<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF 1934

      For the Fiscal Year Ended December 31, 2003


[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF 1934
             FOR THE TRANSITION PERIOD FROM _________ to __________

                         Commission File Number: 0-31847


                        LAWRENCE FINANCIAL HOLDINGS, INC.
                 (Name of small business issuer in its charter)

-----------------------------------------  -------------------------------------
                 MARYLAND                               31-1724442
     (state or other jurisdiction           (IRS employer identification no.)
    of incorporation or organization)
-----------------------------------------  -------------------------------------

  311 SOUTH FIFTH STREET, IRONTON, OHIO                    45638
 (address of principal executive offices)               (zip code)

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

         Issuer's telephone number, including area code: (740) 532-0263
        Securities registered pursuant to Section 12(b) of the Act: NONE
           Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (Title of Class)

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

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB. ____

     The issuer's gross revenues for the fiscal year ended December 31, 2003
were $8,250,000.

     The aggregate market value of the voting and non-voting common equity held
by non-affiliates was $15,375,102 based upon the average of the bid and asked
price ($23.65 per share) as quoted on the OTC-Bulletin Board on February 29,
2004. Solely for purposes of this calculation, the shares held by the directors
and officers of the registrant are deemed to be held by affiliates.

     The number of shares outstanding of the registrant's common stock as of
February 29, 2004 was 650,110.

     DOCUMENTS INCORPORATED BY REFERENCE: Portions of the proxy statement for
the 2004 annual meeting of stockholders are incorporated by reference in Parts
II and III, respectively, of this Form 10-KSB.


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

<PAGE>

<TABLE>
<CAPTION>

                                             INDEX

                                            Part I
                                                                                              Page

<S>                                                                                            <C>
Item 1.        Description of Business......................................................    3
Item 2.        Description of Property......................................................   30
Item 3.        Legal Proceedings............................................................   30
Item 4.        Submission of Matters to a Vote of Security Holders..........................   30

                                            Part II

Item 5.        Market for Common Equity and Related Stockholder Matters.....................   31
Item 6.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations....................................................   32
Item 7.        Financial  Statements........................................................   42
Item 8.        Changes in and Disagreements with Accountants on Accounting and
               Financial Disclosure.........................................................   42
Item 8a.       Controls and Procedures......................................................   42

                                            Part III

Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance
          with Section 16(a) of the Exchange Act............................................   43
Item 10. Executive Compensation.............................................................   43
Item 11. Security Ownership of Certain Beneficial Owners and Management.....................   44
Item 12. Certain Relationships and Related Transactions.....................................   44
Item 13. Exhibits, List and Reports on Form 8-K.............................................   45
Item 14. Principal Accountant Fees and Services.............................................   46




                                               2

</TABLE>

<PAGE>

     THIS REPORT CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE FEDERAL SECURITIES LAWS. THESE STATEMENTS ARE NOT HISTORICAL
FACTS, RATHER STATEMENTS BASED ON LAWRENCE FINANCIAL HOLDINGS, INC.'S CURRENT
EXPECTATIONS REGARDING ITS BUSINESS STRATEGIES, INTENDED RESULTS AND FUTURE
PERFORMANCE. FORWARD-LOOKING STATEMENTS ARE PRECEDED BY TERMS SUCH AS "EXPECTS,"
"BELIEVES," "ANTICIPATES," "INTENDS" AND SIMILAR EXPRESSIONS.

     MANAGEMENT'S ABILITY TO PREDICT RESULTS OR THE EFFECT OF FUTURE PLANS OR
STRATEGIES IS INHERENTLY UNCERTAIN. FACTORS WHICH COULD AFFECT ACTUAL RESULTS
INCLUDE INTEREST RATE TRENDS, THE GENERAL ECONOMIC CLIMATE IN THE MARKET AREA IN
WHICH LAWRENCE FINANCIAL HOLDING'S, INC. OPERATES, AS WELL AS NATIONWIDE,
LAWRENCE FINANCIAL HOLDINGS, INC.'S ABILITY TO CONTROL COSTS AND EXPENSES,
COMPETITIVE PRODUCTS AND PRICING, LOAN DELINQUENCY RATES AND CHANGES IN FEDERAL
AND STATE LEGISLATION AND REGULATION. THESE FACTORS SHOULD BE CONSIDERED IN
EVALUATING THE FORWARD-LOOKING STATEMENTS AND UNDUE RELIANCE SHOULD NOT BE
PLACED ON SUCH STATEMENTS. LAWRENCE FINANCIAL HOLDINGS, INC. ASSUMES NO
OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS.


                                     PART I

ITEM 1.         DESCRIPTION OF BUSINESS

GENERAL

     Lawrence Financial Holdings, Inc., headquartered in Ironton, Ohio, was
organized as a Maryland business corporation in August 2000 to become the
holding company for Lawrence Federal Savings Bank in connection with the
conversion of Lawrence Federal from mutual to stock form of ownership. The
conversion was completed on December 28, 2000. As a result of the conversion,
Lawrence Federal is a wholly owned subsidiary of Lawrence Financial and all of
the issued and outstanding capital stock of Lawrence Federal is owned by
Lawrence Financial.

     Lawrence Federal operates as a community-oriented financial institution,
specializing in the acceptance of retail deposits from the general public in the
areas surrounding its five full-service banking offices and using those funds,
together with funds generated from operations and borrowings, to originate
loans. The principal lending activity of Lawrence Federal is the origination of
mortgage loans for the purpose of purchasing or refinancing one- to four-family
residential property. Lawrence Federal also originates a variety of consumer
loans and multi-family and commercial real estate loans. Lawrence Federal
originates loans primarily for long-term investment purposes. Lawrence Federal's
revenues are derived principally from the generation of interest and fees on
loans originated and, to a lesser extent, interest and dividends on investments.
Lawrence Federal's primary sources of funds are deposits, principal and interest
payments on loans and investments and advances from the Federal Home Loan Bank
of Cincinnati.

MARKET AREA

     Lawrence Federal conducts business in southern Ohio from five full-service
offices. Lawrence Federal's main office is in Ironton, Ohio. Ironton is in
Lawrence County, which is the southernmost county in Ohio. Located on the Ohio
River in the heart of the tri-state area of Ohio, Kentucky and West Virginia,
Ironton is the county seat of Lawrence County. Four of Lawrence Federal's branch
offices are also in Lawrence County and the fifth is in adjacent Scioto County.
Lawrence and Scioto Counties, Ohio constitute Lawrence Federal's primary market
area. Lawrence Federal also serves depositors and borrowers in Greenup and Boyd
Counties, Kentucky and Cabell and Wayne Counties, West Virginia.

                                       3
<PAGE>

     Lawrence Federal's market area is predominantly rural. The largest
employment sectors in this area are services, wholesale retail sales and
manufacturing. Lawrence Federal's market area has a lower per capita median
household income when compared to Ohio and the United States. While the economy
in Lawrence County has been stable over the last two years, plant closings in
2000 and 2002 have resulted in job losses. Over the past several years,
unemployment in Lawrence County has been greater than the state and national
rate.

COMPETITION

     Lawrence Federal faces intense competition for the attraction of deposits
and origination of loans in its market area. Its most direct competition for
deposits has historically come from the several financial institutions operating
in Lawrence Federal's market area and, to a lesser extent, from other financial
service companies, such as brokerage firms, credit unions and insurance
companies. Lawrence Federal's competition for loans comes primarily from
financial institutions in its market area, and to a lesser extent from other
financial service providers, such as mortgage companies and mortgage brokers. At
June 30, 2003, which is the most recent date for which data is available from
the FDIC, Lawrence Federal held 21% of the deposits in Lawrence County, which is
the second highest market share out of nine financial institutions with offices
in the county. However, banks owned by U.S. Bancorp and National City
Corporation, both of which are large regional bank holding companies, also
operate in Lawrence County and have significant market share. Additionally,
competition for loans may increase due to the increasing number of
non-depository financial service companies entering the mortgage market, such as
insurance companies, securities companies and specialty finance companies.
Lawrence Federal expects competition to increase in the future as a result of
legislative, regulatory and technological changes and the continuing trend of
consolidation in the financial services industry. Technological advances, for
example, have lowered barriers to entry, allowed banks to expand their
geographic reach by providing services over the Internet and made it possible
for non-depository institutions to offer products and services that
traditionally have been provided by banks. Some of the institutions with which
Lawrence Federal competes are significantly larger than Lawrence Federal and,
therefore, have significantly greater resources. Due to its relatively small
size, Lawrence Federal has fewer resources to devote to marketing and is less
able to take advantage of technological advancements. Competition for deposits
and the origination of loans could limit Lawrence Federal's growth in the
future.

LENDING ACTIVITIES

     GENERAL. Lawrence Federal's loan portfolio primarily consists of one- to
four-family mortgage loans, a variety of consumer loans and mobile home loans.
To a lesser degree, Lawrence Federal's loan portfolio includes multi-family and
commercial real estate loans.

     Lawrence Federal's loans are subject to federal laws and regulations.
Interest rates charged by Lawrence Federal on loans are affected principally by
Lawrence Federal's current asset/liability strategy, the demand for various
types of loans, the supply of money available for lending purposes and the rates
offered by competitors. These factors are, in turn, affected by general and
economic conditions, monetary policies of the federal government, including the
Federal Reserve Board, legislative tax policies and governmental budgetary
matters.

     LOAN PORTFOLIO ANALYSIS. The following table presents the composition of
Lawrence Federal's loan portfolio at the dates indicated. Lawrence Federal had
no concentration of loans exceeding 10% of total loans receivable other than as
disclosed below.

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                 ----------------------------------------
                                                                              AT DECEMBER 31,
                                                                 ----------------------------------------
                                                                       2003                    2002
                                                                 ------------------   -------------------
                                                                  AMOUNT  PERCENT      AMOUNT   PERCENT
                                                                          OF TOTAL              OF TOTAL
                                                                 -------- ---------   -------- ----------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                              <C>          <C>     <C>            <C>
Real estate loans:
   One- to four-family .......................................   $ 40,001     50.0%   $ 43,967      46.3%
   Multi-family and commercial ...............................      9,001     11.3      10,166      10.7
                                                                    -----     ----      ------      ----
      Total real estate loans ................................     49,002     61.3      54,133        57

Consumer loans:
Automobile ...................................................     14,786     18.5      18,742      19.7
   Other .....................................................      3,765      4.7       6,857       7.2
                                                                    -----      ---       -----       ---
      Total consumer loans ...................................     18,551     23.2      25,599      26.9
                                                                   ------     ----      ------      ----
Mobile home loans ............................................     12,289     15.5      15,193      16.1
                                                                   ------     ----      ------      ----
      Total loans ............................................     79,842    100.0%     94,925     100.0%
                                                                             ======                ======
Less:
   Net deferred loan origination costs .......................      2,055                2,643
   Allowance for loan losses .................................     (1,014)              (1,111)
                                                                   ------               ------
   Total loans, net ..........................................   $ 80,883             $ 96,457
                                                                 ========             ========
</TABLE>

     The following table presents certain information at December 31, 2003
regarding the dollar amount of loans maturing in Lawrence Federal's portfolio
based on their contractual terms to maturity or scheduled amortization, but does
not include potential prepayments. Demand loans, loans having no stated schedule
of repayments and no stated maturity, and overdrafts are reported as becoming
due in one year or less. Loan balances do not include undisbursed loan proceeds,
net deferred loan origination costs and allowance for loan losses.

<TABLE>
<CAPTION>
                                     ---------------------------------------------------------
                                                        AT DECEMBER 31, 2003
                                     ---------------------------------------------------------
                                                       MULTI-
                                        ONE- TO     FAMILY AND       CONSUMER
                                         FOUR-      COMMERCIAL          &            TOTAL
                                        FAMILY      REAL ESTATE     MOBILE HOME      LOANS
                                     ------------  --------------  -------------  ------------
                                                            (IN THOUSANDS)
<S>                                     <C>            <C>            <C>           <C>
Amounts due in:
One year or less ...................    $ 4,394        $   884        $ 7,038       $12,316
After one year:
More than one year to three years ..      4,532          1,614         10,303        16,449
More than three years to five years.      4,759          1,775          4,478        11,012
More than five years to 10 years ...     10,515          3,054          5,354        18,923
More than 10 years to 15 years .....      7,488          1,557          3,333        12,378
More than 15 years .................      8,313            117            334         8,764
                                        -------        -------        -------       -------
 Total amount due ..................    $40,001        $ 9,001        $30,840       $79,842
                                        =======        =======        =======       =======
</TABLE>

     Scheduled contractual principal repayments of loans do not reflect the
actual life of the loans. The average life of a loan is substantially less than
its contractual term because of prepayments. In addition, due- on-sale clauses
on loans generally give Lawrence Federal the right to declare loans immediately
due and payable if, among other things, the borrower sells the real property
with the mortgage and the loan is not repaid. The average life of a mortgage
loan tends to increase, however, when current mortgage loan market rates are
substantially higher than rates on existing mortgage loans and, conversely,
tends to decrease when rates on existing mortgage loans are substantially higher
than current mortgage loan market rates.

                                       5
<PAGE>

     The following table sets forth, at December 31, 2003, the dollar amount of
loans contractually due after December 31, 2004, and whether such loans have
fixed interest rates or adjustable interest rates.

<TABLE>
<CAPTION>
                                                    -------------------------------------------
                                                             DUE AFTER DECEMBER 31, 2004
                                                    -------------------------------------------
                                                       FIXED        ADJUSTABLE       TOTAL
                                                    ------------  --------------  -------------
                                                                    (IN THOUSANDS)
<S>                                                      <C>            <C>            <C>
Real estate loans:
   One- to four-family.........................          $22,515        $13,092        $35,607
   Multi-family and commercial.................            3,525          4,592          8,117
   Other.......................................                -              -              -
                                                         -------        -------        -------
     Total real estate loans...................           26,040         17,684         43,724
Consumer and mobile home loans.................           21,126          2,676         23,802
                                                         -------        -------        -------
     Total loans...............................          $47,166        $20,360        $67,526
                                                         =======        =======        =======
</TABLE>

     ONE- TO FOUR-FAMILY REAL ESTATE LOANS. Lawrence Federal's primary lending
activity is the origination of loans secured by one- to four-family residences
located in its market area. Lawrence Federal offers one-year adjustable-rate
mortgage loans and fixed-rate mortgage loans. Historically, Lawrence Federal has
found that borrowers in its market area have a preference for fixed-rate
mortgage loans. At December 31, 2003, approximately 61% of Lawrence Federal's
residential mortgage loans had fixed interest rates and 39% had adjustable
interest rates.

     Lawrence Federal offers fixed-rate loans with terms up to 20 years.
Lawrence Federal's adjustable-rate mortgage loans are based on an amortization
schedule of up to 30 years. The loan fees charged, interest rates and other
provisions of Lawrence Federal's mortgage loans are determined by Lawrence
Federal on the basis of its own pricing criteria and market conditions. Interest
rates and payments on Lawrence Federal's adjustable-rate mortgage loans are
adjusted annually based on the Federal Housing Finance Board's national average
mortgage contract rate for major lenders on the purchase of previously occupied
homes. The maximum amount by which the interest rate may be increased or
decreased on Lawrence Federal's adjustable-rate mortgage loans is generally 1%
per year and the lifetime interest rate cap is generally 6% over the initial
interest rate of the loan. Lawrence Federal qualifies the borrower based on the
borrower's ability to repay the loan based on the current index rate plus the
applicable margin. Lawrence Federal's adjustable-rate mortgage loans typically
include a prepayment penalty if the loan is paid off within three years. The
terms and conditions of the adjustable-rate mortgage loans offered by Lawrence
Federal, including the index for interest rates, may vary from time to time.

     Lawrence Federal occasionally makes loans to individuals for the
construction of their principal residence. These loans are structured as
permanent mortgage loans. Upon the closing of the loan, the proceeds are
disbursed into an escrow account at Lawrence Federal. Funds are disbursed from
the escrow as the house is built following review of the construction project by
an independent inspector.

     Adjustable-rate mortgage loans help reduce Lawrence Federal's exposure to
changes in interest rates. There are, however, unquantifiable credit risks
resulting from the potential of increased costs due to changed rates to be paid
by the borrower. During periods of rising interest rates, the risk of default on
adjustable-rate mortgage loans may increase as a result of repricing and the
increased payments required by the borrower. In addition, although
adjustable-rate mortgage loans help make Lawrence Federal's asset base more
responsive to changes in interest rates, the extent of this interest sensitivity
is limited by the annual and lifetime interest rate adjustment limits. Because
of these considerations, yields on adjustable-rate mortgage

                                       6
<PAGE>

loans may not be sufficient to offset increases in Lawrence Federal's cost of
funds during periods of rising interest rates.

     MULTI-FAMILY AND COMMERCIAL REAL ESTATE LOANS. Lawrence Federal originates
both fixed- and adjustable-rate mortgage loans for the acquisition and
refinancing of multi-family and commercial real estate properties. In addition,
Lawrence Federal occasionally participates in commercial real estate loans with
other financial institutions in its market area. Nearly all of the properties
securing Lawrence Federal's multi- family and commercial real estate loans are
located in Lawrence Federal's market area.

     Most of the multi-family loans and commercial real estate loans originated
by Lawrence Federal are fully amortizing loans with a term of ten years.
Generally, the maximum loan-to-value ratio for a multi- family or commercial
real estate loan is 70%. Lawrence Federal requires written appraisals prepared
by an approved independent appraiser of all properties securing multi-family or
commercial real estate loans.

     At December 31, 2003, Lawrence Federal's commercial real estate loans were
secured by a variety of properties, including retail and small office
properties, hotels and churches. At December 31, 2003, Lawrence Federal's
largest commercial real estate loan had an outstanding balance of $1,619,000.
The loan is secured by a real estate mortgage and personal guarantees. At
December 31, 2003, this loan was performing according to its original terms.

     Multi-family and commercial real estate lending affords Lawrence Federal an
opportunity to receive interest at rates higher than those generally available
from one- to four-family residential lending. However, loans secured by these
properties usually are greater in amount and are more difficult to evaluate and
monitor and, therefore, involve a greater degree of risk than one- to
four-family residential mortgage loans. Because payments on loans secured by
income producing properties are often dependent on the successful operation and
management of the properties, repayment of these loans may be affected by
adverse conditions in the real estate market or the economy. Lawrence Federal
seeks to minimize these risks by generally limiting the maximum loan-to-value
ratio to 70% for multi-family and commercial real estate loans and by strictly
scrutinizing the financial condition of the borrower, the cash flow of the
project, the quality of the collateral and the management of the property
securing the loan. Lawrence Federal also attempts to minimize credit risk by
lending almost solely on local properties to businesses with which Lawrence
Federal is familiar. Lawrence Federal also generally obtains personal loan
guarantees from financially capable parties.

     MOBILE HOME LOANS. From 1976 through April 2002, Lawrence Federal
originated mobile home loans on an indirect basis through Lanco Services, Inc.,
a company that specializes in mobile home lending. Increasing delinquency trends
and an overall decline in the market for the resale of used mobile homes lead
Lawrence Federal to cease originating direct and indirect mobile home loans.
There are currently no plans to restart the mobile home lending program in 2004.

     Prior to April, 2002 Lanco Services assembled the required loan documents
and provided them to Lawrence Federal for review. Lawrence Federal had the
opportunity to accept or reject each loan. Lawrence Federal generally financed
up to a maximum of 95% of the purchase price of new mobile home units and up to
a maximum of 80% of the market value of used mobile home units. Lawrence Federal
required that the borrower surrender the title to the mobile home unit during
the term of the loan and also required homeowner's insurance on the unit at
least equal to the amount financed. Lawrence Federal's mobile home loans, which
were made to borrowers in Kentucky, Ohio and Indiana, have terms ranging from
five to 20 years and have either fixed or adjustable interest rates. At December
31, 2003, Lawrence Federal had 594 mobile home loans, the average size of which
was $20,132.

     Mobile home lending generally entails greater risk than traditional
residential mortgage lending. Loans secured by mobile homes involve more credit
risk than mortgage loans because of the type and nature of the collateral, which
depreciates over time, and because mobile home borrowers tend to have lower
incomes

                                       7
<PAGE>

than Lawrence Federal's residential mortgage borrowers. In many cases, any
repossessed collateral for a defaulted mobile home loan will not provide an
adequate source of repayment of the outstanding loan balance because of
depreciation or improper repair and maintenance of the underlying asset. When
Lawrence Federal stopped originating mobile home loans in April, 2002 it
increased the staff of the collection area and changed the role of Lanco
Services in the collection process. Lanco Services continues to provide valuable
assistance with collection efforts but Lawrence Federal's collection area has
assumed the lead in the collection process. The expansion of the internal
collection process and a more aggressive approach to pursuing repayment of
delinquencies related to the mobile home portfolio have generated additional
expenses to Lawrence Federal including, but not limited to, salaries and
benefits, legal fees, and expenses related to the relocation and sale of a
distressed unit.

     CONSUMER LOANS. Lawrence Federal offers a variety of consumer loans,
including automobile loans, other secured loans, home equity credit lines,
second mortgage loans, and unsecured personal loans. Lawrence Federal sold its
credit card portfolio in November 2002.

     Lawrence Federal offers fixed-rate automobile loans with terms of up to 72
months. Loan-to-value ratios and maximum loan terms vary depending on the age of
the vehicle. Lawrence Federal originates automobile loans through approximately
15 automobile dealers in southern Ohio, western West Virginia and northeastern
Kentucky. These dealers provide Lawrence Federal applications to finance new and
used vehicles sold by their dealerships. Lawrence Federal has the opportunity to
accept or reject each loan. Generally, Lawrence Federal makes automobile loans
only to borrowers who have higher credit ratings. Lawrence Federal does not make
automobile loans that would be considered "sub-prime." Lawrence Federal pays a
fee to the automobile dealer based on the interest rate on the loan. This fee,
or dealer reserve, is deposited into an account at Lawrence Federal and paid to
the dealer monthly. If a loan is paid off or charged off within a specified time
period, Lawrence Federal is credited with a portion of the dealer reserve, which
it may withhold from the dealer's account or credit against future payments to
the dealer. At December 31, 2003, Lawrence Federal held $10.6 million of
indirect auto loans.

     Lawrence Federal also originates consumer loans secured by boats,
motorcycles, campers, motor homes and other recreational vehicles. These loans
have fixed interest rates and terms of up to five years. At December 31, 2003,
Lawrence Federal had $7.3 million of such loans.

     Lawrence Federal offers home equity lines of credit and second mortgage
loans. At December 31, 2003, these loans totaled $2.2 million. The underwriting
standards applicable to these loans generally are the same as for one- to
four-family first mortgage loans, except that the combined loan-to-value ratio,
including the balance of the first mortgage, cannot exceed 89% of the appraised
value of the property.

     Lawrence Federal makes unsecured personal loans in amounts generally not in
excess of $10,000. Lawrence Federal also provides overdraft protection on
checking accounts. At December 31, 2003, unsecured loans totaled $479,000.

     Lawrence Federal believes that it will benefit from the higher yields
earned on consumer loans and that the shorter duration of consumer loans will
improve Lawrence Federal's interest rate risk position. However, consumer loans
entail greater risk than do residential mortgage loans, particularly in the case
of loans that are unsecured or secured by rapidly depreciating assets such as
automobiles. In these cases, any repossessed collateral for a defaulted consumer
loan may not provide an adequate source of repayment of the outstanding loan
balance as a result of the greater likelihood of damage, loss or depreciation.
The remaining deficiency often does not warrant further substantial collection
efforts against the borrower beyond obtaining a deficiency judgment. In
addition, consumer loan collections are dependent on the borrower's continuing
financial stability, and thus are more likely to be adversely affected by job
loss, divorce, illness or personal bankruptcy.

                                       8
<PAGE>

     LOANS TO ONE BORROWER. The maximum amount that Lawrence Federal may lend to
one borrower is limited by regulation. At December 31, 2003, Lawrence Federal's
regulatory limit on loans to one borrower was $2.75 million. At that date,
Lawrence Federal's largest amount of loans to one borrower, including the
borrower's related interests, was approximately $1.7 million and consisted of
commercial real estate loans. These loans were performing according to their
original terms at December 31, 2003.














                                       9
<PAGE>

     LOAN ORIGINATIONS, PURCHASES AND SALES. Lawrence Federal's lending
activities are conducted by its employees operating through Lawrence Federal's
offices. Except in connection with its indirect automobile lending, Lawrence
Federal relies on advertising, referrals from realtors and customers, and
personal contact by Lawrence Federal's staff to generate loan originations.
Lawrence Federal occasionally purchases participation interests in commercial
mortgage loans through other financial institutions in its market area. Lawrence
Federal's ability to originate adjustable-rate and fixed-rate loans is dependent
upon the relative customer demand for such loans, which is affected by the
current and expected future level of interest rates.

     The following table presents activity in the loan portfolio during the
periods indicated.

<TABLE>
<CAPTION>
                                                                           --------------------------
                                                                                      YEAR
                                                                                 ENDED DECEMBER 31,
                                                                           --------------------------
                                                                               2003          2002
                                                                           ------------   -----------
                                                                                 (IN THOUSANDS)
<S>                                                                        <C>              <C>
Loans at beginning of period .......................................       $  94,925        $ 103,084
Originations:
Real estate loans:
One- to four-family ................................................           6,360           10,981
Multi-family and commercial ........................................           3,464            4,182
                                                                           ---------        ---------
       Total real estate loans .....................................           9,824           15,163
Consumer:
   Automobile ......................................................           5,456            7,976
   Other ...........................................................           2,209            7,516
Mobile home ........................................................              --            2,183
                                                                           ---------        ---------
                  Total loans originated ...........................          17,489           32,838

Participation loans purchased ......................................           2,251            1,950
Deduct:
      Principal loan repayments
     and prepayments ...............................................          34,575           40,801
                                                                           ---------        ---------
      Transfers to REO .............................................             248              196
            Sub-total ..............................................          34,823           40,997
                                                                           ---------        ---------
Net loan activity ..................................................         (15,083)          (8,159)
                                                                           ---------        ---------
      Loans at end of period .......................................       $  79,842        $  94,925
                                                                           =========        =========
</TABLE>


                                       10
<PAGE>

     NONPERFORMING ASSETS AND DELINQUENCIES. The following table presents
information with respect to Lawrence Federal's nonperforming assets at the dates
indicated.

<TABLE>
<CAPTION>
                                                                                   ------------------------
                                                                                              AT
                                                                                          DECEMBER 31,
                                                                                   ------------------------
                                                                                      2003         2002
                                                                                   -----------   ----------

                                                                                    (DOLLARS IN THOUSANDS)
<S>                                                                                 <C>              <C>
Accruing loans past due 90 days or more:
   One- to four-family real estate .........................................        $  111           $  225
   Multi-family and commercial real estate .................................           574                5
   Automobile ..............................................................            53               11
   Other consumer ..........................................................           185              210
   Mobile home .............................................................           569              960
                                                                                    ------           ------
         Total .............................................................         1,492            1,411
Nonaccruing loans:
   One- to four-family real estate .........................................            50              239
   Multi-family and commercial real estate .................................            --               --
   Automobile ..............................................................            61              102
   Other consumer ..........................................................            --               10
   Mobile home .............................................................           229              180
                                                                                    ------           ------
         Total .............................................................           340              531
Real estate owned (REO) ....................................................           234              151
Other repossessed assets ...................................................            --               --
                                                                                    ------           ------
         Total nonperforming assets ........................................         2,066            2,093
Troubled debt restructurings ...............................................            --               --
                                                                                    ------           ------
Troubled debt restructurings and
   total nonperforming assets ..............................................        $2,066           $2,093
                                                                                    ======           ======
Total nonperforming loans and
   troubled debt restructurings as a
   percentage of total loans ...............................................          2.59%            2.20%
Total nonperforming assets and
   troubled debt restructurings as a
   percentage of total assets ..............................................          1.65%            1.56%
</TABLE>

     Interest income that would have been recorded for the year ended December
31, 2003 had nonaccruing loans been current according to their original terms
amounted to approximately $8,500. No interest related to these loans was
included in interest income for the year ended December 31, 2003.

     Lawrence Federal ceases accruing interest on loans when principal or
interest payments are delinquent 120 days or more unless the loan is adequately
collateralized and in the process of collection. Once the accrual of interest on
a loan is discontinued, all interest previously accrued is reversed against
current period interest income once management determines that interest is
uncollectible.

                                       11
<PAGE>

     The following table sets forth the delinquencies in Lawrence Federal's loan
portfolio as of the dates indicated.

<TABLE>
<CAPTION>
                                           AT DECEMBER 31, 2003                       AT DECEMBER 31, 2002
                                 ------------------  ------------------   -------------------  ------------------
                                     60-89 DAYS        90 DAYS OR MORE        60-89 DAYS         90 DAYS OR MORE
                                 ------------------  ------------------   -------------------  ------------------
                                          PRINCIPAL          PRINCIPAL             PRINCIPAL            PRINCIPAL
                                  NUMBER   BALANCE   NUMBER   BALANCE      NUMBER   BALANCE    NUMBER    BALANCE
                                    OF        OF       OF        OF          OF        OF        OF         OF
                                   LOANS    LOANS     LOANS    LOANS        LOANS    LOANS      LOANS     LOANS
                                 -------- ---------  ------- ---------    -------- ----------  -------- ---------
                                                             (DOLLARS IN THOUSANDS)
<S>                                   <C>   <C>          <C>   <C>              <C>  <C>          <C>     <C>
Real estate loans:
   One- to four-family....             8      $635        4      $159           16     $695         8       $464
   Multi-family and
      commercial..........            --        --        1       574            1      167        --         --
   Other..................            --        --       --        --           --       --        --         --
Consumer loans:
   Automobile.............             6        41       14       110           13      110        29        274
   Other..................             9        47       28       174            6       12        15         62
Mobile home loans.........            20       390       32       815           18      416        54      1,170
                                      --    ------             ------           --   ------               ------
      Total...............            43    $1,113       79    $1,832           54   $1,400       106     $1,970
                                      ==    ======             ======           ==   ======               ======
Delinquent loans to
   total gross loans......                    1.39%              2.29%                 1.44%                2.02%
</TABLE>

     REAL ESTATE OWNED. Real estate acquired by Lawrence Federal as a result of
foreclosure or by deed- in-lieu of foreclosure is classified as real estate
owned until sold. When property is acquired it is recorded at the lower of its
cost, which is the unpaid principal balance of the loan plus foreclosure costs,
or fair market value at the date of foreclosure, establishing a new cost basis.
Holding costs and declines in fair value after acquisition of the property
result in charges against income. At December 31, 2003, Lawrence Federal had
$234,000 in real estate owned.

     ASSET CLASSIFICATION. Federal banking regulators have adopted various
regulations and practices regarding problem assets of savings institutions.
Under such regulations, examiners have authority to identify problem assets
during examinations and, if appropriate, require them to be classified. There
are three classifications for problem assets: substandard, doubtful and loss.
Substandard assets have one or more defined weaknesses and are characterized by
the distinct possibility that the insured institution will sustain some loss if
the deficiencies are not corrected. Doubtful assets have the weaknesses of
substandard assets with the additional characteristic that the weaknesses make
collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable, and there is a high possibility of loss. An
asset classified as loss is considered uncollectible and of such little value
that continuance as an asset of the institution is not warranted. If an asset or
portion thereof is classified as loss, the insured institution establishes
specific allowances for loan losses for the full amount of the portion of the
asset classified as loss. All or a portion of general loan loss allowances
established to cover probable losses related to assets classified substandard or
doubtful can be included in determining an institution's regulatory capital,
while specific valuation allowances for loan losses generally do not qualify as
regulatory capital. Assets that do not currently expose the insured institution
to sufficient risk to warrant classification in one of the aforementioned
categories but possess weaknesses are designated "special mention." Lawrence
Federal monitors "special mention" assets.

                                       12
<PAGE>

     ALLOWANCE FOR LOAN LOSSES. In originating loans, Lawrence Federal
recognizes that losses will be experienced on loans and that the risk of loss
will vary with, among other things, the type of loan being made, the
creditworthiness of the borrower over the term of the loan, general economic
conditions and, in the case of a secured loan, the quality of the security for
the loan. Lawrence Federal maintains an allowance for loan losses to absorb
losses incurred in the loan portfolio. The allowance for loan losses represents
management's estimate of probable and incurred losses based on information
available as of the date of the financial statements. The allowance for loan
losses is based on management's evaluation of the collectibility of the loan
portfolio, including past loan loss experience, probable and estimable losses,
information about specific borrower situations and estimated collateral values,
economic conditions and other factors.

     The loan portfolio and other credit exposures are regularly reviewed by
management to evaluate the adequacy of the allowance for loan losses. The
methodology for assessing the appropriateness of the allowance includes
comparison to actual losses, peer group comparisons, industry data and economic
conditions. In addition, the regulatory agencies, as an integral part of their
examination process, periodically review Lawrence Federal's allowance for loan
losses. Such agencies may require Lawrence Federal to make additional provisions
for estimated losses based upon judgments different from those of management.

     In connection with assessing the allowance, loss factors are applied to
various pools of outstanding loans. Lawrence Federal segregates the loan
portfolio according to risk characteristics (I.E., mortgage loans, consumer).
Loss factors are derived using Lawrence Federal's historical loss experience and
may be adjusted for significant factors that, in management's judgment, affect
the collectibility of the portfolio as of the evaluation date. In addition,
management assesses the allowance using factors that cannot be associated with
specific credit or loan categories. These factors include management's
subjective evaluation of local and national economic and business conditions,
portfolio concentration and changes in the character and size of the loan
portfolio.


     At December 31, 2003, Lawrence Federal's allowance for loan losses
represented 1.24% of total gross loans and 49.08% of nonperforming loans.
Non-performing assets were $2.1 million at December 31, 2003 remaining unchanged
from the same time in 2002. The Company believes that continued efforts in the
collection process and loan underwriting standards are aiding in the level of
nonperforming loans remaining constant and not increasing as has been seen in
recent years.

     Although management believes that it uses the best information available to
establish the allowance for loan losses, future adjustments to the allowance for
loan losses may likely be necessary and results of operations could be adversely
affected. Furthermore, while Lawrence Federal believes it has established its
existing allowance for loan losses in conformity with generally accepted
accounting principles, there can be no assurance that regulators, in reviewing
Lawrence Federal's loan portfolio, will not request Lawrence Federal to increase
its allowance for loan losses. In addition, because future events affecting
borrowers and collateral cannot be predicted with certainty, there can be no
assurance that the existing allowance for loan losses is adequate or that
increases will not be necessary should the quality of any loans deteriorate as a
result of the factors discussed above. Any material increase in the allowance
for loan losses may adversely affect Lawrence Federal's financial condition and
results of operations.

     Management continues to monitor closely the risk characteristics of the
loan portfolio, local economic conditions and, as stated earlier, will consider
these factors when evaluating the appropriate amount of provision and allowance
for loan losses. Management believes the company to be adequately reserved at
December 31, 2003.

                                       13
<PAGE>

     The following table represents an analysis of Lawrence Federal's allowance
for loan losses. When comparing fiscal year 2003 to 2002 a decrease in
charged-off loans occurred overall, as a result of the continued efforts in the
collection department. Lawrence Federal kept the provision for loan loss expense
in 2003 consistent with 2002 to keep pace with current and projected charge-off
experiences. Total provision for loan losses taken in years 2002 and 2003 was
$1.8 million and total net charge-offs taken during the same two year period
equaled $2.1 million. The result is a net decrease in allowance for loan losses
of $218,000 from January 1, 2002 to December 31, 2003.

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31,
                                                                           ----------------------------
                                                                               2003           2002
                                                                           -------------  -------------
                                                                              (DOLLARS IN THOUSANDS)
                                                                           ----------------------------
<S>                                                                          <C>              <C>
Allowance for loan losses, beginning of year .................               $ 1,111          $ 1,232
Charged-off loans:
   Real estate ...............................................                   (59)             (79)
   Consumer ..................................................                  (310)            (383)
   Mobile home ...............................................                  (689)            (644)
                                                                             -------          -------
      Total charged-off loans ................................                (1,058)          (1,106)
Recoveries on loans previously charged off:
   Real estate ...............................................                     1               --
   Consumer ..................................................                    23               24
   Mobile home ...............................................                    22               34
                                                                             -------          -------
      Total recoveries .......................................                    46               58
                                                                             -------          -------
Net loans charged-off ........................................                (1,012)          (1,048)
Provision for loan losses ....................................                   915              927
                                                                             -------          -------

Allowance for loan losses, end of period .....................               $ 1,014          $ 1,111
                                                                             =======          =======

Net loans charged-off to average loans .......................                  1.14%            1.10%
Allowance for loan losses to total loans .....................                  1.24%            1.14%
Allowance for loan losses to nonperforming loans and .........                 49.08%           53.08%
   troubled debt restructuring
</TABLE>

                                       14
<PAGE>

     The following table presents the approximate allocation of the allowance
for loan losses by loan category at the dates indicated. Management believes
that the allowance can be allocated by category only on an approximate basis.
The allocation of the allowance to each category is not indicative of future
losses and does not restrict the use of any of the allowance to absorb losses in
any category.

<TABLE>
<CAPTION>
                                                        AT DECEMBER 31,
                          ---------------------------------------------------------------------------
                                          2003                                  2002
                          ------------------------------------  -------------------------------------
                                       PERCENT OF    PERCENT                 PERCENT OF    PERCENT
                                       ALLOWANCE     OF LOANS                ALLOWANCE     OF LOANS
                                        IN EACH      IN EACH                  IN EACH      IN EACH
                            AMOUNT      CATEGORY     CATEGORY     AMOUNT      CATEGORY     CATEGORY
                                        TO TOTAL     TO TOTAL                 TO TOTAL     TO TOTAL
                                       ALLOWANCE      LOANS                  ALLOWANCE      LOANS
                          ----------  -----------  -----------  ----------- ------------ ------------
                                                    (DOLLARS IN THOUSANDS)

<S>                         <C>          <C>           <C>        <C>          <C>           <C>
Real estate...........        $152        14.9%        58.1%        $120        10.8%        57.1%
Consumer..............         275         27.1        26.9          362        32.6         26.9
Mobile home...........         587         58.0        15.0          629        56.6         16.0
Unallocated...........          --           --         N/A           --          --          N/A
                            ------       ------                   ------       ------
  Total allowance
    for loan losses...      $1,014       100.0%                   $1,111       100.0%
                            ======       ======                   ======       ======
</TABLE>

INVESTMENT ACTIVITIES

     Under federal law, Lawrence Federal has authority to invest in various
types of liquid assets, including U.S. Government obligations, securities of
various federal agencies and of state and municipal governments, deposits at the
Federal Home Loan Bank of Cincinnati and certificates of deposit of federally
insured institutions. Within certain regulatory limits, Lawrence Federal may
also invest a portion of its assets in corporate securities, including
non-mortgage, asset-backed instruments. Savings institutions like Lawrence
Federal are also required to maintain an investment in Federal Home Loan Bank of
Cincinnati stock. Lawrence Federal is required under federal regulations to
maintain a minimum amount of liquid assets.

     The primary objectives of Lawrence Federal's investment portfolio are to
provide a source of liquidity sufficient to meet regulatory and operating
requirements, provide an alternative source of income through interest and
dividends, improve Lawrence Federal's interest rate risk position, diversify
Lawrence Federal's assets and provide collateral for pledging. Investment
decisions are made in accordance with Lawrence Federal's investment policy and
are based upon the quality of a particular investment, its inherent risks, the
composition of the balance sheet, market expectations, Lawrence Federal's
liquidity, income and collateral needs and how the investment fits within
Lawrence Federal's interest rate risk strategy.


     The investment portfolio consists primarily of debt issues. It is the
current practice of Lawrence Federal to invest in debt securities with
maturities of twenty years or less issued by the United States Treasury, United
States government agencies, or state and municipal governments. All of the
securities in the

                                       15
<PAGE>

portfolio carry market risk, insofar as increases in market interest rates may
cause a decrease in market value.

     Generally accepted accounting principles require that securities be
categorized as either "held-to- maturity," "trading securities" or
"available-for-sale," based on management's intent as to the ultimate
disposition of each security. Debt securities may be classified as
"held-to-maturity" and reported in financial statements at amortized cost only
if the reporting entity has the positive intent and ability to hold those
securities to maturity. Securities that might be sold in response to changes in
market interest rates, changes in the security's prepayment risk, increases in
loan demand, or other similar factors cannot be classified as
"held-to-maturity." Debt and equity securities held for current resale are
classified as "trading securities." These securities are reported at fair value,
and unrealized gains and losses on the securities would be included in earnings.
Lawrence Federal does not currently use or maintain a trading account. Debt and
equity securities not classified as either "held-to-maturity" or "trading
securities" are classified as "available-for-sale." These securities are
reported at fair value, and unrealized gains and losses on the securities are
excluded from earnings and reported, net of deferred taxes, as a separate
component of equity. Lawrence Federal currently classifies all of its securities
as available-for-sale.

     At December 31, 2003, Lawrence Federal did not own any securities, other
than U.S. Government, agency securities and state or municipal government, that
had an aggregate book value in excess of 10% of Lawrence Federal's retained
earnings at that date.

     The following table presents the amortized cost and fair value of Lawrence
Federal's securities at the dates indicated.

<TABLE>
<CAPTION>
                                                                           AT DECEMBER 31,
                                                         ----------------------------------------------------
                                                                   2003                       2002
                                                         -------------------------  -------------------------
                                                          AMORTIZED       FAIR       AMORTIZED       FAIR
                                                            COST          VALUE        COST          VALUE
                                                         -----------   -----------  -----------   -----------
                                                                           (IN THOUSANDS)
<S>                                                         <C>           <C>          <C>           <C>
Obligations of State and Political Subdivisions.....        $3,233        $3,262       $1,646        $1,644
Obligations of U.S. government agencies.............         7,234         7,214        4,754         4,910
Mortgage backed securities..........................        15,913        15,771        7,568         7,638
                                                           -------        ------      -------       -------

      Total.........................................       $26,380       $26,247      $13,968       $14,192
                                                           =======       =======      =======       =======
</TABLE>

                                       16
<PAGE>

     The following presents the activity in the securities portfolio for the
periods indicated.

<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31,
                                                                                     ------------------------
                                                                                         2003        2002
                                                                                     ------------- ----------
                                                                                          (IN THOUSANDS)
<S>                                                                                    <C>          <C>
Investment securities, beginning of period .....................................       $ 14,192     $ 11,046
Purchases:
Investment securities - available-for-sale .....................................         38,457       14,398
Sales:
Investment securities - available-for-sale .....................................        (16,355)      (7,557)
Calls and maturities:
   Investment securities - available-for-sale ..................................         (9,490)      (3,863)
(Amortization) accretion of premium/discount ...................................           (200)          (6)
Increase (decrease) in unrealized appreciation/depreciation ....................           (357)         174
                                                                                       --------     --------
   Net increase (decrease) in investment securities ............................         12,055        3,146
                                                                                       --------     --------
Investment securities, end of period ...........................................       $ 26,247     $ 14,192
                                                                                       ========     ========
</TABLE>

     The table below sets forth certain information regarding the amortized
cost, weighted average yields and contractual maturities of Lawrence Federal's
debt securities as of December 31, 2003.

<TABLE>
<CAPTION>
                                                                   AT DECEMBER 31, 2003
                                ----------------------------------------------------------------------------------------------
                                                      MORE THAN ONE     MORE THAN FIVE
                                                           YEAR             YEARS          MORE THAN TEN          TOTAL
                                 ONE YEAR OR LESS     TO FIVE YEARS     TO TEN YEARS          YEARS
                                ------------------ ------------------ ------------------ ------------------ -------------------
                                AMORTIZED WEIGHTED AMORTIZED WEIGHTED AMORTIZED WEIGHTED AMORTIZED WEIGHTED AMORTIZED  WEIGHTED
                                   COST   AVERAGE    COST    AVERAGE    COST     AVERAGE    COST    AVERAGE    COST     AVERAGE
                                           YIELD              YIELD              YIELD              YIELD               YIELD
                                --------- -------- --------- -------- --------- -------- --------- -------- --------- ---------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                  <C>       <C>  <C>       <C>      <C>        <C>     <C>        <C>     <C>        <C>
Obligations of U.S.
  Government agencies..........      --        --   $ 5,240   3.87%    $  996     3.54%   $   998    5.13%   $ 7,234    3.99%
Obligations of State
and Political .................      --        --        --     --         --       --      3,233    4.49      3,233    4.49%
Subdivisions
Mortgage backed securities ....      --        --     2,781   4.00%     2,165     4.99%    10,967    4.31     15,913    4.35%
                                  -----     -----   -------  -----     ------    -----    -------   -----    -------   -----
   Total debt securities
   at fair value...............      --        --   $ 8,021   3.92%    $3,161     4.53%   $15,198    4.40%   $26,380    4.27%
                                  =====     =====   =======  =====     ======    =====    =======   =====    =======   =====
</TABLE>

DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS

     GENERAL. Deposits are the major external source of funds for Lawrence
Federal's lending and other investment activities. In addition, Lawrence Federal
also generates funds internally from loan principal repayments and prepayments
and maturing securities. Scheduled loan repayments are a relatively stable
source of funds, while deposit inflows and outflows and loan prepayments are
influenced significantly by general interest rates and money market conditions.
Lawrence Federal may use borrowings from the Federal Home Loan Bank of
Cincinnati to compensate for reductions in the availability of funds from other
sources. Presently, Lawrence Federal has no other borrowing arrangements aside
from the Federal Home Loan Bank. Until recent years, Lawrence Federal relied
almost exclusively on deposits and internally generated funds as its source of
funds. Lawrence Federal anticipates that it will increase its use of borrowed
funds in the future, depending on market conditions and its need for funds.

                                       17
<PAGE>

     DEPOSIT ACCOUNTS. Nearly all of Lawrence Federal's depositors reside in
Ohio, Kentucky or West Virginia. Lawrence Federal offers a wide variety of
deposit accounts with a range of interest rates and terms. Lawrence Federal's
deposit accounts consist of a variety of savings accounts, checking and NOW
accounts, certificates of deposit, individual retirement accounts and money
market accounts. The maturities of Lawrence Federal's certificate of deposit
accounts range from 91 days to five years. Deposit account terms vary with the
principal differences being the minimum balance deposit, early withdrawal
penalties, limits on the number of transactions and the interest rate. Lawrence
Federal reviews its deposit mix and pricing weekly.

     Lawrence Federal believes it is competitive in the interest rates it offers
on its deposit products. Lawrence Federal determines the rates paid based on a
number of factors, including rates paid by competitors, Lawrence Federal's need
for funds and cost of funds, borrowing costs and movements of market interest
rates. Lawrence Federal does not utilize brokers to obtain deposits and at
December 31, 2003 had no brokered deposits.

     The following table shows the composition of Lawrence Federal's deposit
accounts at the dates indicated.

<TABLE>
<CAPTION>
                                                                  AT DECEMBER 31
                                                    -----------------------------------------
                                                           2003                  2002
                                                    -------------------   -------------------
                                                                  (IN THOUSANDS)
<S>                                                           <C>                    <C>
Noninterest-bearing accounts................                    $7,754                 $1,996
Savings accounts............................                    29,070                 33,711
Money market accounts.......................                    19,260                 14,963
Certificates of deposit.....................                    54,912                 68,256
                                                                ------                 ------
     Total deposits.........................                  $110,996               $118,926
                                                              ========               ========
</TABLE>

     The following table presents the deposit activity of Lawrence Federal for
the periods indicated:

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                                                 ---------------------------
                                                                                     2003           2002
                                                                                 ------------   ------------
                                                                                        (IN THOUSANDS)
<S>                                                                                <C>            <C>
Beginning balance ...................................................              $ 118,926      $ 116,796
Increase (decrease) before interest credited ........................                (10,291)        (1,501)
Interest credited ...................................................                  2,361          3,631
                                                                                   ---------      ---------
Net increase (decrease) .............................................                 (7,930)         2,130
                                                                                   ---------      ---------
      Ending balance ................................................              $ 110,996      $ 118,926
                                                                                   =========      =========
</TABLE>

     At December 31, 2003, Lawrence Federal had $12.9 million in certificates of
deposit with principal balances of $100,000 or more maturing as follows:

                                       18
<PAGE>

<TABLE>
<CAPTION>
                          MATURITY PERIOD                      AMOUNT           WEIGHTED
                                                                              AVERAGE RATE
      ----------------------------------------------------  ------------  -------------------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                                             <C>                    <C>
      Three months or less                                       $2,699                3.20%
      Over 3 through 6 months                                     1,374                2.25%
      Over 6 through 12 months                                      867                2.12%
      Over 12 months                                              7,992                3.98%
                                                                ------
      Total                                                     $12,932                3.47%
                                                                =======
</TABLE>

     BORROWINGS. Lawrence Federal has the ability to use advances from the
Federal Home Loan Bank of Cincinnati to supplement its supply of lendable funds
and to meet deposit withdrawal requirements. The Federal Home Loan Bank of
Cincinnati functions as a central reserve bank providing credit for savings
banks and certain other member financial institutions. As a member of the
Federal Home Loan Bank of Cincinnati, Lawrence Federal is required to own
capital stock in the Federal Home Loan Bank of Cincinnati and is authorized to
apply for advances on the security of the capital stock and certain of its
mortgage loans and other assets, principally securities that are obligations of,
or guaranteed by, the U.S. Government or its agencies, provided certain
creditworthiness standards have been met. Advances are made under several
different credit programs. Each credit program has its own interest rate and
range of maturities. Depending on the program, limitations on the amount of
advances are based on the financial condition of the member institution and the
adequacy of collateral pledged to secure the credit. At December 31, 2003,
Lawrence Federal had arranged the ability to borrow a total of approximately $15
million from the Federal Home Loan Bank of Cincinnati.

     The following table presents certain information regarding Lawrence
Federal's borrowed funds at or for the periods ended on the dates indicated:

<TABLE>
<CAPTION>
                                                        ----------------------------
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                        ----------------------------
                                                            2003            2002
                                                        ------------    ------------
                                                           (DOLLARS IN THOUSANDS)
<S>                                                             <C>          <C>
FHLB advances:
   Average balance outstanding........................          --           $1,973
   Maximum amount outstanding at any month-end
      during the period...............................          --            2,000
   Balance outstanding at end of period...............          --               --
   Weighted average interest rate during the period...          --             5.92%
   Weighted average interest rate at end of period....          --               --
</TABLE>

SUBSIDIARIES

     Lawrence Federal has one subsidiary, Lawrence Financial Services Corp.
Federal savings associations generally may invest up to 3% of their assets in
service corporations, provided that any amount in excess of 2% is used primarily
for community, inner-city and community development projects. At December 31,
2003, Lawrence Federal's equity investment in its subsidiary was $4,000 or less
than 1.0% of total assets.

                                       19
<PAGE>

PERSONNEL

     As of December 31, 2003, Lawrence Federal had 53 full-time employees and no
part-time employees, none of whom is represented by a collective bargaining
unit. Lawrence Federal believes its relationship with its employees is good.


                           REGULATION AND SUPERVISION

GENERAL

     As a savings and loan holding company, Lawrence Financial is required by
federal law to report to and otherwise comply with, the rules and regulations of
the Office of Thrift Supervision. Lawrence Federal is subject to extensive
regulation, examination and supervision by the Office of Thrift Supervision, as
its primary federal regulator, and the Federal Deposit Insurance Corporation, as
the deposit insurer. Lawrence Federal is a member of the Federal Home Loan Bank
System and, with respect to deposit insurance, of the Savings Association
Insurance Fund managed by the Federal Deposit Insurance Corporation. Lawrence
Federal must file reports with the Office of Thrift Supervision and the Federal
Deposit Insurance Corporation concerning its activities and financial condition
in addition to obtaining regulatory approvals prior to entering into certain
transactions such as mergers with, or acquisitions of, other savings
institutions. The Office of Thrift Supervision and/or the Federal Deposit
Insurance Corporation conduct periodic examinations to test Lawrence Federal's
safety and soundness and compliance with various regulatory requirements. This
regulation and supervision establishes a comprehensive framework of activities
in which an institution can engage and is intended primarily for the protection
of the insurance fund and depositors. The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such regulatory
requirements and policies, whether by the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation or Congress, could have a material adverse
impact on Lawrence Financial, Lawrence Federal and their operations. Certain of
the regulatory requirements applicable to Lawrence Federal and to Lawrence
Financial are referred to below or elsewhere herein. The description of
statutory provisions and regulations applicable to savings institutions and
their holding companies set forth below does not purport to be a complete
description of such statutes and regulations and their effects on Lawrence
Federal and Lawrence Financial.


HOLDING COMPANY REGULATION

     Lawrence Financial is a nondiversified unitary savings and loan holding
company within the meaning of federal law. Under prior law, a unitary savings
and loan holding company, such as Lawrence Financial, was not generally
restricted as to the types of business activities in which it may engage,
provided that Lawrence Federal continued to be a qualified thrift lender. See
"FEDERAL SAVINGS INSTITUTION REGULATION - QTL TEST." The Gramm-Leach-Bliley Act
of 1999 provides that no company may acquire control of a savings institution
after May 4, 1999 unless it engages only in the financial activities permitted
for financial holding companies under the law or for multiple savings and loan
holding companies as described below. Further, the Gramm -Leach-Bliley Act
specifies that existing savings and loan holding companies may only engage in
such activities. The Gramm-Leach-Bliley Act, however, grandfathered the
unrestricted authority for activities with respect to unitary savings and loan
holding companies existing prior to May 4, 1999, so long

                                       20
<PAGE>

as the holding company's savings institution subsidiary continues to comply with
the QTL Test. Lawrence Financial does not qualify for the grandfathering. Upon
any nonsupervisory acquisition by Lawrence Financial of another savings
institution or savings bank that meets the qualified thrift lender test and is
deemed to be a savings institution by the Office of Thrift Supervision, Lawrence
Financial would become a multiple savings and loan holding company (if the
acquired institution is held as a separate subsidiary) and would generally be
limited to activities permissible for bank holding companies under Section
4(c)(8) of Lawrence Federal Holding Company Act, subject to the prior approval
of the Office of Thrift Supervision, and certain activities authorized by Office
of Thrift Supervision regulation. However, OTS has issued an interpretation
concluding that multiple savings and loan holding companies may also engage in
activities permitted for financial holding companies.

     A savings and loan holding company is prohibited from, directly or
indirectly, acquiring more than 5% of the voting stock of another savings
institution or savings and loan holding company without prior written approval
of the Office of Thrift Supervision and from acquiring or retaining control of a
depository institution that is not insured by the Federal Deposit Insurance
Corporation. In evaluating applications by holding companies to acquire savings
institutions, the Office of Thrift Supervision considers the financial and
managerial resources and future prospects of Lawrence Financial and institutions
involved, the effect of the acquisition on the risk to the deposit insurance
funds, the convenience and needs of the community and competitive factors.

     The Office of Thrift Supervision may not approve any acquisition that would
result in a multiple savings and loan holding company controlling savings
institutions in more than one state, subject to two exceptions: (i) the approval
of interstate supervisory acquisitions by savings and loan holding companies and
(ii) the acquisition of a savings institution in another state if the laws of
the state of the target savings institution specifically permit such
acquisitions. The states vary in the extent to which they permit interstate
savings and loan holding company acquisitions.

     Although savings and loan holding companies are not currently subject to
specific capital requirements or specific restrictions on the payment of
dividends or other capital distributions, federal regulations do prescribe such
restrictions on subsidiary savings institutions as described below. Lawrence
Federal must notify the Office of Thrift Supervision 30 days before declaring
any dividend to Lawrence Financial. In addition, the financial impact of a
holding company on its subsidiary institution is a matter that is evaluated by
the Office of Thrift Supervision and the agency has authority to order cessation
of activities or divestiture of subsidiaries deemed to pose a threat to the
safety and soundness of the institution.

ACQUISITION OF LAWRENCE FINANCIAL Under the Federal Change in Bank Control Act,
a notice must be submitted to the Office of Thrift Supervision if any person
(including a company), or group acting in concert, seeks to acquire "control" of
a savings and loan holding company. Under certain circumstances, a change of
control may occur, and prior notice is required, upon the acquisition of 10% or
more of Lawrence Financial's outstanding voting stock, unless the Office of
Thrift Supervision has found that the acquisition will not result in a change of
control of Lawrence Financial. Under the Change in Bank Control Act, the Office
of Thrift Supervision has 60 days from the filing of complete notice to act,
taking into consideration certain factors, including the financial and
managerial resources of the acquirer and the antitrust effects of the
acquisition. Any company that acquires control would then be subject to
regulation as a savings and loan holding company.

FEDERAL SAVINGS INSTITUTION REGULATION

     BUSINESS ACTIVITIES. The activities of federal savings banks are governed
by federal law and regulations. These laws and regulations delineate the nature
and extent of the activities in which federal savings banks

                                       21
<PAGE>

may engage. In particular, certain lending authority for federal savings banks,
E.G., commercial, non-residential real property loans and consumer loans, is
limited to a specified percentage of the institution's capital or assets.

     CAPITAL REQUIREMENTS. The Office of Thrift Supervision capital regulations
require savings institutions to meet three minimum capital standards: a 1.5%
tangible capital to total assets ratio, a 4% leverage ratio (3% for institutions
receiving the highest rating on the CAMELS examination rating system) and an 8%
risk-based capital ratio. In addition, the prompt corrective action standards
discussed below also establish, in effect, a minimum 2% tangible capital
standard, a 4% leverage ratio (3% for institutions receiving the highest rating
on the CAMELS system), and, together with the risk-based capital standard
itself, a 4% Tier 1 risk-based capital standard. The Office of Thrift
Supervision regulations also require that, in meeting the tangible, leverage and
risk-based capital standards, institutions must generally deduct investments in
and loans to subsidiaries engaged in activities as principal that are not
permissible for a national bank.

     The risk-based capital standard for savings institutions requires the
maintenance of Tier 1 (core) and total capital (which is defined as core capital
and supplementary capital) to risk-weighted assets of at least 4% and 8%,
respectively. In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet assets, recourse obligations, residual
interests and direct credit substitutes, are multiplied by a risk-weight factor
of 0% to 100%, assigned by the Office of Thrift Supervision capital regulation
based on the risks believed inherent in the type of asset. Core (Tier 1) capital
is defined as common stockholders' equity (including retained earnings), certain
noncumulative perpetual preferred stock and related surplus and minority
interests in equity accounts of consolidated subsidiaries less intangibles other
than certain mortgage servicing rights and credit card relationships. The
components of supplementary capital currently include cumulative preferred
stock, long-term perpetual preferred stock, mandatory convertible securities,
subordinated debt and intermediate preferred stock, the allowance for loan and
lease losses limited to a maximum of 1.25% of risk-weighted assets and up to 45%
of unrealized gains on available-for-sale equity securities with readily
determinable fair market values. Overall, the amount of supplementary capital
included as part of total capital cannot exceed 100% of core capital.

     The Office of Thrift Supervision also has authority to establish individual
minimum capital requirements in appropriate cases upon a determination that an
institution's capital level is or may become inadequate in light of the
particular circumstances. At December 31, 2003, Lawrence Federal met each of its
capital requirements.

     The following table presents Lawrence Federal's capital position at
December 31, 2003.

<TABLE>
<CAPTION>
                                                                                CAPITAL
                                                                      -----------------------------
                         ACTUAL          REQUIRED         EXCESS         ACTUAL         REQUIRED
                         CAPITAL         CAPITAL          AMOUNT         PERCENT         PERCENT
                      -------------   --------------  --------------  -------------  --------------
                                                 (DOLLARS IN THOUSANDS)
<S>                        <C>               <C>             <C>             <C>             <C>
Tangible............       $12,803           $5,031          $7,772          10.18%          4.00%
Core (Leverage).....        12,803            5,031           7,772          10.18           4.00
Risk-based..........        13,521            6,600           6,921          16.39           8.00
</TABLE>

     PROMPT CORRECTIVE REGULATORY ACTION. The Office of Thrift Supervision is
required to take certain supervisory actions against undercapitalized
institutions, the severity of which depends upon the institution's degree of
undercapitalization. Generally, a savings institution that has a ratio of total
capital to risk weighted assets of less than 8%, a ratio of Tier 1 (core)
capital to risk-weighted assets of less than 4% or a ratio of Tier 1 (core)
capital to total assets of less than 4% (3% or less for institutions with the
highest

                                       22
<PAGE>

examination rating) is considered to be "undercapitalized." A savings
institution that has a total risk-based capital ratio less than 6%, a Tier 1
capital ratio of less than 3% or a leverage ratio that is less than 3% is
considered to be "significantly undercapitalized" and a savings institution that
has a tangible capital to assets ratio equal to or less than 2% is deemed to be
"critically undercapitalized." Subject to a narrow exception, the Office of
Thrift Supervision is required to appoint a receiver or conservator for an
institution that is "critically undercapitalized." The regulation also provides
that a capital restoration plan must be filed with the Office of Thrift
Supervision within 45 days of the date a savings institution receives notice
that it is "undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Compliance with the plan must be guaranteed by any parent
holding company. In addition, numerous mandatory supervisory actions become
immediately applicable to an undercapitalized institution, including, but not
limited to, increased monitoring by regulators and restrictions on growth,
capital distributions and expansion. The Office of Thrift Supervision could also
take any one of a number of discretionary supervisory actions, including the
issuance of a capital directive and the replacement of senior executive officers
and directors.

     INSURANCE OF DEPOSIT ACCOUNTS. Lawrence Federal is a member of the Savings
Association Insurance Fund. The Federal Deposit Insurance Corporation maintains
a risk-based assessment system by which institutions are assigned to one of
three categories based on their capitalization and one of three subcategories
based on examination ratings and other supervisory information. An institution's
assessment rate depends upon the categories to which it is assigned. Assessment
rates for Savings Association Insurance Fund member institutions are determined
semiannually by the Federal Deposit Insurance Corporation and currently range
from zero basis points for the healthiest institutions to 27 basis points of
assessable deposits for the riskiest.

     In addition to the assessment for deposit insurance, institutions are
required to make payments on bonds issued in the late 1980s by the Financing
Corporation to recapitalize the predecessor to the Savings Association Insurance
Fund. During fiscal 2003, Financing Corporation payments for Savings Association
Insurance Fund members approximated 1.60 basis points of assessable deposits.

     The Federal Deposit Insurance Corporation has authority to increase
insurance assessments. A significant increase in Savings Association Insurance
Fund insurance premiums would likely have an adverse effect on the operating
expenses and results of operations of Lawrence Federal. Management cannot
predict what insurance assessment rates will be in the future.

     Insurance of deposits may be terminated by the Federal Deposit Insurance
Corporation upon a finding that the institution has engaged in unsafe or unsound
practices, is in an unsafe or unsound condition to continue operations or has
violated any applicable law, regulation, rule, order or condition imposed by the
Federal Deposit Insurance Corporation or the Office of Thrift Supervision. The
management of Lawrence Federal does not know of any practice, condition or
violation that might lead to termination of deposit insurance.

     LOANS TO ONE BORROWER. Federal law provides that savings institutions are
generally subject to the limits on loans to one borrower applicable to national
banks. A savings institution may not make a loan or extend credit to a single or
related group of borrowers in excess of 15% of its unimpaired capital and
surplus. An additional amount may be lent, equal to 10% of unimpaired capital
and surplus, if secured by specified readily marketable collateral.

     QTL TEST. Federal Law requires savings institutions to meet a qualified
thrift lender test. Under the test, a savings association is required to either
qualify as a "domestic building and loan association" under the Internal Revenue
Code or maintain at least 65% of its "portfolio assets" (total assets less: (i)
specified liquid assets up to 20% of total assets; (ii) intangibles, including
goodwill; and (iii) the value of property

                                       23
<PAGE>

used to conduct business) in certain "qualified thrift investments" (primarily
residential mortgages and related investments, including certain mortgage-backed
securities) in at least 9 months out of each 12-month period.

     A savings institution that fails the qualified thrift lender test is
subject to certain operating restrictions and may be required to convert to a
bank charter. As of December 31, 2003, Lawrence Federal met the qualified thrift
lender test. Recent legislation has expanded the extent to which education
loans, credit card loans and small business loans may be considered "qualified
thrift investments."

     LIMITATIONS ON CAPITAL DISTRIBUTIONS. Office of Thrift Supervision
regulations impose limitations upon all capital distributions by a savings
institution, including cash dividends, payments to repurchase its shares and
payments to shareholders of another institution in a cash-out merger. Under the
regulations, an application to and the prior approval of the Office of Thrift
Supervision is required prior to any capital distribution if the institution
does not meet the criteria for "expedited treatment" of applications under
Office of Thrift Supervision regulations (I.E., generally, examination and
Community Reinvestment Act ratings in the two top categories), the total capital
distributions for the calendar year exceed net income for that year plus the
amount of retained net income for the preceding two years, the institution would
be undercapitalized following the distribution or the distribution would
otherwise be contrary to a statute, regulation or agreement with Office of
Thrift Supervision. If an application is not required, the institution must
still provide prior notice to Office of Thrift Supervision of the capital
distribution if, like Lawrence Federal, it is a subsidiary of a holding company.
In the event Lawrence Federal's capital fell below its regulatory requirements
or the Office of Thrift Supervision notified it that it was in need of increased
supervision, Lawrence Federal's ability to make capital distributions could be
restricted. In addition, the Office of Thrift Supervision could prohibit a
proposed capital distribution by any institution, which would otherwise be
permitted by the regulation, if the Office of Thrift Supervision determines that
such distribution would constitute an unsafe or unsound practice.

     ASSESSMENTS. Savings institutions are required to pay assessments to the
Office of Thrift Supervision to fund the agency's operations. The general
assessments, paid on a semi-annual basis, are computed upon the savings
institution's total assets, including consolidated subsidiaries, as reported in
Lawrence Federal's latest quarterly thrift financial report.

     TRANSACTIONS WITH RELATED PARTIES. Lawrence Federal's authority to engage
in transactions with "affiliates" (E.G., any company that controls or is under
common control with an institution, including Lawrence Financial and its
non-savings institution subsidiaries) is limited by federal law. The aggregate
amount of covered transactions with any individual affiliate is limited to 10%
of the capital and surplus of the savings institution. The aggregate amount of
covered transactions with all affiliates is limited to 20% of the savings
institution's capital and surplus. Certain transactions with affiliates are
required to be secured by collateral in an amount and of a type described in
federal law. The purchase of low quality assets from affiliates is generally
prohibited. The transactions with affiliates must be on terms and under
circumstances that are at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies. In addition, savings institutions are prohibited from lending to any
affiliate that is engaged in activities that are not permissible for bank
holding companies and no savings institution may purchase the securities of any
affiliate other than a subsidiary.

                                       24
<PAGE>

     The Sarbanes-Oxley Act of 2002 generally prohibits loans by Lawrence
Financial to its executive officers and directors. However, that act contains
specific exception for loans by Lawrence Federal to its executive officers and
directors in compliance with federal banking laws. Under such laws, Lawrence
Federal's authority to extend credit to executive officers, directors and 10%
shareholders ("insiders"), as well as entities such persons control, is limited.
The law limits both the individual and aggregate amount of loans Lawrence
Federal may make to insiders based, in part, on Lawrence Federal's capital
position and requires certain board approval procedures to be followed. Such
loans are required to be made on terms substantially the same as those offered
to unaffiliated individuals and not involve more than the normal risk of
repayment. An exception exists for loans made pursuant to a benefit or
compensation program that is widely available to all employees of the
institution and does not give preference to insiders over other employees.

     ENFORCEMENT. The Office of Thrift Supervision has primary enforcement
responsibility over savings institutions and has the authority to bring actions
against the institution and all institution-affiliated parties, including
stockholders, and any attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on an
insured institution. Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of officers and/or
directors to institution of receivership, conservatorship or termination of
deposit insurance. Civil penalties cover a wide range of violations and can
amount to $25,000 per day, or even $1 million per day in especially egregious
cases. The Federal Deposit Insurance Corporation has the authority to recommend
to the Director of the Office of Thrift Supervision that enforcement action to
be taken with respect to a particular savings institution. If action is not
taken by the Director, the Federal Deposit Insurance Corporation has authority
to take such action under certain circumstances. Federal law also establishes
criminal penalties for certain violations.

     STANDARDS FOR SAFETY AND SOUNDNESS. The federal banking agencies have
adopted Interagency Guidelines prescribing Standards for Safety and Soundness.
The guidelines set forth the safety and soundness standards that the federal
banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired. If the Office of Thrift
Supervision determines that a savings institution fails to meet any standard
prescribed by the guidelines, the Office of Thrift Supervision may require the
institution to submit an acceptable plan to achieve compliance with the
standard.

FEDERAL HOME LOAN BANK SYSTEM

     Lawrence Federal is a member of the Federal Home Loan Bank System, which
consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank
provides a central credit facility primarily for member institutions. Lawrence
Federal, as a member of the Federal Home Loan Bank, is required to acquire and
hold shares of capital stock in that Federal Home Loan Bank in an amount at
least equal to 1.0% of the aggregate principal amount of its unpaid residential
mortgage loans and similar obligations at the beginning of each year, or 1/20 of
its advances (borrowings) from the Federal Home Loan Bank, whichever is greater.
Lawrence Federal was in compliance with this requirement with an investment in
Federal Home Loan Bank stock at December 31, 2003 of $639,100.

     The Federal Home Loan Banks are required to provide funds for the
resolution of insolvent thrifts in the late 1980's and to contribute funds for
affordable housing programs. These requirements could reduce the amount of
dividends that the Federal Home Loan Banks pay to their members and could also
result in the Federal Home Loan Banks imposing a higher rate of interest on
advances to their members. If dividends were reduced, or interest on future
Federal Home Loan Bank advances increased, Lawrence Federal S net interest
income would likely also be reduced.

                                       25
<PAGE>

FEDERAL RESERVE SYSTEM

     The Federal Reserve Board regulations require savings institutions to
maintain non-interest-earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The regulations generally provide
that reserves be maintained against aggregate transaction accounts as follows: a
3% reserve ratio is assessed on net transaction accounts up to and including
$45.4 million: a 10% reserve ratio is applied above $45.4 million. The first
$6.6 million of otherwise reservable balances (subject to adjustments by the
Federal Reserve Board) are exempted from the reserve requirements. The amounts
are adjusted annually. Lawrence Federal complies with the foregoing
requirements.

PROSPECTIVE LEGISLATION

     Lawrence Federal and Lawrence Financial, as a savings and loan holding
company, are extensively regulated and supervised. Regulations, which affect
Lawrence Federal on a daily basis, may be changed at any time, and the
interpretation of the relevant law and regulations may also change because of
new interpretations by the authorities who administer those laws and
regulations. Any change in the regulatory structure or the applicable statutes
or regulations, whether by the Office of Thrift Supervision, the Federal Deposit
Insurance Corporation or the U.S. Congress, could have a material impact on
Lawrence Financial, Lawrence Federal or its operations.

     Legislation enacted several years ago provided that the Bank Insurance Fund
and the Savings Association Insurance Fund would have merged on January 01, 1999
if there had been no more savings associations as of that date. Congress did not
enact legislation eliminating the savings association charter by that date.
Lawrence Federal is unable to predict whether the Savings Association Insurance
Fund and Bank Insurance Fund will eventually be merged and what effect, if any,
that may have on its business.

                           FEDERAL AND STATE TAXATION

FEDERAL INCOME TAXATION

     GENERAL. Lawrence Financial and Lawrence Federal report their income on a
calendar year basis using the accrual method of accounting. The federal income
tax laws apply to Lawrence Financial and Lawrence Federal in the same manner as
to other corporations with some exceptions, including particularly Lawrence
Federal's reserve for bad debts discussed below. The following discussion of tax
matters is intended only as a summary and does not purport to be a comprehensive
description of the tax rules applicable to Lawrence Federal or Lawrence
Financial. Lawrence Federal's federal income tax returns have been either
audited or closed under the statute of limitations through tax year 1999. For
its 2003 year, Lawrence Federal's maximum federal income tax rate was 34%.

     BAD DEBT RESERVES. For fiscal years beginning before December 31, 1996,
thrift institutions that qualified under certain definitional tests and other
conditions of the Internal Revenue Code were permitted to use certain favorable
provisions to calculate their deductions from taxable income for annual
additions to their bad debt reserve. A reserve could be established for bad
debts on qualifying real property loans, generally secured by interests in real
property improved or to be improved, under the percentage of taxable income
method or the experience method. The reserve for nonqualifying loans was
computed using the experience method.

     Federal legislation enacted in 1996 repealed the reserve method of
accounting for bad debts and the percentage of taxable income method for tax
years beginning after 1995 and require savings institutions to recapture or take
into income certain portions of their accumulated bad debt reserves.
Approximately $1.5

                                       26
<PAGE>

million of Lawrence Federal accumulated bad debt reserves would not be
recaptured into taxable income unless Lawrence Federal makes a "non-dividend
distribution" to Lawrence Financial as described below.

     DISTRIBUTIONS. If Lawrence Federal makes "non-dividend distributions" to
Lawrence Financial, the distributions will be considered to have been made from
Lawrence Federal's unrecaptured tax bad debt reserves, including the balance of
its reserves as of December 31, 1988, to the extent of the "non-dividend
distributions," and then from Lawrence Federal's supplemental reserve for losses
on loans, to the extent of those reserves, and an amount based on the amount
distributed, but not more than the amount of those reserves, will be included in
Lawrence Federal's taxable income. Non-dividend distributions include
distributions in excess of Lawrence Federal's current and accumulated earnings
and profits, as calculated for federal income tax purposes, distributions in
redemption of stock, and distributions in partial or complete liquidation.
Dividends paid out of Lawrence Federal's current or accumulated earnings and
profits will not be so included in Lawrence Federal's taxable income.

     The amount of additional taxable income triggered by a non-dividend is an
amount that, when reduced by the tax attributable to the income, is equal to the
amount of the distribution. Therefore, if Lawrence Federal makes a non-dividend
distribution to Lawrence Financial, approximately one and one-half times the
amount of the distribution not in excess of the amount of the reserves would be
includable in income for federal income tax purposes, assuming a 34% federal
corporate income tax rate. Lawrence Federal does not intend to pay dividends
that would result in a recapture of any portion of its bad debt reserves.

STATE TAXATION

     OHIO STATE TAXATION. Lawrence Financial is subject to the Ohio corporation
franchise tax, which, as applied to it, is a tax measured by both net income and
net worth. In general, the tax liability is the greater of 5.1% on the first
$50,000 of computed Ohio taxable income and 8.5% of computed Ohio taxable income
in excess of $50,000, or 0.40% of taxable net worth. Under these alternative
measures of computing the tax liability, complex formulas determine the
jurisdictions to which total net income and total net worth are apportioned or
allocated. The minimum tax is $50 per year and maximum tax liability as measured
by net worth is limited to $150,000 per year.

     A special litter tax also applies to all corporations, including Lawrence
Financial, subject to the Ohio corporation franchise tax. This litter tax does
not apply to "financial institutions." If a corporation pays franchise tax on
the basis of net income, the litter tax is equal to 0.11% of the first $50,000
of computed Ohio taxable income and 0.22% of computed Ohio taxable income in
excess of $50,000. If a corporation pays franchise tax on the basis of net
worth, the litter tax is equal to 0.014% times taxable net worth.

     A statutory exemption from the net worth tax is available to Lawrence
Financial if certain conditions are satisfied. Lawrence Financial expects to
qualify for this exemption, which would restrict its tax liability to the tax
measured by net income.

     Lawrence Federal is a "financial institution" for Ohio tax purposes.
Accordingly, it must pay the Ohio corporate franchise tax on "financial
institutions," which is imposed annually at a rate of 1.4% of the Lawrence
Federal's apportioned book net worth, determined under generally accepted
accounting principles, less any statutory deduction. As a "financial
institution," Lawrence Federal does not pay any Ohio tax based upon net income
or net profits.

     MARYLAND STATE TAXATION. As a Maryland corporation not earning income in
Maryland, Lawrence Financial is exempt from Maryland corporate income tax.

                                       27
<PAGE>







ITEM 2.      DESCRIPTION OF PROPERTY

     Lawrence Federal currently conducts its business through its main office
located in Ironton, Ohio, and four other full-service banking offices, all of
which it owns.

<TABLE>
<CAPTION>
                                                                        NET BOOK VALUE
                                                                         OF PROPERTY
LOCATION                                                                 OR LEASEHOLD
                                                  ORIGINAL YEAR        IMPROVEMENTS AT
                                                    ACQUIRED          DECEMBER 31, 2003
MAIN/EXECUTIVE OFFICE:                                                  (IN THOUSANDS)

<C>                                                   <C>                           <C>
311 South 5th Street                                  1976                          $694
Ironton, Ohio 45638

DRIVE THROUGH FACILITY:

511 Vernon Street                                     1997                           179
Ironton, Ohio 45638

BRANCH OFFICES:

401 2nd Avenue                                        1960                           127
Chesapeake, Ohio 45619

7510 State Route 7                                    1993                           132
Proctorville, Ohio 45669

404 Solida Road                                       1975                           155
South Point, Ohio 45680

9000 Ohio River Road                                  1998                           615
Wheelersburg, Ohio  45694                                                         ------

     Total                                                                        $1,902
                                                                                  ======
</TABLE>

                                       28
<PAGE>

ITEM 3.      LEGAL PROCEEDINGS

     Periodically, there have been various claims and lawsuits involving
Lawrence Federal, such as claims to enforce liens, condemnation proceedings on
properties in which Lawrence Federal holds security interests, claims involving
the making and servicing of real property loans and other issues incident to
Lawrence Federal's business. Neither Lawrence Financial nor Lawrence Federal is
a party to any pending legal proceedings that it believes would have a material
adverse effect on the financial condition or operations of Lawrence Financial.

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

     None.









                                       29
<PAGE>

                                     PART II

ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Lawrence Financial's common stock is quoted on the OTC-Bulletin Board under
the symbol "LWFH". As of December 31, 2003, there were 650,110 shares of common
stock outstanding and 176 stockholders, excluding persons or entities who hold
stock in nominee or "street name."

     The following table shows the high and low sales price and dividends paid
on Lawrence Financial's common stock for the periods indicated.

<TABLE>
<CAPTION>
     QUARTER ENDED                                         HIGH        LOW      DIVIDENDS PAID
     -------------                                         ----        ---      --------------

<S>                                                       <C>        <C>             <C>
     March 31, 2002...................................    $17.80     $14.45          $0.07
     June 30, 2002....................................     18.05      16.15           0.07
     September 30, 2002...............................     16.75      14.30           0.07
     December 31, 2002................................     16.85      13.75           0.07
     March 31, 2003...................................     18.95      15.95           0.07
     June 30, 2003....................................     23.50      18.70           0.07
     September 30, 2003...............................     23.30      22.05           0.07
     December 31, 2003................................     27.50      22.80           0.07
</TABLE>

     Dividend payments by Lawrence Financial are dependent primarily on
dividends received by Lawrence Financial from Lawrence Federal. Under federal
regulations, the dollar amount of dividends Lawrence Federal may pay is
dependent upon its capital position and recent net income. Generally, if
Lawrence Federal satisfies its regulatory capital requirements, it may make
dividend payments up to the limits prescribed by the OTS regulations. In
addition, institutions that have converted to the stock form of ownership are
prohibited from engaging in such activities if the effect thereof would cause
the regulatory capital of the institution to be reduced below the amount
required for the liquidation account which was established in the conversion in
accordance with the Office of Thrift Supervision regulations.


                                       30
<PAGE>

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

GENERAL

     Lawrence Federal's results of operations depend primarily on its net
interest income, which is the difference between the interest income earned on
Lawrence Federal's interest-earning assets, such as loans and securities, and
the interest expense on its interest-bearing liabilities, such as deposits and
borrowings. Lawrence Federal also generates noninterest income primarily from
loan fees and service charges. Lawrence Federal's noninterest expenses primarily
consist of employee compensation and benefits, occupancy expense, data
processing costs, and other operating expenses. Lawrence Federal's results of
operations are also affected by general economic and competitive conditions,
notably changes in market interest rates, government policies and regulations.

     OPERATING STRATEGY

     Lawrence Financial Holdings, Inc. (Company), through its wholly owned
subsidiary Lawrence Federal Savings Bank (Bank), operates as a
community-oriented financial institution focused on meeting the financial
service needs of consumers in its market area. To accomplish this objective,
Lawrence Federal offers a variety of mortgage and consumer loans and retail
deposit products. Lawrence Federal has historically extended its lending
activities outside of its market area through programs for originating mobile
home and automobile loans through a network of dealers. These indirect lending
programs have helped Lawrence Federal originate a larger amount of consumer
loans, which typically have shorter terms and higher yields than mortgage loans,
than the Bank would otherwise be able to originate. In addition, the origination
of shorter term consumer loans helps the Company manage it's interest rate risk.
However, indirect lending programs may result in greater risk and require
careful monitoring by management. Adverse developments with the mobile home loan
portfolio led to the termination of this program in 2002.


CRITICAL ACCOUNTING POLICIES

Accounting policies involving significant judgments and assumptions by
management that have, or could have, a material impact on the carrying value of
certain assets and impact income, are considered critical accounting policies.
Lawrence Federal considers the following to be its critical accounting policies:
allowance for loan losses and deferred income taxes. There have been no
significant changes in the methods or assumptions used in the accounting
policies that require material estimates and assumptions.

ALLOWANCE FOR LOAN LOSSES

Arriving at an appropriate level of allowance for loan losses necessarily
involves a high degree of judgment. The ongoing evaluation process includes a
formal analysis of the allowance each quarter, which considers, among other
factors, the character and size of the loan portfolio, business and economic
conditions, loan growth, delinquency trends, nonperforming loans trends,
charge-off experience and other asset quality factors. Provisions for losses on
the loan portfolio are calculated by applying historical charge-off and recovery
experience to the current outstanding balance in each loan category, with
consideration given to loan growth over the preceding twenty four months.
Although management uses available information to establish the appropriate
level of the allowance for loan losses, future additions to the allowance may be
necessary based on estimates that are susceptible to change as a result of
changes in economic conditions and other factors. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review Lawrence Federal Savings Bank's allowance for loan losses.
Such agencies may require Lawrence Federal to recognize adjustments to the
allowance based on their judgments about information available to them at the
time of their examination.

                                       31
<PAGE>

DEFERRED INCOME TAXES

Lawrence Federal uses the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. If current available information raises doubt as to the
realization of the deferred tax assets, a valuation allowance would be
established. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Management exercises
significant judgment in evaluating the amount and timing of recognition of the
resulting tax liabilities and assets, including projections of future taxable
income. These judgments and estimates are reviewed on a continual basis as
regulatory and business factors change.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2003 AND 2002

     During the fiscal year 2003, total assets decreased $8.9 million, or 6.6%,
to $125.5 million at December 31, 2003. The decrease in assets in 2003 primarily
reflected runoff from the loan portfolio. At December 31, 2003, cash and cash
equivalent balances had decreased $5.7 million, or 34.8%, and securities
available for sale had increased by $12.1 million, or 85%, when compared to the
same date in 2002. During the year ended December 31, 2003, gross loans
receivable decreased $15.6 million, or 16.1%. Consumer loans decreased $5.6
million, or 21.8%, real estate loans decreased $6.6 million, or 12.2%, and
mobile home loans decreased $2.9 million, or 19.1%. The majority of the decrease
in consumer loans is primarily due to reducing the number of indirect automobile
loans originated in 2003, while real estate loans decreased as a result of
highly competitive fixed-rate, long-term loans being offered by several regional
banks and mortgage brokers. The outstanding balance of mobile home loans has
been declining during the year, which reflects the Bank's continued efforts to
reduce the concentration of mobile home loans in the portfolio. Lawrence
Federal's long term investments, held in the form of securities, increased by
$12.1 million, or 85%, when compared to December 31, 2002. The reason for the
growth in the long term investments was due to the realignment of the excess
liquidity the bank had in the form of overnight deposits, which were earning
only minimal interest.

     During 2003, total deposits and borrowings decreased $7.9 million, or 6.7%,
to $110.9 million at December 31, 2003. The primary reason for this decrease was
a result of market competition with other local banks offering more competitive
rates.

     Equity decreased $764,000, or 5.2%, during fiscal year 2003 to $14.0
million at December 31, 2003. During the year ending December 31, 2003, treasury
stock purchased totaled $1,045,088, retained earnings increased $477,000 as a
result of net income while accumulated other comprehensive income decreased from
an unrealized gain of $148,000 to an unrealized loss of $88,000, primarily as a
result of changes to the securities available-for-sale portfolio arising during
the period, and $182,000 of cash dividends were paid to shareholders.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

     GENERAL. The Company's net income decreased 21% to $477,000 for 2003 from
$606,000 for 2002. Return on average assets was 0.36% in 2003 and 0.45% in 2002,
and return on average equity was 3.40% in 2003 and 4.07% in 2002. Net interest
income decreased $37,000, or 1%, while noninterest income, exclusive of sale of
securities, increased $32,000, or 5%. The decrease in net interest income was
primarily the result of a decline of $1.7 million in average earning asset
balances during fiscal year 2003. In addition to the decrease in net interest
income was a $408,000 or 10% increase in noninterest expense. There are several
causes for the increase in non-interest expense. Expense for the Employee Stock
Ownership

                                       32
<PAGE>

Program (ESOP) and restricted stock awards increased $33,000 over 2002. The
Company has also experienced increases in: salaries and wages paid; the addition
of employees in the operations department; increased costs of employee benefits;
increased costs related to occupancy and equipment; increased data processing
fees; increased costs related to the collection of delinquent mobile home loans;
and other non-interest expenses related to the day to day operations of the
company.

     INTEREST INCOME. Interest income decreased $1.4 million, or 16%, in 2003
compared to 2002. Interest income on loans decreased $1.5 million, or 19%,
primarily as a result of decreasing interest rates and customers refinancing
loans with various local institutions with more favorable rates. Interest income
on short term investments decreased $71,000, or 49%. The average yield on
interest-earning assets decreased to 5.97% in 2003 from 6.98% in 2002, as the
loan portfolio continued to shrink and loans being refinanced for more favorable
rates.

     INTEREST EXPENSE. Interest expense decreased $1.4 million, or 37%, in 2003
compared to 2002. Interest paid on deposits decreased $1.3 million, or 35%, as a
result of a reduction of interest rates paid on the average balances of deposits
during the year. There was no interest paid on Federal Home Loan Bank advances
in 2003 compared to $117,000 in 2002. The average cost of interest-bearing
liabilities decreased 110 basis points to 2.07% in 2003 from 3.17% in 2002,
primarily as a result of reduced market rates on certificates of deposit and
savings accounts.

     PROVISION FOR LOAN LOSSES. Activity in the allowance for loan losses
consists of increases due to monthly provisions for loan losses and decreases
for periodic charge offs, net of recoveries. Management analyzes the adequacy of
the allowance balance quarterly by determining its estimate of probable losses
in the portfolio and comparing that estimate to the allowance balance.
Management calculates its estimate of probable losses primarily by applying loss
percentages to classified loans within the major loan categories.

     The provision for loan losses was $915,000 for 2003 compared to $927,000
for 2002. The provision for 2003 and 2002 reflected management's assessment of
probable losses, which is impacted by changes in the composition of the loan
portfolio. (See pages 13 through 16 of this filing for more information.)

     At December 31, 2003, the Company's allowance for loan losses as a
percentage of gross loans outstanding increased by 10 basis points, to 1.24%
from 1.14%, when compared to the same period in 2002. Allowance for loan losses
totaled $1.0 million at December 31, 2003, a decrease of $97,000, or 9%,
compared to the same date in 2002. The mix of the allowance also changed with
the portion allocated to real estate loans increasing by $9,000, or 7%, the
portion of the allowance allocated to consumer loans increasing by $87,000, or
2%, mobile home reserves decreasing by $42,000, or 7%, and commercial reserves
increasing by $30,000 or 300%.

     While management believes the existing level of reserves is adequate,
future adjustments to the allowance may be necessary due to economic, operating,
regulatory, and other conditions that may be beyond Lawrence Federal's control.


     NONINTEREST INCOME. The following table shows the components of noninterest
income and the dollar and percentage change from 2003 to 2002.


                                       33
<PAGE>

<TABLE>
<CAPTION>
                                                           2003         2002        DOLLAR      PERCENTAGE
                                                                                   CHANGE        CHANGE
                                                         ---------  ------------ ------------ -------------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                                          <C>            <C>         <C>            <C>
Net securities gains...........................              $189           $55         $134           244%
Service charges................................               503           452           51            11
Other..........................................               236           255          (19)           (8)
                                                              ---           ---         ----
      Total                                                  $928          $762         $166            22
                                                             ====          ====         ====
</TABLE>

     Net securities gains increased in fiscal year 2003 as Lawrence Federal sold
securities at a gain of $189,000 compared to $55,000 in gain reported in the
same period of 2002. Securities were sold in the first quarter of 2003 to reduce
the Banks exposure to unrealized losses in an upward rate environment. These
gains are not expected to be repeated in 2004. Service charges increased in 2003
as a result of adjustments to fee schedules and improved management systems
which enables Lawrence Federal to more effectively assess charges on transaction
accounts. Lawrence Federal will continue to monitor the fee schedules of
in-market competitors and adjust our products to reflect current market pricing.
Other income consists of decreases in the cash surrender value of bank owned
life insurance, gain on the sale of fixed assets and other miscellaneous items.




                                       34
<PAGE>

NONINTEREST EXPENSE. The following table shows the components of noninterest
expense and the dollar and percentage change from 2003 to 2002.

<TABLE>
<CAPTION>
                                                              2003           2002          DOLLAR      PERCENTAGE
                                                                                           CHANGE        CHANGE
                                                          -------------  -------------  ------------- -------------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                             <C>             <C>            <C>               <C>
Salaries and benefits ...............................           $1,963          $1,725         $  238            14%
Deposit insurance premiums ..........................               19              37            (18)          (49)
Occupancy and equipment .............................              426             371             55            15
Data processing .....................................              625             535             90            17
Franchise tax .......................................              138             127             11             9
Professional fees ...................................              246             235             11             5
Advertising expense .................................               80             110            (30)          (27)
Other ...............................................              868             817             51             6
                                                                ------          ------         ------
      Total .........................................           $4,365          $3,957         $  408            10
                                                                ======          ======         ======
</TABLE>

     Salaries and benefits increased as a result of: additional staff, normal
annual merit increases in salaries, a 27% increase in premiums paid for employee
health care insurance; and the recognition of the expense related to employee
stock ownership and incentive plans. Deposit insurance premiums decreased as a
result of the average balance of deposits decreased during 2003. Occupancy and
equipment increased as a result of the company upgrading its computer system and
implementing a local area network. Data processing costs increased as a result
of an $80,000 expense related to the conversion process (discussed in the
following paragraph). Making up the bulk of the increase in "Other" are expenses
related to the repossession of mobile home units and the expenses related to the
sale of other real estate owned which accounted for $46,000 of the increase. In
addition to this increase, the Company experienced increases in various other
expense items.

     In July of 2003, the Company replaced its existing data processing system.
This conversion to a new processing system better positioned the Bank to offer
new products, manage and improve existing products, enhance customer service
value, and as an ultimate result, enhance shareholder value. The final direct
costs for the deconversion process were $80,000. The final cost savings for the
post conversion process will more than offset these costs within the first full
year of processing under the new data processing service provider.


     INCOME TAX EXPENSE. The provision for income tax was $132,000 in 2003
compared to $270,000 in 2002. The provision decreased as a result of declining
taxable income. The effective tax rate for 2003 was 21.7% compared with 30.8%
for 2002. The decrease in the effective tax rate for 2003 compared to 2002 was
primarily due to the increase in tax exempt interest income from various tax
exempt investments.


                                       35
<PAGE>

AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS/COST

     The following table presents certain information regarding average balances
of assets and liabilities, as well as the total dollar amounts of interest
income from average interest-earning assets and interest expense on average
interest-bearing liabilities and the resulting average yields and costs. The
yields and costs for the periods indicated are derived by dividing income or
expense by the average balances of assets or liabilities, respectively, for the
periods presented. Average balances were derived from daily balances.

<TABLE>
<CAPTION>
                                           -----------------------------------------------------------------
                                                               YEAR ENDED DECEMBER 31,
                                           -----------------------------------------------------------------
                                                        2003                             2002
                                           --------------------------------  --------------------------------
                                             AVERAGE               AVERAGE    AVERAGE               AVERAGE
                                             BALANCE    INTEREST    YIELD/    BALANCE    INTEREST    YIELD/
                                                                    RATE                             RATE
                                            ---------- --------- ----------  ---------- --------- ----------
                                                                (DOLLARS IN THOUSANDS)
<S>                                          <C>        <C>          <C>      <C>        <C>           <C>
Interest-earning assets:
  Loans (1) .............................    $ 90,055   $  6,433     7.14%    $101,737   $  7,931      7.80%
  Securities (2) ........................      23,559        816     3.68       12,358        671      5.71
  Interest-bearing deposits .............      10,092         73     0.73       11,355        145      1.28
                                             --------   --------              --------   --------
     Total interest-earning assets ......     123,706      7,322     5.97      125,450      8,747      6.98
Non-interest-earning assets .............      10,287                            9,155
                                             --------                         --------
     Total assets .......................    $133,993                         $134,605
                                             ========                         ========

Interest-bearing liabilities:
  Deposits:
    Savings accounts ....................    $ 31,688        293     0.92     $ 29,058        577      1.98
    Money market accounts ...............         943          7     0.77        1,001         23      2.29
    NOW accounts ........................      14,827        105     0.71       15,449        194      1.25
    Certificates of deposit .............      66,334      1,956     2.93       70,583      2,837      4.02
                                             --------   --------              --------   --------
     Total deposits .....................     113,792      2,361     2.07      116,091      3,631      3.11
  FHLB advances .........................          --         --       --        1,973        117      5.92
                                             --------   --------              --------   --------
     Total interest-bearing
       liabilities.......................     113,792      2,361     2.07      118,064      3,748      3.18

Non-interest-bearing liabilities ........       6,166                            1,631
                                             --------                         --------
     Total liabilities ..................     119,958                          119,695
Total retained earnings .................      14,035                           14,910
                                             --------                         --------
     Total liabilities and
       retained earnings ................    $133,993                         $134,605
                                             ========                         ========

  Net interest-earning assets............      $9,914                            7,386
                                               ======                            =====
  Net interest income/interest rate
    spread (3)...........................                 $4,961     3.90%                 $4,999      3.80%
                                                          ======     ====                  ======      ====
  Net interest margin (4)................                   4.01%                            4.00%
                                                            ====                             ====
  Ratio of interest-earning assets
    to interest-bearing liabilities......      108.71%                          106.26%
                                               ======                           ======
</TABLE>

(1)  Balances are net of deferred loan origination costs, undisbursed proceeds
     of construction loans in process, and include non- accrual loans.
(2)  Includes investment securities available-for-sale, stock in the Federal
     Home Loan Bank of Cincinnati and mutual funds.
(3)  Net interest rate spread represents the difference between the weighted
     average yield on interest-earning assets and the weighted average cost of
     interest-bearing liabilities.
(4)  Net interest margin represents net interest income as a percentage of
     average interest-earning assets.

                                       36
<PAGE>

RATE/VOLUME ANALYSIS

     The following table presents the effects of changing rates and volumes on
the interest income and interest expense of Lawrence Federal. The rate column
shows the effects attributable to changes in rate (changes in rate multiplied by
prior volume). The volume column shows the effects attributable to changes in
volume (changes in volume multiplied by prior rate). The net column represents
the sum of the prior columns. For purposes of this table, changes attributable
to changes in both rate and volume that cannot be segregated have been allocated
proportionately based on the absolute value of the change due to rate and the
change due to volume.

<TABLE>
<CAPTION>
                                                                         ------------------------------------
                                                                             YEAR ENDED DECEMBER 31, 2003
                                                                                      COMPARED TO
                                                                             YEAR ENDED DECEMBER 31, 2002
                                                                         ------------------------------------
                                                                          INCREASE (DECREASE)
                                                                                DUE TO
                                                                         ----------------------   -----------
                                                                           RATE       VOLUME         NET
                                                                         ----------  ----------   -----------
                                                                                (DOLLARS IN THOUSANDS)
INTEREST-EARNING ASSETS:
<S>                                                                       <C>          <C>          <C>
   Loans ....................................................             $  (587)     $  (911)     $(1,498)
   Securities ...............................................                (495)         640          145
   Interest-earning deposits ................................                 (55)         (16)         (71)
                                                                          -------      -------      -------
         Total interest-earning assets ......................              (1,137)        (287)      (1,424)
INTEREST-BEARING LIABILITIES:
   Deposits:
      Passbook accounts .....................................                (336)          52         (284)
      Money market accounts .................................                 (15)          (1)         (16)
      NOW accounts ..........................................                 (81)          (8)         (89)
      Certificates of deposit ...............................                (710)        (171)        (881)
  FHLB advances .............................................                  (1)        (116)        (117)
                                                                          -------      -------      -------

         Total interest-bearing liabilities .................              (1,143)        (244)      (1,387)
                                                                          -------      -------      -------
Increase (decrease) in net interest income ..................             $     6      $   (43)     $   (37)
                                                                          =======      =======      =======
</TABLE>

MANAGEMENT OF INTEREST RATE RISK AND MARKET RISK ANALYSIS

     QUALITATIVE ASPECTS OF MARKET RISK. Lawrence Federal's most significant
form of market risk is interest rate risk. The principal objectives of Lawrence
Federal's interest rate risk management are to evaluate the interest rate risk
inherent in certain balance sheet accounts, determine the level of risk
appropriate given Lawrence Federal's business strategy, operating environment,
capital and liquidity requirements and performance objectives, and manage the
risk consistent with the Board of Director's approved guidelines. Lawrence
Federal has an Asset/Liability Committee, responsible for reviewing its
asset/liability policies and interest rate risk position, which meets monthly
and reports trends and interest rate risk position to the Board of Directors
quarterly. The extent of the movement of interest rates is an uncertainty that
could have a negative impact on the earnings of Lawrence Federal.

     Lawrence Federal's assets include a high percentage of fixed-rate mortgage
loans. This exposes Lawrence Federal to the risk that during periods of rising
interest rates Lawrence Federal's interest expense will increase faster than its
interest income. In recent years, Lawrence Federal has used the following
strategies to manage interest rate risk: (1) emphasizing shorter term consumer
loans; (2) maintaining a high quality portfolio of short- to intermediate-term
securities; (3) maintaining high levels of liquidity; and (4) emphasizing
longer-term certificates of deposit to better structure maturities of its
interest rate sensitive liabilities. Lawrence Federal intends to increase its
emphasis on adjustable-rate loans in order to help

                                       37
<PAGE>

reduce its interest rate risk. Lawrence Federal currently does not participate
in hedging programs, interest rate swaps or other activities involving the use
of off-balance sheet derivative financial instruments.

     QUANTITATIVE ASPECTS OF MARKET RISK. Lawrence Federal primarily utilizes an
interest sensitivity analysis prepared by the Office of Thrift Supervision to
review the level of interest rate risk. This analysis measures interest rate
risk by computing changes in the net portfolio value of Lawrence Federal's cash
flows from assets, liabilities and off-balance sheet items in the event of a
range of assumed changes in market interest rates. Net portfolio value
represents the market value of portfolio equity and is equal to the market value
of assets minus the market value of liabilities, with adjustments made for
off-balance sheet items. This analysis assesses the risk of loss in market risk
sensitive instruments in the event of a sudden and sustained 100 to 300 basis
point increase or decrease in market interest rates with no effect given to any
steps that management might take to counter the effect of that interest rate
movement. The following table, which is based on information provided to
Lawrence Federal by the Office of Thrift Supervision, presents the change in
Lawrence Federal's net portfolio value at December 31, 2003, that would occur
upon an immediate change in interest rates based on Office of Thrift Supervision
assumptions, but without giving effect to any steps that management might take
to counteract that change.

<TABLE>
<CAPTION>
   -------------------                                              -----------------------
                                                                     NPV AS % OF PORTFOLIO
       CHANGE IN                                                        VALUE OF ASSETS
     INTEREST RATES        ------------------------------------     -----------------------
    IN BASIS POINTS                 NET PORTFOLIO VALUE
      (RATE SHOCK)         ------------------------------------
                                                                        NPV        CHANGE
                            AMOUNT       $ CHANGE     % CHANGE         RATIO        (1)
   --------------------    --------    -----------   -----------    ----------  -----------

                                       (DOLLARS IN THOUSANDS)
<S>        <C>              <C>          <C>               <C>         <C>          <C>
           300              $13,703       $(3,445)         (20)%       10.90%       (219)
           200               15,138        (2,010)         (12)        11.85        (124)
           100               16,326          (821)          (5)        12.61         (49)
          Static             17,148            --           --         13.10          --
          -100               17,416           269            2         13.21          11

----------------------------
(1)  Expressed in basis points.
</TABLE>

     The preceding table shows that in the event of a sudden and sustained
increase in market interest rates of 2% or more, the net portfolio value of
Lawrence Federal would decrease moderately.

     The Office of Thrift Supervision uses certain assumptions in assessing the
interest rate risk of savings associations. These assumptions relate to interest
rates, loan prepayment rates, deposit decay rates, and the market values of
certain assets under differing interest rate scenarios, among others.

     As with any method of measuring interest rate risk, certain shortcomings
are inherent in the method of analysis presented in the foregoing table. For
example, although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in market
interest rates. Also, the interest rates on certain types of assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates.
Additionally, certain assets, such as adjustable rate mortgage loans, have
features which restrict changes in interest rates on a short-term basis and over
the life of the asset. Further, if interest rates change, expected rates of
prepayments on loans and early withdrawals from certificates of deposit could
deviate significantly from those assumed in calculating the table.

                                       38

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     On October 24, 2003 Lawrence Financial announced that the Company's Board
of Directors had approved the repurchase of up to 15,000 shares, or
approximately 2% of the Company's outstanding common stock. Repurchases, which
will be conducted through open market purchases or privately negotiated
transactions, will be made from time to time depending on market conditions and
other factors. Funding for the repurchase of stock may serve to reduce liquidity
levels and/or increase the amount of borrowed funds at the Company. Repurchased
shares will be held in treasury, reducing the Company's total equity, and will
be available for the Company's benefit plans.

     Liquidity is the ability to meet current and future financial obligations
of a short-term nature. Lawrence Federal further defines liquidity as the
ability to respond to the needs of depositors and borrowers as well as
maintaining the flexibility to take advantage of investment opportunities.
Lawrence Federal's primary sources of funds consist of deposit inflows, loan
repayments, maturities and sales of investment securities and borrowings from
the Federal Home Loan Bank. While maturities and scheduled amortization of loans
and securities are predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic
conditions and competition.

     Liquidity management is both a daily and long-term responsibility of
management. Lawrence Federal adjusts its investments in liquid assets based upon
management's assessment of (1) expected loan demand, (2) expected deposit flows,
(3) yields available on interest-earning deposits and securities, and (4) the
objectives of its asset/liability management program. Excess liquid assets are
invested generally in interest-earning overnight deposits and short- and
intermediate-term U.S. Government and agency obligations.

     Lawrence Federal's most liquid assets are cash and short-term investments
(securities maturing in one year or less). The levels of these assets are
dependent on Lawrence Federal's operating, financing, lending and investing
activities during any given period. At December 31, 2003, cash and short-term
investments totaled $10.6 million. Securities classified as available-for-sale
totaled $26.3 million at December 31, 2003. In addition, at December 31, 2003,
Lawrence Federal had arranged the ability to borrow a total of approximately
$15.0 million from the Federal Home Loan Bank of Cincinnati.

     The primary investing activities of Lawrence Federal are the origination of
loans and the purchase of securities. In 2003, Lawrence Federal originated $17.5
million of loans and purchased $38.5 million of securities. In 2002, Lawrence
Federal originated $32.8 million of loans and purchased $14.4 million of
securities.

     Financing activities consist primarily of activity in deposit accounts and
Federal Home Loan Bank advances. Lawrence Federal experienced a net decrease in
total deposits of $7.9 million and $2.1 million for 2003 and 2002, respectively.
Deposit flows are affected by the overall level of interest rates, the interest
rates and products offered by Lawrence Federal and its local competitors and
other factors. Lawrence Federal generally manages the pricing of its deposits to
be competitive and to increase core deposit relationships. Occasionally,
Lawrence Federal offers promotional rates on certain deposit products in order
to attract deposits.

                                       39
<PAGE>

     At December 31, 2003, Lawrence Federal had outstanding commitments to
originate loans of $2.4 million. These loans are to be secured by properties
located in its market area. Lawrence Federal anticipates that it will have
sufficient funds available to meet its current loan commitments. Certificates of
deposit that are scheduled to mature in one year or less from December 31, 2003
totaled $32.0 million. Management believes, based on past experience, that a
significant portion of those deposits will remain with Lawrence Federal. Based
on the foregoing, Lawrence Federal considers its liquidity and capital resources
sufficient to meet its outstanding short-term and long- term needs.

     Lawrence Federal is subject to various regulatory capital requirements
administered by the Office of Thrift Supervision including a risk-based capital
measure. The risk-based capital guidelines include both a definition of capital
and a framework for calculating risk-weighted assets by assigning balance sheet
assets and off-balance sheet items to broad risk categories. At December 31,
2003, Lawrence Federal exceeded all of its regulatory capital requirements.
Lawrence Federal is considered "well capitalized" under regulatory guidelines.
See "REGULATION AND SUPERVISION--FEDERAL SAVINGS INSTITUTION REGULATION--CAPITAL
REQUIREMENTS" and note 11 of the notes to the financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

     In the normal course of operations, Lawrence Federal engages in a variety
of financial transactions that, in accordance with generally accepted accounting
principles, are not recorded in the financial statements, or are recorded in
amounts that differ from the notional amounts. These transactions involve, to
varying degrees, elements of credit, interest rate, and liquidity risk. Such
transactions are used by Lawrence Federal primarily to manage customers'
requests for funding.

     For the year ended December 31, 2003, Lawrence Federal engaged in no
off-balance sheet transactions reasonably likely to have a material effect on
its financial condition.

IMPACT OF ACCOUNTING PRONOUNCEMENTS

     During 2003, the Company adopted FASB Statement 149, Amendment of Statement
133 on Derivative Instruments and Hedging Activities, FASB Statement 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equities, FASB Statement 13 (Revised 2003), Employers'
Disclosures about Pensions and Other Postretirement Benefits, FASB
Interpretation 45, Guarantor's Accounting and Disclosure Requirements for
Guarantees, and FASB Interpretation 46, Consolidation of Variable Interest
Entities. Adoption of the new standards did not materially affect the Company's
operating results or financial condition.

EFFECT OF INFLATION AND CHANGING PRICES

     The consolidated financial statements and related financial data presented
in this prospectus have been prepared following generally accepted accounting
principles, which require the measurement of financial position and operating
results in terms of historical dollars without considering the change in the
relative purchasing power of money over time due to inflation. The primary
impact of inflation is reflected in the increased cost of Lawrence Federal's
operations. Unlike most industrial companies, virtually all the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates generally have a more significant impact on a financial
institution's performance than do general levels of inflation. Interest rates do
not necessarily move in the same direction or to the same extent as the prices
of goods and services.

                                       40
<PAGE>

ITEM 7.      FINANCIAL STATEMENTS

     The financial statements listed at Item 13 of this Form 10-KSB are
incorporated by reference into this Item 7 of Part II of Form 10-KSB.

ITEM 8.      CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
             FINANCIAL DISCLOSURE

     None.

ITEM 8A.     CONTROLS AND PROCEDURES

     The Company's management, including the Company's principal executive
officer and principal financial officer, have evaluated the effectiveness of the
Company's "disclosure controls and procedures," as such term is defined in Rule
13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act"). Based upon their evaluation, the principal executive
officer and principal financial officer concluded that, as of the end of the
period covered by this report, the Company's disclosure controls and procedures
were effective for the purpose of ensuring that the information required to be
disclosed in the reports that the Company files or submits under the Exchange
Act with the Securities and Exchange Commission (the "SEC") (1) is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and (2) is accumulated and communicated to the Company's
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.






                                       41
<PAGE>

                                    PART III


ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
             COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     The information relating to the directors and officers of Lawrence
Financial and information regarding compliance with Section 16(a) of the
Exchange Act is incorporated herein by reference to Lawrence Financial's Proxy
Statement for the 2004 Annual Meeting of Stockholders. The information
concerning the Company's code of ethics and business conduct is incorporated
herein by reference to Lawrence Financial's Proxy Statement for the 2004 Annual
Meeting of Stockholders. The Company's Code of Ethics and Business Conduct is
filed as an exhibit to this report.

     The following sets forth certain information regarding the executive
officers and key employees of Lawrence Federal Savings Bank who are not also
directors. The following individuals are elected annually and hold office until
their successors have been elected and qualified or until they are removed or
replaced.

     ROBROY WALTERS has served as Executive Vice President and Chief Financial
Officer of Lawrence Federal Savings Bank since 2000. From 1989 until joining
Lawrence Federal Savings Bank, Mr. Walters was with Peoples Bank NA and Peoples
Bancorp, Inc. where he served in various capacities.

     MARY Y. CRONACHER has been associated with Lawrence Federal Savings Bank
for 27 years. She has served as Vice President, Secretary and Treasurer since
1996.

     MARK R. POTTER has been associated with Lawrence Federal Savings Bank since
1990. He has served as Vice President since 1996.

     JOSEPH W. MARTIN has been associated with Lawrence Federal Savings Bank
since 2000. He was appointed Vice President effective January 14, 2003. Prior to
joining Lawrence Federal Savings Bank, Mr. Martin was with Fifth Third and Ohio
River Bank where he served in various capacities including branch manager and
Assistant Vice President.

     CAREY DUNFEE has been associated with Lawrence Federal Savings Bank since
1994 and since that time has served as Controller.

ITEM 10.     EXECUTIVE COMPENSATION

     The information regarding executive compensation is incorporated herein by
reference to Lawrence Financial's Proxy Statement for the 2004 Annual Meeting of
Stockholders.



                                       42
<PAGE>

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
             RELATED STOCKHOLDER MATTERS.

     The information relating to security ownership of certain beneficial owners
and management is incorporated herein by reference to Lawrence Financial's Proxy
Statement for the 2004 Annual Meeting of Stockholders.

     Management of the Company knows of no arrangements, including any pledge by
any person of securities of the Company, the operation of which may at a
subsequent date result or a change in control of the Company.

1Equity Compensation Plan Information

<TABLE>
<CAPTION>
------------------------------ ---------------------------- ----------------------- --------------------------

PLAN CATEGORY                  NUMBER OF SECURITIES         WEIGHTED-AVERAGE        NUMBER OF SECURITIES
                               TO BE ISSUED UPON EXERCISE   EXERCISE PRICE OF       REMAINING AVAILABLE FOR
                               OF OUTSTANDING OPTIONS,      OUTSTANDING OPTIONS,    FUTURE ISSUANCE UNDER
                               WARRANTS AND RIGHTS          WARRANTS AND RIGHTS     EQUITY COMPENSATION
                                                                                    PLANS (EXCLUDING
                                                                                    SECURITIES REFLECTED IN
                                                                                    COLUMN (A))
                               (A)                          (B)                     (C)
------------------------------ ---------------------------- ----------------------- --------------------------
<S>                                                 <C>                     <C>                        <C>
EQUITY COMPENSATION
PLANS APPROVED BY SECURITY
HOLDERS                                             58,187                  $14.45                     19,395
------------------------------ ---------------------------- ----------------------- --------------------------

EQUITY COMPENSATION
PLANS NOT APPROVED BY
SECURITY HOLDERS                                        --                      --                         --
------------------------------ ---------------------------- ----------------------- --------------------------

TOTAL                                               58,187                  $14.45                     19,395
------------------------------ ---------------------------- ----------------------- --------------------------
</TABLE>




ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information relating to certain relationships and related transactions
is incorporated herein by reference to Lawrence Financial's Proxy Statement for
the 2004 Annual Meeting of Stockholders.



                                       43
<PAGE>

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K.

  (a) (1) The following consolidated financial statements of Lawrence Federal
          are filed as part of this document under Item 7.
          o    Report of Independent Auditors.
          o    Consolidated Balance Sheets for the years ended December 31, 2003
               and 2002.
          o    Consolidated Statements of Income for the years ended December
               31, 2003 and 2002.
          o    Consolidated Statements of Comprehensive Income for the years
               ended December 31, 2003 and 2002.
          o    Consolidated Statements of Equity for the years ended December
               31, 2003 and 2002.
          o    Consolidated Statements of Cash Flows for the years ended
               December 31, 2003 and 2002.
          o    Notes to Consolidated Financial Statements

          (2)  All financial statement schedules are omitted because they are
               not required or applicable, or the required information is shown
               in the consolidated financial statements or the notes thereto.

          (3)  Exhibits
               3.1   Articles of Incorporation of Lawrence Financial Holdings,
                     Inc.(1)
               3.2   Bylaws of Lawrence Financial Holdings, Inc.(1)
               4.0   Specimen Stock Certificate of Lawrence Financial Holdings,
                     Inc.(1)
               10.1  Lawrence Federal Savings Bank Employment Agreement with
                     Jack L. Blair(2)
               10.2  Lawrence Financial Holdings, Inc. Employment Agreement with
                     Jack L. Blair(2)
               10.3  Lawrence Federal Savings Bank 401 (k) Savings Plan(1)
               10.4  Lawrence Federal Savings Bank Employee Severance
                     Compensation Plan(2)
               10.5  Lawrence Federal Savings Bank Supplemental Executive
                     Retirement Plan(2)
               10.6  Deferred Compensation Agreement dated as of June 25, 1996
                     between Lawrence Federal Savings Bank and Jack L. Blair(1)
               10.7  Form of Deferred Fee Agreement between Lawrence Federal
                     Savings Bank and individual directors(1)
               10.8  Form of Amended and Restated Director Retirement Agreement
                     between Lawrence Federal Savings Bank and individual
                     directors
               10.9  Agreement dated December 1, 1992 between Lawrence Federal
                     Savings Bank and Lanco Services, Inc.(1)
               10.10 Lawrence Financial Holdings, Inc. 2001 Stock-Based
                     Incentive Plan.(3)
               14.0  Code of Ethics and Business Conduct
               21.0  Subsidiary information is incorporated herein by reference
                     to Part I, Item 1, "Description of Business-Subsidiaries."
               23.0  Consent of Crowe Chizek and Company LLC
               31.1  Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
                     Officer
               31.2  Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
                     Officer
               32.1  Section 1350 Certification of Chief Financial Officer
               32.2  Section 1350 Certification of Chief Executive Officer
          (1)  Incorporated herein by reference from the Exhibits to Form SB-2,
               Registration Statement and amendments thereto, initially filed on
               September 8, 2000, Registration No. 333-45404.
          (2)  Incorporated herein by reference from the Exhibits to the
               Company's Annual Report on Form 10-KSB for the year ended
               December 31, 2000.
          (3)  Incorporated herein by reference to Appendix A to the Company's
               Proxy Statement for its 2001 annual meeting of shareholders filed
               on May 24, 2001.

  (b) Reports on Form 8-K

               On October 10, 2003, Lawrence Financial furnished a report on
          Form 8-K on which it reported the release of its results of operations
          for the quarter ended September 30, 2003.

                                       44
<PAGE>

ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information relating to Lawrence Financial's principal accountant is
incorporated herein by reference to Lawrence Financial's Proxy Statement for the
2004 Annual Meeting of Stockholders.










                                       45
<PAGE>

CONFORMED SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                      LAWRENCE FINANCIAL HOLDINGS, INC.


Date: March 12, 2004                  By: /s/ Jack L. Blair
                                          ---------------------------------
                                          Jack L. Blair
                                          President Chief Executive Officer
                                          and Director

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

NAME                           Title                                 Date
----                           -----                                 ----


/s/ Jack L. Blair              President, Chief Executive       March 12, 2004
----------------------------   Officer and Director
Jack L. Blair                  (principal executive officer)


/s/ RobRoy Walters             Chief Financial Officer          March 12, 2004
----------------------------   (principal financial and
RobRoy Walters                 accounting officer)


/s/ Tracy E. Brammer, Jr.      Chairman of the Board            March 12, 2004
----------------------------
Tracy E. Brammer, Jr.


/s/ Charles E. Austin, II      Director                         March 12, 2004
----------------------------
Charles E. Austin, II


/s/ Herbert J. Karlet          Director                         March 12, 2004
----------------------------
Herbert J. Karlet


/s/ Phillip O. Mcmahon         Director                         March 12, 2004
----------------------------
Phillip O. McMahon


/s/ Robert N. Taylor           Director                         March 12, 2004
----------------------------
Robert N. Taylor


                                       46
<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.

                                  Ironton, Ohio

                        CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002




                                    CONTENTS




REPORT OF INDEPENDENT AUDITORS............................................... 1


CONSOLIDATED FINANCIAL STATEMENTS

   CONSOLIDATED BALANCE SHEETS............................................... 2

   CONSOLIDATED STATEMENTS OF INCOME......................................... 3

   CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME .......................... 4

   CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY................ 5

   CONSOLIDATED STATEMENTS OF CASH FLOWS..................................... 6

   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................................ 7




<PAGE>





                         REPORT OF INDEPENDENT AUDITORS



Board of Directors
Lawrence Financial Holdings, Inc.
Ironton, Ohio


We have audited the accompanying consolidated balance sheets of Lawrence
Financial Holdings, Inc. as of December 31, 2003 and 2002, and related
consolidated statements of income, comprehensive income, changes in
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Lawrence Financial Holdings, Inc. as of December 31, 2003 and 2002, and the
consolidated results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.


                                          /s/ Crowe Chizek and Company LLC


Columbus, Ohio
January 29, 2004

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

                                                                              1.

<PAGE>

<TABLE>
<CAPTION>

                               LAWRENCE FINANCIAL HOLDINGS, INC.
                                  CONSOLIDATED BALANCE SHEETS
                                  December 31, 2003 and 2002

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

                                                                         2003               2002
                                                                         ----               ----
ASSETS
<S>                                                                 <C>               <C>
  Cash and due from banks                                           $   10,134,534    $   16,140,900
  Merrill Lynch money market fund                                          508,695           179,600
                                                                    --------------    --------------
      Total cash and cash equivalents                                   10,643,229        16,320,500
  Securities available for sale, at fair value                          26,247,238        14,192,370
  Loans, net of allowance of $1,014,448 in 2003
    and $1,110,813 in 2002                                              80,882,658        96,457,033
  Federal Home Loan Bank stock                                             639,100           614,400
  Premises and equipment, net                                            3,474,160         3,340,888
  Accrued interest receivable                                              566,309           685,755
  Cash surrender value of life insurance                                 2,284,990         2,131,685
  Other assets                                                             724,445           645,916
                                                                    --------------    --------------

                                                                    $  125,462,129    $  134,388,547
                                                                    ==============    ==============


LIABILITIES AND SHAREHOLDERS' EQUITY
  Liabilities
      Noninterest-bearing deposits                                  $    7,753,907    $    1,995,918
      Interest-bearing deposits                                        103,241,721       116,930,237
                                                                    --------------    --------------
           Total deposits                                              110,995,628       118,926,155
      Other liabilities                                                    441,248           673,601
                                                                    --------------    --------------
           Total liabilities                                           111,436,876       119,599,756

  Shareholders' Equity
      Common stock; par value $0.01 per share; shares
        authorized:  4,000,000; shares issued:  799,110                      7,991             7,991
      Additional paid-in capital                                         7,559,313         7,467,042
      Retained earnings                                                  9,781,499         9,485,971
      Treasury stock, at cost; shares: 149,000 in 2003
        and 94,000 in 2002                                              (2,728,688)       (1,683,600)
      Unearned ESOP shares; unearned shares: 37,251
        in 2003 and 43,458 in 2002                                        (372,510)         (434,580)
      Unearned restricted stock awards; unearned
        shares: 9,310 in 2003 and 13,965 in 2002                          (134,530)         (201,794)
      Accumulated other comprehensive income (loss),
        net of tax of $(45,242) in 2003 and $76,119 in 2002                (87,823)          147,761
                                                                    --------------    --------------
           Total shareholders' equity                                   14,025,252        14,788,791
                                                                    --------------    --------------

                  Total liabilities and shareholders' equity        $  125,462,129    $  134,388,547
                                                                    ==============    ==============

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

                     See accompanying notes to consolidated financial statements.

                                                                                                  2.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                             LAWRENCE FINANCIAL HOLDINGS, INC.
                              CONSOLIDATED STATEMENTS OF INCOME
                           Years ended December 31, 2003 and 2002

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

                                                                  2003             2002
                                                                  ----             ----
INTEREST INCOME
<S>                                                            <C>               <C>
     Loans, including fees                                     $  6,432,477    $   7,930,951
     Taxable securities                                             709,773          647,490
     Tax exempt securities                                          106,412           23,027
     Overnight deposits                                              73,430          144,785
                                                               ------------    -------------
                                                                  7,322,092        8,746,253
INTEREST EXPENSE
     Deposits                                                     2,360,508        3,631,129
     Federal Home Loan Bank borrowings                                   --          116,905
                                                               ------------    -------------
                                                                  2,360,508        3,748,034
                                                               ------------    -------------

NET INTEREST INCOME                                               4,961,584        4,998,219

Provision for loan losses                                           915,000          927,000
                                                               ------------    -------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES               4,046,584        4,071,219

NONINTEREST INCOME
     Net securities gains                                           189,303           54,564
     Service charges                                                502,783          451,963
     Gain on disposal of premises and equipment                         791               --
     Other                                                          235,321          255,104
                                                               ------------    -------------
                                                                    928,198          761,631
NONINTEREST EXPENSE
     Salaries and benefits                                        1,962,989        1,724,568
     Deposit insurance premiums                                      19,011           37,104
     Occupancy and equipment                                        425,810          371,174
     Data processing                                                624,627          535,132
     Professional fees                                              245,716          234,560
     Franchise tax                                                  138,453          127,152
     Loss on disposal of premises and equipment                          --           25,079
     Advertising expense                                             80,135          109,649
     Other                                                          868,450          792,020
                                                               ------------    -------------
                                                                  4,365,191        3,956,438
                                                               ------------    -------------

INCOME BEFORE INCOME TAX                                            609,591          876,412

Provision for income tax                                            132,401          269,963
                                                               ------------    -------------

NET INCOME                                                     $    477,190    $     606,449
                                                               ============    =============

Basic earnings per common share                                $       0.78    $        0.91
                                                               ============    =============

Diluted earnings per common share                              $       0.76    $        0.90
                                                               ============    =============

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

               See accompanying notes to consolidated financial statements.

                                                                                          3.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                             LAWRENCE FINANCIAL HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                          Years ended December 31, 2003 and 2002

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

                                                                       2003           2002
                                                                       ----           ----
<S>                                                                 <C>            <C>
Net income                                                          $  477,190     $  606,449
Other comprehensive income:
   Unrealized gains (losses) arising during period                    (167,642)       228,432
   Reclassification adjustment for gains
     included in income                                               (189,303)       (54,564)
                                                                    ----------     ----------
                                                                      (356,945)       173,868
   Income tax expense                                                 (121,361)       (59,115)
                                                                    ----------     ----------
     Other comprehensive income (loss), net of tax                    (235,584)       114,753
                                                                    ----------     ----------

Comprehensive income                                                $  241,606     $  721,202
                                                                    ==========     ==========








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

               See accompanying notes to consolidated financial statements.

                                                                                           4.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                             LAWRENCE FINANCIAL HOLDINGS, INC.
                                 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                           Years ended December 31, 2003 and 2002

-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Unearned
                                      Additional                              Unearned    Restricted      Other
                             Common     Paid-In     Retained     Treasury       ESOP         Stock     Comprehensive   Accumulated
                              Stock     Capital     Earnings       Stock       Shares       Awards      Income (Loss)     Total
                              -----     -------     --------       -----       ------       ------      ------------      -----
<S>               <C>        <C>      <C>          <C>          <C>         <C>          <C>             <C>           <C>
Balance - January 1, 2002    $ 7,991  $ 7,426,239  $9,076,779   $       --  $  (496,660) $  (269,059)    $  33,008     $15,778,298

Net Income                        --           --     606,449           --           --           --            --         606,449

Net unrealized
  appreciation on
  securities available
  for sale, net
  of tax of $59,115               --           --          --           --           --           --       114,753         114,753

Treasury stock acquired -
  94,000 shares                   --           --          --   (1,683,000)          --           --            --      (1,683,600)

Cash dividend -
  $0.28 per share                 --           --    (197,257)          --           --           --            --        (197,257)

Stock based compensation -
  4,655 stock awards earned
  and 6,208 shares committed
  to be released under ESOP       --       40,803          --           --       62,080       67,265            --         170,148
                             -------  -----------  ----------  -----------  -----------  -----------     ---------    ------------

Balance December 31, 2002      7,991    7,467,042   9,485,971   (1,683,600)    (434,580)    (201,794)      147,761      14,788,791

Net Income                        --           --     477,190           --           --           --            --         477,190

Net unrealized
  depreciation on
  securities available
  for sale, net
  of tax of $(121,361)            --           --          --           --           --           --      (235,584)       (235,584)

Treasury stock acquired -
  55,000 shares                   --           --          --   (1,045,088)          --           --            --      (1,045,088)

Cash dividend -
  $0.28 per share                 --           --    (181,662)          --           --           --            --        (181,662)

Stock based compensation -
  4,655 stock awards earned
  and 6,207 shares committed
  to be released under ESOP       --       92,271          --           --       62,070       67,264            --         221,605
                             -------  -----------  ----------  -----------  -----------  -----------     ---------    ------------

Balance December 31, 2003    $ 7,991  $ 7,559,313  $9,781,499  $(2,728,688) $  (372,510) $  (134,530)    $ (87,823)    $14,025,252
                             =======  ===========  ==========  ===========  ===========  ===========     =========    ============

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

                                   See accompanying notes to consolidated financial statements.

                                                                                                                                 5.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                 LAWRENCE FINANCIAL HOLDINGS, INC.
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                               Years ended December 31, 2003 and 2002

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

                                                                             2003             2002
                                                                             ----             ----
<S>                                                                      <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                          $     477,190    $     606,449
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                          258,501          208,121
         Provision for loan losses                                             915,000          927,000
         Stock dividend on Federal Home Loan Bank stock                        (24,700)         (27,400)
         Premium amortization                                                  199,988            6,161
         Net securities gains                                                 (189,303)         (54,564)
         (Gain) Loss on disposal of fixed assets                                  (791)          25,079
         Deferred tax benefit                                                   43,375           (2,252)
         ESOP expense                                                          133,686          100,272
         Restricted stock award expense                                         67,264           67,265
         Change in other assets and liabilities                                  1,596         (237,361)
                                                                         -------------    -------------
              Net cash from operating activities                             1,881,806        1,618,770
                                                                         -------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of:
         Securities available for sale                                     (38,457,140)     (14,398,213)
         Premises and equipment                                               (396,532)        (258,896)
     Proceeds from:
         Sale of securities available for sale                              16,544,478        7,610,827
         Calls, maturities and principal repayments of securities
           available for sale                                                9,490,164        3,863,159
         Sale of equipment                                                       5,550               --
     Net change in loans                                                    14,411,680        7,437,673
                                                                         -------------    -------------
              Net cash from investing activities                             1,598,200        4,254,550

CASH FLOWS FROM FINANCING ACTIVITIES
     Net change in deposits                                                 (7,930,527)       2,130,271
     Repayment of Federal Home Loan Bank long-term borrowings                       --       (2,000,000)
     Cash dividend paid                                                       (181,662)        (197,257)
     Purchase of treasury stock                                             (1,045,088)      (1,683,600)
                                                                         -------------    -------------
              Net cash from financing activities                            (9,157,277)      (1,750,586)
                                                                         -------------    -------------

Net change in cash and cash equivalents                                      5,677,271        4,122,734

Cash and cash equivalents at beginning of year                              16,320,500       12,197,766
                                                                         -------------    -------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                 $  10,643,229    $  16,320,500
                                                                         =============    =============

SUPPLEMENTAL DISCLOSURES:
     Cash paid during the year for:
         Interest                                                        $   2,352,603    $   3,757,756
         Income taxes                                                          150,000          386,500

     Non-cash transactions
         Transfer of loans to real estate owned                          $     247,695    $     195,898

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

                        See accompanying notes to consolidated financial statemets.

                                                                                                      6.
</TABLE>

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
Lawrence Financial Holdings, Inc. and its wholly-owned subsidiary, Lawrence
Federal Savings Bank (the "Bank") and the Bank's wholly-owned subsidiary,
Lawrence Financial Services Company (together, the "Company"). Intercompany
transactions and balances are eliminated in consolidation.

NATURE OF OPERATIONS: The Company provides financial services through its
offices in Lawrence and Scioto Counties located in Southeastern Ohio. Its
primary deposit products are checking, savings, and term certificate accounts,
and its primary lending products are real estate mortgage and installment loans.
Substantially all loans are secured by specific items of collateral including
consumer assets and real estate. Lawrence Financial Services Company holds real
property for investment purposes. Management considers the Company to operate in
one segment, banking.

USE OF ESTIMATES: To prepare financial statements in conformity with accounting
principles generally accepted in the United States of America, management makes
estimates and assumptions based on available information. These estimates and
assumptions affect the amounts reported in the financial statements and the
disclosures provided, and future results could differ. The allowance for loan
losses, fair values of financial instruments and status of contingencies are
particularly subject to change.

CASH FLOWS: Cash and cash equivalents include cash on hand and deposits with
other financial institutions with original maturities of 90 days or less. Net
cash flows are reported for loan and deposit transactions and short-term
borrowings.

SECURITIES: Securities are classified as available for sale as they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported in other comprehensive income.
Other securities such as Federal Home Loan Bank stock are carried at cost.
Securities are written down to fair value when a decline in fair value is not
temporary. Gains and losses on sales are based on the amortized cost of the
security sold. Interest and dividend income, adjusted by amortization of
purchase premium or discount using the interest method, is included in earnings.

LOANS: Loans are reported at principal balances outstanding, net of unearned
interest, deferred loan fees and costs, and an allowance for loan losses.
Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over contractual life of the loan.


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

                                  (Continued)

                                                                              7.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Interest on real estate and certain consumer loans is accrued over the term of
the loans based on the principal balance outstanding. Where serious doubt exists
as to the collectibility of a loan, the accrual of interest is discontinued. The
carrying values of impaired loans are periodically adjusted to reflect cash
payments, revised estimates of future cash flows and increases in the present
value of expected cash flows due to the passage of time. Cash payments
representing interest income are reported as such. Other cash payments are
reported as reductions in carrying value, while increases or decreases due to
changes in estimates of future payments and due to the passage of time are
reported as adjustments to the allowance for loan losses. If these adjustments
cause the allowance for loan losses to require adjustment, such adjustment is
reported as an adjustment to the provision for loan losses.

ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is a valuation
allowance for probable incurred credit losses, increased by the provision for
loan losses and decreased by charge-offs less recoveries. Loan losses are
charged against the allowance when management believes the uncollectibility of a
loan balance is confirmed. Subsequent recoveries, if any, are credited to the
allowance. Management estimates the allowance balance required using past loan
loss experience, the nature and volume of the portfolio, information about
specific borrower situations and estimated collateral values, economic
conditions, and other factors. Allocations of the allowance may be made for
specific loans, but the entire allowance is available for any loan that, in
management's judgment, should be charged-off.

The allowance consists of specific and general components. The specific
component relates to loans that are individually classified as impaired or loans
otherwise classified as substandard or doubtful. The general component covers
non-classified loans and is based on historical loss experience adjusted for
current factors.

Loan impairment is reported when full payment under the loan terms is not
expected. Impairment is evaluated in total for smaller-balance loans of similar
nature such as residential mortgage, consumer, and credit card loans, and on an
individual loan basis for other loans. If a loan is impaired, a portion of the
allowance is allocated so that the loan is reported, net, at the present value
of estimated future cash flows using the loan's existing rate or at the fair
value of collateral if repayment is expected solely from the collateral. Loans
are evaluated for impairment when payments are delayed, typically 120 days or
more, or when it is probable that not all principal and interest amounts will be
collected according to the original terms of the loan. While the factors that
identify a credit for consideration for measurement of impairment or nonaccrual
are similar, the measurement considerations differ. A loan is impaired when
management believes it is probable that they will be unable to collect all
amounts due according to the contractual terms of the loan agreement. A loan is
placed on nonaccrual when payments are more than 120 days past due unless the
loan is adequately collateralized and in the process of collection.

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

                                  (Continued)

                                                                              8.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

PREMISES AND EQUIPMENT: Land is carried at cost. Premises and equipment are
stated at cost less accumulated depreciation. Depreciation is computed over the
useful lives of the respective premises and equipment, which are primarily 30 to
50 years for premises and 5 to 10 years for furniture, fixtures and equipment.
Maintenance and repairs are charged to expense as incurred and improvements that
extend the useful lives of assets are capitalized.

REAL ESTATE OWNED: Real estate properties acquired in collection of a loan are
recorded at the lower of cost, which is the unpaid balance plus foreclosure
costs or fair value at acquisition. Any reduction to fair value from the
carrying value of the related loan is accounted for as a loan loss. After
acquisition, a valuation allowance reduces the reported amount to the lower of
the initial amount or fair value less costs to sell. Expenses, gains and losses
on disposition, and changes in the valuation allowance are reported in other
expenses.

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

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

EMPLOYEE STOCK OWNERSHIP PLAN: The cost of shares issued to the ESOP, but not
yet allocated to participants, is shown as a reduction of shareholders' equity.
Compensation expense is based on the market price of shares as they are
committed to be released to participant accounts.

STOCK-BASED COMPENSATION: Employee compensation under the stock option plan is
reported if options are granted below market price at grant date. Pro forma
disclosures of compensation cost of stock-based awards have been determined
using the fair value method that considers the time value of the option
considering the volatility of the Company's stock, expected dividend yield, and
the risk-free interest rate over the expected life of the option using a
Black-Scholes valuation model.

The options granted on December 31, 2001 have an exercise price of $14.45 and
expire in December 2011. One-fifth of the options vested on the date of grant;
the remaining options vest over four years. The fair value of options granted in
2001 was estimated using the following assumptions: Risk-free interest rate of
4.49%, expected life of 5 years, expected volatility of stock price of 27% and
expected dividend yield of 1.94%. Based on these assumptions, the estimated fair
value of options granted in 2001 was $3.77 per option.

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

                                  (Continued)

                                                                              9.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The following pro forma information presents net income and earnings per common
share had the fair value of the options been used to measure compensation cost
for the stock option plan.

<TABLE>
<CAPTION>
                                                                 2003           2002
                                                                 ----           ----
<S>                                                           <C>            <C>
      Reported net income                                     $  477,190     $  606,449
      Pro forma impact                                           (38,901)       (38,901)
                                                              ----------     ----------
      Pro forma net income                                    $  438,289     $  567,548
                                                              ==========     ==========

      Reported basic earnings per common share                $     0.78     $     0.91
      Pro forma impact                                             (0.06)         (0.06)
                                                              ----------     ----------
      Pro forma basic earnings per common share               $     0.72     $     0.85
                                                              ==========     ==========

      Reported diluted earnings per common share              $     0.76     $     0.90
      Pro forma impact                                             (0.06)         (0.05)
                                                              ----------     ----------
      Pro forma diluted earnings per common share             $     0.70     $     0.85
                                                              ==========     ==========
</TABLE>

COMPREHENSIVE INCOME: Comprehensive income consists of net income and other
comprehensive income. Other comprehensive income includes unrealized gains and
losses on securities available for sale, which are also recognized as a separate
component of equity.

EARNINGS PER COMMON SHARE: Basic earnings per common share is net income divided
by the weighted average number of common shares outstanding during the period.
ESOP shares are considered to be outstanding for this calculation unless they
are unearned. Restricted stock awards are considered outstanding as they are
earned. Diluted earnings per common share includes the dilutive effect of
additional potential common shares issuable under stock options and unearned
restrictive stock awards.

The weighted average number of common shares outstanding for basic and diluted
earnings per share computations were as follows.

<TABLE>
<CAPTION>
                                                                 2003             2002
                                                                 ----             ----
<S>                                                               <C>             <C>
   Net weighted-average shares outstanding - Basic                608,873         663,893
   Effect of stock options                                         16,523           5,436
   Effect of non-vested stock awards                                2,394           1,133
                                                              -----------     -----------

   Weighted-average shares outstanding - Diluted                  627,790         670,462
                                                              ===========     ===========
</TABLE>

There were no antidilutive stock options at December 31, 2003 and 2002.

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

                                  (Continued)

                                                                             10.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

NEW ACCOUNTING PRONOUNCEMENTS: During 2003, the Company adopted FASB Statement
149, AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, FASB Statement 150, ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS
WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITIES, FASB Statement 132
(revised 2003), EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT
BENEFITS, FASB Interpretation 45, GUARANTOR'S ACCOUNTING AND DISCLOSURE
REQUIREMENTS FOR GUARANTEES, and FASB Interpretation 46, CONSOLIDATION OF
VARIABLE INTEREST ENTITIES. Adoption of the new standards did not materially
affect the Company's operating results or financial condition.

RECLASSIFICATIONS: Some items in the prior consolidated financial statements
have been reclassified to conform to current presentation.


NOTE 2 - SECURITIES

The fair value of securities available for sale at year-end is as follows.

<TABLE>
<CAPTION>
                                        Amortized      Unrealized      Unrealized         Fair
                                          Cost            Gains          Losses           Value
                                          ----            -----          ------           -----
   2003:
   -----
<S>                                   <C>              <C>            <C>             <C>
   U.S. Government agencies           $  7,233,740     $     2,309    $    (21,697)   $  7,214,352
   Mortgage backed securities           15,913,390           3,459        (146,251)     15,770,598
   State and municipal securities        3,233,173          37,847          (8,732)      3,262,288
                                      ------------     -----------    ------------    ------------

                                      $ 26,380,303     $    43,615    $   (176,680)   $ 26,247,238
                                      ============     ===========    ============    ============

   2002:
   -----
   U.S. Government agencies           $  4,754,331     $   155,967    $         --    $  4,910,298
   Mortgage backed securities            7,567,723          78,905          (8,873)      7,637,755
   State and municipal securities        1,646,436              --          (2,119)      1,644,317
                                      ------------     -----------    ------------    ------------

                                      $ 13,968,490     $   234,872    $    (10,992)   $ 14,192,370
                                      ============     ===========    ============    ============
</TABLE>

Contractual maturities of securities at year-end 2003 were as follows.
Securities not due at a single maturity date are shown separately.

                                                        Fair
                                                        Value
                                                        -----

      Due after one year through five years        $    5,232,753
      Due after five years through ten years              988,518
      Due after ten years                               4,255,369
      Mortgage backed securities                       15,770,598
                                                   --------------

                                                   $   26,247,238
                                                   ==============

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

                                  (Continued)

                                                                             11.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 2 - SECURITIES (Continued)

Proceeds from sales of securities were $16,544,478 and $7,610,827 for 2003 and
2002. Gross gains of $189,303 and $54,564 were recognized on those sales in 2003
and 2002.

Securities with fair value of $2,779,238 and $4,996,292 at December 31, 2003 and
2002 were pledged to secure public deposits.

Securities with unrealized losses at year end 2003 not recognized in income are
as follows.

<TABLE>
<CAPTION>
                                   Less Than 12 Months           12 Months or More                 Total
                                   -------------------           -----------------                 -----
                                   Fair       Unrealized       Fair        Unrealized        Fair         Unrealized
Description of Securities         Value          Loss          Value          Loss           Value           Loss
-------------------------         -----          ----          -----          ----           -----           ----

<S>                            <C>           <C>            <C>           <C>             <C>             <C>
U.S. Government agencies       $ 4,212,666   $   (21,697)   $       --    $       --      $ 4,212,666     $ (21,697)
Mortgage backed securities      13,597,687      (137,634)      862,186         (8,617)     14,459,873      (146,251)
State and municipal securities     668,091        (8,732)           --             --         668,091        (8,732)
                               -----------    ----------    ----------    -----------     -----------     ----------

Total temporarily impaired     $18,478,444   $  (168,063)   $  862,186    $    (8,617)    $19,340,630     $(176,680)
                               ===========   ===========    ==========    ===========     ===========     ==========
</TABLE>

Unrealized losses on securities have not been recognized into income because the
issuers' bonds are of high credit quality (rated AA or higher), management has
the intent and ability to hold for the foreseeable future, and the decline in
fair value is largely due to increases in market interest rates.


NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are as follows.
                                                        DECEMBER 31,
                                                        ------------
                                                 2003                 2002
                                                 ----                 ----
   1-4 family residential
    mortgage loans                           $ 40,000,488        $ 43,967,493
   Other real estate loans                      9,001,410          10,165,401
   Automobile loans                            14,786,276          18,742,226
   Mobile home loans                           12,288,737          15,193,054
   Other                                        3,765,064           6,857,022
                                             ------------        ------------
                                               79,841,975          94,925,196
   Net deferred loan origination
    costs                                       2,055,131           2,642,650
   Allowance for loan losses                   (1,014,448)         (1,110,813)
                                             ------------        ------------

      Total                                  $ 80,882,658        $ 96,457,033
                                             ============        ============

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

                                  (Continued)

                                                                             12.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Activity in the allowance for loan losses is as follows.

                                                    Years Ended December 31,
                                                    ------------------------
                                                   2003                 2002
                                                   ----                 ----

      Beginning balance                        $  1,110,813        $  1,232,085
      Provision for loan losses                     915,000             927,000
      Charge-offs                                (1,058,423)         (1,105,773)
      Recoveries                                     47,058              57,501
                                               ------------        ------------

      Ending balance                           $  1,014,448        $  1,110,813
                                               ============        ============

Impaired loans for the years ended December 31, 2003 and 2002 were not material.

                                                        At December 31,
                                                        ---------------
                                                   2003                2002
                                                   ----                ----

      Accruing loans past due 90 days or more  $  1,491,755        $  1,411,000
      Nonaccruing loans                             340,006             531,000
                                               ------------        ------------

      Total nonperforming loans                $  1,831,761        $  1,942,000
                                               ============        ============

In the normal course of business, the Company has made loans to certain
directors, executive officers and their associates. Loan activity relating to
these individuals for the year ended December 31, 2003 is as follows.

      Beginning balance                        $  1,088,458
      New loans                                     159,939
      Repayments                                    (79,889)
      Other changes                                  54,387
                                               ------------

      Ending balance                           $  1,222,895
                                               ============

Other changes represent loans applicable to the current reporting period that
are excludable from the other report period, due to a change of individuals
considered to be executive officers.


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

                                  (Continued)

                                                                             13.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 4 - PREMISES AND EQUIPMENT

Office properties and equipment consisted of the following.

                                                           December 31,
                                                           ------------
                                                      2003              2002
                                                      ----              ----

      Land                                       $  1,041,609     $  1,041,609
      Buildings and improvements                    3,418,953        3,375,251
      Furniture and equipment                       1,434,842        1,096,497
      Automobile                                       24,611           37,749
                                                 ------------     ------------
           Total cost                               5,920,015        5,551,106
      Accumulated depreciation                     (2,445,855)      (2,210,218)
                                                 ------------     ------------

                                                 $  3,474,160     $  3,340,888
                                                 ============     ============

NOTE 5 - DEPOSITS

Interest-bearing deposits consisted of the following.

                                                          December 31,
                                                          ------------
                                                     2003              2002
                                                     ----              ----

      Savings accounts                           $ 29,069,793     $ 33,710,735
      Money market and NOW accounts                19,259,562       14,963,336
      Certificates of deposit                      54,912,366       68,256,166
                                                 ------------     ------------

                                                 $103,241,721     $116,930,237
                                                 ============     ============

Certificates of deposit of greater than $100,000 were $12,932,162 and
$17,732,485 at December 31, 2003 and 2002. The balances over $100,000 are not
federally insured.

Maturities of certificates of deposits are as follows.

                                                 December 31,
                                                      2003
                                                      ----

          2004                                   $ 32,043,585
          2005                                     11,050,748
          2006                                      5,675,244
          2007                                      3,301,112
          2008                                      2,248,301
          Thereafter                                  593,376
                                                 ------------

                                                 $ 54,912,366
                                                 ============

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

                                  (Continued)

                                                                             14.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 6 - FEDERAL HOME LOAN BANK (FHLB) BORROWINGS

At December 31, 2003 and 2002, the Company had no FHLB borrowings. At December
31, 2003, the Company had letters of credit from the FHLB totaling $10,500,000,
for which $14,175,000 of eligible 1-4 family residential mortgage loans and
$639,100 of FHLB stock were pledged to the FHLB to secure these letters of
credit. The letters of credit are pledged by the Company to secure public
deposits.


NOTE 7 - COMMITMENTS, CONTINGENCIES, CONCENTRATIONS AND FINANCIAL
  INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

Some financial instruments are used to meet customer-financing needs, including
commitments to make loans. These involve, to varying degrees, credit and
interest-rate risks more than the amount reported in the consolidated balance
sheet.

Commitments to extend credit were as follows.

                                                         December 31,
                                                         ------------
                                                    2003              2002
                                                    ----              ----

   Fixed rate                                   $    149,600      $   696,675
   Variable rate                                   2,198,193        4,471,941
                                                ------------      -----------
                                                $  2,347,793      $ 5,168,616
                                                ============      ===========

   Range of interest rates on
     commitments                              3.75% to 12.00%   4.25% to 6.75%

Commitments to make loans are agreements to lend to a customer as long as there
is no violation of any condition established in the commitment, and generally
have fixed expiration dates. Exposure to credit loss if the other party does not
perform is represented by the contractual amount of these items. Collateral or
other security is normally not obtained for these financial instruments before
their use, and many of the commitments are expected to expire without being
used.

At December 31, 2003, the Company had $6,084,420 in demand deposits due from the
Federal Home Loan Bank of Cincinnati.

The Company is, from time to time, involved in various lawsuits and claims that
arise in the normal course of business. In the opinion of management, any
liability that may result from these lawsuits and claims will not materially
affect the financial position or results of operations of the Company.

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

                                  (Continued)

                                                                             15.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 8 - EMPLOYEE BENEFITS

RETIREMENT PLAN: The Company sponsors a 401(k) profit sharing plan for eligible
employees. Under the plan, employees who are at least 21 1/2 years of age and
have completed six months of service are eligible to participate. The Company
matches each employee's contribution at a rate of 100% of employees'
contributions up to 5% of gross compensation. Participants become 100% vested as
to the Company's contributions after three years of service. Contributions and
expense for the years ended December 31, 2003 and 2002 totaled $39,259 and
$38,276.

EMPLOYEE STOCK OWNERSHIP PLAN: Employees participate in an Employee Stock
Ownership Plan (ESOP). On December 29, 2000, the ESOP borrowed $620,660 from the
Company to purchase 62,066 shares of common stock at $10 per share. The Company
makes discretionary contributions to the ESOP, and the ESOP uses funds it
receives to repay the loan. Cash dividends paid on unallocated shares are used
to reduce the accrued interest and principal payable amount of the ESOP's loan
payable to the Company. ESOP shares are allocated to participants based on
relative compensation and expense is recorded. Participants receive the shares
at the end of employment.

Contributions to the ESOP during 2003 and 2002 were $90,373 and $90,373. Expense
for 2003 and 2002 was $133,686 and $100,272.

Shares held by the ESOP at December 31, 2003 and 2002 were as follows.

                                                        December 31,
                                                        ------------
                                                    2003           2002
                                                    ----           ----

   Allocated to participants                          24,815         18,608
   Unearned                                           37,251         43,458
                                                ------------    -----------

   Total ESOP shares                                  62,066         62,066
                                                ============    ===========

   Fair value of unearned shares                $  1,024,210    $   699,674
                                                ============    ===========

DEFERRED COMPENSATION PLAN: The Bank makes payments to retired directors under a
plan approved by the Board of Directors. Outside directors who currently serve
on the Board are also eligible for payments under deferred fee and director
emeritus retirement plans approved by the Board of Directors upon retirement.
The present value of payments expected to be provided are accrued during the
service period of the covered individuals. Expenses related to the plans
amounted to $41,412 and $44,625 for the years ended December 31, 2003 and 2002.


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

                                  (Continued)

                                                                             16.
<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 8 - EMPLOYEE BENEFITS  (Continued)

STOCK-BASED INCENTIVE PLAN: On July 5, 2001, the shareholders approved the
Lawrence Financial Holdings, Inc. 2001 Stock-Based Incentive Plan (the "Plan").
The Plan authorized the granting of up to 77,582 shares of common stock as
options and 31,033 shares of common stock as restricted stock awards. On
December 31, 2001, the Board of Directors granted options to purchase 58,187
shares of common stock at an exercise price equal to the market value (as
defined in the Plan) to certain employees, officers and directors of the
Company. One-fifth of the options awarded were exercisable immediately and the
remainder becomes exercisable on each of the four anniversaries of the date of
grant. The option period expires 10 years from the date of grant.

Following is a summary of stock option plan activity during 2003 and 2002.

<TABLE>
<CAPTION>
                                                   2003                          2002
                                         -------------------------     --------------------------
                                                         Weighted                      Weighted
                                                          Average                       Average
                                                         Exercise                      Exercise
                                           Shares          Price          Shares         Price
                                           ------          -----          ------         -----
<S>                                         <C>          <C>              <C>          <C>
   Outstanding at beginning of year         58,187       $  14.45         58,187       $  14.45
   Granted                                      --             --             --             --
                                         ---------                     ---------

   Outstanding at end of year               58,187       $  14.45         58,187       $  14.45
                                         =========                     =========

   Options exercisable at year-end          34,916       $  14.45         23,278       $  14.45

   Remaining shares available
     for grant as options                   19,395                        19,395
</TABLE>

At December 31, 2003, the 58,187 options outstanding had a weighted average
remaining contractual life of 8 years.

Restricted stock awards are used as a means of providing directors and certain
key employees of the Company with an ownership interest in the Company in a
manner designed to compensate such directors and key employees for services to
the Company.

On December 31, 2001, the Board of Directors awarded 23,283 shares of restricted
stock to outside directors and certain officers of the Company. No shares had
been previously awarded. One-fifth of such shares are earned and nonforfeitable
on each of the first four anniversaries of the date of the award; the first
fifth became exercisable on the award date. 13,973 shares have vested at
December 31, 2003. In the event of the death or disability of a participant or a
change in control of the Company, however, the participant's shares will be

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

                                  (Continued)

                                                                             17.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 8 - EMPLOYEE BENEFITS  (Continued)

deemed earned and nonforfeitable upon such date. At December 31, 2003, there
were 7,750 shares reserved for future awards. Compensation expense related to
restricted stock awards is based upon the cost of the shares, which approximates
fair value at the date of grant. The compensation expense totaled $67,264 and
$67,265 for the years ended December 31, 2003 and 2002, respectively.


NOTE 9 - INCOME TAXES

An analysis of the provision for income tax is as follows.

                                                           December 31,
                                                     -----------------------
                                                        2003          2002
                                                        ----          ----

   Current                                           $  89,026     $ 272,215
   Deferred                                             43,375        (2,252)
                                                     ---------     ---------

                                                     $ 132,401     $ 269,963
                                                     =========     =========

The sources of gross deferred tax assets and liabilities are as follows.

                                                           December 31,
                                                     -----------------------
                                                        2003          2002
                                                        ----          ----
   Deferred tax assets
       Allowance for loan losses                     $ 344,912     $ 367,933
       Deferred compensation                           145,808       164,608
       Accrued ESOP                                      9,112        22,898
       Accrued restrictive stock awards                     --           408
       Net unrealized loss on securities
         available for sale                             45,242            --
       Tax credit carryforwards                         38,070            --

   Deferred tax liabilities
       FHLB stock dividends                            136,536)     (128,138)
       Deferred loan fees/cost                         (15,916)      (24,142)
       Net unrealized gain on securities
          available for sale                                --       (76,119)
       Depreciation                                    (52,968)      (27,710)
                                                     ---------     ---------

          Net deferred tax asset                     $ 377,724     $ 299,738
                                                     =========     =========

The bank has sufficient taxes paid in current and prior years to warrant
recording the full deferred tax asset without a valuation allowance.

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

                                  (Continued)

                                                                             18.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 9 - INCOME TAXES (Continued)

Total federal income tax expense differs from the expected amounts computed by
applying the statutory federal tax rate of 34% to income before taxes. The
reasons for this difference are as follows.

<TABLE>
<CAPTION>
                                                           Years Ended December 31,
                                             -------------------------------------------------
                                                       2003                     2002
                                             ----------------------    -----------------------
                                               Amount        Rate        Amount        Rate
                                               ------        ----        ------        ----
<S>                                          <C>             <C>       <C>             <C>
   Tax expense at statutory rate             $ 207,261       34.0%     $ 297,980       34.0%
   Net earnings of insurance
     contracts                                 (52,124)      (8.5)       (53,212)      (6.1)
   Tax-exempt interest income                  (41,829)      (6.9)       (17,937)      (2.0)
   Other                                        19,093        3.1         43,132        4.9
                                             ---------     -------      ---------     ------

        Tax expense at effective rate        $ 132,401       21.7%     $ 269,963       30.8%
                                             =========     =======      =========     ======
</TABLE>

Retained earnings at December 31, 2003 and 2002 include $1,493,442 for both
years for which no provision for federal income taxes has been made. If this
portion of retained earnings is used in the future for any purpose other than to
absorb bad debts, the amount used will be added to future taxable income. The
unrecorded deferred tax liability on the above amount at December 31, 2003 and
2002 was $507,770 for both years.


NOTE 10 - REGULATORY CAPITAL REQUIREMENTS

Banks and bank holding companies are subject to regulatory capital requirements
administered by federal banking agencies. Capital adequacy guidelines and,
additionally for banks, prompt corrective action regulations involve
quantitative measures of assets, liabilities, and certain off-balance-sheet
items calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by regulators. Failure
to meet capital requirements can initiate regulatory action.

Prompt corrective action regulations provide five classifications: well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition. If adequately capitalized,
regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and capital restoration plans are required. At year-end 2003 and
2002, the most recent regulatory notifications categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. There
are no conditions or events since that notification that management believes
have changed the institution's category.

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

                                  (Continued)

                                                                             19.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 10 - REGULATORY CAPITAL REQUIREMENTS (Continued)

The Bank's actual and required capital amounts and ratios are presented below at
year-end.

<TABLE>
<CAPTION>
                                                                                               Minimum
                                                                                            Required to be
                                                              Minimum Required          Well Capitalized Under
                                                                  for Capital             Prompt Corrective
                                          Actual              Adequacy Purposes          Action Regulations
                                          ------              -----------------          ------------------
(dollars in thousands)             Amount       Ratio      Amount           Ratio       Amount          Ratio
                                   ------       -----      ------           -----       ------          -----
<S>                              <C>            <C>       <C>               <C>        <C>              <C>
December 31, 2003:
-----------------
Total capital (to risk-
  weighted assets)               $ 13,521       16.39%    $  6,600          8.0%       $  8,250         10.0%
Tier 1 (core) capital (to
  risk-weighted assets)          $ 12,803       15.52%    $  3,300          4.0%       $  4,950          6.0%
Tier 1 (core) capital (to
  adjusted total assets)         $ 12,803       10.18%    $  5,031          4.0%       $  6,289          5.0%

December 31, 2002:
-----------------
Total capital (to risk-
  weighted assets)               $ 13,806       15.19%    $  7,271          8.0%       $  9,089         10.0%
Tier 1 (core) capital (to
  risk-weighted assets)          $ 12,976       14.28%    $  3,635          4.0%       $  5,452          6.0%
Tier 1 (core) capital (to
  adjusted total assets)         $ 12,976        9.67%    $  5,368          4.0%       $  6,709          5.0%
</TABLE>

The Qualified Thrift Lender test requires at least 65% of assets be maintained
in housing-related finance and other specified areas. If this test is not met,
limits are placed on growth, branching, new investments, FHLB advances and
dividends, or the Bank must convert to a commercial bank charter. Management
believes that this test is met.

When the Bank converted from a mutual to a stock institution, a "liquidation
account" was established at $8,336,785, which was net worth reported in the
conversion prospectus. Eligible depositors who have maintained their accounts,
less annual reductions to the extent they have reduced their deposits, would
receive a distribution from this account if the Company liquidated. Dividends
may not reduce shareholders' equity below the required liquidation account
balance.

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

                                  (Continued)

                                                                             20.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 10 - REGULATORY CAPITAL REQUIREMENTS (Continued)

Office of Thrift Supervision ("OTS") regulations limit capital distributions by
savings associations. Generally, capital distributions are limited to the
current year to date undistributed net income and prior two years' undistributed
net income, as long as the institution remains well capitalized after the
proposed distribution. At year-end 2003, no income is available to pay dividends
to the holding company without prior approval from the OTS. Subsequent to
December 31, 2003, the Bank must obtain regulatory approval for dividends until
fiscal 2004 net income exceeds $644,280.


NOTE 11 - FAIR VALUES OF FINANCIAL INSTRUMENTS

Estimated fair values and the related carrying values of the Company's financial
instruments at yearend are as follows.

<TABLE>
<CAPTION>
                                                       2003                               2002
                                                       ----                               ----
                                            Carrying           Fair           Carrying             Fair
                                             Value             Value            Value              Value
                                           ----------        ---------       ----------          ---------
<S>                                     <C>               <C>               <C>               <C>
   Financial assets
      Cash and cash equivalents         $   10,643,229    $   10,643,000    $   16,320,500    $  16,320,000
      Securities available for sale         26,247,238        26,247,000        14,192,370       14,192,000
      Loans, net                            80,882,658        82,289,000        96,457,033       99,378,000
      Federal Home Loan Bank
        stock                                  639,100           639,000           614,400          614,000
      Accrued interest receivable              566,309           566,000           685,755          686,000

   Financial liabilities
      Deposits                            (110,995,628)     (111,860,000)     (118,926,155)    (119,527,000)
      Accrued interest payable                 (16,260)          (16,000)           (8,355)          (8,000)
</TABLE>


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

                                  (Continued)

                                                                             21.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 11 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

For purposes of the above disclosures of estimated fair values, certain
assumptions were used. The carrying value for cash and cash equivalents, accrued
interest receivable, Federal Home Loan Bank stock and accrued interest payable
are considered to approximate fair value. The estimated fair value for
securities available for sale is based on quoted market values for the
individual securities or for equivalent securities. The estimated fair value for
loans is based on estimates of the difference in interest rates the Company
would charge the borrowers for similar such loans with similar maturities made
at December 31, 2003 and 2002, applied for an estimated time period until the
loan is assumed to reprice or to be paid. The estimated fair value for demand
deposits, savings deposits and the variable-rate line of credit from Federal
Home Loan Bank is based on their carrying value. The estimated fair value for
time deposits and fixed-rate advances from Federal Home Loan Bank is based on
estimates of the rate the Bank would pay on such deposits or borrowings at
December 31, 2003 and 2002, applied for the time period until maturity. The
estimated fair value for other financial instruments and off-balance-sheet loan
commitments approximate cost at December 31, 2003 and 2002 and are not
considered significant to this presentation. While these estimates of fair value
are based on management's judgment of the most appropriate factors, there is no
assurance that, were the Company to have disposed of such items at December 31,
2003 and 2002, the estimated fair values would necessarily have been realized at
that date, since market values may differ depending on various circumstances.
The estimates of fair values at December 31, 2003 and 2002 should not
necessarily be considered to apply at subsequent dates. In addition, other
assets and liabilities of the Company that are not defined as financial
instruments are not included in the above disclosures, such as premises and
equipment and life insurance contracts. Also, nonfinancial instruments typically
not recognized in the financial statements nevertheless may have value but are
not included in the above disclosures. These include, among other items, the
estimated earnings power of core deposit accounts, the trained work force,
customer goodwill and similar items.



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

                                  (Continued)

                                                                             22.
<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 12 - CONDENSED PARENT COMPANY FINANCIAL INFORMATION

Presented below are condensed financial statements for the parent company,
Lawrence Financial Holdings, Inc.

<TABLE>
<CAPTION>
                                    CONDENSED BALANCE SHEETS
                                   December 31, 2003 and 2002
                                                                       2003            2002
                                                                       ----            ----
<S>                                                                <C>             <C>
   Assets
      Cash and cash equivalents                                    $    896,936    $     695,665
      Investment in subsidiary                                       12,714,031       13,123,120
      Loan receivable from ESOP                                         399,311          447,199
      Dividends receivable from subsidiary                                   --          515,000
      Deferred tax asset                                                 39,746           59,037
                                                                   -------------   -------------

              Total assets                                         $  14,050,024   $  14,840,021
                                                                   =============   =============
   Liabilities
      Accrued expenses and other liabilities                       $      24,772   $      51,230

   Shareholders' equity                                               14,025,252      14,788,791
                                                                   -------------   -------------
              Total liabilities and shareholders' equity           $  14,050,024   $  14,840,021
                                                                   =============   =============
<CAPTION>
                                  CONDENSED STATEMENTS OF INCOME
                              Years ended December 31, 2003 and 2002

                                                                        2003           2002
                                                                        ----           ----
<S>                                                                <C>             <C>
   Interest income                                                 $      48,845   $      58,601
   Dividends from subsidiary bank                                        800,000       1,048,000
                                                                   -------------   -------------
   Income before income taxes and equity in
     undistributed earnings of subsidiary bank                           848,845       1,106,601

   Distributions in excess of earnings
     of subsidiary bank                                                 (307,191)       (337,089)
                                                                   -------------   -------------
   Total income                                                          541,654         769,512

   Non-interest expense                                                  103,490         216,877
                                                                   -------------   -------------
   Income before income taxes                                            438,164         552,635
   Income tax benefit                                                     39,026          53,814
                                                                   -------------   -------------

   Net Income                                                      $     477,190   $     606,449
                                                                   =============   =============
</TABLE>

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

                                  (Continued)

                                                                             23.

<PAGE>

                        LAWRENCE FINANCIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

NOTE 12 - CONDENSED PARENT COMPANY FINANCIAL INFORMATION (Continued)

<TABLE>
<CAPTION>
                                      CONDENSED STATEMENTS OF CASH FLOWS
                                    Years ended December 31, 2003 and 2002

                                                                              2003            2002
                                                                              ----            ----
<S>                                                                      <C>              <C>
Cash flows from operating activities
   Net income                                                            $     477,190    $     606,449
   Adjustments to reconcile net income to net cash from
      operating activities
       Equity in earnings of subsidiary bank                                  (492,809)        (710,911)
       Dividend received                                                       800,000        1,048,000
       Restrictive stock award expense                                          67,264           67,265
       Net change in accrued expenses and other liabilities                    528,488         (530,037)
                                                                         -------------    -------------
          Net cash from operating activities                                 1,380,133          480,766

Cash flows from investing activities
       Proceeds from loan principal repayments                                  47,888           43,734
                                                                         -------------    -------------
          Net cash from investing activities                                    47,888           43,734

Cash flows from financing activities
   Cash dividend paid                                                         (181,662)        (197,257)
   Purchase of treasury stock                                               (1,045,088)      (1,683,600)
                                                                         -------------    -------------
         Net cash from financing activities                                 (1,226,750)      (1,880,857)

   Net change in cash and cash equivalents                                     201,271       (1,356,357)

Cash and cash equivalents at beginning of period                               695,665        2,052,022
                                                                         -------------    -------------


Cash and cash equivalents at end of period                               $     896,936    $     695,665
                                                                         =============    =============
</TABLE>

The extent to which the Company may pay cash dividends to shareholders will
depend on the cash currently available at the Company, as well as the Bank's
ability to pay dividends to the Company (see Note 10).


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

                                  (Continued)

                                                                             24.