Exhibit 13
                                                                      ----------

                                  MFB FINANCIAL


                               Table of Contents


Letter to Shareholders ....................................................    1
Selected Consolidated Financial Data ......................................    2
Management's Discussion and Analysis ......................................    3
Report of Independent Auditors ............................................   17
Consolidated Balance Sheets ...............................................   18
Consolidated Statements of Income .........................................   19
Consolidated Statements of Shareholders' Equity ...........................   20
Consolidated Statements of Cash Flows .....................................   21
Notes to Consolidated Financial Statements ................................   23
Directors and Officers ....................................................   43
Shareholder Information ...................................................   44


DESCRIPTION OF BUSINESS

MFB Corp. is an Indiana unitary  savings and loan holding  company  organized in
1993, and parent company of its wholly owned bank subsidiary, MFB Financial (the
"Bank").  MFB Corp.  and the Bank  (collectively  referred to as the  "Company")
conduct  business from their main office in Mishawaka,  Indiana,  and six branch
locations  in St.  Joseph and Elkhart  Counties  of  Indiana.  The Bank offers a
variety of lending,  deposit,  trust and other financial  services to its retail
and  commercial  customers.  The  Bank's  wholly-owned   subsidiary,   Mishawaka
Financial Services,  Inc., offers general property,  casualty and life insurance
to customers in the Bank's market area.

<PAGE>

Message To Our Shareholders


     On  behalf  of the  Board of  Directors,  our  management  team and all the
employees of MFB Corp. ("the Company") and it's subsidiary,  MFB Financial ("the
Bank"),  it is my pleasure to provide you with our Annual  Report for the fiscal
year  ended  September  30,  2001.

     This has  been  another  significant  year of  progress  for the  Bank.  We
continued to grow our core business and our presence in the community.  The Bank
surpassed  $400  million  in total  assets  for the  first  time in our 112 year
history even as signs of an impending  economic  slowdown began to appear.  Core
deposit  relationships  continued to grow and represented  nearly $87 million or
35% of total deposits by year end, a level never before  achieved.  Non-interest
income grew $919,000 from last year--an  impressive 50% increase.  This increase
was driven by the success of two important  elements of the Company's  strategy.
First, the commitment to our mortgage  banking  operation that generated over $1
million in gains on the sale of loans during the year and secondly,  our efforts
to grow fee income by providing  additional and better  quality  services to all
the clients we service.

     The Company  generated net income of $1.9 million ($1.38  diluted  earnings
per share) during the year despite  absorbing an  additional  $1.8 million ($.79
diluted earnings per share after taxes) to the loan loss reserve necessitated by
the untimely bankruptcy filing of a commercial loan customer.  Nonetheless, book
value per common share outstanding grew to $25.72, another all-time high and the
Company  increased the annual  dividend rate to 39.5 cents per share,  the fifth
increase in as many years.  The market value of the Company's  shares  increased
from  $17.38  per  share to  $19.15  per  share  during  the  year.  This was an
impressive  increase  of 10.2%,  especially  given the  overall  performance  of
virtually every major market index during the same period.

     By most accounts, our economy was on the brink of a recession by the middle
of the year.  That was followed by the tragic events of September  11th. For the
first time since the early 1990's we were clearly in the throws of a significant
economic downturn.  Many local businesses have been impacted by the slowdown. As
a result we  redoubled  our efforts to control and monitor  asset  quality as we
move into uncertain and uncharted  economic waters.  We will remain vigilant and
steadfast in our  commitment to maintain  asset quality that rivals our industry
peers.

     Our core earnings capacity continues to improve and will result in enhanced
long term shareholder  value--a cornerstone in the foundation of our company. We
invite you to review the pages that follow and reiterate our  commitment to grow
the value of your investment.



                                        /s/ Charles J. Viater
                                        -------------------------------------
                                        Charles J. Viater
                                        President and Chief Executive Officer

<PAGE>

Selected Consolidated Financial Data

     The following  selected  consolidated  financial  data of MFB Corp. and its
subsidiary  is qualified  in its entirety by, and should be read in  conjunction
with, the consolidated financial statements,  including notes thereto,  included
elsewhere in this Annual Report.

<TABLE>
<CAPTION>

                                                       At September 30,
                                   --------------------------------------------------------------------
                                                        (In Thousands)
                                           2001          2000          1999         1998        1997
                                        ---------     ---------     ---------    ---------    ---------
Summary of Financial Condition:
<S>                                     <C>           <C>           <C>          <C>          <C>
Total assets                            $ 413,084     $ 396,003     $ 346,454    $ 314,961    $ 255,921
Loans receivable                          311,613       317,178       270,102      232,060      188,634
Allowance for loan losses                   4,632         1,672           638          454          370
Loans held for sale, net                    3,074         6,495         8,062       13,517       12,671
Cash and cash equivalents                  34,223        14,544        12,062       17,904        9,482
Securities, including FHLB stock           54,167        47,930        47,666       46,456       42,028
Deposits                                  245,179       239,394       201,407      180,666      171,887
Securities sold under
   agreements to repurchase                11,022         9,143         6,566        2,366          389
FHLB advances                             119,685       112,152       104,226       92,726       47,500
Shareholders' equity                       34,380        32,514        31,182       30,886       33,550

</TABLE>


<TABLE>
<CAPTION>

                                                             Years Ended September 30,
                                   --------------------------------------------------------------------
                                                                  (In Thousands)
                                           2001          2000          1999         1998        1997
                                        ---------     ---------     ---------    ---------    ---------
Summary of Operating Results:

<S>                                     <C>           <C>           <C>          <C>          <C>
Interest income                         $  29,977     $  28,514     $  24,254    $  20,838    $  17,685
Interest expense                           17,972        16,473        14,448       12,204       10,157
                                        ---------     ---------     ---------    ---------    ---------
 Net interest income                       12,005        12,041         9,806        8,634        7,528
Provision for loan losses                   3,097         1,106           230          120           30
                                        ---------     ---------     ---------    ---------    ---------
 Net interest income after
    provision for loan losses               8,908        10,935         9,576        8,514        7,498
Noninterest income
  Net gains from sales of loans             1,046           525           366          333         --
  Service charges on deposit accounts         735           541           293          192          113
  Trust fee income                            213           146            29         --           --
  Insurance commissions                       140           149           148          143          134
  Brokerage commissions                        29            13            28           36           24
  Net gain (loss) from sales
     of securities                            (52)          (41)            4            8            6
  Loan servicing fees, net                     32            82            54           12         --
  Other                                       621           430           298          240          148
                                        ---------     ---------     ---------    ---------    ---------
    Total noninterest income                2,764         1,845         1,220          964          425

Noninterest expense
  Salaries and employee benefits            4,944         4,668         3,847        3,414        2,772
  Occupancy and equipment expense           1,278         1,081           883          720          580
  Data processing expense                     516           443           380          385          281
  SAIF deposit insurance premium               47            62           109          108          147
  Provision to adjust loans held
    for sale to lower of cost
    or market                                --             123           489         --           --
  Other expense                             2,026         1,895         1,299          998          819
                                        ---------     ---------     ---------    ---------    ---------
    Total noninterest expense               8,811         8,272         7,007        5,625        4,599
                                        ---------     ---------     ---------    ---------    ---------
Income before income taxes                  2,861         4,508         3,789        3,853        3,324
                                        ---------     ---------     ---------    ---------    ---------
Income tax expense                            951         1,693         1,585        1,617        1,322
                                        ---------     ---------     ---------    ---------    ---------
         Net income                     $   1,910     $   2,815     $   2,204    $   2,236    $   2,002
                                        =========     =========     =========    =========    =========
Supplemental Data:
Basic earnings per common share         $    1.42     $    2.04     $    1.56    $    1.44    $    1.21
Diluted earnings per common share       $    1.38     $    2.00     $    1.51    $    1.37    $    1.16
Dividends declared per common share     $    .395     $    .375     $    .355    $    .335    $     .32
Book value per common share             $   25.72     $   23.93     $   21.96    $   20.95    $   20.33
Return on assets (1)                          .47%          .75%          .66%         .80%         .84%
Return on equity (2)                         5.75          8.88          6.97         6.69         5.83
Interest rate spread (3)                     2.64          2.88          2.57         2.54         2.49
Net yield on average
   interest-earning assets (4)               3.07          3.33          3.01         3.17         3.24
Dividend pay-out ratio (5)                  27.82         18.38         22.76        23.26        26.45
Equity-to-assets (6)                         8.32          8.21          9.00         9.81        13.11
Non-performing assets
   to total assets                            .67           .02           .06          .09          .10
Non-performing loans
   to total loans                             .89           .02           .03          .05          .14
Allowance for loan
   losses to total loans                     1.49           .53           .24          .20          .20
</TABLE>

(1)  Net income divided by average total assets.

(2)  Net income divided by average total equity.

(3)  Interest  rate spread is calculated by  subtracting  average  interest rate
     cost from average interest rate earned.

(4)  Net interest income divided by average interest-earning assets.

(5)  Dividends declared per share divided by basic earnings per share.

(6)  Total equity divided by total assets.



Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations


     The principal business of the Bank has historically consisted of attracting
deposits  from the general  public and the business  community  and making loans
secured  by various  types of  collateral,  including  real  estate and  general
business  assets.  The Bank is  significantly  affected by  prevailing  economic
conditions  as well as government  policies and  regulations  concerning,  among
other things,  monetary and fiscal affairs,  housing and financial institutions.
Deposit flows are  influenced by a number of factors,  including  interest rates
paid on competing investments,  account maturities, fee structures, and level of
personal income and savings. Lending activities are influenced by the demand for
funds, the number and quality of lenders, and regional economic cycles.  Sources
of funds  for  lending  activities  of the Bank  include  deposits,  borrowings,
payments on loans and income provided from  operations.  The Company's  earnings
are primarily  dependent  upon the Bank's net interest  income,  the  difference
between interest income and interest expense.

     Interest  income is a function  of the  balances  of loans and  investments
outstanding  during a given  period  and the  yield  earned  on such  loans  and
investments.  Interest  expense is a  function  of the  amount of  deposits  and
borrowings  outstanding  during the same period and interest  rates paid on such
deposits and borrowings.  The Company's earnings are also affected by the Bank's
provisions for loan losses,  service  charges,  fee income,  gains from sales of
loans, retained mortgage loan servicing fees, income from subsidiary activities,
operating expenses and income taxes.

COMPARISON OF FISCAL YEARS ENDED SEPTEMBER 30, 2001 AND 2000

Results Of Operation

     Consolidated  net income for the Company for the year ended  September  30,
2001 was $1.9 million or $1.38  diluted net income per common share  compared to
$2.8 million or $2.00 diluted net income per common share for the same period in
2000.  The  decline in net  income  for the  comparable  periods  was  primarily
attributable  to a  significantly  larger  provision  for  loan  losses  in 2001
partially offset by increased noninterest income.


[GRAPH OMITTED]

DILUTED EARNINGS PER SHARE

                                           Diluted
                                             EPS
                                           --------

                        9/30/1997          $1.16
                        9/30/1998          $1.37
                        9/30/1999          $1.51
                        9/30/2000          $2.00
                        9/30/2001          $1.38        $2.17*

*    Diluted  Earnings per Share restated  excluding the effect of an additional
     $1.8 million  provision to the Loan Loss Reserve  during the first quarter,
     2001


     Net interest income totaled $12.00 million for the year ended September 30,
2001  compared to $12.04  million  for the same period one year ago.  The slight
decrease in net interest income from last year was due to average rate decreases
in  interest-earning  assets and  average  rate  increases  on  interest-bearing
liabilities exceeding the increases to net interest income due to the net growth
in  volume  of those  assets  and  liabilities.  Due to  overall  interest  rate
decreases throughout the year, the yield on interest-earning assets decreased 23
basis points from 7.89% in 2000 to 7.66% in 2001. The average interest rate paid
on  interest-bearing  liabilities  increased one basis point to 5.02% during the
same period, and as a result, the interest rate spread decreased 24 basis points
from 2.88% to 2.64% in 2001.  Interest income increased $1.46 million during the
year ended  September 30, 2001 compared to the same period in 2000. The increase
was  primarily  due to increased  volumes of loans  receivable  during the year,
particularly commercial and consumer loans, and additional earnings derived from
deposits in other  financial  institutions.  Interest  expense  increased  $1.50
million reflecting the growth in deposits and borrowed funds.

     The  provision  for  loan  losses  is   determined  in   conjunction   with
management's  review and evaluation of current economic  conditions,  changes in
the character and size of the loan portfolio,  delinquencies  (current status as
well as past  and  anticipated  trends)  and  adequacy  of  collateral  securing
delinquencies,  historical  and estimated net  charge-offs  and other  pertinent
information.   During  the  fiscal  year  ended  September  30,  2001  the  Bank
experienced  significant  growth  in the  commercial  loan  portfolio.  The Bank
recorded an  additional  $1.8 million  ($1.1 million after tax) to the loan loss
reserves  in the  quarter  ended  December  31, 2000 as a result of a chapter 11
bankruptcy  filing  by a  commercial  borrower.  Based  on  these  factors,  the
provision  for loan  losses  increased  from  $1.1  million  for the year  ended
September 30, 2000 to $3.1 million for the year ended  September  30, 2001.  The
Bank continues to improve its loan review and risk assessment  procedures giving
particular  consideration  to the loss risks  related to the growing  commercial
loan  portfolio,  and the risk of loss for $8.9 million of loans  classified  as
impaired at the end of the year.

     Noninterest  income  increased  from $1.8 for the year ended  September 30,
2000 to $2.8  million  for the twelve  months  ended  September  30,  2001.  The
noninterest  income  increases  are  primarily  due to fees  generated  from the
increasing  number of core  deposit  relationships,  income  generated  from the
Bank's trust  department and net realized gains from loan sales.  The decline in
the overall interest rate environment resulted in a significant increase in loan
originations and subsequent loan sales.

     Noninterest  expense  increased  from $8.3  million to $8.8 million for the
comparable twelve month periods ending September 30. These  noninterest  expense
increases are primarily attributable to staffing increases and expenses incurred
in the offering of additional services to the Bank's customers.

Balance Sheet Composition

     Cash and cash equivalents  increased $19.7 million from $14.5 million as of
September 30, 2000 to $34.2  million as of September 30, 2001.  The increase was
attributable to the investment of excess cash in interest-bearing  deposits with
other financial  institutions  totaling $27.0 million at September 30, 2001. Net
cash provided by operating  activities and financing activities amounted to $7.6
million and $13.6 million,  respectively,  and was partially  offset by net cash
used in investing activities of $1.5 million.

     As of September 30, 2001, the total securities  portfolio amounted to $47.9
million,  an increase of $6.3 million from $41.6  million at September 30, 2000.
The securities  portfolio activity included security purchases of $75.4 million,
security  maturities and sales totaling  $63.5  million,  principal  payments on
mortgage-backed  and  related  securities  of $7.5  million  and a $1.6  million
increase in the market value of securities available for sale.

[GRAPH OMITTED]

ASSET MIX

Cash and Investments                                        89891      21.76%
Other Assets                                                13138       3.18%
Mortgage                                                   163642      39.61%
Construction                                                18659       4.52%
Home Equiity and Second Mortgages                           20275       4.91%
Commercial                                                 100942      24.44%
Consumer and Other                                           6536       1.58%
                                                           ------
                                                           413083


     As of September  30, 2001,  net loans  receivable  were $307.0  million,  a
decrease  of  $8.5  million  from  $315.5  million  as of  September  30,  2000.
Commercial  loans  outstanding  increased by $14.5 million from $91.1 million at
September  30, 2000 to $105.6  million at  September  30,  2001.  Consumer  loan
receivables, which include home equity term loans and lines of credit, increased
$1.8 million to $26.8  million  while  residential  mortgage  loans  receivables
decreased $21.9 million to $180.2 million at September 30, 2001. However,  loans
originated for sale for the year ended  September 30, 2001 grew to $53.9 million
from $20.3  million in the prior year.  Diversification  of the asset mix in the
balance sheet will  continue to be a focus to improve  profit  margins,  control
margin  volatility  and to appeal to a broader  range of customers and potential
customers.  The Company  continues to build on its reputation as a quality local
lender  satisfying  the  market's  desire for local  service and local  decision
making.

     During the year ended September 30, 2001, the Company  completed  secondary
market  mortgage loan sales totaling $57.7 million and the net gains realized on
these loan sales were $1.05  million,  including  $604,000  related to recording
mortgage loan  servicing  rights.  At September 30, 2001,  $3.1 million of loans
were  classified  as loans held for sale.  The loans sold  during the year ended
September  30, 2001 were fixed rate  mortgage  loans with  maturities of fifteen
years or longer.  The sale of loan  production  serves as a source of additional
liquidity and management  anticipates  that the Company will continue to deliver
fixed  rate  loans to the  secondary  market  to meet  consumer  demand,  manage
interest rate risk, and diversify the asset mix of the Company.  Adjustable rate
loans  often  provide  rates of  return  that are  generally  superior  to other
investments that carry similar terms to repricing.  These loans will continue to
be marketed and retained in the Bank's portfolio.


[GRAPH OMITTED]

DEMAND, NOW, SAVING AND MMDA
(Core Deposits)
(in millions)

                                                     Growth
                                                     ------

                        9/30/1997                    $40.2
                        9/30/1998                    $45.1
                        9/30/1999                    $59.8
                        9/30/2000                    $68.4
                        9/30/2001                    $87.0


     Total deposits increased $5.8 million to $245.2 million as of September 30,
2001 from $239.4 million as of September 30, 2000.  Core deposits  consisting of
demand,  NOW,  savings and MMDA accounts  increased  from $68.4 million to $87.0
million from  September  30, 2000 to September 30, 2001.  Securities  sold under
agreements to repurchase increased from $9.1 million to $11.0 million during the
comparable periods. Federal Home Loan Bank ("FHLB") advances also increased from
$112.2  million as of September  30, 2000 to $119.7  million as of September 30,
2001.  The  growth  in  deposits,  repurchase  agreements  and  FHLB  borrowings
primarily funded the increase in securities and  interest-bearing  deposits held
in other financial institutions during the year.

     Total shareholders' equity increased from $32.5 million as of September 30,
2000 to $34.4 million as of September 30, 2001. The increases to equity resulted
mainly from $1.9 million in net income and a $961,000  adjustment to reflect the
increase  in the market  value of  securities  available  for sale,  net of tax,
offset by treasury  stock  transactions  at a cost of $517,000 and cash dividend
payments of $533,000.  The book value of MFB Corp.  common  stock,  based on the
actual number of shares outstanding, increased from $23.93 at September 30, 2000
to $25.72 at September 30, 2001.


[GRAPH OMITTED]

LIABILITY AND EQUITY MIX

Non-Interest Bearing Deposits                               13895       3.36%
Savings, DDA & MMDA Deposits                                73082      17.69%
Other Time Deposits                                        158202      38.30%
Repurchase Agreements                                       11021       2.67%
FHLB Advances                                              119685      28.97%
Other Liabilities                                            2818       0.68%
Stockholders' Equity                                        34380       8.32%
                                                           ------
                                                           413083


COMPARISON OF FISCAL YEARS ENDED SEPTEMBER 30, 2000 AND 1999

Results Of Operation

     Consolidated  net income for the Company for the year ended  September  30,
2000 was $2.8 million or $2.00  diluted net income per common share  compared to
$2.2 million or $1.51 diluted net income per common share for the same period in
1999.

     Net interest  income totaled $12.0 million for the year ended September 30,
2000  compared to $9.8 million for the same period one year ago. The increase in
net  interest  income  was due to  increases  in both the  volume  and  rates of
interest-earning  assets  which  was  offset  by  increases  in  the  volume  of
interest-bearing  liabilities and rates paid on those liabilities.  The yield on
interest-earning assets increased 43 basis points from 7.46% in 1999 to 7.89% in
2000, while the average rate paid on interest-bearing  liabilities  increased 12
basis  points  from 4.89% to 5.01%  during  the same  period.  As a result,  the
interest  rate spread  increased  31 basis points from 2.57% in 1999 to 2.88% in
2000. Interest income increased $4.3 million during the year ended September 30,
2000  compared to the same period in 1999.  The  increase was  primarily  due to
increased  volumes of loans  receivable,  particularly  commercial  and consumer
loans. Interest expense increased $2.0 million reflecting the growth in deposits
and borrowed funds.

     Management  increased the provision for loan and lease losses from $230,000
for the year  ended  September  30,  1999 to $1.1  million  for the  year  ended
September 30, 2000. A  substantial  portion of this increase was recorded in the
quarter  ended  September  30, 2000 as  management  expanded its  procedures  to
evaluate  the  adequacy  of the  allowance  for  loan  losses,  giving  stronger
consideration  to the  commercial  loss  experience  of its peer  group,  as the
Company did not yet have an established loss history is its own. Management gave
particular  consideration  to the loss risks  related to the growing  commercial
loan  portfolio,  and the risk of loss for $1.7 million of loans  classified  as
impaired during the quarter.  Total  commercial loans at September 30, 2000 were
$91.1 million compared to $47.4 million at September 30, 1999, a 92.2% increase.

     Noninterest  income  increased  from $1.2 for the year ended  September 30,
1999 to $1.8  million  for the twelve  months  ended  September  30,  2000.  The
noninterest  income  increases  are  primarily  due to fees  generated  from the
growing number of core deposit  relationships,  income generated from the Bank's
trust  department,  net gains from loan sales and the servicing fees retained on
these sold loans.

     Noninterest  expense  increased  from $7.0  million to $8.3 million for the
comparable twelve month periods ending September 30. These  noninterest  expense
increases are primarily attributable to staffing increases, renovated facilities
to support lending  operations,  expenses  associated with the opening of a full
service  office during the first quarter of 2000,  and expenses  incurred in the
offering of additional services to the Bank's customers.

Balance Sheet Composition

     Cash and cash  equivalents  increased $2.4 million from $12.1 million as of
September 30, 1999 to $14.5 million as of September 30, 2000.  Net cash provided
by operating  activities and financing  activities  amounted to $7.6 million and
$46.8  million,  respectively,  and was  partially  offset  by net cash  used in
investing activities of $52.0 million.

     As of September 30, 2000, the total securities  portfolio amounted to $41.6
million,  a decrease of $0.6 million from $42.2  million at September  30, 1999.
The  securities  portfolio  activity  included  net  security  purchases of $7.0
million,  security  maturities  totaling  $1.6  million,  principal  payments on
mortgage-backed  and related  securities of $5.6 million and a $329,000 decrease
in the market value of securities available for sale.

     As of September 30, 2000,  net loans  receivable  were $315.5  million,  an
increase of $46.0  million from the $269.5  million as of September 30, 1999. In
addition to the increase in commercial loans outstanding,  residential  mortgage
loans and home equity loans  outstanding  increased  by $1.7 million  during the
year ended September 30, 2000. Consumer loans outstanding also increased by $1.6
million from $4.5 million at September 30, 1999 to $6.1 million at September 30,
2000.  Management  believes  the  growth  in all  lending  categories  is partly
attributed to the Company's  reputation as a quality local lender satisfying the
market's desire for local service and local decision making.

     During the year ended September 30, 2000, the Company  completed  secondary
market  mortgage loan sales totaling $24.7 million and the net gains realized on
these loan sales were $525,000, including $235,000 related to recording mortgage
loan  servicing  rights.  At  September  30,  2000,  $6.5  million of loans were
classified  as loans  held for  sale.  The  loans  sold  during  the year  ended
September  30, 2000 were fixed rate  mortgage  loans with  maturities of fifteen
years or longer.  Management, in order to meet consumer demand, anticipates that
the Company will continue to deliver  fixed rate loans to the  secondary  market
manage interest rate risk and to diversify the asset mix of the Company.

     Total  deposits  increased  $38.0 million to $239.4 million as of September
30, 2000 from $201.4 million as of September 30, 1999, and securities sold under
agreements to repurchase  increased from $6.6 million to $9.1 million during the
comparable periods. Federal Home Loan Bank ("FHLB") advances also increased from
$104.2  million as of September  30, 1999 to $112.2  million as of September 30,
2000.  These  increases in deposits,  repurchase  agreements and FHLB borrowings
primarily  funded the loan  growth  during the year.  The Bank will  continue to
focus on growth of core deposit  account  relationships.  FHLB advances can be a
less expensive  alternative than a like term certificate of deposit, can improve
the bank's interest rate risk profile, and will be utilized as necessary to fund
loan demand.

     Total shareholders' equity increased from $31.2 million as of September 30,
1999 to $32.5  million as of  September  30, 2000.  The change to  shareholders'
equity  resulted  mainly from $2.8  million of net income for the year offset by
the repurchases of 61,600 shares of outstanding  common stock during this period
at a cost of $1.1 million along with the payment of cash  dividends of $516,000.
The book value of MFB Corp.  common stock,  based on the actual number of shares
outstanding,  increased from $21.96 at September 30, 1999 to $23.93 at September
30, 2000.

ASSET/LIABILITY MANAGEMENT

     The  Company  is  subject  to  interest  rate risk to the  extent  that its
interest-bearing  liabilities,  primarily  deposits  and Federal  Home Loan Bank
(FHLB) advances with short and medium-term maturities,  reprice more rapidly, or
at different rates than its interest-earning assets.

     A key  element of the  Company's  asset/liability  plan is to  protect  net
earnings  by  managing   the  maturity  or   repricing   mismatch   between  its
interest-earning assets and rate-sensitive  liabilities.  The Company has sought
to reduce exposure to its earnings  through the use of adjustable rate loans and
through the sale of fixed rate loans in the secondary  market,  and by extending
funding maturities through the use of FHLB advances.

     As part of its  efforts  to  monitor  and manage  interest  rate risk,  the
Company uses the Net Portfolio Value ("NPV")  methodology  adopted by the Office
of Thrift  Supervision  as part of its capital  regulations.  In  essence,  this
approach  calculates the  difference  between the present value of expected cash
flows from assets and the present value of expected cash flows from liabilities,
as well as cash flows from  off-balance-sheet  contracts.  The difference is the
NPV which was 8.83% as of June 30, 2001,  (the most  recently  available  data).
Management and the Board of Directors review the OTS measurements on a quarterly
basis to determine  whether the  Company's  interest rate exposure is within the
limits established by the Board of Directors in the Company's interest rate risk
policy.

     The  Company's  asset/liability  management  strategy  dictates  acceptable
limits on the amounts of change in NPV given certain  changes in interest rates.
The tables  presented here, as of June 30, 2001 and 2000, are an analysis of the
Company's interest rate risk as measured by changes in NPV for instantaneous and
sustained parallel shifts in the yield curve, in 100 basis point increments,  up
and down 300 basis points.

<TABLE>
<CAPTION>

                                        June 30, 2001
   Change in                            -------------                   NPV as % of Portfolio
 Interest Rates                                                             Value of Assets
    In Basis               Net Portfolio Value                          ----------------------
    Points                 -------------------                          NPV
 (Rate Shock) (1)       $ Amount        $ Change        % Change        Ratio       Change (1)
----------------------------------------------------------------------------------------------
                                       (Dollars in Thousands)
<S>  <C>                <C>             <C>                <C>          <C>          <C>
    +300                $ 23,394        $(14,281)          (38)%        5.77%        (306)bp
    +200                  29,361          (8,315)          (22)         7.11         (172)bp
    +100                  34,180          (3,496)           (9)         8.13          (70)bp
       0                  37,676                                        8.83
    (100)                 38,299             623             2          8.88            5 bp
    (200)                 36,818            (858)           (2)         8.46          (37)bp
    (300)                 34,298          (3,378)           (9)         7.81         (102)bp
</TABLE>

(1) Expressed in basis points

     As illustrated in the June 30, 2001 table, the Company's interest rate risk
is more sensitive to rising rates than declining  rates.  This occurs  primarily
because,  as rates rise,  the market value of fixed-rate  loans  declines due to
both the rate increases and slowing prepayments. When rates decline, the Company
does not  experience a significant  rise in market value for these loans because
borrower prepayments  increase.  The value of the Bank's deposits and borrowings
change  in  approximately  the  same  proportion  in  rising  and  falling  rate
scenarios.  Specifically,  the  table  indicates  that,  at June 30,  2001,  the
Company's  NPV was  $37.7  million  or 8.83% of the  market  value of  portfolio
assets.  Based upon the  assumptions  utilized,  an  immediate  200 basis  point
increase in market  interest rates would result in a $8.3 million or 22% decline
in the  Company's  NPV and would result in a 172 basis point or 19.5% decline in
the  Company's  NPV ratio to 7.11%.  Conversely,  an  immediate  200 basis point
decrease in market interest rates would result in only a $858,000 or 2% decrease
in the  Company's  NPV,  and  only a 37  basis  point  or 4.2%  decrease  in the
Company's NPV ratio to 8.46%.

<TABLE>
<CAPTION>

                                        June 30, 2000
   Change in                            -------------                   NPV as % of Portfolio
 Interest Rates                                                             Value of Assets
    In Basis               Net Portfolio Value                          ----------------------
    Points                 -------------------                          NPV
 (Rate Shock) (1)       $ Amount        $ Change        % Change        Ratio       Change (1)
----------------------------------------------------------------------------------------------
                                       (Dollars in Thousands)
<S> <C>                 <C>             <C>              <C>            <C>      <C>
   +300                 $23,139         $(15,799)        (41)%          6.31%    (361) bp
   +200                  28,608          (10,330)        (27)           7.62     (230) bp
   +100                  34,016           (4,922)        (13)           8.86     (106) bp
   0                     38,938                                         9.92
   (100)                 42,796            3,858          10           10.70        78 bp
   (200)                 44,350            5,412          14           10.95       103 bp
   (300)                 45,337            6,399          16           11.06       114 bp
</TABLE>

(1) Expressed in basis points

     As illustrated in the June 30, 2000 table, the Company had greater interest
rate  sensitivity to rising rates over declining rates than for the period ended
June 30, 2001.  Specifically,  the table  indicates  that, at June 30, 2000, the
Company's  NPV was  $38.9  million  or 9.92% of the  market  value of  portfolio
assets.  Based upon the  assumptions  utilized,  an  immediate  200 basis  point
increase in market interest rates would result in a $10.3 million or 27% decline
in the  Company's  NPV and would result in a 230 basis point or 23.2% decline in
the  Company's  NPV ratio to 7.62%.  Conversely,  an  immediate  200 basis point
decrease in market interest rates would result in a $5.4 million or 14% increase
in the Company's  NPV, and a 103 basis point or 10.4%  increase in the Company's
NPV ratio to 10.95%.

     In  addition  to  monitoring  selected  measures  of NPV,  management  also
monitors effects on net interest income resulting from increases or decreases in
rates.  This  process  is used in  conjunction  with NPV  measures  to  identify
excessive interest rate risk. In managing its asset/liability  mix, the Company,
depending on the relationship between long and short term interest rates, market
conditions  and consumer  preference,  may place  somewhat  greater  emphasis on
maximizing its net interest  margin than on strictly  matching the interest rate
sensitivity  of  its  assets  and  liabilities.  Management  believes  that  the
increased net income which may result from an acceptable  mismatch in the actual
maturity or repricing of its asset and liability  portfolios can, during periods
of declining or stable interest rates, provide sufficient returns to justify the
increased  exposure to sudden and  unexpected  increases in interest rates which
may result from such a mismatch. Management believes that the Company's level of
interest rate risk is acceptable under this approach as well.

     In evaluating the Company's  exposure to interest rate  movements,  certain
shortcomings inherent in the method of analysis presented in the foregoing table
must be considered.  For example,  although  certain assets and  liabilities may
have  similar  maturities  or  repricing  periods,  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
interest rates. Additionally,  certain assets, such as adjustable rate mortgages
(ARM's),  have features which restrict changes in interest rates on a short-term
basis and over the life of the  asset.  Further,  in the event of a  significant
change in interest rates,  prepayment and early  withdrawal  levels would likely
deviate  significantly  from those assumed above.  Finally,  the ability of many
borrowers to service  their debt may  decrease in the event of an interest  rate
increase.  The Company considers all of these factors in monitoring its exposure
to interest rate risk.

     The Board of Directors and  management of the Company  believe that certain
factors  afford the  Company  the  ability to operate  successfully  despite its
exposure to interest  rate risk.  The Company  manages its interest rate risk by
originating  adjustable  rate  loans and by  selling a portion of its fixed rate
one-to-four  family real estate loans.  While the Company  generally  originates
loans for its own  portfolio,  sales of certain fixed rate first  mortgage loans
with  maturities  of 15 years or  greater  are  currently  undertaken  to manage
interest rate risk.  Loans  classified as held for sale as of September 30, 2001
totaled $3.1  million.  The Company  retains the  servicing on loans sold in the
secondary  market and, at September  30, 2001,  $91.7 million in such loans were
being serviced for others.

     The Company's investment strategy is to maintain a diversified portfolio of
high quality investments that balances the goals of minimizing interest rate and
credit risks while striving to maximize  investment return and provide liquidity
necessary to meet funding needs. Wholesale banking activities are conducted as a
means to  supplement  net income and to achieve  desired  growth  targets.  This
strategy  involves the  acquisition of assets funded through  sources other than
retail  deposits,  such as FHLB  advances.  The goal is to create  interest rate
spreads between asset yields and funding costs within acceptable risk parameters
while improving return on equity.

     The Company's  cost of funds  responds to changes in interest  rates due to
the relatively short-term nature of its deposit portfolio.  The Company offers a
range of maturities on its deposit  products at  competitive  rates and monitors
the maturities on an ongoing basis.

<PAGE>


AVERAGE BALANCE SHEETS

The following are the average balance sheets for the years ended September 30:

<TABLE>
<CAPTION>

                                             2001          2000         1999
--------------------------------------------------------------------------------
                                           Average       Average       Average
                                         Outstanding   Outstanding   Outstanding
                                           Balance       Balance       Balance
--------------------------------------------------------------------------------
                                                       (In Thousands)
Assets:

Interest earning assets:
<S>                                       <C>          <C>          <C>
 Interest-bearing deposits                $  18,422    $   4,536    $  11,983
 Securities (1)                              28,589       25,576       17,347
 Mortgage-backed securities (1)              19,707       19,191       30,461
 FHLB stock                                   6,308        5,853        5,453
 Loans held for sale (2)                        293        3,837       15,571
 Loans receivable (3)                       317,217      300,717      244,132
                                          ---------    ---------    ---------
     Total interest-earning assets          390,536      359,710      324,947
Noninterest-earning assets, net
  of allowance for loan losses               17,354       17,335       11,246
                                          ---------    ---------    ---------
     Total assets                         $ 407,890    $ 377,045    $ 336,193
                                          =========    =========    =========


Liabilities and shareholders' equity:
Interest-bearing liabilities:
 Savings accounts                         $  15,946    $  15,218    $  12,277
 NOW and money market accounts               51,520       40,583       36,422
 Certificates of deposit                    167,519      156,855      137,734
 Repurchase agreements                        8,416        7,718        3,892
 FHLB advances                              114,903      108,759      104,894
                                          ---------    ---------    ---------
     Total interest-bearing
        liabilities                         358,304      329,133      295,219
Other liabilities                            16,333       16,222        9,351
                                          ---------    ---------    ---------
     Total liabilities                      374,637      345,355      304,570
Shareholders' equity:
 Common stock                                13,077       13,065       12,933
 Retained earnings                           28,227       26,541       24,550
 Net unrealized gain (loss) on
   securities available for sale               (434)        (921)         213
 Less common stock acquired by:
     Employee stock ownership plan             --           (131)        (352)
     Recognition and retention plan            --           --            (11)
 Treasury stock                              (7,617)      (6,864)      (5,710)
                                          ---------    ---------    ---------
 Total shareholders' equity                  33,253       31,690       31,623
                                          ---------    ---------    ---------
 Total liabilities and
   shareholders' equity                   $ 407,890    $ 377,045    $ 336,193
                                          =========    =========    =========

</TABLE>


(1)  Average  outstanding  balances reflect unrealized gain (loss) on securities
     available for sale.

(2)  Average  outstanding  balances reflect unrealized gain (loss) on loans held
     for sale.

(3)  Total loans less deferred net loan fees and loans in process.

INTEREST RATE SPREAD

     The following table sets forth the average  effective  interest rate earned
by the Company on its consolidated loan and investment  portfolios,  the average
effective cost of the Company's  consolidated deposits and FHLB borrowings,  the
interest   rate   spread  of  the   Company,   and  the  net  yield  on  average
interest-earning assets for the periods presented. Average balances are based on
daily average balances.

<TABLE>
<CAPTION>

                                        Year ended September 30,
                                        ------------------------
                                        2001     2000     1999
                                        ------------------------
Average interest rate earned on:
<S>                                      <C>     <C>     <C>
  Interest-bearing deposits              5.03%   6.39%   5.12%
  Securities (1)                         6.11    6.71    5.96
  Mortgage-backed securities (1)         6.26    6.60    5.99
  FHLB stock                             7.86    8.13    8.00
  Loans held for sale                    7.17    7.48    7.01
  Loans receivable                       8.04    8.11    7.88
      Total interest-earning assets      7.66    7.89    7.46
Average interest rate of:
  Savings accounts                       2.25    2.44    2.39
  NOW and money market accounts          2.42    2.60    2.75
  Certificates of deposit                5.65    5.48    5.29
  Repurchase agreements                  3.47    3.89    3.80
  FHLB advances                          5.75    5.65    5.45
      Total interest-bearing
        liabilities                      5.02    5.01    4.89

Interest rate spread (2)                 2.64    2.88    2.57
Net yield on interest-earning
        assets (3)                       3.07    3.33    3.01

</TABLE>

(1)  Yield is based on amortized cost without  adjustment  for  unrealized  gain
     (loss) on securities available for sale.

(2)  Interest rate spread is calculated by subtracting the average interest rate
     cost from the average interest rate earned for the period indicated.

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

     The following table describes the extent to which changes in interest rates
and changes in volume of  interest-related  assets and liabilities have affected
the  Company's  consolidated  interest  income and  expense  during the  periods
indicated.  For each category of  interest-earning  assets and  interest-bearing
liabilities,  information is provided on changes  attributable to (1) changes in
rate (i.e.,  changes in rate multiplied by old volume) and (2) changes in volume
(i.e., changes in volume multiplied by old rate).

<PAGE>

Year ending September 30, 2001
compared to year  ended            Total Net   Due to    Due to
September 30, 2000                  Change      Rate     Volume
                                   ---------  -------    ------
                                            (In Thousands)

Interest-earning assets:
   Interest-bearing deposits       $   637    $   (74)   $   711
   Securities                           20       (166)       186
   Mortgage-backed securities          (81)       (66)       (15)
   FHLB stock                           20        (16)        36
   Loans held for sale                (266)       (12)      (254)
   Loans receivable                  1,133       (195)     1,328
                                   ---------  -------    ------
       Total                         1,463       (529)     1,992
Interest-bearing liabilities:
   Savings accounts                    (13)       (30)        17
   NOW and money market accounts       192        (77)       269
   Certificates of deposit             866        269        597
   Repurchase agreements                (8)       (34)        26
   FHLB advances                       462        110        352
                                   ---------  -------    ------
       Total                         1,499        238      1,261
                                   ---------  -------    ------
Change in net interest income      $   (36)   $  (767)   $   731
                                   =========  =======    =======


Year ending September 30, 2000
compared to year ended             Total Net   Due to    Due to
September 30, 1999                  Change      Rate     Volume
                                   ---------  -------    ------
                                          (In Thousands)

Interest-earning assets:
   Interest-bearing deposits       $  (323)   $   126    $  (449)
   Securities                          713        146        567
   Mortgage-backed securities         (508)       171       (679)
   FHLB stock                           40          8         32
   Loans held for sale                (804)        18       (822)
   Loans receivable                  5,142        551      4,591
                                   ---------  -------    ------
       Total                         4,260      1,020      3,240
Interest-bearing liabilities:
   Savings accounts                     77          5         72
   NOW and money market accounts        54        (56)       110
   Certificates of deposit           1,315        274      1,041
   Repurchase agreements               152          3        149
   FHLB advances                       427        212        215
                                   ---------  -------    ------
       Total                         2,025        438      1,587
                                   ---------  -------    ------
Change in net interest income      $ 2,235    $   582    $ 1,653
                                   =========  =======    =======

LIQUIDITY AND CAPITAL RESOURCES

     Liquidity  relates  primarily to the Company's ability to fund loan demand,
meet  deposit  customers'  withdrawal  requirements  and provide  for  operating
expenses.  Assets used to satisfy  these needs  consist of cash,  deposits  with
other  financial  institutions,  overnight  interest-bearing  deposits  in other
financial  institutions  and  securities  available  for sale.  These assets are
commonly referred to as liquid assets.

     Liquid assets were $83.6 million as of September 30, 2001 compared to $56.2
million as of September 30, 2000. This $27.4 million increase was due to a $19.7
million increase in cash and cash  equivalents,  a $1.5 million increase in time
deposits held in other financial  institutions,  and a $6.2 million  increase in
securities available for sale. The sale of fixed rate loan production throughout
the year, along with the growth in deposits,  FHLB advances and other borrowings
has  provided  the  source of  additional  liquidity.  Management  believes  the
liquidity  level as of  September  30, 2001 is  sufficient  to meet  anticipated
liquidity needs.

     The cash flow statements provide an indication of the Company's sources and
uses of cash as well as an  indication of the ability of the Company to maintain
an adequate  level of  liquidity.  A discussion  of the changes in the cash flow
statements for the years ended September 30, 2001, 2000 and 1999 follows.

     During the year ended  September  30, 2001,  net cash and cash  equivalents
increased  $19.7  million  from $14.5  million at  September  30,  2000 to $34.2
million at September 30, 2001.

     The Company experienced a net increase in cash from operating activities of
$7.6 million during the year that was primarily  attributable  to the net income
of $1.9 million and proceeds of $57.7 million realized from the sale of mortgage
loans,  offset by the  origination  of $53.9 million of loans held for sale. The
Bank  continues to  originate,  sell and deliver all fixed rate,  owner-occupied
residential  mortgage loans on a "Best  Efforts"  delivery  program basis.  This
program allows the Bank to commit loans for delivery to investors at prices that
are determined  prior to loan  approval.  In the event that loans are not closed
and therefore not delivered,  the Bank incurs no penalty.  The strategy  reduces
interest rate risk exposure by minimizing the volume of loans closed and carried
in the held for sale loan portfolio.

     The $1.5 million  decrease in cash from  investing  activities for the year
ended September 30, 2001 was primarily related to investment  security purchases
exceeding  maturities and sales by $11.9  million,  $1.5 million of time deposit
purchases,  and $1.0 million of fixed asset purchases,  offset by principal loan
payments  exceeding  loan  originations  of $5.4  million  and $7.5  million  of
mortgage-backed securities principal payments.

     Financing activities generated net cash of $13.6 million for the year ended
September  30,  2001.  The net  cash was  provided  primarily  from net  deposit
increases of $5.8 million, $7.5 million in net new borrowed funds, and increases
of  $1.9  million  in  repurchase  agreements,  partially  offset  by the use of
$647,000 to repurchase  the Company's  stock and $533,000 in cash dividends paid
during the year.

     During the year ended  September  30, 2000,  net cash and cash  equivalents
increased $2.5 million from $12.0 million at September 30, 1999 to $14.5 million
at September 30, 2000.

     The Company experienced a net increase in cash from operating activities of
$7.6 million during the year that was primarily  attributable  to the net income
of $2.8 million and proceeds of $24.7 million realized from the sale of mortgage
loans, offset by the origination of $20.3 million of loans held for sale.

     The $52.0 million  decrease in cash from investing  activities for the year
ended September 30, 2000 was primarily  related to the $49.8 million increase in
loan originations exceeding principal payments, investment security purchases of
$18.2  million,  and a $1.9  million  low  income  housing  limited  partnership
investment  offset by sales and maturities of securities  totaling $12.8 million
and $5.6 million of mortgage-backed and related securities principal payments.

     Financing activities generated net cash of $46.9 million for the year ended
September  30,  2000.  The net  cash was  provided  primarily  from net  deposit
increases  of  $38.0  million,  $7.9  million  in net new  borrowed  funds,  and
increases of $2.6 million in repurchase agreements,  partially offset by the use
of $1.1 million to repurchase the Company's stock and $516,000 in cash dividends
paid during the year.

     As  of  September  30,  2001   management  is  not  aware  of  any  current
recommendations by regulatory authorities which, if they were to be implemented,
would have, or are reasonably  likely to have, a material  adverse effect on the
Company's liquidity, capital resources or operations.

NEW ACCOUNTING PRONOUNCEMENT

     On October 1, 2000, the Company adopted  Statement of Financial  Accounting
Standards No. 133 ("SFAS No. 133"),  "Accounting for Derivative  Instruments and
Hedging Activities",  as amended. SFAS 133 establishes  accounting and reporting
standards for  derivative  instruments  and for hedging  activities and requires
that all  derivative  instruments be recorded on the balance sheet at their fair
value.  Changes in the fair value of  derivatives  are  recorded  each period in
current earnings or other comprehensive income, depending on the intended use of
the derivative and its resulting designation. The adoption is not significant to
the  consolidated  financial  statements  of the Company  during the year and at
September 30, 2001.

IMPACT OF INFLATION

     The audited  consolidated  financial  statements presented herein have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America.  These  principles  require  measurement  of financial
position  and  operating  results in terms of  historical  dollars  (except  for
securities  available for sale which are reported at fair market value and loans
held for sale which are reported at the lower of cost or estimated  market value
in the aggregate),  without considering changes in the relative purchasing power
of money over time due to inflation.

     The primary assets and liabilities of the Bank are monetary in nature. As a
result,  interest  rates  have  a  more  significant  impact  on  the  Company's
performance than the effects of general levels of inflation.  Interest rates can
be affected by inflation, however, do not necessarily move in the same direction
or with the same magnitude as the indexes that measure inflation.

     In periods of rapidly  changing  interest rates, the liquidity and maturity
structures  of  the  Company's  assets  and  liabilities  are  critical  to  the
maintenance of acceptable  performance levels. For a discussion of the Company's
continuing efforts to reduce its vulnerability to changes in interest rates, see
"Asset/Liability Management."

     The  principal  effect of  inflation,  as distinct  from levels of interest
rates, on earnings is in the area of noninterest expense.  Such expense items as
employee compensation,  employee benefits, and occupancy and equipment costs may
be subject to increases as a result of inflation. Although difficult to measure,
an additional  effect of inflation is the possible  increase in the dollar value
of the collateral securing loans made by the Bank.

FORWARD LOOKING STATEMENTS

     When used in this  filing  and in future  filings by the  Company  with the
Securities  and Exchange  Commission,  in the Company's  press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized executive officer, the words or phrases, "anticipate,"
"would be," "will allow," "intends to," "will likely result," "are expected to,"
will continue," "is anticipated," "estimated," "project," or similar expressions
are intended to identify, "forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
risks and  uncertainties,  including  but not  limited to  changes  in  economic
conditions  in the  Company's  market  area,  changes in policies by  regulatory
agencies,  fluctuations  in interest  rates,  demand for loans in the  Company's
market area, and competition, all or some of which could cause actual results to
differ  materially from historical  earnings and those presently  anticipated or
projected.

     The Company  wishes to caution  readers not to place undue  reliance on any
such  forward-looking  statements,  which  speak only as of the date  made,  and
advise readers that various factors,  including  regional and national  economic
conditions,  substantial  changes in levels of market interest rates, credit and
other risks of lending and investing activities,  and competitive and regulatory
factors,  could affect the Company's  financial  performance and could cause the
Company's  actual  results for future  periods to differ  materially  from those
anticipated or projected.

     The Company does not undertake,  and specifically disclaims any obligation,
to update any forward looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements..

<PAGE>
                         Report of Independent Auditors



Board of Directors and Shareholders
MFB Corp.
Mishawaka, Indiana

     We have audited the accompanying  consolidated  balance sheets of MFB Corp.
and  Subsidiary as of September  30, 2001 and 2000 and the related  consolidated
statements  of income,  shareholders'  equity and cash flows for the years ended
September 30, 2001, 2000 and 1999. These consolidated  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 financial  position of MFB Corp.
and  Subsidiary  as of  September  30,  2001 and 2000,  and the results of their
operations and their cash flows for the years ended September 30, 2001, 2000 and
1999 in conformity with accounting  principles  generally accepted in the United
States of America.




/s/ Crowe, Chizek and Company LLP
---------------------------------
Crowe, Chizek and Company LLP
South Bend, Indiana
November 8, 2001

<PAGE>


MFB CORP.  AND SUBSIDIARY
Consolidated Balance Sheets

                                                          September 30,
                                                ------------------------------
                                                      2001             2000
                                                     ------           ------
ASSETS
Cash and due from financial institutions        $   7,229,130    $   9,692,995
Interest-bearing deposits in other financial
   institutions - short-term                       26,994,158        4,850,957
                                                -------------    -------------
      Total cash and cash equivalents              34,223,298       14,543,952
                                                -------------    -------------
Interest-bearing time deposits
     in other financial institutions                1,500,000             --
Securities available for sale                      47,859,663       41,622,790
Federal Home Loan Bank (FHLB) stock,
     at cost                                        6,307,600        6,307,600
Loans held for sale, net of unrealized losses
  of $-0- in 2001 and $131,618 in 2000              3,073,700        6,494,568
Loans receivable                                  311,613,196      317,177,699
  Less: allowance for loan losses                  (4,631,981)      (1,672,000)
                                                -------------    -------------
    Loans receivable, net                         306,981,215      315,505,699
                                                -------------    -------------
Accrued interest receivable                         1,774,284        1,894,602
Premises and equipment, net                         5,100,144        4,687,662
Mortgage servicing rights, net of accumulated
  amortization of $239,451 in 2001 and
  $92,954 in 2000                                   1,068,801          611,013
Investment in limited partnership                   2,877,088        2,948,463
Other assets                                        2,318,389        1,387,030
                                                -------------    -------------
      Total assets                              $ 413,084,172    $ 396,003,379
                                                =============    =============

Liabilities
  Deposits
    Noninterest-bearing demand deposits         $  13,894,743    $  11,802,027
    Savings, NOW and MMDA deposits                 73,082,351       56,568,936
    Other time deposits                           158,202,159      171,023,260
                                                -------------    -------------
           Total deposits                         245,179,253      239,394,223
                                                -------------    -------------
  Securities sold under agreements
        to repurchase                              11,021,511        9,143,345
  Federal Home Loan Bank advances                 119,684,985      112,151,525
  Advances from borrowers for taxes
    and insurance                                   1,599,356        2,115,832
  Accrued expenses and other liabilities            1,219,052          684,027
                                                -------------    -------------
           Total liabilities                      378,704,157      363,488,952
Shareholders' equity
  Common stock, no par value, 5,000,000
    shares authorized; shares issued:
    1,689,417 - 2001 and 2000; shares
    outstanding: 1,336,539 - 2001,
    1,358,449 - 2000                               13,023,255       13,136,003
  Retained earnings - substantially
    restricted                                     29,088,683       27,711,396
  Accumulated other comprehensive
    income (loss), net of tax of
    $83,004 in 2001 and $(601,096)
    in 2000                                            45,036         (916,439)
  Treasury stock, 352,878 common
    shares - 2001; 330,968 common
    shares - 2000, at cost                         (7,776,959)      (7,416,533)
                                                -------------    -------------
      Total shareholders' equity                   34,380,015       32,514,427
                                                -------------    -------------
        Total liabilities and
           shareholders' equity                 $ 413,084,172    $ 396,003,379
                                                =============    =============

The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>


MFB CORP.  AND SUBSIDIARY
Consolidated Statements of  Income
<TABLE>
<CAPTION>

                                                      Years ended September 30,
                                          --------------------------------------------
                                               2001            2000            1999
                                          ------------    ------------    ------------
Interest income
   Loans receivable, including fees
<S>                                       <C>             <C>             <C>
      Mortgage loans                      $ 13,674,238    $ 14,966,575    $ 14,997,969
      Consumer and other loans               2,416,480       1,948,952       1,267,455
      Commercial loans                       9,439,644       7,748,432       4,060,194
   Securities                                3,519,155       3,559,796       3,315,190
   Other interest-earning assets               927,363         290,012         612,977
                                          ------------    ------------    ------------
      Total interest income                 29,976,880      28,513,767      24,253,785

Interest expense
   Deposits                                 11,070,863      10,025,303       8,580,571
   Securities sold under agreements
      to repurchase                            292,318         300,358         147,675
   FHLB advances                             6,608,615       6,147,365       5,719,852
                                          ------------    ------------    ------------
      Total interest expense                17,971,796      16,473,026      14,448,098
                                          ------------    ------------    ------------
Net interest income                         12,005,084      12,040,741       9,805,687
Provision for loan losses                    3,096,594       1,106,393         230,000
                                          ------------    ------------    ------------
Net interest income after provision
   for loan losses                           8,908,490      10,934,348       9,575,687

Noninterest income
   Service charges on deposit accounts         735,344         540,877         293,202
   Trust fee income                            212,535         145,594          29,398
   Insurance commissions                       140,084         149,357         147,521
   Brokerage commissions                        29,370          13,230          28,157
   Net realized gains (losses) from
      sales of securities available
      for sale                                 (51,570)        (38,552)          3,803
   Net realized losses from sales
      of securities held to maturity              --            (2,245)           --
   Net realized gains from sales
      of loans                               1,046,147         524,969         366,320
   Loan servicing fees, net of
      amortization of $146,497 in 2001,
      $36,383 in 2000 and
      $37,195 in 1999                           31,662          81,846          54,025
   Other income                                620,848         429,577         297,640
                                          ------------    ------------    ------------
      Total noninterest income               2,764,420       1,844,653       1,220,066
Noninterest expense
   Salaries and employee benefits            4,943,774       4,668,011       3,846,889
   Occupancy and equipment expense           1,278,395       1,080,785         882,698
   Data processing expense                     516,504         442,983         379,715
   SAIF deposit insurance premium               46,692          62,117         109,208
   Provision to adjust loans held
      for saleo lower of cost
      or market                                   --           122,896         489,152
   Other expense                             2,025,890       1,895,029       1,298,419
                                          ------------    ------------    ------------
      Total noninterest expense              8,811,255       8,271,821       7,006,081
                                          ------------    ------------    ------------
Income before income taxes                   2,861,655       4,507,180       3,789,672
Income tax expense                             951,283       1,692,623       1,585,374
                                          ------------    ------------    ------------
   Net income                             $  1,910,372    $  2,814,557    $  2,204,298
                                          ============    ============    ============
Basic earnings per common share           $       1.42    $       2.04    $       1.56
Diluted earnings per common share                 1.38            2.00            1.51

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>


MFB CORP.  AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity
Years ended September 30, 2001, 2000 and 1999


<TABLE>
<CAPTION>

                                                                     Accumulated
                                                                        Other
                                                                     Comprehensive                                        Total
                                        Common          Retained     Income (Loss), Unearned     Unearned   Treasury   Shareholders'
                                         Stock          Earnings      Net of Tax   ESOP Shares  RRP Shares     Stock       Equity
                                       -----------    -----------    ------------- -----------  ---------- ----------- -------------
<S>                                    <C>            <C>             <C>          <C>          <C>        <C>          <C>
Balance at September 30, 1998          $12,846,979    $23,730,167     $(45,417)    $(444,557)   $(38,500)  $(5,162,895) $30,885,777

Purchase of 56,668 shares
   of treasury stock                            --             --           --            --          --    (1,209,619)  (1,209,619)

Stock option exercise-issuance
   of 2,500 shares of
   treasury stock                          (33,906)            --           --            --          --        58,906       25,000

Cash dividends declared -
   $ .355 per share                             --       (514,743)          --        13,961          --            --     (500,782)

Effect of contribution to
   fund ESOP                                    --             --           --       207,633          --            --      207,633

Market adjustment of 19,186
   ESOP shares committed to
   be released                             203,229             --           --            --          --            --      203,229

Amortization of RRP contribution                --             --           --            --      38,500            --       38,500

Comprehensive income:

    Net income for the year end
        September 30, 1999                               2,204,298          --            --          --            --    2,204,298

    Other comprehensive income (loss)           --              --    (672,406)           --          --            --     (672,406)

          Total comprehensive income            --              --          --            --          --            --    1,531,892
                                       -----------    -----------    ---------   -----------  ----------   -----------  ------------

Balance at September 30, 1999           13,016,302     25,419,722     (717,823)     (222,963)         --    (6,313,608)  31,181,630

Purchase of 61,600 shares
   of treasury stock                            --             --           --            --          --    (1,102,925)  (1,102,925)

Cash dividends declared -
   $ .375 per share                             --       (522,883)          --         7,269          --            --     (515,614)

Effect of contribution to fund ESOP             --             --           --       215,694          --            --      215,694

Market adjustment of 20,857 ESOP shares
   committed to be released                119,701             --           --            --          --            --      119,701

    Net income for the year end
        September 30, 2000                      --      2,814,557           --            --          --            --    2,814,557

    Other comprehensive income (loss)           --             --     (198,616)           --          --            --     (198,616)

          Total comprehensive income            --             --           --            --          --            --    2,615,941
                                       -----------    -----------    ---------   -----------  ----------   -----------  ------------

Balance at September 30, 2000           13,136,003     27,711,396     (916,439)           --          --    (7,416,533)  32,514,427

Purchase of 34,760 shares of
        treasury stock                          --             --           --            --          --     (647,398)     (647,398)

Stock option exercise-issuance of
        12,850 shares of
        treasury stock                    (156,893)            --           --            --          --       286,972      130,079

Tax benefit related to employee
        stock plan                          44,145             --           --            --          --            --       44,145

Cash dividends declared -
        $ .395 per share                        --       (533,085)          --            --          --            --     (533,085)

Comprehensive income:

    Net income for the year end
        September 30, 2001                      --      1,910,372           --            --          --            --    1,910,372

    Other comprehensive income (loss)           --             --      961,475            --          --            --      961,475

          Total comprehensive income            --             --           --            --          --            --    2,871,847
                                       -----------    -----------    ---------   -----------  ----------   -----------  ------------

Balance at September 30, 2001          $13,023,255    $29,088,683    $  45,036     $      --  $       --   $(7,776,959) $34,380,015
                                       ===========    ===========    =========     =========  ==========   ===========  ============
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>


MFB CORP. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended September 30, 2001, 2000 and 1999

<TABLE>
<CAPTION>


                                                                    2001            2000            1999
                                                               ------------    ------------    ------------

Cash flows from operating activities
<S>                                                            <C>             <C>             <C>
   Net income                                                  $  1,910,372    $  2,814,557    $  2,204,298
   Adjustments to reconcile net income
      to net cash from operating activities
         Depreciation and amortization, net of accretion            391,333         493,800         298,862
         Amortization of RRP contribution                              --              --            38,500
         Provision for loan losses                                3,096,594       1,106,393         230,000
         Provision to adjust loans held for sale
           to lower of cost or market                                  --           122,896         489,152
         Net realized (gains) losses from sales of
           securities available for sale                             51,570          38,552          (3,803)
         Net realized losses from sales of
           securities held to maturity                                 --             2,245            --
         Net realized gains from sales of loans                  (1,046,147)       (524,969)       (366,320)
         Amortization of mortgage servicing rights                  146,497          36,383          37,195
         Origination of loans held for sale                     (53,858,737)    (20,311,571)    (20,948,828)
         Proceeds from sales of loans held for sale              57,721,467      24,651,870      20,728,574
         Equity in loss of investment in limited partnership         71,375         132,578           8,084
         Market adjustment of ESOP shares
           committed to be released                                    --           119,701         203,229
         ESOP expense                                                  --           215,694         207,633
         Net change in:
                  Accrued interest receivable                       120,318        (531,284)       (395,323)
                  Other assets                                   (1,571,314)       (459,378)        (24,475)
                  Accrued expenses and other liabilities            535,025        (277,312)       (138,798)
                                                               ------------    ------------    ------------
                        Net cash from operating activities        7,568,353       7,630,155       2,567,980

Cash flows from investing activities
   Net change in interest-bearing time
     deposits in other financial institutions                    (1,500,000)      1,000,000      (1,000,000)
   Net change in loans receivable                                 5,427,890     (49,753,856)    (32,793,948)
   Proceeds from:
         Sales of securities available for sale                     190,930       9,632,387       1,989,992
         Sales of securities held to maturity                          --         1,602,755            --
         Principal payments of mortgage-backed
           and related securities                                 7,451,031       5,550,697      21,505,020
         Maturities and calls of securities
           available for sale                                    63,297,820       1,104,095      42,410,326
         Maturities of securities held to maturity                     --           500,000            --
   Purchase of:
         Securities available for sale                          (75,417,941)     (3,000,000)    (63,280,952)
         Securities held to maturity                                   --       (15,243,229)     (3,984,360)
         FHLB stock                                                    --          (796,300)       (875,000)
         Premises and equipment, net                               (968,523)       (752,752)     (2,001,153)
         Investment in limited partnership                             --        (1,867,611)           --
                                                               ------------    ------------    ------------
               Net cash from investing activities                (1,518,793)    (52,023,814)    (38,030,075)
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


(Continued)
<PAGE>


MFB CORP.  AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
Years ended September 30, 2001, 2000 and 1999

<TABLE>
<CAPTION>

                                                               2001           2000           1999
                                                         ------------    ------------    ------------

Cash flows from financing activities
<S>                                                      <C>             <C>             <C>
   Purchase of MFB Corp. common stock                    $   (647,398)   $ (1,102,925)   $ (1,209,619)
   Net change in deposits                                   5,785,030      37,986,834      20,741,414
   Net change in securities sold under
     agreements to repurchase                               1,878,166       2,576,950       4,200,679
   Proceeds from FHLB borrowings                           20,000,000      91,000,000      23,000,000
   Repayment of FHLB borrowings                           (12,466,540)    (83,074,225)    (16,431,214)
   Proceeds from exercise of stock options                    130,079            --            25,000
   Net change in advances from
     borrowers for taxes and insurance                       (516,476)          4,649        (205,134)
   Cash dividends paid                                       (533,085)       (515,614)       (500,782)
                                                         ------------    ------------    ------------
            Net cash from financing activities             13,629,776      46,875,669      29,620,344
                                                         ------------    ------------    ------------

Net change in cash and cash equivalents                    19,679,336       2,482,010      (5,841,751)

Cash and cash equivalents at beginning of year             14,543,952      12,061,942      17,903,693
                                                         ------------    ------------    ------------

Cash and cash equivalents at end of year                 $ 34,223,288    $ 14,543,952    $ 12,061,942
                                                         ============    ============    ============
Supplemental disclosures of cash flow information
   Cash paid during the year for:
      Interest                                           $ 17,975,287    $ 16,422,424    $ 14,403,181
      Income taxes                                          2,190,000       2,192,981       1,627,895

Supplemental schedule of noncash investing activities:
   Transfer from:
      Loans receivable to loans held for sale            $       --      $  6,626,186    $       --
      Loans held for sale to loans receivable                    --         4,020,337       5,294,087
      Securities held to maturity to securities
      available for sale                                         --        17,163,545            --
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>
                   Notes to Consolidated Financial Statements



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles  of  Consolidation:   The  accompanying  consolidated  financial
statements  include the accounts of MFB Corp., and its  wholly-owned  subsidiary
MFB  Financial  (the  "Bank"),  a federal  stock  savings  bank,  and  Mishawaka
Financial  Services,  Inc.,  a  wholly-owned  subsidiary  of the Bank  (together
referred to as "the Company").  Mishawaka Financial Services, Inc. is engaged in
the sale of general property,  casualty,  and life insurance to customers in the
Bank's market area. All significant  intercompany  transactions and balances are
eliminated in consolidation.

     Nature of Business and Concentrations of Credit Risk: The primary source of
income  for  the  Company  results  from  granting   commercial,   consumer  and
residential  real  estate  loans in St.  Joseph  and  Elkhart  counties  and the
surrounding area. Loans secured by real estate mortgages comprise  approximately
59% of the loan  portfolio at September  30, 2001 and are  primarily  secured by
residential  mortgages.  The Company operates  primarily in the banking industry
which accounts for more than 90% of its revenues, operating income and assets.

     Use of Estimates In Preparing  Financial  Statements:  The  preparation  of
consolidated  financial  statements in  conformity  with  accounting  principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period, as well as the disclosures  provided.  Areas involving the
use of  estimates  and  assumptions  in the  accompanying  financial  statements
include the  allowance  for loan  losses,  fair values of  securities  and other
financial instruments,  determination and carrying value of loans held for sale,
determination  and  carrying  value of  impaired  loans,  the value of  mortgage
servicing rights, the value of investments in limited partnerships, the value of
stock options,  the realization of deferred tax assets, and the determination of
depreciation  of premises and equipment  recognized  in the Company's  financial
statements.  Actual  results  could  differ  from  those  estimates.   Estimates
associated  with the allowance for loan losses and the fair values of securities
and other financial instruments are particularly  susceptible to material change
in the near term.

     Cash and Cash  Equivalents:  For purposes of reporting cash flows, cash and
cash  equivalents  is defined to include the  Company's  cash on hand,  due from
financial  institutions  and  short-term   interest-bearing  deposits  in  other
financial  institutions.  The Company  reports net cash flows for customer  loan
transactions,  deposit  transactions,  short term borrowings  having an original
maturity of 90 days or less,  advances from  borrowers for taxes and  insurance,
and interest-bearing time deposits in other financial institutions.

     Securities:  Securities  are  classified as held to maturity and carried at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Securities are classified as available for sale when they might be
sold before maturity.  Securities  available for sale are carried at fair value,
with  unrealized   holding  gains  and  losses  reported   separately  as  other
comprehensive income or loss and in shareholders' equity, net of tax. Securities
are  classified as trading when held for short term periods in  anticipation  of
market gains, and are carried at fair value. Securities are written down to fair
value when a decline in fair value is not temporary.

     Gains  and  losses  on the sale of  securities  are  determined  using  the
specific  identification  method  based on amortized  cost and are  reflected in
results  of  operations  at the  time of sale.  Interest  and  dividend  income,
adjusted by amortization of purchase premium or discount over the estimated life
of the security using the level yield method, is included in earnings.

     Mortgage  Banking  Activities:  Mortgage loans  originated and intended for
sale in the  secondary  market  are  reported  on the  statements  of  financial
condition  as  loans  held  for sale  and are  carried  at the  lower of cost or
estimated market value in the aggregate. Net unrealized losses are recognized in
a valuation allowance by charges to income.

     Loan servicing fees are recognized  when received and the related costs are
recognized when incurred.  The Bank sells mortgages into the secondary market at
market prices, which includes consideration for normal servicing fees.

     Servicing  rights are recognized as assets for purchased rights and for the
allocated value of retained servicing rights on loans sold. Servicing rights are
expensed  in  proportion  to, and over the period of,  estimated  net  servicing
revenues.  Impairment is evaluated based on the fair value of the rights,  using
groupings of the underlying loans as to interest rates and then, secondarily, as
to geographic and  prepayment  characteristics.  Fair value is determined  using
prices for similar assets with similar characteristics, when available, or based
upon discounted cash flows using market-based  assumptions.  Any impairment of a
grouping is reported as a valuation allowance.

     Loans  Receivable:  Loans  receivable  that  management  has the intent and
ability to hold for the  foreseeable  future or until  maturity  or pay-off  are
reported at their outstanding  principal  balances adjusted for any charge-offs,
the  allowance  for loan losses,  and any deferred  fees or costs on  originated
loans, and unamortized premiums or discounts on purchased loans.

     Premiums or discounts on mortgage  loans are  amortized to income using the
level yield method over the remaining period to contractual  maturity,  adjusted
for anticipated prepayments. Loan fees and certain direct loan origination costs
are deferred, and the net fee or cost is recognized as an adjustment to interest
income using the interest method.

     Because some loans may not be repaid in full,  an allowance for loan losses
is recorded.  An allowance for loan losses is a valuation allowance for probable
incurred  credit  losses.  The  allowance  for loan  losses  is  increased  by a
provision for loan losses charged to expense and decreased by  charge-offs  (net
of  recoveries).  Estimating the risk of loss and the amount of loss on any loan
is  necessarily  subjective.   Accordingly,   the  allowance  is  maintained  by
management  at a level  considered  adequate to cover losses that are  currently
anticipated.  Management's  periodic evaluation of the adequacy of the allowance
is based on the Company's past loan loss experience, known and inherent risks in
the  portfolio,  periodic,  adverse  situations  that may affect the  borrower's
ability to repay, the estimated value of any underlying collateral,  and current
economic conditions.  While management may periodically allocate portions of the
allowance for specific problem loan situations, the whole allowance is available
for any loan  charge-offs  that  occur.  Loan  losses are  charged  against  the
allowance when  management  believes the  uncollectibility  of a loan balance is
confirmed.

     Loans are considered  impaired if full  principal or interest  payments are
not anticipated in accordance with the  contractual  loan terms.  Impaired loans
are carried at the present value of expected future cash flows discounted at the
loan's  effective  interest  rate or at the fair value of the  collateral if the
loan is  collateral  dependent.  A portion of the  allowance  for loan losses is
allocated to impaired loans if the value of such loans is deemed to be less than
the unpaid balance.  If these allocations cause the allowance for loan losses to
require increase,  such increase is reported as a component of the provision for
loan losses.

     Smaller-balance  homogeneous  loans are evaluated for  impairment in total.
Such loans include  residential  first  mortgage  loans  secured by  one-to-four
family residences,  residential  construction  loans,  automobile,  manufactured
homes,  home equity and second  mortgage  loans.  Commercial  loans and mortgage
loans secured by other  properties are evaluated  individually  for  impairment.
When analysis of borrower  operating results and financial  condition  indicates
that underlying  cash flows of the borrower's  business are not adequate to meet
its debt service requirements,  the loan is evaluated for impairment. Often this
is  associated  with a delay  or  shortfall  in  payments  of 30  days or  more.
Nonaccrual loans are often also considered impaired. Impaired loans, or portions
thereof, are charged off when deemed uncollectible.

     Interest  income on loans is accrued  over the term of the loans based upon
the  principal  outstanding.  The  accrual  of  interest  on  impaired  loans is
discontinued when, in management's  opinion,  the borrower may be unable to meet
payments as they become due. When interest accrual is  discontinued,  all unpaid
accrued interest is reversed. Interest income is subsequently recognized only to
the extent that cash payments are received until, in management's  judgment, the
borrower has the ability to make contractual interest and principal payments, in
which case the loan is returned to accrual status.

     Foreclosed Real Estate: Real estate properties acquired through, or in lieu
of,  loan  foreclosure  are  initially  recorded  at fair  value  at the date of
acquisition, establishing a new cost basis. Any reduction to fair value from the
carrying  value of the related loan at the time of  acquisition is accounted for
as a loan loss and charged against the allowance for loan losses. Valuations are
periodically  performed by  management  and  valuation  allowances  are adjusted
through a charge to income for changes in fair value or estimated selling costs.

     Income  Taxes:  Deferred  tax  assets  and  liabilities  are  reflected  at
currently  enacted  income  tax  rates  applicable  to the  period  in which the
deferred tax assets or  liabilities  are expected to be realized or settled.  As
changes in tax laws or rates are enacted,  deferred  tax assets and  liabilities
are adjusted  through  income tax  expense.  A valuation  allowance,  if needed,
reduces deferred tax assets to the amount expected to be realized.

     Premises and Equipment: Land is carried at cost. Buildings and improvements
and furniture and equipment are carried at cost, less  accumulated  depreciation
and amortization computed principally by using the straight-line method over the
estimated  useful lives of the assets.  These assets are reviewed for impairment
when events  indicate the carrying  amount is  significantly  less than the fair
value.

     Employee  Stock  Ownership Plan (ESOP):  The Company  accounts for its ESOP
under AICPA  Statement of Position  (SOP) 93-6. The cost of shares issued to the
ESOP,  but not yet  allocated to  participants,  are presented as a reduction of
shareholders'  equity.  Compensation  expense is  recorded  based on the average
market  price  of  the  shares  committed  to  be  released  for  allocation  to
participant  accounts.  The difference  between the market price and the cost of
shares  committed to be released is recorded as an  adjustment  to common stock.
Dividends  on  allocated  ESOP shares are  recorded  as a reduction  of retained
earnings; dividends on unearned ESOP shares are reflected as a reduction of debt
and accrued interest.

     Financial  Instruments  with  Off-Balance-Sheet  Risk: The Company,  in the
normal  course  of  business,  makes  commitments  to make  loans  which are not
reflected  in  the  consolidated  financial  statements.   A  summary  of  these
commitments is disclosed in Note 13.

     Earnings Per Common Share:  Basic earnings per common share is based on the
net income divided by the weighted  average number of common shares  outstanding
during the period.  ESOP shares are  considered  outstanding  for  earnings  per
common share calculations as they are committed to be released;  unearned shares
are not considered  outstanding.  Recognition  and retention plan ("RRP") shares
are considered  outstanding  for earnings per common share  calculations as they
become vested. Diluted earnings per common share shows the dilutive effective of
additional  potential  common shares  issuable under stock options and nonvested
shares issued under the RRP.

     Stock  Compensation:  Expense for employee  compensation under stock option
plans is based on  Accounting  Principles  Board (APB)  Opinion 25, with expense
reported  only if  options  are  granted  below  market  price  at  grant  date.
Disclosures  of net income and  earnings per common share are provided as if the
fair value method of SFAS No. 123 were used for stock-based compensation.

     Comprehensive  Income (Loss):  Comprehensive  income (loss) consists of net
income and other comprehensive  income (loss). Other comprehensive income (loss)
includes  the net  change  in net  unrealized  gains and  losses  on  securities
available for sale, net of reclassification  adjustments and tax effects, and is
also recognized as a separate component of shareholders' equity.

     Segments:  MFB Corp. and its  subsidiary,  MFB Financial and its subsidiary
Mishawaka Financial  Services,  Inc. provide a broad range of financial services
to  individuals  and  companies in Mishawaka  and the  surrounding  area.  These
services include demand, time and savings deposits;  lending;  insurance;  trust
and other  financial  services.  While the  Company's  management  monitors  the
revenue  streams of the various  Company  products and services,  operations are
managed  and  financial  performance  is  evaluated  on  a  Company-wide  basis.
Accordingly,   all  of  the  Company's  banking  operations  are  considered  by
management to be aggregated in one reportable operating segment.

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

NOTE 2 - EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE

A reconciliation of the numerators and denominators used in the computation of
the basic earnings per common share and diluted earnings per common share is
presented below:

<TABLE>
<CAPTION>

                                                     Year ended September 30,
                                            ----------------------------------------
                                                 2001         2000           1999
                                            -----------   -----------    -----------

Basic Earnings Per Common Share
  Numerator
<S>                                         <C>           <C>            <C>
   Net income                               $ 1,910,372   $ 2,814,557    $ 2,204,298
                                            ===========   ===========    ===========
Denominator
   Weighted average common shares
     outstanding                              1,345,904     1,389,274      1,448,790
   Less:  Average unallocated ESOP shares          --         (10,428)       (30,450)
   Less:  Average nonvested RRP shares             --            --           (1,925)
                                            -----------   -----------    -----------
   Weighted average common shares
     outstanding for basic earnings per
     common share                             1,345,904     1,378,846      1,416,415
                                            ===========   ===========    ===========
Basic earnings per common share             $      1.42   $      2.04    $      1.56
                                            ===========   ===========    ===========
</TABLE>


                                                  Year ended September 30,
                                           ------------------------------------
                                               2001         2000         1999
                                           ----------   ----------   ----------

Diluted Earnings Per Common Share
 Numerator
    Net income                             $1,910,372   $2,814,557   $2,204,298
                                           ==========   ==========   ==========
Denominator
    Weighted average common shares
      outstanding for basic earnings per
      common share                          1,345,904    1,378,846    1,416,415
    Add:  Dilutive effects of average
      nonvested RRP shares                       --           --            448
    Add:  Dilutive effects of assumed
      exercises of stock options               34,838       31,715       44,793
                                           ----------   ----------   ----------
    Weighted average common shares
      and dilutive potential common
      shares outstanding                   $1,380,742   $1,410,561   $1,461,656
                                           ==========   ==========   ==========
Diluted earnings per common share          $     1.38   $     2.00   $     1.51
                                           ==========   ==========   ==========

     Stock options for 75,750, 80,750 and 78,250 shares of common stock were not
considered  in computing  diluted  earnings per common share for the years ended
September 30, 2001, 2000 and 1999 because they were antidilutive.

NOTE 3 - SECURITIES

The amortized cost and fair value of securities available for sale and held to
maturity are as follows:

<TABLE>
<CAPTION>

                                                Available for Sale
                                                September 30, 2001
                              ------------------------------------------------------------
                                                 Gross            Gross
                                 Amortized     Unrealized       Unrealized        Fair
                                   Cost          Gains            Losses          Value
                               ------------   ------------    -------------   ------------
Debt securities
  U.S. Government and
<S>                            <C>            <C>             <C>             <C>
    federal agencies           $  2,919,520   $    102,082    $       --      $  3,021,602
  Municipal bonds                   145,000            357            --           145,357
  Mortgage-backed                20,090,566        244,565         (14,950)     20,320,181
  Commercial paper                4,994,828              4            --         4,994,832
  Corporate notes                15,329,446        402,319        (524,824)     15,206,941
                               ------------   ------------    -------------   ------------
                                 43,479,360        749,327        (539,774)     43,688,913
Marketable equity securities      4,252,263           --           (81,513)      4,170,750
                               ------------   ------------    -------------   ------------
                               $ 47,731,623   $    749,327    $   (621,287)   $ 47,859,663
                               ============   ============    =============   ============

</TABLE>
<TABLE>

<CAPTION>


                                                     Available for Sale
                                                     September 30, 2000
                               -----------------------------------------------------------
                                                  Gross            Gross
                                Amortized       Unrealized      Unrealized        Fair
                                   Cost           Gains           Losses          Value
                               ------------   ------------    ------------    ------------
Debt securities
  U.S. Government and
<S>                            <C>            <C>             <C>             <C>
    federal agencies           $ 17,944,537   $      5,868    $   (212,198)   $ 17,738,207
  Mortgage-backed                14,833,896           --          (621,714)     14,212,182
  Corporate notes                 9,924,042          2,493        (571,820)      9,354,715
                               ------------   ------------    ------------    ------------
                                 42,702,475          8,361      (1,405,732)     41,305,104
Marketable equity securities        437,850           --          (120,164)        317,686
                               ------------   ------------    ------------    ------------
                               $ 43,140,325   $      8,361    $ (1,525,896)   $ 41,622,790
                               ============   ============    =============   ============

</TABLE>


     The  amortized  cost  and  fair  value of debt  securities  by  contractual
maturity  are shown  below.  Expected  maturities  may differ  from  contractual
maturities  because  borrowers may have the right to call or prepay  obligations
with or without call or prepayment penalties.

                                                   September 30, 2001
                                                   Available for Sale
                                                -------------------------
                                                 Amortized       Fair
                                                    Cost         Value
                                                -----------   -----------

        Due in one year or less                 $ 5,441,189   $ 5,441,815
        Due after one year through
          five years                             12,700,403    13,068,697
        Due after five years through
          ten years                               1,288,180     1,349,600
        Due after ten years                       3,959,022     3,508,620
                                                -----------   -----------
                                                 23,388,794    23,368,732
        Mortgage-backed securities               20,090,566    20,320,181
                                                -----------   -----------
                                                $43,479,360   $43,688,913
                                                ===========   ===========

     Proceeds from sales and  liquidation of securities  available for sale were
$190,930 during the year ended September 30, 2001. Gross gains of $-0- and gross
losses  of  $51,570  were  realized  on  these  sales.  Proceeds  from  sales of
securities  available for sale were  $9,632,387  during the year ended September
30, 2000.  Gross gains of $18,750 and gross  losses of $57,302 were  realized on
these sales.  During the year ended September 30, 1999,  proceeds from the sales
of securities  available for sale were $1,989,992 with gross gains of $5,026 and
gross losses of $1,223 realized on these sales.

     In September 2000, a held-to-maturity  security was sold. Proceeds from the
sale of the security were  $1,602,755 and a gross loss of $2,245 was realized on
the sale. As a result of this sale,  all remaining  held-to-maturity  securities
with a carrying  value of  $17,163,545  and a market value of  $16,843,467  were
transferred to available-for-sale.

NOTE 4 - LOANS RECEIVABLE, NET

Loans receivable, net at September 30 are summarized as follows:

                                                      2001            2000
                                                -------------    -------------

First mortgage loans (principally conventional)
  Principal balances
     Secured by one-to-four family residences   $ 157,186,968    $ 185,266,466
     Construction loans                            18,658,571       13,146,237
     Other                                          4,330,573        3,630,897
                                                -------------    -------------
                                                  180,176,112      202,043,600
     Less undisbursed portion of construction
       and other mortgage loans                       142,734)         (54,156)
                                                -------------    -------------
         Total first mortgage loans               180,033,378      201,989,444

Commercial and consumer loans:
  Principal balances
     Home equity and second mortgage               20,275,377       18,916,792
     Commercial                                   105,555,466       91,105,033
     Municipal                                         19,289             --
     Other                                          6,536,466        6,089,133
                                                -------------    -------------
        Total commercial and consumer loans       132,386,598      116,110,958
Net deferred loan origination fees                   (806,780)        (922,703)
                                                -------------    -------------
                                                $ 311,613,196    $ 317,177,699
                                                =============    =============


Activity in the allowance for loan losses is summarized as follows for the years
ended September 30:

                                    2001           2000           1999
                               -----------    -----------    -----------

Balance at beginning of year   $ 1,672,000    $   638,465    $   453,567
Provision for loan losses        3,096,594      1,106,393        230,000
Charge-offs                       (140,483)       (72,858)       (45,102)
Recoveries                           3,870           --             --
                               -----------    -----------    -----------
Balance at end of year         $ 4,631,981    $ 1,672,000    $   638,465
                               ===========    ===========    ===========


Impaired loans were as follows.

                                                   2001         2000
                                               ----------   ----------

Year-end loans with no allocated allowance
  for loan losses                              $1,290,000   $   60,000
Year-end loans with allocated allowance
  for loan losses                               7,641,000    1,591,000
                                               ----------   ----------
                  Total                        $8,931,000   $1,651,000
                                               ==========   ==========

Amount of the allowance for loan
  losses allocated                             $2,700,000   $  150,000
Average of impaired loans during the year      $2,274,000   $   12,000
Interest income recognized during impairment   $     --     $    1,000
Cash-basis interest income recognized
  during impairment                            $     --     $     --

There were no impaired loans during 1999.


Nonperforming loans were as follows at year-end:


                                                          2001         2000
                                                      ----------   ----------

Loans past due over 90 days still on accrual status   $  152,000   $   60,000
Nonaccrual loans                                       2,632,000        6,000
                                                      ----------   ----------
   Total nonperforming loans                          $2,784,000   $   66,000
                                                      ==========   ==========


     Mortgage  loans  serviced for others are not  included in the  accompanying
consolidated  balance  sheets.  The  Company  is  subject  to  certain  recourse
obligations on the loans serviced for Telebank. The unpaid principal balances of
these loans at September 30, are summarized as follows:


                                                 2001          2000
                                             ----------   ----------

Mortgage loan portfolios serviced for:
   Telebank                                  $ 5,036,074   $ 6,699,963
   Hanover Capital Mortgage Holdings, Inc.     5,239,120     6,376,675
   LaSalle Bank, FSB                           5,158,242     6,740,764
   Citizens Bank                               4,930,591     5,698,176
   Federal Home Loan Mortgage Corporation     71,313,412    31,292,424
                                             -----------   -----------
                                             $91,677,439   $56,808,002
                                             ===========   ===========


     Custodial  escrow  balances  maintained  in  connection  with the foregoing
serviced loans were $758,000 and $345,000 at September 30, 2001 and 2000.

     Certain directors and executive officers of the Company and its subsidiary,
including  associates  of such  persons,  are loan  customers.  A summary of the
related party loan activity,  for loans  aggregating  $60,000 or more to any one
related party, is as follows:

                                                    2001          2000
                                               -----------    -----------

        Balance - beginning of year            $ 1,683,514    $ 1,582,502
        New loans                                  723,404         40,496
        Repayments                                (457,504)       (47,918)
        Effect of changes in related parties          --          108,434
                                               -----------    -----------
        Balance - end of year                  $ 1,949,414    $ 1,683,514
                                               ===========    ===========

NOTE 5 - PREMISES AND EQUIPMENT, NET

Premises and equipment at September 30 are summarized as follows:

                                                        2001           2000
                                                    -----------    -----------

        Land                                        $ 1,214,895    $   834,895
        Buildings and improvements                    3,889,303      3,810,621
        Furniture and equipment                       3,017,330      2,507,489
                                                    -----------    -----------
                 Total cost                           8,121,528      7,153,005
        Accumulated depreciation and amortization    (3,021,384)    (2,465,343)
                                                    -----------    -----------
                                                    $ 5,100,144    $ 4,687,662
                                                    ===========    ===========

     Depreciation  and  amortization  of  premises  and  equipment  included  in
occupancy  and  equipment  expense  was  approximately  $556,000,  $478,000  and
$383,000 for the years ended September 30, 2001, 2000 and 1999, respectively.

NOTE 6 - DEPOSITS

     The  aggregate  amount of  short-term  jumbo  certificates  of  deposit  in
denominations of $100,000 or more was approximately  $34,841,000 and $39,609,000
at September 30, 2001 and 2000.

     At September 30, 2001, the scheduled  maturities of certificates of deposit
are as follows:

                2002                            $128,886,499
                2003                              19,829,859
                2004                               8,410,701
                2005                                 636,019
                2006                                 389,720
                Thereafter                            49,361
                                                ------------
                                                $158,202,159
                                                ============

NOTE 7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

     Securities  sold under  agreements to repurchase  consist of obligations of
the  Company  to  other  parties.  These  arrangements  are all  one-day  retail
repurchase agreements and are secured by investment securities.  Such collateral
is held by safekeeping agents of the Company.

     Information concerning securities sold under agreements to repurchase as of
September 30 is summarized as follows:
<TABLE>
<CAPTION>

                                             2001           2000           1999
                                        -----------    -----------    -----------

<S>                                     <C>            <C>            <C>
Average daily balance during the year   $ 8,416,000    $ 7,718,000    $ 3,892,000
Average interest rate during the year          3.47%          3.89%          3.80%
Maximum month end balance
  during the year                       $11,021,511    $10,201,000    $ 7,079,000
Balance at end of year                  $11,021,511    $ 9,143,345    $ 6,566,395
Fair value of  securities underlying
  these agreements at year end          $11,898,887    $11,921,000    $ 9,310,000

</TABLE>

NOTE 8 - FEDERAL HOME LOAN BANK ADVANCES

     At  September  30,  2001,  advances  from the  Federal  Home  Loan  Bank of
Indianapolis  with  fixed and  variable  rates  ranging  from 3.60% to 6.82% are
required to be repaid in the year ending September 30 as follows:

                2002                   $    350,000
                2003                     20,300,000
                2004                        800,000
                2005                      5,200,000
                2006                     10,500,000
                Thereafter               82,534,985
                                       ------------
                                       $119,684,985
                                       ============

     FHLB  advances  are secured by all FHLB stock,  qualifying  first  mortgage
loans, and government agency  securities.  At September 30, 2001,  $6,308,000 of
FHLB stock,  $165,111,000 of eligible mortgage loan collateral and $1,000,000 of
government securities are pledged to the FHLB to secure advances outstanding.

     In addition, $104,000,000 of the advances outstanding at September 30, 2001
contained  put options  with put dates  ranging from  December  2001 to December
2003,  whereby  the  advance  can be  called  by the  FHLB  prior  to  maturity.
Seventy-four million of these advances with put options are for maturities after
September 30, 2006.

NOTE 9 - EMPLOYEE BENEFITS

     Employee  Pension  Plan:  The Bank is part of a  qualified  noncontributory
multiple-employer defined benefit pension plan covering substantially all of its
employees.   The  plan  is   administered  by  the  trustees  of  the  Financial
Institutions  Retirement Fund.  There is no separate  valuation of plan benefits
nor segregation of plan assets  specifically  for the Bank because the plan is a
multiple-employer  plan and  separate  actuarial  valuations  are not made  with
respect to each  employer nor are the plan assets so  segregated.  As of July 1,
2001,  the latest  actuarial  valuation  date,  total plan assets  exceeded  the
actuarially  determined value of total vested benefits.  The cost of the plan is
set annually as an established percentage of wages. Pension plan expense for the
years ended September 30, 2001, 2000 and 1999 was approximately  $6,600,  $4,400
and $6,900, respectively.

     401(k) Plan: The Company  maintains a retirement  savings 401(k) plan which
covers all full time  employees who are 21 or older and have  completed one year
of service.  Participants may defer up to 15% of  compensation,  and the Company
matches  50% of  elective  deferrals  on 6% of the  participants'  compensation.
Expense for the 401(k) plan for the years ended  September  30,  2001,  2000 and
1999 was approximately $122,000, $69,000 and $60,000.

     Employee  Stock  Ownership  Plan  (ESOP):  In  conjunction  with its  stock
conversion,  the Company established an ESOP for eligible  employees.  Employees
with at least one year of employment  and who have attained age  twenty-one  are
eligible  to  participate.  The ESOP  borrowed  $1,400,000  from the  Company to
purchase  140,000  shares of common  stock issued in the  conversion  at $10 per
share. Collateral for the loan was the unearned shares of common stock purchased
by the ESOP with the loan  proceeds.  The loan was repaid  principally  from the
Company's discretionary  contributions to the ESOP over a period of seven years.
The interest rate for the loan was 6.25%. Shares purchased by the ESOP were held
in suspense until allocated among ESOP  participants as the loan was repaid.  As
of September  30,  2000,  the loan was paid in full and the  remaining  unearned
shares were allocated to participants. During the year ended September 30, 2001,
an  additional  7,500  shares  were  purchased  by the  ESOP  and  allocated  to
participants.

     ESOP expense was  approximately  $-0-,  $335,000 and $411,000 for the years
ended September 30, 2001, 2000 and 1999.  Contributions  to the ESOP,  including
dividends  on unearned  ESOP  shares,  were  approximately  $-0-,  $223,000  and
$222,000 during the years ended September 30, 2001, 2000 and 1999.

     Company  contributions  to the  ESOP  and  shares  released  from  suspense
proportional  to the  repayment  of the  ESOP  loan  are  allocated  among  ESOP
participants on the basis of  compensation  in the year of allocation.  Benefits
generally become 100% vested after five years of credited service. A participant
who terminates  employment for reasons other than death,  normal  retirement (or
early  retirement),  or  disability  prior to the  completion  of five  years of
credited  service does not receive any benefits under the ESOP.  Forfeitures are
reallocated among the remaining participating  employees, in the same proportion
as contributions.

     Benefits  are  payable in the form of stock  except for  fractional  shares
which  are  paid  in  cash  upon   termination  of  employment.   The  Company's
contributions  to the ESOP are not fixed,  so  benefits  payable  under the ESOP
cannot be estimated.

     ESOP participants receive  distributions from their ESOP accounts only upon
termination of service.  For the years ended  September 30, 2001, 2000 and 1999,
-0-,  20,857 and 19,186  shares with an average  fair value of $-0-,  $16.08 and
$21.41 per share, were committed to be released.

NOTE 9 - EMPLOYEE BENEFITS (continued) The ESOP shares as of September 30 were
as follows:


                                            2001         2000         1999
                                        ---------    ---------    ---------

        Allocated shares                  147,500      140,000      119,143
        Unearned shares                      --           --         20,857
        Shares withdrawn from the
          plan by participants            (16,198)     (14,571)     (14,571)
                                        ---------    ---------    ---------
             Total ESOP shares held
                in the plan               131,302      125,429      125,429
                                        =========    =========    =========
        Fair value of unearned shares   $    --      $    --      $ 412,000
                                        =========    =========    =========

     Recognition  and Retention  Plans  (RRPs):  In  conjunction  with its stock
conversion,  the Company  established  RRPs as a method of providing  directors,
officers and other key employees of the Company with a  proprietary  interest in
the Company in a manner  designed to  encourage  such persons to remain with the
Company.  Eligible  directors,  officers and other key  employees of the Company
become  vested  in  awarded  shares  of  common  stock at a rate of 20% per year
commencing March 24, 1994. The RRPs acquired, in the aggregate, 70,000 shares of
common stock issued in the  conversion  at $10 per share and 70,000  shares were
awarded to RRP  participants at no cost to them. RRP expense for the years ended
September  30, 2001,  2000 and 1999 was  approximately  $-0-,  $-0- and $38,500,
respectively.

     Stock  Option Plan:  The Board of Directors of the Company  adopted the MFB
Corp. Stock Option Plans (the "Option Plans").  The number of options authorized
under the Plans totals 350,000 shares of common stock.  Officers,  employees and
outside  directors of the Company and its subsidiary are eligible to participate
in the Option Plans.  The option  exercise price must be no less than 85% of the
fair market value of common stock on the date of the grant,  and the option term
cannot exceed ten years and one day from the date of the grant.  As of September
30, 2001,  all options  granted  have an exercise  price of at least 100% of the
market  value of the  common  stock on the  date of  grant  and no  compensation
expense was recognized for stock options for the years ended September 30, 2001,
2000 and 1999. As of September 30, 2001,  67,500  options  remain  available for
future grants.

     The fair value for the options granted during the year was estimated at the
date of grant using a  Black-Scholes  option  pricing  model with the  following
weighted-average assumptions:

                                            2000     1999
                                           ------   ------
         Risk-free interest rate            6.62%    4.74%
         Expected dividend rate             2.17%    1.71%
         Stock price volatility            16.25%   12.20%

     Had compensation  cost for stock options been measured using FASB Statement
No 123, net income and  earnings per share would have been the proforma  amounts
indicated  below. The proforma effect may increase in the future if more options
are granted.

<TABLE>
<CAPTION>

                                                   2001           2000            1999
                                            -------------   -------------       ---------

<S>                                         <C>             <C>                 <C>
         Net income as reported             $   1,910,372   $   2,814,557       2,204,298
         Proforma net income                    1,783,652       2,687,837       2,054,921

         Reported earnings per common and
           common equivalent share
                  Basic                             $1.42           $2.04           $1.56
                  Diluted                           $1.38           $2.00           $1.51

Proforma earnings per common and common

           equivalent share
                  Basic                             $1.33           $1.95           $1.45
                  Diluted                           $1.29           $1.91           $1.41
</TABLE>

Activity in the Option Plan for the years ended is summarized as follows:


<TABLE>
<CAPTION>

                                                              Weighted   Weighted
                                  Number of                   Average     Average
                                Outstanding   Exercise        Exercise  Fair Value
                                 Options       Price            Price    of Grants
                                ----------- --------------    --------  ----------

<S>                              <C>        <C>               <C>          <C>
Balance at September 30, 1998    166,500    $10.00-$26.75     $   15.45
         Granted                  35,750    $18.25-$21.875    $   21.37    $5.30
         Exercised                (2,500)   $10.00            $   10.00
                                -----------
Balance at September 30, 1999    199,750    $10.00-$26.75     $   16.58
         Granted                   5,500    $16.31-$17.25     $   17.05    $5.52
         Exercised                  --
                                -----------
Balance at September 30, 2000    205,250    $10.00-$26.75     $   16.59
         Granted                    --                                       --
         Forfeited                (3,750)   $16.3125-$26.75
         Exercised               (12,850)   $10.00-$16.3125
                                -----------
Balance at September 30, 2001    188,650    $10.00-$26.75     $   16.68

</TABLE>

Options exercisable at September 30 are as follows:

                                Weighted
                                 Number                Average
                               of Options           Exercise Price
                               ----------           --------------
              1999              120,000                 $12.19
              2000              141,758                 $13.67
              2001              146,415                 $15.05

At September 30, 2001, options outstanding were summarized as follows:

                                    Outstanding            Exercisable
                              -----------------------   -----------------------
                                     Weighted Average                 Weighted
Range of                                Remaining                     Average
Exercise                               Contractual                    Exercise
Price                       Number         Life          Number         Price
--------                   -------   ----------------   -------      ---------
$10-$15                     96,400      2.78 years       96,400      $   11.04
$15-$20                     16,500      6.05 years       12,667          15.80
$20-$26.75                  75,750      6.75 years       37,348          25.15
--------                   -------   ----------------   -------      ---------
Outstanding at year end    188,650      4.66 years      146,415      $   15.05
                           =======   ================   =======      =========
NOTE 10 - INCOME TAXES

     The Company files consolidated  income tax returns.  Tax legislation passed
in August 1996  requires  the Bank to deduct a  provision  for bad debts for tax
purposes  based on actual  loss  experience  and  recapture  the excess bad debt
reserve accumulated in tax years after September 30, 1987. The related amount of
deferred tax liability which must be recaptured is approximately $446,000 and is
payable over a six year period  beginning with the tax year ending September 30,
1999.

     Income tax expense  for the years  ended  September  30 are  summarized  as
follows:

                                   2001           2000           1999
                              -----------    -----------    ------------

Federal
  Current                     $ 1,456,063    $ 1,530,984    $ 1,535,497
  Deferred                       (765,324)      (239,781)      (284,395)
                              -----------    -----------    ------------
                                  690,739      1,291,203      1,251,102
State
  Current                         400,201        439,792        397,363
  Deferred                       (139,657)       (38,372)       (63,091)
                              -----------    -----------    ------------
                                  260,544        401,420        334,272
                              -----------    -----------    ------------
   Total income tax expense   $   951,283    $ 1,692,623    $ 1,585,374
                              ===========    ===========    ===========

Total income tax expense differed from the amounts computed by applying the
federal income tax rate of 34% in all periods presented to income before income
taxes as a result of the following for the years ended September 30:

<TABLE>
<CAPTION>

                                              2001         2000            1999
                                        -----------    -----------    -----------

<S>                                     <C>            <C>            <C>
Income taxes at statutory rate          $   972,963    $ 1,532,441    $ 1,288,488
Tax effect of:
  State tax, net of federal income
    tax effect                              171,960        264,937        220,620
  Excess of fair value of ESOP shares
    released over cost                         --           40,698         69,098
  Low income housing credits               (174,401)      (155,000)          --
  Other items, net                          (19,239)         9,547          7,168
                                        -----------    -----------    -----------
     Total income tax expense           $   951,283    $ 1,692,623    $ 1,585,374
                                        ===========    ===========    ===========
</TABLE>

     The  components of the net deferred tax asset  (liability)  recorded in the
consolidated balance sheets as of September 30 are as follows:

                                                     2001           2000
                                                -----------    -----------

Deferred tax assets
  Bad debt deduction                            $ 1,745,555    $   413,217
  Net deferred loan fees                            342,882        392,148
  Valuation adjustment on loans held for sale          --           55,938
  Net unrealized depreciation
    on securities available for sale                   --          601,096
  Other                                              10,798         41,843
                                                -----------    -----------
                                                  2,099,235      1,504,242
Deferred tax liabilities
  Accretion                                         (56,370)       (31,852)
  Depreciation                                      (49,889)       (48,351)
  Net unrealized appreciation
    on securities available for sale                (83,004)          --
  Mortgage servicing rights                        (454,240)      (259,681)
  Other                                            (129,017)       (58,524)
                                                -----------    -----------
                                                   (772,520)      (398,408)
                                                -----------    -----------
  Net deferred tax asset (liability)            $ 1,326,715    $ 1,105,834
                                                ===========    ===========
NOTE 10 - INCOME TAXES  (continued)

     Federal  income tax laws provided  savings banks with  additional  bad debt
deductions  through the tax year ended September 30, 1987,  totaling  $4,596,000
for the Bank. Accounting standards do not require a deferred tax liability to be
recorded on this amount,  which liability  would  otherwise total  $1,563,000 at
September 30, 2001 and 2000. If the Bank were liquidated or otherwise  ceases to
be a bank or if tax laws change, the $1,563,000 would be recorded as expense.

NOTE 11 - REGULATORY MATTERS

     The Bank is subject to  regulatory  capital  requirements  administered  by
federal banking  agencies.  Capital  adequacy  guidelines and prompt  corrective
action regulations involve  quantitative  measures of assets,  liabilities,  and
certain   off-balance-sheet   items  calculated   under  regulatory   accounting
practices.  Capital amounts and  classifications are also subject to qualitative
judgments by regulators about  components,  risk weightings,  and other factors,
and the regulators can lower  classifications in certain cases.  Failure to meet
various capital  requirements can initiate  regulatory  action that could have a
direct material effect on the financial statements.

     The prompt  corrective  action  regulations  provide five  classifications,
including   well   capitalized,   adequately   capitalized,    undercapitalized,
significantly undercapitalized, and critically undercapitalized,  although these
terms are not used to represent overall financial condition.  If only adequately
capitalized,  regulatory  approval is required to accept brokered  deposits.  If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and plans for capital restoration are required.

     The Bank's  actual  capital  and  required  capital  amounts and ratios are
presented below:

<TABLE>
<CAPTION>

                                                                                            Minimum
                                                                                          Requirement
                                                                     Minimum              To Be Well
                                                                   Requirement         Capitalized Under
                                                                   For Capital         Prompt Corrective
                                               Actual           Adequacy Purposes      Action Provisions
                                        ------------------      -----------------      -----------------
                                        Amount       Ratio      Amount      Ratio      Amount      Ratio
                                        ------       -----      ------      -----      ------      -----
         (Dollars in Thousands)

As of September 30, 2001
         Total capital (to risk
<S>                                    <C>           <C>        <C>          <C>       <C>          <C>
           weighted assets)            $35,454       13.11%     $21,627      8.00%     $27,033      10.00%
         Tier 1 (core) capital
           (to risk weighted assets)    33,522       12.40       10,813      4.00       16,220       6.00
         Tier 1 (core) capital (to
           adjusted total assets)       33,522        8.12       16,509      4.00       20,636       5.00

As of September 30, 2000
         Total capital (to risk
           weighted assets)            $33,810       13.25%      $20,416      8.00%    $25,520      10.00%
         Tier 1 (core) capital
           (to risk weighted assets)    32,288       12.65        10,208      4.00      15,312       6.00
         Tier 1 (core) capital (to
           adjusted total assets)       32,288        8.141        5,869      4.00      19,836       5.00

</TABLE>

     Regulations  of the Office of Thrift  Supervision  limit the dividends that
may be paid without prior approval of the Office of Thrift Supervision. The Bank
is currently a "well-capitalized"  Tier 1 institution and can make distributions
during a year of 100% of its retained  net income for the calendar  year-to-date
plus retained net income for the previous two calendar years (less any dividends
previously paid) as long as the Bank would remain "well-capitalized",  following
the proposed distribution.  Accordingly, at September 30, 2001 $3,669,000 of the
Bank's  retained  earnings was  potentially  available for  distribution  to the
Company, without obtaining prior regulatory approval.

NOTE 12 - OTHER NONINTEREST  INCOME AND EXPENSE

     Other noninterest  income and expense amounts are summarized as follows for
the years ended September 30:
<TABLE>
<CAPTION>

                                                 2001          2000          1999
                                           -----------    -----------    -----------

Other noninterest income
<S>                                        <C>            <C>            <C>
  Loan fee income                          $    90,052    $    46,463    $    37,386
  ATM/debit card income                        228,819        138,004         68,627
  Other service charges and fees               245,647        176,231        111,765
  Other                                         56,330         68,879         79,862
                                           -----------    -----------    -----------
                                           $   620,848    $   429,577    $   297,640
                                           ===========    ===========    ===========
Other noninterest expense
  Advertising and promotion                $   155,138    $   208,274    $   206,254
  Professional fees                            311,154        197,819        170,429
  Printing, postage, stationery,
    and supplies                               308,749        278,928        219,267
  Direct loan origination costs deferred      (218,450)      (135,694)      (202,349)
  Other                                      1,469,299      1,345,702        904,818
                                           -----------    -----------    -----------
                                           $ 2,025,890    $ 1,895,029    $ 1,298,419
                                           ===========    ===========    ===========
</TABLE>

NOTE 13 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONTINGENCIES

     Various  outstanding   commitments  and  contingent   liabilities  are  not
reflected in the financial statements. Commitments to make loans at September 30
are as follows:

<TABLE>
<CAPTION>

                                                  2001                                      2000
                                ---------------------------------------   ---------------------------------------
                                   Fixed        Variable                      Fixed       Variable
                                 Rate Loans    Rate Loans      Total       Rate Loans    Rate Loans      Total
                                -----------   -----------   -----------   -----------   -----------   -----------
<S>                             <C>           <C>           <C>           <C>           <C>           <C>
First mortgage loans            $15,728,800   $ 4,764,935   $20,493,735   $ 3,023,124   $ 1,454,250   $ 4,477,374
Commercial loans                  3,500,427     4,949,239     8,449,666       677,750     5,880,332     6,558,082
Unused lines of credit            2,909,796    17,269,033    20,178,829     8,656,675     8,204,191    16,860,866
Unused commercial loan
  lines and letters of credit          --      30,839,623    30,839,623          --      29,085,625    29,085,625
Unused construction loan
  lines of credit                 2,217,851     8,376,783    10,594,634     1,691,061     5,207,279     6,898,340
                                -----------   -----------   -----------   -----------   -----------   -----------
                                $24,356,874   $66,199,613   $90,556,487   $14,048,610   $49,831,677   $63,880,287
                                ===========   ===========   ===========   ===========   ===========   ===========

</TABLE>

     Fixed rate  mortgage  loan  commitments  at September 30, 2001 are at rates
primarily  ranging from 6.125% to 10.25%.  Mortgage loan fixed rate  commitments
are primarily for terms ranging from 15 to 30 years, while commercial loan fixed
rate  commitments  are  primarily  for five year terms.  Rates on variable  rate
mortgage  loans range from 5.75% to 8.875% and are tied to the one year treasury
bill  rate.  Rates  on  variable  commercial  loan  commitments  are tied to the
national prime rate.

     Since  commitments  to make  loans and to fund  unused  lines of credit and
loans in process may expire without being used,  the amounts do not  necessarily
represent future cash  commitments.  In addition,  commitments are agreements to
lend to a customer as long as there is no violation of any condition established
in  the  contract.  The  maximum  exposure  to  credit  loss  in  the  event  of
nonperformance   by  the  other  party  is  the  contractual   amount  of  these
instruments.  The same credit policy is used to make such commitments as is used
for loans receivable.

     Under  employment  agreements with certain  executives,  officers,  certain
events  leading to  separation  from the Company  could result in cash  payments
totaling $1,531,500 as of September 30, 2001.

     The Company and the Bank are  subject to certain  claims and legal  actions
arising in the ordinary course of business. In the opinion of management,  after
consultation  with legal counsel,  the ultimate  disposition of these matters is
not expected to have a material  adverse  effect on the  consolidated  financial
position or results of operation of the Company.

NOTE 14 - PARENT COMPANY FINANCIAL STATEMENTS

Presented below are the condensed financial statements for the parent company,
MFB Corp.

                            CONDENSED BALANCE SHEETS
                          September 30, 2001 and 2000

                                                      2001          2000
                                                 -----------   -----------

ASSETS
  Cash and cash equivalents                      $   364,766   $   552,249
  Securities available for sale                    1,213,540     1,277,686
  Investment in Bank subsidiary                   33,586,359    31,468,005
  Other assets                                        14,893        21,960
                                                 -----------   -----------
    Total assets                                 $35,179,558   $33,319,900
                                                 ===========   ===========
LIABILITIES
  Loan payable to Bank subsidiary                $   750,000   $   750,000
  Accrued expenses and other liabilities              49,543        55,473
                                                 -----------   -----------
    Total liabilities                                799,543       805,473
SHAREHOLDERS' EQUITY                              34,380,015    32,514,427
                                                 -----------   -----------
    Total liabilities and shareholders' equity   $35,179,558   $33,319,900
                                                 ===========   ===========

                         CONDENSED STATEMENTS OF INCOME
                 Years ended September 30, 2001, 2000 and 1999

                                               2001        2000         1999
                                          ----------   ----------   ----------

INCOME
  Dividends from Bank subsidiary - cash   $  790,000   $1,544,000   $1,125,000
  Interest income                             87,021      109,608       57,205
                                          ----------   ----------   ----------
    Total                                    877,021    1,653,608    1,182,205
EXPENSES
  Interest expense                            60,567       66,187       17,062
  Other expenses                             217,154      120,362      110,790
                                          ----------   ----------   ----------
    Total                                    277,721      186,549      127,852
  Income before income taxes and
    equity in undistributed net income
    of Bank subsidiary                       599,300    1,467,059    1,054,353
  Income tax benefit                          77,410       32,350       29,857
                                          ----------   ----------   ----------
  Income before equity in undistributed
    net income of Bank subsidiary            676,710    1,499,409    1,084,210
  Equity in undistributed net income of
    Bank subsidiary                        1,233,662    1,315,148    1,120,088
                                          ----------   ----------   ----------
  Net income                              $1,910,372   $2,814,557   $2,204,298
                                          ==========   ==========   ==========


                       CONDENSED STATEMENTS OF CASH FLOWS
                 Years ended September 30, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                     2001           2000           1999
                                                 -----------    -----------    -----------
Cash flows from operating activities
<S>                                              <C>            <C>            <C>
  Net income                                     $ 1,910,372    $ 2,814,557    $ 2,204,298
  Adjustments to reconcile net income to
    net cash  from operating activities
     Equity in undistributed net income of
       Bank subsidiary                            (1,233,662)    (1,315,148)    (1,120,088)
     Net realized losses from sales
       of securities available for sale               51,570          5,110           --
     Net change in other assets                      (29,798)        16,605        353,863
        Net change in accrued expenses and
          other liabilities                           15,287        (49,964)       121,285
                                                 -----------    -----------    -----------
            Net cash from operating activities       713,769      1,471,160      1,559,358

Cash flows from investing activities
  Principal repayments on loan receivable
    from ESOP                                           --          222,963        221,594
  Purchase of securities available for sale          (41,778)          --             --
  Purchase of securities held to maturity               --             --       (1,000,000)
  Proceeds from sales of securities
    available for sale                               190,930         99,890           --
                                                 -----------    -----------    -----------
           Net cash from investing activities        149,152        322,853       (778,406)

Cash flows from financing activities
  Proceeds from loan payable to Bank
    subsidiary                                          --             --          750,000
  Purchase of MFB Corp. common stock                (647,398)    (1,102,925)    (1,209,619)
  Proceeds from exercise of stock options            130,079           --           25,000
  Cash dividends paid                               (533,085)      (522,883)      (514,743)
                                                 -----------    -----------    -----------
           Net cash from financing activities     (1,050,404)    (1,625,808)      (949,362)
                                                 -----------    -----------    -----------
Net change in cash and cash equivalents             (187,483)       168,205       (168,410)
Cash and cash equivalents at beginning
  of year                                            552,249        384,044        552,454
                                                 -----------    -----------    -----------
Cash and cash equivalents at end of year         $   364,766    $   552,249    $   384,044
                                                 ===========    ===========    ===========
</TABLE>


NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The following table shows the estimated fair values and the related carrying
amounts of the Company's financial instruments at September 30, 2001 and 2000.
Items which are not financial instruments are not included.

<TABLE>
<CAPTION>

                                              2001                              2000
                                 ------------------------------    ------------------------------
                                    Carrying        Estimated         Carrying        Estimated
                                      Amount        Fair Value         Amount         Fair Value
                                 -------------    -------------    -------------    -------------

<S>                              <C>              <C>              <C>              <C>
Cash and cash equivalents        $  34,223,288    $  34,223,000    $  14,543,952    $  14,544,000

Interest-bearing time
  deposits in other financial
  institutions                       1,500,000        1,500,000             --               --

Securities available for sale       47,859,663       47,860,000       41,622,790       41,623,000

FHLB stock                           6,307,600        6,308,000        6,307,600        6,308,000

Loans held for sale, net             3,073,700        3,074,000        6,494,568        6,495,000

Loans receivable, net of
  allowance for loan losses        306,981,215      311,930,000      315,505,699      309,494,000

Accrued interest receivable          1,774,284        1,774,000        1,894,602        1,895,000

Mortgage servicing rights, net       1,068,801        1,069,000          611,013          611,000

Investment in limited
  partnership                        2,877,088        2,877,000        2,948,463        2,948,000

Noninterest bearing demand
  deposits                         (13,894,743)     (13,895,000)     (11,802,027)     (11,802,000)

Savings, NOW and MMDA
  deposits                         (73,082,351)     (73,082,000)     (56,568,936)     (56,569,000)

Other time deposits               (158,202,159)    (159,388,000)    (171,023,260)    (169,977,000)

Securities sold under
  agreements to repurchase         (11,021,511)     (11,022,000)      (9,143,345)      (9,143,000)

FHLB advances                     (119,684,985)    (117,525,000)    (112,151,525)    (108,300,000)

Advances from borrowers
  for taxes and insurance           (1,599,356)      (1,599,000)      (2,115,832)      (2,116,000)

</TABLE>

     For  purposes  of the  above  disclosures  of  estimated  fair  value,  the
following assumptions were used as of September 30, 2001 and 2000. The estimated
fair value for cash and cash equivalents and  interest-bearing  time deposits in
other financial  institutions are considered to approximate  cost. The estimated
fair value for securities available for sale and securities held to maturity, is
based upon quoted market values for the individual  securities or for equivalent
securities.  The estimated fair value for loans held for sale,  net, is based on
the price  offered in the  secondary  market on September  30, 2001 and 2000 for
loans having similar interest rates and maturities. The estimated fair value for
loans receivable is based upon estimates of the difference in interest rates the
Company  would  charge  the  borrowers  for  similar  such  loans  with  similar
maturities  made at September 30, 2001 and 2000,  applied for an estimated  time
period  until the loan is  assumed  to reprice  or be paid.  In  addition,  when
computing the estimated fair value for loans receivable,  the allowance for loan
losses was subtracted from the calculated fair value for consideration of credit
issues.  The estimated fair value for FHLB stock,  accrued interest  receivable,
mortgage  servicing  rights,  investment  in  limited  partnership,  noninterest
bearing  demand  deposits,  savings,  NOW and MMDA  deposits and  advances  from
borrowers  for taxes and  insurance  is based upon  their  carrying  value.  The
estimated  fair value for other time deposits as well as  securities  sold under
agreements to repurchase  and FHLB advances is based upon  estimates of the rate
the Company  would pay on such  deposits or borrowings at September 30, 2001 and
2000,  applied for the time period until  maturity.  The estimated fair value of
other financial instruments and off-balance-sheet  loan commitments  approximate
cost 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 September 30, 2001 and 2000,  the estimated  fair
values would  necessarily  have been achieved at that date,  since market values
may differ  depending on various  circumstances.  The  estimated  fair values at
September  30, 2001 and 2000 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  property  and  equipment.   Also,  nonfinancial  instruments  typically  not
recognized  in  financial  statements  nevertheless  may have  value but are not
included  in the  above  disclosures.  Excluded,  among  other  items,  are  the
estimated  earning  power of core  deposit  accounts,  the  trained  work force,
customer goodwill and similar items.

NOTE 16 - OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) components and related taxes were as follows:
<TABLE>
<CAPTION>

                                                        2001         2000          1999
                                                  -----------   -----------    -----------

Net change in net unrealized gains and losses
  on securities available for sale
     Unrealized gains (losses) arising during
<S>                                               <C>           <C>            <C>
        the year                                  $ 1,594,005   $   (47,362)   $(1,109,639)
     Reclassification adjustment for transfer
        of securities from held-to-maturity to
        available-for-sale                               --        (320,078)          --
     Reclassification adjustment for (gains)
        losses included in net income                  51,570        38,552         (3,803)
                                                  -----------   -----------    -----------
          Net change in net unrealized gains
             and losses on securities available
             for sale                               1,645,575      (328,888)    (1,113,442)
Tax benefit                                           684,100      (130,272)      (441,036)
                                                  -----------   -----------    -----------
     Total other comprehensive income (loss)      $   961,475   $  (198,616)   $  (672,406
                                                  ===========   ============   ===========
</TABLE>


NOTE 17 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

                                             Year Ended September 30, 2001
                                         --------------------------------------
                                           1st        2nd      3rd       4th
(In thousands, except per share data)    Quarter    Quarter   Quarter   Quarter
                                         -------    -------   -------   -------

Interest income                          $ 7,744    $ 7,619   $ 7,398   $ 7,216

Interest expense                           4,637      4,622     4,467     4,246
                                         -------    -------   -------   -------
Net interest income                        3,107      2,997     2,931     2,970

Provision for loan losses                  1,957        150       261       729

Net interest income after provision
  for loan losses                          1,150      2,847     2,670     2,241

Noninterest income                           661        602       743       758

Noninterest expense                        2,049      2,230     2,268     2,264
                                         -------    -------   -------   -------
Income before income taxes                  (238)     1,219     1,145       735

Income tax expense                          (103)       410       405       239
                                         -------    -------   -------   -------
Net income                               $  (135)   $   809   $   740   $   496
                                         ========   =======   =======   ========
Basic earnings per common share          $  (.10)   $   .60   $   .55   $   .37
                                         ========   =======   =======   ========
Diluted earnings per common share        $  (.10)   $   .59   $   .54   $   .35
                                         ========   =======   =======   ========



                                               Year Ended September 30, 2000
                                            ----------------------------------
                                              1st      2nd     3rd       4th
(In thousands, except per share data)       Quarter  Quarter Quarter   Quarter
                                            -------  ------- -------   -------
Interest income                             $6,520   $6,894   $7,405   $7,695

Interest expense                             3,685    3,972    4,279    4,537
                                            -------  ------- -------   -------
Net interest income                          2,835     2,92    3,126    3,158

Provision for loan losses                       75       80      190      761
                                            -------  ------- -------   -------
Net interest income after provision
  for loan losses                            2,760    2,842    2,936    2,397

Noninterest income                             358      295      569      623

Noninterest expense                          2,010    1,978    2,160    2,124
                                            -------  ------- -------   -------
Income before income taxes                   1,108    1,159    1,345      896

Income tax expense                             419      435      501      338
                                            -------  ------- -------   -------
Net income                                  $  689   $  724   $  844   $  558
                                            ======   ======   ======   ======
Basic earnings per common share             $  .49   $  .52   $  .62   $  .41
                                            ======   ======   ======   ======
Diluted earnings per common share           $  .48   $  .51   $  .61   $  .40
                                            ======   ======   ======   ======


<PAGE>

                MFB Corp. and Subsidiary Directors and Officers
                               September 30, 2001



MFB CORP. AND MFB FINANCIAL DIRECTORS

M. Gilbert Eberhart (age 67) has served as Secretary of MFB Financial since 1987
and of MFB Corp. since inception. He is also a dentist based in Mishawaka.

Thomas F. Hums (age 68) served as President and Chief  Executive  Officer of MFB
Financial from 1972 until  September 1995. He also served as President and Chief
Executive  Officer  of  Mishawaka  Financial  Services,  Inc.  from  1975  until
September 1995. He also served as President and Chief  Executive  Officer of MFB
Corp. from inception  until  September  1995. He is the current  Chairman of MFB
Corp. and MFB Financial.

Jonathan E. Kintner (age 58) is an optometrist based in Mishawaka

Christine  A.  Lauber  (age 56) is a  Certified  Public  Accountant  in  private
practice in South Bend, Indiana.

Michael J. Marien (age 54) is a Sales Representative with Signode Corporation, a
division of ITW.

Charles J. Viater (age 47) has served as President and Chief  Executive  Officer
of MFB Corp.,  MFB  Financial  and  Mishawaka  Financial  Services,  Inc.  since
September  1995.  He  previously  served as Executive  Vice  President for Amity
Federal  Savings  Bank and Chief  Financial  Officer of Amity  Bancshares,  Inc.
beginning in December 1990.

Reginald  H. Wagle  (age 59) has served as Vice  President  of  Memorial  Health
Foundation since 1992. Until 1992, he was a free-lance  political consultant and
until 1991, he also served as District  Director for the Office of United States
Representative John P. Hiler, Third Congressional District of Indiana.

MFB FINANCIAL EXECUTIVE OFFICERS

Charles J. Viater                               Thomas J. Flournoy
President and Chief Executive Officer*          Vice President and
                                                Chief Financial Officer

Donald R. Kyle                                  M. Gilbert Eberhart
Executive Vice President and                    Secretary*
Chief Operating Officer


* Holds same position with MFB Corp.

<PAGE>

                MFB Corp. and Subsidiary Shareholder Information
                               September 30, 2001



Market Information

     The common  stock of MFB Corp.  is traded on the  National  Association  of
Securities Dealers Automated Quotation System, National Market System, under the
symbol  "MFBC."  As  of  September  30,  2001,  there  were   approximately  532
shareholders  of record.  The following  table sets forth market price (based on
daily closing prices) and dividend  information  for the Company's  common stock
for the periods indicated.

                                                                   Dividend
Fiscal Quarters Ended           High Trade       Low Trade         Declared
---------------------           ----------       ---------         --------
December 31, 1999                 $20.00          $15.50             $.090
March 31, 2000                     17.62           15.25              .095
June 30, 2000                      17.00           16.00              .095
September 30, 2000                 19.75           15.75              .095
December 31, 2000                  17.87           16.00              .095
March 31, 2001                     20.12           16.75              .100
June 30, 2001                      20.50           18.39              .100
September 30, 2001                 21.50           18.00              .100

Transfer Agent and Registrar
         Registrar and Transfer Company
         10 Commerce Drive
         Cranford, NJ 07016

Special Counsel
         Barnes & Thornburg
         1313 Merchants Company Building
         11 South Meridan Street
         Indianapolis, IN 46204

Independent Auditors
         Crowe, Chizek and Company LLP
         330 East Jefferson Blvd.
         South Bend, IN 46624


<PAGE>


                MFB Corp. and Subsidiary Shareholder Information
                               September 30, 2001



Shareholder and General Inquiries

     The  Company  is  required  to file an  Annual  Report on Form 10-K for its
fiscal  year  ended   September  30,  2001  with  the  Securities  and  Exchange
Commission.  Copies of this annual  report may be obtained  without  charge upon
written request to:

                  Charles J. Viater
                  President and Chief Executive Officer
                  MFB Corp.
                  121 South Church Street
                  PO Box 528
                  Mishawaka, IN 46546


Office Locations


Main Office
121 S. Church St.
Mishawaka, IN 46544

Branch Office
402 W. Cleveland Rd.
Mishawaka, IN 46545

Branch Office
100 E. Wayne Street
Suite 150
South Bend, IN 46601

Branch Office
411 W. McKinley Ave.
Mishawaka, IN 46545

Branch Office
2427 Mishawaka Ave.
South Bend, IN 46615

Branch Office
25990 County Road 6
Elkhart, IN 46514

Branch Office
2304 Lincolnway East
Goshen, IN 46526

                                 MFB FINANCIAL