Harvest Home Financial Corporation

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

General

Since its formation, the Corporation's activities have been primarily limited to
holding the stock of Harvest  Home.  As a result,  the  discussion  that follows
focuses largely on the operations of Harvest Home.

Harvest Home's  operating  results are dependent to a significant  degree on its
net interest  income,  which is the difference  between interest income on loans
and  investments  and  interest  expense on deposits and  borrowings.  Like most
thrift  institutions,  the interest income and interest  expense of Harvest Home
changes as interest rates fluctuate and assets and liabilities reprice. Interest
rates may  fluctuate  because of general  economic  conditions,  the policies of
various regulatory  authorities and other factors beyond Harvest Home's control.
Assets and liabilities will reprice in accordance with the contractual  terms of
the asset or liability  instrument and in accordance  with customer  reaction to
general economic trends.

Harvest Home's interest-earning assets repricing within one year after September
30, 1998, are greater than  interest-bearing  liabilities  repricing  within the
same period by approximately  $9.8 million,  resulting in a positive  cumulative
one-year gap of 10.1% of total assets. The Corporation's interest-earning assets
repricing  within three years of September 30, 1998,  were $9.4 million  greater
than interest bearing liabilities repricing during the same period, resulting in
a positive cumulative gap for such period of 9.7% of total assets.

In the event that  interest  rates rise  during the  forthcoming  year,  Harvest
Home's positive  cumulative  one-year gap may have a positive effect on earnings
because   interest-earning   assets   may   reprice   at  a  faster   pace  than
interest-bearing  liabilities.  However, rising interest rates could also affect
Harvest  Home's  earnings in a negative  manner as a result of  diminished  loan
demand and the increased risk of delinquencies  resulting from increased payment
amounts on adjustable-rate loans.

Harvest Home's  earnings are also vulnerable to changes in interest rates due to
the  amount of  adjustable-rate  mortgage  loans  ("ARMs")  originated  with low
margins and adjustment  caps. In the 1980s,  Harvest Home  originated ARMs which
provide for interest rate adjustments every three years. Moreover, many of these
loans  have  adjustment  caps of 2% in any  three  year  period.  Therefore,  if
interest rates rise rapidly, Harvest Home may be unable to increase the interest
rates on such loans as rapidly as the cost of liabilities increase.

Notwithstanding  the foregoing risks, the Bank is operating within  management's
predetermined  level of interest rate risk and management  believes that Harvest
Home's interest rate risk posture and the strategies discussed below will result
in the Bank  maintaining  acceptable  operating  results in the current interest
rate environment.








                                        1



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Asset and Liability Management

Harvest Home's interest rate spread is the principal  determinant of income. The
interest rate spread,  and therefore net interest income,  can vary considerably
over time because asset and liability repricing do not coincide.  Moreover,  the
long-term or  cumulative  effect of interest  rate  changes can be  substantial.
Interest rate risk is defined as the  sensitivity of an  institution's  earnings
and net asset values to changes in interest rates. In managing its interest rate
risk,  Harvest  Home begins with an  objective  to increase  the  interest  rate
sensitivity  of its assets by  originating  loans with interest rates subject to
period adjustment and market conditions and/or shorter maturities.  Harvest Home
has  historically had to rely primarily upon retail deposit accounts as a source
of funds and intends to continue to do so. Management  believes that reliance on
retail deposit  accounts as a source of funds compared to brokered  deposits and
long-term  borrowings  may reduce  the  effects of  interest  rate  fluctuations
because  these  deposits  generally  represent  a more  stable  source of funds.
However,  in fiscal 1998 and 1997,  Harvest Home has utilized FHLB advances as a
source of financing to fund purchases of certain mortgage-backed securities when
favorable spreads became available.

Savings  banks  have  historically  presented  a gap  analysis  as a measure  of
interest  rate risk.  The gap analysis  presents the  projected  maturities  and
periods to repricing of a savings bank's rate sensitive  assets and liabilities.
As stated previously,  Harvest Home's cumulative  one-year gap, which represents
the  difference  between the amount of  interest  sensitive  assets  maturing or
repricing in one year and the amount of interest sensitive  liabilities maturing
or  repricing  in the same  period,  was a  positive  10.1% of total  assets  at
September 30, 1998. A positive  cumulative gap indicates that interest sensitive
assets exceed  interest  sensitive  liabilities  at a specific date. In a rising
interest rate environment, institutions with positive repricing or maturity gaps
generally  experience a more rapid increase in interest  income earned on assets
than the interest expense paid on liabilities.  Conversely, in an environment of
falling interest rates, interest income earned on assets will generally decrease
more rapidly than the interest expense paid on liabilities.  A negative gap will
have the opposite  effect.  Harvest Home's one to three year gap was essentially
matched,  while all other  maturities  greater  than  three  years  reflected  a
negative gap of 2.8% of total assets.  The  foregoing  totals have been based on
certain prepayment and repricing data that may not reflect actual performance in
a rapidly rising or declining interest rate environment.

Forward-Looking Statements

In addition to historical information contained herein, the following discussion
contains  forward-looking  statements  that  involve  risks  and  uncertainties.
Economic  circumstances,  the  Corporation's  operations  and the  Corporation's
actual  results  could  differ   significantly   from  those  discussed  in  the
forward-looking  statements.  Some of the factors that could cause or contribute
to such differences are discussed herein but also include changes in the economy
and interest rates in the nation and the Corporation's market area generally.

Some of the  forward-looking  statements  included  herein  are  the  statements
regarding management's determination of the amount and adequacy of the allowance
for  losses on loans,  the  effect  of the year 2000 on  information  technology
systems and the effect of recent accounting pronouncements.



                                        2


<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Discussion of Changes in Financial Condition from September 30, 1997 to 
September 30, 1998

The  Corporation's  assets  totaled  $96.9  million at September  30,  1998,  an
increase of $3.1 million,  or 3.3%, over September 30, 1997 levels. The increase
in total assets was funded  primarily by a $1.9 million increase in Federal Home
Loan Bank advances and a $1.4 million increase in deposits.

Cash,  federal  funds  sold and  interest-bearing  deposits  in other  financial
institutions  totaled  $2.9  million at  September  30, 1998, a decrease of $2.4
million,  or 45.2%,  from 1997  levels.  Federal  funds sold  decreased  by $2.4
million, while  interest-bearing  deposits and cash remained relatively constant
during 1998. Investment securities totaled $4.0 million at September 30, 1998, a
decline of $4.0 million,  or 49.8%, from the balance at September 30, 1997. This
decline  resulted  primarily  from the  maturity of $4.0  million of  investment
securities during the 1998 period.  The proceeds from such maturities and excess
liquidity  were  primarily   redeployed  to  fund  the  purchase  of  fixed-rate
mortgage-backed securities and new loan originations.

Mortgage-backed  securities  increased by $5.4 million,  or 16.6%, to a total of
$37.9  million at  September  30,  1998,  compared to  September  30,  1997,  as
purchases of $27.0  million  exceeded  principal  repayments  and sales of $19.9
million and $1.9 million, respectively. During fiscal 1998, management purchased
$22.2   million   of   long-term,   adjustable-rate   U.S.   Government   agency
collateralized mortgage obligations with a weighted-average yield of 6.41%. Such
purchases  were funded  with  proceeds  from  Federal  Home Loan Bank  advances.
Additionally,  the  Savings  Bank  acquired  $4.8  million of  intermediate-term
Federal Home Loan Mortgage  Corporation  participation  certificates  at a fixed
rate  of  6.0%,  primarily  using  proceeds  from  the  maturity  of  investment
securities.

Loans receivable increased by $3.6 million, or 7.9%, to a total of $48.8 million
at September 30, 1998, compared to September 30, 1997 levels. Loan disbursements
totaled  $13.9 million  during  fiscal 1998, as compared to $8.9 million  during
fiscal 1997, and were partially  offset by principal  repayments  totaling $10.4
million. Growth in the loan portfolio consisted primarily of one- to four-family
residential and construction  loans,  which increased by $3.2 million,  or 7.6%,
year to year.

At  September  30,  1998,  Harvest  Home's  allowance  for loan  losses  totaled
$127,000,  representing .3% of total loans and 259.2% of nonperforming loans. At
September 30, 1997,  the allowance for loan losses totaled  $115,000,  or .2% of
total loans, and 121.1% of nonperforming loans.  Nonperforming loans amounted to
$49,000,  or .1%, and $95,000, or .1%, of total assets at September 30, 1998 and
1997,  respectively.  Although  management  believes that its allowance for loan
losses at September  30, 1998,  was adequate  based on the  available  facts and
circumstances,  there can be no assurance  that additions to such allowance will
not be necessary in future periods,  which could adversely affect Harvest Home's
results of operations.

Deposits  totaled  $60.2  million at  September  30,  1998,  an increase of $1.4
million,  or 2.4%,  over the $58.8  million  total at September  30,  1997.  The
increase resulted  primarily from management's  continuing efforts to maintain a
moderate rate of growth through marketing and pricing strategies.



                                        3


<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Discussion  of  Changes  in  Financial  Condition  from  September  30,  1997 to
September 30, 1998 (continued)

Federal Home Loan Bank advances  totaled $25.9 million at September 30, 1998, an
increase of $1.9  million,  or 7.7%,  over  September  30, 1997,  as  management
elected to fund the purchase of mortgage-backed securities with a combination of
fixed- and  variable-rate,  long-term  advances.  At  September  30,  1998,  the
advances  carried a 5.26%  weighted-average  interest  rate and are scheduled to
mature through fiscal 2008.

Stockholders'  equity totaled $10.0 million at September 30, 1998, a decrease of
$367,000,  or 3.5%,  from  September  30, 1997  levels.  The  decrease  resulted
primarily from cash dividends paid totaling $393,000,  coupled with the purchase
of  treasury  shares  totaling  $756,000,  which  were  partially  offset by net
earnings of  $541,000,  a $47,000  increase in  unrealized  gains on  securities
designated as available for sale and  amortization of stock benefit plan expense
totaling $194,000.


Comparison of Results of Operations for the Fiscal Years Ended September 30, 
1998 and 1997

General

Net earnings for the year ended September 30, 1998, totaled $541,000, a decrease
of $86,000,  or 13.7%, from the $627,000 in net earnings reported for the fiscal
year ended September 30, 1997. The decrease in net earnings  resulted  primarily
from a $70,000 decline in net interest income,  coupled with a $107,000 increase
in general  administrative  and other expense,  which were partially offset by a
$45,000  increase in other income and a $49,000  decrease in the  provision  for
federal income taxes.

Net Interest Income

Total  interest  income  amounted  to $6.4  million  for the  fiscal  year ended
September 30, 1998, an increase of $384,000, or 6.4%, over fiscal 1997. Interest
income on loans totaled $3.6 million in fiscal 1998, an increase of $114,000, or
3.3%.  This  increase  was  due  primarily  to a $2.5  million  increase  in the
weighted-average  balance  outstanding,  which was  offset  by a 17 basis  point
decrease  in  weighted-average  yield,  to  7.70% in 1998.  Interest  income  on
mortgage-backed  securities  increased by $431,000,  or 26.1%,  as a result of a
$7.4 million increase in the  weighted-average  balance  outstanding,  which was
partially  offset by a 14 basis point  decrease in  weighted-average  yield,  to
6.24%  in  fiscal  1998.   Interest   income  on   investment   securities   and
interest-bearing  deposits  decreased by $161,000,  or 18.5%, due primarily to a
$2.5 million decrease in the weighted-average balance outstanding.








                                        4



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Comparison of Results of Operations for the Fiscal Years Ended September 30,
1998 and 1997 (continued)

Net Interest Income (continued)

Interest  expense  totaled $4.1 million for the fiscal year ended  September 30,
1998, an increase of $454,000, or 12.3%, over the $3.7 million total recorded in
fiscal 1997.  Interest expense on deposits  increased by $136,000,  or 4.9%, due
primarily to a 6 basis point increase in the weighted-average  cost of funds, to
4.87% during fiscal 1998.  Interest  expense on borrowings  totaled $1.2 million
during  fiscal  1998,  an  increase of $318,000  over  fiscal  1997,  due to the
previously  discussed $6.1 million increase in the  weighted-average  balance of
advances outstanding from the Federal Home Loan Bank.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest  income  decreased by $70,000,  or 3.1%,  from $2.3 million for the
fiscal year ended  September  30, 1997,  to $2.2  million for fiscal  1998.  The
interest  rate spread  declined by 22 basis points  during fiscal 1998 to 1.95%,
while  the  net  interest  margin  declined  by 31  basis  points  year-to-year,
amounting to 2.45% in fiscal 1998.

Provision for Losses on Loans

A  provision  for  losses on loans is  charged  to  earnings  to bring the total
allowance for loan losses to a level considered  appropriate by management based
on  historical  experience,  the  volume and type of  lending  conducted  by the
Savings Bank,  the status of past due principal and interest  payments,  general
economic  conditions,  particularly  as such  conditions  relate to the  Savings
Bank's  market area,  and other  factors  related to the  collectibility  of the
Savings Bank's loan portfolio. As a result of such analysis, management recorded
a $12,000  provision for losses on loans during the fiscal year ended  September
30, 1998, as compared to $9,000 for fiscal 1997.  There can be no assurance that
the  allowance  for loan  losses of the  Savings  Bank will be adequate to cover
losses on nonperforming assets in the future.

Other Income

Other income  increased by $45,000,  or 70.0%,  from $64,000 for the fiscal year
ended  September  30, 1997 to $109,000  for fiscal  1998.  The  increase was due
primarily   to  a  $36,000   increase  in  gain  on  sale  of   investment   and
mortgage-backed securities during the year.

General, Administrative and Other Expense

General,  administrative and other expense increased by $107,000,  or 7.6%, to a
total of $1.5 million for the year ended September 30, 1998, as compared to $1.4
million for fiscal 1997.  The increase  resulted  primarily  from an increase of
$48,000,  or 6.0%, in employee  compensation and benefits,  a $25,000,  or 9.7%,
increase in occupancy and equipment expense and a $23,000,  or 11.5% increase in
other operating  expenses.  The increase in employee  compensation  and benefits
resulted from normal merit increases and additional  staffing levels,  while the
increases in occupancy and equipment  resulted from the addition of new computer
technology and other related corporate expenses, respectively.


                                        5



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Comparison of Results of Operations for the Fiscal Years Ended September 30, 
1998 and 1997 (continued)

Federal Income Taxes

The  provision  for federal  income taxes  totaled  $264,000 for the fiscal year
ended  September  30, 1998,  a decrease of $49,000  from the  $313,000  total in
fiscal 1997. The decrease resulted primarily from a $135,000, or 14.4%, decrease
in pre-tax  earnings.  The effective tax rates for the years ended September 30,
1998 and 1997 were 32.8% and 33.3%, respectively.


Comparison of Results of Operations for the Fiscal Years Ended September 30, 
1997 and 1996

General

Net  earnings  for the year ended  September  30,  1997,  totaled  $627,000,  an
increase of $495,000,  or 375.0%, over the $132,000 in net earnings reported for
the fiscal year ended September 30, 1996. The increase in net earnings  resulted
primarily from a $727,000 decline in general,  administrative and other expense,
including a one-time charge to recapitalize  the Savings  Association  Insurance
Fund ("SAIF") totaling $368,000 which was recorded in fiscal 1996,  coupled with
a $54,000  increase in net interest  income,  which were  partially  offset by a
$268,000 increase in the provision for federal income taxes.

Net Interest Income

Total  interest  income  amounted  to $6.0  million  for the  fiscal  year ended
September  30,  1997,  an  increase of  $774,000,  or 14.9%,  over fiscal  1996.
Interest  income on loans  totaled $3.5  million in fiscal 1997,  an increase of
$298,000, or 9.4%. This increase was due primarily to a $3.5 million increase in
the weighted-average balance outstanding, coupled with an 6 basis point increase
in weighted-average  yield, to 7.87% in 1997. Interest income on mortgage-backed
securities  increased by  $887,000,  or 115.6%,  as a result of a $13.4  million
increase in the weighted-average  balance outstanding,  coupled with an 25 basis
point  increase in  weighted-average  yield,  to 6.38% in fiscal 1997.  Interest
income on  investment  securities  and  interest-bearing  deposits  decreased by
$411,000,   or  32.0%,   due  primarily  to  a  $6.8  million  decrease  in  the
weighted-average  balance outstanding,  which was partially offset by a 15 basis
point increase in the weighted-average yield year-to-year.

Interest  expense  totaled $3.7 million for the fiscal year ended  September 30,
1997, an increase of $720,000, or 24.3%, over the $3.0 million total recorded in
fiscal 1996.  Interest  expense on deposits  decreased by $28,000,  or 1.0%, due
primarily to a 6 basis point decrease in the weighted-average  cost of funds, to
4.81% during fiscal 1997. Interest expense on borrowings totaled $903,000 during
fiscal 1997,  an increase of $748,000  over fiscal 1996,  due to a $12.7 million
increase  in the  weighted-average  balance  of  advances  outstanding  from the
Federal Home Loan Bank.



                                        6



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Comparison of Results of Operations for the Fiscal Years Ended September 30, 
1997 and 1996 (continued)

Net Interest Income (continued)

As a result of the foregoing  changes in interest  income and interest  expense,
net interest  income  increased by $54,000,  or 2.4%,  from $2.2 million for the
fiscal year ended  September  30, 1996,  to $2.3  million for fiscal  1997.  The
interest  rate spread  declined by 7 basis points  during  fiscal 1997 to 2.17%,
while  the  net  interest  margin  declined  by 31  basis  points  year-to-year,
amounting to 2.76% in fiscal 1997.

Provision for Losses on Loans

A  provision  for  losses on loans is  charged  to  earnings  to bring the total
allowance for loan losses to a level considered  appropriate by management based
on  historical  experience,  the  volume and type of  lending  conducted  by the
Savings Bank,  the status of past due principal and interest  payments,  general
economic  conditions,  particularly  as such  conditions  relate to the  Savings
Bank's  market area,  and other  factors  related to the  collectibility  of the
Savings Bank's loan portfolio. As a result of such analysis, management recorded
a $9,000  provision  for losses on loans during the fiscal year ended  September
30, 1997, as compared to $1,000 for fiscal 1996.

Other Income

Other  income  declined by $10,000,  or 13.5%,  from $74,000 for the fiscal year
ended  September  30,  1996 to $64,000  for fiscal  1997.  The  decline  was due
primarily to a $12,000  decline in the recovery from the Ohio Deposit  Guarantee
Fund which totaled $2,000 in fiscal 1997, as compared to $14,000 in fiscal 1996.

General, Administrative and Other Expense

General,  administrative and other expense decreased by $727,000, or 34.0%, to a
total of $1.4 million for the year ended September 30, 1997, as compared to $2.1
million for fiscal 1996. The decrease resulted  primarily from a $368,000 charge
recorded in fiscal 1996 to  recapitalize  the SAIF, a decrease of  $229,000,  or
22.2%, in employee compensation and benefits and a $28,000, or 12.3% decrease in
other operating  expenses.  The decrease in employee  compensation  and benefits
resulted primarily from management's  decision to accelerate expenses related to
the ESOP during  fiscal 1996,  which  resulted in a $200,000  charge during that
period.  The decrease in other  operating  expenses  resulted from a decrease in
professional and reporting expenses year-to-year.

Federal Income Taxes

The  provision  for federal  income taxes  totaled  $313,000 for the fiscal year
ended  September  30, 1997,  an increase of $268,000  over the $45,000  total in
fiscal  1996.  The  increase  resulted  primarily  from a  $763,000,  or 431.1%,
increase  in  pre-tax  earnings.  The  effective  tax rates for the years  ended
September 30, 1997 and 1996 were 33.3% and 25.4%, respectively.



                                        7



<PAGE>


                       Harvest Home Financial Corporation
                             AVERAGE YIELD ANALYSIS


The  following  table  presents for the periods  indicated,  the total amount of
interest income from average  interest-earning  assets and the resulting yields,
and the interest expense on average interest-bearing liabilities, expressed both
in dollars and rates, and the net interest margin. Balances are based on average
monthly balances which, in the opinion of management,  do not differ  materially
from daily balances.
<TABLE>
<CAPTION>
                                                                              Year ended September 30,
                                                                        1998                                1997                  
                                                           Average   Interest                    Average   Interest               
                                                       outstanding    earned/     Yield/     outstanding    earned/     Yield/    
                                                           balance       paid       rate         balance       paid       rate    
                                                                                                    (Dollars in thousands)
<S>                                                         <C>          <C>         <C>           <C>         <C>          <C> 
Interest-earning assets:
  Loans receivable                                         $46,391     $3,571        7.70%       $43,929     $3,457        7.87%  
  Mortgage-backed securities                                33,391      2,085       6.24          25,938      1,654       6.38    
  Investment securities                                      5,900        402       6.81           9,846        675       6.86    
  Interest-bearing deposits and other                        5,008        309       6.17           3,538        197       5.57    
                                                           -------     ------   --------         -------     ------   --------    
         Total interest-earning assets                      90,690      6,367       7.02          83,251      5,983       7.19    

Non-interest-earning assets                                  2,031                                 2,153                          
                                                           -------                               -------                          

         Total assets                                      $92,721                               $85,404                          
                                                            ======                                ======                          

Interest-bearing liabilities:
  Deposits
    NOW accounts                                          $  3,533         77       2.18        $  3,477        110       3.16    
    Passbook                                                 9,264        250       2.70           9,057        252       2.78    
    Money market demand deposits                             4,354        130       2.99           4,436        144       3.25    
    Certificates                                            42,814      2,465       5.76          40,909      2,280       5.57    
  Borrowings                                                21,738      1,221       5.62          15,615        903       5.78    
                                                            ------      -----   --------          ------     ------   --------    
         Total interest-bearing liabilities                 81,703      4,143       5.07          73,494      3,689       5.02    
                                                                        -----   --------                      -----   --------    
Non-interest-bearing liabilities                               770                                 1,608                          
                                                          --------                               -------                          

         Total liabilities                                  82,473                                75,102                          

Stockholders' equity                                        10,248                                10,302                          
                                                            ------                                ------                          

         Total liabilities and stockholders' equity        $92,721                               $85,404                          
                                                            ======                                ======                          

Net interest income; interest rate spread (1)                          $2,224        1.95%                   $2,294        2.17%  
                                                                        =====    ========                     =====    ========   

Net yield (net interest income as a percent of average
  interest-earning assets)                                                           2.45%                                 2.76%  
                                                                                 ========                              ========   

Ratio of average interest-earning assets to average
  interest-bearing liabilities                                                     111.00%                               113.28%  
                                                                                   ======                                ======   
</TABLE>


<TABLE>
<CAPTION>

                                                            Year ended September 30,
                                                                       1996
                                                          Average   Interest
                                                      outstanding    earned/     Yield/
                                                          balance       paid       rate
                                                     
<S>                                                        <C>          <C>         <C>                 
Interest-earning assets:
  Loans receivable                                        $40,432     $3,159        7.81%
  Mortgage-backed securities                               12,505        767       6.13
  Investment securities                                    15,250      1,026       6.73
  Interest-bearing deposits and other                       4,896        257       5.25
                                                          -------     ------   --------
         Total interest-earning assets                     73,083      5,209       7.13

Non-interest-earning assets                                 1,215
                                                          -------

         Total assets                                     $74,298
                                                           ======

Interest-bearing liabilities:
  Deposits
    NOW accounts                                         $  2,753         74       2.69
    Passbook                                                9,671        270       2.79
    Money market demand deposits                            4,746        144       3.03
    Certificates                                           40,639      2,326       5.72
  Borrowings                                                2,885        155       5.37
                                                          -------     ------   --------
         Total interest-bearing liabilities                60,694      2,969       4.89
                                                                       -----   --------
Non-interest-bearing liabilities                            1,017
                                                          -------

         Total liabilities                                 61,711

Stockholders' equity                                       12,587
                                                           ------

         Total liabilities and stockholders' equity       $74,298
                                                           ======

Net interest income; interest rate spread (1)                         $2,240        2.24%
                                                                       =====    ======== 

Net yield (net interest income as a percent of averag
  interest-earning assets)                                                          3.07%
                                                                                ======== 

Ratio of average interest-earning assets to average
  interest-bearing liabilities                                                    120.41%
                                                                                  ====== 
</TABLE>


(1)  Represents  the  difference  between the average yield on  interest-earning
     assets and the average cost of interest-bearing liabilities.

                                        8



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Rate/Volume Table

The following  table describes the extent to which changes in interest rates and
changes in volume of interest-earning  assets and  interest-bearing  liabilities
have affected the  Corporation's  interest  income and expense during the fiscal
years   indicated.   For  each   category   of   interest-earning   assets   and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume  (change in volume  multiplied  by prior year rate),  (ii)
changes in rate  (change in rate  multiplied  by prior year  volume),  and (iii)
total changes in rate and volume. The combined effects of changes in both volume
and  rate,   which  cannot  be  separately   identified,   have  been  allocated
proportionately to the change due to volume and the change due to rate:

<TABLE>
<CAPTION>
                                                                     Year ended September 30,
                                                       1998 vs. 1997                        1997 vs. 1996
                                                          Increase                             Increase
                                                         (decrease)                           (decrease)
                                                           due to                               due to
                                                     Volume       Rate      Total          Volume       Rate      Total
                                                                              (In thousands)
<S>                                                    <C>         <C>       <C>             <C>         <C>       <C>
Interest income attributable to:
  Loans receivable                                     $190       $(76)      $114            $273        $25       $298
  Mortgage-backed securities                            469        (38)       431             855         32        887
  Investment securities                                (269)        (4)      (273)           (370)        19       (351)
  Other interest-earning assets(1)                       87         25        112             (74)        14        (60)
                                                       ----        ---        ---            ----       ----       ----
     Total interest income                              477        (93)       384             684         90        774

Interest expense attributable to:
  Deposits(2)                                           100         36        136               4        (32)       (28)
  Borrowings                                            345        (27)       318             735         13        748
                                                        ---        ---        ---             ---     ------        ---
     Total interest expense                             445          9        454             739        (19)       720
                                                        ---       ----        ---             ---       ----        ---


Increase (decrease) in net interest income                                  $ (70)                                $  54
                                                                             ====                                  ====
</TABLE>

(1)  Includes  interest-bearing  deposits in other  financial  institutions  and
     other interest-earning assets.

(2)  Includes interest-bearing escrow deposits.












                                        9



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Liquidity and Capital Resources

Harvest Home's principal sources of funds are deposits,  repayments on loans and
mortgage-backed  securities,  maturities  of  investment  securities,  and funds
provided by  operations.  While  scheduled loan and  mortgage-backed  securities
amortization and maturing  interest-bearing  deposits and investment  securities
are  relatively  predictable  sources  of  funds,  deposit  flows  and  loan and
mortgage-backed  securities  prepayments  are  greatly  influenced  by  economic
conditions, the general level of interest rates, and competition. The particular
sources of funds  utilized by Harvest Home from time to time are selected  based
on comparative costs and availability.

The FDIC requires  savings banks to maintain a level of investments in specified
types of liquid assets sufficient to protect and ensure the safety and soundness
of the Savings Bank. The FDIC has no specific minimum guideline for liquidity.

The primary  investing  activities  of Harvest Home include  investing in loans,
mortgage-backed  securities  and investment  securities.  Such  investments  are
funded primarily from loans and mortgage-backed securities repayments, increases
in customer deposit  liabilities and borrowings from the Federal Home Loan Bank.
During the fiscal year ended September 30, 1998, loan originations totaled $13.9
million and  purchases of  mortgage-backed  securities  totaled  $27.0  million,
representing the deployment of funds from deposit growth,  proceeds from Federal
Home Loan Bank advances and proceeds  from  maturity of  investment  securities.
Customer deposits  increased during the fiscal year ended September 30, 1998, by
$1.4 million and  increased  during the fiscal year ended  September 30, 1997 by
$828,000.

The FDIC has adopted  risk-based  capital ratio guidelines to which Harvest Home
is subject.  The  guidelines  establish a systematic  analytical  framework that
makes  regulatory  capital  requirements  more  sensitive to differences in risk
profiles among banking  organizations.  Risk-based capital ratios are determined
by allocating  assets and specified  off-balance  sheet commitments to four risk
weighted  categories,  with  higher  levels of capital  being  required  for the
categories perceived as representing greater risk.

These  guidelines  divide the capital into two tiers.  The first tier ("Tier I")
includes  common  equity,  certain  non-cumulative   perpetual  preferred  stock
(excluding  auction rate issues) and  minority  interests in equity  accounts of
consolidated  subsidiaries,  less goodwill and certain other  intangible  assets
(except  mortgage  servicing  rights and  purchased  credit card  relationships,
subject to certain  limitations).  Supplementary  ("Tier II") capital  includes,
among other items,  cumulative  perpetual and long-term  limited-life  preferred
stock,  mandatory  convertible  securities,  certain hybrid capital instruments,
term subordinated debts and the allowance for loan and lease losses,  subject to
certain  limitations,  less required  deductions.  Savings Banks are required to
maintain a total risk-based capital (the sum of Tier 1 and Tier 2 capital) ratio
of 8%, of which 4% must be Tier I  capital.  The FDIC may,  however,  set higher
capital  requirements  when a bank's  particular  circumstances  warrant.  Banks
experiencing or anticipating  significant growth are expected to maintain a Tier
I leverage ratio,  including tangible capital positions,  well above the minimum
levels.



                                       10



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Liquidity and Capital Resources (continued)

In  addition,  the FDIC  established  guidelines  prescribing  a minimum  Tier I
leverage  ratio (Tier I capital to adjusted  total  assets as  specified  in the
guidelines).  These guidelines provide for a minimum Tier I leverage ratio of 3%
for banks that meet certain  specified  criteria,  including  that they have the
highest  regulatory rating and are not experiencing or anticipating  significant
growth.  All other banks are required to maintain a Tier I leverage  ratio of 3%
plus an additional cushion of at least 100 to 200 basis points.

The  following  table sets  forth the  regulatory  capital  of  Harvest  Home at
September 30, 1998:

<TABLE>
<CAPTION>

<S>                                                          <C>
Total Capital to Risk-Weighted Assets                        23.7%
Tier I Capital to Risk-Weighted Assets                       23.4%
Tier I Leverage Ratio                                         9.6%
</TABLE>


Effect of Recent Accounting Pronouncements

In June 1996,  the  Financial  Accounting  Standards  Board (the "FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 125,  "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities",
that provides accounting guidance on transfers of financial assets, servicing of
financial assets, and extinguishment of liabilities.  SFAS No. 125 introduces an
approach to accounting  for transfers of financial  assets that provides a means
of dealing with more complex transactions in which the seller disposes of only a
partial  interest in the assets,  retains  rights or  obligations,  makes use of
special  purpose  entities  in the  transaction,  or  otherwise  has  continuing
involvement with the transferred assets. The new accounting method,  referred to
as the financial components  approach,  provides that the carrying amount of the
financial assets transferred be allocated to components of the transaction based
on their relative fair values.  SFAS No. 125 provides  criteria for  determining
whether control of assets has been relinquished and whether a sale has occurred.
If the transfer  does not qualify as a sale,  it is  accounted  for as a secured
borrowing. Transactions subject to the provisions of SFAS No. 125 include, among
others, transfers involving repurchase agreements,  securitizations of financial
assets,  loan   participations,   factoring   arrangements,   and  transfers  of
receivables with recourse.

An entity that undertakes an obligation to service  financial assets  recognizes
either a servicing asset or liability for the servicing contract (unless related
to a securitization of assets,  and all the securitized  assets are retained and
classified  as  held-to-maturity).  A  servicing  asset  or  liability  that  is
purchased or assumed is initially recognized at its fair value. Servicing assets
and  liabilities are amortized in proportion to and over the period of estimated
net  servicing  income  or net  servicing  loss and are  subject  to  subsequent
assessments for impairment based on fair value.






                                       11


<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Effect of Recent Accounting Pronouncements (continued)

SFAS No. 125 provides that a liability is removed from the balance sheet only if
the debtor  either pays the creditor and is relieved of its  obligation  for the
liability or is legally released from being the primary obligor.

SFAS No. 125 is effective for  transfers  and servicing of financial  assets and
extinguishment  of liabilities  occurring  after December 31, 1997, and is to be
applied  prospectively.  Earlier or  retroactive  application  is not permitted.
Management  adopted  SFAS No. 125 during  fiscal 1998 without  material  adverse
effect on the  Corporation's  consolidated  financial  position  or  results  of
operations.

In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income."
SFAS No. 130  establishes  standards for reporting and display of  comprehensive
income and its components (revenues,  expenses,  gains and losses) in a full set
of general-purpose  financial  statements.  SFAS No. 130 requires that all items
that are required to be recognized under  accounting  standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same  prominence  as other  financial  statements.  It does  not  require  a
specific  format for that  financial  statement  but requires that an enterprise
display an amount representing total comprehensive income for the period in that
financial statement.

SFAS  No.  130  requires  that  an  enterprise   (a)  classify  items  of  other
comprehensive  income by their nature in a financial  statement  and (b) display
the accumulated balance of other  comprehensive  income separately from retained
earnings and additional  paid-in capital in the equity section of a statement of
financial  position.  SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997.  Reclassification of financial statements for earlier periods
provided for comparative  purposes is required.  SFAS No. 130 is not expected to
have a material impact on the Corporation's financial statements.

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  about Segments of an
Enterprise and Related  Information." SFAS No. 131 significantly changes the way
that public business  enterprises report information about operating segments in
annual financial  statements and requires that those enterprises report selected
information  about reportable  segments in interim  financial  reports issued to
shareholders.  It also  establishes  standards  for  related  disclosures  about
products and services, geographic areas and major customers. SFAS No. 131 uses a
"management  approach" to disclose  financial and descriptive  information about
the way that management  organizes the segments within the enterprise for making
operating  decisions  and  assessing  performance.  For  many  enterprises,  the
management  approach  will likely  result in more segments  being  reported.  In
addition,  SFAS No. 131 requires  significantly more information to be disclosed
for each reportable segment than is presently being reported in annual financial
statements  and also requires that selected  information  be reported in interim
financial statements. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. SFAS No. 131 is not expected to have a material impact on the
Corporation's financial statements.



                                       12


<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Effect of Recent Accounting Pronouncements (continued)

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities,"  which requires  entities to recognize all
derivatives  in their  financial  statements  as either  assets  or  liabilities
measured at fair value.  SFAS No. 133 also  specifies  new methods of accounting
for hedging  transactions,  prescribes  the items and  transactions  that may be
hedged,  and  specifies  detailed  criteria  to be  met  to  qualify  for  hedge
accounting.

The definition of a derivative  financial instrument is complex, but in general,
it is an instrument  with one or more  underlyings,  such as an interest rate or
foreign exchange rate, that is applied to a notional  amount,  such as an amount
of currency,  to determine the settlement  amount(s).  It generally  requires no
significant initial investment and can be settled net or by delivery of an asset
that is  readily  convertible  to cash.  SFAS No.  133  applies  to  derivatives
embedded in other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.

SFAS No. 133 is effective  for fiscal years  beginning  after June 15, 1999.  On
adoption, entities are permitted to transfer held-to-maturity debt securities to
the  available-for-sale  or trading category without calling into question their
intent to hold other debt securities to maturity in the future.  SFAS No. 133 is
not  expected  to  have  a  material  impact  on  the  Corporation's   financial
statements.


Year 2000 Compliance Matters

As with most  providers of financial  services,  Harvest  Home's  operations are
heavily dependent on information technology systems.  Harvest Home is addressing
the potential  problems  associated with the possibility that the computers that
control  or  operate   Harvest   Home's   information   technology   system  and
infrastructure  may not be  programmed to read  four-digit  date codes and, upon
arrival of the year 2000,  may  recognize  the  two-digit  code "00" as the year
1900, causing systems to fail to function or to generate erroneous data. Harvest
Home is  working  with the  companies  that  supply or service  its  information
technology systems to identify and remedy any year 2000 related problems.

Harvest Home's primary data processing applications are handled by a third-party
service  bureau,  NCR.  NCR has advised  Harvest  Home that it has migrated to a
fully Year 2000 compliant processing system that will be fully tested by January
1, 1999.  Management has also reviewed Harvest Home's ancillary equipment and is
in the  process  of  providing  the  appropriate  remedial  measures,  including
requesting  service  providers to assure the Savings Bank that their systems and
products  are fully  year 2000  compliant.  Harvest  Home is in the  process  of
upgrading its existing teller  operating system with a capital expense budget of
$150,000 - $175,000.





                                       13



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Year 2000 Compliance Matters (continued)

No  assurance  can be  given,  however,  that  significant  expense  will not be
incurred in future  periods.  In the  unlikely  event that the  Savings  Bank is
ultimately  required to purchase  replacement  computer  systems,  programs  and
equipment,  or incur  substantial  expense to make the  Savings  Bank's  current
systems,  programs and equipment  year 2000  compliant,  the Savings  Bank's net
earnings and financial condition could be adversely affected.

Management  has  developed  a  contingency  plan  which  includes  access  to an
alternative processing site provided by NCR. Additionally,  the Savings Bank can
process transactions manually for a period of several weeks, if necessary,  upon
arrival of the year 2000.

In addition to possible  expense related to its own systems,  Harvest Home could
incur losses if loan  payments are delayed due to year 2000  problems  affecting
any major  borrowers in Harvest  Home's  primary  market area.  Because  Harvest
Home's loan portfolio is highly diversified with regard to individual  borrowers
and  types  of  businesses  and  Harvest  Home's  primary  market  area  is  not
significantly  dependent  upon one employer or  industry,  Harvest Home does not
expect any significant or prolonged  difficulties  that will affect net earnings
or cash flow.


Impact of Inflation and Changing Prices

The  consolidated  financial  statements and notes thereto  included herein have
been prepared in accordance with generally accepted accounting principles, which
require the Corporation to measure financial  position and results of operations
in terms of  historical  dollars  without  considering  changes in the  relative
purchasing power of money over time because of inflation.

In  management's  opinion,  changes  in  interest  rates  affect  the  financial
condition of a financial institution to a far greater degree than changes in the
rate of inflation. While interest rates are greatly influenced by changes in the
inflation  rate, they do not change at the same rate or in the same magnitude as
the inflation rate. Rather,  interest rate volatility is based on changes in the
expected  rate of  inflation,  as well as on  changes  in  monetary  and  fiscal
policies.


Recapitalization of the Deposit Insurance Fund

The deposit  accounts of the Savings Bank and of other savings  associations are
insured by the FDIC in the Savings  Association  Insurance  Fund  ("SAIF").  The
reserves of the SAIF were below the level required by law, because a significant
portion of the assessments paid into the fund were used to pay the cost of prior
thrift  failures.  The deposit  accounts of commercial  banks are insured by the
FDIC in the Bank  Insurance  Fund ("BIF"),  except to the extent such banks have
acquired SAIF deposits. The reserves of the BIF met the level required by law in
May 1995. As a result of the  respective  reserve  levels of the funds,  deposit
insurance  assessments paid by healthy savings associations  exceeded those paid
by healthy  commercial banks by approximately $.19 per $100 in deposits in 1995.
In 1996, no BIF assessments  were required for healthy  commercial  banks except
for a $2,000 minimum fee.



                                       14



<PAGE>


                       Harvest Home Financial Corporation

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Recapitalization of the Deposit Insurance Fund (continued)

Legislation  was enacted to  recapitalize  the SAIF that  provided for a special
assessment  totaling  $.657 per $100 of SAIF deposits held at March 31, 1995, in
order to increase SAIF reserves to the level required by law.

The Savings Bank had $56.0  million in deposits at March 31, 1995,  resulting in
an  assessment  of  approximately  $368,000,  or $243,000  after tax,  which was
charged to operations in 1996.

A component of the recapitalization plan provides for the merger of the SAIF and
BIF on January 1, 1999. The SAIF recapitalization  legislation also provides for
an elimination of the thrift  charter or of the separate  federal  regulation of
thrifts prior to the merger of the deposit  insurance  funds.  As a result,  the
Savings Bank could be regulated as a bank  holding  company  under  Federal laws
which  would  subject  it to the more  restrictive  activity  limits  imposed on
national banks. Under separate legislation related to the recapitalization plan,
the Savings  Bank is  required  to  recapture  as taxable  income  approximately
$370,000 of its bad debt reserve,  which  represents the post-1987  additions to
the reserve,  and will be unable to utilize the percentage of earnings method to
compute its reserve in the future.  The Savings Bank has provided deferred taxes
for this amount and will be permitted to amortize the  recapture of its bad debt
reserve over a six year period, commencing in fiscal 1999.



























                                       15



<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Harvest Home Financial Corporation

We have audited the accompanying  consolidated statements of financial condition
of Harvest Home Financial Corporation as of September 30, 1998 and 1997, and the
related  consolidated  statements of earnings,  stockholders'  equity,  and cash
flows for each of the three years ended September 30, 1998, 1997 and 1996. These
consolidated  financial  statements are the  responsibility of the Corporation's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  consolidated  financial  position of Harvest Home
Financial  Corporation as of September 30, 1998 and 1997,  and the  consolidated
results  of its  operations  and its  cash  flows  for each of the  years  ended
September  30,  1998,  1997 and 1996,  in  conformity  with  generally  accepted
accounting principles.


GRANT THORNTON LLP


Cincinnati, Ohio
November 12, 1998







                                       16


<PAGE>


                       Harvest Home Financial Corporation
<TABLE>
<CAPTION>
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                  September 30,
                        (In thousands, except share data)

         ASSETS                                                                                1998                 1997
<S>                                                                                           <C>                    <C>
Cash and due from banks                                                                    $  1,505            $     558
Federal funds sold                                                                              200                2,600
Interest-bearing deposits in other financial institutions                                     1,182                2,106
                                                                                            -------              -------
         Cash and cash equivalents                                                            2,887                5,264

Investment securities designated as available for sale - at market                            4,032                8,039
Mortgage-backed securities designated as available for sale - at market                      37,864               32,466
Loans receivable - net                                                                       48,797               45,229
Office premises and equipment - at depreciated cost                                           1,117                  981
Federal Home Loan Bank stock - at cost                                                        1,606                1,219
Accrued interest receivable on loans                                                            257                  245
Accrued interest receivable on mortgage-backed securities                                       173                  139
Accrued interest receivable on investments and interest-
  bearing deposits                                                                               47                  126
Prepaid expenses and other assets                                                               114                   73
Prepaid federal income taxes                                                                     -                    51
                                                                                            -------            ---------

         Total assets                                                                       $96,894              $93,832
                                                                                             ======               ======

         LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits $60,225                                                                            $58,786
Advances from the Federal Home Loan Bank                                                     25,850               24,000
Advances by borrowers for taxes and insurance                                                   119                  107
Accrued interest payable                                                                        126                   89
Other liabilities                                                                               230                  253
Accrued federal income taxes                                                                     65                   - 
Deferred federal income taxes                                                                   302                  253
                                                                                           --------             --------
         Total liabilities                                                                   86,917               83,488

Commitments                                                                                      -                    - 

Stockholders' equity
  Common stock - 2,000,000 shares of no par value authorized;
    991,875 shares issued                                                                        -                    - 
  Additional paid-in capital                                                                  6,903                6,884
  Retained earnings - restricted                                                              5,191                5,043
  Shares acquired by Employee Stock Ownership Plan                                             (301)                (378)
  Shares acquired by Recognition and Retention Plan                                            (291)                (389)
  Unrealized gains on securities designated as available
    for sale, net of related tax effects                                                         87                   40
  Less 129,518 and 77,018 shares of treasury stock - at cost                                 (1,612)                (856)
                                                                                            -------             --------
         Total stockholders' equity                                                           9,977               10,344
                                                                                            -------               ------

         Total liabilities and stockholders' equity                                         $96,894              $93,832
                                                                                             ======               ======
</TABLE>





The accompanying notes are an integral part of these statements.

                                       17


<PAGE>


                       Harvest Home Financial Corporation
<TABLE>
<CAPTION>

                       CONSOLIDATED STATEMENTS OF EARNINGS

                        For the year ended September 30,
                        (In thousands, except share data)

                                                                                  1998              1997            1996
<S>                                                                              <C>                 <C>            <C>
Interest income
  Loans                                                                         $3,571            $3,457          $3,159
  Mortgage-backed securities                                                     2,085             1,654             767
  Investment securities                                                            402               675           1,026
  Interest-bearing deposits and other                                              309               197             257
                                                                                ------            ------          ------
         Total interest income                                                   6,367             5,983           5,209

Interest expense
  Deposits                                                                       2,922             2,786           2,814
  Borrowings                                                                     1,221               903             155
                                                                                 -----            ------          ------
         Total interest expense                                                  4,143             3,689           2,969
                                                                                 -----             -----           -----

         Net interest income                                                     2,224             2,294           2,240

Provision for losses on loans                                                       12                 9               1
                                                                               -------          --------        --------
         Net interest income after provision
           for losses on loans                                                   2,212             2,285           2,239

Other income
  Gain on sale of investment and mortgage-backed securities                         43                 7               2
  Other operating                                                                   66                57              72
                                                                               -------           -------         -------
         Total other income                                                        109                64              74

General, administrative and other expense
  Employee compensation and benefits                                               851               803           1,032
  Occupancy and equipment                                                          282               257             254
  Federal deposit insurance premiums                                                36                28             498
  Franchise taxes                                                                  124               121             124
  Other operating                                                                  223               200             228
                                                                                ------            ------          ------
         Total general, administrative and
           other expense                                                         1,516             1,409           2,136
                                                                                 -----             -----           -----

         Earnings before income taxes                                              805               940             177

Federal income taxes
  Current                                                                          241               130             150
  Deferred                                                                          23               183            (105)
                                                                               -------            ------          ------
         Total federal income taxes                                                264               313              45
                                                                                ------            ------         -------

         NET EARNINGS                                                          $   541           $   627         $   132
                                                                                ======            ======          ======

         EARNINGS PER SHARE
           Basic                                                                  $.63              $.71            $.16
                                                                                   ===               ===             ===

           Diluted                                                                $.60              $.70            $.16
                                                                                   ===               ===             ===
</TABLE>

The accompanying notes are an integral part of these statements.

                                       18


<PAGE>


                       Harvest Home Financial Corporation
<TABLE>
<CAPTION>

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

              For the years ended September 30, 1998, 1997 and 1996
                       (In thousands, except share data)

                                                                                                Unrealized
                                                                                      Shares    gain (loss)
                                                                                    acquired  on securities
                                                          Additional                by stock  designated as
                                                 Common      paid-in    Retained     benefit      available    Treasury
                                                  stock      capital    earnings       plans       for sale       stock       Total
<S>                                                <C>          <C>        <C>          <C>           <C>          <C>        <C>  
Balance at October 1, 1995                          $-        $9,473      $5,021     $  (794)           $-     $   (994)    $12,706

Net earnings for the year ended 
  September 30, 1996                                 -            -          132          -              -           -          132
Cash distributions of $3.40 per share                -        (2,796)       (366)         -              -           -       (3,162)
Purchase of treasury shares - at cost                -            -           -           -              -          (80)        (80)
Amortization of expense related to stock 
  benefit plans                                      -            18          -          120             -           -          138
Purchase of shares for recognition and 
  retention plan                                     -            45          -         (486)            -          441          - 
Unrealized losses on securities designated as 
  available for sale, net of related tax effects     -            -           -           -              (9)         -           (9)
                                                     --        -----       -----      ------          -----      ------   ---------

Balance at September 30, 1996                        -         6,740       4,787      (1,160)            (9)       (633)      9,725

Net earnings for the year ended 
  September 30, 1997                                 -            -          627          -              -           -          627
Cash dividends of $.40 per share                     -            -         (371)         -              -           -         (371)
Purchase of treasury shares - at cost                -            -           -           -              -         (223)       (223)
Amortization of expense related to stock 
  benefit plans                                      -           144          -          393             -           -          537
Unrealized gains on securities designated as
  available for sale, net of related tax effects     -            -           -           -              49          -           49
                                                     --        -----       -----       -----           ----      ------   ---------

Balance at September 30, 1997                        -         6,884       5,043        (767)            40        (856)     10,344

Net earnings for the year ended 
  September 30, 1998                                 -            -          541          -              -           -          541
Cash dividends of $.44 per share                     -            -         (393)         -              -           -         (393)
Purchase of treasury shares - at cost                -            -           -           -              -         (756)       (756)
Amortization of expense related to stock
  benefit plans                                      -            19          -          175             -           -          194
Unrealized gains on securities designated as
  available for sale, net of related tax effects     -            -           -           -              47          -           47
                                                     --        -----       -----       -----           ----      ------   ---------

Balance at September 30, 1998                       $-        $6,903      $5,191     $  (592)         $  87     $(1,612)   $  9,977
                                                     ==        =====       =====      ======           ====      ======     =======
</TABLE>


The accompanying notes are an integral part of these statements.
                                       19



<PAGE>


                       Harvest Home Financial Corporation
<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                        For the year ended September 30,
                                 (In thousands)



                                                                                    1998            1997           1996
<S>                                                                                 <C>              <C>            <C>
Cash flows from operating activities:
  Net earnings for the year                                                    $     541       $     627      $     132
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Amortization of deferred loan origination fees                                   (34)            (34)           (43)
    Depreciation and amortization                                                     57              51             51
    Amortization of premiums on mortgage-backed securities                             5               6             14
    Amortization of premiums (discounts) on investment securities - net              (33)             17             42
    Gain on sale of investment and mortgage-backed securities                        (43)             (7)            (2)
    Amortization expense of stock benefit plans                                      194             537            138
    Provision for losses on loans                                                     12               9              1
    Federal Home Loan Bank stock dividends                                          (102)            (59)           (40)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable on loans                                           (12)            (36)           (23)
      Accrued interest receivable on mortgage-backed securities                      (34)            (37)           (47)
      Accrued interest receivable on investments and interest-
        bearing deposits                                                              79              85            116
      Prepaid expenses and other assets                                              (41)              1             15
      Accrued interest payable                                                        37              12             53
      Other liabilities                                                              (23)           (563)           677
      Federal income taxes
        Current                                                                      116              22            (57)
        Deferred                                                                      23             183           (105)
                                                                               ---------        --------       --------
         Net cash provided by operating activities                                   742             814            922

Cash flows provided by (used in) investing activities:
  Principal repayments on mortgage-backed securities                              19,867           2,644          1,144
  Purchase of mortgage-backed securities                                         (26,992)        (18,205)       (12,972)
  Proceeds from sale of mortgage-backed securities
    available for sale                                                             1,878             141            267
  Proceeds from maturity of mortgage-backed securities                                -            3,500             - 
  Proceeds from maturity of investment securities                                  4,000           2,003          6,000
  Proceeds from sale of investment securities available
    for sale                                                                          -            2,003             - 
  Principal repayments on loans                                                   10,376           5,976          8,280
  Loan disbursements                                                             (13,922)         (8,913)       (12,260)
  Purchase of Federal Home Loan Bank stock                                          (285)           (572)            - 
  Purchase of office equipment                                                      (193)            (80)          (291)
                                                                                --------       ---------       --------
         Net cash used in investing activities                                    (5,271)        (11,503)        (9,832)
                                                                                 -------          ------        -------

         Net cash used in operating and investing
           activities (balance carried forward)                                   (4,529)        (10,689)        (8,910)
                                                                                 -------          ------        -------
</TABLE>



                                       20


<PAGE>


                       Harvest Home Financial Corporation
<TABLE>
<CAPTION>

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                        For the year ended September 30,
                                 (In thousands)


                                                                                    1998            1997           1996
<S>                                                                               <C>               <C>             <C>
         Net cash used in operating and investing
           activities (balance brought forward)                                 $ (4,529)       $(10,689)      $ (8,910)

Cash flows provided by (used in) financing activities:
  Net increase in deposits                                                         1,439             828          1,533
  Proceeds from Federal Home Loan Bank advances                                   38,200          18,200         10,000
  Repayment of Federal Home Loan Bank advances                                   (36,350)         (4,200)            - 
  Advances by borrowers for taxes and insurance                                       12              11             14
  Distributions and dividends on common stock                                       (393)           (371)        (3,162)
  Purchase of treasury stock                                                        (756)           (223)           (80)
                                                                                --------       ---------      ---------
         Net cash provided by financing activities                                 2,152          14,245          8,305
                                                                                 -------         -------        -------

Net increase (decrease) in cash and cash equivalents                              (2,377)          3,556           (605)

Cash and cash equivalents at beginning of year                                     5,264           1,708          2,313
                                                                                 -------        --------        -------

Cash and cash equivalents at end of year                                        $  2,887       $   5,264       $  1,708
                                                                                 =======        ========        =======

Supplemental disclosure of cash flow information:
 Cash paid during the year for:
    Federal income taxes                                                       $     121     $        96      $     208
                                                                                ========      ==========       ========

    Interest paid on deposits and borrowings                                    $  4,106       $   3,677       $  2,916
                                                                                 =======        ========        =======


Supplemental disclosure of noncash investing activities:
  Transfer of investment and mortgage-backed securities
    to an available for sale classification                                     $     -        $      -         $25,732
                                                                                 =======        ========         ======

  Unrealized gains (losses) on securities designated as
    available for sale, net of related tax effects                            $       47     $        49    $        (9)
                                                                               =========      ==========     ========== 

</TABLE>









The accompanying notes are an integral part of these statements.

                                       21


<PAGE>


                       Harvest Home Financial Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        September 30, 1998, 1997 and 1996


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Harvest Home Financial Corporation (the "Corporation") is a savings and loan
    holding company whose activities are primarily  limited to holding the stock
    of Harvest  Home  Savings  Bank,  (the  "Savings  Bank").  The Savings  Bank
    conducts a general banking  business in southwestern  Ohio which consists of
    attracting  deposits from the general  public and primarily  applying  those
    funds  to  the   origination   of  loans  for   residential,   consumer  and
    nonresidential  purposes.  The Savings Bank's profitability is significantly
    dependent on net interest income,  which is the difference  between interest
    income generated from  interest-earning  assets (i.e. loans and investments)
    and the interest expense paid on interest-bearing liabilities (i.e. customer
    deposits  and  borrowed  funds).  Net  interest  income is  affected  by the
    relative amount of interest-earning assets and interest-bearing  liabilities
    and the interest  received or paid on these balances.  The level of interest
    rates paid or received by the Savings Bank can be  significantly  influenced
    by a number of environmental  factors, such as governmental monetary policy,
    that are outside of management's control.

    The consolidated financial information presented herein has been prepared in
    accordance  with  generally  accepted  accounting  principles  ("GAAP")  and
    general  accounting  practices within the financial  services  industry.  In
    preparing   consolidated  financial  statements  in  accordance  with  GAAP,
    management  is required to make  estimates and  assumptions  that affect the
    reported  amounts of assets and liabilities and the disclosure of contingent
    assets and liabilities at the date of the financial  statements and revenues
    and expenses during the reporting  period.  Actual results could differ from
    such estimates.

    The  following  is a summary  of the  Corporation's  significant  accounting
    policies  which have been  consistently  applied in the  preparation  of the
    accompanying consolidated financial statements.

    1.  Principles of Consolidation

    The  consolidated   financial   statements   include  the  accounts  of  the
    Corporation and the Savings Bank. All significant  intercompany balances and
    transactions have been eliminated.

    2.  Investment Securities and Mortgage-Backed Securities

    The Corporation  accounts for investment and  mortgage-backed  securities in
    accordance with Statement of Financial Accounting Standards ("SFAS") No. 115
    "Accounting for Certain Investments in Debt and Equity Securities". SFAS No.
    115 requires that  investments in debt and equity  securities be categorized
    as held-to-maturity,  trading, or available for sale.  Securities classified
    as  held-to-maturity  are  carried at cost only if the  Corporation  has the
    positive  intent and ability to hold these  securities to maturity.  Trading
    securities  and  securities  designated as available for sale are carried at
    fair value with resulting  unrealized gains or losses recorded to operations
    or stockholders' equity, respectively.



                                       22



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    2.  Investment Securities and Mortgage-Backed Securities (continued)

     In November 1995,  the Financial  Accounting  Standards  Board (the "FASB")
     issued a Special  Report on  Implementation  of SFAS No. 115 (the  "Special
     Report"), which provided for the reclassification of securities between the
     held-to-maturity,  available  for  sale  and  trading  portfolios  during a
     forty-five day period,  without  calling into question  management's  prior
     intent with respect to such securities.  Management  elected to restructure
     the Corporation's  securities portfolio pursuant to the Special Report, and
     transferred  all  investment  and   mortgage-backed   securities  from  the
     held-to-maturity  portfolio to an  available  for sale  classification.  At
     September  30,  1998  and  1997,  the  Corporation's  stockholders'  equity
     reflected net  unrealized  gains on securities  designated as available for
     sale totaling $87,000 and $40,000, respectively.

     Realized gains and losses on sales of securities  are recognized  using the
     specific identification method.

    3.  Loans Receivable

     Loans receivable are stated at the principal amount  outstanding,  adjusted
     for  deferred  loan  origination  fees and the  allowance  for loan losses.
     Interest is accrued as earned unless the  collectibility  of the loan is in
     doubt. Interest on loans that are contractually past due is charged off, or
     an allowance is established based on management's periodic evaluation.  The
     allowance  is  established  by a charge  to  interest  income  equal to all
     interest previously accrued, and income is subsequently  recognized only to
     the extent that cash payments are received until, in management's judgment,
     the borrower's ability to make periodic interest and principal payments has
     returned to normal,  in which case the loan is returned to accrual  status.
     If the  ultimate  collectibility  of the loan is in  doubt,  in whole or in
     part,  all  payments  received  on  nonaccrual  loans are applied to reduce
     principal until such doubt is eliminated.

    4.  Loan Origination Fees

     The Savings Bank accounts for loan origination fees in accordance with SFAS
     No.  91  "Accounting  for  Nonrefundable  Fees and  Costs  Associated  with
     Originating or Acquiring Loans and Initial Direct Cost of Leases". Pursuant
     to the provisions of SFAS No. 91, origination fees received from loans, net
     of direct  origination costs, are deferred and amortized to interest income
     using the  level-yield  method,  giving effect to actual loan  prepayments.
     Additionally,   SFAS  No.  91  generally  limits  the  definition  of  loan
     origination  costs  to the  direct  costs  of  originating  a  loan,  i.e.,
     principally actual personnel costs. Fees received for loan commitments that
     are expected to be drawn upon, based on the Savings Bank's  experience with
     similar  commitments,  are deferred and amortized over the life of the loan
     using the level-yield  method. Fees for other loan commitments are deferred
     and amortized over the loan commitment period on a straight-line basis.



                                       23



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    5.  Allowance for Losses on Loans

     It is the  Savings  Bank's  policy  to  provide  valuation  allowances  for
     estimated  losses  on loans  based on past loss  experience,  trends in the
     level of delinquent and problem loans,  adverse  situations that may affect
     the  borrower's  ability to repay,  the estimated  value of any  underlying
     collateral and current and anticipated  economic  conditions in the primary
     lending area. When the collection of a loan becomes doubtful,  or otherwise
     troubled,  the  Savings  Bank  records  a  loan  charge-off  equal  to  the
     difference between the fair value of the property securing the loan and the
     loan's carrying value.  Major loans  (including  development  projects) and
     major  lending  areas are  reviewed  periodically  to  determine  potential
     problems at an early date.  The  allowance  for loan losses is increased by
     charges to earnings and decreased by charge-offs (net of recoveries).

     The Savings Bank accounts for impaired  loans in  accordance  with SFAS No.
     114,  "Accounting  by Creditors for  Impairment of a Loan," which  requires
     that  impaired  loans be measured  based upon the present value of expected
     future cash flows discounted at the loan's  effective  interest rate or, as
     an alternative,  at the loan's observable market price or fair value of the
     collateral.  The Savings Bank's current procedures for evaluating  impaired
     loans result in carrying such loans at the lower of cost or fair value.

     A loan is defined  under SFAS No. 114 as  impaired  when,  based on current
     information  and events,  it is probable  that a creditor will be unable to
     collect all  amounts due  according  to the  contractual  terms of the loan
     agreement.  In applying  the  provisions  of SFAS No. 114, the Savings Bank
     considers  its  investment  in one- to  four-family  residential  loans and
     consumer  installment  loans to be homogeneous and therefore  excluded from
     separate  identification for evaluation of impairment.  With respect to the
     Savings Bank's investment in multi-family and nonresidential loans, and its
     evaluation of impairment thereof, such loans are collateral dependent,  and
     as a result,  are carried as a practical  expedient at the lower of cost or
     fair value.

     It is the Savings  Bank's policy to charge off  unsecured  credits that are
     more than ninety days  delinquent.  Similarly,  collateral  dependent loans
     which are more than ninety days  delinquent  are  considered  to constitute
     more than a minimum delay in repayment  and are  evaluated  for  impairment
     under SFAS No. 114 at that time.

     At September 30, 1998 and 1997, the Savings Bank had no loans that would be
     defined as impaired under SFAS No. 114.







                                       24


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    6.  Office Premises and Equipment

    Office  premises and equipment are carried at cost and include  expenditures
    which extend the useful lives of existing assets.  Maintenance,  repairs and
    minor   renewals  are  expensed  as  incurred.   For  financial   reporting,
    depreciation  and  amortization  are  provided  on  the   straight-line  and
    accelerated  methods  over the useful  lives of the assets,  estimated to be
    forty years for buildings, ten to forty years for building improvements, and
    five to ten years for furniture and equipment. An accelerated method is used
    for tax reporting purposes.

    7.  Real Estate Acquired Through Foreclosure

    Real  estate  acquired  through  foreclosure  is carried at the lower of the
    loan's unpaid principal  balance (cost) or fair value less estimated selling
    expenses  at the  date of  acquisition.  Real  estate  loss  provisions  are
    recorded  if the  properties'  fair value  subsequently  declines  below the
    amount determined at the recording date. In determining the lower of cost or
    fair value at acquisition,  costs relating to development and improvement of
    property are  capitalized.  Costs  relating to holding real estate  acquired
    through  foreclosure,  net of rental income, are charged against earnings as
    incurred.

    8.  Federal Income Taxes

    The  Corporation  accounts for federal  income taxes in accordance  with the
    provisions of SFAS No. 109,  "Accounting for Income Taxes".  Pursuant to the
    provisions  of SFAS No. 109, a deferred tax  liability or deferred tax asset
    is computed by applying  the current  statutory  tax rates to net taxable or
    deductible  differences  between the tax basis of an asset or liability  and
    its  reported  amount in the  consolidated  financial  statements  that will
    result in taxable or  deductible  amounts in future  periods.  Deferred  tax
    assets are  recorded  only to the extent  that the amount of net  deductible
    temporary  differences or  carryforward  attributes may be utilized  against
    current period earnings,  carried back against prior years' earnings, offset
    against  taxable  temporary  differences  reversing  in future  periods,  or
    utilized to the extent of management's  estimate of future taxable income. A
    valuation  allowance  is provided for deferred tax assets to the extent that
    the  value  of  net  deductible   temporary   differences  and  carryforward
    attributes exceeds management's estimates of taxes payable on future taxable
    income.  Deferred  tax  liabilities  are provided on the total amount of net
    temporary differences taxable in the future.

    The Corporation's  principal temporary  differences between pretax financial
    income and taxable  income result from  different  methods of accounting for
    deferred  loan  origination  fees and  costs,  Federal  Home Loan Bank stock
    dividends,  certain components of retirement expense,  the general loan loss
    allowance  and  percentage  of  earnings  bad  debt  deductions.  Additional
    temporary  differences  result from depreciation  computed using accelerated
    methods for tax purposes.




                                       25


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    9.  Benefit Plans

    The Savings  Bank  provides a  supplemental  retirement  plan to certain key
    officers.  The Savings Bank's  obligations  under the supplemental plan have
    been funded via the  purchase of key man life  insurance  policies for which
    the Savings Bank is the  beneficiary.  Expense under the  supplemental  plan
    totaled approximately $1,000 during each of the fiscal years ended September
    30, 1998, 1997 and 1996.

    The Corporation has an Employee Stock Ownership Plan ("ESOP") which provides
    retirement  benefits for  substantially  all  full-time  employees  who have
    completed  one year of service.  The  Corporation  accounts  for the ESOP in
    accordance with Statement of Position ("SOP") 93-6,  "Employers'  Accounting
    for Employee Stock  Ownership  Plans".  SOP 93-6 requires that  compensation
    expense  recorded by employers equal the fair value of ESOP shares allocated
    to participants  during a given fiscal year.  Expense  recognized related to
    the ESOP totaled approximately $111,000,  $48,000 and $342,000 for the years
    ended September 30, 1998, 1997 and 1996, respectively.

    The Corporation  also has a Recognition  and Retention Plan ("RRP").  During
    fiscal 1996,  the RRP purchased  39,675 shares of the  Corporation's  common
    stock in the open market and 34,712 of such shares were granted to executive
    officers and members of the Board of Directors  of the  Corporation.  Common
    stock  granted  under  the  RRP  vests  ratably  over  a five  year  period,
    commencing  in December  1995. A provision  of $97,000,  $97,000 and $73,000
    related  to the RRP was  charged  to  expense  for the  fiscal  years  ended
    September 30, 1998, 1997 and 1996, respectively.

    10.  Earnings Per Share and Dividends Per Share

    Basic  earnings per share for the years ended  September 30, 1998,  1997 and
    1996 is computed based upon the  weighted-average  shares outstanding during
    the period, less 28,252, 36,774 and 65,933 shares, respectively, in the ESOP
    that are  unallocated  and not  committed to be  released.  Weighted-average
    common shares deemed  outstanding  totaled 859,891,  881,720 and 849,627 for
    the years ended September 30, 1998, 1997 and 1996, respectively.

    Diluted  earnings  per share is computed  taking into  consideration  common
    shares  outstanding and dilutive  potential common shares to be issued under
    the Corporation's stock option plan.  Weighted-average  common shares deemed
    outstanding  for purposes of computing  diluted  earnings per share  totaled
    894,437,  893,942 and 851,025 for the fiscal years ended September 30, 1998,
    1997 and 1996, respectively.






                                       26


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    10.  Earnings Per Share and Dividends Per Share (continued)

    Effective  during the fiscal year ended  September 30, 1998, the Corporation
    began  presenting  earnings per share pursuant to the provisions of SFAS No.
    128,  "Earnings Per Share."  Accordingly,  the fiscal 1997 and 1996 earnings
    per share presentation has been revised to conform to the provisions of SFAS
    No. 128.

    During fiscal 1996, the Corporation declared capital  distributions of $3.40
    per common share. Of this amount, $3.00 per share was paid in September 1996
    from funds  retained by the  Corporation in the conversion to stock form and
    was  deemed  by  management  to  constitute  a  return  of  excess  capital.
    Accordingly,  the Corporation charged the return of capital  distribution to
    additional   paid-in-capital.   Additionally,   management   believes   that
    approximately  $.33 and  $.37 of the  fiscal  1998  and 1997  distributions,
    respectively, constituted a tax-free return of capital.

    11.  Fair Value of Financial Instruments

    SFAS No.  107,  "Disclosures  About  Fair Value of  Financial  Instruments",
    requires disclosure of the fair value of financial instruments,  both assets
    and liabilities  whether or not recognized in the consolidated  statement of
    financial condition, for which it is practicable to estimate that value. For
    financial  instruments  where quoted market prices are not  available,  fair
    values  are based on  estimates  using  present  value  and other  valuation
    methods.

    The methods used are greatly affected by the assumptions applied,  including
    the discount  rate and estimates of future cash flows.  Therefore,  the fair
    values  presented  may not  represent  amounts  that could be realized in an
    exchange for certain financial instruments.

    The  following  methods  and  assumptions  were used by the  Corporation  in
    estimating its fair value disclosures for financial instruments at September
    30, 1998 and 1997:

                  Cash and cash  equivalents:  The carrying amounts presented in
                  the  consolidated  statements of financial  condition for cash
                  and cash equivalents are deemed to approximate fair value.

                  Investment and mortgage-backed  securities: For investment and
                  mortgage-backed  securities, fair value is deemed to equal the
                  quoted market price.








                                       27


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    11.  Fair Value of Financial Instruments (continued)

                  Loans receivable:  The loan portfolio has been segregated into
                  categories  with  similar  characteristics,  such  as  one- to
                  four-family   residential,    multi-family   residential   and
                  nonresidential real estate. These loan categories were further
                  delineated into fixed-rate and adjustable-rate loans. The fair
                  values for the  resultant  loan  categories  were computed via
                  discounted  cash flow analysis,  using current  interest rates
                  offered for loans with  similar  terms to borrowers of similar
                  credit quality. For loans on deposit accounts and consumer and
                  other  loans,  fair values  were deemed to equal the  historic
                  carrying  values.  The historical  carrying  amount of accrued
                  interest on loans is deemed to approximate fair value.

                  Federal Home Loan Bank stock: The carrying amount presented in
                  the consolidated  statements of financial  condition is deemed
                  to approximate fair value.

                  Deposits:  The fair value of NOW accounts,  passbook accounts,
                  money  market   demand  and  escrow   deposits  is  deemed  to
                  approximate  the amount  payable on  demand.  Fair  values for
                  fixed-rate certificates of deposit have been estimated using a
                  discounted  cash flow  calculation  using the  interest  rates
                  currently   offered   for   deposits   of  similar   remaining
                  maturities.

                  Advances  from the Federal  Home Loan Bank:  The fair value of
                  these advances is estimated using the rates currently  offered
                  for similar advances of similar remaining maturities.

                  Commitments   to   extend    credit:    For   fixed-rate   and
                  adjustable-rate  loan  commitments,  the fair  value  estimate
                  considers the  difference  between  current levels of interest
                  rates and committed rates. At September 30, 1998 and 1997, the
                  difference  between the fair value and notional amount of loan
                  commitments was not material.













                                       28



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    11.  Fair Value of Financial Instruments (continued)

    Based on the foregoing methods and assumptions,  the carrying value and fair
    value of the  Corporation's  financial  instruments  at  September 30 are as
    follows:
<TABLE>
<CAPTION>

                                                                    1998                            1997
                                                        Carrying            Fair       Carrying           Fair
                                                           value           value          value          value
                                                                              (In thousands)
<S>                                                        <C>              <C>            <C>            <C>           
    Financial assets
      Cash and cash equivalents                         $  2,887        $  2,887       $  5,264       $  5,264
      Investment securities                                4,032           4,032          8,039          8,039
      Mortgage-backed securities                          37,864          37,864         32,466         32,466
      Loans receivable                                    48,797          50,590         45,229         46,244
      Stock in Federal Home Loan Bank                      1,606           1,606          1,219          1,219
                                                         -------         -------        -------        -------

                                                         $95,186         $96,979        $92,217        $93,232
                                                          ======          ======         ======         ======
    Financial liabilities
      Deposits                                           $60,225         $61,304        $58,786        $58,938
      Advances from Federal Home Loan Bank                25,850          25,775         24,000         23,837
      Escrow deposits                                        119             119            107            107
                                                        --------        --------       --------       --------

                                                         $86,194         $87,198        $82,893        $82,882
                                                          ======          ======         ======         ======
</TABLE>

    12.  Cash and Cash Equivalents

    For purposes of reporting cash flows, cash and cash equivalents include cash
    and due from  banks,  federal  funds sold and  interest-bearing  deposits in
    other financial  institutions  with original  maturities of less than ninety
    days.

    13.  Reclassifications

    Certain  prior year  amounts have been  reclassified  to conform to the 1998
consolidated financial statement presentation.










                                       29


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES

    The amortized cost, gross unrealized  gains,  gross unrealized  losses,  and
    estimated  fair values of  investment  securities  at September 30, 1998 and
    1997 are summarized as follows:
<TABLE>
<CAPTION>

                                                                                1998
                                                                        Gross           Gross        Estimated
                                                   Amortized       unrealized      unrealized             fair
                                                        cost            gains          losses            value
    Available for sale:                                                     (In thousands)
<S>                                                     <C>             <C>              <C>               <C>
      U.S. Government agency
        obligations                                   $4,005              $27             $-            $4,032
                                                       =====               ==              ==            =====
</TABLE>

<TABLE>
<CAPTION>

                                                                                1997
                                                                        Gross           Gross        Estimated
                                                   Amortized       unrealized      unrealized             fair
                                                        cost            gains          losses            value
    Available for sale:                                                     (In thousands)
<S>                                                    <C>              <C>              <C>              <C>
      U.S. Government agency
        obligations                                   $7,972              $67             $-            $8,039
                                                       =====               ==              ==            =====
</TABLE>

    The  amortized  cost and  estimated  fair values of U.S.  Government  agency
    obligations by contractual term to maturity at September 30 are shown below:

<TABLE>
<CAPTION>
                                                                 1998                            1997
                                                                    Estimated                        Estimated
                                                   Amortized             fair         Amortized           fair
                                                        cost            value              cost          value
                                                                            (In thousands)
<S>                                                    <C>               <C>              <C>            <C>
    Due within one year                               $4,005           $4,032            $3,971         $4,013
    Due after one year through
      five years                                          -                -              4,001          4,026
                                                       -----            -----             -----          -----

                                                      $4,005           $4,032            $7,972         $8,039
                                                       =====            =====             =====          =====
</TABLE>











                                       30


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)

    The amortized cost, gross  unrealized  gains,  gross  unrealized  losses and
    estimated  fair values of  mortgage-backed  securities at September 30, 1998
    and 1997 are summarized as follows:
<TABLE>
<CAPTION>

                                                                                              1998
                                                                                     Gross           Gross    Estimated
                                                                  Amortized     unrealized      unrealized         fair
                                                                       cost          gains          losses        value
    Available for sale:                                                                  (In thousands)
<S>                                                                   <C>            <C>               <C>         <C>
      Federal Home Loan Mortgage Corporation:
        Participation certificates                                 $  6,140         $    3           $  26     $  6,117
        Collateralized mortgage obligations                          15,358              8              29       15,337
      Federal National Mortgage Association:
        Participation certificates                                    3,068             29              37        3,060
        Collateralized mortgage obligations                          13,193            172              15       13,350
                                                                     ------            ---            ----       ------

         Total mortgage-backed securities                           $37,759           $212            $107      $37,864
                                                                     ======            ===             ===       ======
</TABLE>


<TABLE>
<CAPTION>

                                                                                              1997
                                                                                     Gross           Gross    Estimated
                                                                  Amortized     unrealized      unrealized         fair
                                                                       cost          gains          losses        value
    Available for sale:                                                                  (In thousands)
<S>                                                                   <C>             <C>             <C>           <C>
      Federal Home Loan Mortgage Corporation:
        Participation certificates                                 $  2,236          $  19           $  37     $  2,218
        Collateralized mortgage obligations                           6,471             10               4        6,477
      Federal National Mortgage Association:
        Participation certificates                                    4,058             30              53        4,035
        Collateralized mortgage obligations                          19,709             65              38       19,736
                                                                     ------           ----            ----       ------

         Total mortgage-backed securities                           $32,474           $124            $132      $32,466
                                                                     ======            ===             ===       ======
</TABLE>












                                       31



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)

    The amortized cost of  mortgage-backed  securities,  by contractual terms to
    maturity,  are shown below. Expected maturities will differ from contractual
    maturities  because  borrowers  may  generally  prepay  obligations  without
    prepayment penalties.
<TABLE>
<CAPTION>
                                                            September 30,
                                                     1998                1997
                                                           (In thousands)
<S>                                               <C>                    <C>
    Due within three years                       $  1,010            $  1,145
    Due in three to five years                      5,713               2,169
    Due in five to ten years                           -                1,253
    Due in ten to twenty years                      2,857                 834
    Due after twenty years                         28,179              27,073
                                                   ------              ------

                                                  $37,759             $32,474
                                                   ======              ======
</TABLE>


NOTE C - LOANS RECEIVABLE

    The  composition  of the loan  portfolio at September  30 is  summarized  as
follows:
<TABLE>
<CAPTION>

                                                             1998           1997
                                                               (In thousands)
<S>                                                      <C>               <C>
    Residential real estate
      One-to-four family                                  $41,214        $39,821
      Home equity lines of credit                           1,275          1,130
      Multifamily                                           1,367          1,402
      Construction                                          4,663          1,513
    Nonresidential real estate and land                     3,024          2,554
    Deposit account                                            25             45
                                                        ---------      ---------
                                                           51,568         46,465
    Less:
      Undisbursed portion of loans in process               2,556          1,019
      Deferred loan origination fees                           88            102
      Allowance for loan losses                               127            115
                                                         --------       --------

                                                          $48,797        $45,229

</TABLE>







                                       32



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE C - LOANS RECEIVABLE (continued)

    As depicted  above,  the Savings  Bank's lending  efforts have  historically
    focused on one-to-four family  residential and multifamily  residential real
    estate loans,  which comprise  approximately  $46.0 million,  or 94%, of the
    total loan portfolio at September 30, 1998,  and $42.8  million,  or 95%, of
    the total loan portfolio at September 30, 1997.  Generally,  such loans have
    been underwritten on the basis of no more than an 80%  loan-to-value  ratio,
    which has  historically  provided the Savings Bank with adequate  collateral
    coverage in the event of default.  Nevertheless,  the Savings  Bank, as with
    any lending institution, is subject to the risk that residential real estate
    values could  deteriorate in its primary lending area of southwestern  Ohio,
    thereby impairing  collateral values.  However,  management is of the belief
    that  residential  real estate values in the Savings Bank's primary  lending
    area are presently stable.

    The Savings Bank has sold participating  interests in loans in the secondary
    market,  retaining  servicing on the loans sold. Loans sold and serviced for
    others totaled  approximately  $196,000,  $250,000 and $350,000 at September
    30, 1998, 1997 and 1996, respectively.

    In the ordinary  course of business,  the Savings Bank has granted  loans to
    some of its directors,  officers and their related business  interests.  All
    loans to related parties have been made on  substantially  the same terms as
    those  prevailing at the time for  unrelated  third  parties.  The aggregate
    dollar amount of loans to officers and directors was approximately $157,000,
    $156,000 and $181,000 at September  30, 1998,  1997 and 1996,  respectively.
    During the fiscal year ended  September 30, 1998,  $18,000 of new loans were
    disbursed to officers and directors,  while principal  repayments of $17,000
    were received from officers and directors.


NOTE D - ALLOWANCE FOR LOAN LOSSES

     The activity in the  allowance for loan losses is summarized as follows for
     the years ended September 30:
<TABLE>
<CAPTION>

                                                1998         1997         1996
                                                       (In thousands)
<S>                                             <C>          <C>          <C>
    Balance at beginning of year                $115         $111         $110
    Provision for losses on loans                 12            9            1
    Charge-off of loans                           -            (5)          - 
                                                  --        -----           --

    Balance at end of year                      $127         $115         $111
                                                 ===          ===          ===
</TABLE>







                                       33


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE D - ALLOWANCE FOR LOAN LOSSES (continued)

    At September  30, 1998,  the Savings  Bank's  allowance  for loan losses was
    comprised solely of a general loan loss allowance,  which is includible as a
    component of regulatory risk-based capital.

    At September 30, 1998,  1997 and 1996,  the Savings  Bank's  nonaccrual  and
    nonperforming  loans totaled  $49,000,  $95,000 and $164,000,  respectively.
    Interest income which would have been recognized if such loans had performed
    pursuant to  contractual  terms  totaled  approximately  $2,000,  $6,000 and
    $7,000 for the years ended September 30, 1998, 1997 and 1996, respectively.


NOTE E - OFFICE PREMISES AND EQUIPMENT

    Office  premises and  equipment  are comprised of the following at September
30:
<TABLE>
<CAPTION>

                                                           1998           1997
                                                             (In thousands)
<S>                                                       <C>             <C>
    Land and improvements                               $   119        $   119
    Office buildings and improvements                     1,397          1,230
    Furniture, fixtures and equipment                       474            492
    Automobile                                               14             14
                                                        -------        -------
                                                          2,004          1,855
      Less accumulated depreciation                         887            874
                                                         ------         ------

                                                         $1,117        $   981
                                                          =====         ======

</TABLE>

















                                       34


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE F - DEPOSITS

    Deposits consist of the following major classifications at September 30:
<TABLE>
<CAPTION>

    Deposit type and weighted-average                         1998                        1997
    interest rate                                        Amount      %              Amount      %  
                                                                 (Dollars in thousands)
<S>                                                      <C>          <C>            <C>          <C>
    NOW accounts - 1.84% in 1998 and
      2.69% in 1997                                    $  3,208        5.3        $  2,699        4.6%
    Super NOW accounts - 2.75% in 1998
      and 1997                                              253         .4             300         .5
    Passbook accounts - 2.53% in 1998
      and 2.79% in 1997                                   9,494       15.8           9,143       15.6
    Money market demand deposit -
      3.00% in 1998 and 1997                              4,107        6.8           4,332        7.4
                                                        -------    -------         -------    -------
           Total demand, transaction and
             passbook deposits                           17,062       28.3          16,474       28.1

    Certificates of deposit:
      Original maturities of:
        Less than 12 months
          5.13% in 1998 and 5.09% in 1997                 3,163        5.3           3,547        6.0
        12 months
          5.15% in 1998 and 5.87% in 1997                21,945       36.4          21,993       37.4
        18 months
          5.86% in 1998 and 5.82% in 1997                 4,760        7.9           4,634        7.9
        30 months
          5.80% in 1998 and 5.79% in 1997                 5,254        8.7           4,297        7.3
        48 months
          5.13% in 1998 and 5.03% in 1997                    13          -              72         .1
        More than 48 months
          6.12% in 1998 and 1997                          8,028       13.4           7,769       13.2
                                                        -------     ------          -------    ------

           Total certificates of deposit                 43,163       71.7          42,312       71.9
                                                         ------     ------          ------     ------

           Total deposits                               $60,225      100.0%        $58,786      100.0%
                                                         ======      =====          ======      ===== 
</TABLE>

    At September 30, 1998 and 1997, the Savings Bank had  certificate of deposit
    accounts with balances greater than $100,000  totaling $2.9 million and $2.5
    million, respectively.







                                       35



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996

NOTE F - DEPOSITS (continued)

    Interest  expense on deposit accounts is summarized as follows for the years
ended September 30:
<TABLE>
<CAPTION>

                                                  1998         1997         1996
                                                         (In thousands)
<S>                                               <C>          <C>          <C>
    Money market demand deposit accounts       $   130      $   144      $   144
    Passbook and escrow accounts                   254          256          270
    NOW and Super NOW accounts                      73          107           74
    Certificates of deposit                      2,465        2,279        2,326
                                                 -----        -----        -----

                                                $2,922       $2,786       $2,814
                                                 =====        =====        =====
</TABLE>

    Maturities of outstanding  certificates of deposit are summarized as follows
at September 30:
<TABLE>
<CAPTION>

                                                         1998             1997
                                                           (In thousands)
<S>                                                    <C>               <C>
    Less than six months                              $13,202          $13,423
    Six months to one year                             16,864           19,090
    One to two years                                    6,976            3,536
    Two to three years                                  4,358            3,548
    Three to four years                                   341            2,338
    Over four years                                     1,422              377
                                                      -------         --------

                                                      $43,163          $42,312
                                                       ======           ======
</TABLE>


NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

    Advances  from the Federal Home Loan Bank,  collateralized  at September 30,
    1998 by pledges of certain residential mortgage loans totaling $38.8 million
    and the Savings  Bank's  investment  in Federal  Home Loan Bank  stock,  are
    summarized as follows:
<TABLE>
<CAPTION>

    Interest Rate                    Maturing fiscal                          September 30,
                                     year ending in                     1998              1997
                                                                          (In thousands)
<S>                                        <C>                         <C>                <C>
    6.53%                                  1998                     $     -           $  3,200
    5.58%                                  2000                        3,000                - 
    5.71%                                  2006                           -              6,500
    5.43% - 5.71%                          2007                          950            14,300
    4.66% - 5.64%                          2008                       21,900                - 
                                                                      ------           -------

                                                                     $25,850           $24,000
                                                                      ======            ======

 Weighted-average interest rate                                         5.26%             5.82%
                                                                        ====              ==== 
</TABLE>


                                       36


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE H - COMMITMENTS

    The Savings Bank is a party to financial instruments with  off-balance-sheet
    risk in the normal  course of  business to meet the  financing  needs of its
    customers including  commitments to extend credit. Such commitments involve,
    to varying degrees,  elements of credit and interest-rate  risk in excess of
    the amount recognized in the consolidated  statement of financial condition.
    The contract or notional  amounts of the  commitments  reflect the extent of
    the Savings Bank's involvement in such financial instruments.

    The Savings Bank's exposure to credit loss in the event of nonperformance by
    the other party to the financial instrument for commitments to extend credit
    is represented by the contractual notional amount of those instruments.  The
    Savings  Bank  uses the same  credit  policies  in  making  commitments  and
    conditional obligations as those utilized for on-balance-sheet instruments.

    At September 30, 1998, the Savings Bank had  commitments for unused lines of
    credit under home equity loans of $2.7  million.  Management  believes  that
    such  loan  commitments  are  able  to be  funded  through  cash  flow  from
    operations and existing excess  liquidity.  Fees received in connection with
    these commitments have not been recognized in earnings.

    Commitments to extend credit are agreements to lend to a customer as long as
    there  is no  violation  of  any  condition  established  in  the  contract.
    Commitments  generally  have  fixed  expiration  dates or other  termination
    clauses and may require  payment of a fee. Since many of the commitments may
    expire  without  being  drawn  upon,  the total  commitment  amounts  do not
    necessarily  represent future cash requirements.  The Savings Bank evaluates
    each  customer's  creditworthiness  on a case-by-case  basis.  The amount of
    collateral  obtained,  if it is deemed  necessary  by the Savings  Bank upon
    extension  of credit,  is based on  management's  credit  evaluation  of the
    counterparty.  Collateral on loans may vary but the  preponderance  of loans
    granted generally include a mortgage interest in real estate as security.


NOTE I - FEDERAL INCOME TAXES

    Federal  income  taxes  differ  from the amounts  computed at the  statutory
    corporate tax rate for the years ended September 30 as follows:
<TABLE>
<CAPTION>

                                                            1998           1997           1996
                                                                     (In thousands)
<S>                                                          <C>           <C>             <C>
    Federal income taxes computed at
      statutory rate                                        $274           $320            $60
    Decrease in taxes resulting from:
      Other                                                  (10)            (7)           (15)
                                                            ----          -----             --
    Federal income tax provision per consolidated
      financial statements                                  $264           $313            $45
                                                             ===            ===             ==
</TABLE>




                                       37


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE I - FEDERAL INCOME TAXES (continued)

     The  composition  of  the  Corporation's  net  deferred  tax  liability  at
     September 30 is as follows:
<TABLE>
<CAPTION>

                                                                       1998           1997
                                                                           (In thousands)
     Taxes (payable) refundable on temporary  
     differences at estimated corporate tax rate:
<S>                                                                    <C>           <C>
       Deferred tax assets:
         General loan loss allowance                                 $   43         $   39
         Stock benefit plans                                             25             25
         Other                                                           -               3
                                                                        ---         ------
           Total deferred tax assets                                     68             67

       Deferred tax liabilities:
         Percentage of earnings bad debt deduction                     (125)          (125)
         Deferred loan origination costs                                (24)           (17)
         Federal Home Loan Bank stock dividends                        (176)          (156)
         Unrealized gain on securities designated as
           available for sale                                           (45)           (19)
         Other                                                           -              (3)
                                                                        ---         ------
           Total deferred tax liabilities                              (370)          (320)
                                                                       ----           ----

           Net deferred tax liability                                 $(302)         $(253)
                                                                       ====           ==== 
</TABLE>

     The  Savings  Bank was  allowed a  special  bad debt  deduction  based on a
     percentage of earnings, generally limited to 8% of otherwise taxable income
     and subject to certain  limitations  based on  aggregate  loans and savings
     account   balances  at  the  end  of  the  year.  This  deduction   totaled
     approximately  $1.7 million as of September  30, 1998.  If the amounts that
     qualify as  deductions  for federal  income tax purposes are later used for
     purposes  other  than  for bad  debt  losses,  including  distributions  in
     liquidation,  such distributions will be subject to federal income taxes at
     the then current  corporate income tax rate. The approximate  amount of the
     unrecognized  deferred tax liability  relating to the  cumulative  bad debt
     deduction  is $450,000.  See Note L for  additional  information  regarding
     future percentage of earnings bad debt deductions.











                                       38


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE J - REGULATORY CAPITAL

    The Savings Bank is subject to the regulatory  capital  requirements  of the
    Federal Deposit Insurance Corporation (the "FDIC").  Failure to meet minimum
    capital   requirements  can  initiate  certain   mandatory  -  and  possibly
    additional discretionary - actions by regulators that, if undertaken,  could
    have a direct  material effect on the Savings Bank's  financial  statements.
    Under capital  adequacy  guidelines and the regulatory  framework for prompt
    corrective  action,  the Savings Bank must meet specific capital  guidelines
    that  involve   quantitative   measures  of  the  Savings   Bank's   assets,
    liabilities,   and  certain  off-balance-sheet  items  as  calculated  under
    regulatory  accounting  practices.  The Savings Bank's  capital  amounts and
    classification  are also subject to qualitative  judgments by the regulators
    about components, risk weightings, and other factors.

    During the  calendar  year,  the  Savings  Bank was  notified by its primary
    regulator that it was categorized as "well-capitalized" under the regulatory
    framework   for   prompt   corrective   action.   To   be   categorized   as
    "well-capitalized"  the Savings Bank must maintain minimum capital ratios as
    set forth in the table that follows.

    The FDIC has  adopted  risk-based  capital  ratio  guidelines  to which  the
    Savings Bank is subject.  The guidelines  establish a systematic  analytical
    framework  that makes  regulatory  capital  requirements  more  sensitive to
    differences in risk profiles among banking organizations. Risk-based capital
    ratios are determined by allocating  assets and specified  off-balance sheet
    commitments to four risk-weighting categories, with higher levels of capital
    being required for the categories perceived as representing greater risk.

    These  guidelines  divide the capital into two tiers.  The first tier ("Tier
    1") includes common equity, certain non-cumulative perpetual preferred stock
    (excluding auction rate issues) and minority interests in equity accounts of
    consolidated subsidiaries, less goodwill and certain other intangible assets
    (except mortgage  servicing rights and purchased credit card  relationships,
    subject to certain limitations).  Supplementary ("Tier 2") capital includes,
    among other items, cumulative perpetual and long-term limited-life preferred
    stock, mandatory convertible securities, certain hybrid capital instruments,
    term subordinated debt and the allowance for loan losses, subject to certain
    limitations,  less  required  deductions.  Savings  banks  are  required  to
    maintain a total  risk-based  capital (the sum of Tier 1 and Tier 2 capital)
    ratio of 8%, of which 4% must be Tier 1 capital.  The FDIC may, however, set
    higher capital requirements when particular  circumstances warrant.  Savings
    banks  experiencing  or  anticipating  significant  growth are  expected  to
    maintain capital ratios,  including tangible capital  positions,  well above
    the minimum levels.








                                       39



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE J - REGULATORY CAPITAL (continued)

    In addition,  the FDIC established  guidelines  prescribing a minimum Tier 1
    leverage  ratio (Tier 1 capital to adjusted total assets as specified in the
    guidelines). These guidelines provide for a minimum Tier 1 leverage ratio of
    3% for savings banks that meet certain  specified  criteria,  including that
    they  have  the  highest  regulatory  rating  and  are not  experiencing  or
    anticipating  significant  growth.  All other  savings banks are required to
    maintain  a Tier 1  leverage  ratio of 3% plus an  additional  cushion of at
    least 100 to 200 basis points.

    As of September 30, 1998 and 1997, management believes that the Savings Bank
    met all capital adequacy requirements to which it is subject.

<TABLE>
<CAPTION>
                                                                          1998
                                                                                                 To be "well-
                                                                                              capitalized" under
                                                                     For capital               prompt corrective
                                             Actual                adequacy purposes          action provisions
                                         Amount    Ratio           Amount    Ratio             Amount     Ratio
                                                                  (Dollars in thousands)
<S>                                       <C>        <C>             <C>      <C>              <C>          <C>
    Total capital
      (to risk-weighted assets)          $9,419    23.7%         =>$3,174    =>8.0%          =>$3,967     =>10.0%

    Tier I capital
      (to risk-weighed assets)           $9,292    23.4%         =>$1,587    =>4.0%          =>$2,380     =>  6.0%

    Tier I leverage                      $9,292      9.6%        =>$3,860    =>4.0%          =>$4,825     =>  5.0%
</TABLE>


<TABLE>
<CAPTION>

                                                                          1997
                                                                                                 To be "well-
                                                                                              capitalized" under
                                                                     For capital               prompt corrective
                                             Actual                adequacy purposes          action provisions
                                         Amount    Ratio           Amount    Ratio             Amount     Ratio
                                                                  (Dollars in thousands)
<S>                                        <C>       <C>            <C>        <C>              <C>          <C>
    Total capital
      (to risk-weighted assets)          $8,679    25.1%         =>$2,762    =>8.0%          =>$3,453     =>10.0%

    Tier I capital
      (to risk-weighed assets)           $8,564    24.8%         =>$1,381    =>4.0%          =>$2,072     =>  6.0%

    Tier I leverage                      $8,564     9.3%         =>$3,698    =>4.0%          =>$4,622     =>  5.0%

</TABLE>

    The Savings Bank's  management  believes that, under the current  regulatory
    capital  regulations,  the  Savings  Bank will  continue to meet its minimum
    capital requirements in the foreseeable future.  However,  events beyond the
    control of the Savings Bank, such as increased  interest rates or a downturn
    in the economy in the primary market areas,  could  adversely  affect future
    earnings and,  consequently,  the ability to meet future minimum  regulatory
    capital requirements.

                                       40



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE K - STOCK OPTION PLAN

    The Board of  Directors  adopted a Stock  Option Plan that  provided for the
    issuance of 129,333 shares (adjusted) of authorized,  but unissued shares of
    common stock at fair value at the date of grant.  During  fiscal  1996,  the
    Corporation  granted  options to  purchase  74,297  shares to members of the
    Board of Directors and executive officers at an initial fair value of $12.25
    per share.  The number of shares granted under option and the exercise price
    were adjusted to 96,879 and $9.42 per share, respectively, in fiscal 1997 to
    give effect to the return of capital distribution. As of September 30, 1998,
    none of the stock options granted had been exercised.

    In 1996, the Corporation  adopted SFAS No. 123,  "Accounting for Stock-Based
    Compensation,"   which  contains  a  fair  value-based  method  for  valuing
    stock-based  compensation that entities may use, which measures compensation
    cost at the grant date based on the fair value of the award. Compensation is
    then  recognized  over the  service  period,  which is usually  the  vesting
    period. Alternatively,  SFAS No. 123 permits entities to continue to account
    for stock options and similar equity instruments under Accounting Principles
    Board ("APB")  Opinion No. 25,  "Accounting  for Stock Issued to Employees."
    Entities that continue to account for stock options using APB Opinion No. 25
    are required to make pro forma  disclosures of net earnings and earnings per
    share, as if the fair value-based  method of accounting  defined in SFAS No.
    123 had been applied.

    The  Corporation  applies  Accounting  Principles  Board  Opinion No. 25 and
    related   Interpretations   in   accounting   for  its  stock  option  plan.
    Accordingly,  no  compensation  cost has been  recognized  for the plan. Had
    compensation  cost for the  Corporation's  stock option plan been determined
    based on the  fair  value at the  grant  dates  for  awards  under  the plan
    consistent  with  the  accounting  method  utilized  in SFAS  No.  123,  the
    Corporation's net earnings and earnings per share would have resulted in the
    pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                            1998             1997         1996
<S>                                               <C>                      <C>               <C>          <C>

    Net earnings (In thousands)                  As reported                $541             $627         $132
                                                                             ===              ===          ===

                                                   Pro-forma                $541             $627        $  34
                                                                             ===              ===         ====

    Earnings per share
      Basic                                      As reported                $.63              $.71         $.16
                                                                             ===               ===          ===

                                                   Pro-forma                $.63              $.71         $.04
                                                                             ===               ===          ===

      Diluted                                    As reported                $.60              $.70         $.16
                                                                             ===               ===          ===

                                                   Pro-forma                $.60              $.70         $.04
                                                                             ===               ===          ===
</TABLE>

    The fair value of each option  grant is estimated on the date of grant using
    the  modified   Black-Scholes   options-pricing  model  with  the  following
    weighted-average  assumptions used for grants in fiscal 1996: dividend yield
    of 5.5%, expected volatility of 20.0%, a risk-free interest rate of 6.5% and
    expected lives of ten years.


                                       41


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE K - STOCK OPTION PLAN (continued)

    A  summary  of the  status  of the  Corporation's  stock  option  plan as of
    September 30, 1998,  1997 and 1996, and changes during the periods ending on
    those dates is presented below:
<TABLE>
<CAPTION>

                                                1998                        1997                         1996
                                                      Weighted-                  Weighted-                    Weighted-
                                                        average                    average                      average
                                                       exercise                   exercise                     exercise
                                            Shares        price        Shares        price          Shares        price
<S>                                          <C>           <C>          <C>           <C>              <C>          <C>      
    Outstanding at beginning of year        96,879        $9.42        74,297       $12.25              -       $     -
    Adjustment for return of capital
     distribution                               -         $    -       22,582       $  9.42             -       $    -    
    Granted                                     -         $    -           -        $    -          74,297      $12.25
    Exercised                                   -         $    -           -        $    -              -       $    -
    Forfeited                                   -         $    -           -        $    -              -       $    -    
                                           -------         ---------  -------        ---------     -------       ---------

    Outstanding at end of year              96,879        $9.42        96,879       $  9.42         74,297      $12.25
                                            ======         ====        ======        ======         ======       =====

    Options exercisable at year-end         96,879        $9.42        96,879       $  9.42         74,297      $12.25
                                            ======         ====        ======        ======         ======       =====
    Weighted-average fair value of
      options granted during the year                      N/A                        N/A                       $  1.99
                                                           ===                        ===                        ======
</TABLE>

    The following  information  applies to options  outstanding at September 30,
1998:
<TABLE>
<CAPTION>

<S>                                                                   <C>
    Number outstanding                                                96,879
    Range of exercise prices                                           $9.42
    Weighted-average exercise price                                    $9.42
    Weighted-average remaining contractual life                   7.25 years
</TABLE>


NOTE L - LEGISLATIVE MATTERS

    The deposit  accounts of the Savings Bank and of other savings  associations
    are insured by the Federal Deposit  Insurance  Corporation ( "FDIC") through
    the Savings  Association  Insurance Fund ("SAIF").  The reserves of the SAIF
    were below the level  required by law because a  significant  portion of the
    assessments  paid into the fund  were  used to pay the cost of prior  thrift
    failures.  The deposit  accounts of commercial banks are insured by the FDIC
    through the Bank  Insurance  Fund  ("BIF"),  except to the extent such banks
    have acquired SAIF deposits.  The reserves of the BIF met the level required
    by law in May 1995.  As a result  of the  respective  reserve  levels of the
    funds,  deposit insurance  assessments paid by healthy savings  associations
    exceeded those paid by healthy  commercial banks by  approximately  $.19 per
    $100 in deposits in 1995. In 1996 and 1997, no BIF assessments were required
    for healthy commercial banks except for a $2,000 minimum fee.

    Legislation was enacted to recapitalize the SAIF that provided for a special
    assessment  totaling $.657 per $100 of SAIF deposits held at March 31, 1995,
    in order to increase SAIF reserves to the level required by law. The Savings
    Bank held $56.0  million in  deposits  at March 31,  1995,  resulting  in an
    assessment  of  approximately  $368,000,  or $243,000  after tax,  which was
    charged to operations in fiscal 1996.

                                       42


<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE L - LEGISLATIVE MATTERS (continued)

    Under separate legislation related to the recapitalization plan, the Savings
    Bank is required to recapture as taxable  income  approximately  $370,000 of
    its tax bad debt reserve,  which  represents the post-1987  additions to the
    reserve,  and will be unable to utilize the percentage of earnings method to
    compute its bad debt deduction in the future.  The Savings Bank has provided
    deferred  taxes  for this  amount  and will be  permitted  to  amortize  the
    recapture  of the  bad  debt  reserve  in  taxable  income  over  six  years
    commencing in fiscal 1999.


NOTE M - CONDENSED FINANCIAL STATEMENTS OF HARVEST HOME FINANCIAL
  CORPORATION

    The  following  condensed  financial   statements  summarize  the  financial
    position of Harvest Home Financial  Corporation as of September 30, 1998 and
    1997,  and the  results of its  operations  and its cash flows for the three
    years ended September 30, 1998, 1997 and 1996.

                       Harvest Home Financial Corporation
<TABLE>
<CAPTION>
                        STATEMENTS OF FINANCIAL CONDITION
                                  September 30,
                                 (In thousands)

    ASSETS                                                                    1998                1997
<S>                                                                           <C>                 <C>
    Cash and cash equivalents                                            $     130           $     355
    Mortgage-backed securities designated as available for
      sale - at market                                                         397               1,020
    Loan receivable from ESOP                                                  301                 378
    Investment in Harvest Home Savings Bank                                  9,370               8,585
    Prepaid expenses and other                                                  69                  44
                                                                         ---------           ---------

          Total assets                                                     $10,267             $10,382
                                                                            ======              ======

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Other liabilities                                                    $     290          $       38

    Stockholders' equity
      Common stock and additional paid-in capital                            6,903               6,884
      Retained earnings                                                      5,191               5,043
      Shares acquired by stock benefit plans                                  (592)               (767)
      Unrealized gain on securities designated as available
        for sale, net of tax effects                                            87                  40
      Less treasury stock - at cost                                         (1,612)               (856)
                                                                           -------            --------
          Total stockholders' equity                                         9,977              10,344
                                                                           -------              ------

          Total liabilities and stockholders' equity                       $10,267             $10,382
                                                                            ======              ======
</TABLE>


                                       43



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE M - CONDENSED FINANCIAL STATEMENTS OF HARVEST HOME FINANCIAL
  CORPORATION (continued)

                       Harvest Home Financial Corporation
<TABLE>
<CAPTION>
                             STATEMENTS OF EARNINGS
                        For the year ended September 30,
                                 (In thousands)
                                                             1998            1997           1996
<S>                                                          <C>              <C>           <C>
    Revenue
      Interest income                                       $  57            $108           $274
      Other income                                             26              27             44
      Equity in earnings of Harvest Home Savings Bank         542             602            156
                                                              ---             ---            ---
         Total revenue                                        625             737            474

    General and administrative expenses                        98             100            354
                                                             ----             ---            ---

         Earnings before income taxes (credits)               527             637            120

    Federal income taxes (credits)                            (14)             10            (12)
                                                             ----            ----           ----

         NET EARNINGS                                        $541            $627           $132
                                                              ===             ===            ===

</TABLE>
























                                                              44



<PAGE>


                       Harvest Home Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1998, 1997 and 1996


NOTE M - CONDENSED FINANCIAL STATEMENTS OF HARVEST HOME FINANCIAL CORPORATION 
(continued)

                       Harvest Home Financial Corporation
<TABLE>
<CAPTION>
                            STATEMENTS OF CASH FLOWS
                            Year ended September 30,
                                 (In thousands)

                                                                          1998            1997           1996
<S>                                                                       <C>              <C>            <C>
    Cash provided by (used in) operating activities:
      Net earnings for the year                                        $   541            $627        $   132
      Adjustments to reconcile net earnings to net
      cash provided by (used in) operating activities
        Accretion of discounts on mortgage-backed securities                (4)             (4)            (7)
        Undistributed earnings of consolidated subsidiary                 (542)           (602)          (156)
        Amortization expense of employee benefit plans                       8             144             - 
        Gain on sale of mortgage-backed securities                          (6)             -              - 
        Increase (decrease) in cash due to changes in:
          Prepaid expenses and other assets                                (25)             66             67
          Other liabilities                                                257            (199)           126
                                                                        ------             ---         ------
          Net cash provided by operating activities                        229              32            162

    Cash flows provided by (used in) investing activities:
      Proceeds from repayment of loan to ESOP                               77             296            120
      Proceeds from maturities of investment securities                     -               -           2,000
      Proceeds from sale of mortgage-backed securities                     337              -              - 
      Principal repayments on mortgage-backed securities                   281             228            491
                                                                        ------             ---         ------
          Net cash provided by investing activities                        695             524          2,611

    Cash flows provided by (used in) financing activities:
      Payment of dividends on common stock                                (393)           (371)        (3,162)
      Purchase of treasury stock                                          (756)           (223)           (80)
      Proceeds from sale of treasury stock                                  -               -             486
                                                                         -----              --         ------
          Net cash used in financing activities                         (1,149)           (594)        (2,756)
                                                                         -----             ---          -----

    Net increase (decrease) in cash and cash equivalents                  (225)            (38)            17

    Cash and cash equivalents at beginning of year                         355             393            376
                                                                        ------             ---         ------

    Cash and cash equivalents at end of year                           $   130            $355        $   393
                                                                        ======             ===         ======

</TABLE>





                                       45