SFAS 114 and SFAS 118
have not had a  significant  impact on results of  operations  in 1998,  1997 or
1996.

Property and Equipment

Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation  is  computed  principally  by the  straight-line  method  over the
estimated useful lives (5 to 40 years) of the related assets.

Income Taxes

Deferred tax assets and liabilities  are  established for temporary  differences
between the financial  reporting basis and tax basis of assets and  liabilities,
at the enacted tax rates expected to be in effect when the temporary differences
reverse.  The effect of a tax rate change is  recognized in income in the period
of enactment.

1. Significant Accounting Policies (continued)

Pro Forma Earnings Per Share (Unaudited)

In 1997,  the Financial  Accounting  Standards  Board issued  Statement No. 128,
"Earnings Per Share" (SFAS 128).  SFAS 128 replaced the  calculation  of primary
and fully diluted  earnings per share with basic and diluted earnings per share.
Unlike  primary  earnings  per share,  basic  earnings  per share  excludes  any
dilutive  effects of  options,  warrants  and  convertible  securities.  Diluted
earnings  per share is very similar to the  previously  reported  fully  diluted
earnings per share.

Historical earnings per share is not presented on the consolidated statements of
income because it is not meaningful due to the stock offering  occurring and the
formation  of the ESOP in  September,  1997.  Both pro forma basic  earnings per
share and pro forma  diluted  earnings per share would have been $ 0.94 in 1998.
Earnings  per share on a pro forma  basis  assumes  the stock  offering  and the
formation  of the ESOP had occurred on July 1, 1997 and includes the increase in
earnings  associated with the investment of the net proceeds raised in regard to
the issuance of common stock in the subscription stock offering.

Pro forma basic  earnings per share is computed by dividing pro forma net income
by the weighted  average  number of common  shares  outstanding  during the year
assuming the stock offering occurred on July 1, 1997. Pro forma diluted earnings
per share is computed by dividing pro forma net income,  by the weighted average
number of common shares  outstanding during the year assuming the stock offering
and the  formation of the ESOP  occurred on July 1, 1997.  The weighted  average
shares used in the  computation  of both pro forma basic  earnings per share and
the pro forma diluted  earnings per share were 978,648 shares in 1998.  Earnings
per share  information  for 1997 and 1996 is not  applicable  as no shares  were
issued or outstanding prior to the subscription stock offering in 1998.

Use of Estimates

Preparation of financial  statements  requires  management to make estimates and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

Reclassifications

Certain  elements of the 1997 and 1996  consolidated  financial  statements have
been reclassified to conform with the 1998 presentation herein.

Recent Accounting Pronouncements

Reporting Comprehensive Income

In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting  Comprehensive  Income"  ("SFAS  130").  This  Statement  establishes
standards for reporting and displaying  comprehensive  income and its components
in the financial statements.  Comprehensive income consists of the net income or
loss of the entity,  plus or minus the change in equity of the entity during the
period  from  transactions,  other  events,  and  circumstances  resulting  from
nonowner  sources.  SFAS 130 is effective for years beginning after December 15,
1997,  and  will  require  financial  statements  of  earlier  periods  that are
presented for comparative purposes to be reclassified.  The adoption of SFAS 130
is not expected to have a material effect on the Company's financial condition.

1. Significant Accounting Policies (continued)

Disclosures about Segments of an Enterprise and Related Information

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  131,  "Disclosures  about  Segments of an
Enterprise  and  Related   Information"   ("SFAS  131").  SFAS  131  established
information about operating  segments of their business in both their annual and
interim  financial  reports provided to shareholders.  SFAS 131 is effective for
financial  statement  periods  beginning after December 15, 1997. In the initial
year  of  application,  comparative  information  for  earlier  years  is  to be
restated, unless impracticable. In addition, the provisions of SFAS 131 need not
be  applied  to  interim  financial  statements  issued in the  initial  year of
application.  The adoption of SFAS 131 is not expected to have a material effect
on the Company's financial condition.

2. Loans Receivable

Loans receivable consist of the following:
                                                         June 30
                                                 1998            1997
--------------------------------------------------------------------------------
Real estate mortgage loans:
     One-to-four family residential           $35,928,334     $29,887,850
     Commercial                                 3,656,862       2,375,245
Construction loans                                611,000       1,419,800
Installment loans                               7,064,802       5,475,168
Loans secured by deposits                         149,973         193,111
                                              ---------------------------
                                               47,410,971      39,351,174
Less:
     Allowance for loan losses                    268,837         211,635
     Deferred loan fees                           109,376         101,140
     Undisbursed portion of loan proceeds          96,355         602,983
                                              ---------------------------
                                                  474,568         915,758
                                              ---------------------------
                                              $46,936,403     $38,435,416
                                              ===========================

Changes in the allowance for loan losses are as follows:

                                            Years ended June 30,
                                 ---------------------------------------
                                    1998           1997           1996
------------------------------------------------------------------------
Balance at beginning of year     $ 211,635      $ 138,606      $  46,416
   Provision for losses             72,000         83,000         80,000
   Charge-offs                     (16,443)       (11,597)            --
   Recoveries                        1,645          1,626         12,190
                                 ---------------------------------------
Balance at end of year           $ 268,837      $ 211,635      $ 138,606
                                 =======================================
<PAGE>


2.  Loans Receivable (continued)

At June 30, 1998 the Company had loan commitments of approximately  $309,000. Of
the $309,000 loan commitments, $205,000 are fixed rate commitments at 7.27%. The
Company also had approximately  $2,650,000 of unused lines of credit at June 30,
1998.

The  Company's  loan  portfolio  consists  primarily of loans  originated in its
principal market area of Frankfort,  Indiana,  Clinton County and its contiguous
counties.  The economy of the  Company's  market area  primarily  includes  some
diversified industries and agriculture.  At June 30, 1998 and June 30, 1997, and
for the years then ended,  the Company  had no loans  considered  to be impaired
under SFAS 114.  Advances  from the Federal Home Loan Bank of  Indianapolis  are
secured by a  floating  lien on the  Company's  one-to-four  family  residential
mortgage loans (see Note 7).

3. Loans to Related Parties

The Company has granted  loans to certain of its  directors,  officers and their
associates.  Related  party  loans  are made on  substantially  the same  terms,
including  interest rates and  collateral,  as those  prevailing at the time for
comparable  transactions  with  unrelated  parties and do not involve  more than
normal risk of collectibility.  The aggregate dollar amounts of these loans were
$2,766,000  and $2,211,000 at June 30, 1998 and 1997,  respectively.  During the
year ended June 30, 1998, related party loans were increased  $2,686,000 by loan
advances and reduced  $2,131,000 by loan repayments.  During 1997, related party
loans were  increased  $890,000 by loan  advances  and reduced  $323,000 by loan
repayments.

4. Land Held for Development

The Company,  through its 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,  1998,  1997,  and 1996,
approximately  $34,000,  $68,000, and $240,000,  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, 1998, 1997, and 1996 approximately  $69,000,  $166,000,
and  $270,000,  respectively,  was  received  from  the  sale  of  lots  in  the
development  resulting in gains from sale of these lots of $9,000,  $17,000, and
$33,000 for each year,  respectively.  The Service  Corp.  owns an additional 45
acres of land for future development.

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

5. Property and Equipment

Property and equipment consists of the following:

                                               June 30
                                      -------------------------
                                         1998           1997
---------------------------------------------------------------
Land                                  $  137,307     $  137,307
Office building                          647,154        647,154
Furniture, fixtures and equipment        274,796        255,327
                                      -------------------------
                                       1,059,257      1,039,788
Less accumulated depreciation            494,619        461,445
                                      -------------------------
                                      $  564,638     $  578,343
                                      =========================


6. Deposits

Deposits consist of the following:

                                                   June 30
                                         ---------------------------
                                            1998            1997
--------------------------------------------------------------------
Savings accounts:
Fixed rate, passbook                     $ 6,421,631     $ 6,904,561
Variable rate, money market                3,081,666       3,354,231
                                         ---------------------------
                                           9,503,297      10,258,792
Negotiable order of withdrawal (NOW)
     accounts                              4,569,764       4,072,240
Certificates                              19,994,420      22,024,181
                                         ---------------------------
                                         $34,067,481     $36,355,213
                                         ===========================


<PAGE>

6. Deposits (continued)

The following  table presents  interest  expense on deposits for the years ended
June 30, 1998, 1997 and 1996.

                                           Years ended June 30,
                                    1998           1997           1996
-------------------------------------------------------------------------
Fixed rate, passbooks            $  216,059     $  216,388     $  224,314
Variable rate, money markets        106,756        108,991        107,232
NOWs                                106,303         86,551         79,569
Certificates                      1,223,550      1,228,938      1,127,771
                                 -----------------------------------------
Total interest on deposits       $1,652,668     $1,640,868     $1,538,886
                                 =========================================

Accrued  interest  payable,  which relates  primarily to  certificate  accounts,
totaled  $31,000  and $69,000 at June 30,  1998 and 1997,  respectively,  and is
included  in  other  liabilities.   Cash  paid  for  interest  on  deposits  was
$1,691,000,  $1,611,000, and $1,539,000 for the years ended June 30, 1998, 1997,
and 1996,  respectively.  Deposit  accounts  with balances in excess of $100,000
totaled $4,526,000 with a weighted average interest rate of 4.45% as of June 30,
1998. Deposits over $100,000 are not federally insured.

Contractual maturities of certificates of deposit at June 30, 1998 were:

                         Certificates over       All other
 Year ended June 30,         $100,000          Certificates         Total
-----------------------------------------------------------------------------
            1999             $ 1,585,993        $  8,998,109      $10,584,102
            2000                 306,397           4,874,223        5,180,620
            2001                 303,228           1,389,689        1,692,917
            2002                 118,456           2,087,285        2,205,741
            2003                       -             267,981          267,981
      Thereafter                       -              63,059           63,059
                              -----------------------------------------------
                              $2,314,074         $17,680,346      $19,994,420
                              ===============================================

7. Advances from Federal Home Loan Bank of Indianapolis

Advances from the Federal Home Loan Bank of Indianapolis  totaling $3,500,000 at
June 30,  1998 bear  fixed and  variable  interest  rates and are due at various
dates through December 1998. The Company is required to maintain  eligible loans
in its  portfolio of at least 170% of  outstanding  advances as  collateral  for
advances from the Federal Home Loan Bank of Indianapolis.

The following table presents certain information  relating to advances at or for
the years ended June 30, 1998, 1997 and 1996.

<TABLE>
<CAPTION>
                              Years ended June 30,
                                           ---------------------------------------------
                                              1998            1997            1996
----------------------------------------------------------------------------------------
<S>                                          <C>             <C>             <C>
FHLB Advances:
     Outstanding at end of period             $3,500,000      $4,000,000      $3,000,000
     Average balance outstanding for period    1,730,769       3,212,000       1,923,000
     Maximum amount outstanding at any
       month-end during the period             3,500,000       5,000,000       3,000,000
     Weighted average interest rate
       during the period                            4.96%           5.41%           5.94%
     Weighted average interest rate
       at end of period                             6.21            6.51            5.82
</TABLE>

8.  Income Taxes

Income tax expense is summarized as follows:

                                  Years ended June 30,
                          1998           1997           1996
---------------------------------------------------------------
Federal:
   Current             $ 550,558      $ 204,275      $ 255,830
   Deferred              (80,259)       (62,054)       (58,491)
                       ---------------------------------------
                         470,299        142,221        197,339
State:
   Current               131,215         55,276         71,900
   Deferred              (21,335)       (14,272)       (15,982)
                       ---------------------------------------
                         109,880         41,004         55,918
                       ---------------------------------------
Income tax expense     $ 580,179      $ 183,225      $ 253,257
                       =======================================


<PAGE>

8.  Income Taxes (continued)

Federal income taxes vary from the amount computed using the corporate statutory
rate due  principally to income on the cash surrender  value of a life insurance
policy (see Note 10).

The  reconciliation  of income tax computed at the federal statutory rate to the
Company's effective income tax is as follows:

                                                    Years ended June 30,
                                                --------------------------------
                                                1998         1997         1996
--------------------------------------------------------------------------------
Tax rate of federal statutory rate              34.0%        34.0%        34.0%
State franchise tax, net of federal benefit      5.0          4.9          5.0
Income on cash surrender value of life
     insurance policy                           (1.0)        (7.5)        (5.9)
Other                                            1.9          1.7          1.5
                                                -------------------------------
Effective tax rate                              39.9%        33.1%        34.6%
                                                ===============================

The  components of the Company's net deferred tax asset included in other assets
as of June 30 are as follows:

                                             1998         1997         1996
--------------------------------------------------------------------------------
Deferred tax assets:
   Deferred loan origination fees          $137,596    $ 124,563    $ 118,904
   Unrealized loss on investment                 --           --       35,698
   Officer supplemental retirement plan     106,362       99,263       67,681
   Allowance for loan losses                114,256       89,945       58,908
   Capital loss carryover                    25,604           --           --
   RRP compensation expense                  10,982           --           --
   ESOP compensation expense                 34,248           --           --
   Other                                     24,336       21,484       15,621
                                          ------------------------------------
                                            453,384      335,255      296,812
Deferred tax liabilities:
   FHLB stock dividend                      (27,132)     (27,132)     (27,132)
   Deferred loan origination costs          (91,112)     (81,579)     (78,680)
   Percentage bad debt deduction             (4,345)     (49,107)     (58,915)
   Other                                    (24,844)     (15,669)     (13,116)
                                          ------------------------------------
                                           (147,433)    (173,487)    (177,843)
                                          ------------------------------------
Net deferred tax asset                    $ 305,951    $ 161,768    $ 118,969
                                          ====================================

The Company and the Bank file separate federal income tax returns.  The Bank and
its wholly owned subsidiary file a consolidated  federal income tax return.  The
Company paid  $262,538,  $431,009 and $248,646 of federal and state income taxes
in 1998, 1997 and 1996, respectively.

9. Shareholders' Equity

Citizens has authorized the issuance of 2,000,000 shares of preferred stock with
no par value.  Preferred stock may be issued by the Board of Directors from time
to time on terms set by the Board of  Directors  without  further  authorization
from the shareholders.

The Board of Directors may declare  dividends to be paid on the Company's common
stock.  Such  payments may depend on dividends  paid by the Bank to the Company.
The  amount  the Bank can pay in  dividends  is  limited  by  Office  of  Thrift
Supervision rules that generally allow for capital distributions in any calendar
year equal to the higher of net  income  for the  calendar  year to date plus an
amount that would reduce by one-half the surplus  capital ratio at the beginning
of the calendar year or 75% of the net income over the previous  four  quarters.
As of June 30,  1998,  the  Bank's  allowable  capital  distribution  amount was
approximately $4,012,000.

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

Pursuant to the Financial  Institutions  Reform  Recovery and Enforcement Act of
1989  (FIRREA),  as  implemented  by a rule  promulgated by the Office of Thrift
Supervision  ("OTS"),  savings  institutions  must meet three  separate  minimum
capital-to-assets  requirements:  (i) a risk-based capital  requirement of 8% of
risk-weighted  assets,  (ii) a leverage ratio of 3% core capital to total assets
and (iii) a tangible capital  requirement of 1.5% tangible core capital to total
assets.  The following table summarizes,  the Bank's capital  requirements under
FIRREA and its actual capital and capital ratios at June 30.

9. Shareholders' Equity (continued)

<TABLE>
<CAPTION>

                         Capital
                       Requirements                    Actual Capital                  Amount
                       %              $                %                $             of Excess
-------------------------------------------------------------------------------------------------
<S>                  <C>           <C>               <C>             <C>               <C>
June 30, 1998:
   Risk-based        8.0%          $2,614,000        29.2%           $9,554,000        $6,940,000
   Leverage          3.0            1,574,000        17.7             9,285,000         7,711,000
   Tangible          1.5              787,000        17.7             9,285,000         8,498,000

June 30, 1997:
   Risk-based        8.0%        $  2,174,000        18.1%        $   4,910,000      $  2,736,000
   Leverage          3.0            1,365,000        10.3             4,698,000         3,333,000
   Tangible          1.5              683,000        10.3             4,698,000         4,015,000
</TABLE>

At June 30, 1998 and 1997,  the Bank had  approximately  $953,000 and  $993,000,
respectively,  invested in its  Service  Corp.,  which  invests in land held for
development.  Since  enactment of FIRREA,  regulatory  capital  rules  require a
reduction of regulatory capital for such an investment. The amount of regulatory
capital reduction was 100% as of June 30, 1998 and 1997. Pursuant to the Federal
Deposit   Insurance   Corporation   Improvement  Act  Prompt  Corrective  Action
regulations,  for all  periods  presented,  the  Office  of  Thrift  Supervision
categorized the Bank as  "well-capitalized"  under the regulatory  framework for
prompt corrective  action. To be categorized as  well-capitalized  the Bank must
maintain  a total  risk-based  capital  (as  defined)  ratio  of  10%,  a Tier 1
risk-based  capital (as defined) ratio of 6%, and a Tier 1 leverage (as defined)
ratio of 5%. The Bank's ratios were as follows:

<TABLE>
<CAPTION>


                                  Capital
                                Requirements                    Actual Capital
                                %              $                %                $
----------------------------------------------------------------------------------------
<S>                          <C>            <C>               <C>             <C>
June 30, 1998:
   Risk-based                10.0%          $3,267,000        29.2%           $9,554,000
   Tier 1 risk-based          6.0            1,960,000        28.4             9,285,000
   Tier 1 leverage            5.0            2,624,000        17.7             9,285,000

 June 30,1997:
   Risk-based                10.0%          $2,717,000        18.1%           $4,910,000
   Tier 1 risk-based          6.0            1,630,000        17.3             4,698,000
   Tier 1 leverage            5.0            2,276,000        10.3             4,698,000
</TABLE>

<PAGE>

9. Shareholders' Equity (continued)

The Bank has  qualified  under  provisions  of the  Internal  Revenue Code which
permit it to deduct from taxable  income a provision for bad debts which differs
from the provision for such losses charged against income. Accordingly, retained
income  includes income of  approximately  $1,349,000 for which no provision for
federal income taxes has been made. If, in the future,  this portion of retained
income is used for any purpose other than to absorb loan losses,  federal income
taxes may be imposed at the then applicable rates.

The Bank  established  a liquidation  account at the time of  conversion  from a
mutual  savings bank to a capital stock savings  bank.  The account  balance was
equal to the amount of the Bank's net worth on June 30,  1997.  The account will
be  maintained  for  the  benefit  of  eligible   deposit  account  holders  and
supplemental  eligible account holders who continue to maintain deposit accounts
following the conversion. In the unlikely event of a complete liquidation,  each
eligible deposit account holder and supplemental eligible account holder will be
entitled to receive a liquidation  distribution  of any assets  remaining  after
payment of all valid creditor's  claims,  including the claims of all depositors
to the withdrawal values of their deposit  accounts,  but before any liquidation
distribution  may be made with respect to the Company's  common stock.  Eligible
deposit account  holders have a subaccount in the  liquidation  account for each
deposit account as of December 31, 1995.  Supplemental  eligible account holders
have a subaccount in the liquidation account for each deposit account as of June
30, 1997. The liquidation  account  balance will gradually  decrease as eligible
deposit account holders' and supplemental  eligible account holders'  subaccount
balances  are  required  or cease to  exist.  Dividends  cannot be paid from the
liquidation account.

10. Employee and Director Benefit Plans

Pension Plan -  Substantially  all full-time  employees are covered by a defined
benefit pension plan administered by the Financial Institutions  Retirement Fund
(FIRF),  a  multi-employer,  industry  sponsored plan.  Plan  information is not
available  for the Company as an  individual  entity  within the  multi-employer
group.  Pension  expense which  includes plan  administration  costs amounted to
approximately $1,649, $20,556, and $1,300 in 1998, 1997, and 1996, respectively.

Supplemental  Non-qualified  Pension Plan - The Company  sponsors a supplemental
non-qualified  pension plan that provides  certain officers with defined pension
benefits in excess of those  provided in the  qualified  plan. To fund the plan,
the  Company   purchased   single  premium  life  insurance   contracts  on  the
participating employees. The carrying value of this investment, representing the
cash surrender value of the policies,  was $1,119,000 and $1,076,000 at June 30,
1998 and 1997,  respectively.  During the years ended June 30, 1998,  1997,  and
1996, $16,700, $74,300, and $69,000, respectively, were charged to expense under
this plan.

Employee  Stock  Ownership  Plan  ("ESOP")  -  In  conjunction   with  Citizens'
subscription stock offering,  an ESOP was created and 84,640 shares of Citizens'
stock were purchased for future allocation to employees. The purchase was funded
with a loan from  Citizens.  Shares will be allocated to all eligible  employees
annually  on the last day of the fiscal  year based on a pro rata share of total
compensation  for the year.  Employees with at least one year of employment with
the Company and who have attained age 21 are eligible to  participate.  Benefits
vest in full upon completion of ten years of qualified service.  The ESOP shares
are released in proportion to the annual principal and interest  payments on the
loan. The Company  recognizes expense based upon the fair value of the shares as
they are released.  Compensation  expense for the ESOP was $122,000 for the year
ended June 30,  1998.  The shares are  considered  outstanding  for earnings per
share purposes once they are released.

10. Employee and Director Benefit Plans (continued)

The following table reflects the shares held by the ESOP:

                                       June 30, 1998
                                       -------------
Shares allocated to participants             8,134
Unallocated shares                          76,506
        Total                               84,640
                                        ----------
   Fair value of unallocated shares     $1,099,774
                                        ==========

The Bank will make minimum  contributions  to the ESOP sufficient to meet annual
principal and interest  obligations on the loan from Citizens.  Contributions in
excess of this  amount  may be made at the  Bank's  discretion.  Cash  dividends
received  with  respect  to  unallocated  shares,  if any,  will be  applied  to
principal and interest due on the loan.

Recognition  and Retention Plan - The Recognition and Retention Plan ("RRP") was
approved with an effective date of March 24, 1998. The RRP purchased, with funds
contributed  by the Company,  42,320 shares in the open market during the fourth
quarter of fiscal 1998.  Directors  and officers  become vested in the shares of
common  stock  awarded to them  under the RRP at a rate of 20 percent  per year,
commencing  one year after the grant  date,  and 20 percent on each  anniversary
date thereof for the following  four years.  As of June 30, 1998,  32,798 shares
have been  awarded to  officers  and  directors.  RRP  compensation  expense was
$26,000  for the year  ended June 30,  1998.  The Bank  accounts  for its RRP in
accordance   with   Accounting   Principle   Board  Statement  25  (APB  No.25).
Compensation  expense is recognized  over the vesting  period for shares awarded
under the plan.

Stock Option Plans - At a special  shareholders'  meeting on March 24, 1998, the
1998 Stock Option Plan ("SOP") was approved.  The Board of Directors reserved an
amount of stock equal to 105,800 shares,  or 10 percent of the common stock sold
in the  conversion  for issuance under the SOP. The options will be granted by a
Committee, comprised of directors, to key employees and directors based on their
services.  The exercise  price of options  granted must be at least equal to the
fair market value of the common stock on the date the option is granted. Options
granted will vest over a five year period and become exercisable over a ten year
period.

The  Company  has  elected  to  follow  APB 25 and  related  Interpretations  in
accounting  for its employee  stock options  because,  as discussed  below,  the
alternative  fair  value  accounting  provided  for under  FASB  Statement  123,
"Accounting for Stock-Based  Compensation,"  ("SFAS 123") requires use of option
valuation  models  that were not  developed  for use in valuing  employee  stock
options.  Under APB 25,  because the exercise  price of the  Company's  employee
stock  options  equals the market price of the  underlying  stock on the date of
grant, no compensation expense is required.

Pro forma information regarding net income and earnings per share is required by
SFAS 123,  and has been  determined  as if the  Company  had  accounted  for its
employee stock options under the fair value method of that  Statement.  The fair
value for these options was estimated at the date of grant using a  Black-Sholes
option pricing model with the following weighted average assumptions:

                                   1998
                                 -------
Number of options granted        81,995
Risk-free interest rate            5.38%
Expected life, in years               8
Expected volatility                19.9%
Expected dividend yield            1.31%


<PAGE>

10.  Employee and Director Benefit Plans (continued)

The Black-Sholes  option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective assumptions,  including expected stock price volatility.  Because the
Company's employee stock options have  characteristics  significantly  different
from  those of traded  options,  and  because  changes in the  subjective  input
assumptions  can  materially  affect the fair value  estimate,  in  management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

For the  purposes  of pro forma  disclosures,  the  estimated  fair value of the
options  is  amortized  to  expense  over  the  options'  vesting  period.   Had
compensation  cost for the Company's stock options been determined  based on the
fair market  value  consistent  with the method of SFAS 123, the  Company's  net
income for 1998 would have been  reduced by  $12,969.  Both pro forma  basic and
diluted  earnings  per share,  which  assumes  that the stock  offering  and the
formation  of the  ESOP  occurred  on  July  1,  1997,  would  have  been  $0.93
(unaudited) for 1998.

A summary of the Company's stock option  activity,  and the related  information
for the year ended June 30, 1998 follow:

                                                  1998
                                                        Weighted-
                                                        average
                                           Options    Exercise Price
--------------------------------------------------------------------
Outstanding at beginning of year                --     $   --
Granted                                     81,995         15.25
Exercised                                       --         --
    Outstanding at end of year              81,995         15.25

Exercisable at end of year                      --         --

Weighted-average fair value per option
     of options granted during the year  $    4.86


The exercise  price for the options  outstanding as of June 30, 1998 was $15.25.
The  weighted-average  remaining  contractual life of those options is almost 10
years.

11. Fair Value of Financial Instruments

Statement  No. 107,  "Disclosures  About Fair Value of  Financial  Instruments,"
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly  affected by the assumptions used,  including
the  discount  rate and  estimates  of future cash flows.  In that  regard,  the
derived  fair  value  estimates   cannot  be   substantiated  by  comparison  to
independent  markets  and,  in many cases,  could not be  realized in  immediate
settlement  of the  instrument.  Statement  No. 107 excludes  certain  financial
instruments and all nonfinancial  instruments from its disclosure  requirements.
Accordingly,  the aggregate  fair value  amounts  presented do not represent the
underlying value of the Company.

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

     Cash and interest bearing deposits:  The carrying amounts approximate those
     assets' fair values.

     Investment  securities  available  for sale:  Fair  values  for  investment
     securities are based on quoted market prices,  where  available.  If quoted
     market  prices are not  available,  fair values are based on quoted  market
     prices of comparable instruments.

     Stock in Federal Home Loan Bank of  Indianapolis:  The amount of stock held
     in the Federal Home Loan Bank is determined by regulation  and is stated at
     cost which approximates market.

     Loans receivable:  For variable-rate  loans that reprice  frequently,  fair
     values are based on  carrying  values.  The fair values for all other loans
     are estimated  using  discounted  cash flow analyses,  using interest rates
     currently  being  offered  for loans with  similar  terms to  borrowers  of
     similar credit quality.


<PAGE>

     Deposit  liabilities:  The  fair  values  disclosed  for  demand  deposits,
     including  interest-bearing  and  noninterest-bearing   accounts,  passbook
     savings,  and certain types of money market  accounts  are, by  definition,
     equal to the amount  payable on demand at the reporting  date (i.e.,  their
     carrying amounts).  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 time deposits.

     Federal Home Loan Bank advances:  The carrying  amounts  approximate  their
     fair values.

11.  Fair Value of Financial Instruments (continued)

The estimated  fair values of the Company's  financial  instruments  at June 30,
1998 are as follows:

<TABLE>
<CAPTION>
                                                         Carrying              Fair
                                                          Amount               Value
---------------------------------------------------------------------------------------
Assets:
<S>                                                    <C>               <C>
     Cash on hand and in other institutions            $      305,908    $      305,908
     Interest bearing deposits                              2,226,658         2,226,658
     Investment securities available for sale                 315,041           315,041
     Stock in Federal Home Loan Bank of Indianapolis          351,600           351,600
     Loans receivable                                      46,936,403        49,410,000

Liabilities:
     Deposits                                              34,067,481        34,219,000
     Federal Home Loan Bank advances                        3,500,000         3,500,000

</TABLE>

12.  Quarterly Financial Data (Unaudited)

Summarized quarterly financial data for 1998:

<TABLE>
<CAPTION>


                                               First       Second        Third       Fourth
                                              Quarter      Quarter      Quarter      Quarter
----------------------------------------------------------------------------------------------
<S>                                         <C>         <C>          <C>            <C>
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
Pro forma basic earnings per share              $0.32        $0.20        $0.22          $0.20
Pro forma diluted earnings per share            $0.32        $0.20        $0.22          $0.20

</TABLE>


13.  Parent Company Information

The condensed financial  information for Citizens Bancorp,  prepared on a parent
company unconsolidated basis, is presented as follows:


                                  June 30, 1998
                                                         -------------
Condensed statement of condition Assets:
     Cash on deposit with Citizens Savings Bank           $ 4,014,235
     Investment securities available for sale at market
         value, cost $139,375                                 145,000
     Investment in Citizens Savings Bank                   10,237,433
     ESOP loan receivable                                     825,240
     Other assets                                              43,248
                                                          -----------
Total assets                                              $15,265,156
                                                          ===========

Liabilities and shareholders' equity
     Liabilities                                          $    97,128
     Shareholders' Equity                                  15,168,028
                                                          -----------
Total liabilities and shareholders' equity                $15,265,156
                                                          ===========



                                                     Year ended
                                                       June 30
                                                         1998
                                                      ---------
Condensed statement of income
Interest income on investments                        $  53,683
Interest income on ESOP loan                             55,481
                                                      ---------
        Total interest income                           109,164

Expenses                                                115,814
                                                      ---------
     Loss before income tax expense                      (6,650)
Income tax expense                                           --
                                                      ---------
     Loss before equity in undistributed net income
         of subsidiary                                   (6,650)
Equity in undistributed net income of Citizens
     Savings Bank                                       880,528
                                                      ---------
     Net income                                       $ 873,878
                                                      =========

<PAGE>



13.  Parent Company Information (continued)

                                                                Year ended
                                                                 June 30
                                                                   1998
                                                              ------------
Condensed statement of cash flows
Operating activities
     Net income                                               $    873,878
     Adjustments  to  reconcile  net income to net cash
       provided  by  operating activities:
         Undistributed Net income of Citizens Savings  Bank       (880,528)
         Increase in other assets                                  (34,784)
         Increase in other liabilities                              42,000
                                                              ------------
Net cash provided by operating activities                              566

Investing activities
     Purchases of available for sale securities                   (139,375)
     Loan to ESOP for stock purchase                              (846,400)
     ESOP loan repayment                                            21,160
                                                              ------------
Net cash provided by investing activities                         (964,615)

Financing activities:
     Dividend paid on common stock                                 (52,900)
     Proceeds from sale of common stock                         10,062,369
     Purchase of Citizens Savings Bank common stock             (5,031,185)
                                                              ------------
Net cash provided by financing activities                        4,978,284
                                                              ------------

Increase in cash and cash equivalents                            4,014,235

Cash and cash equivalents as beginning of year                          --
                                                              ------------
Cash and cash equivalents at end of year                      $  4,014,235
                                                              ============

14.  Subsequent Event

The Board of Directors has  authorized the Company to repurchase up to 5% of its
outstanding  1,058,000  shares of common stock,  or 52,900  shares,  in the open
market. On August 21, 1998, notice of the proposed  repurchase  program was sent
to the OTS for their approval.  As OTS regulations restrict stock repurchases in
the first year after conversion, on September 2, 1998, the Company applied for a
waiver  of  regulatory  requirements  so the  repurchase  program  may  commence
immediately. On September 3, 1998, the Company received approval from the OTS of
both  the  repurchase  plan  and the  waiver  of the  one  year  restriction  on
repurchases.   The  repurchases  will  be  executed  in  open  market  or  block
transactions  and will be  subject  to market  conditions.  Management  does not
believe the repurchases  will have any adverse effect on the financial  position
of the Company.

<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 66) 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 73) 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 42) has served as the Bank's Controller since 1989.

     Perry W. Lewis (age 77) 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 59) 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 49) has served as the Bank's senior Loan Officer
since 1989.

     Billy J. Wray (age 66) 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, 1998, there were  approximately 657 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
Month Ended               High            Low             Per Share
September 30, 1997        $14 1/4       $13 7/8            $ ---
October 31, 1997           15 1/2       14  1/4            $ ---
November 30, 1997          15           14  5/16           $ ---
December 31, 1997          15 1/8       14  1/2            $ ---

January 31, 1998           15 3/8       14  7/8            $ ---
February 28, 1998          15 1/2       15                 $ ---
March 31, 1998             16           15  1/4            $ .05
April 30, 1998             16           15  1/4            $ ---
May 31, 1998               16           15                 $ ---
June 30, 1998              15           14                 $ .05

*    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 month.




<PAGE>

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
Ernst & Young LLP
One Indiana Square, Suite 3400
Indianapolis, Indiana  46204

SHAREHOLDERS AND GENERAL INQUIRIES

     On or before  September 28, 1998, the Company will file an Annual Report on
Form 10-K for its  fiscal  year  ended  June 30,  1998 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