[Front Cover]

Cornerstone2000.com

Western Ohoi Financial Corporation

1999 Annual Report

<PAGE>

[Inside Cover]

Table of Contents

Letter to Shareholders.........................................................3

Selected Consolidated Financial Information....................................6

Market Price of Western Ohio Financial Corporation's Common Shares and Related
  Shareholder Matters..........................................................7

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

  General......................................................................8

  Forward-Looking Statements...................................................8

  Analysis of Financial Condition..............................................8

  Comparison of Years Ended December 31, 1999 and December 31, 1998............9

  Comparison of Years Ended December 31, 1998 and December 31, 1997...........10

  Average Balances, Interest Rates and Yields.................................11

  Rate/Volume Analysis........................................................12

Asset/Liability Management and Market Risk....................................13

  Liquidity and Capital Resources.............................................14

  Impact of New Accounting Standards..........................................15

  Impact of Inflation and Changing Prices.....................................15

  Year 2000 Issue.............................................................15

Report of Independent Auditors................................................16

  Consolidated Financial Statements...........................................17

Board of Directors and Officers...............................................38

Western Ohio Financial Corporation and Subsidiary Shareholder Information.....38

Market Makers.................................................................39


2                                             Western Ohio Financial Corporation



<PAGE>



Dear Shareholders


     1999 was a year of continued improvement and advancement for Western
Ohio Financial Corporation and Cornerstone Bank:

   o..We have become a community  bank with  broader  service  capability  while
maintaining the personal touch we know our customers want.

   o..Our net income improved by 30% over 1998.

   o..Our efforts to build business banking have been especially rewarding.

   o..Our mortgage banking capabilities remain strong.

[Photograph of David L.  Dillahunt,  Chairman of the Board and John W. Raisbeck,
President and CEO]


      Two and a half years  ago,  when John  became  President  and CEO,  his
 conversations  with many local  business and  community  leaders  indicated
 that, although our company was  under-recognized and  under-performing,  it
 had a lot of potential.  Saying it another way, WOFC and  Cornerstone  Bank
 had been a well-kept secret.

      Since that time,  our  planning  and actions have focused on marketing
 our bank and telling  people who we are and what we can do for them as well
 as strengthening our position for the future. Our company and its employees
 have also been more involved with community affairs and support.

      That first year, 1997, Cornerstone Bank made $183,000. In 1998 profits
 increased  to  $1,295,000  and in the  past  year  profits  grew to  nearly
 $1,700,000,  an increase of 30%. Fully diluted earnings per share increased
 by nearly 47 percent.  This  improvement in core earnings  performance  was
 achieved by reducing  operating  expenses and managing our balance sheet to
 improve our net yield.

      A major  focus  of ours  continues  to be on  business  banking.  As a
 result,  we  strengthened  our bank  lending  team  with  highly  qualified
 commercial  loan and commercial real estate lenders who have the experience
 and  know-how  to assess  the risks and  underwrite  such  loans.  Business
 banking  enables us to broaden our base of  profitable  relationships.  The
 focus is the same, however: providing all of our financial services through
 bankers who believe in helping people meet their needs.

      Cornerstone  Bank remains in  residential  mortgage  lending which has
 long been its core  business.  Our  mortgage  lending  remains  strong  and
 competitive. We have modernized our service capacity in that area by adding
 new, more advanced mortgage  processing software and computer technology as
 well as by more training of our staff.

      Cornerstone Bank knows it will only succeed by building sincere client
 relationships    and   providing   banking   service   on   a   one-to-one,
 person-to-person   basis.  This  philosophy   applies  to  all  clients  of
 Cornerstone Bank. Because many large banks have lost the ability to provide
 such personal attention and service, we have a great opportunity to win new
 friends and customers by emphasizing this more personal approach.

      Many business clients and prospects like to feel they are working with
 people who are qualified and empowered to make lending and other  decisions
 locally.  As evidence of Cornerstone  Bank's commitment to business lending
 and  related  services,  we hired Phil  Teusink in  Springfield  and Kemper
 Allison  in  Columbus  during  1999.  Both have an  established  network of
 business  contacts and clients  which is vitally  important to  Cornerstone
 Bank's future growth. The

1999 Annual Report to Shareholders                                             3

<PAGE>

[PHOTOGRAPH  OF JOHN W.  RAISBACK,  DIRECTOR,  PRESIDENT,  AND  CHIEF  EXECUTIVE
OFFICER,  DAVID L. DILLAHUNT,  CHAIRMAN,  ARISTIDES G. GIANAKOPOULOS,  DIRECTOR,
HOWARD V. DODDS, DIRECTOR, JOHN E. FIELD, DIRECTOR,  JEFFREY L. LEVINE, DIRECTOR
WILLIAM N. SCARFF, DIRECTOR (LEFT TO RIGHT)]

Cornerstone  Bank Business Banking team has nearly 100 years of combined lending
experience.

     Kemper  Allison,  Regional Vice President,  joined us in early 1999,  after
serving for over 15 years as a commercial and commercial  real estate lender for
a Columbus bank. He now directs our Columbus loan office.

     Phil Teusink, Vice President,  is a highly qualified and experienced senior
loan manager who has served as a commercial loan officer in the Springfield area
for 19 years with a large regional  bank. As a Vice  President with  Cornerstone
Bank, Phil will continue serving the needs of our local business community.

     By adding  these  two  senior-level  bankers,  we are  investing  in highly
experienced,  proven producers who can help us make significant contributions to
developing long-term profitable relationships.

     As we look back again over the past two and a half years,  it's clear we've
made  progress  toward our goals.  We've built on the existing  strengths of the
organization by training our people and upgrading the business systems they work
with. It's also clear that still more can be done to enhance the earnings of the
bank by improving  interest margins as well as non-interest  income such as loan
and deposit-related fees. In fact, we're seeing significant growth in fee income
from the business banking side.

     Technology  continues  to work for us,  too. We are  currently  launching a
major   conversion   of  our  data   processing   system.   Soon  we  will  have
state-of-the-art data processing  capabilities with significant  improvements in
operating  efficiency for about the same cost as our previous  system.  With the
new system,  we will have more control and greater ability to respond to changes
in the marketplace in terms of service as well as products.

     We  have  the key  people  in  place--not  just at the  upper  levels,  but
increasingly  across the  organization.  As a result of our staff  training  and
development,  we are now able to promote more from within and place people where
they can be more productive.

     We continue to work on instilling a broader sense of ownership and personal
accountability throughout our

[PHOTOGRAPH OF JOHN W. RAISBECK, DIRECTOR, PRESIDENT, AND CHIEF EXECUTIVE
OFFICER, CRAIG E. FORTIN, SENIOR VICE PRESIDENT, TREASURER AND CHIEF FINANCIAL
OFFICER
(STANDING)  GARY L. HICKS,  EXECUTIVE VICE PRESIDENT,  MORTGAGE  BANKING JOHN T.
HECKMAN,  EXECUTIVE  VICE  PRESIDENT,  OPERATIONS AND  ADMINISTRATION  ROBERT P.
BREZING, SENIOR VICE PRESIDENT, BUSINESS BANKING]

company.  More of our  employees  can and are taking the  initiative  to address
whatever  problems  they  might  encounter.  This  means  better  service to our
customers.

     A large number of smaller and mid-sized banks and thrifts have  experienced
significant  deflation  of their  stock  prices  in  recent  months.  WOFC is no
exception.  These stocks  continue to lag behind the  performance of the overall
equity  market.  The  outlook has been  clouded by  concerns of rising  interest
rates, year 2000 issues (which have now proved insignificant) and slowing merger
activity.  This is an  industry-wide  phenomenon.  When you look at the  capital
strength,  the asset quality and the earnings trends, many feel these stocks are
undervalued. WOFC continues its program to repurchase its capital stock.

     Our  plan is to  continue  our  present  path  toward  adding  value to our
franchise.  The actions we have taken and the trends are  encouraging  to us. We
believe 2000 will be another year of improvement.

     Summing it up,  we're  heading in the right  direction.  We are a community
bank with  quality  people and the  capital to support our  efforts.  We believe
these are  essential  ingredients  for  improved  long-term  performance  in our
marketplace.

     With the continuing support of our shareholders and Board of Directors, our
valued customers and staff, we expect another successful year.



John W. Raisbeck
President and Chief Executive Officer

David L. Dillahunt
Chairman of the Board


1999 Annual Report to Shareholders                                             5
<PAGE>



Selected Consolidated Financial Information
<TABLE>
<CAPTION>



                                                                  December 31,
                                   ---------------------------------------------------------------
                                      1999          1998         1997         1996          1995
                                    -------     ----------    ----------   ----------    ----------
                                                       (Dollars in thousands)

<S>                                 <C>         <C>           <C>          <C>           <C>
Selected Financial Condition Data:

Total assets                       $329,685       $327,728     $371,988    $392,765     $231,387
Loans and loans held for sale, net  254,871        234,812      277,731     287,611      150,476
Cash and cash equivalents             9,614         13,854       31,239      15,611       17,605
Mortgage-backed securities           41,591         50,044       22,433      36,843       45,719
Securities                            8,775         15,402       22,455      35,729       12,039
Deposits                            202,331        192,966      246,909     233,203      139,129
Borrowed funds                       82,183         85,252       68,339     102,602       31,528
Total shareholders' equity           42,989         47,594       54,600      54,048       59,668

Selected Operations Data:

Total interest income              $ 23,415       $ 25,856     $ 29,039    $ 24,160      $14,809
Total interest expense               13,632         15,992       17,934      13,783        7,034
                                   --------       --------     --------    --------     --------
Net interest income                   9,783          9,864       11,105      10,377        7,775
Provision for loan losses               246           (363)       2,285         399            6
                                   --------       --------     --------    --------     --------
Net interest income after provision
  for loan losses                     9,537         10,227        8,820       9,978        7,769

Non-interest income:
  Loan fees and service charges       1,085          1,005          650         156           60
  Gain on sales of loans,
    mortgage-backed securities
    and securities                      111            652          311         340        1,207
  Gain on sale of branches                -          2,054            -           -            -
  Other non-interest income              65            (22)          31          54          713
                                   --------       --------     --------    --------     --------
Total non-interest income             1,261          3,689          992         550        1,980
Total non-interest expense            8,127          9,757        9,471       8,759        5,349
Income before income taxes            2,671          4,159          341       1,769        4,400
Income tax expense                      988          2,864          158         707        1,507
                                   --------       --------     --------    --------     --------

Net income                          $ 1,683         $1,295      $   183      $1,062       $2,893
                                   ========       ========     ========    ========     ========
</TABLE>




6                                             Western Ohio Financial Corporation
<PAGE>




Selected Consolidated Financial Information
<TABLE>
<CAPTION>

                                                                  December 31,
                                              ----------------------------------------------------
                                                1999        1998       1997       1996      1995
                                              --------    ---------  --------    -------  --------

<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)                        0.52%       0.36%       0.05%     0.33%      1.42%
  Interest rate spread information:
  Average during year                            2.57        2.40        2.42      2.42       2.65
    End of year                                  2.37        2.55        2.31      2.23       2.05
    Net interest margin                          3.13        2.91        2.95      3.26       4.01
  Ratio of operating expense to
    average total assets                         2.51        2.69        2.39      2.72       2.63
  Return on equity (ratio of net income
    to average equity)                           3.75        2.42        0.34      2.00       4.72

Quality Ratios:
  Non-performing assets to total
    assets at end of year                        0.83        1.39        0.54      0.52       0.01
  Allowance for loan losses to
    non-performing loans                       100.94       70.47      196.59     83.95     255.45
  Allowance for loan losses to total
    loans, net                                   1.09        1.39        1.41      0.60       0.51
  Allowance for loan losses to
    classified assets                           75.14       68.89      130.08     73.74      87.66

Capital Ratios:
  Total equity to total assets at end
    of year                                     13.04       14.52       14.67     13.76      25.79
  Average equity to average assets              13.87       14.80       13.44     16.50      30.07
  Ratio of average interest-earning
    assets to average interest-bearing
    liabilities                                  1.13  x     1.11  x     1.11  x   1.19 x     1.37 x

Per Share Data:
  Earnings per common share-Basic             $  0.86      $ 0.60      $ 0.08    $ 0.47     $ 1.18
  Earnings per common share-Diluted              0.85        0.58        0.08      0.46       1.15
  Dividend payout ratio                          1.18  x     1.67   x   12.50  x   2.13  x    0.85  x
  Book value per share                        $ 21.82      $23.45      $22.91    $23.48     $25.27

Number of full service offices                   6           6          10        10          5

</TABLE>


<PAGE>





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

There were  1,969,912  common  shares of WOFC  outstanding,  excluding  unearned
employee  benefit  plan  shares,  on  December  31,  1999,  held  of  record  by
approximately  696 registered  shareholders and 1,350 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
"WstrnOHFnl" in the National Market Listing.

<TABLE>
<CAPTION>

                        Fiscal Year 1999           Fiscal Year 1998
                     Low     High   Dividend     Low    High      Dividend
                    ------------------------     -------------------------

<S>                 <C>      <C>    <C>          <C>    <C>       <C>

First quarter       $ 21.75$ 23.00  $  .25       $25.00 $ 27.00   $ .25
Second quarter        21.75  29.00     .25        24.75   27.00     .25
Third quarter         17.50  26.00     .25        19.75   25.25     .25
Fourth quarter        16.38  19.25     .25        19.75   23.38     .25

</TABLE>

The Company has repurchased  shares and intends to continue to repurchase shares
in order to enhance  shareholder  value.  During 1999,  the Company  repurchased
135,200  shares  and  277,500  in 1998.  The  Company  is no longer  subject  to
quantitative  regulatory limitations imposed by the Office of Thrift Supervision
("OTS") on stock repurchases and intends to continue repurchases of stock.



<PAGE>


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

General
As a  unitary  savings  and  loan  association  holding  company,  Western  Ohio
Financial  Corporation  ("the  Company"  or  "WOFC"),   holds  Cornerstone  Bank
("Cornerstone"),   whose  principal  business  has  traditionally  consisted  of
attracting  deposits  from the  general  public,  and  making  loans  secured by
residential  real  estate.  Cornerstone's  profitability  and  consequently  the
Company'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.  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. Cornerstone's profitability is also affected by the provisions for loan
losses and the level of  non-interest  income and expense.  Non-interest  income
consists primarily of service charges and other fees, gains (losses) on sales of
securities and other assets and income from real estate operations. Non-interest
expense  includes  salaries  and  employee  benefits,  real  estate  operations,
occupancy of premises, federal deposit insurance premiums, franchise taxes, data
processing expenses and other operating  expenses.  In October 1997, the Company
incorporated   another   subsidiary,    CornerstoneBanc    Financial   Services,
Incorporated (formerly West Central Mortgage Services,  Incorporated)  ("CFSI").
The primary business of CFSI is to engage in mortgage banking activities.

The  operating  results of the  Company 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 Company'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 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 Company offers a range of customer services and products,  including deposit
accounts  and loans  with a special  emphasis  on  one-to-four  family  mortgage
lending  and,  to a lesser  extent,  multi-family  and  commercial  real  estate
lending.   Smaller  portions  of  the  Company's  loans  receivable  consist  of
construction, commercial and consumer loans. Management has expanded and intends
to continue to expand its consumer lending  portfolio by soliciting its existing
customer base and has increased efforts to solicit commercial loans.

Management  and the Board of  Directors  of the  Company  have sought to enhance
shareholder value by using excess capital to repurchase  outstanding shares when
business and market conditions warrant.

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 interes 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 Company's  financial  performance  and could cause actual
results for future periods to differ  materially  from any statements  expressed
with respect to future periods.

The Company 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.

Analysis of  Financial  Condition
Total assets of the Company increased $2.0 million,  from $327.7 million in 1998
to $329.7  million in 1999.  This  increase  was a result of  increases in loans
receivable  offset by reductions in cash and cash  equivalents  and  securities.
Cash and cash equiva lents decreased $4.2 million from $13.8 million at December
31, 1998 to $9.6  million at  December  31,  1999.  Securities  decreased  $15.0
million from $65.4  million at December 31, 1998,  to $50.4  million at December
31, 1999. The primary reason for the reductions in cash,  cash  equivalents  and
securities was to fund the net increase in loans.

Net loans and loans held for sale  increased from $234.8 million at December 31,
1998, to $254.9 million at December 31, 1999, an increase of $20.1  million,  or
8.5%.  The increase was primarily the result of  purchasing  participations  and
originating  multi-family  mortgage  loans,  and  originating  new consumer home
equity loans.

Liabilities  increased  from $280.1  million at  December  31,  1998,  to $286.7
million at December 31, 1999, an increase of $6.6 million,  or 2.4%. The primary
reason for the  increase  in total  liabilities  was an  increase  in  deposits.
Deposits  increased  during  1999 by  $9.3  million  as a  result  of  continued
aggressive advertising and competitive pricing. For the year, deposits increased
4.9% to $202.3 million at December 31, 1999, from $193.0 million at December 31,
1998.  Offsetting the deposit increase,  the Company decreased advances from the
Federal Home Loan Bank of Cincinnati  ("FHLB") $3.1 million, or 3.6%, from $85.3
million at December 31, 1998,  to $82.2  million at December 31, 1999.  Rates on
advances drawn during the year ranged from 3.50% to 6.99%. At December 31, 1999,
$66.8  million  of  the  $82.2  million  total  advances  were  fixed-rate.  The
above-mentioned advances are

8                                             Western Ohio Financial Corporation

secured  by a  blanket  pledge  of  mortgages  to the  FHLB  and are not tied to
specific securities or mortgages.

Total equity decreased $4.6 million, or 9.7%,  primarily due to the $2.7 million
net repurchase of shares during 1999 and the net  unrealized  loss on securities
available for sale of $2.0 million.  Earnings of $1.7 million less  dividends of
$2.0 million decreased retained earnings by $0.3 million in 1999. The Company is
no longer subject to regulatory  limitations on stock repurchases and intends to
continue modest repurchases of its own stock.

Comparison of Results of Operations

Comparison of Years Ended December 31, 1999 and December 31, 1998

The  Company'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 Company receives fees from loan originations,  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, 1999, was $1.7 million,  an
increase of $388,000  compared to the year ended December 31, 1998. The increase
was primarily the result of lower operating  expenses and income tax expense due
to exiting the Cincinnati market in 1998. During 1998, management determined the
branch  investment  in the  Cincinnati  area was not in line with the  Company's
long-term goals. As a result,  the Company sold the Cincinnati area deposits and
closed or sold four branches.  The net gain on the sale of deposits and branches
was $2.1 million before taxes.

Net interest income decreased $81,000 from $9.9 million to $9.8 million, or less
than 1.0%,  primarily as a result of a combination of lower rates and volumes of
average  interest-earning  assets partially offset by lower rates and volumes of
average interest-bearing liabilities. The provision for loan losses for the year
ended December 31, 1999, was $246,000,  an increase of $609,000  compared to the
year ended  December 31, 1998,  which was a recapture of $363,000.  Non-interest
income  decreased  $2.4 million as a result of the net gain before taxes on sale
of the Cincinnati area deposits.  Non-interest  expense  decreased $1.6 million,
from $9.7 million at December  31,  1998,  to $8.1 million at December 31, 1999,
primarily due to lower expenses of approximately $1.3 million related to exiting
the Cincinnati  area.  Income taxes  decreased $1.9 million from $2.9 million at
December 31, 1998,  to $1.0 million at December 31, 1999, as a result of the tax
effect of intangible  asset  disposition  associated  with the  Cincinnati  area
branch closing.

Interest Income.  Total interest income decreased $2.4 million,  or 9.4% for the
year ended December 31, 1999,  compared to the prior year.  This decrease is due
to a  combination  of lower rates and lower average  volume of interest  earning
assets.  This lower volume is due mostly to lower  short-term  funds held by the
Company which had been  accumulated  in 1998 in  anticipation  of the Cincinnati
area  deposit  sale.  The lower rates were  primarily  due to lower rates on new
loans  originated  than  previously  held.  Interest income from loans decreased
$590,000  and  $725,000  as  a  result  of  the  decreased   volume  and  rates,
respectively.  Interest from  securities  and other sources fell by $1.1 million
primarily due to reducing volumes generated to fund the deposit sale.

Interest Expense. Total interest expense decreased $2.4 million or 14.8% for the
year ended  December 31, 1999,  compared to the prior year. The decrease was due
primarily  to a  lower  average  volume  of time  deposits  as a  result  of the
Cincinnati  area branch  sale.  Interest on deposits  decreased  $2.8 million or
22.3% for the year ended December 31, 1999, compared to the prior year. Interest
on  borrowings  increased  $408,000  or 11.5% over the prior year due to average
higher volumes.

Provision  for Loan  Losses.  The  provision  for  loan  losses  is a result  of
management's  periodic analysis of the adequacy of the allowance for loan losses
and any  specific  losses  applied  to that  allowance.  During  the year  ended
December 31, 1999, the provision for loan loss was $246,000. This is a change of
$609,000 from a $363,000  recapture of the provision  during the prior year. The
reduction of the loan loss provision in 1998 was due to the  decreasing  overall
loan  portfolio  and the  successful  resolution  of a major loan  concern.  The
increase  in 1999  was due to an  increase  in the  loan  portfolio.  Management
believes that the total allowance of $2.8 million on total loans of $262 million
at December 31, 1999, is adequate given the area economic conditions,  the level
of impaired and nonperforming  loans, and the composition of the loan portfolio.
At December  31,  1999,  the Company was aware of no  regulatory  directives  or
suggestions that the Company make additional provisions for losses on loans.

The  Company  will  continue  to review its  allowance  for loan losses and make
further  allowances as economic and asset quality conditions  dictate.  Although
the Company maintains its allowance for loan losses at a level that it considers
to be adequate to provide for probable  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
Company'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.

Western Ohio Financial Corporation                                             9

Non-interest Income.  Non-interest income decreased from $3.7 million in 1998 to
$1.3 million in 1999.  This decrease is due primarily to 1998  including the net
gain before taxes on sale of the Cincinnati area branches of $2.1 million.  Gain
on sales of  securities  decreased  due to selling a Federal Home Loan  Mortgage
Corporation  ("FHLMC") certificate and a FHLMC investment security in 1998 for a
total gain of $307,000.  Additionally, gains on sales of loans declined $234,000
due to lower mortgage loan originations and sales compared to the prior year.

Non-interest  Expense.  Total non-interest expense decreased 16.7% in 1999, from
$9.8 million in 1998 to $8.1  million.  The decrease is primarily  the result of
reducing costs by approximately  $1.3 million associated with the divestiture of
the  Cincinnati  area  branches.   Additionally,  the  Company  reduced  outside
consultant expenses and Ohio franchise taxes for Cornerstone.

Income Tax  Expense.  Income tax  expense  was $1.0  million  for the year ended
December  31,  1999,  a decrease of $1.9  million from the same period the prior
year. Income taxes decreased primarily as a result of prior year's tax effect of
the intangible  asset  disposition  associated  with the Cincinnati  area branch
sale.  The  1998  write-off  of the $1.4  million  intangible  asset  originally
associated  with the  Cincinnati  area  acquisition  is not  deductible  for tax
purposes,  and is a permanent  tax  difference  for  computing the Company's tax
expense.  As a  result,  the  Company's  effective  tax rate for 1998 was  68.9%
compared to 37.0% in 1999.

Comparison of Years Ended December 31, 1998 and December 31, 1997

General.  Net income for the year ended December 31, 1998, was $1.3 million,  an
increase of $1.1  million  compared to the year ended  December  31,  1997.  The
increase  was  primarily  the result of a  decrease  in the  provision  for loan
losses,  an  increase  in  non-interest  income  due to a net  gain  on  sale of
branches,  and  increases  in service  fees  offset in part by a decrease in net
interest  income and an increase in provision for income taxes  primarily due to
the gain on sale.  The  provision  for the year ended  December 31, 1998,  was a
reversal  of  $363,000,  a change of $2.6  million  compared  to the year  ended
December 31, 1997,  which  reflected a provision of $2.3  million.  Net interest
income  decreased  $1.2 million from $11.1  million to $9.9  million,  or 11.2%,
primarily  as  a  result  of  a   combination   of  lower   volumes  of  average
interest-earning  assets partially  offset by lower volumes of  interest-bearing
liabilities. Non-interest income increased $2.7 million as a result of increased
deposit account service fees and net gain before taxes on sale of the Cincinnati
area deposits.  For the year ended December 31, 1998,  non-interest  income also
included  a  $307,000  gain from the sale of  securities.  Non-interest  expense
increased  $286,000,  from $9.5 million at December 31, 1997, to $9.7 million at
December 31, 1998,  primarily due to additional  expenses of $301,000 related to
exiting the Cincinnati  area.  Income taxes increased $2.7 million from $158,000
at December  31, 1997,  to $2.9  million at December  31,  1998,  as a result of
higher income and the tax effect of intangible asset disposition associated with
the Cincinnati area branch closing.

Interest  Income.  Total interest income decreased $3.2 million or 11.0% for the
year ended  December  31,  1998,  compared to the prior year.  This  decrease is
chiefly due to the lower volume of interest earning assets. This lower volume is
due  mostly  to  customer  refinancing  of  loans  during  the year due to lower
mortgage rates. Interest income from loans decreased $3.4 million as a result of
the  decreased  volume.  Interest  from  securities  and other  sources  rose by
$221,000 primarily due to additional volumes generated to fund the deposit sale.

Interest Expense. Total interest expense decreased $1.9 million or 10.8% for the
year ended  December 31, 1998,  compared to the prior year. The decrease was due
primarily  to a  lower  average  volume  of  borrowings.  Interest  on  deposits
increased $217,000 or 1.8% for the year ended December 31, 1998, compared to the
prior year.  Interest on  borrowings  decreased  $2.2  million or 37.8% over the
prior year due primarily to lower volumes.

Provision  for Loan  Losses.  The  provision  for  loan  losses  is a result  of
management's  periodic analysis of the adequacy of the allowance for loan losses
and any  specific  losses  applied  to that  allowance.  During  the year  ended
December 31, 1998, the provision for loan loss was $(363,000).  This is a change
of $2.6 million from a $2.3 million  provision  during the prior year.  In 1997,
management  identified  losses and increased  its provision for several  problem
loans  during  the fourth  quarter of 1997.  These  loans  were  primarily  of a
commercial nature.  Based on satisfactory  resolution of one of the problem loan
situations,  actual  problem  loan  activity,  net  charge-offs  of $359,000 and
continued review,  management  recaptured $363,000 of the loan loss provision in
1998.  Management  believes  that the total  allowance  of $3.2 million on total
loans of $237 million at December 31, 1998, is adequate  given the area economic
conditions and its loan portfolio composition. At December 31, 1998, the Company
was aware of no  regulatory  directives  or  suggestions  that the Company  make
additional provisions for losses on loans.

Non-interest Income. Non-interest income increased from $992,000 in 1997 to $3.7
million in 1998.  This increase is due primarily to additional  deposit  account
service fees and net gain before taxes on sale of the Cincinnati  area branches.
Deposit  account  service fees  increased  $355,000 as  management  continues to
actively increase fee income resulting from deposit activity.

During 1998,  management determined the branch investment in the Cincinnati area
was not in line with the Company's  long-term  goals.  As a result,  the Company
sold the Cincinnati area deposits and closed or sold four branches. The net gain
on the sale of deposits and branches was $2.1 million before taxes.

10                                            Western Ohio Financial Corporation

Non-interest  Expense.  Total non-interest  expense increased 3.0% in 1998, from
$9.5 million in 1997 to $9.8  million.  The increase is primarily  the result of
additional personnel costs of approximately  $169,000 associated with closing of
the Cincinnati area branches.

Income Tax  Expense.  Income tax  expense  was $2.9  million  for the year ended
December  31,  1998,  an increase of $2.7 million from the same period the prior
year. Income taxes increased  primarily as a result of increased earnings before
income taxes, and the tax effect of the intangible asset disposition  associated
with the  Cincinnati  area  branch  sale.  The  write-off  of the  $1.4  million
intangible asset  originally  associated with the Cincinnati area acquisition is
not deductible for tax purposes, and is a permanent tax difference for computing
the Company's  tax expense.  As a result,  the Company's  effective tax rate for
1998 was 68.9% compared to 46.3% in 1997.

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. No tax equivalent adjustments were made. All average balances are monthly
average  balances.  Non-accruing  loans have been included in the table as loans
carrying a zero yield.  The average  balance of  mortgage-backed  securities and
securities  available for sale includes  unrealized gains and losses while yield
is based on amortized cost.

<TABLE>
<CAPTION>

                                                                   Year Ended December 31,
                              ------------------------------------------------------------------------------------------
                                            1999                           1998                         1997
                              ------------------------------------------------------------------------------------------
                                Average    Interest            Average    Interest            Average   Interest
                              Outstanding  Earned/   Yield/  Outstanding   Earned/  Yield/  Outstanding Earned/   Yield/
                               Balance      Paid     Rate     Balance       Paid    Rate      Balance     Paid     Rate
                              -----------  --------  ------  -----------  --------  ------  ----------- --------  ------
<S>                           <C>          <C>       <C>     <C>          <C>       <C>     <C>         <C>       <C>
                                                                  (Dollars in thousands)
Interest-earning assets:
  Loans receivable            $244,824     $19,096   7.80%    $252,232    $20,411    8.09%   $298,111   $23,815    7.99%
  Mortgage-backed securities    45,683       2,888   6.34       27,626      1,608    5.85      28,994     1,843    6.39
  Securities                    10,274         679   6.64       14,781        980    6.65      33,083     2,143    6.40
  Interest-bearing deposits      4,163         247   5.93       37,399      2,379    6.36       9,585       797    8.32
  FHLB stock                     7,135         505   7.06        6,649        478    7.19       6,102       441    7.23
                              --------     --------  -----    ----------  --------  ------   ---------- --------  ------
    Total interest-earning
      assets                   312,079      23,415   7.50      338,687     25,856    7.63     375,875    29,039    7.73
                              --------     --------  -----    ----------  --------  ------   ---------- --------  ------

  Non-earning assets            12,071                          23,508                         20,124
                              --------                        ----------                     ----------
    Total assets              $324,150                        $362,195                       $395,999
                              ========                        ==========                     ==========

Interest-bearing liabilities:
  Time deposits               $122,992       6,987   5.68     $164,302    $ 9,641    5.87     175,163    10,447    5.96
  Demand and NOW deposits       12,767         145   1.14       12,990        180    1.39      11,998       129    1.08
  Savings deposits              64,387       2,535   3.94       65,709      2,614    3.98      53,305     1,642    3.08
  Borrowings                    76,449       3,965   5.19       62,802      3,557    5.66      97,414     5,716    5.87
                              --------      ------  -------   ---------   -------    ------
    Total interest-bearing
      liabilities              276,595      13,632   4.93      305,803     15,992    5.23     337,880    17,934    5.31
                                            ------                         ------                        ------

  Non-earning liabilities        2,643                           2,775                          4,908
                              --------                         -------                        --------
    Total liabilities          279,238                         308,578                        342,788

  Equity                        44,912                          53,617                         53,211
                              --------                         -------                        --------

    Total liabilities/equity  $324,150                        $362,195                       $395,999
                              ========                        ========                       ========

Net interest income                         $9,783                         $9,864                       $11,105
                                            ======                         ======                       =======
Net interest rate spread                             2.57%                          2.40%                          2.42%
                                                    =====                           =====                         ======
Net earning asset              $35,484                         $32,884                        $37,995
                              ========                        ========                        =======
Net yield on average
  interest-earning assets                            3.13%                          2.91%                          2.95%
                                                     =====                          =====                         ======
Average interest-earning
  assets to average
  interest-bearing
  liabilities                                 1.13 x                         1.11                          1.11 x
                                              ======                        =====                          =====

</TABLE>

Western Ohio Financial Corporation                                            11
<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 that 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,
                              --------------------------------------------------------------
                                        1998 vs. 1999                 1997 vs. 1998
                              --------------------------------------------------------------
                                    Increase                         Increase
                                   (Decrease)        Total          (Decrease)      Total
                                     Due to         Increase         Due to       Increase
                              --------------------               --------------
                                Volume     Rate    (Decrease)    Volume   Rate   (Decrease)
                              ----------   ------- ----------    ------- ------  ----------
                                       (Dollars in thousands)
<S>                           <C>          <C>     <C>           <C>     <C>     <C>

Interest-earning assets:
  Loans receivable            $ (590)      $(725)  $(1,315)     $(3,709)  $305   $(3,404)
  Mortgage-backed securitie    1,131         149     1,280          (84)  (151)     (235)
  Securities                    (298)         (3)     (301)      (1,237)    74    (1,163)
  Other                       (1,947)       (158)   (2,105)       1,875   (256)    1,619
                              -------      ------  --------      -------  -----  --------
    Total interest-earninng
      assets                  (1,705)       (736)   (2,441)     $(3,155)   (28)   (3,183)
                              -------      ------  --------      -------  -----  --------
                              -------      ------  --------      -------  -----  --------

terest-bearing liabilities:
  Time deposits              $(2,337)      $(316)   (2,653)     $  (643) $(163)     (806)
  Demand and NOW deposits         (3)        (33)      (36)          12     39        51
  Savings deposits               (52)        (27)      (79)         431    541       972
  Borrowings                     726        (318       408       (1,952)  (207)   (2,159)
                              -------      ------   -------     -------- ------  --------
    Total interest-bearing
      liabilitie             $(1,666)      $(694)   (2,360)     $(2,152) $ 210    (1,942)
                             ========      ======   =======     ======== ======  ========

Net interest income                                 $  (81)                      $(1,241)
                                                    =======                      ========



</TABLE>


12                                            Western Ohio Financial Corporation



<PAGE>




Asset/Liability Management and Market Risk

The  Company's  primary  market risk  exposure  is interest  rate risk and, to a
lesser extent, liquidity risk. Interest rate risk is the risk that the Company'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 Company places great importance
on monitoring and controlling  interest-rate  risk. The measurement and analysis
of the exposure of the Company's primary operating subsidiary, Cornerstone Bank,
to changes in the interest rate  environment  is referred to as  asset/liability
management.  One method used to analyze the Company'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  200 basis point (1 basis point equals .01%) change in
market interest rates.  Both a 200 basis point increase in market interest rates
and a 200 basis point decrease in market interest rates are considered.

Presented  below  is an  analysis  of  Cornerstone's  interest  rate  risk as of
December  31, 1999,  and  December  31, 1998,  as measured by changes in NPV for
instantaneous  and  sustained  parallel  shifts  of 100  basis  points in market
interest  rates.  The table also  contains the policy limits set by the Board of
Directors.  The policy  limits use minimum NPV ratios where the NPV ratio is the
NPV  divided  by  the  present   value  of  expected   incoming  cash  flows  on
interest-earning  and other  assets.  The Board of Directors  deem these minimum
limits  advisable  after  considering  the impact of various changes in interest
rates on NPV and the institution's strong capital position.

<TABLE>
<CAPTION>

                              December 31, 1999              December 31, 1998
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
-------------  ----------- --------   --------  ------   --------   --------  ------
<S>            <C>         <C>        <C>       <C>      <C>        <C>       <C>
                             (Dollars in thousands)

+300             6.00%    ($17,132)    (42)%      7.72%  $(13,580)   (29)%     10.43%
+200             6.75      (11,389)    (28)       9.35     (8,505)   (18)      11.84
+100             7.25       (5,565)    (14)      10.92     (3,731)    (8)      13.01
   -             8.00            -       -       12.33          -      -       13.84
(100)            9.00        4,439      11       13.38      1,551      3       14.07
(200)            9.00        7,262      18       13.98      2,519      5       14.14
(300)            9.00        9,341      23       14.37      3,951      9       14.32

</TABLE>


As illustrated in the table, 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 in 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  made.  Moreover,  the  interest
Cornerstone   would  pay  on  its  deposits  would  increase   rapidly   because
Cornerstone's deposits generally have shorter periods to repricing.  Assumptions
used in calculating the amounts in these tables correspond with OTS assumptions.

As of December  31,  1999,  the NPV ratios  resulting  from  certain  changes in
interest  rates  were  within the policy  limits of the  institution's  Board of
Directors.  It should be noted that the table below only pertains to Cornerstone
Bank and does not apply to the holding company. The holding company's assets are
all of a short term or short term to  repricing  nature  and  therefore  are not
subject to significant interest rate risk.

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.

In the event that interest  rates continue to rise,  Cornerstone's  net interest
income could be expected to be negatively  affected.  Moreover,  rising interest
rates could negatively affect  Cornerstone's  earnings and thereby the Company's
earnings

Western Ohio Financial Corporation                                            13


<PAGE>

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.

Cornerstone intends to limit the addition of fixed-rate  long-duration loans and
securities to its portfolio.  The Company  continues to offer consumer  products
that  reprice  on a  monthly  basis.  It is  expected  that as the size of these
portfolio  segments grows,  the interest rate risk will be lessened,  though not
eliminated.


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, 1999,
1998 and 1997.



                                   Year Ended December 31,
                            -------------------------------------
                              1999           1998          1997
                            ---------     ---------      --------
                                 (Dollars in thousands)

Net income                  $ 1,683        $ 1,295       $  183
Adjustments to reconcile
  net income to net cash
  from operating activities   5,135         (2,173)         669
                            -------        --------      ------
Net cash from operating
  activities                  6,818           (878)         852
Net cash from investment
  activities                (12,606)        23,025       35,999
Net cash from financing
  activities                  1,548        (39,532)     (21,223)
                            -------        --------     -------
Net change in cash and
  cash equivalents           (4,240)       (17,385)      15,628
Cash and cash equivalents
  at beginning of period     13,854         31,239       15,611
                            -------        --------     -------
Cash and cash equivalents
  at end of period           $9,614        $13,854      $31,239
                            =======        ========     =======


At December 31, 1999, the Company had no  outstanding  commitments to sell loans
or securities.

The OTS requires  minimum levels of liquid  assets.  OTS  regulations  presently
require  Cornerstone  to  maintain  an average  daily  balance of liquid  assets
(United States Treasury and federal agency  obligations,  of any maturity) equal
to at least  4% of the sum of its  average  daily  balance  of net  withdrawable
deposit accounts and borrowings  payable in one year or less. Such  requirements
may be  changed  from  time  to time by the  OTS to  reflect  changing  economic
conditions.

Such  investments  are intended to provide a source of  relatively  liquid funds
upon which Cornerstone may rely, if necessary,  to fund deposit  withdrawals and
other short-term funding needs.  Cornerstone's  average regulatory  liquidity at
December 31, 1999, was 21.7%.

The Company's  primary  sources of funds  consist of deposits and  repayments of
loans and interest earned on securities. The Company maintains a higher ratio of
loans to deposits in comparison with other similarly sized savings institutions.
Historically,  this has not had a material effect on the Company's  liquidity as
it has utilized other potential  sources of funds including  borrowings from the
FHLB to maintain liquidity and to meet operating  expenses.  Management believes
that loan  repayments  and other  sources of funds will be  adequate to meet the
Company's foreseeable liquidity needs.

The Company's  primary financing source during 1999 was borrowings from the FHLB
of $81.2 million.  Also a major financing source was the net increase in savings
deposits  of $9.4  million.  The  Company  paid $2.0  million in  dividends  and
acquired  treasury  stock for $2.8 million in 1999.  Liquidity  management  is a
daily and  long-term  responsibility  of  management.  The  Company  adjusts its
investments in liquid assets based upon  assessment of (i) expected loan demand,
(ii) expected deposit flows, (iii) yields available on interest-bearing deposits
and  (iv) the  objectives  of its  asset/liability  management  program.  Excess
liquidity is invested generally in interest-bearing overnight deposits and other
short-term government and agency obligations. If the Company requires additional
funds  beyond its  internal  ability to generate,  it has  additional  borrowing
capacity with the FHLB.

The Company  anticipates  that it will have sufficient  funds avail-able to meet
current loan  commitments.  At December 31,  1999,  the Company had  outstanding
commitments to extend credit that amounted to $15.0 million.

OTS regulations  require that institutions  maintain  "tangible  capital" of not
less than 1.5% of the 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 tha the OTS  prompt  corrective  action
regulations require to be considered adequately capitalized.

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 $1.4 million as
of December 31, 1999.


14                                            Western Ohio Financial Corporation

<PAGE>



The following table summarizes Cornerstone's regulatory capital requirements and
actual capital at December 31, 1999.

<TABLE>
<CAPTION>

                                                                   Excess of Actual
                                                                  Capital Over Current
                         Actual Capital       Current Requirement    Requirement
                      ---------------------  -------------------- -------------------
                       Amount       Percent   Amount      Percent  Amount     Percent
                      --------     --------  --------    -------- --------  ---------
<S>                   <C>          <C>       <C>         <C>      <C>       <C>
                                            (Dollars in thousands)

Tangible capital      $40,041        12.08%  $4,972      1.50%    $35,069     10.58%
Core capital           40,041        12.08   13,258      4.00      26,783      8.08
Risk-Based capital     41,435        19.80   16,735      8.00      24,700     11.80


</TABLE>

Impact of New Accounting Standards
Statement of Financial  Accounting  Standards ("SFAS") No. 133,  "Accounting for
Derivative  Instruments and Hedging  Activities,"  requires  companies to record
derivatives  on the  balance  sheet as assets or  liabilities,  measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted  for  depending on the use of the  derivative  and whether it
qualifies for hedge  accounting.  The key criterion for hedge accounting is that
the  hedging  relationship  must be highly  effective  in  achieving  offsetting
changes  in fair  value or cash  flows.  SFAS 133 does not  allow  hedging  of a
security which is classified as held to maturity,  accordingly, upon adoption of
SFAS 133,  companies  may  reclassify  any  security  from held to  maturity  to
available  for sale if they wish to be able to hedge the security in the future.
SFAS 133 is effective for fiscal years beginning after June 15, 2000, with early
adoption  encouraged  for any fiscal  quarter  beginning July 1, 1998, or later,
with no retroactive application. Management does not expect the adoption of SFAS
133 to have a significant impact on the Company's financial statements.

Impact of Inflation and Changing Prices
The  consolidated  financial  statements and related data presented  herein have
been  prepared  according  to generally  accepted  accounting  principles  which
require the measurement of financial  position and operating results in terms of
historical dollars without  considering changes in the relative purchasing power
of  money  over  time  due  to  inflation.   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 Company are monetary in nature.
As a result,  interest  rates have a more  significant  impact on the  Company's
performance  than the effects of general levels of inflation.  Interest rates do
not  necessarily  move in the same direction or magnitude as the prices of goods
and services.

Year 2000 Issue
The Company is unaware of any material adverse effects related to the Year 2000.
The Company's  operating  systems,  facilities  and  infrastructure  continue to
operate as expected. In addition, the Company is unaware of any material adverse
effects on any of the  Company's  customers  or  vendors.  Although  the Company
continues to not anticipate any material  adverse effects on its operations as a
result of the Year 2000  issue,  the  Company  cannot  guarantee  that Year 2000
issues will not affect its operations  negatively,  and continues to monitor its
operations.

The Company spent  approximately  $65,000 to test and renovate  mission critical
systems.


Western Ohio Financial Corporation                                            15

<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,  1999  and  1998,  and the  related
consolidated   statements   of   income,   comprehensive   income,   changes  in
shareholders'  equity and cash flows for the years then ended.  These  financial
statements  are  the  responsibility  of  the  Corporation's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits. The 1997 consolidated financial statements of Western Ohio Financial
Corporation  were audited by other  auditors whose report dated January 23, 1998
expressed an unqualified opinion on those statements.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of Western  Ohio
Financial  Corporation  as of December 31, 1999 and 1998, and the results of its
operations  and its cash  flows for the years then  ended,  in  conformity  with
generally accepted accounting principles.


Crowe, Chizek and Company LLP

February 10, 2000
Columbus, Ohio


16                                           Western Ohio Financial Corporation

<PAGE>

WESTERN OHIO FINANCIAL CORPORATION
Consolidated Balance Sheets
December 31, 1999 and 1998
(Dollars in thousands, except share data)

Assets

<TABLE>
<CAPTION>
                                                                           1999           1998
                                                                        ---------      ---------

   <S>                                                                <C>              <C>

   Cash and due from financial institutions                           $ 6,455          $  3,987
   Overnight deposits in other financial institutions                   3,159             4,550
   Interest-bearing deposits in other financial institutions              ---             5,317
                                                                      ---------        ---------
          Total cash and cash equivalents                                9,614           13,854
   Securities available for sale                                        50,366           65,446
   Federal Home Loan Bank stock                                          7,451            6,948
   Loans, net                                                          254,654          230,914
   Loans held for sale                                                     217            3,898
   Premises and equipment, net                                           3,475            3,241
   Accrued interest receivable                                           1,806            1,897
   Other assets                                                          2,102            1,530
                                                                      ---------        ---------

          Total assets                                                $329,685         $327,728
                                                                     =========         =========

Liabilities
   Deposits                                                           $202,331         $192,966
   Borrowed funds                                                       82,183           85,252
   Advance payments from borrowers for taxes and insurance                 864              881
   Other liabilities                                                     1,318            1,035
                                                                     ---------         ---------
          Total liabilities                                            286,695          280,134

Shareholders' Equity
   Common stock, $.01 par value; 7,250,000 shares authorized;
     2,645,000 shares issued                                                26               26
   Additional paid-in capital                                           40,452           40,452
   Retained earnings                                                    20,060           20,351
   Unearned employee stock ownership plan shares                        (1,071)          (1,309)
   Unearned management recognition plan shares                            (200)            (372)
   Treasury stock; 608,136 and 476,317 shares, at cost                 (14,121)         (11,434)
   Accumulated other comprehensive income                               (2,157)            (120)
                                                                      ---------       ---------
          Total shareholders' equity                                    42,989           47,594

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

          Total liabilities and shareholders'                         $329,685         $327,728
                                                                      =========       =========
</TABLE>

See accompanying notes to consolidated financial statements.


1999 Annual Report to Shareholders                                            17

<PAGE>


WESTERN OHIO FINANCIAL CORPORATION
Consolidated Statements of Income
Years Ended December 31, 1999, 1998, and 1997
(Dollars in thousands except earnings per common share data)

<TABLE>
<CAPTION>

                                                                       1999          1998           1997
                                                                      -------      -------        -------
<S>                                                                   <C>          <C>            <C>

Interest and dividend income
   Loans, including fees                                              $19,096      $20,411        $23,815
   Securities                                                           3,567        2,588          3,986
   Interest-bearing deposits and overnight funds                          247        2,379            797
   Other interest and dividend income                                     505          478            441
                                                                      -------      -------        -------
     Total interest income                                            $23,415       25,856         29,039

Interest expense
   Deposits                                                             9,667       12,435         12,218
   Borrowed funds                                                       3,965        3,557          5,716
                                                                      -------      -------        -------
     Total interest expense                                            13,632       15,992         17,934
                                                                      -------      -------        -------

Net interest income                                                     9,783        9,864         11,105
Provision for loan losses                                                 246         (363)         2,285
                                                                      -------      -------        -------
Net interest income after provision for loan losses                     9,537       10,227          8,820

Noninterest income
   Service charges                                                      1,085        1,005            650
   Net gain (loss) on sale of securities                                   -           307             (5)
   Net gain on sale of portfolio loans                                     -             -            228
   Net gain on sale of loans held for sale                               111           345              -
   Net gain (loss) on disposal of premises and equipment                   -           (82)            88
   Net gain on sale of branches                                            -         2,054              -
   Other                                                                  65            60             31
                                                                      -------      -------        -------
     Total noninterest income                                          1,261         3,689            992

Noninterest expense
   Salaries and employee benefits                                      3,958         4,494          4,410
   Occupancy and equipment                                               945           965            950
   Federal deposit insurance                                             128           148            128
   State franchise taxes                                                 620           748            732
   Professional services                                                 454           703            405
   Advertising                                                           340           436            354
   Amortization of goodwill                                                -           295            425
   Data processing                                                       502           455            643
   Other                                                               1,180         1,513          1,424
                                                                      -------      -------        -------
     Total noninterest expense                                         8,127         9,757          9,471
                                                                      -------      -------        -------
Income before income taxes                                             2,671         4,159            341
Income tax expense                                                       988         2,864            158
                                                                      -------      -------        -------
Net income                                                            $1,683       $ 1,295        $   183
                                                                      =======      =======        =======
Earnings per common share:
     Basic                                                            $ 0.86       $  0.60        $  0.08
                                                                      =======      =======        =======
     Diluted                                                          $ 0.85       $  0.58        $  0.08
                                                                      =======      =======        =======

See accompanying notes to consolidated financial statements.
</TABLE>

18                                            Western Ohio Financial Corporation

<PAGE>

WESTERN OHIO FINANCIAL CORPORATION Consolidated Statements of Comprehensive
Income Years ended December 31, 1999, 1998, and 1997
(Dollars in thousands)

<TABLE>
<CAPTION>

                                                                        1999         1998       1997
                                                                       -------     -------    -------
<S>                                                                     <C>        <C>        <C>

Net income                                                              $1,683     $1,295     $  183


Other comprehensive income (loss), net of tax
  Unrealized gain (loss) on available for sale
  securities arising during the period                                  (2,037)      (226)       548

Reclassification adjustment for amounts realized on
  securities sales included in net income                                    -       (203)         3
                                                                       -------     -------    -------
     Total other comprehensive income (loss)                            (2,037)      (429)       551
                                                                       -------     -------    -------

Comprehensive income (loss)                                           $   (354)    $  866      $ 734
                                                                       ========    =======    =======

See accompanying notes to consolidated financial statements.
</TABLE>

1999 Annual Report to Shareholders                                            19


<PAGE>


WESTERN OHIO  FINANCIAL  CORPORATION  Consolidated  Statements of  Shareholders'
Equity Years Ended December 31, 1999, 1998, and 1997
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                   Unearned                  Accumulated
                                                            Additional             Employee                    Other
                                                    Common    Paid-In   Retained    Benefit     Treasury   Comprehensive
                                                    Stock    Capital    Earnings   Plan Shares   Stock         Income       Total
                                                  --------  ---------   --------   -----------   ---------   ----------    -------
<S>                                               <C>       <C>         <C>        <C>           <C>         <C>          <C>


Balance at January 1, 1997                            $26    $41,158     $23,234    $(2,549)      $(7,579)    $(242)       $54,048

  Net income                                            -          -         183          -             -         -            183
  Cash dividends - $1.00 per share                      -          -      (2,219)         -             -         -         (2,219)
  Purchase of treasury shares                           -          -           -          -          (370)        -           (370)
  Commitment to release employee stock
    ownership plan shares                               -        141           -        238             -         -            379
  Shares awarded under management recognition plan      -         19           -        (76)           57         -             -
  Shares earned under management recognition plan,
    including tax benefit realized on vesting of
    plan shares                                         -       (279)          -        444             -         -            165
  Stock options exercised, including tax benefit        -       (581)          -          -         2,444         -          1,863
  Change in net unrealized gain(loss) on securities
    available for sale, net of reclassification and
    tax effects                                         -          -           -          -             -       551            551
                                                     ----    -------      ------    -------         -----     ------       -------


Balance at December 31, 1997                           26     40,458      21,198     (1,943)       (5,448)      309         54,600

  Net income                                            -          -       1,295          -             -         -          1,295
  Cash dividends - $1.00 per share                      -          -      (2,142)         -             -         -         (2,142)
  Purchase of treasury shares                           -          -           -          -        (6,611)        -         (6,611)
  Commitment to release employee stock
    ownership plan shares                               -        120           -        238             -         -            358
  Reclassification of management recognition plan
    shares                                              -          -           -       (148)          148         -             -
  Shares earned under management recognition plan,
    including tax benefit realized on vesting of
    plan shares                                         -          -           -        172             -         -            172
  Stock options exercised, including tax benefit        -       (126)          -          -           477         -            351
  Change in net unrealized gain(loss) on securities
    available for sale, net of reclassification and
    tax effects                                         -          -           -          -          (429)     (429)
                                                       ----  -------      ------      -----        -------     -----        ------


Balance at December 31, 1998                           26     40,452      20,351     (1,681)      (11,434)     (120)        47,594

  Net income                                            -          -       1,683          -             -         -          1,683
  Cash dividends - $1.00 per share                      -          -      (1,974)         -             -         -         (1,974)
  Purchase of treasury shares                           -          -           -          -        (2,826)        -         (2,826)
  Commitment to release employee stock
    ownership plan shares                               -         83           -        238             -         -            321
  Shares earned under management recognition plan,
    including tax benefit realized on vesting of
    plan shares                                         -          -           -        159             -         -            159
  Management recognition plan shares awarded,
    net of forfeitures                                  -          -           -         13           (13)        -            159
  Stock options exercised, including tax benefit        -        (83)          -          -           152         -             69
  Change in net unrealized gain(loss) on securities
    available for sale, net of reclassification
    and tax effects                                     -          -           -          -             -    (2,037)        (2,037)
                                                     ----    --------    -------      --------    --------   -------        -------
Balance at December 31, 1999                          $26    $40,452     $20,060      $(1,271)    $(14,121)  $(2,157)       $42,989
                                                     ====    ========    =======      ========    ========   =======        =======

See accompanying notes to consolidated financial statements.
</TABLE>



 20                                           Western Ohio Financial Corporation
<PAGE>


WESTERN OHIO FINANCIAL CORPORATION  Consolidated  Statements of Cash Flows Years
Ended December 31, 1999, 1998, and 1997
(Dollars in thousands)
<TABLE>
<CAPTION>

                                                       1999          1998             1997
                                                       -------     -------           -------
<S>                                                    <C>         <C>               <C>

Cash flows from operating activities
  Net income                                           $ 1,683     $ 1,295           $  183
  Adjustments to reconcile net income to net cash
    from operating activities
      Net amortization (accretion) on securities           137          78             (239)
      Compensation expense on ESOP shares                  321         358              379
      Compensation expense on MRP share                    159         172              165
      Depreciation and amortization                        313         711              678
      FHLB stock dividends                                (503)       (478)            (441)
      Deferred loan fee income                             (21)        (16)            (119)
      Deferred income taxes                                342         (71)            (177)
      Provision for loan losses                            246        (363)           2,285
      Net gain on sale of branches                           -      (2,054)               -
      Net realized (gain) loss on sales of securities        -           5             (307)
      Net gain on sale of loans                           (111)          -             (228)
      Net (gain) loss on sale or disposal of premises
        and equipment                                        6          82              (88)
      Net loss on sale of real estate owned                  1          32                -
      Net change in:
        Loans held for sale                              3,792      (1,131)               -
        Other assets and other liabilities                 262         (83)            (780)
        Accrued interest receivable                         91         463             (190)
        Taxes payable                                      100         434             (581)
                                                       -------     -------          -------
          Net cash from operating activities           $ 6,818     $  (878)          $  852

Cash flows from investing activities
  Securities available for sale:
    Purchases                                                -     (50,179)          (2,001)
    Maturities and principal payments                   11,857       6,888           19,808
    Sales                                                    -      22,312           10,684
  Purchases of FHLB stock                                    -           -             (167)
  Purchases of loans                                   (27,842)          -           (3,710)
  Proceeds from sale of portfolio loans                      -           -           15,751
  Net (increase) decrease in loans                       3,877      44,406           (4,047)
  Premises and equipment expenditures                   (1,076)       (397)            (483)
  Proceeds from sale of premises and equipment             523          27              164
  Purchase of real estate                                    -        (249)               -
  Proceeds from sale of real estate owned                   55         217                -
                                                      --------     -------          -------
    Net cash from investing activities                $(12,606)    $23,025          $35,999

(continued)

</TABLE>

1999 Annual Report to Shareholders                                            21
<PAGE>




WESTERN  OHIO  FINANCIAL  CORPORATION
Consolidated  Statements  of  Cash  Flows (Continued)
Years Ended December 31, 1999, 1998, and 1997
(Dollars in thousands)

<TABLE>
<CAPTION>

                                                    1999         1998           1997
                                                  --------     ---------      ---------
<S>                                               <C>          <C>            <C>

Cash flows from financing activities
  Cash paid for sale of branches                       -         (78,453)          -
  Net change in deposits                           9,365          30,422      13,706
  Net change in advance payments from borrowers
    for taxes and insurance                          (17)            (12)         60
  Proceeds from FHLB advances                     81,175          76,190      93,640
  Repayments on FHLB advances                    (84,244)        (59,277)   (127,903)
  Cash dividends paid                             (1,974)         (2,142)     (2,219)
  Proceeds from exercise of stock options             69             351       1,863
  Purchase of treasury stock                      (2,826)         (6,611)       (370)
                                                  --------     ----------    --------
    Net cash from financing activities             1,548         (39,532     (21,223)

Net change in cash and cash equivalents           (4,240)        (17,385)     15,628

Cash and cash equivalents at beginning of year    13,854          31,239      15,611
                                                  -------      ----------    -------

Cash and cash equivalents at end of year          $9,614       $  13,854     $31,239
                                                  =======      ==========    =======

Supplemental disclosures of cash flow information
  Cash paid during the year for
    Interest                                     $13,401       $  16,171     $17,926
    Income taxes                                     540           2,425       1,010
  Noncash activities
     Transfer of portfolio loans to loans held
       for sale                                        -           2,767           -

See accompanying notes to consolidated
  financial statements.
</TABLE>



22                                            Western Ohio Financial Corporation
<PAGE>



WESTERN OHIO FINANCIAL  CORPORATION Notes to Consolidated  Financial  Statements
December 31, 1999, 1998 and 1997 (Dollars in thousands, except per share data)

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
subsidiaries,  CornerstoneBanc  Financial Services, Inc. (formerly known as West
Central Mortgage  Services,  Inc.) (CFSI) and West Central  Financial  Services,
Inc.   (WCFS).   Intercompany   transactions  and  balances  are  eliminated  in
consolidation.

Nature of Operations:  The Corporation's  revenues,  operating income and assets
are primarily from the banking industry. The Corporation operates six 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. The  Corporation's  primary funding source is deposits
from customers in its market area. The  Corporation  also purchases  investments
and engages in mortgage banking operations.

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

Cash 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.

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.

Interest income is reported on the interest method and includes  amortization of
net  deferred  loan fees and costs  over the loan term.  Interest  income is not
reported  when  full loan  repayment  is in  doubt,  typically  when the loan is
impaired or payments are past due over 90 days.  Payments received on such loans
are reported as principal reductions.


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.

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  credit  card  loans,  and on an
individual loan basis for other loans.  If a loan is impaired,  a portion of the
allowance is allocated so that the loan is reported,  net, at the present  value
of  estimated  future cash flows using the loan's  existing  rate or at the fair
value of collateral if repayment is expected solely from the collateral.

Foreclosed  Assets:  Assets acquired  through or instead of loan foreclosure are
initially  recorded at 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.  Depreciation is computed over the
assets' useful lives using straight-line and accelerated  methods.  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.

1999 Annual Report to Shareholders                                           23

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.  In 1999 the Corporation sold its servicing rights in loans
previously sold. Loan servicing rights totaled $28 at year-end 1998.

Intangibles:  Purchased intangibles,  primarily goodwill and core deposit value,
are  recorded  at  cost  and  amortized  over  the  estimated   life.   Goodwill
amortization was straight-line  over twenty years and core deposit  amortization
was accelerated over ten years.  These intangibles were eliminated in connection
with the sale of branch  offices as more  fully  disclosed  in note 2.  Goodwill
amortization expense totaled $295 and $425 in 1998 and 1997.

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
represent  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 option plans is
reported if options  are granted  below  market  price at grant date.  Pro forma
disclosures  of net income and earnings per share are shown using the fair value
method of SFAS No. 123 to measure expense for options granted after 1994,  using
an option pricing model to estimate fair value.

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 common  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.

New  Accounting  Pronouncements:  Beginning  January 1, 2001,  a new  accounting
standard  will  require all  derivatives  to be  recorded at fair value.  Unless
designated  as hedges,  changes in these fair  values  will be  recorded  in the
income statement. Fair value changes involving hedges will generally be recorded
by offsetting  gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not otherwise recorded. This is not expected to
have a material  effect but the effect will depend on  derivative  holdings when
this standard applies.

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 statement.

Restrictions of Cash: The Corporation was required to have $251 and $236 of cash
on hand or on deposit with the Federal Reserve Bank to meet  regulatory  reserve
and clearing  requirements at year end 1999 and 1998. These balances do not earn
interest.

Fair Value of Financial  Instruments:  Fair values of financial  instruments are
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.

24                                            Western Ohio Financial Corporation


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

Business  Segment:  Internal  financial  information  is primarily  reported and
aggregated solely in the line of the business of banking.

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

2.    Sale of Branch Offices

In 1998, the Corporation sold its Cincinnati, Ohio, area branch offices. Details
of the assets and liabilities sold with the branch offices are as follows:
<TABLE>
<CAPTION>
<S>                                     <C>


   Assets
   Cash and cash equivalent             $78,453
   Loans                                     23
   Premises and equipment                   586
                                        -------
                                        $79,602
                                        =======

   Liabilities
   Deposits                             $84,365
                                        =======

The net gain realized in connection with the sale was determined as follows:

   Premium on deposit sold              $ 5,426
   Write-off of intangible assets        (3,255)
   Loss on premises and equipmen           (117)
                                        --------
     Net gain on sale of branch offices   2,054
                                        ========

</TABLE>


3.    Securities
<TABLE>
<CAPTION>

Year-end securities available for sale were as follows:

                                              Gross          Gross
                                Amortized  Unrealized     Unrealized     Fair
                                  Cost        Gains        Losses        Value
                                ---------- ----------    -----------   ---------
<S>                             <C>        <C>           <C>           <C>


1999
U.S. government agencies        $10,000    $      -      $ (1,225)     $ 8,775
Mortgage-backed securities       43,635          28        (2,072)      41,591
                                ---------  ----------    -----------   ---------

                      Total     $53,635    $     28      $ (3,297)     $50,366
                                =======    ==========    ===========   =========

1998
U.S. Treasury                   $   499    $      3      $      -      $   502
U.S. government agencies         15,000          16          (116)      14,900
Mortgage-backed securities       50,128         106          (190)      50,044
                               --------     ---------    -----------   ---------

   Total                       $ 65,627    $    125      $   (306)     $65,446
                               ========      =======     ===========   =========

</TABLE>

1999 Annual Report to Shareholders                                            25

At  year-end  1999 and 1998,  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  1999 were as follows.
Securities  not  due  at  a  single  maturity  date,  primarily  mortgage-backed
securities, are shown separately.

                                         Amortized        Fair
                                           Cost           Value
                                         --------        --------
Due in one year or less                  $     -         $    -
Due after one year through five years          -              -
Due after five years through ten years         -              -
Due after ten years                       10,000          8,775
Mortgage-backed securities                43,635         41,591
                                         --------        --------
                                         $53,635         $0,366
                                         ========        ========


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

                      1999         1998             1997
                    ---------   -----------      ----------

Securities
  Proceeds          $     -       $22,312         $10,684
  Gross gains             -           312               -
  Gross losses            -             5               5

Securities  with an approximate  par value of $14,336 at December 31, 1999, were
pledged  to  secure  public  deposits,  borrowings,  and for other  purposes  as
required or permitted by law. No securities were pledged at December 31, 1998.


4.    Loans

Year-end loans were as follows:

                                        1999           1998
                                      ---------     -----------

First mortgage loans secured by:
  One-to-four family residences         $178,304       $177,109
  Other properties                        52,572         33,097
  Construction properties                  6,923          3,908
Consumer and other loans:
  Consumer                                 3,332          5,194
  Commercial                               5,499          6,914
  Home equity                             15,369         10,054
  Other                                      157            285
                                      ----------    -----------
    Total loans                          262,156        236,561

   Less:
     Net deferred loan fees,
       premiums and discounts                (62)           (83)
     Loans in process                     (4,659)        (2,364)
     Allowance for loan losses            (2,781)        (3,200)
                                      ----------    -----------
       Net loans                        $254,654       $230,914
                                      ==========    ===========

Activity in the allowance for loan losses was as follows:

                                      1999             1998           1997
                                   -----------    -------------  -------------

 Beginning balance                 $3,200          $3,922         $1,716
   Provision for loan losses          246            (363)         2,285
   Loans charged of                  (736)           (396)           (79)
   Recoveries of previous
     charge-offs                       71              37              -
                                   -----------    -------------  -------------
   Balance at end of year          $2,781          $3,200         $3,922




Impaired loans were as follows:

                                       1999          1998
                                   -----------    -------------

   Year-end loans with no
     allocated allowance
     for loan losses               $ 479          $   361
   Year-end loans with
     allocated allowance
     for loan losses               1,909            2,431
                                   -----------    -------------

     Total                         $2,388         $ 2,792
                                   ===========    =============


   Amount of the allowance
     for loan losses allocated     $1,159         $ 1,287

   Average of impaired loans
     during the year                2,409           2,799

   Interest income recognized
     during impairment                 110              47

   Cash-basis interest income
     recognized during impairment      110              47

Non-performing loans were as follows:

                                      1999             1998
                                   ----------     --------------
Loans past due over 90 days
  still on accrual                 $      -       $       -
   Nonaccrual loans                   2,755           4,541

Non-performing loans includes all impaired loans and smaller balance homogeneous
loans,  such as residential  mortgage and consumer loans,  that are collectively
evaluated for impairment.

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:

                                     1999             1998
                                   ----------     --------------

   Beginning balance               $ 1,255          $  711
     New loans                         766           1,104
     Repayments                       (527)           (535)
     Other changes                       -             (25)
   Ending balance                  $ 1,494         $ 1,255


Other  changes  represent  loans  reportable  at the end of one period  that are
excludable  from  the  other  period  due to  changes  in  borrowers  and  other
circumstances.


5.    Premises and Equipment

Year-end premises and equipment were as follows:

                                     1999             1998
                                   ----------     --------------

   Land                            $  815         $    862
   Buildings and improvements       3,102            3,416
   Furniture, fixtures and
     equipment                      2,648            2,009
                                   -----------    --------------

                                    6,565            6,287
   Accumulated depreciation        (3,090)          (3,046)

                                   $3,475         $  3,241
                                   ==========     =============

Certain  facilities  and  equipment  are  leased  under  various   noncancelable
operating leases,  which expire at various dates through 2001. Rental expense on
lease  commitments  amounted to $197 and $165 in 1999 and 1998.  Future  minimum
lease payments on lease obligations are as follows:

        2000                    $    80
        2001                         27
        2002                          7
        2003                          4
                                -------
                                $   118
                                =======

6.    Deposits

Year-end deposits were as follows:


   NOW accounts, including
     noninterest-bearing deposits
     of $5,578 and $1,857               $13,529        $ 12,708
   Money market accounts                 49,149          49,084
   Passbook savings accounts             12,065          13,629
   Certificates of deposit:
     In denominations
       under $100,000                   115,325         103,204
     In denominations of
       $100,000 or more                  12,263          14,341
                                       $202,331        $192,966

At year-end  1999,  scheduled  maturities  of  certificates  of deposit  were as
follows:

                 2000      $73,199
                 2001       32,192
                 2002       16,922
                 2003        2,160
                 2004        2,293
                 Thereafter    822
                          --------
                          $127,588
                          ========


7.    Borrowed Funds

Borrowed  funds at year-end 1999 and 1998 consisted of advances from the Federal
Home Loan Bank of Cincinnati ("FHLB") and were as follows:


                                     1999             1998
                                   ----------     --------------
Fixed rate maturities March 1999
  through October 2008 at rates
  from 4.52% to 8.65%,
  averaging 5.29                   $     -        $  74,752
Fixed rate maturities March 2000
  through October 2019 at rates
  from 3.50% to 8.65%,
  averaging 5.29%                   66,783                -
Variable rate maturity due
  February 1999 at rate of 5.52    %     -           10,500
   Variable rate maturities February
     2000 through September 2008
     at rates from 5.40% to 6.12%,
     averaging 5.97%                15,400                -
                                   $82,183        $  85,252

1999 Annual Report to Shareholders                                            27

<PAGE>

The  maximum  month-end  balance of FHLB  advances  outstanding  was $90,247 and
$88,256 in 1999 and 1998. Average balances of borrowings outstanding during 1999
and 1998 were $76,449 and $62,802.  Mortgage  loans and all shares at FHLB stock
owned by the Bank  totalling  $123,275  and $7,451 at  December  31,  1999,  and
$127,878  and $6,948 at December 31, 1998,  were pledged as  collateral  for the
FHLB advances.

At year-end 1999, required annual principal payments were as follows:

   2000                     $11,425
   2001                       5,367
   2002                         729
   2003                         234
   2004                       5,075
   Thereafter                59,353
                            -------
                            $82,183
                            =======


8.    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 1999, 1998 and 1997
was $321, $358 and $379.

The ESOP shares at year-end 1999 and 1998 were as follows:


                                     1999             1998
                                   ----------     -------------

Allocated shares                     66,951            52,073
Shares committed to be
  released for allocation            14,878            14,878
Unreleased shares                    66,952            81,830
                                   ----------     -------------
  Total ESOP shares                 148,781           148,781
                                   ==========     =============

Fair value of unreleased shares    $  1,105       $     1,780
                                   ==========     =============

Management recognition plan: 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,  1999,  64,770  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 $159, $172 and $444 for 1999, 1998 and 1997.

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.  The  liability for the future  payments is secured by  single-premium
life insurance policies on each of the individuals covered.

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 1999, 1998 and 1997. 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 cash  contribution  expense  included  in  salaries  and  employee
benefits was $46, $45 and $35 for 1999, 1998 and 1997.

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.

In 1996, the Corporation  acquired Seven Hills Savings Association (Seven Hills)
and  subsequently  merged Seven Hills into Cornerstone as retail branch offices.
In April 1997,  shareholders approved conversion of Seven Hills stock options to
Western Ohio  Financial  Corporation  options.  Accordingly,  43,057  options to
purchase  stock in Western Ohio  Financial  Corporation at a price of $11.47 per
share were issued.

28                                            Western Ohio Financial Corporation

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:

                                    Stock Options
                        -----------------------------------

                                                  Weighted-
                         Options                  Average
                        Available   Options       Exercise
                         for Grant Outstanding    Price
                        ---------   ---------     ---------

January 1, 1997          34,229      227,271      $17.75

  Plan adopted
   (Acquisition)         43,057            -           -
  Granted               (77,057)      77,057       16.76
  Forfeited               6,000       (6,000)      17.50
  Exercised                   -     (107,958)      16.25

December 31, 1997         6,229      190,370       18.17

  Plan adopted          235,224            -           -
  Granted               (32,936)      32,936        23.00
  Forfeited               1,690       (1,690)       15.23
  Exercised                   -      (19,882)       18.39

December 31, 1998       210,207      201,734        19.22

  Granted                (6,000)       6,000        21.89
  Forfeited               4,630       (4,630)       17.50
  Exercised                   -       (9,063)       13.77

December 31, 1999       208,837      194,041       $19.60


The following table summarizes  information  about stock options  outstanding at
year-end 1999:


                   Weighted Average
        Exercise       Remaining       Number
          Price    Contractual Life  Outstanding       Exercisable
         -------     ------------     -------------    -----------
       $  11.47          7.29 years      7,151            7,151
          17.50          5.08           76,282           58,538
          18.50          5.38           28,172           23,636
          19.75          5.39            5,000            4,000
          20.50          5.55            5,000            4,000
          21.75          7.37            1,000              400
          22.00          7.48           25,000           10,000
          22.13          9.13            4,000            4,000
          22.19          9.15              500              500
          22.50          9.42            1,000            1,000
          23.00          8.86           32,936           32,936
          26.63          7.81            8,000            3,200
                                       ------------    -----------
                                       194,041          149,361
                                       ============    ===========

No stock appreciation rights or restricted stock awards have been granted.

The fair value of options granted in 1999 was estimated using the  Black-Scholes
option pricing model using the following weighted average assumptions: risk-free
interest rate of 5.1%,  expected life of 5 years,  expected  volatility of stock
price of 13.32% and expected dividend rate of 4.60%. Based on these assumptions,
the estimated fair value of options granted in 1999 was $2.22 per option.

The fair value of options granted in 1998 was estimated using the  Black-Scholes
option pricing model using the following assumptions: risk-free interest rate of
4.81%,  expected life of 5 years,  expected  volatility of stock price of 18.48%
and expected dividend rate of 4.44%. Based on these  assumptions,  the estimated
fair value of options granted in 1998 was $3.16 per option.

The fair value of options  granted prior to 1998 were also  estimated  using the
Black-Scholes  option pricing model using the following  assumptions:  risk-free
interest rate of 6.12% to 7.24%,  expected life of 10 years; expected volatility
of stock price of .05% to .17% and an expected annual dividend rate of $1.00 per
share.


SFAS No. 123,  "Accounting  for Stock Based  Compensation,"  requires  pro forma
disclosures  for  companies  not adopting its fair value  accounting  method for
stock-based  employee  compensation.   Accordingly,   the  following  pro  forma
information  presents net income and earnings per share for 1999,  1998 and 1997
had the Standard's fair value method been used to measure  compensation cost for

1999 Annual Report to Shareholders                                            29

<PAGE>

stock  option  plans.  No  compensation  expense  related to stock  options  was
actually recognized.


                            1999            1998            1997
                         ----------     -----------     ------------

Net income:
  As reported            $1,683         $1,295            183
  Pro forma               1,526          1,132              5

Earnings per share:
  As reported
    Basic                   .86            .60            .08
    Diluted                 .85            .58            .08
  Pro forma
    Basic                   .78            .52              -
    Diluted                 .77            .51              -


<PAGE>




9.    Commitments, Off-Balance Sheet Risk
      and Contingencies

Commitments to Extend Credit: Some financial  instruments are used in the normal
course  of  business  to meet  financing  needs of  customers.  These  financial
instruments include commitments to extend credit,  standby letters of credit and
financial guarantees.  These involve, to varying degrees,  credit risk in excess
of the amount reported in the financial statements.

Exposure to credit loss if the other  party does not perform is  represented  by
the  contractual  amount for  commitments to extend credit,  standby  letters of
credit and financial  guarantees written.  The same credit policies are used for
commitments  and  conditional  obligations as are used for loans.  The amount of
collateral  obtained,  if deemed  necessary,  on extension of credit is based on
management's   credit  evaluation  and  generally  consists  of  residential  or
commercial  real  estate.  Lines of  credit  are  primarily  home  equity  lines
collateralized by second mortgages on one-to-four family residential real estate
and commercial lines of credit collateralized by business assets.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there  is  no  violation  of  any  condition   established  in  the  commitment.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. Since many of the commitments are expected to
expire without being used, the total  commitments do not  necessarily  represent
future cash requirements.

At year-end 1999 and 1998, the  Corporation  had  commitments to originate loans
and amounts available on approved lines of credit as follows:

                               Fixed         Variable
                                Rate          Rate           Total
                               -----         --------       ------
1999
First mortgage loans          $ 488          $ 1,619         $2,107
Consumer and other loans          -            1,903          1,903
Commercial loans                  -                -              -
Home equity lines of credit       -            9,267          9,267
Commercial lines of credit        -            1,716          1,716
Stand-by letters of credit        -                -              -
                              ------          -------        -------
                              $  488          $14,505        $14,993
                              ======          =======        =======
1998
First mortgage loans          $1,573          $   515        $ 2,088
Consumer and other loans           -            1,506          1,506
Commercial loans                   -              868            868
Home equity lines of credit        -            7,304          7,304
Commercial lines of credit                      2,640          2,640
Stand-by letters of credit        35                -             35
                              ------         --------       --------
                              $1,608          $12,833        $14,441
                              ======         ========       ========

The interest rates on fixed-rate loan commitments  ranged from 7.63% to 8.25% at
year-end 1999.

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 $21,664, 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.


30                                            Western Ohio Financial Corporation

<PAGE>




10. Disclosures About Fair Values of Financial Instruments

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

                                          1999                    1998
                                   ------------------      ------------------
                                   Carrying    Fair        Carrying     Fair
                                   Amount     Value        Amount      Value
                                   ------    ------        ------     ------
Financial assets:
  Cash and cash equivalents        $ 9,614    $9,614      $13,854    $ 13,854
  Securities available for sale     50,366    50,366       65,446      65,446
  FHLB stock                         7,451     7,451        6,948       6,948
  Loans, net                       254,654   247,421      230,914     233,942
  Loans held for sale                  217         -        3,898       3,898
  Accrued interest receivable        1,806     1,806        1,897       1,897

Financial liabilities:
  Deposits                        (202,331) (201,617)    (192,966)   (194,072)
  Borrowed funds                   (82,183)  (79,655)     (85,252)    (82,754)
  Advance payments by borrowers
    for taxes and insurance           (864)     (864)        (881)       (881)
  Accrued interest payable            (717)     (717)        (486)       (486)

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  long-term  debt 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.

While  these  estimates  of fair  value are based on  management's  judgment  of
appropriate  factors,  there is no assurance  that, were the Corporation to have
disposed  of such items at year-end  1999 and 1998,  the  estimated  fair values
would  necessarily  have been  achieved at that date,  since  market  values may
differ depending on various circumstances. The estimated fair values at year-end
1999 and 1998 should not necessarily be considered to apply at subsequent dates.

In addition,  other assets,  such as property and equipment,  and liabilities of
the Corporation  that are not defined as financial  instruments are not included
in  the  above  disclosures.   Also,  nonfinancial   instruments  typically  not
recognized  in  financial  statements  nevertheless  may have  value but are not
included  in the above  disclosures.  These  include,  among  other  items,  the
estimated  earning  power of core  deposit  accounts,  the  trained  work force,
customer goodwill and similar items.


11.   Income Taxes

Income tax expense consisted of the following:

                1999           1998          1997
              --------      ----------    -----------
Current       $  646        $ 2,935       $   630
Deferred         342            (71)         (472)
              --------      ----------    -----------

              $  988        $ 2,864       $   158
              ========      ==========    ===========

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

                                              1999       1998
                                            --------   --------
Deferred tax assets
  Deferred compensation and
    management recognition plan             $  88      $    61
  Allowance for loans losses                  875        1,034
  Unrealized loss on securities
    available for sale                      1,111           62
  Other                                        21           59
                                            -----      -------
                                            2,095        1,216
Deferred tax liabilities
  FHLB stock dividends                        924          752
                                            _____      _______

                                           $1,171      $   464
                                           ======      =======

1999 Annual Report to Shareholders                                            31
<PAGE>

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:

                                           1999      1998    1997
                                          -----     -----   -------
Income tax computed at
  the statutory tax rate                  $ 908     $1,414  $  116
Tax effect of:
  Dividend exclusion                          -          -     (17)
  Intangible assets                           9      1,372     145
  Other                                      71         78     (86)
                                          -----     ------  -------
                                          $ 988     $2,864  $  158
                                          =====     ======  =======

  Effective tax rate                       37.0%      68.9%   46.3%
                                          =====     ======  =======

As a result of  legislation  that  changed  the method  used by many  thrifts to
calculate  their  bad  debt  reserve  for  federal  income  tax  purposes,   the
Corporation  must  recapture that portion of the reserve that exceeds the amount
that could have been taken under the experience  method for tax years  beginning
after December 31, 1987. The  legislation  also requires  thrifts to account for
bad debts for federal income tax purposes on the same basis as commercial  banks
for tax years beginning after December 31, 1995. The recapture is occurring over
a six-year  period.  The  commencement  of the recapture by the  Corporation was
delayed  until  1998  as  the  Corporation  met  certain   residential   lending
requirements.  In 1999 and  1998,  the  Corporation  recaptured  $52 in bad debt
reserves.  At December 31, 1999, the  Corporation  had $208 in bad debt reserves
remaining to be  recaptured  for federal  income tax purposes over the next four
years.  The deferred tax liability  related to the recapture has been previously
established.

Retained  earnings at December 31, 1999 and 1998,  includes  $8,709 for which no
provision for federal  income taxes has been made.  This amount  represents  the
qualifying  and  non-qualifying  tax bad debt  reserve as of December  31, 1987,
which is the Corporati on'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, 1999 and 1998. 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.

12.   Regulatory Capital Requirements

Cornerstone is subject to various regulatory capital  requirements  administered
by the federal regulatory agencies. Failure to meet minimum capital requirements
can initiate certain mandatory actions that, if undertaken,  could have a direct
material effect on Cornerstone's  financial  statements.  Under capital adequacy
guidelines  and  the  regulatory   framework  for  prompt   corrective   action,
Cornerstone  must meet specific  capital  guidelines  that involve  quantitative
measures of  Cornerstone's  assets,  liabilities  and certain  off-balance-sheet
items as calculated under regulatory accounting practices. Cornerstone's capital
amounts and  classifications  are also subject to  qualitative  judgments by the
regulators about Cornerstone's components, risk weightings and other factors. At
year-end 1999 and 1998,  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 1999 and 1998. Management is
not aware of any  matters  subsequent  to  December  31,  1999 that would  cause
Cornerstone's capital category to change.

The following is a reconciliation of capital under generally accepted accounting
principles,  as  shown  on the  accompanying  consolidated  balance  sheets,  to
Cornerstone's regulatory capital at year-end 1999 and 1998:


                                        1999               1998
                                     ---------         -----------

Total shareholders' equity
  per financial statements            $42,989          $   47,594
Nonallowable items:
  Parent company equity                (5,105)             (6,605)
  Intangible assets                         -                 (31)
  Unrealized (gain) loss on
    securities available for sale       2,157                 120
                                     ---------         -----------
Tier I (core) and tangible capital     40,041              41,078
Additional capital items:
  General valuation
    allowances (limited)                1,394               1,769
                                     --------          -----------

Total risk-based capital             $ 41,435          $   42,847
                                     ========          ===========


32                                           Western Ohio Financial Corporation
<PAGE>





At  year-end  1999 and 1998,  Cornerstone's  actual  capital  level and  minimum
required levels were as follows:

<TABLE>
<CAPTION>


                                                                                   Minimum Required
                                                                      Minimum       to be Well Capitalized
                                                                       Required           Under Prompt
                                                                    for Capital      Corrective Action
                                                      Actual        Adequacy Purpose      Regulations
                                                  ---------------   --------------   ---------------------
                                                   Amount  Ratio    Amount  Ratio     Amount   Ratio
                                                  -------  ------   ------  ------   -------  ------------
<S>                                               <C>      <C>      <C>     <C>      <C>      <C>

1999
Total capital (to risk-weighted assets)           $ 41,435  19.8%   $16,735  8.0%    $20,918   10.0%
Tier 1 (core) capital (to risk-weighted assets)     40,041  19.1      8,367  4.0      12,551    6.0
Tier 1 (core)  capital (to adjusted  total assets)  40,041  12.1     13,258  4.0      16,572    5.0
Tangible capital (to adjusted total assets)         40,041  12.1      4,972  1.5       N/A

1998
Total capital (to risk-weighted  assets)          $ 42,847  24.2%   $14,188  8.0%    $17,736   10.0
% Tier 1 (core) capital (to risk-weighted assets)   41,078  23.2      7,094  4.0      10,641    6.0
Tier 1 (core)  capital (to adjusted  total assets)  41,078  12.6     13,082  4.0      16,353    5.0
Tangible capital (to adjusted total assets)         41,078  12.6      4,906  1.5       N/A

</TABLE>


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,   and  (iii)  the
distribution  does not exceed its net income for the calendar  year-to-date plus
retained  net income for the previous  two  calendar  years (less any  dividends
previously paid). If Cornerstone does not meet the above stated requirements, it
must  obtain  the  prior  approval  of the OTS  before  declaring  any  proposed
distributions.




1999 Annual Report to Stockholders                                            33

<PAGE>




13.   Parent Company Only Condensed Financial Statement

Condensed  financial  information  of Western Ohio  Financial  Corporation is as
follows:
Condensed Balance Sheets
December 31, 1999 and 1998
                                                   1999         1998
                                                  --------     --------

Assets
  Cash and cash equivalents                       $ 4,059      $ 5,626

  Investment in bank subsidiary                    37,884       40,989

  Intercompany receivables                          1,070          904

  Other assets                                        185          300
                                                  --------     -------
     Total assets                                 $43,198      $47,819
                                                  ========     =======

Liabilities and shareholders' equity
  Other liabilities                               $   209      $   225

  Shareholders' equity                             42,989       47,594
                                                  -------      -------
    Total liabilities and shareholders' equity    $43,198       47,819
                                                  =======      =======



Condensed Statements of Income
Years ended December 31, 1999, 1998 and 1997
                                               1999          1998        1997
                                             -------        -------     -------
Interest and dividend income
  Dividends from subsidiaries                $3,000         $6,000      $5,002
  Loan to ESOP                                   90            128         123
  Other                                          47             53          75
                                            -------        -------     -------
    Total interest and dividend income        3,137          6,181       5,200

Other income                                      -              -          22
Operating expenses                             (516)          (608)       (728)
                                             -------        -------     -------

Income before income taxes and distributions
  in excess of earnings of subsidiary         2,621          5,573       4,494

Income tax benefit                              129            145         157
                                             -------        -------     -------

Income before distributions in excess of
  earnings of subsidiary                      2,750          5,718       4,651

Distributions in excess of earnings of
  subsidiary                                 (1,067)        (4,423)     (4,468)
                                             -------        -------     -------

Net Income                                   $1,683         $1,295      $  183
                                             =======        =======     =======



34                                            Western Ohio Financial Corporation

<PAGE>





Condensed Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997

                                              1999        1998        1997

                                             -------     -------     -------
Cash flows from operating activities:
Net income                                   $1,683      $1,295      $  183
  Adjustments to reconcile net income
     to cash provided by operations:
       Distributions in excess of earnings
         of subsidiary                        1,067       4,423       4,468
       Compensation expense on ESOP and
         MRP shares                             480         530         544
       Changes in:
         Other assets                           116         (43)       (172)
         Other liabilities                      (16)        101        (968)
                                              ------      ------      ------
           Net cash from operating activitie  3,330       6,306       4,055


Cash flows from investing activities
  Investment in subsidiaries                     -            -         (37)

  Intercompany advance                        (166)           -      (5,489)

  Proceeds from repayments of intercompany
   advances                                      -        4,960           -
                                              ------      ------     ------
          Net cash from investing activitie    (166)      4,960      (5,526)


Cash flows from financing activities
  Cash dividends paid                        (1,974)     (2,142)     (2,219)

  Proceeds from stock options exercised          69         351       1,863

  Purchase of treasury stock                 (2,826)     (6,611)       (370)

                                             ------      -------     -------
     Net cash from financing activities      (4,731)     (8,402)       (726)

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

Net change in cash and cash equivalents      (1,567)      2,864      (2,197)


Cash and cash equivalents at beginning of
  year                                        5,626       2,762       4,959

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

Cash and cash equivalents at end of year     $4,059      $5,626      $2,762

                                             ======      ======      ======



1999 Annual Report to Shareholders                                            35
<PAGE>



14.   Earnings Per Common Share

The factors used in the earnings per share computation follow:
<TABLE>
<CAPTION>


                                                     1999          1998         1997
                                                 ----------     ----------   ------------

<S>                                               <C>           <C>          <C>

Basic
    Net income                                    $   1,683     $    1,295    $     183
                                                 ==========     ==========   ============

    Weighted average common shares outstanding    2,092,738      2,323,256    2,406,732
    Less: Average unallocated ESOP shares           (72,496)       (87,374)    (102,252)
    Less: Average nonvested MRP shares              (53,367)       (62,742)     (72,190)
                                                 ----------     -----------   -----------

Average shares                                    1,966,875      2,173,140    2,232,290
                                                 ==========     ==========    ===========

Basic earnings per common share                   $    0.86      $    0.60    $    0.08
                                                 ===========    ==========    ===========

Diluted
    Net income                                    $   1,683      $   1,295    $     183
                                                 ===========    ==========    ===========

    Weighted average common shares outstanding for basic
      earnings per common share                   1,966,875       2,173,140   2,232,290
    Add: Dilutive effects of stock options           15,874          32,509      46,993
    Add: Dilutive effects of average nonvested
      MRP shares                                          -          13,263           -
                                                 -----------    -----------   ---------

Average shares and dilutive potential common
  shares                                          1,982,749       2,218,912   2,279,283
                                                 ===========    ===========  ===========

Diluted earnings per common share                 $    0.85      $     0.58  $     0.08
                                                 ===========    ===========  ===========


</TABLE>

Stock options for 72,436 and 8,000 shares of common stock were not considered in
computing  diluted earnings per common share for 1999 and 1998 because they were
antidilutive.

36                                            Western Ohio Financial Corporation

<PAGE>



15.   Selected Quarterly Financial Data (Unaudited)

The following tables summarize selected quarterly results of operations for 1999
and 1998.

<TABLE>
<CAPTION>

                                               Three months ended
                                               ------------------
1999                            March 31     June 30     September 30 December 31
                                ---------    -------     ----------   ----------
                                     (In thousands except per share data)

<S>                             <C>          <C>         <C>         <C>

Interest and dividend income     $5,834      $5,821      $5,849      $5,911
Interest expense                  3,407       3,359       3,393       3,473
                                 ------      ------      ------      ------
Net interest income               2,427       2,462       2,456       2,438
Provision for loan losses            33          75          75          63
                                 ------      ------      ------      ------
Net interest income after
  provision for loan losses       2,394       2,387       2,381       2,375
Non-interest income                 374         321         275         291
Non-interest expense             (2,031)     (2,096)     (2,048)     (1,952)
                                 ------      ------      ------      ------
Income before income tax            737         612         608         714
Income tax expense                  286         212         229         261
                                 ------      ------      ------      ------
Net income                       $  451      $  400      $  379      $  453
                                 ======      ======      ======      ======

Earnings per common share
  Basic                          $ 0.22      $ 0.20      $ 0.19      $ 0.23
                                 ======      ======      ======      ======
  Diluted                        $ 0.22      $ 0.19      $ 0.19      $ 0.23
                                 ======      ======      ======      ======

Dividends declared per share     $ 0.25      $ 0.25      $ 0.25      $ 0.25
                                 ======      ======      ======      ======
</TABLE>


<TABLE>
<CAPTION>


                                               Three months ended
                                               ------------------
1998                            March 31     June 30     September 30 December 31
                                ---------    -------     ----------   ----------
                                     (In thousands except per share data)

<S>                             <C>          <C>         <C>         <C>

Interest and dividend income     $6,740      $6,551      $6,314      $6,251
Interest expense                  4,155       3,993       4,029       3,815
                                 ------      ------      ------      ------
Net interest income               2,585       2,558       2,285       2,436
Provision for loan losses             -       (261)           -       (102)
                                 ------      ------      ------      ------
Net interest income after
  provision for loan losses       2,585       2,819       2,285       2,538
Non-interest income                 393         477         382       2,437
Non-interest expense             (2,262)     (2,544)     (2,331)     (2,620)
                                 ------      ------      ------      ------
Income before income tax            716         752         336       2,355
Income tax expense                  281         282         150       2,151
                                 ------      ------      ------      ------
Net income                       $  435      $  470      $  186      $  204
                                 ======      ======      ======      ======

Earnings per common share
  Basic                          $ 0.19      $ 0.21      $ 0.09      $ 0.11
                                 ======      ======      ======      ======
  Diluted                        $ 0.19      $ 0.21      $ 0.08      $ 0.10
                                 ======      ======      ======      ======

Dividends declared per share     $ 0.25      $ 0.25      $ 0.25      $ 0.25
                                 ======      ======      ======      ======

</TABLE>


1999 Annual Report to Shareholders                                            37

<PAGE>



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
President, Howard's Foods, Inc.
John E. Field
Vice Chairman of the Board, Wallace & Turner, Inc.
Jeffrey L. Levine
President, Larry Stein Realty and Levine Realty Co.
William N. Scarff
President, Scarff's Nursery, Inc. and Scarff's Land Co.
Aristides G. Gianakopoulos
President, The Champion Company

Officers of Western Ohio Financial Corporation

John W. Raisbeck
President and Chief Executive Officer
John T. Heckman
Executive Vice President
Gary L. Hicks
Executive Vice President
Robert P. Brezing
Senior Vice President
Craig F. Fortin
Senior Vice President, Treasurer and Chief Financial Officer
Suzanne E. Moeller
Corporate Secretary

Officers of Cornerstone Bank

John W. Raisbeck
President and Chief Executive Officer
John T. Heckman
Executive Vice President, Operations and Administration
Gary L. Hicks
Executive Vice President, Mortgage Lending
Robert P. Brezing
Senior Vice President, Business Banking
Craig F. Fortin
Senior Vice President, Treasurer and Chief Financial Officer
Suzanne E. Moeller
Corporate Secretary


Annual Report on Form 10-K

A copy of the Company'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, Ohio 45501-0509
                                 (937)327-1106

Annual Meeting

The Annual Meeting of Shareholders of Western Ohio Financial Corporation will be
held at 9:00 AM on Thursday,  April 27, 2000, at the Springfield  Inn, 100 South
Fountain Avenue, Springfield, Ohio 45502.

Transfer Agent

American  Securities  Transfer and Trust,  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:

                                 American Securities Transfer & Trust, Inc.
                                 12039 W. Alameda Parkway, Suite Z-2
                                 Lakewood CO 80228



38                                            Western Ohio Financial Corporation
<PAGE>



Legal Counsel

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

Special Counsel
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue N.W.
Washington D.C. 20005


Market Makers

ABN AMRO, Inc.
208 La Salle Street
Chicago, IL 60604
(315)855-7600

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

Everen Securities, Inc.
77 West Wacker Dr.
Chicago, IL 60601
(312)574-6000

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

Keefe, Bruyette & Woods, Inc.
2 World Trade Center
89th Floor
New York, NY 10048
(212)323-8300

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

Sandler O'Neill & Partners, L.P.
2 World Trade Center
104th Floor
New York, NY 10048
(212)466-7744
(Cornerstone Bank branch listing and information omitted)

1999 Annual Report to Shareholdes                                             39
[BACK]

Western Ohio Financial Corporation
28 East Main Street
Springfield, OH 45502
1-800-600-1884




(C) Copyright 2000 Western Ohio Financial Corporation, All Rights Reserved.