##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For Quarter Ended September 30, 2009



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------

Commission File Number 000-24147





KILLBUCK
BANCSHARES, INC.

(Exact name of registrant as specified in its Charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|OHIO                                                           |  | 34-1700284                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

165 N. Main Street, Killbuck, OH 44637

(Address of principal executive offices and zip code)

(330) 276-2771

(Registrants telephone number, including area code)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
    Yes  x    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting Company |  | x

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).     ̈  Yes     ̈  No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

State the number of shares outstanding for each of the issuers classes of common equity as of the latest practicable date:

Class: Common Stock, no par value

Outstanding at October 31, 2009: 616,716









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##### Table of Contents

KILLBUCK BANCSHARES, INC.

Index



|                              |  |                                                                                                        |  |           
|----------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | ----------
|                              |  |                                                                                                        |  | PageNumber
|PART I. FINANCIAL INFORMATION |  |                                                                                                       
|Item 1.                       |  | Financial Statements (Unaudited):                                                                      |  |           
|                              |  |                                                                                                       
|                              |  | Consolidated Balance Sheet as of September 30, 2009 and December 31, 2008                              |  | 3         
|                              |  |                                                                                                       
|                              |  | Consolidated Statement of Income for the nine months ended September 30, 2009 and 2008                 |  | 4         
|                              |  |                                                                                                       
|                              |  | Consolidated Statement of Income for the three months ended September 30, 2009 and 2008                |  | 5         
|                              |  |                                                                                                       
|                              |  | Consolidated Statement of Changes In Shareholders Equity for the nine months ended September 30, 2009 |  | 6         
|                              |  |                                                                                                       
|                              |  | Consolidated Statement of Cash Flows for the nine months ended September 30, 2009 and 2008             |  | 7         
|                              |  |                                                                                                       
|                              |  | Notes to Unaudited Consolidated Financial Statements                                                   |  | 8-13      
|                              |  |                                                                                                       
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                  |  | 14-24     
|                              |  |                                                                                                       
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                             |  | 25        
|                              |  |                                                                                                       
|Item 4.                       |  | Controls and Procedures                                                                                |  | 25        
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                       
|Item 1.                       |  | Legal Proceedings                                                                                      |  | 26        
|                              |  |                                                                                                       
|Item 1A.                      |  | Risk Factors                                                                                           |  | 26        
|                              |  |                                                                                                       
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                            |  | 26        
|                              |  |                                                                                                       
|Item 3.                       |  | Default Upon Senior Securities                                                                         |  | 26        
|                              |  |                                                                                                       
|Item 4.                       |  | Submissions of Matters to a Vote of Security Holders                                                   |  | 26        
|                              |  |                                                                                                       
|Item 5.                       |  | Other Information                                                                                      |  | 27        
|                              |  |                                                                                                       
|Item 6.                       |  | Exhibits                                                                                               |  | 27        
|                              | 
|SIGNATURES                    |  | 28                                                                                                    



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##### Table of Contents

Killbuck Bancshares, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)



|                                                                         |  |                   |             |   |                  |   |             |  
|------------------------------------------------------------------------ |  | ----------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                         |  | September 30,2009 |             |   | December 31,2008 |  
|ASSETS                                                                   |  |                   |             |   |                  |   |             |  
|Cash and cash equivalents:                                               |  |                   |             |   |                  |   |             |  
|Cash and amounts due from depository institutions                        |  | $                 | 24,195,239  |   |                  | $ | 31,868,633  |  
|Federal funds sold                                                       |  |                   | 5,470,000   |   |                  |   | 8,448,000   |  
|                                                                         |  |                   |             |   |                  |   |             |  
|Total cash and cash equivalents                                          |  |                   | 29,665,239  |   |                  |   | 40,316,633  |  
|                                                                         |  |                   |             |   |                  |   |             |  
|                                                                         |  |                  
|Investment securities:                                                   |  |                   |             |   |                  |   |             |  
|Securities available for sale                                            |  |                   | 58,791,535  |   |                  |   | 51,549,966  |  
|Time Deposits                                                            |  |                   | 980,000     |   |                  |   |            |  
|Securities held to maturity (fair value of $37,985,921 and $33,265,569)  |  |                   | 36,094,491  |   |                  |   | 32,168,512  |  
|                                                                         |  |                   |             |   |                  |   |             |  
|Total investment securities                                              |  |                   | 95,866,026  |   |                  |   | 83,718,478  |  
|                                                                         |  |                   |             |   |                  |   |             |  
|                                                                         |  |                  
|Loans (net of allowance for loan losses of $2,464,242 and $2,525,202)    |  |                   | 205,232,069 |   |                  |   | 200,448,708 |  
|                                                                         |  |                  
|Loans held for sale                                                      |  |                   |            |   |                  |   |            |  
|Premises and equipment, net                                              |  |                   | 6,070,692   |   |                  |   | 6,321,031   |  
|Accrued interest receivable                                              |  |                   | 1,627,226   |   |                  |   | 1,470,883   |  
|Goodwill, net                                                            |  |                   | 1,329,249   |   |                  |   | 1,329,249   |  
|Other assets                                                             |  |                   | 7,916,543   |   |                  |   | 7,732,841   |  
|                                                                         |  |                   |             |   |                  |   |             |  
|Total assets                                                             |  | $                 | 347,707,044 |   |                  | $ | 341,337,823 |  
|                                                                         |  |                   |             |   |                  |   |             |  
|                                                                         |  |                  
|LIABILITIES                                                              |  |                   |             |   |                  |   |             |  
|Deposits:                                                                |  |                   |             |   |                  |   |             |  
|Noninterest bearing demand                                               |  | $                 | 48,823,410  |   |                  | $ | 52,971,305  |  
|Interest bearing demand                                                  |  |                   | 24,856,325  |   |                  |   | 27,372,343  |  
|Money market                                                             |  |                   | 30,141,774  |   |                  |   | 23,834,736  |  
|Savings                                                                  |  |                   | 41,125,631  |   |                  |   | 40,496,289  |  
|Time                                                                     |  |                   | 151,900,852 |   |                  |   | 144,272,233 |  
|                                                                         |  |                   |             |   |                  |   |             |  
|Total deposits                                                           |  |                   | 296,847,992 |   |                  |   | 288,946,906 |  
|Short-term borrowings                                                    |  |                   | 4,980,000   |   |                  |   | 6,385,000   |  
|Federal Home Loan Bank advances                                          |  |                   | 1,374,724   |   |                  |   | 1,862,667   |  
|Accrued interest and other liabilities                                   |  |                   | 920,355     |   |                  |   | 1,207,652   |  
|                                                                         |  |                   |             |   |                  |   |             |  
|Total liabilities                                                        |  |                   | 304,123,071 |   |                  |   | 298,402,225 |  
|                                                                         |  |                   |             |   |                  |   |             |  
|                                                                         |  |                  
|SHAREHOLDERS EQUITY                                                     |  |                   |             |   |                  |   |             |  
|                                                                         |  |                  
|Common stock  No par value: 1,000,000 shares authorized, 718,431 issued |  |                   | 8,846,670   |   |                  |   | 8,846,670   |  
|Retained earnings                                                        |  |                   | 44,014,419  |   |                  |   | 42,461,137  |  
|Accumulated other comprehensive gain                                     |  |                   | 208,943     |   |                  |   | 643,359     |  
|Treasury stock, at cost (101,190 and 96,949 shares)                      |  |                   | (9,486,059  | ) |                  |   | (9,015,568  | )
|                                                                         |  |                   |             |   |                  |   |             |  
|Total shareholders equity                                               |  |                   | 43,583,973  |   |                  |   | 42,935,598  |  
|                                                                         |  |                   |             |   |                  |   |             |  
|                                                                         |  |                  
|Total liabilities and shareholders equity                               |  | $                 | 347,707,044 |   |                  | $ | 341,337,823 |  
|                                                                         |  |                   |             |   |                  |   |             |  

See accompanying notes to the unaudited consolidated financial statements.



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Killbuck Bancshares, Inc. and Subsidiary

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)



|                                                    |  |                                |            |      |   |           
|--------------------------------------------------- |  | ------------------------------ | ---------- | ---- | - | ----------
|                                                    |  | Nine Months EndedSeptember
30,
|                                                    |  | 2009                           |            | 2008
|INTEREST INCOME                                     |  |                                |            |      |   |           
|Interest and fees on loans                          |  | $                              | 9,295,475  |      | $ | 10,862,950
|Federal funds sold                                  |  |                                | 36,524     |      |   | 454,919   
|Investment securities:                              |  |                                |            |      |   |           
|Taxable                                             |  |                                | 1,663,897  |      |   | 2,118,229 
|Exempt from federal income tax                      |  |                                | 1,059,279  |      |   | 996,637   
|                                                    |  |                                |            |      |   |           
|Total interest income                               |  |                                | 12,055,175 |      |   | 14,432,735
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|INTEREST EXPENSE                                    |  |                                |            |      |   |           
|Deposits                                            |  |                                | 3,354,635  |      |   | 5,033,074 
|Short term borrowings                               |  |                                | 9,198      |      |   | 14,410    
|Federal Home Loan Bank advances                     |  |                                | 70,630     |      |   | 97,533    
|                                                    |  |                                |            |      |   |           
|Total interest expense                              |  |                                | 3,434,463  |      |   | 5,145,017 
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|NET INTEREST INCOME                                 |  |                                | 8,620,712  |      |   | 9,287,718 
|                                                    |  |                               
|Provision for loan losses                           |  |                                | 2,000      |      |   |          
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                                | 8,618,712  |      |   | 9,287,718 
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|NON INTEREST INCOME                                 |  |                                |            |      |   |           
|Service charges on deposit accounts                 |  |                                | 287,317    |      |   | 277,336   
|NSF & OD fees, net                                  |  |                                | 572,574    |      |   | 622,529   
|Gain on sale of loans, net                          |  |                                | 108,430    |      |   | 27,227    
|BOLI                                                |  |                                | 177,519    |      |   | 396,405   
|Other income                                        |  |                                | 111,099    |      |   | 117,875   
|                                                    |  |                                |            |      |   |           
|Total non interest income                           |  |                                | 1,256,939  |      |   | 1,441,372 
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|NON INTEREST EXPENSE                                |  |                                |            |      |   |           
|Salaries and employee benefits                      |  |                                | 3,790,555  |      |   | 3,823,922 
|Occupancy and equipment expense                     |  |                                | 768,672    |      |   | 798,565   
|Professional fees                                   |  |                                | 290,999    |      |   | 253,912   
|Data Processing                                     |  |                                | 151,266    |      |   | 151,526   
|Insurance & Bond                                    |  |                                | 334,671    |      |   | 57,455    
|Franchise tax                                       |  |                                | 390,761    |      |   | 375,274   
|Other expenses                                      |  |                                | 988,425    |      |   | 1,016,017 
|                                                    |  |                                |            |      |   |           
|Total non interest expense                          |  |                                | 6,715,349  |      |   | 6,476,671 
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|INCOME BEFORE INCOME TAXES                          |  |                                | 3,160,302  |      |   | 4,252,419 
|Income taxes                                        |  |                                | 709,688    |      |   | 841,244   
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|NET INCOME                                          |  | $                              | 2,450,614  |      | $ | 3,411,175 
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|Earning per common share                            |  | $                              | 3.95       |      | $ | 5.43      
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|Dividend per share                                  |  | $                              | 1.45       |      | $ | 1.45      
|                                                    |  |                                |            |      |   |           
|                                                    |  |                               
|Weighted Average shares outstanding                 |  |                                | 619,054    |      |   | 628,356   
|                                                    |  |                                |            |      |   |           

See accompanying notes to the unaudited consolidated financial statements.



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Killbuck Bancshares, Inc. and Subsidiary

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)



|                                                    |  |                                 |           |      |   |          
|--------------------------------------------------- |  | ------------------------------- | --------- | ---- | - | ---------
|                                                    |  | Three Months EndedSeptember 30,
|                                                    |  | 2009                            |           | 2008
|INTEREST INCOME                                     |  |                                 |           |      |   |          
|Interest and fees on loans                          |  | $                               | 3,023,714 |      | $ | 3,447,195
|Federal funds sold                                  |  |                                 | 12,443    |      |   | 122,908  
|Investment securities:                              |  |                                 |           |      |   |          
|Taxable                                             |  |                                 | 492,975   |      |   | 704,782  
|Exempt from federal income tax                      |  |                                 | 363,707   |      |   | 342,897  
|                                                    |  |                                 |           |      |   |          
|Total interest income                               |  |                                 | 3,892,839 |      |   | 4,617,782
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|INTEREST EXPENSE                                    |  |                                 |           |      |   |          
|Deposits                                            |  |                                 | 1,059,251 |      |   | 1,493,831
|Short term borrowings                               |  |                                 | 2,850     |      |   | 3,120    
|Federal Home Loan Bank advances                     |  |                                 | 21,283    |      |   | 30,119   
|                                                    |  |                                 |           |      |   |          
|Total interest expense                              |  |                                 | 1,083,384 |      |   | 1,527,070
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|NET INTEREST INCOME                                 |  |                                 | 2,809,455 |      |   | 3,090,712
|                                                    |  |                                
|Provision for loan losses                           |  |                                 |          |      |   |         
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                                 | 2,809,455 |      |   | 3,090,712
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|NON INTEREST INCOME                                 |  |                                 |           |      |   |          
|Service charges on deposit accounts                 |  |                                 | 102,843   |      |   | 96,842   
|NSF & OD fees, net                                  |  |                                 | 198,827   |      |   | 197,751  
|Gain on sale of loans, net                          |  |                                 | 17,738    |      |   | 3,390    
|BOLI                                                |  |                                 | 58,960    |      |   | 55,891   
|Other income                                        |  |                                 | 35,881    |      |   | 39,493   
|                                                    |  |                                 |           |      |   |          
|Total non interest income                           |  |                                 | 414,249   |      |   | 393,367  
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|NON INTEREST EXPENSE                                |  |                                 |           |      |   |          
|Salaries and employee benefits                      |  |                                 | 1,305,694 |      |   | 1,314,133
|Occupancy and equipment expense                     |  |                                 | 258,193   |      |   | 255,327  
|Professional fees                                   |  |                                 | 94,894    |      |   | 70,652   
|Data Processing                                     |  |                                 | 52,846    |      |   | 47,474   
|Insurance & Bond                                    |  |                                 | 103,829   |      |   | 21,278   
|Franchise tax                                       |  |                                 | 131,826   |      |   | 126,734  
|Other expenses                                      |  |                                 | 333,130   |      |   | 350,604  
|                                                    |  |                                 |           |      |   |          
|Total non interest expense                          |  |                                 | 2,280,412 |      |   | 2,186,202
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|INCOME BEFORE INCOME TAXES                          |  |                                 | 943,292   |      |   | 1,297,877
|Income taxes                                        |  |                                 | 199,711   |      |   | 199,624  
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|NET INCOME                                          |  | $                               | 743,581   |      | $ | 1,098,253
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|Earning per common share                            |  | $                               | 1.20      |      | $ | 1.75     
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|Dividend per share                                  |  | $                               | .00       |      | $ | .00      
|                                                    |  |                                 |           |      |   |          
|                                                    |  |                                
|Weighted Average shares outstanding                 |  |                                 | 617,932   |      |   | 627,404  
|                                                    |  |                                 |           |      |   |          

See accompanying notes to the unaudited consolidated financial statements.



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Killbuck Bancshares, Inc. and Subsidiary

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY (UNAUDITED)

NINE MONTHS ENDED September 30, 2009



|                                                         |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                            |   |            |   |  |   |           |  
|-------------------------------------------------------- |  | ----------- | --------- | ---------------- | - | ---------- | ----------------------------------- |  | - | ------------- | - |  | ------------------------ | ---------- | - | -------------------------- | - | ---------- | - |  | - | --------- | -
|                                                         |  | CommonStock |           | RetainedEarnings |   |            | AccumulatedOtherComprehensiveIncome |  |   | TreasuryStock |   |  | TotalShareholdersEquity |            |   | ComprehensiveIncome (Loss) |  
|Balance, December 31, 2008                               |  | $           | 8,846,670 |                  | $ | 42,461,137 |                                     |  | $ | 643,359       |   |  | $                        | (9,015,568 | ) |                            | $ | 42,935,598 |   |  |   |           |  
|Net income                                               |  |             |           |                  |   | 2,450,614  |                                     |  |   |               |   |  |                          |            |   |                            |   | 2,450,614  |   |  | $ | 2,450,614 |  
|Purchase of Treasury stock, at cost (4,241 shares)       |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          | (470,491   | ) |                            |   | (470,491   | ) |  |   |           |  
|Cash dividends paid ($1.45 per share)                    |  |             |           |                  |   | (897,332   | )                                   |  |   |               |   |  |                          |            |   |                            |   | (897,332   | ) |  |   |           |  
|Other comprehensive income:                              |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                            |   |            |   |  |   |           |  
|Net unrealized (loss) on securities, net of tax $223,790 |  |             |           |                  |   |            |                                     |  |   | (434,416      | ) |  |                          |            |   |                            |   | (434,416   | ) |  |   | (434,416  | )
|                                                         |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                            |   |            |   |  |   |           |  
|Comprehensive income                                     |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                            |   |            |   |  | $ | 2,016,198 |  
|                                                         |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                            |   |            |   |  |   |           |  
|                                                         |  |             |           |                  |   |           
|Balance, September 30, 2009                              |  | $           | 8,846,670 |                  | $ | 44,014,419 |                                     |  | $ | 208,943       |   |  | $                        | (9,486,059 | ) |                            | $ | 43,583,973 |   |  |   |           |  
|                                                         |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                            |   |            |   |  |   |           |  

See accompanying notes to the unaudited consolidated financial statements.



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##### Table of Contents

Killbuck Bancshares, Inc. and Subsidiary

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)



|                                                                                  |  |                                |             |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                  |  | Nine Months EndedSeptember
30, |            
|                                                                                  |  | 2009                           |             |   | 2008 |  
|OPERATING ACTIVITIES                                                              |  |                                |             |   |      |   |             |  
|Net income                                                                        |  | $                              | 2,450,614   |   |      | $ | 3,411,175   |  
|Adjustments to reconcile net income to net cash provided by Operating activities: |  |                                |             |   |      |   |             |  
|Provision for loan losses                                                         |  |                                | 2,000       |   |      |   |            |  
|Gain on sale of loans                                                             |  |                                | (108,430    | ) |      |   | (27,227     | )
|Provision for depreciation and amortization                                       |  |                                | 760,713     |   |      |   | 356,888     |  
|Origination of loans held for sale                                                |  |                                | (13,970,350 | ) |      |   | (2,922,600  | )
|Proceeds from the sale of loans                                                   |  |                                | 14,078,780  |   |      |   | 3,119,827   |  
|Federal Home Loan Bank stock dividend                                             |  |                                |            |   |      |   | (35,300     | )
|Bank Owned Life Insurance (BOLI) benefit income                                   |  |                                |            |   |      |   | (234,396    | )
|Net change in:                                                                    |  |                                |             |   |      |   |             |  
|Accrued interest and other assets                                                 |  |                                | (333,067    | ) |      |   | (1,002,683  | )
|Accrued expenses and other liabilities                                            |  |                                | (70,486     | ) |      |   | (157,540    | )
|                                                                                  |  |                                |             |   |      |   |             |  
|Net cash provided by operating activities                                         |  |                                | 2,809,774   |   |      |   | 2,508,144   |  
|                                                                                  |  |                                |             |   |      |   |             |  
|                                                                                  |  |                               
|INVESTING ACTIVITIES                                                              |  |                                |             |   |      |   |             |  
|Investment securities available for sale:                                         |  |                                |             |   |      |   |             |  
|Proceeds from maturities and repayments                                           |  |                                | 26,013,858  |   |      |   | 14,179,846  |  
|Purchases                                                                         |  |                                | (34,306,322 | ) |      |   | (17,487,043 | )
|Bank CDs  Purchases                                                              |  |                                | (1,715,000  | ) |      |   |            |  
|Bank CDs  Proceeds from Maturities                                               |  |                                | 735,000     |   |      |   |            |  
|Investment securities held to maturity:                                           |  |                                |             |   |      |   |             |  
|Proceeds from maturities and repayments                                           |  |                                | 1,564,701   |   |      |   | 544,851     |  
|Purchases                                                                         |  |                                | (5,529,969  | ) |      |   | (3,659,588  | )
|Net increase in loans                                                             |  |                                | (4,785,361  | ) |      |   | (1,774,270  | )
|Net Purchase of premises and equipment                                            |  |                                | (78,395     | ) |      |   | (226,193    | )
|Bank Owned Life Insurance (BOLI)                                                  |  |                                |             |   |      |   |             |  
|Proceeds                                                                          |  |                                |            |   |      |   | 395,915     |  
|Purchases                                                                         |  |                                |            |   |      |   | (2,000,000  | )
|                                                                                  |  |                                |             |   |      |   |             |  
|Net cash used in investing activities                                             |  |                                | (18,101,488 | ) |      |   | (10,026,482 | )
|                                                                                  |  |                                |             |   |      |   |             |  
|                                                                                  |  |                               
|FINANCING ACTIVITIES                                                              |  |                                |             |   |      |   |             |  
|Net increase in demand, money market and savings deposits                         |  |                                | 272,467     |   |      |   | 9,197,655   |  
|Net increase (decrease) in time deposits                                          |  |                                | 7,628,619   |   |      |   | (6,443,209  | )
|Net decrease in short term borrowings                                             |  |                                | (1,405,000  | ) |      |   | (345,000    | )
|Repayments of Federal Home Loan Bank advances                                     |  |                                | (487,943    | ) |      |   | (505,059    | )
|Purchase of Treasury stock                                                        |  |                                | (470,491    | ) |      |   | (486,204    | )
|Dividends paid                                                                    |  |                                | (897,332    | ) |      |   | (909,464    | )
|                                                                                  |  |                                |             |   |      |   |             |  
|Net cash provided by financing activities                                         |  |                                | 4,640,320   |   |      |   | 508,719     |  
|                                                                                  |  |                                |             |   |      |   |             |  
|                                                                                  |  |                               
|Net decrease in cash and cash equivalents                                         |  |                                | (10,651,394 | ) |      |   | (7,009,619  | )
|Cash and cash equivalents at beginning of period                                  |  |                                | 40,316,633  |   |      |   | 41,172,750  |  
|                                                                                  |  |                                |             |   |      |   |             |  
|Cash and cash equivalents at end of period                                        |  | $                              | 29,665,239  |   |      | $ | 34,163,131  |  
|                                                                                  |  |                                |             |   |      |   |             |  
|                                                                                  |  |                               
|Supplemental Disclosures of Cash Flows Information                                |  |                                |             |   |      |   |             |  
|Cash Paid During the Period For:                                                  |  |                                |             |   |      |   |             |  
|Interest on deposits and borrowings                                               |  | $                              | 3,499,519   |   |      | $ | 5,298,928   |  
|                                                                                  |  |                                |             |   |      |   |             |  
|                                                                                  |  |                               
|Income taxes                                                                      |  | $                              | 606,735     |   |      | $ | 1,019,193   |  
|                                                                                  |  |                                |             |   |      |   |             |  

See accompanying notes to the unaudited consolidated financial statements.



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Killbuck Bancshares, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1  BASIS OF PRESENTATION

The consolidated financial statements include the
accounts of Killbuck Bancshares, Inc. (the Company) and its wholly-owned subsidiary Killbuck Savings Bank Company (the Bank). All significant intercompany balances and transactions have been eliminated in the consolidation.

The accompanying reviewed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and,
therefore, do not necessarily include all information that would be included in audited financial statements. The information furnished reflects all adjustments, which are, in the opinion of management, necessary for a fair statement of the results
of operations. All such adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

These statements should be read in conjunction with the consolidated statements of and for the year ended December 31, 2008 and related notes which are
included on the Form 10-K (file no. 000-24147).

NOTE 2  EARNINGS PER SHARE

The Company currently maintains a simple capital structure; therefore, there are no dilutive effects on earnings per share. As such, earnings per share are
calculated using the weighted number of shares for the period.

NOTE 3  COMPREHENSIVE INCOME

The Company is required to present comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income is
comprised of the following:



|                                         |  |                                     |           |   |                                     |   |           |  
|---------------------------------------- |  | ----------------------------------- | --------- | - | ----------------------------------- | - | --------- | -
|                                         |  | Nine MonthsEndedSeptember 30, 2009  |           |   | Nine MonthsEndedSeptember 30, 2008  |  
|Net income                               |  | $                                   | 2,450,614 |   |                                     | $ | 3,411,175 |  
|Other comprehensive income:              |  |                                     |           |   |                                     |   |           |  
|Net unrealized (loss) gain on securities |  |                                     | (658,205  | ) |                                     |   | (378,769  | )
|Tax effect                               |  |                                     | 223,789   |   |                                     |   | 51,342    |  
|                                         |  |                                     |           |   |                                     |   |           |  
|Total comprehensive income               |  | $                                   | 2,016,198 |   |                                     | $ | 3,083,748 |  
|                                         |  |                                     |           |   |                                     |   |           |  
|                                         |  |                                    
|                                         |  | Three MonthsEndedSeptember 30, 2009 |           |   | Three MonthsEndedSeptember 30, 2008 |  
|Net income                               |  | $                                   | 743,581   |   |                                     | $ | 1,098,253 |  
|Other comprehensive income:              |  |                                     |           |   |                                     |   |           |  
|Net unrealized (loss) gain on securities |  |                                     | (52,402   | ) |                                     |   | (968      | )
|Tax effect                               |  |                                     | 17,817    |   |                                     |   | (60,335   | )
|                                         |  |                                     |           |   |                                     |   |           |  
|Total comprehensive income               |  | $                                   | 708,996   |   |                                     | $ | 1,036,950 |  
|                                         |  |                                     |           |   |                                     |   |           |  



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NOTE 4  DISCLOSURES ABOUT FAIR VALUE ASSETS AND LIABILITIES

Fair Value Measurements.The Fair Value Measurements Topic of the FASB Accounting Standards Codification (FASB ASC) defines fair value,
establishes a framework for measuring fair value and expands disclosures about fair value measurements. FASB ASC Topic 820-10-20 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Topic 820-10-55 established a fair value hierarchy that emphasizes use of observable inputs and minimizes use of unobservable inputs when fair value. The standard describes three
levels of inputs that may be used to measure fair value:



|           |  |                                                                                                                                                                                                                                                                                                                                                                                          
|---------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level I:   |  | Quoted prices are available in active markets for identical assets or liabilities as of the reported date.                                                                                                                                                                                                                                                                               
|           | 
|Level II:  |  | Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and
liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
|           | 
|Level III: |  | Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using managements best
estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.                                                                       

The following table presents the fair value measurements of assets recognized in the accompanying
condensed consolidated balance sheet measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at September 30, 2009.



|                              |  |                    |   |          |   |            |  |       |   |  |   |           
|----------------------------- |  | ------------------ | - | -------- | - | ---------- |  | ----- | - |  | - | ----------
|                              |  | September 30, 2009
|                              |  | Level I            |   | Level II |   | Level III  |  | Total
|                              |  | (In thousands)    
|Assets:                       |  |                    |   |          |   |            |  |       |   |  |   |           
|Securities available for sale |  | $                  |  |          | $ | 58,791,535 |  | $     |  |  | $ | 58,791,535
|Loans held for sale           |  |                    |  |          |   |           |  |       |  |  |   |          



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NOTE 5  FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values at September 30, 2009 and December 31, 2008 are as follows:



|                                          |  |                |             |           |   |                |  |           |             |  |   |            
|----------------------------------------- |  | -------------- | ----------- | --------- | - | -------------- |  | --------- | ----------- |  | - | -----------
|                                          |  | 2009           |             | 2008     
|                                          |  | CarryingAmount |             | FairValue |   | CarryingAmount |  | FairValue
|Financial assets:                         |  |                |             |           |   |                |  |           |             |  |   |            
|Cash and due from depository institutions |  | $              | 24,195,239  |           | $ | 24,195,239     |  | $         | 31,868,633  |  | $ | 31,868,633 
|Federal funds sold                        |  |                | 5,470,000   |           |   | 5,470,000      |  |           | 8,448,000   |  |   | 8,448,000  
|Securities available for sale             |  |                | 58,791,535  |           |   | 58,791,535     |  |           | 51,549,966  |  |   | 51,549,966 
|Time Deposits                             |  |                | 980,000     |           |   | 980,000        |  |           |            |  |   |           
|Securities held to maturity               |  |                | 36,094,491  |           |   | 37,985,921     |  |           | 32,168,512  |  |   | 33,265,569 
|Net loans                                 |  |                | 205,232,069 |           |   | 212,319,000    |  |           | 200,448,708 |  |   | 211,277,000
|Loans held for sale                       |  |                |            |           |   |               |  |           |            |  |   |           
|Accrued interest receivable               |  |                | 1,627,226   |           |   | 1,627,226      |  |           | 1,470,833   |  |   | 1,470,883  
|Regulatory Stock                          |  |                | 1,734,560   |           |   | 1,734,560      |  |           | 1,734,560   |  |   | 1,734,560  
|Bank Owned Life Insurance                 |  |                | 5,607,180   |           |   | 5,607,180      |  |           | 5,442,906   |  |   | 5,442,906  
|                                          |  |                |             |          
|Financial liabilities:                    |  |                |             |           |   |                |  |           |             |  |   |            
|Deposits                                  |  | $              | 296,847,992 |           | $ | 299,855,140    |  | $         | 288,946,906 |  | $ | 292,313,673
|Short term borrowings                     |  |                | 4,980,000   |           |   | 4,980,000      |  |           | 6,385,000   |  |   | 6,385,000  
|Federal Home Loan Bank advances           |  |                | 1,374,724   |           |   | 1,570,000      |  |           | 1,862,667   |  |   | 2,180,000  
|Accrued interest payable                  |  |                | 180,190     |           |   | 180,190        |  |           | 245,247     |  |   | 245,247    

Financial instruments are defined as cash, evidence of ownership interest in an entity, or a contract
which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.

Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale. If a quoted market price
is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.

If no readily available market exists, the fair value estimates for financial instruments should be based upon managements judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated
losses, and other factors as determined through various option pricing formulas or simulation modeling. As many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting
estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in assumptions on which the estimated fair values are based may have a significant impact on the resulting
estimated fair values.

As certain assets and liabilities such as deferred tax assets and liabilities, premises and equipment and many other
operational elements of the Company, are not considered financial instruments, but have value, this estimated fair value of financial instruments would not represent the full market value of the Company.

The Company employed simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices were not available
based upon the following assumptions:

Cash and Due from Banks, Federal Funds Sold, Accrued Interest Receivable, Regulatory Stock, BOLI,
Short-Term Borrowings, and Accrued Interest Payable

The fair value approximates the current carrying value.



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NOTE 5  FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS CONTINUED



Investment Securities and Loans Held for Sale

The fair value of investment securities and loans held for sale are equal to the available quoted market price. If no quoted market price is available, fair
value is estimated using the quoted market price for similar securities.

Loans, Deposits, and Federal Home Loan Bank Advances

The fair value is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would
be made to borrowers of similar credit quality. Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were utilized as estimates for fair value. Demand, savings, and money market deposit
accounts are valued at the amount payable on demand as of year end. The fair values of certificates of deposit and other borrowed funds are based on the discounted value of contractual cash flows. The discount rates are estimated using rates
currently offered for similar instruments with similar remaining maturities. Demand, Savings, and money market deposits are valued at the amount payable on demand as of year-end.

Commitments to Extend Credit and Standby Letters of Credit

These financial
instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined
by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure. The contractual amounts of unfunded
commitments and letters of credit are presented previously in the commitments and contingent liabilities note.

NOTE 6  SUBSEQUENT
EVENTS

Subsequent events have been evaluated for potential recognition and disclosure in the consolidated financial statements through
November 4, 2009, which is the date the financial statements were available to be issued. No events were identified that would require adjustment to or disclosure in the financial statements.



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NOTE 7  NEW ACCOUNTING PRONOUNCEMENTS

On January 1, 2009, the Company adopted a new standard which requires, among other things, the acquiring entity in a business combination to recognize
all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to
investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. The adoption of this standard had no effect on the Companys financial statements.

On January 1, 2009, the Company adopted a new standard which establishes accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued or available to be issued. The standard defines (i) the period after the balance sheet date during which a reporting entitys management should evaluate events or transactions that may occur
for potential recognition or disclosure in the financial statements (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (iii) the
disclosures an entity should make about events or transactions that occurred after the balance sheet date. The adoption of this standard had no effect on the Companys financial statements.

In April 2009, the Financial Accounting Standards Board (FASB) issued accounting guidance on the recognition and presentation of OTTI. This
guidance amends current OTTI guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of OTTI on debt and equity securities in the financial statements. This guidance does not amend
existing recognition and measurement guidance related to OTTI of equity securities. The literature provides for the bifurcation of OTTI into: (i) amounts related to credit losses, which are recognized through earnings, and (ii) amounts
related to all other factors that are recognized as a component of other comprehensive income. The Company elected to early adopt this guidance effective January 1, 2009 and has incorporated the guidance into preparing the Consolidated
Financial Statements as of September 30, 2009.

In June 2009, the FASB issued accounting guidance on the accounting for transfers of
financial assets. This guidance improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer
on its financial position, financial performance, and cash flows; and a transferors continuing involvement, if any, in transferred financial assets. The guidance is effective for periods ending after November 15, 2009. Management is
currently evaluating the potential impact of this guidance on the Companys financial position, results of operations and cash flows.

In
June 2009, the FASB issued guidance that significantly changes the criteria for determining whether the consolidation of a variable interest entity is required. This guidance also addresses the effect of changes on consolidation of variable interest
entities and concerns regarding the application of certain provisions in previously issued accounting guidance, including concerns that the accounting and disclosures do not always provide timely and useful information about an entitys
involvement in a variable interest entity. This guidance is effective for interim and annual reporting periods that begin after November 15, 2009. Management is currently assessing the impact of this guidance on the Companys financial
position and results of operations.

On June 30, 2009, the Company adopted new accounting standards that provide additional application
guidance and enhance disclosures regarding fair value measurements and impairments of securities, as well as clarity and consistency in accounting for and presenting impairment losses on securities. The standards give guidance to determining fair
values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets
have become inactive. The standards also relate to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Previously, fair values for these assets and liabilities were
only disclosed once a year. These disclosures are now required on a quarterly basis to provide qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value.
The adoption of this standard had no impact on the Companys financial statements.



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NOTE 7  NEW ACCOUNTING PRONOUNCEMENTS CONTINUED



On September 30, 2009, the Company adopted a new standard that makes the Financial Accounting
Standards Boards Accounting Standards Codification (the Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements
in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative guidance for SEC registrants. All guidance contained in the
Codification carries and equal level of authority. All non-grandfathered, non-SEC accounting literature not included in the Codification is superseded and deemed non-authoritative. The Codification does not change or alter existing GAAP and,
therefore, the adoption of this standard had no effect on the Companys financial statements, other than to eliminate previous references to accounting pronouncements that are no longer applicable as a result of this new codification scheme.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. When used in this discussion, the words believes,
anticipates, contemplates, expects, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to
differ materially from those projected. Those risks and uncertainties include changes in interest rates, risks associated with the ability to control costs and expenses, and general economic conditions. Killbuck Bancshares, Inc. undertakes no
obligation to publicly release the results of any revisions to those forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

The Company conducts no significant business or operations of its own other than holding all of the outstanding stock of the Killbuck Savings Bank Company.
As a result, references to the Company generally refer to the Bank unless the context indicates otherwise.

Critical
Accounting Policies

The Companys accounting policies are integral to understanding the results reported. The accounting policies
are described in detail in Note 1 of the consolidated financial statements filed with the Commission as part of the Companys annual report on Form 10-K for its fiscal year ended December 31, 2008. Our most complex accounting policies
require managements judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. We have established detailed policies and control procedures that are intended to ensure valuation methods are well controlled and
applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief description of our current accounting
policies involving significant management valuation judgments.

Allowance for Loan Losses - Arriving at an appropriate level of
allowance for loan losses involve a high degree of judgment. The Companys allowance for loan losses provides for probable losses based upon evaluations of known and inherent risks in the loan portfolio.

Management uses historical information to assess the adequacy of the allowance for loan losses as well as the prevailing business environment as it is
affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. The allowance is increased by provisions for loan losses and by recoveries of loans previously charged-off and
reduced by loans charged-off. For a full discussion of the Companys methodology of assessing the adequacy of the reserve for loan losses, refer to Note 1 of the consolidated financial statements filed with the Commission as part of the
Companys annual report on Form 10-K for its fiscal year ended December 31, 2008.

Goodwill and Other Intangible Assets - As
discussed in Note 7 of the consolidated financial statements, filed with the Commission as part of the Companys annual report on Form 10-K for its fiscal year ended December 31, 2008; the Company must assess goodwill and other intangible
assets each year for impairment. This assessment involves estimating cash flows for future periods. If the future cash flows were less than the recorded goodwill and other intangible assets balances, we would be required to take a charge against
earnings to write down the assets to the lower value.

Deferred Tax Assets - We use an estimate of future earnings to support our
position that the benefit of our deferred tax assets will be realized. If future income should prove non-existent or less than the amount of the deferred tax assets within the tax years to which they may be applied, the asset may not be realized and
our net income will be reduced. Our deferred tax assets are described further in Note 14 of the consolidated financial statements filed with the Commission as part of the Companys annual report on Form 10-K for its fiscal year ended
December 31, 2008.



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##### Table of Contents

Financial Condition

Total assets at September 30, 2009 were $347,707,000 compared to $341,338,000 at December 31, 2008.

Cash and cash equivalents decreased by $10,652,000 or 26.4% from December 31, 2008, to September 30, 2009, with federal funds sold decreasing $2,978,000. The decrease was used to partially fund
the increase in the Banks loan portfolio.

Investment securities available for sale increased by $7,242,000 or 14.0% from
December 31, 2008, to September 30, 2009 due to an increase in suitable securities available to purchase for the portfolio. Time Deposits held at other institutions were purchased for $1.0 million due to attractive rates and the increase
in FDIC insurance limits. Investments held to maturity increased $3,925,000 or 12.2% due to some attractive municipal securities available for the portfolio.

Net loans increased by $4,783,000 or 2.4% from December 31, 2008 to September 30, 2009. An increase of $4,847,000 occurred in the real estate loan category, which is attributable primarily to
residential real estate lending of $7,439,000 with an additional increase in farm lending of $412,000 and a decrease of $2,573,000 in commercial real estate lending and $431,000 in construction loan activity. Management believes the residential loan
activities have seen an increase in the Banks lending area. Commercial and other loan balances increased by $528,000 due to additional draws on existing lines of credit. The Consumer loan balances decreased by $592,000.

Total deposits at September 30, 2009 were $296,848,000 compared to $288,947,000 at December 31, 2008. Demand accounts decreased $6,664,000, while
money market accounts, savings accounts and time deposits accounts increased $6,307,000, $629,000 and $7,629,000 respectively. Management attributes these changes to the changes in interest rates. A Money Market account is a short term investment
that customers use while waiting until the interest rates meet their expectations for longer term time deposits. Management believes the demand accounts decreases are attributable to normal fluctuations due to customer usage.

Federal Home Loan Bank advances decreased $488,000 due to maturities and scheduled repayments, and short-term borrowings decreased $1,405,000 at
September 30, 2009 from December 31, 2008.

Shareholders Equity increased by $648,000 or 1.5%, which was mainly due to
earnings of $2,451,000 for the first nine months of 2009 decreased by a $435,000 unrealized loss on securities included in other comprehensive income, dividends paid totaling $897,000 and by the purchase of Treasury stock for $471,000. Treasury
stock purchases are monitored against the Companys Strategic Plan and the goals set forth in the plan. The Treasury stock purchases have not exceeded the Strategic Plans guidelines for the first nine months of 2009. Management monitors
risk-based capital and leveraged capital ratios in order to assess compliance of the regulatory guidelines. At September 30, 2009, the total capital ratio was 19.49%; the Tier I capital ratio was 18.41%, and the leverage ratio was 12.04%,
compared to regulatory capital requirements of 8.00%, 4.00% and 4.00% respectively. These ratios are well in excess of regulatory capital requirements.



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RESULTS OF OPERATIONS

Comparison of the Nine Months Ended September 30, 2009 and 2008

Net income for the nine-month period ended September 30, 2009, was $2,451,000, a decrease of $960,000 or 28.1% from the $3,411,000 reported at September 30, 2008.

Total interest income of approximately $12,055,000 for the nine-month period ended September 30, 2009, compares to $14,433,000 for the same period in 2008, a decrease of $2,378,000 or 16.5%. The
decrease in total interest income is primarily attributable to a decrease in interest and fees on loans due primarily to a decrease in the average yield on the underlying balances. See Average Balance Sheet for the nine-month periods
ended September 30, 2009 and 2008. The yield on loans decreased to 5.99% for the first nine months of 2009 compared to 7.20% for the first nine months of 2008. Average loan balances were $206,906,000 for the first nine months of 2009 compared
to $201,277,000 for the first nine months of 2008. The interest on taxable investment securities of $1,664,000 for 2009 compares to $2,118,000 for 2008. The decrease in investment income is primarily attributable to a decrease in yield. The Average
investment balances on taxable securities were $61,741,000 compared to $54,080,000 and the yields were 3.42% compared to 5.05% for the first nine months of 2009 and 2008 respectively. The interest on Federal Funds also decreased. It decreased due to
the decrease in volume and yield. The average balance outstanding in Federal Funds and Due from Federal Reserve Bank were $19,978,000 compared to $25,108,000 for the first nine months of 2009 and 2008 respectively. The yield on the excess liquidity
in Federal Funds and Due from Federal Reserve Bank decreased from 2.42% for 2008 to .24% for 2009.

Total interest expense of $3,434,000 for
the nine-month period ending September 30, 2009 represents a decrease of $1,711,000 from the $5,145,000 reported for the same nine-month period in 2008. The decrease in interest expense on deposits of $1,679,000 is due mainly to a decrease in
interest rates. The decreases in the average rate paid on the underlying balances of the interest bearing liabilities are due mainly to the Time deposits. The cost of Time deposits was 2.68% compared to 3.92% for this nine-month period of 2009 and
2008, respectively. The cost on interest bearing deposits was 1.8%, compared to 2.8% for the nine-month periods of 2009 and 2008 respectively. Average interest-bearing deposits were $246,216,000 for the first nine months of 2009 compared to
$238,909,000 for the first nine months of 2008. See Average Balance Sheet for the nine-month periods ended September 30, 2009 and 2008.

Net interest income of $8,621,000 for the nine months ended September 30, 2009, compares to $9,288,000 for the same nine-month period in 2009, a decrease of $667,000 or 7.2%. The net interest margin
is expected to stabilize in 2009 but remain low.

Total non-interest income for the nine-month period ended September 30, 2009, of
$1,257,000 compares to $1,441,000 for the same nine-month period in 2008, a decrease of $184,000 or 12.8%. The net Non-sufficient funds fees and overdraft fees decreased $50,000 due to a decrease in Non-sufficient funds activity. Gains on sale of
loans increased $81,000 primarily due to refinancings. Bank Owned Life Insurance (BOLI) income decreased $218,000 primarily due to an asset reduction resulting from a benefit payout in the first nine months of 2008.

Total non-interest expense of $6,715,000 for the nine months ended September 30, 2009, compares to $6,477,000 for the same nine-month period in 2008.
This represents an increase of $238,000 or 3.7%. Salary and employee benefits decreased approximately $33,000. The bonus accrual has decreased approximately $52,000; however, this decrease was partially offset by normal increases in salaries and
employee benefits. Occupancy and Equipment costs decreased approximately $30,000; approximately $28,000 is due to decreased depreciation expense and computer technology expense. Professional fees increased approximately $37,000, which included
additional auditing fees for SOX 404 compliance and other regulatory requirements such as Bank Secrecy Act and Gramm-Leach-Bliley Act, increasing regulatory examination costs, and the legal expense associated with these areas. Insurance and bond
expense increased approximately $278,000 or 4.88% due to FDIC assessments.



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##### Table of Contents

The Federal Deposit Insurance Corporation (FDIC) increased the regular FDIC assessment rates on all insured
institutions as well as levied a special 5 basis points (bps) assessment that was assessed as of June 30, 2009 and paid September 30, 2009. The changes in the remaining expense accounts were attributable to increases/decreases in items
that are normal and recurring in nature.



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##### Table of Contents

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2009 and 2008

Net income for the three-month period ended September 30, 2009, was $744,000, a decrease of $354,000 or 32.2% from the $1,098,000 reported at September 30, 2008.

Total interest income of approximately $3,893,000 for the three-month period ended September 30, 2009, compares to $4,618,000 for the same period in 2008, a decrease of $725,000 or 15.7%. The
decrease in total interest income is primarily attributable to a decrease in the loan category. Interest and fees on loans decreased $423,000 or 12.3% for the three-month period ended September 30, 2009 compared to the same period for 2008. The
decrease in interest and fees on loans is due to a decrease in the yields earned on the underlying balances. Average loan balances were $207,588,000 compared to $201,033,000 and the yield was 5.83% compared to 6.86% for this three-month period of
2009 and 2008, respectively. See Average Balance Sheet for the three-month periods ended September 30, 2009 and 2008. The decrease in interest on taxable investment securities of $226,000 was primarily attributable to a decrease in
the yields earned on the average balances outstanding. The average balances of taxable investment securities were $60,651,000 for 2009 compared to $55,474,000 for 2008 and the yield was 3.02% compared to 4.93% for this three-month period of 2009 and
2008 respectively. See Average Balance Sheet for the three-month periods ended September 30, 2009 and 2008.

Total interest
expense of $1,083,000 for the three-month period ending September 30, 2009, represents a decrease of $444,000 from the $1,527,000 reported for the same three-month period in 2008. The decrease in interest expense on deposits of $435,000 is due
mainly to the decreases in the average rate paid on the underlying balances of the interest bearing liabilities, specifically the Time deposits. The cost of Time deposits was 2.47% compared to 3.52% for this three-month period of 2009 and 2008,
respectively and the cost of interest bearing deposits was 1.7% compared to 2.50% for this three-month period of 2009 and 2008 respectively. The average time deposits were $152,295,000 for this three-month period of 2009 compared to $149,429,000 for
the same three months of 2009. Average interest-bearing deposits were $249,198,000 for this three-month period of 2009 compared to $239,361,000 for the same three months of 2008. See Average Balance Sheet for the three-month periods
ended September 30, 2009 and 2008.

Net interest income of $2,810,000 for the three months ended September 30, 2009, compares to
$3,091,000 for the same three-month period in 2008, a decrease of $281,000 or 9.1%. The net interest margin is expected to stabilize in 2009 but remain low.

Total non-interest income for the three-month period ended September 30, 2009, of $414,000 compares to $393,000 for the same three-month period in 2008, an increase of $21,000 or 5.3%. Gains on sale
of loans increased $15,000 primarily due to refinancings. The changes in the remaining income accounts were attributable to increases/decreases in items that are normal and recurring in nature.

Total non-interest expense of $2,281,000 for the three months ended September 30, 2009, compares to $2,186,000 for the same three-month period in 2008.
This represents an increase of $95,000 or 4.3%. Salary and employee benefits decreased $8,000. The bonus accrual has decreased approximately $17,000; however, this decrease was partially offset by normal increases in salaries and employee benefits.
Professional fees increased approximately $24,000, which included additional auditing fees for SOX 404 compliance and other regulatory requirements such as Bank Secrecy Act and Gramm-Leach-Bliley Act, increasing regulatory costs, and the legal
expense associated with these areas. Insurance and bond expense increased approximately $83,000 or 388.0% due to FDIC assessments. The Federal Deposit Insurance Corporation (FDIC) increased the regular FDIC assessment rates on all insured
institutions. The changes in the remaining expense accounts were attributable to increases/decreases in items that are normal and recurring in nature.



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##### Table of Contents

Liquidity

Management monitors projected liquidity needs and determines the level desirable based in part on the Companys commitments to make loans and managements assessment of the Companys
ability to generate funds.

The primary sources of funds are deposits, repayment of loans, maturities of investments, funds provided from
operations and advances from the FHLB of Cincinnati. While scheduled repayments of loans and maturities of investment securities are predictable sources of funds, deposit flows and loan repayments are greatly influenced by the general level of
interest rates, economic conditions and competition. The Company uses its sources of funds to fund existing and future loan commitments, to fund maturing time deposits and demand deposit withdrawals, to invest in other interest-earning assets, to
maintain liquidity, and to meet operating expenses.

Cash and amounts due from depository institutions and federal funds sold totaled
$29,665,000 at September 30, 2009. These assets provide the primary source of liquidity for the Company. In addition, management has designated a portion of the investment portfolio, $58,792,000 as available for sale and has an available unused
line of credit of $42,078,000 with the Federal Home Loan Bank of Cincinnati to provide additional sources of liquidity at September 30, 2009. As of September 30, 2009, the Company had commitments to fund loans of approximately $2,808,000
and unused lines of credit totaling $40,176,000.

Cash was provided during the nine month period ended September 30, 2009, mainly from
operating activities of $2.8 million, and the net increase in deposits of $7.9 million, the maturities and repayments of investment securities of $28.3 million. Cash was used during the nine month period ended September 30, 2009, mainly to fund
a net increase in loans of $4.8 million, for the purchase of investment securities of $41.5 million, and to reduce $1.9 million in Federal Home Loan Bank advances and short-term borrowings. In addition, $.5 million was used to purchase Treasury
Stock, and $.9 million was used to pay dividends to shareholders. Cash and cash equivalents totaled $29.7 million at September 30, 2009, a decrease of $10.6 million from $40.3 million at December 31, 2008.

Management is not aware of any conditions, including any regulatory recommendations or requirements, which would adversely affect its liquidity or ability
to meet its funding needs in the normal course of business.



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##### Table of Contents

Risk Elements

The table below presents information concerning nonperforming assets including nonaccrual loans, renegotiated loans, loans 90 days or more past due, other real estate loans and repossessed assets at
September 30, 2009, and December 31, 2008. The Company ceased accruing interest on residential mortgages secured by real estate and consumer loans when principal or interest payments are delinquent 90 days or more. Commercial loans, that
are 90 days or more past due, are reviewed by the Executive Vice President and the loan officer to determine whether they will be classified as nonperforming. These officers review various factors, which include, but are not limited to, the timing
of the maturity of the loan in relation to the ability to collect, whether the loan is deemed to be well secured, whether the loan is in the process of collection, and the favorable results of the analysis of customer financial data. A nonperforming
loan will only be re-classified as a performing loan when stringent criteria have been met. At the time the accrual of interest is discontinued, future income is recognized only when cash is received or the loan has been returned to performing loan
status. Renegotiated loans are those loans which terms have been renegotiated to provide a reduction or deferral of principal or interest as of result of the deterioration of the borrower.



|                                                  |  |                        |     |   |                  |   |     |  
|------------------------------------------------- |  | ---------------------- | --- | - | ---------------- | - | --- | -
|                                                  |  | September 30,2009      |     |   | December 31,2008 |  
|                                                  |  | (dollars in thousands) |    
|Loans on nonaccrual basis                         |  | $                      | 11  |   |                  | $ | 73  |  
|Loans past due 90 days or more                    |  |                        |    |   |                  |   |    |  
|Renegotiated loans                                |  |                        |    |   |                  |   |    |  
|                                                  |  |                        |     |   |                  |   |     |  
|Total nonperforming loans                         |  | $                      | 11  |   |                  | $ | 73  |  
|                                                  |  |                       
|Other real estate                                 |  |                        |    |   |                  |   |    |  
|Repossessed assets                                |  |                        |    |   |                  |   |    |  
|                                                  |  |                        |     |   |                  |   |     |  
|Total nonperforming assets                        |  | $                      | 11  |   |                  | $ | 73  |  
|                                                  |  |                        |     |   |                  |   |     |  
|                                                  |  |                       
|Nonperforming loans as a percent of total loans   |  |                        | .01 | % |                  |   | .04 | %
|                                                  |  |                       
|Nonperforming loans as a percent of total assets  |  |                        | .00 | % |                  |   | .02 | %
|                                                  |  |                       
|Nonperforming assets as a percent of total assets |  |                        | .00 | % |                  |   | .02 | %

Management monitors impaired loans on a continual basis. As of September 2009, impaired loans had no
material effect on the Companys financial position or results from operations.

The allowance for loan losses at September 30,
2009, totaled $2,464,000 or 1.19% of total loans as compared to $2,525,000 or 1.24% at December 31, 2008. Provisions for loan losses were $2,000 for the nine months ended September 30, 2009 and $0 for the three months ended
September 30, 2009. The provision was for the Overdraft Privilege program.

The level of funding for the provision is a reflection of the
overall loan portfolio. Nonperforming loans consist of approximately $11,000 in commercial loan balances. The collateral requirements on such loans reduce the risk of potential losses to an acceptable level in managements opinion.

Management performs a quarterly evaluation of the allowance for loan losses. The evaluation incorporates internal loan review and actual historical
losses, as well as any negative economic trends in the local market. The evaluation is presented to and approved by the Board of Directors. Although the Company maintains its allowance for loan losses at a level that it considers to be adequate to
provide for the inherent risk of loss in its portfolio, 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.



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##### Table of Contents

AVERAGE BALANCE SHEET

Average Balance Sheet for the Nine-Month Period Ended September 30

The following
table sets forth certain information relating to the Companys average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated and the average yields earned and rates paid. Such yields
and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are derived from month-end balances. Management does not believe that the use of month-end
balances instead of daily average balances has caused any material differences in the information presented.



|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|------------------------------------------ |  | -------------- | ----------- | - | -------- | - | ---------- |  | ---- | -------------- |  | - | ----------- | - | ---------- | - | ---------- |  | ---- | -
|                                           |  | Period Ended   |            
|                                           |  | 2009           |             |   | 2008     |  
|                                           |  | AverageBalance |             |   | Interest |   | Yield/Rate |  |      | AverageBalance |  |   | Interest    |   | Yield/Rate |  
|Assets                                     |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Interest Earnings Assets:                  |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Loans (1)(2)(3)                            |  | $              | 206,905,771 |   |          |   | 9,295,475  |  | 5.99 | %              |  | $ | 201,277,236 |   |            | $ | 10,862,950 |  | 7.20 | %
|Securities-taxable (4)                     |  |                | 61,740,605  |   |          |   | 1,585,587  |  | 3.42 | %              |  |   | 54,079,797  |   |            |   | 2,048,880  |  | 5.05 | %
|Securities-nontaxable (4)                  |  |                | 33,751,864  |   |          |   | 1,059,279  |  | 4.18 | %              |  |   | 30,811,689  |   |            |   | 996,637    |  | 4.31 | %
|Securities-Equity (4,5)                    |  |                | 1,734,560   |   |          |   | 78,310     |  | 6.02 | %              |  |   | 1,697,923   |   |            |   | 69,349     |  | 5.45 | %
|Federal funds sold                         |  |                | 6,556,359   |   |          |   | 7,708      |  | 0.16 | %              |  |   | 25,108,478  |   |            |   | 454,919    |  | 2.42 | %
|Due from Federal Reserve Bank              |  |                | 13,421,474  |   |          |   | 28,816     |  | 0.29 | %              |  |   |            |   |            |   |           |  |     | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Total interest earnings assets             |  |                | 324,110,633 |   |          |   | 12,055,175 |  | 4.96 | %              |  |   | 312,975,123 |   |            |   | 14,432,735 |  | 6.15 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |  
|Noninterest earning assets:                |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Cash and due from other institutions       |  |                | 10,199,930  |   |          |   |            |  |      |                |  |   | 11,517,628  |   |            |   |            |  |      |  
|Premises and equipment, net                |  |                | 6,192,475   |   |          |   |            |  |      |                |  |   | 6,519,352   |   |            |   |            |  |      |  
|Accrued interest                           |  |                | 1,278,820   |   |          |   |            |  |      |                |  |   | 1,381,096   |   |            |   |            |  |      |  
|Other assets                               |  |                | 8,190,378   |   |          |   |            |  |      |                |  |   | 7,711,671   |   |            |   |            |  |      |  
|Less allowance for loan losses             |  |                | (2,518,939  | ) |          |   |            |  |      |                |  |   | (2,495,053  | ) |            |   |            |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Total noninterest earnings assets          |  |                | 23,342,664  |   |          |   |            |  |      |                |  |   | 24,634,694  |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Total Assets                               |  | $              | 347,453,297 |   |          |   |            |  |      |                |  | $ | 337,609,817 |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |  
|Liabilities and Shareholders Equity       |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Interest bearing liabilities:              |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Interest bearing demand                    |  |                | 26,059,089  |   |          |   | 29,723     |  | 0.15 | %              |  |   | 26,721,053  |   |            |   | 84,687     |  | 0.42 | %
|Money market accounts                      |  |                | 28,670,605  |   |          |   | 183,558    |  | 0.85 | %              |  |   | 21,114,047  |   |            |   | 261,374    |  | 1.65 | %
|Savings deposits                           |  |                | 40,928,340  |   |          |   | 119,871    |  | 0.39 | %              |  |   | 38,560,113  |   |            |   | 205,903    |  | 0.71 | %
|Time deposits                              |  |                | 150,557,793 |   |          |   | 3,021,483  |  | 2.68 | %              |  |   | 152,513,352 |   |            |   | 4,481,110  |  | 3.92 | %
|Short term borrowings                      |  |                | 5,353,424   |   |          |   | 9,198      |  | 0.23 | %              |  |   | 5,328,085   |   |            |   | 14,410     |  | 0.36 | %
|Federal Home Loan Advances                 |  |                | 1,587,346   |   |          |   | 70,630     |  | 5.93 | %              |  |   | 2,250,118   |   |            |   | 97,533     |  | 5.78 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Total interest bearing liabilities         |  |                | 253,156,597 |   |          |   | 3,434,463  |  | 1.81 | %              |  |   | 246,486,768 |   |            |   | 5,145,017  |  | 2.78 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |  
|Noninterest bearing liabilities:           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Demand deposits                            |  |                | 50,193,496  |   |          |   |            |  |      |                |  |   | 48,267,996  |   |            |   |            |  |      |  
|Accrued expenses and other liabilities     |  |                | 2,864,614   |   |          |   |            |  |      |                |  |   | 3,316,456   |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Total noninterest bearing liabilities      |  |                | 53,058,110  |   |          |   |            |  |      |                |  |   | 51,584,452  |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Shareholders equity                       |  |                | 41,238,590  |   |          |   |            |  |      |                |  |   | 39,538,597  |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|Total Liabilities and Shareholders Equity |  | $              | 347,453,297 |   |          |   |            |  |      |                |  | $ | 337,609,817 |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |  
|Net interest income                        |  |                |             |   |          | $ | 8,620,712  |  |      |                |  |   |             |   |            | $ | 9,287,718  |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |  
|Interest rate spread (6)                   |  |                |             |   |          |   |            |  | 3.15 | %              |  |   |             |   |            |   |            |  | 3.37 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  
|                                           |  |                |             |   |          |  
|Net yield on interest earning assets (7)   |  |                |             |   |          |   |            |  | 3.55 | %              |  |   |             |   |            |   |            |  | 3.96 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |            |  |      |  



|(1) | For purposes of these computations, the daily average loan amounts outstanding are net of deferred loan fees.
|--- | -------------------------------------------------------------------------------------------------------------

|(2) | Included in loan interest income are loan related fees of $275,000 and $275,000 in 2009 and 2008, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------

|(3) | Nonaccrual loans are included in loan totals and do not have a material impact on the information presented.
|--- | ------------------------------------------------------------------------------------------------------------

|(4) | Average balance is computed using the carrying value of securities. The average yield has been computed using the historical amortized cost average balance for
securities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Equity securities are comprised of common stock of the Federal Home Loan Bank, Federal Reserve Bank, and Great Lakes Bankers Bank.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(6) | Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Net yield on interest earning assets represents net interest income as a percentage of average interest earning assets.
|--- | -----------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

AVERAGE BALANCE SHEET

Average Balance Sheet for the Three-Month Period Ended September 30

The following
table sets forth certain information relating to the Companys average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated and the average yields earned and rates paid. Such yields
and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are derived from month-end balances. Management does not believe that the use of month-end
balances instead of daily average balances has caused any material differences in the information presented.



|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|------------------------------------------ |  | -------------- | ----------- | - | -------- | - | ---------- |  | ---- | -------------- |  | - | ----------- | - | ---------- | - | --------- |  | ---- | -
|                                           |  | Period Ended   |            
|                                           |  | 2009           |             |   | 2008     |  
|                                           |  | AverageBalance |             |   | Interest |   | Yield/Rate |  |      | AverageBalance |  |   | Interest    |   | Yield/Rate |  
|Assets                                     |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Interest Earnings Assets:                  |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Loans (1)(2)(3)                            |  | $              | 207,587,818 |   |          |   | 3,023,714  |  | 5.83 | %              |  | $ | 201,033,218 |   |            | $ | 3,447,195 |  | 6.86 | %
|Securities-taxable (4)                     |  |                | 60,651,342  |   |          |   | 457,906    |  | 3.02 | %              |  |   | 55,474,344  |   |            |   | 684,079   |  | 4.93 | %
|Securities-nontaxable (4)                  |  |                | 34,816,800  |   |          |   | 363,707    |  | 4.18 | %              |  |   | 31,967,024  |   |            |   | 342,897   |  | 4.29 | %
|Securities-Equity (4,5)                    |  |                | 1,734,560   |   |          |   | 35,069     |  | 8.09 | %              |  |   | 1,714,703   |   |            |   | 20,703    |  | 4.83 | %
|Federal funds sold                         |  |                | 6,789,321   |   |          |   | 2,065      |  | 0.12 | %              |  |   | 24,724,312  |   |            |   | 122,908   |  | 1.99 | %
|Due from Federal Reserve Bank              |  |                | 16,229,068  |   |          |   | 10,378     |  | 0.26 | %              |  |   |            |   |            |   |          |  |     | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Total interest earnings assets             |  |                | 327,808,909 |   |          |   | 3,892,839  |  | 4.75 | %              |  |   | 314,913,601 |   |            |   | 4,617,782 |  | 5.87 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Noninterest earning assets:                |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Cash and due from other institutions       |  |                | 9,675,153   |   |          |   |            |  |      |                |  | $ | 12,041,897  |   |            |   |           |  |      |  
|Premises and equipment, net                |  |                | 6,111,544   |   |          |   |            |  |      |                |  |   | 6,465,752   |   |            |   |           |  |      |  
|Accrued interest                           |  |                | 1,178,927   |   |          |   |            |  |      |                |  |   | 1,265,083   |   |            |   |           |  |      |  
|Other assets                               |  |                | 8,341,036   |   |          |   |            |  |      |                |  |   | 8,015,000   |   |            |   |           |  |      |  
|Less allowance for loan losses             |  |                | (2,500,868  | ) |          |   |            |  |      |                |  |   | (2,485,320  | ) |            |   |           |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Total noninterest earnings assets          |  |                | 22,805,793  |   |          |   |            |  |      |                |  |   | 25,302,412  |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Total Assets                               |  | $              | 350,614,701 |   |          |   |            |  |      |                |  | $ | 340,216,013 |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |  
|Liabilities and Shareholders Equity       |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Interest bearing liabilities:              |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Interest bearing demand                    |  |                | 25,236,692  |   |          |   | 9,395      |  | 0.15 | %              |  | $ | 27,419,713  |   |            | $ | 27,969    |  | 0.41 | %
|Money market accounts                      |  |                | 30,726,250  |   |          |   | 67,435     |  | 0.88 | %              |  |   | 23,066,191  |   |            |   | 87,712    |  | 1.52 | %
|Savings deposits                           |  |                | 40,940,158  |   |          |   | 40,204     |  | 0.39 | %              |  |   | 39,446,537  |   |            |   | 63,245    |  | 0.64 | %
|Time deposits                              |  |                | 152,294,778 |   |          |   | 942,217    |  | 2.47 | %              |  |   | 149,428,729 |   |            |   | 1,314,905 |  | 3.52 | %
|Short term borrowings                      |  |                | 4,921,774   |   |          |   | 2,850      |  | 0.23 | %              |  |   | 5,387,011   |   |            |   | 3,120     |  | 0.23 | %
|Federal Home Loan Advances                 |  |                | 1,424,618   |   |          |   | 21,283     |  | 5.98 | %              |  |   | 2,080,994   |   |            |   | 30,119    |  | 5.79 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Total interest bearing liabilities         |  |                | 255,544,270 |   |          |   | 1,083,384  |  | 1.70 | %              |  |   | 246,829,175 |   |            |   | 1,527,070 |  | 2.47 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |  
|Noninterest bearing liabilities:           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Demand deposits                            |  |                | 50,828,045  |   |          |   |            |  |      |                |  |   | 50,307,203  |   |            |   |           |  |      |  
|Accrued expenses and other liabilities     |  |                | 3,736,863   |   |          |   |            |  |      |                |  |   | 4,391,342   |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Total noninterest bearing liabilities      |  |                | 54,564,908  |   |          |   |            |  |      |                |  |   | 54,698,545  |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Shareholders equity                       |  |                | 40,505,523  |   |          |   |            |  |      |                |  |   | 38,688,293  |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|Total Liabilities and Shareholders Equity |  | $              | 350,614,701 |   |          |   |            |  |      |                |  | $ | 340,216,013 |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |  
|Net interest income                        |  |                |             |   |          | $ | 2,809,455  |  |      |                |  |   |             |   |            | $ | 3,090,712 |  |      |  
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |  
|Interest rate spread (6)                   |  |                |             |   |          |   |            |  | 3.05 | %              |  |   |             |   |            |   |           |  | 3.40 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  
|                                           |  |                |             |   |          |  
|Net yield on interest earning assets (7)   |  |                |             |   |          |   |            |  | 3.43 | %              |  |   |             |   |            |   |           |  | 3.93 | %
|                                           |  |                |             |   |          |   |            |  |      |                |  |   |             |   |            |   |           |  |      |  



|(1) | For purposes of these computations, the daily average loan amounts outstanding are net of deferred loan fees.
|--- | -------------------------------------------------------------------------------------------------------------

|(2) | Included in loan interest income are loan related fees of $102,000 and $89,000 in 2009 and 2008, respectively.
|--- | --------------------------------------------------------------------------------------------------------------

|(3) | Nonaccrual loans are included in loan totals and do not have a material impact on the information presented.
|--- | ------------------------------------------------------------------------------------------------------------

|(4) | Average balance is computed using the carrying value of securities. The average yield has been computed using the historical amortized cost average balance for
securities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Equity securities are comprised of common stock of the Federal Home Loan Bank, Federal Reserve Bank, and Great Lakes Bankers Bank.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(6) | Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Net yield on interest earning assets represents net interest income as a percentage of average interest earning assets.
|--- | -----------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Rate/Volume Analysis

The table below sets forth certain information regarding changes in interest income and interest expense of the Company for the periods indicated. For each
category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (changes in average volume multiplied by old rate) and (ii) changes in rates (changes in rate
multiplied by old average volume). Changes, which are not solely attributable to rate, or volume are allocated to changes in rate due to rate sensitivity of interest-earning assets and interest-bearing liabilities (dollars in thousands).



|                                   |  |                                                                                  |      |   |      |   |        |     |  |   |        |  
|---------------------------------- |  | -------------------------------------------------------------------------------- | ---- | - | ---- | - | ------ | --- |  | - | ------ | -
|                                   |  | Nine-Month Period Ended September2009 Compared to 2008Increase (Decrease) Due To |     
|                                   |  | Volume                                                                           |      |   | Rate |   |        | Net | 
|Interest income                    |  |                                                                                  |      |   |      |   |        |     |  |   |        |  
|Loans                              |  | $                                                                                | 405  |   |      | $ | (1,973 | )   |  | $ | (1,568 | )
|Securities-taxable                 |  |                                                                                  | 387  |   |      |   | (850   | )   |  |   | (463   | )
|Securities-nontaxable              |  |                                                                                  | 127  |   |      |   | (65    | )   |  |   | 62     |  
|Securities-equities                |  |                                                                                  | 2    |   |      |   | 7      |     |  |   | 9      |  
|Federal funds sold                 |  |                                                                                  | (124 | ) |      |   | (294   | )   |  |   | (418   | )
|Due from Federal Reserve           |  |                                                                                  |     |   |      |   |       |     |  |   |       |  
|                                   |  |                                                                                  |      |   |      |   |        |     |  |   |        |  
|Total interest earning Assets      |  | $                                                                                | 797  |   |      | $ | (3,175 | )   |  | $ | (2,378 | )
|                                   |  |                                                                                  |      |   |      |   |        |     |  |   |        |  
|                                   |  |                                                                                  |     
|Interest expense                   |  |                                                                                  |      |   |      |   |        |     |  |   |        |  
|Interest bearing demand            |  |                                                                                  | (3   | ) |      |   | (52    | )   |  |   | (55    | )
|Money market accounts              |  |                                                                                  | 125  |   |      |   | (203   | )   |  |   | (78    | )
|Savings deposits                   |  |                                                                                  | 17   |   |      |   | (103   | )   |  |   | (86    | )
|Time deposits                      |  |                                                                                  | (77  | ) |      |   | (1,383 | )   |  |   | (1,460 | )
|Short-term borrowing               |  |                                                                                  | 0    |   |      |   | (5     | )   |  |   | (5     | )
|Federal Home Loan Bank Advances    |  |                                                                                  | (38  | ) |      |   | 11     |     |  |   | (27    | )
|                                   |  |                                                                                  |      |   |      |   |        |     |  |   |        |  
|Total interest bearing Liabilities |  |                                                                                  | 24   |   |      |   | (1,735 | )   |  |   | (1,711 | )
|                                   |  |                                                                                  |      |   |      |   |        |     |  |   |        |  
|                                   |  |                                                                                  |     
|Net change in net interest income  |  | $                                                                                | 773  |   |      | $ | (1,440 | )   |  | $ | (667   | )
|                                   |  |                                                                                  |      |   |      |   |        |     |  |   |        |  



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##### Table of Contents

Rate/Volume Analysis

The table below sets forth certain information regarding changes in interest income and interest expense of the Company for the periods indicated. For each
category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (changes in average volume multiplied by old rate) and (ii) changes in rates (changes in rate
multiplied by old average volume). Changes, which are not solely attributable to rate, or volume are allocated to changes in rate due to rate sensitivity of interest-earning assets and interest-bearing liabilities (dollars in thousands).



|                                   |  |                                                                                   |     |   |      |   |        |     |  |   |      |  
|---------------------------------- |  | --------------------------------------------------------------------------------- | --- | - | ---- | - | ------ | --- |  | - | ---- | -
|                                   |  | Three-Month Period Ended September2009 Compared to 2008Increase (Decrease) Due To |    
|                                   |  | Volume                                                                            |     |   | Rate |   |        | Net | 
|Interest income                    |  |                                                                                   |     |   |      |   |        |     |  |   |      |  
|Loans                              |  | $                                                                                 | 450 |   |      | $ | (873   | )   |  | $ | (423 | )
|Securities-taxable                 |  |                                                                                   | 255 |   |      |   | (481   | )   |  |   | (226 | )
|Securities-nontaxable              |  |                                                                                   | 122 |   |      |   | (101   | )   |  |   | 21   |  
|Securities-equities                |  |                                                                                   | 1   |   |      |   | 13     |     |  |   | 14   |  
|Federal funds sold                 |  |                                                                                   | (34 | ) |      |   | (77    | )   |  |   | (111 | )
|Due from Federal Reserve Bank      |  |                                                                                   |    |   |      |   |       |     |  |   |     |  
|                                   |  |                                                                                   |     |   |      |   |        |     |  |   |      |  
|Total interest earning Assets      |  | $                                                                                 | 794 |   |      | $ | (1,519 | )   |  | $ | (725 | )
|                                   |  |                                                                                   |     |   |      |   |        |     |  |   |      |  
|                                   |  |                                                                                   |    
|Interest expense                   |  |                                                                                   |     |   |      |   |        |     |  |   |      |  
|Interest bearing demand            |  |                                                                                   | (9  | ) |      |   | (10    | )   |  |   | (19  | )
|Money market accounts              |  |                                                                                   | 116 |   |      |   | (136   | )   |  |   | (20  | )
|Savings deposits                   |  |                                                                                   | 10  |   |      |   | (33    | )   |  |   | (23  | )
|Time deposits                      |  |                                                                                   | 101 |   |      |   | (474   | )   |  |   | (373 | )
|Short-term borrowing               |  |                                                                                   | (1  | ) |      |   | 1      |     |  |   |     |  
|Federal Home Loan Bank Advances    |  |                                                                                   | (38 | ) |      |   | 29     |     |  |   | (9   | )
|                                   |  |                                                                                   |     |   |      |   |        |     |  |   |      |  
|Total interest bearing Liabilities |  |                                                                                   | 179 |   |      |   | (623   | )   |  |   | (444 | )
|                                   |  |                                                                                   |     |   |      |   |        |     |  |   |      |  
|                                   |  |                                                                                   |    
|Net change in net interest income  |  | $                                                                                 | 615 |   |      | $ | (896   | )   |  | $ | (281 | )
|                                   |  |                                                                                   |     |   |      |   |        |     |  |   |      |  



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##### Table of Contents

Item 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable to Smaller Reporting Companies.

Item 4  CONTROLS AND PROCEDURES

The Company has carried
out an evaluation, under the supervision and with the participation of the Companys management, including the Companys President and Chief Executive Officer and Vice President and Chief Financial Officer, of the effectiveness of the
design and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the President and Chief Executive Officer and Vice President and Chief Financial Officer concluded that
the Companys disclosure controls and procedures are effective, as of the end of the period covered by this report, in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be
included in the Companys periodic SEC filings.

Disclosure controls and procedures are the control and other procedures of the Company
that are designed to ensure that the information required to be disclosed by the Company in its reports or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and
Exchanges Commissions rules and forms.

There was no change in the Companys internal control over financial reporting that
occurred during the Companys fiscal quarter ended September 30, 2009 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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---

##### Table of Contents

Part II  OTHER INFORMATION

Item 1 - Legal Proceedings

None

Item 1A - Risk Factors

Not Applicable to Smaller Reporting Companies.

Item 2 - Unregistered sales of equity securities and use of proceeds

The Company did not engage in any unregistered sales of its securities during the quarter ended September 30, 2009

ISSUER PURCHASES OF EQUITY SECURITIES



|                       |  |                                             |  |                                         |        |                                                                                             |     |                                                                                                                        |    
|---------------------- |  | ------------------------------------------- |  | --------------------------------------- | ------ | ------------------------------------------------------------------------------------------- | --- | ---------------------------------------------------------------------------------------------------------------------- | ---
|Period                 |  | (a) TotalNumber ofShares
(orUnits)Purchased |  | (b)Average PricePaid per Share(or Unit) |        | (c) Total Number ofShares (or
Units)Purchased as Part ofPublicly AnnouncedPlans or Programs |     | (d) Maximum Number(or Approximate DollarValue) of Shares (orUnits) that May Yet BePurchased Under thePlans or Programs
|                       |  |                                             |  |                                        
|July 1  30, 2009      |  | 805                                         |  | $                                       | 104.30 |                                                                                             | N/A |                                                                                                                        | N/A
|                       |  |                                             |  |                                        
|August 1  31, 2009    |  |                                            |  | $                                       |       |                                                                                             | N/A |                                                                                                                        | N/A
|                       |  |                                             |  |                                        
|September 1  30, 2009 |  | 673                                         |  | $                                       | 105.20 |                                                                                             | N/A |                                                                                                                        | N/A
|                       |  |                                             |  |                                         |        |                                                                                             |     |                                                                                                                        |    
|                       |  |                                             |  |                                        
|Total (1)              |  | 1,478                                       |  | $                                       | 104.71 |                                                                                             | N/A |                                                                                                                        | N/A
|                       |  |                                             |  |                                         |        |                                                                                             |     |                                                                                                                        |    



|(1) | 1,478 shares of common stock were purchased by Killbuck Bancshares in open-market transactions.
|--- | -----------------------------------------------------------------------------------------------

Item 3 - Default upon senior securities

None

Item 4 - Results of votes of security holders

None



-26-



---

##### Table of Contents

Item 5 - Other Information

None

Item 6 - Exhibits

The following exhibits are included in this report or incorporated
herein by reference:



|        |  |                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------
|3.1(i)  |  | Articles of Incorporation of Killbuck Bancshares, Inc.*                                                
|        | 
|3.1(ii) |  | Amendment to the Articles of Incorporation of Killbuck Bancshares, Inc. increasing authorized shares.**
|        | 
|3.2     |  | Code of Regulations of Killbuck Bancshares, Inc.*                                                      
|        | 
|31.1    |  | Rule 13a-14(a) Certification                                                                           
|        | 
|31.2    |  | Rule 13a-14(a) Certification                                                                           
|        | 
|32.1    |  | Section 1350 Certifications                                                                            
|        | 
|32.2    |  | Section 1350 Certifications                                                                            
|        | 
|99.1    |  | Report of Independent Registered Public Accounting Firm                                                



|* | Incorporated by reference to an identically numbered exhibit to the Form 10 (file No. 0-24147) filed with SEC on April 30, 1998 and subsequently amended on
July 8, 1998 and July 31, 1998.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Incorporated by reference to Registrants report on Form 10-Q for the quarter ended March 31, 2004, filed with the Commission on May 13, 2004.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.



|                        |  |                           |  |                                      
|----------------------- |  | ------------------------- |  | -------------------------------------
|                        |  | Killbuck Bancshares, Inc.
|                        |  |                          
|Date: November 13, 2009 |  | By:                       |  | /S/    LUTHER E.
PROPER              
|                        |  |                           |  | Luther E. Proper                     
|                        |  |                           |  | President and Chief Executive Officer
|                        |  |                          
|Date: November 13, 2009 |  | By:                       |  | /S/    DIANE
KNOWLES                 
|                        |  |                           |  | Diane Knowles                        
|                        |  |                           |  | Chief Financial Officer              



-28-