TABLE OF CONTENTS




|                                                                  |  |  |  |  |  |  |  | 
|----------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Item 1. FINANCIAL STATEMENTS.                                    
|Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|PART II. OTHER INFORMATION                                       



---



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended March 31, 2000

or

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

For the transition period from __________________ to ________________

Commission File Number 0-28162

LENOX BANCORP, INC.
(Exact name of small business issuer as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Ohio                                                           |  | 31-1445959                          
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                         |  |  |  |           
|---------------------------------------- |  |  |  | ----------
|4730 Montgomery Road, Norwood, Ohio      |  |  |  | 45212     
|                                        
|                                        
|                                        
|                                        
|(Address of principal executive offices) |  |  |  | (Zip Code)

(513) 531-8655
(Issuers telephone number)

Not Applicable
(Former name, former address and former fiscal year, if changes since last report)

APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date: 285,028 shares of common
stock, par value $0.01 per share, were outstanding as of May 10, 2000.

Transitional Small Business Disclosure Format (check one):       Yes [ ] No [X]





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##### Table of Contents



LENOX BANCORP, INC.
FORM 10-QSB

For the Quarter Ended March 31, 2000

INDEX

|           |  |                                                                                            |  |      |    | 
|---------- |  | ------------------------------------------------------------------------------------------ |  | ---- | -- | 
|           |  |                                                                                            |  | Page
|           |  |                                                                                            |  |     
|PART I     |  | FINANCIAL INFORMATION                                                                     
|          
|Item 1.    |  | Financial Statements-Unaudited                                                            
|          
|           |  | Consolidated Balance Sheets at
March 31, 2000 and December 31, 1999                        |  |      | 3  | 
|          
|           |  | Consolidated Statements of Operations  For the Three
Months Ended March 31, 2000 and 1999 |  |      | 4  | 
|          
|           |  | Consolidated Statements of Cash Flows  For the
Three Months Ended March 31, 2000 and 1999 |  |      | 5  | 
|          
|           |  | Notes to Unaudited Consolidated Financial Statements                                       |  |      | 6  | 
|          
|Item 2.    |  | Managements Discussion and Analysis or Plan of Operation                                  |  |      | 7  | 
|          
|PART II:   |  | OTHER INFORMATION                                                                         
|          
|Item 1.    |  | Legal Proceedings                                                                          |  |      | 12 | 
|          
|          
|          
|          
|Item 2.    |  | Changes in Securities                                                                      |  |      | 12 | 
|          
|          
|          
|          
|Item 3.    |  | Defaults Upon Senior Securities                                                            |  |      | 12 | 
|          
|          
|          
|          
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                        |  |      | 12 | 
|          
|          
|          
|          
|Item 5.    |  | Other Information                                                                          |  |      | 12 | 
|          
|          
|          
|          
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                           |  |      | 12 | 
|          
|SIGNATURES

2



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##### Table of Contents



PART I. FINANCIAL INFORMATION
LENOX BANCORP, INC.




Item 1. FINANCIAL STATEMENTS.

LENOX BANCORP, INC.
CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |        |        |        | 
|----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | -------------------------- | ------ | ---------------------- | ------ | ------------ | ------ | ------ | ------ | 
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        | At                     |        | At          
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        | March 31,              |        | December 31,
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        | 2000                   |        | 1999        
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |             
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        | (Unaudited)           
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        | (Dollars in thousands)
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Assets                                                                                                                                               
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Cash and due from banks                                                                                                                               |                                                                                                                                                                     | $                                                              | 1,362                      |        |                        | $      | 738          |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Certificates of deposit                                                                                                                               |                                                                                                                                                                     |                                                                | 95                         |        |                        |        | 193          |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Investment securities  available for sale, at fair value (amortized cost
of $2,700 and $2,702 at March 31, 2000 and December 31, 1999)               |                                                                                                                                                                     |                                                                | 2,548                      |        |                        |        | 2,535        |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Mortgage-backed securities  available for sale, at fair value (amortized
cost of $586 and $602 at March 31, 2000 and December 31, 1999)              |                                                                                                                                                                     |                                                                | 571                        |        |                        |        | 588          |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Collateralized mortgage obligations  available for sale, at fair value
(amortized cost of $4,159 and $4,159 at March 31, 2000 and December 31, 1999) |                                                                                                                                                                     |                                                                | 4,101                      |        |                        |        | 4,171        |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Loans receivable, net                                                                                                                                 |                                                                                                                                                                     |                                                                | 63,228                     |        |                        |        | 59,434       |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Loans held for sale  at lower of cost or market                                                                                                      |                                                                                                                                                                     |                                                                | 90                         |        |                        |        | 5,611        |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Accrued interest receivable:                                                                                                                         
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      |                                                                                                                                                                     | Loans                                                          |                            |        | 397                    |        |              |        | 361    |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      |                                                                                                                                                                     | Mortgage-backed securities                                     |                            |        | 4                      |        |              |        | 4      |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      |                                                                                                                                                                     | Collateralized mortgage obligations                            |                            |        | 24                     |        |              |        | 23     |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      |                                                                                                                                                                     | Investments and certificates of deposit                        |                            |        | 66                     |        |              |        | 50     |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Property and equipment, net                                                                                                                           |                                                                                                                                                                     |                                                                | 1,266                      |        |                        |        | 399          |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Federal Home Loan Bank stock  at cost                                                                                                                |                                                                                                                                                                     |                                                                | 1,617                      |        |                        |        | 1,583        |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Prepaid expenses and other assets                                                                                                                     |                                                                                                                                                                     |                                                                | 385                        |        |                        |        | 217          |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Prepaid federal income taxes                                                                                                                          |                                                                                                                                                                     |                                                                | 34                         |        |                        |        | 77           |       
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |       
|                                                                                                                                                      |                                                                                                                                                                     |                                                                | Total assets               |        | $                      | 75,788 |              |        | $      | 75,984 | 
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |       
|Liabilities and Stockholders Equity                                                                                                                 
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Liabilities:                                                                                                                                         
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Deposits:                                                                                                                                                          
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      |                                                                                                                                                                     | Savings, club and other accounts                               |                            | $      | 5,153                  |        |              | $      | 5,129  |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      |                                                                                                                                                                     | Money market and NOW accounts                                  |                            |        | 5,372                  |        |              |        | 5,050  |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      |                                                                                                                                                                     | Certificate accounts                                           |                            |        | 28,082                 |        |              |        | 29,257 |       
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |       
|                                                                                                                                                      |                                                                                                                                                                     |                                                                | Total deposits             |        |                        | 38,607 |              |        |        | 39,436 | 
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Advances from Federal Home Loan Bank                                                                                                                                |                                                                |                            | 31,775 |                        |        |              | 31,139 |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Advance payments by borrowers for taxes and insurance                                                                                                               |                                                                |                            | 148    |                        |        |              | 265    |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Accrued expenses                                                                                                                                                    |                                                                |                            | 465    |                        |        |              | 309    |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Deferred federal income taxes                                                                                                                                       |                                                                |                            | 13     |                        |        |              | 55     |       
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |       
|                                                                                                                                                      |                                                                                                                                                                     |                                                                | Total liabilities          |        | $                      | 71,008 |              |        | $      | 71,204 | 
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |       
|Stockholders Equity:                                                                                                                                
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Common stock  no par value: 2,000,000 authorized, 425,677 issued
and 285,028 outstanding at March 31, 2000 and 285,028 issued and outstanding
at December 31, 1999 |                                                                |                            |       |                        |        |              |       |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Additional paid in capital                                                                                                                                          |                                                                |                            | 3,776  |                        |        |              | 3,776  |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Retained earnings  substantially restricted                                                                                                                        |                                                                |                            | 4,140  |                        |        |              | 4,108  |       
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Unearned ESOP shares                                                                                                                                                |                                                                |                            | (208   | )                      |        |              | (208   | )     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Shares acquired for Stock Incentive Plan                                                                                                                            |                                                                |                            | (212   | )                      |        |              | (217   | )     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Treasury stock 140,649 shares at March 31, 2000 and December 31, 1999                                                                                               |                                                                |                            | (2,567 | )                      |        |              | (2,567 | )     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Accumulated other comprehensive income (loss):                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      |                                                                                                                                                                     | Unrealized loss on available for sale securities, net of taxes |                            |        | (149                   | )      |              |        | (112   | )     
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |       
|                                                                                                                                                      |                                                                                                                                                                     |                                                                | Total stockholders equity |        |                        | 4,780  |              |        |        | 4,780  | 
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |       
|                                                                                                                                                      | Total liabilities and stockholders equity                                                                                                                          |                                                                | $                          | 75,788 |                        |        | $            | 75,984 |       
|                                                                                                                                                      |                                                                                                                                                                     |                                                                |                            |        |                        |        |              |       

3



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##### Table of Contents



LENOX BANCORP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS

|                                     |  |                                                      |       |    |                        |       |       |    |     |     | 
|------------------------------------ |  | ---------------------------------------------------- | ----- | -- | ---------------------- | ----- | ----- | -- | --- | --- | 
|                                     |  |                                                      |       |    | Three Months Ended    
|                                     |  |                                                      |       |    | March 31,             
|                                     |  |                                                      |       |    |                       
|                                     |  |                                                      |       |    | 2000                   |       | 1999 
|                                     |  |                                                      |       |    |                        |       |      
|                                     |  |                                                      |       |    | (Unaudited)           
|                                     |  |                                                      |       |    | (Dollars in thousands 
|                                     |  |                                                      |       |    | except per share data)
|                                    
|                                    
|                                    
|                                    
|Interest Income and Dividend Income:
|                                    
|                                    
|                                    
|                                    
|                                     |  | Loans                                                |       | $  | 1,190                  |       |       | $  | 735 |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Mortgage-backed securities                           |       |    | 10                     |       |       |    | 11  |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Collateralized mortgage obligations                  |       |    | 69                     |       |       |    | 85  |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Investments and interest bearing deposits            |       |    | 45                     |       |       |    | 68  |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | FHLB stock dividends                                 |       |    | 29                     |       |       |    | 14  |    
|                                     |  |                                                      |       |    |                        |       |       |   
|                                     |  |                                                      | Total |    |                        | 1,343 |       |    |     | 913 | 
|                                     |  |                                                      |       |    |                        |       |       |   
|Interest Expense:                   
|                                    
|                                    
|                                    
|                                    
|                                     |  | Deposits                                             |       |    | 451                    |       |       |    | 397 |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Borrowed money and capitalized leases                |       |    | 458                    |       |       |    | 201 |    
|                                     |  |                                                      |       |    |                        |       |       |   
|                                     |  |                                                      | Total |    |                        | 909   |       |    |     | 598 | 
|                                    
|                                    
|                                    
|                                    
|                                     |  | Net interest income before provision for loan losses |       |    | 434                    |       |       |    | 315 |    
|                                    
|                                    
|                                    
|                                    
|Provision for loan losses            |  |                                                      | 23    |    |                        |       | 9     |   
|                                     |  |                                                      |       |    |                        |       |       |   
|                                     |  | Net interest income after provision for loan losses  |       |    | 411                    |       |       |    | 306 |    
|                                     |  |                                                      |       |    |                        |       |       |   
|Other Income:                       
|                                    
|                                    
|                                    
|                                    
|                                     |  | Service fee income                                   |       |    | 35                     |       |       |    | 33  |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Gain on sale of loans                                |       | 23 |                        |       |       | 21 |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Loan fees and other                                  |       |    | 49                     |       |       |    |    |    
|                                     |  |                                                      |       |    |                        |       |       |   
|                                     |  |                                                      | Total |    |                        | 107   |       |    |     | 54  | 
|                                     |  |                                                      |       |    |                        |       |       |   
|General and Administrative Expenses:
|                                    
|                                    
|                                    
|                                    
|                                     |  | Compensation and employee benefits                   |       |    | 216                    |       |       |    | 162 |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Occupancy and equipment                              |       |    | 49                     |       |       |    | 55  |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Federal insurance premium                            |       |    | 2                      |       |       |    | 5   |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Franchise taxes                                      |       |    | 16                     |       |       |    | 21  |    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Other expenses                                       |       |    | 184                    |       |       |    | 130 |    
|                                     |  |                                                      |       |    |                        |       |       |   
|                                     |  |                                                      | Total |    |                        | 467   |       |    |     | 373 | 
|                                    
|                                    
|                                    
|                                    
|                                     |  | Income (loss) before provision for income taxes      |       |    | 51                     |       |       |    | (13 | )  
|                                    
|                                    
|                                    
|                                    
|Provision (credit) for income taxes  |  |                                                      | 19    |    |                        |       | (3    | ) 
|                                     |  |                                                      |       |    |                        |       |       |   
|                                     |  | Net income (loss)                                    |       | $  | 32                     |       |       | $  | (10 | )  
|                                     |  |                                                      |       |    |                        |       |       |   
|Basic earnings (loss) per share      |  | $                                                    | 0.11  |    |                        | $     | (0.03 | ) 
|                                     |  |                                                      |       |    |                        |       |       |   
|Diluted earnings (loss) per share    |  | $                                                    | 0.11  |    |                        | $     | (0.03 | ) 
|                                     |  |                                                      |       |    |                        |       |       |   

4



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##### Table of Contents



LENOX BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                 |                                                                                          |                                                       |                                                  |        |                            |      |        |        |        |      |  
|------------------------------------------------ | ---------------------------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------------------ | ------ | -------------------------- | ---- | ------ | ------ | ------ | ---- | -
|                                                 |                                                                                          |                                                       |                                                  |        | For the Three Months Ended
|                                                 |                                                                                          |                                                       |                                                  |        | March 31,                 
|                                                 |                                                                                          |                                                       |                                                  |        |                           
|                                                 |                                                                                          |                                                       |                                                  |        | 2000                       |      | 1999  
|                                                 |                                                                                          |                                                       |                                                  |        |                            |      |       
|                                                 |                                                                                          |                                                       |                                                  |        | (Unaudited)               
|                                                 |                                                                                          |                                                       |                                                  |        | (Dollars in thousands)    
|                                                
|                                                
|                                                
|                                                
|Cash flows from operating activities:           
|                                                
|                                                
|                                                
|                                                
|                                                 | Net income(loss)                                                                         |                                                       | $                                                | 32     |                            |      | $      | (10    | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Adjustments to reconcile net income to net cash provided (used)
by operating activities:
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Depreciation and amortization                         |                                                  |        | 18                         |      |        |        | 40     |     
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Provision for losses on loans                         |                                                  |        | 23                         |      |        |        | 9      |     
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Amortization of deferred loan (fees) costs            |                                                  |        | 17                         |      |        |        | (1     | )   
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Deferred loan origination fees (costs)                |                                                  |        | (22                        | )    |        |        | (31    | )   
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | FHLB stock dividends                                  |                                                  |        | (29                        | )    |        |        | (14    | )   
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Gain on sale of loans                                 |                                                  |        | (23                        | )    |        |        | (21    | )   
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Amortization of stock incentive plan award            |                                                  |        | 5                          |      |        |        | 6      |     
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | ESOP expense, net of tax benefit                      |                                                  |        |                           |      |        |        | 17     |     
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Effect of change in operating assets and liabilities:
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          |                                                       | Accrued interest receivable                      |        |                            | (53  | )      |        |        | (6   | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          |                                                       | Prepaid expenses                                 |        |                            | (139 | )      |        |        | (108 | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          |                                                       | Prepaid federal income tax                       |        |                            | 20   |        |        |        |     |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          |                                                       | Advances by borrowers for taxes and insurance    |        |                            | (117 | )      |        |        | (26  | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          |                                                       | Accrued expenses                                 |        |                            | 156  |        |        |        | 178  |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          |                                                       | Accrued federal income taxes                     |        |                            |     |        |        |        | (3   | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          |                                                       | Deferred federal income taxes                    |        |                            |     |        |        |        | (6   | )
|                                                 |                                                                                          |                                                       |                                                  |        |                            |      |        |       
|                                                 |                                                                                          |                                                       | Net cash provided (used) by operating activities |        |                            | (112 | )      |        |        | 24   |  
|                                                
|                                                
|                                                
|                                                
|Cash flows from investing activities:           
|                                                
|                                                
|                                                
|                                                
|                                                 | Property and equipment additions                                                         |                                                       |                                                  | (882   | )                          |      |        | (6     | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments of mortgage-backed securities                                                 |                                                       |                                                  | 15     |                            |      |        | 83     |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of certificates of deposits                                                     |                                                       |                                                  | (2     | )                          |      |        | (3     | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Maturity of certificate of deposits                                                      |                                                       |                                                  | 100    |                            |      |        |       |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Net change in loans                                                                      |                                                       |                                                  | (4,153 | )                          |      |        | (7,341 | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from sale of mortgage loans                                                     |                                                       |                                                  | 5,885  |                            |      |        | 1,260  |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of FHLB stock                                                                   |                                                       |                                                  | (34    | )                          |      |        |       |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Maturity of investments  held-to-maturity                                               |                                                       |                                                  |       |                            |      |        | 701    |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Maturity of investments  available-for-sale                                             |                                                       |                                                  |       |                            |      |        | 500    |       
|                                                 |                                                                                          |                                                       |                                                  |        |                            |      |        |       
|                                                 |                                                                                          | Net cash used by investing activities                 |                                                  |        | 929                        |      |        |        | (4,806 | )   
|                                                
|                                                
|                                                
|                                                
|Cash flows from financing activities:           
|                                                
|                                                
|                                                
|                                                
|                                                 | Net increase (decrease) in deposits                                                      |                                                       |                                                  | (829   | )                          |      |        | 3,343  |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Borrowings from FHLB                                                                     |                                                       |                                                  | 5,100  |                            |      |        | 700    |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments of FHLB advances                                                              |                                                       |                                                  | (4,464 | )                          |      |        | (870   | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Reissue Treasury Stock                                                                   |                                                       |                                                  |       |                            |      |        | 4      |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Dividends paid                                                                           |                                                       |                                                  |       |                            |      |        | (20    | )     
|                                                 |                                                                                          |                                                       |                                                  |        |                            |      |        |       
|                                                 |                                                                                          | Net cash provided by financing activities             |                                                  |        | (193                       | )    |        |        | 3,157  |     
|                                                 |                                                                                          |                                                       |                                                  |        |                            |      |        |       
|Increase (decrease) in cash and cash equivalents |                                                                                          |                                                       | 624                                              |        |                            |      | (1,625 | )     
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |                                                                                          |                                                       | 738                                              |        |                            |      | 2,350  |       
|                                                 |                                                                                          |                                                       |                                                  |        |                            |      |        |       
|Cash and cash equivalents at end of period       |                                                                                          | $                                                     | 1,362                                            |        |                            | $    | 725    |       
|                                                 |                                                                                          |                                                       |                                                  |        |                            |      |        |       
|Supplemental disclosure:                        
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash paid for:                                                                          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Interest expense                                      |                                                  | $      | 901                        |      |        | $      | 582    |     
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                          | Income taxes                                          |                                                  |        |                           |      |        |        | 25     |     

5



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##### Table of Contents



LENOX BANCORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THREE MONTHS ENDED MARCH 31, 2000 AND 1999

1. Principles of Consolidation

The consolidated unaudited financial statements include the accounts of
Lenox Bancorp, Inc. (Lenox or the Company) and its wholly-owned subsidiary
Lenox Savings Bank (the Bank), which includes Lenox Mortgage Corporation.
All significant intercompany transactions have been eliminated in
consolidation. The investment in the Bank on Lenoxs financial statements is
carried at the parent companys equity in the underlying net assets.

The consolidated balance sheet as of March 31, 2000 and the related
consolidated statement of income, cash flows and changes in stockholders
equity for the three months ending March 31, 2000 and 1999 are unaudited. In
the opinion of management, all adjustments necessary for a fair presentation of
such financial statements have been included. Such adjustments consisted of
normal recurring items. Interim results are not necessarily indicated of
results for a full year.

The financial statements and notes are presented as permitted by Form
10-QSB. The interim statements are unaudited and should be read in conjunction
with the financial statements and notes thereto contained in the Banks annual
report for the year ended December 31, 1999.

2. Conversion to Capital Stock Form of Ownership

The Board of Directors of Lenox Savings Bank adopted a plan of conversion,
pursuant to which the Bank converted from an Ohio-chartered mutual savings bank
to an Ohio-chartered capital stock savings bank, with the concurrent formation
of the holding company, Lenox Bancorp, Inc. On July 17, 1996, the conversion
from the mutual to stock form was finalized. Lenox was capitalized through the
initial sale of 425,677 shares of common stock to eligible account holders, an
employee benefit plan of the Bank, supplemental eligible account holders, other
members of the Bank and the general public. Lenox then used a portion of the
proceeds from the sale to purchase all of the outstanding shares of the Bank.
This transaction was accounted for in a manner similar to the pooling of
interest method.

The Bank may not declare or pay cash dividends on or repurchase any of its
shares of common stock if the effect thereof would cause equity to be reduced
below applicable regulatory capital maintenance requirements or if such
declaration and payment would otherwise violate regulatory requirements.

3. Earnings Per Share

Net income for the three months ended March 31, 2000 was $0.11 per share
or $32,000 on an average of 285,028 shares, compared to a net loss for the
quarter ending March 31, 1999 of $10,000 or $0.03 per share on an average of
364,887 shares.

6



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##### Table of Contents






Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following analysis discusses changes in the financial condition and
results of operations at and for the three months ended March 31, 2000, and
should be read in conjunction with the Banks Consolidated Financial Statements
and the notes thereto, appearing in Part I, Item 1 of this document.

Forward-Looking Statements

This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identified by use of the words believe, expect, intend,
anticipate, estimate, project, or similar expressions. The Companys
ability to predict results or the actual effect of future plans or strategies
is inherently uncertain. Factors which could have a material adverse effect on
the operations of the Company and the subsidiaries include, but are not limited
to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
the Companys market area and accounting principles and guidelines. These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Further
information concerning the Company and its business, including additional
factors that could materially affect the Companys financial results, is
included in the Companys filings with the Securities and Exchange Commission.

The Company does not undertake  and specifically disclaims any
obligation  to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.

Management Strategy

The Banks current strategic plan is to enhance its long-term
profitability, reduce the level of interest rate risk and improve market share.
Management is committed to achieving a substantial increase in the Banks
return on equity within the next three years. Improved earnings through asset
growth is an important step toward meeting this objective. Asset growth has
increased 62% since the Banks conversion from mutual to stock form in 1996.
Expanding

7



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##### Table of Contents



the loan portfolio to include multi-family lending, originating and
selling more loans through the Banks newly established subsidiary, Lenox
Mortgage Corporation, and the opportunity to attract new customers through the
Banks new branch and executive offices are major components of planned growth.
The Bank also intends to enhance profitability by continuing to seek means of
increasing non-interest income through the generation of transaction fees,
commissions and participation in the secondary market. Finally, the Bank
intends to continue to seek to reduce costs. Management is committed to its
goal of enhancing shareholder value through improving profitability, reducing
interest rate risk and increasing market share and believes that the actions it
has taken to date and its future strategic plans will enhance the long-term
profitability of the Company.

Comparison of Financial Condition at March 31, 2000 and December 31, 1999

Assets.Total assets decreased by $196,000, or 0.3%, to $75.8 million at
March 31, 2000 from $76.0 million at December 31, 1999. This decrease was due
to a $1.7 million, or 2.7%, decrease in loans receivable from $65.0 million at
December 31, 1999, to $63.3 million at March 31, 2000 as the Company sold
approximately $5.4 million of loans with servicing retained during January 2000
to strengthen the Banks capital position. This decrease was offset by an
increase in property and equipment of $867,000, or 217.3%, in connection with
the change in the Companys executive offices to Norwood, Ohio in March 2000.
Prepaid expenses and other assets also increased $168,000, or 77.4%, from
$217,000 at December 31, 1999 to $385,000 at March 31, 2000, primarily
resulting from an increase in mortgage loan servicing rights because of
servicing rights recognized from the loan sales in January 2000. Cash and due
from banks increased $624,000 to $1.4 million at March 31, 2000 from $738,000
at December 31, 1999, as excess funds were held in interest bearing accounts.

Liabilities.Total liabilities decreased by $196,000, or 2.8%, from $71.2
million at December 31, 1999 to $71.0 million at March 31, 2000, primarily due
to a decrease in deposits of $829,000, or 2.1%, from $39.4 million at December
31, 1999 to $38.6 million at March 31, 2000. The decrease in deposits was
primarily due to a $1.2 million decrease in certificates of deposits to $28.1
million at March 31, 2000 from $29.3 million at March 31, 2000, as the Bank
elected not to renew higher-rate certificates of deposit. Savings and money
market/NOW accounts increased $346,000 to $10.5 million at March 31, 2000 from
$10.2 million at December 31, 1999. Accrued expenses and other liabilities
also increased $156,000 to $465,000 at March 31, 2000 from $309,000 at December
31, 1999 for payments received on loans serviced for others. The decreases in
liabilities were offset by an increase in advances from the FHLB of $636,000,
or 2.0%, from $31.1 million at December 31, 1999 to $31.2 million at March 31,
2000 as FHLB advances were used to fund certificate of deposit outflows.

8



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##### Table of Contents



Liquidity and Capital Resources.The Companys primary sources of funds
are deposits, FHLB advances, principal and interest payments on loans and loan
sales in the secondary market. While maturities and scheduled amortization of
loans are predictable sources of funds, deposit flow and mortgage prepayments
are strongly influenced by changes in general interest rates, economic
conditions and competition.

The primary investment activity of the Company for the three months ended
March 31, 2000 was the origination of mortgage and consumer loans. The most
significant source of funds for the three months ended March 31, 2000 was the
repayment of mortgage loans and the sale of $5.4 million in loans.

The Bank is required to maintain a minimum level of liquidity (net cash,
short term and marketable assets divided by total withdrawable deposits and
short term liabilities), as defined by the Federal Deposit Insurance
Corporation (FDIC). The Banks liquidity at March 31, 2000 was 17.5%. The
Banks most liquid assets are cash, federal funds sold, and marketable
securities. The levels of the Banks liquid assets are dependent on the Banks
operation, financing, lending and investing activities during any given period.
At March 31, 2000 assets qualifying for short term liquidity, including cash
and short term investment, totaled $4.0 million.

At March 31, 2000, the Banks capital exceeded all the capital
requirements of the FDIC. The Banks Tier 1 leverage and total capital to
risk-weighted capital ratios were 6.4% and 12.0%, respectively.

For the three months ended March 31, 2000 and 1999, the Company had a
comprehensive loss of $5,000 and $23,000, respectively. The difference between
net income and comprehensive income consists solely of the effect of unrealized
gain and losses, net of taxes, on available for sale securities.

Comparison of Results of Operations for the Three Months Ended March 31, 2000 and 1999

General.The Company reported net income of $32,000 for the three months
ended March 31, 2000, which represents a $42,000 increase from $10,000 of net
loss reported for the three months ended March 31, 1999. This increase was
attributable to an increase in net interest income due to increases in the loan
portfolio compared to the prior year. An additional $49,000 in other income
was generated by the Mortgage Corporation as it became fully operational in
late 1999. The increase in income was offset by additional general and
administrative expenses in connection with the operations of the Mortgage
Corporation.

Interest and Dividend Income.Interest and dividend income for the three
months ended March 31, 2000 was $1.3 million compared to $913,000 for the three
months ended March 31, 1999, an increase of $430,000, or 47.1%. The primary
reason for the increase was a $455,000, or 61.9%, increase in interest earned
on loans to $1.2 million for the three months ended March 31,

9



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##### Table of Contents



2000 from
$735,000 for the three months ended March 31, 1999, due to a $10.2 million
increase in the average loans and an increase in the yield from 7.32% for the
period ended March 31, 1999 to 7.43% for the period ended March 31, 2000. The
increased yield was due to a higher interest rate environment and an increase
in higher-yielding multi-family loans.

Interest Expense.Interest expense for the three months ended March 31,
2000 was $909,000 compared to $598,000 for the three months ended March 31,
1999, an increase of $311,000, or 52.0%, primarily due to an increase in the
average balance of FHLB advances from $21.6 million for the period ended March
31, 1999 to $29.9 million for the period ended March 31, 2000 as the Bank
utilized FHLB advances to fund the asset growth. The Bank also experienced an
increase in the yield on the FHLB advance of 43 basis points due to the
increase in interest rates. The increase in interest expense was also due to
higher average deposits of $1.4 million and an increase in the yield on
deposits from 4.63% for the period ended March 31, 1999 to 4.68% for the period
ended March 31, 2000.

Net Interest Income After Provision for Loan Losses.Net interest income
after provision for loan losses increased $105,000, or 4.3%, for the three
months ended March 31, 2000 to $411,000 from $306,000 for the three months
ended March 31, 1999. Such increase was offset by an increase of $14,000 in
the provision for loan losses for the three months ended March 31, 2000 as
compared to the prior period, due to an increase in the loan portfolio and the
inherent risk in lending. The allowance for loan losses was
$112,000 and $72,000 at March 31, 2000 and March 31, 1999, respectively. The
allowance for loan losses represented 74.7% of nonperforming loans and 0.18% of
total loans at March 31, 2000 and 72.7% of nonperforming loans and 0.16% of
total loans at March 31, 1999.

Other Income.Other income increased $53,000, or 98.2%, for the three
months ended March 31, 2000 to $107,000 from $54,000 for March 31, 1999. This
increase was due to the loan sales made by the Mortgage Corporation as the
Mortgage Corporation began operations in late 1999. The Mortgage
Corporation originates loans to be sold to third parties.

General and Administrative Expenses.General and administrative expenses
for the three months ended March 31, 2000 were $467,000 compared to $373,000
for the three months ended March 31, 1999, an increase of $94,000, or 25.2%.
The increase in general and administrative expenses was due to an increase of
$54,000 in compensation and benefits and an increase of $54,000 in other
expenses. The increase in compensation and benefits was due to the additional
expenses relating to the establishment and operations of the Mortgage
Corporation. The increase in other expenses was primarily due to additional
expenses relating to the Mortgage Corporation and additional professional fees
to respond to regulatory and shareholder issues.

Income Taxes.Income taxes for the three months ended March 31, 1999
increased $22,000 to $19,000 from a credit of $3,000 for the three months ended
March 31, 1999 because of an increase in pretax earnings. Net income before
tax provision was $51,000 for the three

10



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##### Table of Contents



months ended March 31, 2000, compared
to a loss of $10,000 for the same period ended March 31, 1999.

Recent Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which established for derivative
instruments, including derivative instruments imbedded in other contracts, and
for hedging activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. SFAS No. 133, as amended by SFAS No.
137, is effective for all fiscal quarters of fiscal years beginning after June
15, 2000. Management does not believe the adoption of this standard will have
an impact on the Companys financial statement as the Company does not hold any
instruments covered by this standard.

11



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##### Table of Contents






PART II. OTHER INFORMATION

Item 1.           Legal Proceedings.

The Company is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business. Such
routine legal proceedings, in the aggregate, are believed by management to be
immaterial to the Companys financial condition or results of operation.

|        |  |                                                              |                     |                                                                 
|------- |  | ------------------------------------------------------------ | ------------------- | ----------------------------------------------------------------
|Item 2. |  | Changes in Securities and Use of Proceeds.                  
|       
|       
|       
|       
|        |  | None.                                                       
|       
|       
|       
|       
|Item 3. |  | Defaults Upon Senior Securities.                            
|       
|       
|       
|       
|        |  | None.                                                       
|       
|       
|       
|       
|Item 4. |  | Submission of Matters to a Vote of Security Holders.        
|       
|       
|       
|       
|        |  | None.                                                       
|       
|       
|       
|       
|Item 5. |  | Other Information.                                          
|       
|       
|       
|       
|        |  | None.                                                       
|       
|       
|       
|       
|Item 6. |  | Exhibits and Reports on Form 8-K (§249.308 of this Chapter).
|       
|       
|       
|       
|        |  | (a)                                                          | Exhibits           
|       
|       
|       
|       
|        |  |                                                              | 3.1                 | Amended Articles of Incorporation of Lenox Bancorp, Inc.*       
|       
|       
|       
|       
|        |  |                                                              | 3.2                 | Amended and Restated Code of Regulations of Lenox Bancorp, Inc.*
|       
|       
|       
|       
|        |  |                                                              | 11.0                | Statement re: Computation of Per Share Earnings                 
|       
|       
|       
|       
|        |  |                                                              | 27.0                | Financial Data Schedule                                         
|       
|       
|       
|       
|        |  | (b)                                                          | Reports on Form 8-K
|       
|       
|       
|       
|        |  |                                                              | None.              



---

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
| 
| 
| 
| 
|* |  | Incorporated herein by reference to the Companys Form 10-KSB, filed on
March 25, 1998.

12



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##### Table of Contents



SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                    |  |  |     |  |  |                                                                                                                
|------------------- |  |  | --- |  |  | ---------------------------------------------------------------------------------------------------------------
|                    |  |  |     |  |  | LENOX BANCORP, INC.                                                                                            
|                   
|Dated: May 15, 2000 |  |  | By: |  |  | /s/ Virginia M. Deisch                                                                                         
|                    |  |  |     |  |  |                                                                                                                
|                    |  |  |     |  |  | Virginia M. Deisch
President and Chief Executive Officer
(principal executive financial and
accounting officer)

13