<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                      EXHIBIT 13

TABLE OF CONTENTS

<TABLE>
<S>                                                                                                <C>
Letter to Shareholders                                                                              3

Market Price of Western Ohio Financial Corporation's
   Common Shares and Related Shareholder Matters                                                    5

Selected Consolidated Financial Information                                                         6

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

General                                                                                             8
Forward-Looking Statements                                                                          9
Analysis of Financial Condition                                                                    12
Comparison of Years Ended December 31, 2003 and December 31, 2002                                  13
Comparison of Years Ended December 31, 2002 and December 31, 2001                                  16
Average Balances, Interest Rates and Yields                                                        19
Rate/Volume Analysis                                                                               20
Asset/Liability Management and Market Risk                                                         21
Liquidity and Capital Resources                                                                    23
Impact of Inflation and Changing Prices                                                            25

Report of Independent Auditors                                                                     26

Consolidated Financial Statements                                                                  27
  Notes to Consolidated Financial Statements                                                       33

Western Ohio Financial Corporation and Subsidiary Shareholder Information                          56

Board of Directors and Officers                                                                    56

Market Makers                                                                                      58
</TABLE>

                                                                               2
<PAGE>

Dear Fellow Shareholders:

2003 was another strong year for Western Ohio Financial Corporation and its sole
subsidiary, Cornerstone Bank. Earnings, return on assets and return on equity
improved for the sixth consecutive year in spite of industry-wide compression of
net interest margin and a recession.

Let's look at the 2003 highlights, details of which are covered more
comprehensively in the Management Discussion and Analysis.

         - Net income improved 6.6% over 2002 from $2,347,000 to $2,501,000,
         while fully diluted earnings per share increased from $1.35 to $1.42.

         - Non-interest income improved nearly 21% reflecting increased gains on
         sale of mortgage loans, deposit service charges and loan fees. Once a
         major weakness, your company ranks near the top of its peer group for
         this earnings component.

         - Total assets grew 15% from $346,800,000 to $399,540,000 reflecting an
         increase in loan balances of 30% from $257,000,000 to $334,600,000 for
         2003.

         - Total deposits increased by 13.4% from $219,200,000 to $248,700,000
         for the year. Core deposits grew 10%.

         - Non-interest expense increased only a modest 1.0%.

         - Earning asset quality has been excellent as reflected in
         significantly lower average impaired loans and non-performing loan
         levels and net charge offs.

         - The branch network experienced increased loan and deposit volumes as
         well as significant growth in related fees resulting largely from
         increased calls, cross-selling and bank at work services.

         - Our capital position remains in all respects well above required
         minimums.

The primary reason for our success has been the commitment and ability to
develop relationships and build on those relationships. Across the bank where
our staff meets the customer, we remain focused on relationships with our
customers, providing value at a competitive price, providing enhanced
convenience and broader product offerings as well as efficiency in answering
questions, solving problems, providing faster credit turnaround times, and above
all courtesy and respect for our valued customers at all times.

Not only do we strive to develop relationships with our customers, we also
strive to develop lasting relationships with the local communities we serve and
the charitable organizations that serve them. We have accomplished this in many
different ways throughout the year. Our caring employees actively participated
in community charity events

                                                                               3
<PAGE>

with such organizations as the American Cancer Society, MR/DD, American Red
Cross, Junior Achievement, United Way, Habitat for Humanity and others. Our
employees are very proud of the home they helped build and sponsor with Habitat
for Humanity. We are also grateful for the recognition each year from the United
Way and American Cancer Society for outstanding campaigns. Our employees look
forward to our regular blood drives. These are just a small sampling of what
makes us proud and our communities a better place to live and work. Our
Cornerstone Bank employees are committed to helping the communities we serve and
our fellow employees any time there is a need or a good cause. We take our
community involvement seriously.

Our corporate challenges remain the same: finding new sources for profitable
growth, increased competition, coping with regulatory change, growing our core
deposits, competing on value not just price and service quality in an
ever-changing environment; and most of all, retaining and acquiring top quality
people in all phases of our business. On the national scene, from most reports
an economic recovery appears to be in progress. This should ultimately bode well
for the markets we serve and your company, although we expect some sluggishness
for the next few months especially in the jobs sector. We also anticipate some
modest continuation of margin compression in the finance sector, although we
believe interest rates could remain fairly steady with some upward pressure
perhaps just before and especially after the election this Fall. There remains
uncertainty regarding war and potential terrorist acts.

We remain committed to improving the performance of the company and thus
shareholder value. We have been successful over the past six years, but there is
still much more to accomplish.

We can't thank enough our shareholders, our dedicated and caring staff and Board
of Directors and our valued customers for their continuing support.

John W. Raisbeck
President and Chief Executive Officer

David L. Dillahunt
Chairman of the Board

                                                                               4
<PAGE>

MARKET PRICE OF WESTERN OHIO FINANCIAL CORPORATION'S
COMMON SHARES AND RELATED SHAREHOLDER MATTERS

There were 1,779,823 common shares of WOFC outstanding, including unearned
employee benefit plan shares, on December 31, 2003, held of record by
approximately 574 registered shareholders and 1,050 beneficial holders behind
brokers, banks, and depositories. Price information with respect to WOFC's
common shares is quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") National Market System. The Wall Street
Journal publishes daily trading information for our stock under the abbreviation
"WstnOH Fnl" in the National Market Listing.

<TABLE>
<CAPTION>
                                      Fiscal Year 2003                     Fiscal Year 2002
                                -----------------------------        -----------------------------
                                 Low        High     Dividend         Low        High     Dividend
                                -----------------------------        -----------------------------
<S>                             <C>        <C>       <C>             <C>        <C>       <C>
First quarter                   $20.05     $23.50      $.25          $18.55     $20.35      $.25
Second quarter                   20.78      26.13       .25           19.10      21.02       .25
Third quarter                    24.05      28.51       .25           18.77      21.00       .25
Fourth quarter                   28.27      33.28       .25           19.87      21.50       .25
</TABLE>

The Corporation has repurchased shares and intends to continue to repurchase
shares in order to enhance shareholder value when the Board of Directors
considers it to be in the best interest of the Corporation's shareholders.
During 2003 the Corporation repurchased 31,500 shares and 22,200 in 2002. The
Corporation's ability to repurchase shares will continue to be limited by its
earnings and profits, and pre-1988 bad debt tax reserves included in
Cornerstone's retained earnings.

There were no sales of unregistered securities during 2003.

          See accompanying notes to consolidated financial statements.

                                                                               5
<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                             December 31,
                                              --------------------------------------------------------------------------
                                                 2003            2002           2001             2000           1999
                                              ------------    -----------   -------------    --------------  -----------
                                                                            (In Thousands)
<S>                                           <C>             <C>           <C>              <C>             <C>
Selected Financial Condition Data:

Total assets                                  $   399,540     $  346,795      $  341,711      $  352,562       $ 329,685
Loans, net                                        334,469        256,883         269,300         283,604         254,871
Cash and cash equivalents                           6,853         19,312          16,915           4,805           9,614
Mortgage-backed securities                         21,808         36,866          36,006          39,219          41,591
Securities                                         10,927          9,135           3,642           9,434           8,775
Deposits                                          248,681        219,169         220,287         208,332         202,331
Borrowed funds                                    103,473         81,243          76,655         100,225          82,183
Total stockholders' equity                         44,357         43,205          41,945          41,810          42,989
</TABLE>

<TABLE>
<CAPTION>
                                                                             December 31,
                                              --------------------------------------------------------------------------
                                                 2003            2002           2001            2000            1999
                                              -----------     ----------    ------------     -----------      ----------
                                                                            (In Thousands)
<S>                                           <C>             <C>           <C>              <C>              <C>
Selected Operations Data:

Total interest income                         $    18,559     $   21,381      $   24,718      $   25,624       $  23,415
Total interest expense                              9,149         11,462          15,199          15,730          13,632
                                              -----------     ----------      ----------      ----------       ---------
Net interest income                                 9,410          9,919           9,519           9,894           9,783
Provision for loan losses                             286            343             358             349             246
                                              -----------     ----------      ----------      ----------       ---------
Net interest income after pro-
     vision for loan losses                         9,124          9,576           9,161           9,545           9,537

Non-interest income:
     Service charges                                2,537          2,278           1,603           1,182           1,085
     Gain on sales of loans
           and securities                             629            730             314              75             111

     Other non-interest income                        477             85              22              37              65
                                              -----------     ----------      ----------      ----------       ---------
Total non-interest income                           3,643          3,093           1,939           1,294           1,261
Total non-interest expense                          9,229          9,136           8,216           7,899           8,127
                                              -----------     ----------      ----------      ----------       ---------

Income before income taxes                          3,538          3,533           2,884           2,940           2,671

Income tax expense                                  1,037          1,186           1,009           1,089             988
                                              -----------     ----------      ----------      ----------       ---------
Net income                                    $     2,501     $    2,347      $    1,875      $    1,851       $   1,683
                                              ===========     ==========      ==========      ==========       =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                               6
<PAGE>

                  SELECTED CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                               December 31,
                                                     --------------------------------------------------------------
                                                          2003         2002        2001         2000         1999
                                                          ----         ----        ----         ----         ----
<S>                                                  <C>              <C>          <C>          <C>          <C>
Selected Financial Ratios and Other Data:

Performance Ratios:
   Return on assets (ratio of net income to
     average total assets)                                  0.70%       0.68%       0.54%        0.54%         0.52%
   Interest rate spread information:
     Average during year                                    2.54        2.55        2.30         2.44          2.57
     End of year                                            2.45        2.54        2.20         2.65          2.37
   Net interest margin                                      2.77        2.95        2.83         2.99          3.13
   Ratio of operating expense to
     average total assets                                   2.57        2.64        2.37         2.32          2.51
   Return on equity (ratio of net
     income to average equity)                              5.72        5.47        4.43         4.50          3.75

Quality Ratios:
   Non-performing assets to total assets at end
     of year                                                0.36        0.51        0.82         1.02          0.83
   Allowance for loan losses to non-performing
     loans                                                126.92      101.52       60.15        46.24        100.94
   Allowance for loan losses to total loans                 0.54        0.70        0.63         0.58          1.09
   Allowance for loan losses to classified assets          41.76       28.78       51.04        42.30         75.14

Capital Ratios:
   Total equity to total assets at end of
     year                                                  11.10       12.46       12.27        11.86         13.04
   Average equity to average assets                        12.21       12.40       12.21        12.09         13.87
   Ratio of average interest-earning assets to
     average interest-bearing liabilities                   1.09 x      1.12 x      1.12 x       1.12 x        1.13 x

Per Share Data:
   Earnings per share-Basic                          $      1.44        1.36        1.08         1.01          0.86
   Earnings per share-Diluted                               1.42        1.35        1.08         1.01          0.85
   Dividend payout ratio                                    0.69 x      0.74  x     0.93 x       0.99 x        1.18 x
   Book value per share                              $     24.92       24.62       23.89        23.15         21.82
   Cash dividends paid                               $      1.00        1.00        1.00         1.00          1.00

Number of full service offices                                 7           7           7            6             6
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                               7
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Western Ohio Financial Corporation ("the Corporation" or "WOFC"), owns
Cornerstone Bank ("Cornerstone"), a federal savings bank as its principal
subsidiary. The business of Cornerstone, which has traditionally consisted of
attracting deposits from the general public and making loans secured by
residential and nonresidential real estate. Cornerstone's profitability, and
consequently the Corporation's profitability, is primarily dependent upon its
net interest income, which is the difference between interest income on its loan
and investment portfolio and interest paid on deposits and other borrowed funds
and the levels of non-interest income and non-interest expense. Net interest
income is directly affected by the relative amounts of interest-earning assets
and interest-bearing liabilities and the interest rates earned or paid on such
amounts. Non-interest income consists primarily of service charges and other
fees and gains on sales of securities and other assets. Non-interest expense
includes salaries and employee benefits, occupancy of premises, federal deposit
insurance premiums, franchise taxes, data processing expenses and other
operating expenses. In October 1997, the Corporation formed another subsidiary,
CornerstoneBanc Financial Services, Incorporated (formerly West Central Mortgage
Services, Incorporated), ("CFSI"). The primary business of CFSI is to hold
one-to-four family mortgage loans from outside the Corporation's primary market
area.

The operating results of the Corporation are also affected by general economic
conditions, the monetary and fiscal policies of federal agencies and the
policies of agencies that regulate financial institutions. The Corporation's
cost of funds is influenced by interest rates on competing investments and
general market rates of interest. Lending activities are influenced by the
demand for real estate loans, commercial loans and other types of loans, which
is, in turn, affected by the interest rates at which such loans are made,
general economic conditions affecting loan demand and the availability of funds
for lending activities.

The Corporation's primary market area consists of Clark, Greene and portions of
Montgomery counties. Located in west-central Ohio, Clark and Greene counties'
economic environment consists of a traditional industrial base supplemented by
the service and support industries, and its close proximity to a major U.S.
military installation, Wright Patterson Air Force Base. Since September 11,
2001, the Air Force Base has increased some of its military operations and this
could increase the economic environment in Clark and Greene Counties. Navistar
Truck Manufacturer is the largest industrial employer in Clark County. While
Navistar's Clark County operations have provided stable employment for the area
over the last several decades, in recent years Navistar has shifted its
operations to smaller truck production, which has led to layoffs that could
possibly affect the economic viability of the Corporation's market area. The
Community Hospital, Clark State Community College, Mercy Medical Center and
Wittenberg University are also major employers in the area. Unemployment for all
three counties has improved during the past year with Clark and Montgomery
County unemployment rates moving fairly consistent with the national average
while Greene County has remained below the national rate of unemployment.

The Corporation offers a range of customer services and products, including
deposit accounts and loans. These loans are primarily one-to-four family
mortgage loans, multi-family and commercial real estate loans, commercial

          See accompanying notes to consolidated financial statements.

                                                                               8
<PAGE>

loans and home equity lines of credit. Smaller portions of the Corporation's
loans receivable consist of construction and consumer loans.

Management and the Board of Directors of the Corporation have sought to enhance
shareholder value by using excess capital to repurchase outstanding shares when
business and market conditions warrant. As a practical matter, however, the
Corporation's ability to repurchase shares will continue to be limited by its
earnings, level of stock price and pre-1988 bad debt tax reserves included in
Cornerstone's retained earnings.

FORWARD-LOOKING STATEMENTS

When used throughout this document, the words or phrases "will likely result,"
"are expected to," "will continue," "is anticipated," "estimated," "projected,"
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in the Bank's market area, changes in policies by regulatory
agencies, fluctuations in interest rates, demand for loans in the Bank's market
area and competition that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Factors listed
above could affect the Corporation's financial performance and could cause
actual results for future periods to differ materially from any statements
expressed with respect to future periods.

The reader should not place undue reliance on any forward-looking statements.
The Corporation does not undertake, and specifically disclaims any obligation,
to publicly revise any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events or for any other reason.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Western Ohio's consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States and follow general
practices within the banking industries. Application of these principles
requires management to make estimates, assumptions, and judgments that affect
the amounts reported in the financial statements and accompanying notes. These
estimates, assumptions, and judgments are based on information available as of
the date of the financial statements; accordingly, as this information changes,
the financial statements could reflect different estimates, assumptions, and
judgments. Certain policies inherently have a greater reliance on the use of
estimates, assumptions, and judgments and as such have a greater possibility of
producing results that could be materially different than originally reported.
Estimates, assumptions, and judgments are necessary when assets and liabilities
are required to be recorded at fair value, when a decline in the value of an
asset not carried on the financial statements at fair value warrants an
impairment, write-down or valuation reserve to be established, or when an asset
or liability needs to be recorded contingent upon a future event. Carrying
assets and liabilities at fair value inherently results in more financial
statement volatility. The fair values and the information used to record
valuation adjustments for certain assets and liabilities are based either on
quoted market prices or are provided by other third-party sources, when
available. When third-party information is not available, valuation adjustments
are estimated in good faith by management primarily through the use of internal
cash flow modeling techniques.

          See accompanying notes to consolidated financial statements.

                                                                               9
<PAGE>

The most significant accounting policies followed by the Corporation are
presented in Note 1 to the consolidated financial statements. These policies,
along with the disclosures presented in the other financial statement notes and
in this financial review, provide information on how significant assets and
liabilities are valued in the financial statements and how those values are
determined. Based on the valuation techniques used and the sensitivity of
financial statement amounts to the methods, assumptions, and the estimates
underlying those amounts, management has identified the determination of the
allowance for loan losses, the valuation of retained interests, including
mortgage and other servicing assets, to be the accounting areas that require the
most subjective or complex judgments, and as such would most likely be subject
to subsequent revision as new information becomes available.

The allowance for loan losses represents management's estimate of probable
credit losses incurred in the loan portfolio at a particular balance sheet date.
Determining the amount of the allowance for loan losses is considered a critical
accounting estimate because it requires significant judgment and the use of
estimates related to the amount and timing of expected future cash flows on
impaired loans, estimated losses on pools of homogeneous loans based on
historical loss experience, and consideration of current economic trends and
conditions and collateral values, all of which may be susceptible to significant
change. The loan portfolio also represents the largest asset type on the
consolidated balance sheet. Note 1 to the consolidated financial statements
describes the methodology used to determine the allowance for loan losses and a
discussion of the factors driving changes in the amount of the allowance for
loan losses.

The allowance for loan losses consists of allocated and unallocated components.
The allocated component of the allowance for loan losses reflects expected
losses resulting from analyses developed through specific credit allocations for
individual loans and historical loss experience for each loan category. The
specific credit allocations are based upon regular analyses of all loans over a
fixed-dollar amount where the internal credit rating is at or below a
predetermined classification. These analyses involve a high degree of judgment
in estimating the amount of loss associated with specific loans, including
estimating the amount and timing of future cash flows and collateral values.

The unallocated portion of the allowance for loan losses reflects management's
estimate of likely inherent but undetected losses within the loan portfolio due
to uncertainties in economic conditions, delays in obtaining information,
including unfavorable information about the financial condition of the borrower,
the difficulty in identifying future events that correlate to subsequent loss
rates, and risk factors that have not yet materialized that would impact loss
allocation factors. The unallocated allowance also includes a component that
accounts for the inherent imprecision in loan loss analysis. The analysis for
both the allocated and unallocated components is updated quarterly.

Many factors requiring both quantitative as well as qualitative judgment, affect
the allowance for loan losses. Although management believes its process for
determining the allowance adequately considers all of the potentially critical
factors that could ultimately result in credit losses, the process includes
subjective elements and therefore may be susceptible to significant change. To
the extent the actual outcomes differ from management estimates, additional
provision for loan losses could be required that could adversely affect the
earnings and financial position in the future.

          See accompanying notes to consolidated financial statements.

                                                                              10
<PAGE>

Retained interests, including Mortgage Servicing Rights (MSRs), are established
and accounted for based on discounted cash flow modeling techniques which
require management to make estimates regarding the amount and timing of expected
future cash flows, including assumptions about loan prepayment rates, credit
loss experience, and costs to service, as well as discount rates that consider
the risk involved. MSRs do not trade in an open market with active trading with
readily available market prices. Although sales of MSRs do occur, the exact
terms and conditions may not be readily available to assist in a valuation
exercise. Because the values of these assets are sensitive to changes in
assumptions, the valuation of retained interests, which in part is provided by
an independent third party, is considered a critical accounting estimate.

The expected and actual prepayment rates for mortgage loans are the most
significant factors impacting the value of MSRs, which have a high correlation
to the movement of market interest rates. Increases in mortgage loan prepayments
reduce estimated future net servicing cash flows because the life of the
underlying loan has declined. Management compares its fair value estimates and
assumptions to observable market data when available, monitors the movement in
market interest rates due to their impact on the prepayment of loans, and
updates the valuation of MSRs quarterly.

OVERVIEW

The main source of revenue for the Corporation is net interest income from
lending activity and deposit gathering. In addition the Company collects fees
from customers for services related to these two major activities. The level of
lending activity is influenced by the economic factors such as market interest
rates, business spending and consumer confidence coupled with the competitive
conditions within the financial services industry, which includes both Community
Banks as well as larger Regional Banks.

The low level of interest rates during the past year provided the Company the
opportunity to originate very high levels of residential mortgage loans, however
this low level of rates also afforded customers the opportunity to refinance
their existing mortgages at lower rates, which resulted in a higher level of
loan payoffs. This in turn affected the Company's ability to grow the balance
sheet during 2003. The result has been continued margin compression for both the
Bank as well as the industry. The Bank experienced a modest decline in net
interest income during 2003 and the result was a lower net interest margin due
to lower spread, primarily driven by reduced yields on originated loans. In
order to provide a slightly higher level of earning assets during the year, the
Company purchased mortgage loan pools in order to replace the higher level of
residential mortgages that were paid off due to refinancing.

The Company will continue to increase its focus on fee-based services in order
to reduce the reliance on net interest income due to its interest rate
sensitivity. In addition, the Bank will continue to focus on the growth of
Business Banking and increased business relationships. The business loans
provide a higher net interest spread than residential mortgages and also provide
an additional source of fees and cost-effective deposits.

Finally, the credit quality of the loan portfolio showed continued improvement
during the past year due in part to an improving economy which contributed to
improved financial results for business customers.

          See accompanying notes to consolidated financial statements.

                                                                              11
<PAGE>

Competitive conditions within the financial services industry will continue in
2004 and net interest margin compression will continue to challenge the Company.
The economy, which has improved recently but still provides many mixed results,
especially on the jobs front, may provide improved loan and business
opportunities during 2004.

ANALYSIS OF FINANCIAL CONDITION

Total assets of the Corporation increased $52.7 million, or 15.2% from $346.8
million at December 31, 2002 to $399.5 million at December 31, 2003. This
increase in assets was attributable to growth in loans receivable, partially
offset by declines in cash and cash equivalents and securities. Cash and cash
equivalents decreased $12.5 million from $19.3 million at December 31, 2002 to
$6.9 million at December 31, 2003. Securities decreased $13.3 million from $46.0
million at December 31, 2002, to $32.7 million at December 31, 2003. The primary
reason for the increase in loans receivable was the purchase of mortgage loan
pools, primarily fifteen year and adjustable rate mortgages.

Net loans receivable increased from $256.9 million at December 31, 2002, to
$334.5 million at December 31, 2003, an increase of $77.6 million, or 30.2%. The
increase was primarily the result of purchasing $76.5 million of new residential
mortgage loan originations within the United States, primarily fifteen year
fixed and adjustable rate loans of three to five years. Traditional one-to-four
family residential mortgage loans increased $51.0 million from $124.1 million at
December 31, 2002 to $175.1 at December 31, 2003. This increase was the result
of the purchased residential mortgage loans previously mentioned coupled with a
net reduction in Bank originated loans due to the continued heavy mortgage
refinancing activity in 2003. Additionally, commercial real estate mortgage
loans increased $26.5 million from $87.0 million at December 31, 2002 to $113.5
million at December 31, 2003. The Bank's strategic direction continues to be
diversification of its loan portfolio into more commercial and other real estate
mortgage type loans in order to increase loan interest income and
non-interest-bearing commercial deposits as well as reducing the duration of its
typical one-to-four family mortgage portfolio.

Securities available for sale decreased $13.3 million, or 28.8%, from $46.0
million at December 31, 2002 to $32.7 million at December 31, 2003. The decrease
was due to sale of securities of $9.5 million and maturities and principal
repayments of $22.7 million. Principal repayments on existing mortgage-backed
securities available for sale accelerated in 2003, which was primarily
attributable to higher levels of residential mortgage refinancing during this
current low interest rate environment. The decline in securities available for
sale was partially offset by securities purchases amounting to $20.1 million
during 2003.

Liabilities increased from $303.6 million at December 31, 2002, to $355.2
million at December 31, 2003, an increase of $51.6 million, or 17.0%. The
primary reason for the increase in total liabilities was an increase in brokered
deposits and Federal Home Loan Bank ("FHLB") advances, which provided the
funding for the loan growth mentioned above. FHLB advances increased $22.2
million, or 27.4%, to $103.5 million at December 31, 2003 from $81.2 million at
December 31, 2002. The FHLB advances are secured by a blanket pledge of
mortgages to the FHLB and are not tied to specific securities or mortgages.
Under the blanket pledge, the Corporation had approximately $36.5 million in
additional borrowing capacity with the FHLB at December 31, 2003.

Deposits, which are comprised of customer accounts and brokered certificates of
deposit, increased $29.5 million, or 13.5%, from $219.2 million as of December
31, 2002 to $248.7 million as of December 31, 2003. The increase occurred
entirely in brokered deposit accounts, from a zero balance at

          See accompanying notes to consolidated financial statements.

                                                                              12
<PAGE>

December 31, 2002 to $30.7 million at December 31, 2003. Deposits in the money
market accounts increased $0.4 million from $66.5 million at December 31, 2002
to $66.9 million at December 31, 2003. Deposits in non-interest-bearing checking
accounts increased $2.4 million, or 22.0%, to $13.1 million at December 31, 2003
from $10.8 million at December 31, 2002. These increases in customer deposits
were offset by reductions in interest-bearing checking accounts and customer
certificates of deposit. Management's strategy has been to encourage multiple
deposit relationships and achieve parity in pricing between certificates of
deposit and wholesale funding from the FHLB.

Total shareholders' equity increased $1.2 million, or 2.7%, from $43.2 million
at December 31, 2002 to $44.4 million at December 31, 2003. This increase was
due primarily to net income of $2.5 million during the current year, an increase
of $238,000 in the employee stock ownership plan and a net reduction of $609,000
in the cost of the Company's treasury shares in 2003. The increase was partially
offset by dividend payments to shareholders of $1.7 million and a reduction of
$488,000 in accumulated other comprehensive income.

COMPARISON OF RESULTS OF OPERATIONS

COMPARISON OF YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002

The Corporation's results of operations depend primarily on the level of its net
interest income, non-interest income (fees) as well as the level of its
operating expenses. Net interest income depends upon the volume of
interest-earning assets and interest-bearing liabilities and the interest rate
earned and paid on them, respectively. In addition, the Corporation receives
fees from loan originations, loan sales, late payments, loan servicing and
payments for service related to transaction and other deposit accounts, and from
dividends on its FHLB stock.

GENERAL. Net income for the year ended December 31, 2003, was $2.5 million, an
increase of $154,000 or 6.6% compared to the year ended December 31, 2002. The
increase was primarily the result of growth in non-interest income in 2003 of
$550,000 above the prior year's level, partially offset by a decline in net
interest income of $509,000 from the level in 2002 and a modest increase in
total non-interest expense. The returns on average assets and average
shareholders' equity in 2003 were 0.70% and 5.72%, respectively, compared to
0.68% and 5.47% in 2002. Earnings per share on a fully diluted basis increased
$.07 per share, or 5.2% from $1.35 per share for 2002 to $1.42 per share for
2003.

Net interest income is the largest component of the Corporation's income and is
affected by the interest rate environment and the volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
decreased $509,000 from $9.9 million to $9.4 million, or 5.1%, primarily due to
a decline in the yields on interest-earning assets, both investment securities
and loans, partially offset by lower rates paid on interest-bearing liabilities
coupled with a modest shift of deposits from higher rate certificates of deposit
to lower rate checking and money market accounts. The Corporation's net interest
margin of 2.77% in 2003 declined 18 basis points from 2.95% in 2002 mainly
resulting from a reduction in the net interest rate spread by 1.0 basis points
from 2.55% in 2002 to 2.54% in 2003. The benefit of the decline in the rate paid
on interest-bearing liabilities of 90 basis points from 3.81% in 2002 to 2.92%
in 2003 was more than offset by the reduction in the yield on interest-earning
assets of 98 basis points from 6.36% in 2002 to 5.46% in 2003. (See the table
under Average Balances, Interest Rates and Yields). Management expects the
current level of deposit costs to increase in the second half of 2004 and
subsequent years since the general level of interest rates is expected to rise.

          See accompanying notes to consolidated financial statements.

                                                                              13
<PAGE>

The provision for loan losses for the year ended December 31, 2003, was
$286,000, a decrease of $57,000, compared to $343,000 for the year ended
December 31, 2002. Non-interest income increased $550,000 to $3.6 million for
the full year 2003 above the prior years results, primarily due to an increase
in deposit service charges and other non-interest income. Non-interest expense
increased $93,000 from $9.1 million at December 31, 2002, to $9.2 million at
December 31, 2003, primarily the result of increased professional services and
other non-interest expense. Income taxes decreased $149,000 from $1.2 million at
December 31, 2002, to $1.1 million at December 31, 2003, as a result of an
increase in nontaxable earning assets from the Bank owned life insurance policy.

INTEREST INCOME. Total interest income of $18.6 million for the year ended
December 31, 2003 decreased $2.8 million, or 13.2%, from $21.4 million for the
year ended December 31, 2002. This decrease is due primarily to lower yields on
loans and securities, which was partially offset by an increase in the amount of
interest-earning assets, namely loans receivable. The yield on interest-earning
assets of 5.46% in 2003 declined 90 basis points from 6.36% in 2002, primarily
due to a decline in loan yields. The reduction in yields on total loans of 99
basis points in 2003 to 5.82% from 6.81% in 2002 was the largest contributor to
the declining interest income. There was an increase in average gross loan
balances in 2003 of $24.8 million, or 9.2%, primarily in commercial mortgage
loans and 1-4 family residential mortgages, partially offset the reduction of
interest income for loans. Interest income from securities and other investments
declined by $1.5 million in 2003 from the prior year principally due to a
decline in average interest-earning assets of $18.6 million, or 31.0%, in 2003
versus 2002 and a reduction in the average yield of 176 basis points from 4.89%
in 2002 to 3.13% in 2003. (See the table under Average Balances, Interest Rates
and Yields)

INTEREST EXPENSE. Total interest expense of $9.1 million for the year ended
December 31, 2003, decreased by $2.3 million, or 20.2%, compared to $11.5
million for the year ended December 31, 2002. The decrease was primarily rate
driven as lower rates were paid on all deposit accounts and the deposit mix
shifted modestly from generally higher cost certificates of deposit to lower
rate checking and money market accounts. The total cost of funds declined by 89
basis points year over year as rates paid on interest-bearing liabilities of
3.81% in 2002 declined to 2.92% in 2003. Overall, interest expense on deposits,
which included brokered certificates of deposit, decreased $2.1 million or 28.8%
for the year ended December 31, 2003 from $7.3 million in December 31, 2002 to
$5.2 million at December 31, 2003. Interest expense on FHLB borrowings decreased
$272,000, or 6.5%, from $4.2 million in 2002 to $3.9 million in 2003 due
primarily to a decline of 58 basis points from 5.03% in 2002 to 4.45% in 2003.
An increase in average FHLB advances of $4.9 million in 2003 above the prior
year modestly offset the decline in interest expense. (See the table under
Average Balances, Interest Rates and Yields)

PROVISION FOR LOAN LOSSES. The provision for loan losses totaled $286,000 and
$343,000 for the years ended December 31, 2003 and December 31, 2002,
respectively. The Corporation maintains an allowance for loan losses in an
amount, which in management's judgment, is adequate to absorb probable losses
incurred in the loan portfolio. While management utilizes its best judgment and
information available, ultimate adequacy of the allowance is dependent on a
variety of factors, including performance of the Corporation's loan portfolio,
the economy, changes in real estate values and interest rates and the view of
the regulatory authorities toward loan classifications. The provision for loan
losses is determined by management as the amount to be added to the allowance
for loan losses after net charge-offs have been deducted to bring the allowance
to a level considered adequate to absorb probable losses in the loan portfolio.
The amount of the provision is based on management's regular review of the loan
portfolio and consideration of such

          See accompanying notes to consolidated financial statements.

                                                                              14
<PAGE>

factors as historical loss experience, changes in size and composition of the
loan portfolio and specific borrower considerations, including the ability of
the borrower to repay the loan and the estimated value of the underlying
collateral. Management believes that the total allowance of $1.8 million on
total loan portfolio of $337.4 million at December 31, 2003 is adequate.

The ratio of nonperforming loans to total loans and the allowance for loan
losses to total loans at December 31, 2003 amounted to 0.42% and .53%,
respectively versus 0.69% and 0.70% at December 31, 2002. Net charge-offs of
$353,000 in 2003 increased $59,000 from the prior year's results. The allowance
for loan losses of $1.8 million at December 31, 2003 remained the same as the
prior year-end balance.

Nonperforming loans, of $1.4 million at December 31, 2003, decreased by
$360,000, or 20.2%, from $1.8 million at December 31, 2002. This decrease
occurred primarily in commercial loans and one-to-four family mortgage loans. At
December 31, 2003 approximately $1.3 million, or 89% of the nonperforming loans,
were secured by one-to-four family mortgages where the Corporation is well
secured and has had low loan loss experience.

The Corporation will continue to review its allowance for loan losses and make
further provisions as required dependent upon the economic and asset quality
conditions. Although the Corporation maintains its allowance for loan losses at
a level that it considers to be adequate to provide for probable incurred
losses, there can be no assurance that future losses will not exceed estimated
amounts or that additional provisions for loan losses will not be required in
future periods. In addition, the Corporation's determination as to the amount of
the allowance for loan losses is subject to review by the Office of Thrift
Supervision ("OTS") and the Federal Deposit Insurance Corporation ("FDIC"),
which can order the establishment of additional allowances. At December 31,
2003, the Corporation was aware of no regulatory directives or suggestions that
the Corporation make additional provisions for losses on loans.

NON-INTEREST INCOME. Non-interest income increased $550,000 from $3.1 million in
2002 to $3.6 million in 2003 due to increases in service charges and other
non-interest income modestly offset by a decline in gains on the sale of loans.
Service charges on loans and deposits, including nonsufficient funds charges,
increased approximately $259,000 during 2003 above the prior year's results. The
Corporation believes these deposit service charges continue to be sustainable
due to its overdraft honor program, which provides most customers the courtesy
of honoring checks drawn on insufficient balances, up to limits established by
management. Gains on loan sales of $433,000 in 2003 occurred on the sale of
$18.9 million of new mortgage loan originations. This compares to gains on loan
sales in 2002 of $504,000 on new mortgage loan originations of $29.5 million.
Other non-interest income of $477,000 in the year ended December 31, 2003
increased by $392,000 from $85,000 in the year ended December 31, 2002 due to
the benefit of the full year of added interest income from the Bank owned life
insurance policy, accounted for as fee income, which was purchased by the Bank
in late 2002. In addition, net gains on securities amounted to $196,000 for
fiscal year 2003 versus securities gains of $226,000 for fiscal year 2002.

NON-INTEREST EXPENSE. Total non-interest expense increased modestly, by $93,000,
or only 1.0% in 2003, from $9.1 million in 2002 to $9.2 million in 2003. The
increase is primarily due to increases in professional services, state franchise
taxes and other non-interest expense. Professional services increased $122,000
from $614,000 in 2002 to $736,000 in 2003, due primarily to the consulting
expense related to the overdraft honor program. As noted above, the service
charges collected on deposits have more than offset this expenditure. The
contract is scheduled to expire at the end of 2004. State franchise taxes
increased primarily due to a higher level of earnings for the Bank in 2003.
Other non-interest expense of $1.3 million for the period ended December 31,
2003 increased by $47,000, or 3.60%, from $1.3 million for the previous year.
This increase was primarily comprised of loan fees for servicing purchased
mortgage loans and added expenses related to the Bank

          See accompanying notes to consolidated financial statements.

                                                                              15
<PAGE>

owned life insurance. Other major categories of non-interest expense consist of
salaries and wages, data processing, advertising, franchise taxes, telephone,
and printing and supplies.

INCOME TAX EXPENSE. Income tax expense was $1.1 million for the year ended
December 31, 2003, a decrease of $149,000, or 12.6%, from the same period the
prior year. The reduction in income taxes occurred primarily due to the addition
of $8.4 million of Bank owned life insurance in the fourth quarter of 2002. The
income received on the BOLI, which is nontaxable, resulted in increased revenue
without a corresponding tax liability. The Corporation's effective tax rate for
2003 and 2002 was 29.4% and 33.6%, respectively. The addition of the Bank owned
life insurance in 2002 was the primary factor in the reduction in the effective
tax rate for the Company.

COMPARISON OF YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001

The Corporation's results of operations depend primarily on the level of its net
interest income and non-interest income and the level of its operating expenses.
Net interest income depends upon the volume of interest-earning assets and
interest-bearing liabilities and the interest rate earned or paid on them. In
addition, the Corporation receives fees from loan originations, loan sales, late
payments, loan servicing and payments for service related to transaction and
other deposit accounts, and from dividends on its FHLB stock.

GENERAL. Net income for the year ended December 31, 2002, was $2.3 million, an
increase of $472,000, or 25.2%, compared to the year ended December 31, 2001.
The increase was primarily the result of an increase in non-interest income in
2002 of $1.2 million, offset in part by an increase in total non-interest
expense. In addition, net interest income grew by $400,000. The returns on
average assets and average shareholders' equity in 2002 were 0.68% and 5.47%,
respectively, compared to 0.54% and 4.43% in 2001. Basic earnings per share
increased $.28 per share from $1.08 per share for 2001 to $1.36 per share for
2002.

Net interest income is the largest component of the Corporation's income and is
affected by the interest rate environment and volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
increased $400,000 from $9.5 million to $9.9 million, or 4.2%, primarily due to
lower interest rates on interest-bearing liabilities as the shift of deposits
went from certificates of deposit to checking and money market accounts,
partially offset by lower rates on loans and securities. The continued general
decrease in rates paid on liabilities during the year 2002 positively impacted
the Corporation's net interest margin, which increased 12 basis points from
2.83% in 2001 to 2.95% in 2002. The average cost of funds decreased to 3.81% in
2002 from 5.04% in 2001.

The provision for loan losses for the year ended December 31, 2002, was
$343,000, a decrease of $15,000 compared to $358,000 for the year ended December
31, 2001. Non-interest income increased $1.2 million to $3.1 million primarily
due to an increase in deposit fees, service charges, security sales, and gains
on loan sales. Non-interest expense increased $920,000, from $8.2 million at
December 31, 2001, to $9.1 million at December 31, 2002, primarily the result of
increases in salaries, benefits and professional services. Income taxes
increased $177,000 from $1.0 million at December 31, 2001, to $1.2 million at
December 31, 2002, as a result of higher tax expense associated with the
additional net income.

INTEREST INCOME. Total interest income decreased $3.3 million, or 13.5%, for the
year ended December 31, 2002, compared to the prior year. This decrease is due
primarily to lower yields on loans and securities and, to a lesser extent, a
decrease in volume. Total gross loans decreased 4.6% with the decrease primarily
in one-to-four family real estate loans. With the overall decrease in interest
rates during the year, new loans were added with lower yields during 2002
compared to new loans added during 2001. Interest from securities

          See accompanying notes to consolidated financial statements.

                                                                              16
<PAGE>

and other sources fell by $250,000 primarily due to lower yields on securities
and overnight investments partially offset by an increase in the average
balances of securities held for sale.

INTEREST EXPENSE. Total interest expense decreased $3.7 million or 24.6% for the
year ended December 31, 2002, compared to the prior year 2001. The decrease was
due primarily to lower rates paid on all deposit accounts and the shift from
certificates of deposit to checking and money market accounts, and to a lesser
extent, a decrease in volume. Overall, interest expense on deposits decreased
$3.0 million, or 29.3%, for the year ended December 31, 2002 from $10.3 million
in December 31, 2001 to $7.3 million in December 31, 2002. Interest on FHLB
borrowings decreased $724,000, or 14.7%, from $4.9 million in 2001 to $4.2
million in 2002 due to a decrease in borrowing costs and a decrease in average
outstanding borrowings from the FHLB.

PROVISION FOR LOAN LOSSES. The provision for loan losses totaled $343,000 and
$358,000 for the year ended December 31, 2002 and December 31, 2001. The
Corporation maintains an allowance for loan losses in an amount, which, in
management's judgment, is adequate to absorb probable losses in the loan
portfolio. Management believed that the total allowance for loan losses of $1.8
million at December 31, 2002, was adequate given the collateral supporting
non-performing loans, local economic conditions, the level of impaired and
non-performing loans, and the composition of the loan portfolio.

Net charge-offs were $232,000 and $328,000 for the years ended December 31, 2002
and December 31, 2001 respectively. Allowance for loan loss increased $111,000
from $1.7 million in 2001 to $1.8 million in 2002. During the same period,
nonresidential and commercial balances increased $15.8 million. With respect to
the higher concentrations in nonresidential and commercial loans, management
believes that the total allowance of $1.8 million on total loans of $260 million
at December 31, 2002 is adequate.

Non-performing loans decreased to $1.8 million at December 31, 2002 from $2.8
million at December 31, 2001. This decrease occurred primarily in commercial
loans and one-to-four family mortgage loans. At December 31, 2002 approximately
$1.5 million, or 86%, of the non-performing loans, were secured by one-to-four
family mortgages where the Corporation is well secured and has had low loan loss
experience.

NON-INTEREST INCOME. Non-interest income increased $1.2 million from $1.9
million in 2001 to $3.1 million in 2002. Service charges on loans and deposits
increased approximately $675,000 during 2002. Service charges on deposits,
including non-sufficient funds and ATM charges, increased $589,000. The
Corporation believes these deposit service charges are sustainable due to its
new overdraft honor program, which provides to most customers the courtesy of
honoring checks drawn on insufficient balances, up to limits established by
management. Loan service and prepayment fees increased $85,000 due to increased
volume from lower rates during the year. Additionally, gain on loan sales
increased $167,000 to $504,000 in 2002 due to the sale of $29.5 million of new
mortgage loan originations. This compares to gains on loan sales in 2001 of
$337,000 on new mortgage loan originations of $13.7 million. In addition, gains
on securities increased by $249,000 to $226,000 as of December 31, 2002 compared
to a loss of $23,000 for December 31, 2001.

          See accompanying notes to consolidated financial statements.

                                                                              17
<PAGE>

NON-INTEREST EXPENSE. Total non-interest expense increased 11.2% in 2002, from
$8.2 million in 2001 to $9.1 million in 2002. The increase is primarily due to
increases in salaries and benefits of $673,000 and an increase in occupancy
expense of $22,000. Professional services increased $106,000 from $508,000 in
2001 to $614,000 in 2002. This is due primarily to the fees payable to the
consultants on the overdraft honor program. As noted above, the service charges
on deposits have more than offset this expenditure. Other non-interest expense
consists of items such as data processing, marketing, franchise taxes,
telephone, printing and supplies and loan expenses. Additionally, included in
the 2002 non-interest expense totals is approximately $396,000 of expenses
related to the Corporation's Centerville, Ohio branch, which opened in September
2001.

INCOME TAX EXPENSE. Income tax expense was $1.2 million for the year ended
December 31, 2002, an increase of $177,000 from the same period of the prior
year. Income taxes increased primarily due to higher net income. The
Corporation's effective tax rate for 2002 and 2001 was 33.6% and 35.0%,
respectively.

          See accompanying notes to consolidated financial statements.

                                                                              18
<PAGE>

AVERAGE BALANCES, INTEREST RATES AND YIELDS. The following table presents for
the periods indicated the total dollar amount of interest income from average
interest-earning assets and the resultant yields, as well as the interest
expense on average interest-bearing liabilities, expressed both in dollars and
rates paid. No tax equivalent adjustments were made. All average balances are
monthly average balances. Nonaccruing loans have been included in the table as
loans carrying a zero yield. The average balance of securities available for
sale includes unrealized gains and losses.

<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                        ---------------------------------------------------------------------------------------------
                                     2003                             2002                            2001
                        ------------------------------  ------------------------------- -----------------------------
                          Average   Interest              Average    Interest             Average    Interest
                        Outstanding Earned/   Yield/    Outstanding   Earned/  Yield/   Outstanding   Earned/  Yield/
                          Balance    Paid      Rate       Balance      Paid     Rate      Balance      Paid     Rate
                         ---------  --------  ------    -----------   ------    -----   -----------  --------   -----
                                                                (Dollars in Thousands)
<S>                     <C>         <C>       <C>       <C>          <C>       <C>      <C>          <C>       <C>
Interest-earning
assets:
    Loans, net          $ 293,856   $ 17,092  5.82%     $   269,060   18,316    6.81%   $  279,612   $ 21,403   7.65%
    Securities             34,279      1,074  3.13           52,754    2,578    4.89        42,836      2,600   6.07
    Interest-bearing
    deposits                2,919         29  0.99            5,619       84    1.49         5,856        161   2.75
    FHLB stock              9,107        364  4.00            8,720      403    4.62         8,236        554   6.73
                        ---------   --------  ----      -----------   ------    ----    ----------   --------
      Total
      interest-earning
      assets              340,161     18,559  5.46          336,153   21,381    6.36       336,540     24,718   7.34

    Non-earning
    assets                 18,285                            10,137                         10,332
                        ---------                       -----------                     ----------
      Total assets      $ 358,446                       $   346,290                     $  346,872
                        =========                       ===========                     ==========

Interest-bearing
liabilities:
    Time deposits       $ 119,122   $  4,234  3.55      $   121,156    5,670    4.68    $  133,226      7,966   5.98
    Demand and NOW
    deposits               29,064         99  0.34           24,382      123    0.50        19,148        156   0.81
    Savings
    deposits               76,356        881  1.15           71,728    1,462    2.04        60,117      2,146   3.57
    Borrowings             88,466      3,935  4.45           83,599    4,207    5.03        88,898      4,931   5.55
                        ---------   --------  ----      -----------   ------            ----------   --------
      Total
      interest-bearing
      liabilities         313,008      9,149  2.92          300,865   11,462    3.81       301,389     15,199   5.04

    Non-earning
    liabilities             1,677                             2,481                          3,146
                        ---------                       -----------                     ----------
      Total
      liabilities         314,685                           303,346                        304,535

    Equity                 43,761                            42,944                         42,337
                        ---------                       -----------                     ----------

      Total
      Liabilities/
      Equity            $ 358,446                       $   346,290                     $  346,872
                        =========                       ===========                     ==========

Net interest
income                              $  9,410                          $9,919                         $  9,519
                                    ========                          ======                         ========
Net interest rate
  spread                                      2.54%                             2.55%                           2.30%
                                              ====                              ====                            ====
Net earning assets      $  27,153                       $    35,288                     $   35,151
                        =========                       ===========                     ==========
Net yield on average
interest-
    earning assets                            2.77%                             2.95%                           2.83%
                                              ====                              ====                            ====
Average interest-
  earning assets
  to average interest
  -bearing liabilities                  1.09 X                          1.12 X                           1.12 X
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                              19
<PAGE>

RATE/VOLUME ANALYSIS. The following schedule presents the dollar amount of
changes in interest income and interest expense for major components of
interest-earning assets and interest-bearing liabilities. It distinguishes
between the increase or decrease related to changes in average outstanding
balances and changes due to the volatility of interest rates. For each category
of interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (i) changes in volume (i.e., changes in
volume multiplied by new rate) and (ii) changes in rate (i.e., changes in rate
multiplied by old volume). For purposes of this table, changes attributable to
both rate and volume, which cannot be segregated, have been allocated
proportionately to the change due to volume and the change due to rate.

<TABLE>
<CAPTION>
                                            Year Ended December 31,                    Year Ended December 31,
                                    ---------------------------------------     ------------------------------------
                                                 2003 vs. 2002                             2002 vs. 2001
                                    ---------------------------------------     ------------------------------------
                                              Increase                                 Increase
                                             (Decrease)                                (Decrease)
                                               Due to               Total                Due to              Total
                                    -----------------------       Increase      ----------------------     Increase
                                      Volume         Rate        (Decrease)       Volume        Rate      (Decrease)
                                    ---------      --------      ----------     ---------    ---------    ----------
                                                                 (Dollars in Thousands)
<S>                                 <C>            <C>           <C>            <C>          <C>          <C>
Interest-earning assets:
    Loans, net                      $   2,112      $ (3,336)     $   (1,224)    $    (785)   $  (2,302)   $   (3,087)
    Securities                           (749)         (755)         (1,504)          538         (560)          (22)
    Other                                 (22)          (72)            (94)           25         (253)         (228)
                                    ---------      --------      ----------     ---------    ---------    ----------
       Total interest-earning
       assets                       $   1,341      $ (4,163)     $   (2,822)    $    (222)   $  (3,115)   $   (3,337)
                                    =========      ========      ==========     =========    =========    ==========

Interest-bearing liabilities:
    Time deposits                   $    (101)     $ (1,335)     $   (1,436)    $    (676)   $  (1,620)   $   (2,296)
    Demand and NOW deposits                35           (59)            (24)           36          (69)          (33)
    Savings deposits                      101          (682)           (581)          359       (1,043)         (684)
    Borrowings                            273          (545)           (272)         (283)        (441)         (724)
                                    ---------      --------      ----------     ---------    ---------    ----------

       Total interest-bearing
       liabilities                  $     308      $ (2,621)     $   (2,313)    $    (564)   $  (3,173)   $   (3,737)
                                    =========      ========      ==========     =========    =========    ==========

Net interest income                                              $     (509)                              $      400
                                                                 ==========                               ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                              20
<PAGE>

ASSET/LIABILITY MANAGEMENT AND MARKET RISK

The Corporation's primary market risk exposure is interest rate risk and, to a
lesser extent, liquidity risk. Interest rate risk is the risk that the
Corporation's financial condition will be adversely affected due to movements in
interest rates. The income of financial institutions is primarily derived from
the excess of interest earned on interest-earning assets over the interest paid
on interest-bearing liabilities. Accordingly, the Corporation places great
importance on monitoring and controlling interest-rate risk. The measurement and
analysis of the exposure of the Corporation's primary operating subsidiary,
Cornerstone Bank, to changes in the interest rate environment are referred to as
asset/liability management. One method used to analyze the Corporation's
sensitivity to changes in interest rates is the "net portfolio value" ("NPV")
methodology used by the OTS as part of its capital regulations.

NPV is generally considered to be the present value of the difference between
expected incoming cash flows on interest-earning and other assets and expected
outgoing cash flows on interest-bearing and other liabilities. The application
attempts to quantify interest rate risk as the change in the NPV, which would
result from a theoretical basis point (1 basis point equals .01%) change in
market interest rates. Changes of 100 and 200 basis point increases and
decreases in market interest rates are considered in the measurement of the
Corporation's interest rate risk.

Presented on the following page is an analysis of Cornerstone's interest rate
risk as of December 31, 2003, and December 31, 2002, as measured by changes in
NPV for instantaneous and sustained parallel shifts of 100 to 200 basis points
in market interest rates. The tables also contain the policy limits set by the
Board of Directors as the maximum change in NPV the Board of Directors deems
advisable in the event of various changes in interest rates. Such limits have
been established with consideration to the impact on the NPV capital position of
various rate changes and the institution's strong capital position.

As illustrated in the tables, the institution's NPV is more sensitive to rising
rates than declining rates. From an overall perspective, such difference in
sensitivity occurs principally because, as rates rise, borrowers do not prepay
fixed-rate loans as quickly as they do when interest rates are declining. Thus,
in a rising interest rate environment, because Cornerstone has primarily
fixed-rate loans within its loan portfolio, the amount of interest Cornerstone
would receive on its loans would increase relatively slowly as loans are slowly
prepaid and new loans at higher rates are originated. Moreover, the interest
Cornerstone would pay on its deposits would increase relatively rapidly because
Cornerstone's deposits generally have shorter periods to repricing.

          See accompanying notes to consolidated financial statements.

                                                                              21
<PAGE>

<TABLE>
<CAPTION>
                                           December 31, 2003                   December 31, 2002
   Change in       Board limit             -----------------                   -----------------
 Interest Rate       Minimum           $Change   %Change   NPV              $Change    %Change   NPV
(Basis Points)      NPV Ratio          In NPV    In NPV   Ratio             In NPV     In NPV   Ratio
-------------       ---------          ------    ------   -----             ------     ------   -----
                                        (Dollars in Thousands)
<S>                <C>                 <C>       <C>      <C>              <C>         <C>      <C>
   +200              6.75              (4,928)    (11)    11.72%           (5,756)       (12)   11.72
   +100              7.25              (4,089)     (9)    12.57            (2,103)        (4)   12.57
     -               8.00                   -       -     13.01                 -          -    13.01
   (100)             9.00               1,019       2     13.17               978          2    13.17
   (200)             9.00              (1,318)     (3)    13.40             2,234          5    13.40
</TABLE>

As of December 31, 2003, the percentage change in NPV resulting from certain
changes in interest rates were within the policy limits of the institution's
Board of Directors. As the table above suggests, in a rising interest rate
environment, Cornerstone's net interest income could be negatively affected.
Moreover, rising interest rates could negatively affect Cornerstone's earnings
and thereby the Corporation's earnings due to diminished loan demand. As part of
its interest rate risk strategy, Cornerstone has attempted to utilize
adjustable-rate and short-term duration loans and investments.

As with any method of measuring interest rate risk, certain shortcomings are
inherent in the NPV approach. For example, although certain assets and
liabilities may have similar maturities or periods of repricing, they may react
in different degrees to changes in market interest rates. Also, the interest
rates on certain types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag
behind changes in market rates. Further, in the event of a change in interest
rates, expected rates of prepayment on loans and mortgage-backed securities and
early withdrawal levels from certificates of deposit would likely deviate
significantly from those assumed in making risk calculations.

Consideration also needs to be given to the current low interest rate
environment. Many of the Bank's deposits are within 100 and 200 basis points of
a zero interest rate. If overall rates and loan yields continue to decline, the
Bank's ability to reduce deposit rates will be limited by the zero interest rate
floor. This could negatively affect earnings and future NPV.

          See accompanying notes to consolidated financial statements.

                                                                              22
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Western Ohio Financial Corporation's liquidity, primarily represented by cash
equivalents, is a result of its operating, investing and financing activities.
These activities are summarized below for the years ended December 31, 2003,
2002 and 2001.

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                    2003          2002          2001
                                                -----------   -----------   -----------
<S>                                             <C>           <C>           <C>
Net income                                      $     2,501   $     2,347   $     1,875
Adjustments to reconcile net income to
    Net cash from operating activities                  152         1,041         1,375
                                                -----------   -----------   -----------
Net cash from operating activities                    2,653         3,388         3,250
Net cash from investment activities                 (65,576)       (2,587)       23,237
Net cash from financing activities                   50,464         1,596       (14,377)
                                                -----------   -----------   -----------
Net change in cash and cash equivalents             (12,459)        2,397        12,110
Cash and cash equivalents at
    Beginning of period                              19,312        16,915         4,805
                                                -----------   -----------   -----------
Cash and cash equivalents at
    End of period                               $     6,853   $    19,312   $    16,915
                                                ===========   ===========   ===========
</TABLE>

At December 31, 2003, the Corporation had no outstanding commitments to sell
loans or securities.

OTS regulations presently require Cornerstone Bank to maintain sufficient
liquidity to assure its safe and sound operation. To that end, Cornerstone Bank
maintains investments generally having maturities of five years or less, sells
loans into the secondary market and borrows funds from the FHLB. These
activities are intended to provide a source of relatively liquid funds on which
Cornerstone may rely, if necessary, to fund deposit withdrawals or other
short-term funding needs.

The Corporation's primary sources of funds consist of deposits and repayments of
loans and interest earned on securities. The Bank maintains a higher ratio of
loans to deposits in comparison with other similarly sized financial
institutions. Historically, this factor has not had a material effect on the
Corporation's liquidity as it has utilized other potential sources of funds
including borrowings from the FHLB of Cincinnati to maintain liquidity and to
meet operating expenses. In 2003, the Corporation also utilized brokered
certificates of deposit, which will primarily have maturity dates of three years
or less, to fund asset growth. Management believes that loan sales and
repayments and other sources of funds will be adequate to meet the Corporation's
foreseeable liquidity needs. The Corporation anticipates that it will have
sufficient funds available to meet current loan commitments. At December 31,
2003, the Corporation had outstanding commitments to extend credit that amounted
to $ 41.1 million.

OTS regulations require that financial institutions maintain "tangible capital"
of not less than 1.5% of the financial institution's adjusted total assets.
Tangible capital is defined as "core capital" less any intangible assets. Core
capital is comprised of common shareholders' equity (including retained
earnings). OTS prompt corrective action regulations require core capital to be
maintained at 3% of total institution assets. The following table indicates the
requirement for core capital is 4% because that is the level that the OTS prompt
corrective action regulations require to be considered adequately capitalized.

          See accompanying notes to consolidated financial statements.

                                                                              23
<PAGE>

OTS regulations require the institution to maintain "risk-based capital" in an
amount not less than 8% of risk-weighted assets. Risk-based capital is defined
as core capital plus certain additional items. Cornerstone's adjustment to core
capital included the portion of the loan and lease loss allowance over the
amount required for loans classified as loss. This adjustment is $1.8 million as
of December 31, 2003.

The following table summarizes Cornerstone's regulatory capital requirements and
actual capital at December 31, 2003.

<TABLE>
<CAPTION>
                                                                                                 Excess of Actual
                                                                                               Capital Over Current
                                 Actual Capital               Current Requirement                   Requirement
                             ----------------------         ----------------------            ----------------------
                              Amount        Percent           Amount       Percent             Amount        Percent
                              ------        -------           ------       -------             ------        -------
                                                              (Dollars in thousands)
<S>                          <C>            <C>               <C>          <C>                <C>            <C>
Tangible Capital             $41,295         10.34%           $5,993         1.50%            $35,302          8.84%
Core Capital                  41,295         10.34            15,980         4.00              25,315          6.34
Risk-Based Capital            43,087         14.66            23,510         8.00              19,577          6.66
</TABLE>

See Note 11 of Notes to Consolidated Financial Statements.

The Corporation has various financial obligations, including contractual
obligations and commitments, that may require future cash payments.

The following table provides significant fixed and determinable contractual
obligations to third parties by payment date at December 31, 2003. Further
discussion of the nature of each obligation is provided in Notes 5 and 6 to the
consolidated financial statements.

<TABLE>
<CAPTION>
                                            One Year     One to Three      Three to        Over Five
                                             or Less         Years        Five Years         Years          Total
                                             -------         -----        ----------         -----          -----
<S>                                         <C>          <C>              <C>              <C>            <C>
Deposits without a maturity                 $108,869        $    --         $    --        $    --        $108,869
Consumer and Brokered Deposits                48,086         78,824          11,318          1,584         139,812
FHLB Advances                                 23,386          8,424          52,754         18,909         103,473
</TABLE>

The following table indicates the amounts of significant commitments at December
31, 2003. Further discussion is provided in Note 8 to the consolidated financial
statements.

<TABLE>
<CAPTION>
                                                          Fixed         Variable
                                                           Rate           Rate           Total
                                                       -----------     ----------     -----------
<S>                                                    <C>             <C>            <C>
First mortgage loans                                   $       973     $        -     $       973
Consumer and other loans                                         -            111             111
Commercial loans                                                 -          6,087           6,087
Home equity lines of credit                                      -         16,776          16,776
Commercial lines of credit                                       -          7,231           7,231
Stand-by letters of credit                                       -          9,919           9,919
                                                       -----------     ----------     -----------
                                                       $       973     $   40,124     $    41,097
                                                       ===========     ==========     ===========
</TABLE>

Commitments to extend credit, including loan commitments, standby letters of
credit, and commercial letters of credit do not necessarily represent future

          See accompanying notes to consolidated financial statements.

                                                                              24
<PAGE>

cash requirements, in that these commitments often expire without being drawn
upon.

NEW ACCOUNTING STANDARDS

During 2003, the Company adopted FASB Statement 149, Amendment of Statement 133
on Derivative instruments and Hedging Activities, requiring that commitments to
make mortgage loans be accounted for as derivatives if the loans are to be held
for sale. FASB Statement 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equities requires reporting trust
preferred securities and mandatory redeemable shares as liabilities on the
balance sheet. As of December 31, 2003 the Company did not have financial
instruments with these characteristics on the balance sheet. FASB Statement 132
(revised in 2003), Employers' Disclosures about Pensions and Other
Postretirement Benefits, was revised in 2003 to require additional disclosures
as to expense recorded, assets, obligations and cash flows related to these
benefits or retirement plans. FASB Interpretation 45, Guarantor's Accounting and
Disclosure Requirements for Guarantees, requires recognizing the fair values of
guarantees, such as standby letters of credit, performance guarantees and
guarantees of the indebtedness of others. FASB Interpretation 46 (revised in
December, 2003), Consolidation of Variable Interest Entities, changes the
accounting model for consolidation from one based on consideration of control
through voting interests to consideration as to whether the entity has
sufficient equity at risk to enable it to operate without additional financial
support or whether voting rights in the entity are not proportional to the
equity interest. The adoption of these new standards, where applicable, did not
materially affect the Company's operating results or financial condition.

IMPACT OF INFLATION (DEFLATION) AND CHANGING PRICES

The consolidated financial statements and related data presented herein have
been prepared according to accounting principles generally accepted in the
United States of America which require the measurement of financial position and
operating results primarily in terms of historical dollars without considering
changes in the relative purchasing power of money over time due to inflation and
more recently, the impact of deflation. An exception to historical cost
presentation is the valuation of securities available for sale under FASB No.
115. The primary assets and liabilities of the Corporation are monetary in
nature. As a result, interest rates have a more significant impact on the
Corporation's performance than the effects of general levels of inflation and
deflation. Interest rates do not necessarily move in the same direction or
magnitude as the prices of goods and services.

          See accompanying notes to consolidated financial statements.

                                                                              25
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Western Ohio Financial Corporation
Springfield, Ohio

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

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Western Ohio
Financial Corporation as of December 31, 2003 and 2002, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles general accepted in
the United States of America.

                                               Crowe Chizek and Company LLC

Columbus, Ohio
February 5, 2004

          See accompanying notes to consolidated financial statements.

                                                                              26
<PAGE>

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2003 and 2002
                    (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                           2003            2002
                                                                                           ----            ----
<S>                                                                                   <C>              <C>
ASSETS
     Cash and due from financial institutions                                         $      5,558     $      5,243
     Overnight deposits in other financial institutions                                      1,295           13,947
     Interest-bearing deposits in other financial institutions                                   -              122
                                                                                      ------------     ------------
         Total cash and cash equivalents                                                     6,853           19,312
     Securities available for sale                                                          32,735           46,001
     Federal Home Loan Bank stock                                                            9,335            8,971
     Loans, net of allowance of $1,801 in 2003 and $1,806 in 2002                          334,469          256,883
     Real estate owned                                                                         323              494
     Premises and equipment, net                                                             4,192            4,352
     Accrued interest receivable                                                             1,879            1,511
     Bank owned life insurance                                                               9,122            8,683
     Other assets                                                                              632              588
                                                                                      ------------     ------------

              Total assets                                                            $    399,540     $    346,795
                                                                                      ============     ============

LIABILITIES
     Deposits
         Non-interest-bearing deposits                                                $     13,149     $     10,778
         Interest-bearing deposits                                                         235,532          208,391
     Borrowed funds                                                                        103,473           81,243
     Advance payments from borrowers for taxes and insurance                                   638              644
     Other liabilities                                                                       2,391            2,534
                                                                                      ------------     ------------
         Total liabilities                                                                 355,183          303,590

SHAREHOLDERS' EQUITY
     Common stock, $.01 par value; 7,250,000 shares authorized;
       2,645,000 shares issued                                                                  26               26
     Additional paid-in capital                                                             40,709           40,642
     Retained earnings                                                                      21,626           20,855
     Unearned employee stock ownership plan shares                                            (119)            (357)
     Unearned management recognition plan shares                                               (51)             (71)
     Shares held by deferred compensation plan                                                (325)            (260)
     Treasury stock; 865,177 and 889,889 shares, at cost                                   (17,493)         (18,102)
     Accumulated other comprehensive income (loss)                                             (16)             472
                                                                                      ------------     ------------
         Total shareholders' equity                                                         44,357           43,205
                                                                                      ------------     ------------

              Total liabilities and shareholders' equity                              $    399,540     $    346,795
                                                                                      ============     ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                              27
<PAGE>

                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 2003, 2002, and 2001
                  (Dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                                                              2003           2002           2001
                                                                              ----           ----           ----
<S>                                                                      <C>            <C>             <C>
INTEREST AND DIVIDEND INCOME
     Loans, including fees                                               $    17,092    $    18,316     $    21,403
     Securities                                                                1,074          2,578           2,600
     Interest-bearing deposits and overnight funds                                29             84             161
     Other interest and dividend income                                          364            403             554
                                                                         -----------    -----------     -----------
         Total interest income                                                18,559         21,381          24,718

INTEREST EXPENSE
     Deposits                                                                  5,214          7,255          10,268
     Borrowed funds                                                            3,935          4,207           4,931
                                                                         -----------    -----------     -----------
         Total interest expense                                                9,149         11,462          15,199
                                                                         -----------    -----------     -----------

NET INTEREST INCOME                                                            9,410          9,919           9,519

Provision for loan losses                                                        286            343             358
                                                                         -----------    -----------     -----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                            9,124          9,576           9,161

NON-INTEREST INCOME
     Service charges                                                           2,537          2,278           1,603
     Net gain on sale of securities                                              196            226             (23)
     Net gain on sale of loans held for sale                                     433            504             337
     Other                                                                       477             85              22
                                                                         -----------    -----------     -----------
         Total non-interest income                                             3,643          3,093           1,939

NON-INTEREST EXPENSE
     Salaries and employee benefits                                            4,747          4,718           4,045
     Occupancy and equipment                                                     893            928             906
     Federal deposit insurance                                                    34             38              40
     State franchise taxes                                                       562            495             531
     Professional services                                                       736            614             508
     Advertising                                                                 133            227             322
     Data processing                                                             789            828             811
     Other                                                                     1,335          1,288           1,053
                                                                         -----------    -----------     -----------
         Total non-interest expense                                            9,229          9,136           8,216
                                                                         -----------    -----------     -----------

INCOME BEFORE INCOME TAXES                                                     3,538          3,533           2,884

Income tax expense                                                             1,037          1,186           1,009
                                                                         -----------    -----------     -----------

NET INCOME                                                               $     2,501    $     2,347     $     1,875
                                                                         ===========    ===========     ===========

EARNINGS PER COMMON SHARE
     Basic                                                               $      1.44    $      1.36     $      1.08
                                                                         ===========    ===========     ===========
     Diluted                                                             $      1.42    $      1.35     $      1.08
                                                                         ===========    ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                              28
<PAGE>

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                  Years ended December 31, 2003, 2002, and 2001
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                              2003          2002           2001
                                                                              ----          ----           ----
<S>                                                                      <C>            <C>             <C>
NET INCOME                                                               $     2,501    $     2,347     $     1,875

OTHER COMPREHENSIVE INCOME, NET OF TAX
     Unrealized gain (loss) on available for sale securities
       arising during the period                                                (357)           558             788
     Reclassification adjustment for amounts realized on
       securities sales included in net income                                  (131)          (149)             15
                                                                         -----------    -----------     -----------
         Total other comprehensive income, net of tax                           (488)           409             803
                                                                         ------------   -----------     -----------

COMPREHENSIVE INCOME                                                     $     2,013    $     2,756     $     2,678
                                                                         ===========    ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                              29
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  Years ended December 31, 2003, 2002, and 2001
                    (Dollars in thousands, except share data)

<TABLE>
<CAPTION>

                                                                                             Additional
                                                                       Shares       Common     Paid-In     Retained
                                                                    Outstanding     Stock      Capital     Earnings
                                                                    -----------   ---------  ----------   ---------
<S>                                                                 <C>           <C>        <C>          <C>
BALANCE AT JANUARY 1, 2001                                            1,815,834   $      26   $  40,617   $  20,065
   Net income                                                                 -           -           -       1,875
   Cash dividends declared - $1.00 per share                                  -           -           -      (1,709)
   Purchase of treasury shares                                          (64,600)          -           -           -
   Commitment to release employee stock ownership plan shares                 -           -          34           -
   Shares earned under management recognition plan, including
     tax benefit realized on vesting of plan shares                           -           -           -           -
   Management recognition plan shares awarded, net of forfeitures           600           -           -           -
   Shares purchased for deferred compensation plan                            -           -           4           -
   Stock options exercised, including tax benefit                         3,667           -         (33)          -
    Change in net unrealized gain (loss) on securities available
     for sale, net of reclassification and tax effects                        -           -           -           -
                                                                    -----------   ---------   ---------   ---------

BALANCE AT DECEMBER 31, 2001                                          1,755,501          26      40,622      20,231
   Net income                                                                 -           -           -       2,347
   Cash dividends declared-$1.00 per share                                    -           -           -      (1,723)
   Purchase of treasury shares                                          (22,200)          -           -           -
   Commitment to release employee stock ownership plan shares                 -           -          61           -
   Shares earned under management recognition plan, including
     tax benefit realized on vesting of plan shares                           -           -           -           -
   Management recognition plan shares awarded, net of forfeitures         3,024           -           -           -
   Shares purchased for deferred compensation plan                            -           -          87           -
   Stock options exercised, including tax benefit                        18,786           -        (128)          -
   Change in net unrealized gain (loss) on securities available
     for sale, net of reclassification and tax effects                        -           -           -           -
                                                                    -----------   ---------   ---------   ---------

BALANCE AT DECEMBER 31, 2002                                          1,755,111          26      40,642      20,855
   Net income                                                                 -           -           -       2,501
   Cash dividends declared-$1.00 per share                                    -           -           -      (1,730)
   Purchase of treasury shares                                          (31,500)          -           -           -
   Commitment to release employee stock ownership plan shares                 -           -         140           -
   Shares earned under management recognition plan, including
     tax benefit realized on vesting of plan shares                           -           -           -           -
   Management recognition plan shares awarded, net of forfeitures          (173)          -           -           -
   Shares purchased for deferred compensation plan                            -           -          64           -
   Stock options exercised, including tax benefit                        56,385           -        (137)          -
   Change in net unrealized gain (loss) on securities available
     for sale, net of reclassification and tax effects                        -           -           -           -
                                                                    -----------   ---------   ---------   ---------

BALANCE AT DECEMBER 31, 2003                                          1,779,823   $      26   $  40,709   $  21,626
                                                                    ===========   =========   =========   =========

<CAPTION>
                                                                     Unearned               Accumulated
                                                                     Employee                  Other
                                                                      Benefit    Treasury  Comprehensive
                                                                    Plan Shares    Stock       Income          Total
                                                                    -----------  --------  -------------       -----
<S>                                                                 <C>          <C>       <C>               <C>
BALANCE AT JANUARY 1, 2001                                           $   (935)   $(17,223)   $   (740)       $  41,810
   Net income                                                               -           -           -            1,875
   Cash dividends declared - $1.00 per share                                -           -           -           (1,709)
   Purchase of treasury shares                                              -      (1,200)          -           (1,200)
   Commitment to release employee stock ownership plan shares             238           -           -              272
   Shares earned under management recognition plan, including
     tax benefit realized on vesting of plan shares                        41           -           -               41
   Management recognition plan shares awarded, net of forfeitures         (11)         11           -                -
   Shares purchased for deferred compensation plan                          -          (4)          -                -
   Stock options exercised, including tax benefit                           -          86           -               53
   Change in net unrealized gain (loss) on securities available
     for sale, net of reclassification and tax effects                      -           -         803              803
                                                                     --------    --------    --------        ---------

BALANCE AT DECEMBER 31, 2001                                             (667)    (18,330)         63           41,945
   Net income                                                               -           -           -            2,347
   Cash dividends declared-$1.00 per share                                  -           -           -           (1,723)
   Purchase of treasury shares                                              -        (443)          -             (443)
   Commitment to release employee stock ownership plan shares             238           -           -              299
   Shares earned under management recognition plan, including
     tax benefit realized on vesting of plan shares                        59           -           -               59
   Management recognition plan shares awarded, net of forfeitures         (58)         58           -                -
   Shares purchased for deferred compensation plan                          -         (87)          -                -
   Stock options exercised, including tax benefit                           -         440           -              312
   Change in net unrealized gain (loss) on securities available
     for sale, net of reclassification and tax effects                      -           -         409              409
                                                                     --------    --------    --------        ---------

BALANCE AT DECEMBER 31, 2002                                             (428)    (18,362)        472           43,205
   Net income                                                               -           -           -            2,501
   Cash dividends declared-$1.00 per share                                  -           -           -           (1,730)
   Purchase of treasury shares                                              -        (701)          -             (701)
   Commitment to release employee stock ownership plan shares             238           -           -              378
   Shares earned under management recognition plan, including
     tax benefit realized on vesting of plan shares                        34           -           -               34
   Management recognition plan shares awarded, net of forfeitures         (14)         14           -                -
   Shares purchased for deferred compensation plan                          -         (64)          -                -
   Stock options exercised, including tax benefit                           -       1,295           -            1,158
   Change in net unrealized gain (loss) on securities available
     for sale, net of reclassification and tax effects                      -           -        (488)            (488)
                                                                     --------    --------    --------        ---------

BALANCE AT DECEMBER 31, 2003                                         $   (170)   $(17,818)   $    (16)       $  44,357
                                                                     ========    ========    ========        =========
</TABLE>

          See accompanying notes to consolidated financial statements.

<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2003, 2002, and 2001
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                            2003            2002           2001
                                                                            ----            ----           ----
<S>                                                                      <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                          $     2,501    $     2,347     $     1,875
     Adjustments to reconcile net income to net cash
       from operating activities:
         Net amortization on securities                                          599            422             203
         Compensation expense on ESOP shares                                     378            299             272
         Compensation expense on MRP shares                                       34             59              41
         Depreciation and amortization                                           488            677             692
         FHLB stock dividends                                                   (364)          (403)           (554)
         Net deferred loan fees                                                  131              8              30
         Deferred income taxes                                                   (26)           113             182
         Provision for loan losses                                               286            343             358
         Net realized gain on sales of securities                               (196)          (226)             23
         Net gain on sale of loans                                              (433)          (504)           (337)
         Net gain on sale of real estate owned                                   (27)           (92)              -
         Net change in:
              Bank owned life insurance                                         (439)             -               -
              Other assets and other liabilities                                  90            156             120
              Accrued interest receivable                                       (368)           189             345
                                                                         -----------    -----------     -----------

                  Net cash from operating activities                           2,654          3,388           3,250

CASH FLOWS FROM INVESTING ACTIVITIES
     Securities available for sale:
         Purchases                                                           (20,100)       (29,382)        (14,016)
         Maturities and principal payments                                    22,743         11,599           9,417
         Sales                                                                 9,481         11,855          14,598
     Purchases of loans                                                      (76,485)       (12,763)         (1,582)
     Net (increase) decrease in loans                                         (1,125)        24,556          15,835
     Purchase of Bank owned life insurance                                         -         (8,684)              -
     Premises and equipment expenditures                                        (333)          (143)         (1,035)
     Proceeds from sale of premises and equipment                                  5              -              20
     Proceeds from sale of real estate owned                                     238            375               -
                                                                         -----------    -----------     -----------
                  Net cash from investing activities                         (65,576)        (2,587)         23,237
</TABLE>

                                   (Continued)

                                                                              31
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                  Years ended December 31, 2003, 2002, and 2001
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                             2003           2002           2001
                                                                             ----           ----           ----
<S>                                                                      <C>            <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
     Net change in deposits                                                   29,512         (1,118)         11,955
     Net change in advance payments from borrowers
       for taxes and insurance                                                    (6)           (20)             94
     Net change in short-term borrowings                                      (2,420)       (13,305)        (16,915)
     Proceeds from FHLB advances                                              25,243         21,693           2,500
     Repayments on FHLB advances                                                (593)        (3,800)         (9,155)
     Cash dividends paid                                                      (1,730)        (1,723)         (1,709)
     Proceeds from exercise of stock options                                   1,158            312              53
     Purchase of treasury stock                                                 (701)          (443)         (1,200)
                                                                         -----------    -----------     -----------
                  Net cash from financing activities                          50,463          1,596         (14,377)
                                                                         -----------    -----------     -----------

Net change in cash and cash equivalents                                      (12,459)         2,397          12,110

Cash and cash equivalents at beginning of year                                19,312         16,915           4,805
                                                                         -----------    -----------     -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                 $     6,853    $    19,312     $    16,915
                                                                         ===========    ===========     ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     Cash paid during the year for
         Interest                                                        $     8,983    $    11,670     $    15,584
         Income taxes                                                          1,065          1,010             821
     Supplemental noncash disclosures:
         Transfer from loans to real estate owned                                 40            777               -
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                              32
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principals of Consolidation: The consolidated financial statements include the
accounts of Western Ohio Financial Corporation (Western) and its wholly owned
subsidiary, Cornerstone Bank (Bank), together referred to as the Corporation.
The financial statements of the Bank include the accounts of its wholly-owned
subsidiary, CornerstoneBanc Financial Services, Inc.

Nature of Operations: The Corporation's revenues, operating income and assets
are primarily from the banking industry. The Corporation operates seven offices
in west central Ohio. Loan customers include a wide range of individuals,
businesses and other organizations. Major portions of loans are secured by
various forms of collateral including real estate, business assets, consumer
property and other items. Commercial loans are expected to be repaid from cash
flows from operations of businesses. The Corporation's primary funding source is
deposits from customers in its market area, although borrowings from the Federal
Home Loan Bank and wholesale certificates of deposit are used to support
investment and lending activities. The Corporation also purchases investments
and engages in limited mortgage banking operations.

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

Cash Flow Reporting: Cash and cash equivalents include cash on hand, amounts due
from depository institutions, federal funds sold and interest-bearing deposits
in other financial institutions with original maturities of 90 days or less. Net
cash flows are reported for customer loan and deposit transactions, advance
payments from borrowers for taxes and insurance and short-term borrowings.

Securities: Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value
with unrealized holding gains and losses reported in other comprehensive income.
Securities are classified as trading when held for short-term periods in
anticipation of market gains and are carried at fair value. Other securities
such as Federal Home Loan Bank stock are carried at cost.

Interest income includes amortization of purchase premiums and discounts. Gains
and losses on sales are based on the amortized cost of the specific security
sold. Securities are written down to fair value when a decline in fair value is
not temporary.

Loans: Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at the principal
balance outstanding, net of deferred loan fees and costs and an allowance for
loan losses. Loans held for sale are reported at the lower of cost or market, on
an aggregate basis.

                                   (Continued)

                                                                              33
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over the loan term. Consumer loans are
typically charged off no later than 180 days past due. In all cases, loans are
placed on nonaccrual or charged-off at an earlier date if collection of
principal or interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed
against interest income. Interest received on such loans is accounted for on the
cash basis or cost recovery method, until qualifying for return to accrual.
Loans are returned to accrual status when all the principal and interest amounts
contractually due are brought current and future payments are reasonably
assured.

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

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

A loan is impaired when full payment under the loan terms is not expected.
Impairment is evaluated in total for smaller-balance loans of similar nature
such as residential mortgage, consumer, and home equity loans, and on an
individual loan basis for other loans. If a loan is impaired, a portion of the
allowance is allocated so that the loan is reported, net, at the present value
of estimated future cash flows using the loan's existing rate or at the fair
value of collateral if repayment is expected solely from the collateral.

Foreclosed Assets: Assets acquired through or instead of loan foreclosure are
initially recorded at the lower of cost or fair value when acquired,
establishing a new cost basis. If fair value declines, a valuation allowance is
recorded through expense. Costs after acquisition are expensed.

Premises and Equipment: Land is carried at cost. Premises and equipment are
stated at cost less accumulated depreciation. Building and related components
are depreciated using the straight-line method with useful lives ranging from 5
to 39 years. Furniture, fixtures and equipment are depreciated using the
straight-line method with useful lives ranging from 3 to 5 years. These assets
are reviewed for impairment when events indicate the carrying amount may not be
recoverable. Maintenance and repairs are expensed, and major improvements are
capitalized.

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

                                   (Continued)

                                                                              34
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Bank Owned Life Insurance: The Company has purchased life insurance policies on
certain key executives and directors. Bank owned life insurance is recorded at
its cash surrender value, or the amount that can be realized.

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

Financial Instruments: Financial instruments include off-balance sheet credit
instruments, such as commitments to make loans and standby letters of credit
issued to meet customer financing needs. The face amount for these items
represents the exposure to loss, before considering customer collateral or
ability to repay. Such financial instruments are recorded when they are funded.

Stock Compensation: Employee compensation expense under stock options is
reported using the intrinsic value method. No stock-based compensation cost is
reflected in net income, as all options granted had an exercise plan equal to or
greater than the market price of the underlying common stock at date of grant.
The following table illustrates the effect on net income and earnings per share
if expense was measured using the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock -Based Compensation.

<TABLE>
<CAPTION>
                                 2003           2002              2001
                                 ----           ----              ----
<S>                           <C>           <C>                 <C>
Net income:
      As reported             $   2,501     $     2,347         $  1,875
      Pro forma                   2,496           2,280            1,804
Earnings per share:
      As reported
          Basic               $    1.44     $      1.36         $   1.08
          Diluted                  1.42            1.35             1.08
      Pro forma
          Basic               $    1.44     $      1.32         $   1.04
          Diluted                  1.41            1.31             1.04
</TABLE>

The pro forma effects are computed using option pricing models, using the
following weighted-average assumptions as of grant date.

<TABLE>
<CAPTION>
                                                     2003              2002               2001
                                                     ----              ----               ----
<S>                                                <C>                <C>                <C>
Risk-free interest rate                              3.27%              4.40%              4.87%
Expected option life                               5 Years            5 Years            5 Years
Expected stock price volatility                     15.15              23.36              23.82
Dividend yield                                       3.68%              5.05%              5.59%

Estimated fair value of options granted             $2.85              $3.00              $2.66
</TABLE>

                                   (Continued)

                                                                              35
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Employee Stock Ownership Plan: The cost of shares issued to the employee stock
ownership plan ("ESOP"), but not yet allocated to participants, is shown as a
reduction of shareholders' equity. Compensation expense is based on the market
price of shares as they are committed to be released to participant accounts.
Dividends on allocated ESOP shares reduce retained earnings; dividends on
unearned ESOP shares reduce debt and accrued interest.

Management Recognition Plan: The cost of unearned shares held by the management
recognition plan ("MRP") is shown as a reduction of shareholders' equity. The
cost of shares awarded to participants is amortized to expense as the shares are
earned over the vesting periods of the awards on a straight-line method.

Earnings Per Common Share: Basic earnings per common share is based on net
income divided by the weighted average number of shares outstanding during the
period. ESOP shares are considered outstanding for the calculation unless
unearned. Diluted earnings per common share includes the dilutive effect of
additional potential common shares issuable under stock options. MRP shares are
considered outstanding as they become vested.

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

Loss Contingencies: Loss contingencies, including claims and legal actions
arising in the ordinary course of business, are recorded as liabilities when the
likelihood of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there now are such matters that will have
a material effect on the financial statements.

Restrictions of Cash: The Corporation was required to have $250,000 and $364,000
cash on hand or on deposit with the Federal Reserve Bank to meet regulatory
reserve and clearing requirements at year-end 2003 and 2002. These balances do
not earn interest.

Fair Value of Financial Instruments: Fair value of financial instruments is
estimated using relevant market information and other assumptions, as more fully
disclosed in a separate note. Fair value estimates involve uncertainties and
matters of significant judgment regarding interest rates, credit risk,
prepayments, and other factors, especially in the absence of broad markets for
particular items. Changes in assumptions or in market conditions could
significantly affect the estimates.

Newly Issued But Not Yet Effective Accounting Standards: New accounting
standards on asset retirement obligations, restructuring activities and exit
costs, operating leases, and early extinguishment of debt were issued in 2002.
Management has determined that the new accounting standards adopted in 2003 have
not had a material impact on the Company's financial condition or results of
operations.

                                   (Continued)

                                                                              36
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Dividend Restriction: Banking regulations require the maintenance of certain
capital levels and may limit the amount of dividends paid by the Bank to Western
Ohio Financial Corporation or Western Ohio Financial Corporation shareholders.

Operating Segments: Internal financial information is primarily reported and
aggregated in two lines of business, banking and mortgage banking. While the
chief decision-makers monitor the revenue streams of the various products and
services, the identifiable segments are not material and operations are managed
and financial performance is evaluated on a Company-wide basis. Accordingly, all
of the financial service operations are considered by management to be
aggregated in one reportable operating segment.

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

                                   (Continued)

                                                                              37
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 2 - SECURITIES

Year-end securities available for sale were as follows:

<TABLE>
<CAPTION>
                                                                   Gross          Gross
                                                    Fair        Unrealized      Unrealized
                                                    Value          Gains          Losses
                                                 -----------    -----------     -----------
<S>                                              <C>            <C>             <C>
2003
U.S. government agencies                         $     4,094              8             (4)
Municipal securities                                   6,833             59              -
Mortgage-backed securities                            21,808             14           (100)
                                                 -----------    -----------     ----------

         Total                                   $    32,735    $        81     $     (104)
                                                 ===========    ===========     ==========

2002
U.S. government agencies                         $     2,180    $       128     $        -
Municipal securities                                   6,955             23              -
Mortgage-backed securities                            36,866            595            (30)
                                                 -----------    -----------     ----------

         Total                                   $    46,001    $       746     $      (30)
                                                 ===========    ===========     ==========
</TABLE>

At year-end 2003 and 2002, there were no holdings of securities of any one
issuer, other than the U.S. government and its agencies, in an amount greater
than 10% of shareholders' equity.

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

<TABLE>
<CAPTION>
                                                                   Available for sale
                                                                           Fair
                                                                          Value
                                                                          -----
<S>                                                                <C>
Due in one year or less                                                $        -
Due from one to five years                                                  4,094
Due from five to ten years                                                      -
Due after ten years                                                         6,833
Mortgage-backed securities                                                 21,808
                                                                       ----------

                                                                       $   32,735
                                                                       ==========
</TABLE>

                                   (Continued)

                                                                              38
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 2 - SECURITIES (CONTINUED)

Proceeds of available for sale securities and the gross gains and losses were as
follows:

<TABLE>
<CAPTION>
                                                             2003            2002            2001
                                                             ----            ----            ----
<S>                                                     <C>             <C>              <C>
Proceeds                                                $      9,481    $     11,855     $     14,598
Gross gains                                                      204             234                3
Gross losses                                                       8               8               26
</TABLE>

Securities pledged at year-end 2003 and 2002 had a carrying amount of $ 4,352
and $ 11,020 and were pledged to secure public deposits, borrowings, and for
other purposes as required or permitted by law.

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

<TABLE>
<CAPTION>
                                       Less than 12 Months        12 Months or More
                                       -------------------        -----------------                       Total
                                       Fair     Unrealized      Fair       Unrealized      Fair         Unrealized
Description of Securities              Value       Loss         Value         Loss        Value           Loss
-------------------------              -----       ----         -----         ----        -----           ----
<S>                                    <C>      <C>           <C>          <C>           <C>            <C>
US treasury                            $  --       $ --       $  4,094       $    4      $  4,094         $   4
Municipal securities                      --         --          6,833           --         6,833            --
Mortgage- backed securities              258         --         21,550          100        21,808           100
                                       -----       ----       --------       ------      --------         -----

Total temporarily impaired             $ 258       $ --       $ 32,477       $  104      $ 32,735         $ 104
                                       =====       ====       ========       ======      ========         =====
</TABLE>

NOTE 3 - LOANS

Year-end loans were as follows:

<TABLE>
<CAPTION>

                                                                             2003            2002
                                                                             ----            ----
<S>                                                                     <C>              <C>
First mortgage loans secured by:
    One-to-four family residences                                       $    175,139     $    124,117
    Other properties                                                         113,472           87,031
    Construction properties                                                    3,473            4,644
Other loans:
    Consumer                                                                     749              848
    Commercial                                                                20,107           21,977
    Home equity                                                               24,426           21,587
                                                                        ------------     ------------
         Total loans                                                         337,366          260,204
Less:
    Net deferred loan fees, premiums and discounts                               217             (125)
    Loans in process                                                          (1,313)          (1,390)
    Allowance for loan losses                                                 (1,801)          (1,806)
                                                                        ------------     ------------

         Net loans                                                      $    334,469     $    256,883
                                                                        ============     ============
</TABLE>

There was one loan held for sale as of December 31, 2003 for a total of $1.6
million.

                                   (Continued)

                                                                              39
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 3 - LOANS (Continued)

Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
                                                            2003             2002            2001
                                                            ----             ----            ----
<S>                                                     <C>             <C>              <C>
Beginning balance                                       $      1,806    $      1,695     $      1,665
Provision for loan losses                                        286             343              358
Loans charged-off                                               (353)           (533)            (413)
Recoveries of previous charge-offs                                62             301               85
                                                        ------------    ------------     ------------

Balance at end of year                                  $      1,801    $      1,806     $      1,695
                                                        ============    ============     ============
</TABLE>

Impaired loans were as follows:

<TABLE>
<CAPTION>
                                                            2003             2002
                                                            ----             ----
<S>                                                     <C>             <C>
Year-end loans with no
      allocated allowance for loan losses               $        293    $        216
Year-end loans with
      allocated allowance for loan losses                          -             268
                                                        ------------    ------------
Total                                                   $        293    $        484
                                                        ============    ============

Amount of the allowance for loan losses allocated       $          -    $        129
</TABLE>

<TABLE>
<CAPTION>
                                                                2003            2002             2001
                                                                ----            ----             ----
<S>                                                     <C>             <C>              <C>
Average of impaired loans during the year               $        408    $        376     $      1,005

Interest income recognized during impairment                      16              36              265

Cash-basis interest income recognized
      during impairment                                           16              36              265
</TABLE>

                                   (Continued)

                                                                              40
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 3 - LOANS (Continued)

Non-performing loans were as follows:

<TABLE>
<CAPTION>
                                                                               2003           2002
                                                                               ----           ----
<S>                                                                        <C>            <C>
Loans past due over 90 days still on accrual                               $        -     $         -
Nonaccrual loans                                                                1,419           1,779
</TABLE>

Nonperforming loans include both smaller balance homogeneous loans that are
collectively evaluated for impairment and individually classified loans.

Certain directors and executive officers and their related interests were loan
customers of the Corporation. A summary of activity on related party loans is as
follows:

<TABLE>
<CAPTION>
                                                                             2003
                                                                             ----
<S>                                                                     <C>
Beginning balance                                                       $      3,838
    New loans                                                                  2,968
    Repayments                                                                (1,148)
    Other changes                                                                  -
                                                                        ------------

Ending balance                                                          $      5,658
                                                                        ============
</TABLE>

The Bank services for investors' mortgage loans with aggregate unpaid principal
balances of $41.6 million at December 31, 2003, and $35.6 million at December
31, 2002, which are not reflected in the accompanying, consolidated balance
sheets. Custodial escrow balances maintained in connection with serviced loans
were $375,934 and $314,744 at year end 2003 and 2002. The right to service loans
for others is generally obtained by the sale of loans with servicing retained.

Activity regarding mortgage servicing rights (MSRs):

<TABLE>
<CAPTION>
                                                            2003             2002            2001
                                                            ----             ----            ----
<S>                                                     <C>             <C>              <C>
Beginning balance                                       $        304    $         95     $          -
Capitalized MSRs                                                 148             288               97
Amortization of MSRs                                            (149)            (79)              (2)
                                                        ------------    ------------     ------------

Balance at end of year                                  $        303    $        304     $         95
                                                        ============    ============     ============
</TABLE>

There was no valuation allowance related to MSRs at December 31, 2003.

                                   (Continued)

                                                                              41
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 4 - PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows:

<TABLE>
<CAPTION>
                                                                               2003           2002
                                                                               ----           ----
<S>                                                                        <C>            <C>
Land                                                                       $    1,214     $     1,214
Buildings and improvements                                                      4,089           4,075
Furniture, fixtures and equipment                                               4,249           3,961
                                                                           ----------     -----------
                                                                                9,552           9,250
Accumulated depreciation                                                       (5,360)         (4,898)
                                                                           ----------     -----------

                                                                           $    4,192     $     4,352
                                                                           ==========     ===========
</TABLE>

Depreciation expense was $488,000 $677,000 and $692,000 for 2003, 2002 and 2001.

NOTE 5 - DEPOSITS

Year-end deposits were as follows:

<TABLE>
<CAPTION>
                                                                               2003           2002
                                                                               ----           ----
<S>                                                                        <C>            <C>
Checking - non-interest-bearing                                            $   13,149     $    10,778
Checking - interest-bearing                                                    16,890          18,596
Money market accounts                                                          66,945          66,466
Passbook and savings accounts                                                  11,885          11,502
Certificates of deposit:
    In denominations under $100,000                                            58,342          91,210
    In denominations of $100,000 or more                                       50,773          20,617
Brokered Certificates of Deposit                                               30,697               -
                                                                           ----------     -----------
                                                                           $  248,681     $   219,169
                                                                           ==========     ===========
</TABLE>

Deposits from principal officers, directors and their affiliates at year-end
2003 and 2002 were $1,133,000 and $2,359,000 respectively.

At year-end 2003, scheduled maturities of certificates of deposit were as
follows:

<TABLE>
<S>                                                 <C>
2004                                                $    48,086
2005                                                     38,493
2006                                                     23,801
2007                                                     16,530
2008                                                     11,318
Thereafter                                                1,584
                                                    -----------
                                                    $   139,812
                                                    ===========
</TABLE>

                                   (Continued)

                                                                              42
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 6- BORROWED FUNDS

Borrowed funds at year-end 2003 and 2002 consisted of advances from the Federal
Home Loan Bank of Cincinnati ("FHLB") and were as follows:

<TABLE>
<CAPTION>
                                                                  2003                         2002
                                                                  ----                         ----
                                                                       Weighted                      Weighted
                                                          Balance    Average Rate       Balance    Average Rate
                                                          -------    ------------       -------    ------------
<S>                                                     <C>          <C>               <C>         <C>
FHLB advances maturing in:
     2003                                               $         -        -           $   15,674     3.90%
     2004                                                    23,386     2.63%               7,516     5.85
     2005                                                     8,424     3.06                4,462     4.23
     2006                                                     5,232     2.65                1,043     4.73
     2007                                                     2,000     2.62                   46     4.92
     2008                                                    48,754     4.81               45,049     4.98
     2009-Thereafter                                         15,677     4.90                7,453     5.15
                                                        -----------     ----           ----------     ----

     Total                                              $   103,473     4.03%          $   81,243     4.92%
                                                        ===========     ====           ==========     ====
</TABLE>



Average balances of borrowings outstanding during 2003 and 2002 were $88.5 and
$83.6. Advances under the borrowing agreements are collateralized by a blanket
pledge of the Corporation's residential mortgage loan portfolio and FHLB stock.
Mortgage loans and all shares of FHLB stock owned by the Bank totaling $193.0
and $9.3 at December 31, 2003, and $142.6 and $9.0 at December 31, 2002 were
pledged as collateral for the FHLB advances. Advances of $45.0, $4.0 and $3.0
million maturing in 2008, 2009, and 2010 are fixed rate advances convertible to
quarterly adjustable at the option of the FHLB after certain pre-established
dates.

Payments on amortizing FHLB advances usually amount to approximately $40,000 to
$50,000 a month.

NOTE 7 - EMPLOYEE BENEFIT PLANS

Employee stock ownership plan: The Corporation offers an ESOP for the benefit of
all salaried employees who meet age and service requirements. The ESOP borrowed
funds from the Corporation with which to acquire common shares of the
Corporation. The loan is secured by the shares purchased with the loan proceeds
and will be repaid by the ESOP with funds from the Corporation's discretionary
contributions to the ESOP and earnings on ESOP assets. The shares are being
allocated to eligible employees' accounts over a ten-year period, which started
in 1994. Expense for shares committed to be allocated during 2003, 2002 and 2001
was $378,000, $299,000 and $272,000.

                                   (Continued)

                                                                              43
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 7 - EMPLOYEE BENEFIT PLANS(CONTINUED)

The ESOP shares at year-end 2003 and 2002 were as follows:

<TABLE>
<CAPTION>
                                                                     2003               2002
                                                                     ----               ----
<S>                                                             <C>                <C>
Allocated shares                                                       126,463            111,585
Shares committed to be released for allocation                          14,878             14,878
Unreleased shares                                                        7,440             22,318
                                                                --------------     --------------
     Total ESOP shares                                                 148,781            148,781
                                                                ==============     ==============

Fair value of unreleased shares                                 $          239     $          465
                                                                ==============     ==============
</TABLE>

Management recognition plan (MRP): The Corporation maintains an MRP for the
benefit of directors and certain key employees of the Corporation. The MRP is
used to provide such individuals ownership interest in the Corporation in a
manner designed to compensate such directors and key employees for services to
the Corporation. As of December 31, 2003, 68,220 shares of the initial 105,800
shares reserved for grants have been awarded. One-fifth of such shares will be
earned and nonforfeitable on each of the first five anniversaries of the dates
of the awards. Grantees have all the benefits of shareholders, including the
right to receive dividends, except for certain restrictions on the
transferability of the shares. Compensation expense, which is based upon the
cost of the shares, was $34,000, $59,000 and $41,0000 for 2003, 2002 and 2001.

Deferred compensation plans: In 1996, the Corporation adopted a non-qualified
deferred compensation plan for two officers. Under the plan, those covered
agreed to defer a portion of their current compensation in exchange for future
payments.

In 1998, the Corporation established a non-qualified deferred compensation plan
for the benefit of certain officers and directors. Eligible employees may
allocate up to 100% of compensation (base salary, bonus, MRP, annual retainer or
meeting fees) to their deferred compensation accounts.

401(k) profit sharing plan: The Corporation offers a 401(k) profit sharing plan
covering substantially all employees. The annual expense of the plan is based on
a partial matching of voluntary employee contributions of up to 6% of individual
compensation. The matching percentage was 50% for 2003, 2002 and 2001. Employee
contributions are vested at all times and the Corporation's matching
contributions become fully vested after an individual has completed 5 years of
service. The contribution expense included in salaries and employee benefits was
$59,000, $58,000 and $55,000 for 2003, 2002 and 2001.

Stock option and incentive plans: In January 1995, shareholders approved an
Incentive Stock Option Plan. Under the provisions of the Plan, 264,500 shares
have been allocated for non-qualified and incentive stock options to be granted
to directors and selected employees. Grantees are awarded 10-year options to
acquire shares at the market price on the date the option is granted. The
options fully vest and become exercisable in five equal annual installments
commencing one year after the date of the grant.

                                   (Continued)

                                                                              44
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 7 - EMPLOYEE BENEFIT PLANS(CONTINUED)

In April 1998, shareholders approved an Omnibus Incentive Plan. Under the
provisions of the plan, 235,224 shares have been allocated for non-qualified and
incentive stock options to be granted to directors and selected employees.
Grantees are awarded 10-year options to acquire shares at the market price on
the date the option is granted. The options are fully vested and exercisable on
the date of the grant.

The following is a summary of activity in the stock option and incentive plan:

<TABLE>
<CAPTION>
                                                    -------------------Stock Options-------------------
                                                                                            Weighted-
                                                        Options                              Average
                                                       Available          Options            Exercise
                                                       for Grant        Outstanding           Price
                                                       ---------        -----------           -----
<S>                                                    <C>              <C>                 <C>
January 1, 2001                                         161,532           241,346            $  18.56

Granted                                                  (5,800)            5,800               17.91
Forfeited                                                 7,028            (7,028)              20.20
Exercised                                                     -            (3,667)              13.86
                                                        -------           -------            --------

December 31, 2001                                       162,760           236,451               18.56

Granted                                                  (6,000)            6,000               19.93
Forfeited                                                 3,400            (3,400)              21.83
Exercised                                                     -           (18,786)              15.09
                                                        -------           -------            --------

December 31, 2002                                       160,160           220,265               18.87

Granted                                                  (2,834)            2,834               27.20
Forfeited                                                 5,900            (5,900)              24.16
Exercised                                                     -           (56,385)              16.09
                                                        -------           -------            --------

December 31, 2003                                       163,226           160,814            $  19.02
                                                        =======           =======            ========
</TABLE>

                                   (Continued)

                                                                              45
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 7 - EMPLOYEE BENEFIT PLANS(CONTINUED)

The following table summarizes information about stock options outstanding at
year-end 2003:

<TABLE>
<CAPTION>
                      Weighted Average
                          Remaining               Number
Exercise Price        Contractual Life          Outstanding      Exercisable
--------------        ----------------          -----------      -----------
<S>                   <C>                       <C>              <C>
$     14.75                6.43                    37,938             37,938
      16.88                6.55                       500                500
      17.50                1.08                    39,284             39,284
      17.90                7.47                     2,000              2,000
      18.00                7.34                     1,350              1,350
      18.50                1.43                    16,172             16,172
      18.77                8.05                     2,000              2,000
      20.02                8.84                     2,000              2,000
      20.99                8.41                     2,000              2,000
      22.00                3.48                    25,000             25,000
      23.00                4.86                    25,736             25,736
      26.90                3.81                     4,000              4,000
      27.20                9.64                     2,834              2,834
                                                  -------            -------

                                                  160,814            160,814
                                                  =======            =======
</TABLE>

NOTE 8 - COMMITMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES

Some financial instruments, such as loan commitments, credit lines, letters of
credit and overdraft protection are issued to meet customer financing needs.
These are arrangements to provide credit or to support the credit of others, as
long as conditions established in the contract are met, and usually have
expiration dates. Off-balance sheet risk to credit losses exists up to the face
amount of these instruments, although material losses are not anticipated. The
same credit policies are used to make such commitments as are used for loans,
including obtaining collateral at exercise of the commitment.

At year-end 2003 and 2002, the Corporation had commitments to originate loans
and amounts available on approved lines of credit as follows:

<TABLE>
<CAPTION>
                                                           Fixed        Variable
                                                           Rate           Rate           Total
                                                           ----           ----           -----
<S>                                                    <C>             <C>            <C>
2003
First mortgage loans                                   $       973     $        -     $       973
Consumer and other loans                                         -            111             111
Commercial loans                                                 -          6,087           6,087
Home equity lines of credit                                      -         16,776          16,776
Commercial lines of credit                                       -          7,231           7,231
Stand-by letters of credit                                       -          9,919           9,919
                                                       -----------     ----------     -----------

                                                       $       973     $   40,124     $    41,097
                                                       ===========     ==========     ===========
</TABLE>

                                   (Continued)

                                                                              46
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 8- COMMITMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES (Continued)

<TABLE>
<S>                                                    <C>             <C>            <C>
2002
First mortgage loans                                   $       840     $        -     $       840
Consumer and other loans                                         -            419             419
Commercial loans                                                 -          6,365           6,365
Home equity lines of credit                                      -         14,763          14,763
Commercial lines of credit                                       -         13,612          13,612
Stand-by letters of credit                                       -          9,362           9,362
                                                       -----------     ----------     -----------

                                                       $       840     $   44,521     $    45,361
                                                       ===========     ==========     ===========
</TABLE>

The interest rates on fixed-rate loan commitments ranged from 6.00% to 6.63% at
year-end 2003 and 5.38% to 7.00% at year-end 2002.

Employment Agreements: The Corporation has employment agreements with certain
officers of the Corporation and Cornerstone. The agreements provide for a term
of employment for up to four years and a salary and performance review not less
often than annually, as well as inclusion of the employee in any formally
established employee benefit plan for which such personnel are eligible. The
employment agreements also contain provisions with respect to payment should a
change in control occur.

Liquidation Account: In conjunction with its conversion to a stock institution
in 1994, the Corporation established a liquidation account of $21.7, which was
equal to its total net worth as of the date of the latest statement of financial
condition appearing in the final conversion prospectus. The liquidation account
is maintained for the benefit of eligible depositors who continue to maintain
their accounts with the Corporation after the conversion. The liquidation
account is reduced annually to the extent that eligible depositors have reduced
their qualifying deposits. Subsequent increases do not restore an eligible
account holder's interest in the liquidation account. In the event of a complete
liquidation, each eligible depositor will be entitled to receive a distribution
from the liquidation account in an amount proportionate to the current adjusted
qualifying balances for accounts then held.

                                   (Continued)

                                                                              47
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 9 - DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of financial instruments at
year-end were as follows:

<TABLE>
<CAPTION>
                                                           2003                           2002
                                                           ----                           ----
                                               Carrying          Fair          Carrying           Fair
                                                Amount           Value          Amount            Value
                                                ------           -----          ------            -----
<S>                                         <C>              <C>             <C>              <C>
Financial assets:
     Cash and cash equivalents              $      6,853     $      6,853    $     19,312     $     19,312
     Securities available for sale                32,735           32,735          46,001           46,001
     FHLB stock                                    9,335            9,335           8,971            8,971
     Loans, net                                  334,469          337,507         256,883          265,445
     Accrued interest receivable                   1,879            1,879           1,511            1,511

Financial liabilities:
     Deposits                                   (248,681)        (250,296)       (219,169)        (223,596)
     Borrowed funds                             (103,473)        (105,302)        (81,243)         (82,918)
     Advance payments by borrowers
       for taxes and insurance                      (638)            (638)           (644)            (644)
     Accrued interest payable                       (660)            (660)           (494)            (494)
</TABLE>

The estimated fair value approximates carrying amount for all items except those
described below. Estimated fair value for securities is based on quoted market
values for the individual securities or for equivalent securities. Estimated
fair values of fixed-rate loans and loans that reprice less frequently than each
year, are based on the rates charged at year-end for new loans with similar
maturities, applied until the loan is assumed to reprice or be paid. Estimated
fair values for certificates of deposit and borrowings are based on the rates
paid at year-end for new deposits or borrowings applied until maturity.
Estimated fair values for other financial instruments and off-balance-sheet loan
commitments are considered nominal. Fair values for impaired loans are estimated
using discounted cash flow analysis or underlying collateral values. Fair values
of loans held for sale is based on market quotes.

NOTE 10 - INCOME TAXES

Income tax expense consisted of the following:

<TABLE>
<CAPTION>
                                            2003           2002           2001
                                            ----           ----           ----
<S>                                     <C>             <C>            <C>
Current                                 $     1,063     $    1,073     $       827
Deferred                                        (26)           113             182
                                        -----------     ----------      ----------

                                        $     1,037     $    1,186     $     1,009
                                        ===========     ==========     ===========
</TABLE>

                                   (Continued)

                                                                              48
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 10 - INCOME TAXES(CONTINUED)

The sources of year-end gross deferred income tax assets and liabilities were as
follows:

<TABLE>
<CAPTION>
                                                                                   2003           2002
                                                                                   ----           ----
<S>                                                                             <C>            <C>
Deferred tax assets
     Deferred compensation and management
       recognition plan                                                         $      145     $       117
     Allowance for loan losses                                                         612             596
     Unrealized loss on securities available for sale                                    8              35
     Deferred loan fees                                                                102               -
                                                                                ----------     -----------
                                                                                       867             748
Deferred tax liabilities
     Accumulated depreciation                                                           23              62
     FHLB stock dividends                                                            1,564           1,440
     Unrealized gain on securities available for sale                                    -             243
     Loan servicing                                                                    103             103
                                                                                ----------     -----------
                                                                                     1,690           1,848
                                                                                ----------     -----------
                                                                                $     (823)    $    (1,100)
                                                                                ==========     ===========
</TABLE>

Total income tax expense differed from the amounts computed by applying the U.S.
federal income tax rate of 34% to income before income taxes as a result of the
following:

<TABLE>
<CAPTION>
                                                               2003           2002           2001
                                                               ----           ----           ----
<S>                                                        <C>             <C>            <C>
Income tax computed at the
  statutory tax rate                                       $     1,203     $    1,201     $       981
Tax-exempt income                                                  (59)           (38)             (3)
Tax-exempt life insurance earinings                               (143)            (6)             (5)
Tax effect of other items                                           36             29              36
                                                           -----------     ----------     -----------

                                                           $     1,037     $    1,186     $     1,009
                                                           ===========     ==========     ===========

Effective tax rate                                                29.3%          33.6%           35.0%
                                                           ===========     ==========     ===========
</TABLE>

Retained earnings at December 31, 2003 and 2002 include $8,709 for which no
provision for federal income taxes has been made. This amount represents the
qualifying and nonqualifying tax bad debt reserve as of December 31, 1987, which
is the Corporation's base year for purposes of calculating the bad debt
deduction for tax purposes. The related amount of unrecognized deferred tax
liability was $2,961 at December 31, 2003 and 2002. If this portion of retained
earnings is used in the future for any purpose other than to absorb bad debts,
it will be added to future taxable income.

                                   (Continued)

                                                                              49
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 11 - REGULATORY CAPITAL REQUIREMENTS

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

Prompt corrective action regulations provide five classifications: well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically under capitalized, although these terms are not
used to represent overall financial condition. If adequately capitalized,
regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required. At year-end 2003 and
2002, management believes Cornerstone is in compliance with all regulatory
capital requirements. Cornerstone is considered well capitalized under the
Federal Deposit Insurance Act at year-end 2003 and 2002. Management is not aware
of any matters subsequent to December 31, 2003 that would cause Cornerstone's
capital category to change.

The following is a reconciliation of capital under accounting principles
generally accepted in the United States of America, as shown on the accompanying
consolidated balance sheets, to the Bank's regulatory capital at year-end 2003
and 2002:

<TABLE>
<CAPTION>
                                                                          2003               2002
                                                                          ----               ----
<S>                                                                 <C>                <C>
Total shareholders' equity per financial statements                 $       44,357     $       43,205
Nonallowable items:
    Parent Corporation equity                                               (3,078)            (1,979)
    Unrealized (gain)/ loss on securities available for sale                    16               (472)
                                                                    --------------     --------------
Tier I (core) and tangible capital                                          41,295             40,754
Additional capital items:
    General valuation allowances (limited)                                   1,792              1,663
                                                                    --------------     --------------

Total risk-based capital                                            $       43,087     $       42,417
                                                                    ==============     ==============
</TABLE>

                                   (Continued)

                                                                              50
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE-11-REGULATORY CAPITAL REQUIREMENTS (Continued)

At year-end 2003 and 2002, Cornerstone's actual capital levels and minimum
required levels were as follows:

<TABLE>
<CAPTION>
                                                                                                      Minimum
                                                                                                  Required To Be
                                                                        Minimum Required         Well Capitalized
                                                                           For Capital             Under  Prompt
                                                   Actual               Adequacy Purposes       Action Regulations
                                                   ------               -----------------       ------------------
                                               Amount     Ratio          Amount     Ratio        Amount     Ratio
                                               ------     -----          ------     ----         ------     -----
<S>                                          <C>          <C>          <C>          <C>         <C>         <C>
2003
Total capital (to risk-weighted assets)      $  43,087     14.7%       $  23,510     8.0%       $  29,388    10.0%
Tier 1 (core) capital (to
  risk-weighted assets)                         41,295     14.0           11,755     4.0           17,633     6.0
Tier 1 (core) capital (to adjusted
  total assets)                                 41,295     10.3           15,980     4.0           19,975     5.0
Tangible capital (to adjusted total assets)     41,295     10.3            5,993     1.5              N/A

2002
Total capital (to risk-weighted assets)      $  42,417     17.0%       $  19,989     8.0%       $  22,428    10.0%
Tier 1 (core) capital (to
  risk-weighted assets)                         40,754     16.3            9,994     4.0           14,991     6.0
Tier 1 (core) capital (to adjusted
  total assets)                                 40,754     11.8           13,841     4.0           17,301     5.0
Tangible capital (to adjusted total assets)     40,754     11.8            5,190     1.5              N/A
</TABLE>

Banking regulations limit capital distributions by banks. Generally, capital
distributions are limited to the current year to date undistributed net income
and prior two years' undistributed net income, as long as the institution
remains well capitalized after the proposed distribution.

Cornerstone may make a capital distribution without the approval of the OTS
provided it notifies the OTS 30 days before it declares the capital distribution
and it meets the following requirements: (i) has a regulatory rating in one of
the two top examination categories, (ii) is not of supervisory concern, and will
remain adequately-or well-capitalized, as defined in the OTS prompt corrective
action regulations, following the proposed distribution.

                                   (Continued)

                                                                              51
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 12 - PARENT CORPORATION ONLY CONDENSED FINANCIAL STATEMENTS

Condensed financial information of Western Ohio Financial Corporation is as
follows:

                            CONDENSED BALANCE SHEETS
                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                                    2003          2002
                                                                                    ----          ----
<S>                                                                             <C>            <C>
ASSETS
     Cash and cash equivalents                                                  $    2,625     $     1,484
     Investment in bank subsidiary                                                  41,279          41,226
     Intercompany receivables                                                          119             357
     Other assets                                                                      334             271
                                                                                ----------     -----------
         Total assets                                                           $   44,357     $    43,338
                                                                                ==========     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
     Other liabilities                                                          $        -     $       133
     Shareholders' equity                                                           44,357          43,205
                                                                                ----------     -----------
         Total liabilities and shareholders' equity                             $   44,357     $    43,338
                                                                                ==========     ===========
</TABLE>

                         CONDENSED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                          2003           2002           2001
                                                                          ----           ----           ----
<S>                                                                    <C>            <C>            <C>
INTEREST AND DIVIDEND INCOME
     Dividends from subsidiaries                                       $     2,700    $     2,000    $     2,000
     Loan to ESOP                                                               20             37             54
     Other                                                                      17             17             27
                                                                       -----------    -----------    -----------
         Total interest and dividend income                                  2,737          2,054          2,081

Operating expenses                                                            (541)          (442)          (412)
                                                                       -----------    -----------    -----------

INCOME BEFORE INCOME TAXES AND DISTRIBUTIONS
  IN EXCESS OF EARNINGS OF SUBSIDIARY                                        2,196          1,612          1,669

Income tax benefit                                                             165            132            113
                                                                       -----------    -----------    -----------

INCOME BEFORE DISTRIBUTIONS IN EXCESS OF
  EARNINGS OF SUBSIDIARY                                                     2,361          1,744          1,782

Undistributed subsidiary earnings                                              140            603             93
                                                                       -----------    -----------    -----------

NET INCOME                                                             $     2,501    $     2,347    $     1,875
                                                                       ===========    ===========    ===========
</TABLE>

                                   (Continued)

                                                                              52
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 12 - PARENT CORPORATION ONLY CONDENSED FINANCIAL STATEMENTS (Continued)

                       CONDENSED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                          2003             2002           2001
                                                                          ----             ----           ----
<S>                                                                    <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                             $     2,501    $     2,347    $     1,875
     Adjustments to reconcile net income to cash
       provided by operations:
         Undistributed subsidiary earnings                                    (140)          (603)           (93)
         Compensation expense on ESOP and MRP shares                           412            358            313
         Changes in:
         Other assets and other liabilities                                   (597)          (339)           (11)
                                                                       -----------    -----------    -----------
              Net cash from operating activities                             2,176          1,763          2,084

CASH FLOWS FROM INVESTING ACTIVITIES
     Change in intercompany advances/receivables                               238            (99)           (85)
                                                                       -----------    -----------    -----------
              Net cash from investing activities                               238            (99)           (85)

CASH FLOWS FROM FINANCING ACTIVITIES
     Cash dividends paid                                                    (1,730)        (1,723)        (1,709)
     Proceeds from stock options exercised                                   1,158            312             53
     Purchase of treasury stock                                               (701)          (443)        (1,200)
                                                                       -----------    -----------    -----------
              Net cash from financing activities                            (1,273)        (1,854)        (2,856)
                                                                       -----------    -----------    -----------

Net change in cash and cash equivalents                                      1,141           (190)          (857)

Cash and cash equivalents at beginning of year                               1,484          1,674          2,531
                                                                       -----------    -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                               $     2,625    $     1,484    $     1,674
                                                                       ===========    ===========    ===========
</TABLE>

                                   (Continued)

                                                                              53
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 13 - EARNINGS PER COMMON SHARE

The factors used in the earnings per share computation were as follows:

<TABLE>
<CAPTION>
                                                                        2003            2002              2001
                                                                        ----            ----              ----
<S>                                                                <C>              <C>              <C>
Basic earnings per common share
     Net income                                                    $        2,501   $        2,347   $        1,875
                                                                   ==============   ==============   ==============

     Weighted average common shares outstanding                         1,753,590        1,758,510        1,780,119
     Less:  Average unallocated ESOP shares                               (16,701)         (31,579)         (46,458)
     Less:  Average nonvested MRP shares                                   (2,686)          (3,531)          (4,422)
                                                                   --------------   --------------   --------------

     Average shares                                                     1,734,203        1,723,400        1,729,239
                                                                   ==============   ==============   ==============

     Basic earnings per common share                               $         1.44   $         1.36   $         1.08
                                                                   ==============   ==============   ==============

Diluted earnings per common share
     Net income                                                    $        2,501   $        2,347   $        1,875
                                                                   ==============   ==============   ==============

     Weighted average common shares outstanding for basic
      earnings per  common shares                                       1,734,203        1,723,400        1,729,239
     Add:  Dilutive effects of stock options                               30,760           17,666           11,701
                                                                   --------------   --------------   --------------

     Average shares and dilutive potential
       common shares                                                    1,764,963        1,741,066        1,740,940
                                                                   ==============   ==============   ==============

     Diluted earnings per common share                             $         1.42   $         1.35   $         1.08
                                                                   ==============   ==============   ==============
</TABLE>

Stock options covering 6,834, 68,936 and 79,736 shares of common stock were not
considered in computing diluted earnings per common share for 2003, 2002 and
2001, respectively, as they were anti dilutive. In addition, nonvested MRP
awards for 2,064, 3,725, and 3,687 shares of common stock were not considered in
computing diluted earnings per common share for 2003, 2002 and 2001,
respectively as they were antidilutive.

                                   (Continued)

                                                                              54
<PAGE>

                       WESTERN OHIO FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001
                  (Dollars in thousands, except per share data)

NOTE 14 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables summarize selected quarterly results of operations for 2003
and 2002.

<TABLE>
<CAPTION>
                                                                          Three months ended
                                                                          ------------------
December 31, 2003                                     March 31         June 30        September 30       December 31
                                                      --------         -------        ------------       -----------
<S>                                                <C>               <C>              <C>               <C>
Interest and dividend income                       $     4,729       $     4,634      $     4,406       $     4,787
Interest expense                                        (2,336)           (2,250)          (2,235)           (2,326)
                                                   -----------       -----------      -----------       -----------
Net interest income                                      2,393             2,384            2,171             2,461
Provision for loan losses                                  (84)              (84)             (63)              (55)
                                                   -----------       -----------      -----------       -----------
Net interest income after
  provision for loan losses                              2,309             2,300            2,108             2,406
Non-interest income                                        825               781            1,044             1,086
Non-interest expense                                    (2,246)           (2,237)          (2,252)           (2,496)
                                                   -----------       -----------      -----------       -----------
Income before income tax                                   888               844              900               996
Income tax expense                                        (267)             (229)            (252)             (318)
                                                   -----------       -----------      -----------       -----------
Net income                                         $       621       $       615      $       648       $       678
                                                   ===========       ===========      ===========       ===========

Earnings per share
  Basic                                            $      0.36       $      0.36      $      0.37       $      0.35
                                                   ===========       ===========      ===========       ===========
  Diluted                                          $      0.36       $      0.35      $      0.37       $      0.34
                                                   ===========       ===========      ===========       ===========
Dividends declared per share                       $      0.25       $      0.25      $      0.25       $      0.25
                                                   ===========       ===========      ===========       ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                          Three months ended
                                                                          ------------------
December 31, 2002                                     March 31,       June 30,        September 30,     December 31
                                                      ---------       --------        -------------     -----------
<S>                                                <C>               <C>              <C>               <C>
Interest and dividend income                       $     5,469       $     5,593      $     5,290       $     5,029
Interest expense                                        (3,072)           (2,967)          (2,834)           (2,589)
                                                   -----------       -----------      -----------       -----------
Net interest income                                      2,397             2,626            2,456             2,440
Provision for loan losses                                  (84)              (84)             (91)              (84)
                                                   -----------       -----------      -----------       -----------
Net interest income after
  provision for loan losses                              2,313             2,542            2,365             2,356
Non-interest income                                        574               720              754             1,045
Non-interest expense                                    (2,208)           (2,302)          (2,230)           (2,396)
                                                   -----------       -----------      -----------       -----------
Income before income tax                                   679               960              889             1,005
Income tax expense                                        (230)             (328)            (298)             (330)
                                                   -----------       -----------      -----------       -----------
Net income                                         $       449       $       632      $       591       $       675
                                                   ===========       ===========      ===========       ===========

Earnings per share
  Basic                                            $      0.26       $      0.37      $      0.34       $      0.39
                                                   ===========       ===========      ===========       ===========
  Diluted                                          $      0.26       $      0.36      $      0.34       $      0.39
                                                   ===========       ===========      ===========       ===========
Dividends declared per share                       $      0.25       $      0.25      $      0.25       $      0.25
                                                   ===========       ===========      ===========       ===========
</TABLE>

                                                                              55
<PAGE>

Shareholder Information

Board of Directors of Western Ohio Financial Corporation and Cornerstone Bank

David L. Dillahunt
Senior Vice President, Advest, Inc.
John W. Raisbeck
President and Chief Executive Officer, Cornerstone Bank
Howard V. Dodds
Chief Executive Officer, Howard's Foods, Inc.
John E. Field
Chairman of the Board, Wallace & Turner, Inc.
Jeffrey L. Levine
President, Larry Stein Realty and Levine Realty Co.
William N. Scarff
Chairman of the Board, Scarff's Nursery, Inc.
Aristides G. Gianakopoulos
President, The Champion Corporation
Pete Hackett
Retired Managing Partner, Clark Shaffer Hackett & Co.

Officers of Western Ohio Financial Corporation

John W. Raisbeck
President and Chief Executive Officer
John R. Clemmer
Senior Vice President
William E. Whitmoyer
Senior Vice President
Robert P. Brezing
Senior Vice President
Robert A. Kuehl
Senior Vice President, Treasurer & Chief Financial Officer
Deborah S. Horton
Corporate Secretary

Officers of Cornerstone Bank

John W. Raisbeck
President and Chief Executive Officer
John R. Clemmer
Senior Vice President, Retail Banking
William E. Whitmoyer
Senior Vice President, Retail Lending
Robert P. Brezing
Senior Vice President, Business Banking
Robert A. Kuehl
Senior Vice President, Treasurer & Chief Financial Officer
Deborah S. Horton
Corporate Secretary

Annual Report on Form 10-K

                                                                              56
<PAGE>

A copy of the Corporation's Annual Report on Form 10-K filed with the Securities
and Exchange Commission will be available without charge upon request to:

Investor Relations
Western Ohio Financial Corporation
28 East Main Street
P.O. Box 509
Springfield, OH 45501-0509
(937) 325-9990

Annual Meeting

The Annual Meeting of Shareholders of Western Ohio Financial Corporation will be
held at 9:00 AM on Thursday, April 22, 2003, at the Springfield Inn, 100 South
Fountain Avenue, Springfield, OH 45502.

Transfer Agent

Computershare Trust Corporation, Inc. serves as the
transfer agent for Western Ohio Financial Corporation's shares. Communications
regarding change of address, transfer of shares, and lost certificates should be
sent to:

Computershare Trust Corporation, Inc.
350 Indiana St., Suite 800
Golden, CO 80401

Legal Counsel

Local Counsel
Martin Browne Hull & Harper
1 South Limestone Street
Springfield, OH 45502

Special Counsel
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson St., N.W.
East Lobby, Suite 700
Washington, DC 20007-5201

                                                                              57
<PAGE>

Market Makers

Advest, Inc.
One Commercial Plaza
280 Trumbull Street
Hartford, CT 06103
(203) 525-1421

Dain Rauscher, Inc.
Suite 3000
500 West Madison Street
Chicago, IL 60604
(315) 855-7600

Friedman Billings Ramsey & Co.
Potomac Tower
18th Floor
1001 19th Street North
Arlington, VA 22209
(703) 312-9600

Keefe, Bruyette & Woods, Inc.
787 7th Ave., 4th Floor
New York, NY 10019
(800) 966-1559

McDonald Investments, Inc.
800 Superior Ave.
Cleveland, OH 44114-2603
(216) 443-2300

Sandler O'Neill & Partners, L.P.
919 Third Ave., 6th Floor
New York, NY 10022
(212) 466-7744

                                                                              58
<PAGE>

Office Locations

Visit any of our branch office locations!

We invite you to call on the Cornerstone Bank office nearest you for your
personal and business banking needs. Stop by the office in your community to
learn more, or call (800) 600-1884.

Main Springfield Office - (937) 325-4683
28 E Main Street
Springfield, OH 45502-1306

Upper Valley Office - (937) 323-8381
1480 Upper Valley Pike
Springfield, OH 45504-4024

New Carlisle Office - (937) 845-3256
210 N Main Street
New Carlisle, OH 45344-1837

Beavercreek Office - (937) 427-6361
3216 Seajay Drive
Beavercreek, OH 45430-1355

Yellow Springs Office - (937) 767-2060
50 Kahoe Lane
Yellow Springs, OH 45387-1237

Enon Office - (937) 864-1928
7601 Dayton Road
Fairborn, OH 45324-1903

Centerville Office - (937) 432-9705
6291 Wilmington Pike
Dayton, OH 45459-7108

                                                                              59