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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



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



For Quarter Ended September 30, 2003



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



Commission File Number 000-24147



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KILLBUCK BANCSHARES, INC.

(Exact name of registrant as specified in its Charter)



|OHIO                                                          |  | 34-1700284                         
|------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification 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)



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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 an accelerated filer (as
defined in Exchange Act Rule 12b-2).  Yes ̈No x



The aggregate market value of the voting stock held by nonaffiliates of the
registrant, calculated by reference to the stock valuation done on Killbuck Bancshares, Inc. common stock as of December 31, 2002 was $61,536,891 and was $62,190,895 as of September 30, 2003 (Registrant has assumed that all of its executive officers
and directors are affiliates. Such assumption shall not be deemed to be conclusive for any other purpose):



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 November 4, 2003: 676,788



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##### Table of Contents

KILLBUCK BANCSHARES, INC.



Index



|                              |  |         |  |                                                                                                         |  | Page Number
|----------------------------- |  | ------- |  | ------------------------------------------------------------------------------------------------------- |  | -----------
|PART I. FINANCIAL INFORMATION |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Financial Statements (Unaudited):                                                                       |  |            
|                              |  |         | 
|                              |  |         |  | Consolidated Balance Sheet as of September 30, 2003 and December 31, 2002                               |  | 3          
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Income for the nine months ended September 30, 2003 and 2002                 |  | 4          
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Income for the three months ended September 30, 2003 and 2002                |  | 5          
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Changes In Shareholders Equity for the nine months ended September 30, 2003 |  | 6          
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002             |  | 7          
|                              |  |         | 
|                              |  |         |  | Notes to Unaudited Consolidated Financial Statements                                                    |  | 8-10       
|                              |  |         | 
|                              |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                   |  | 11-20      
|                              |  |         | 
|                              |  | Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                              |  | 21-22      
|                              |  |         | 
|                              |  | Item 4. |  | Controls and Procedures                                                                                 |  | 23         
|                              | 
|PART II. OTHER INFORMATION    |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Legal Proceedings                                                                                       |  | 24         
|                              |  |         | 
|                              |  | Item 2. |  | Changes in Securities                                                                                   |  | 24         
|                              |  |         | 
|                              |  | Item 3. |  | Default Upon Senior Securities                                                                          |  | 24         
|                              |  |         | 
|                              |  | Item 4. |  | Submissions of Matters to a Vote of Security Holders                                                    |  | 24         
|                              |  |         | 
|                              |  | Item 5. |  | Other Information                                                                                       |  | 24         
|                              |  |         | 
|                              |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                                        |  | 24         
|                              | 
|SIGNATURES                    |  | 25     



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Killbuck Bancshares, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)



|                                                                          |  | September 30,2003 |             |   | December 31,2002 |  
|------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------------- | -
|ASSETS                                                                    |  |                   |             |   |                  |  
|Cash and cash equivalents:                                                |  |                   |             |   |                  |  
|Cash and amounts due from depository institutions                         |  | $                 | 7,852,805   |   |                  | $
|Federal funds sold                                                        |  |                   | 1,400,000   |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|Total cash and cash equivalents                                           |  |                   | 9,252,805   |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|Investment securities:                                                    |  |                   |             |   |                  |  
|Securities available for sale                                             |  |                   | 27,370,019  |   |                  |  
|Securities held to maturity (market value of $46,133,680 and $44,201,169) |  |                   | 43,545,765  |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|Total investment securities                                               |  |                   | 70,915,784  |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|Loans (net of allowance for loan losses of $2,594,608 and $2,325,560)     |  |                   | 193,106,017 |   |                  |  
|Loans held for sale                                                       |  |                   | 698,000     |   |                  |  
|Premises and equipment, net                                               |  |                   | 5,041,244   |   |                  |  
|Accrued interest receivable                                               |  |                   | 1,546,504   |   |                  |  
|Goodwill, net                                                             |  |                   | 1,329,249   |   |                  |  
|Other assets                                                              |  |                   | 2,036,819   |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|Total assets                                                              |  | $                 | 283,926,422 |   |                  | $
|                                                                          |  |                   |             |   |                  |  
|LIABILITIES                                                               |  |                   |             |   |                  |  
|Deposits:                                                                 |  |                   |             |   |                  |  
|Noninterest bearing demand                                                |  | $                 | 35,961,128  |   |                  | $
|Interest bearing demand                                                   |  |                   | 31,568,197  |   |                  |  
|Money market                                                              |  |                   | 22,025,313  |   |                  |  
|Savings                                                                   |  |                   | 41,261,868  |   |                  |  
|Time                                                                      |  |                   | 110,352,170 |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|Total deposits                                                            |  |                   | 241,168,676 |   |                  |  
|Federal Home Loan Bank advances                                           |  |                   | 3,686,681   |   |                  |  
|Short-term borrowings                                                     |  |                   | 3,375,000   |   |                  |  
|Accrued interest and other liabilities                                    |  |                   | 688,198     |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|Total liabilities                                                         |  |                   | 248,918,555 |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|SHAREHOLDERS EQUITY                                                      |  |                   |             |   |                  |  
|Common stockNo par value: 1,000,000 shares authorized, 718,431 issued    |  |                   | 8,846,670   |   |                  |  
|Retained earnings                                                         |  |                   | 29,213,843  |   |                  |  
|Accumulated other comprehensive income                                    |  |                   | 234,651     |   |                  |  
|Treasury stock, at cost (41,643 and 34,771 shares)                        |  |                   | (3,287,297  | ) |                  |  
|                                                                          |  |                   |             |   |                  |  
|Total shareholders equity                                                |  |                   | 35,007,867  |   |                  |  
|                                                                          |  |                   |             |   |                  |  
|Total liabilities and shareholders equity                                |  | $                 | 283,926,422 |   |                  | $
|                                                                          |  |                   |             |   |                  |  



See accompanying notes
to the unaudited consolidated financial statements.







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Killbuck Bancshares, Inc.

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)



|                                                    |  | Nine Months EndedSeptember 30,
|--------------------------------------------------- |  | ------------------------------
|                                                    |  | 2003                          
|INTEREST INCOME                                     |  |                               
|Interest and fees on loans                          |  | $                             
|Federal funds sold                                  |  |                               
|Investment securities:                              |  |                               
|Taxable                                             |  |                               
|Exempt from federal income tax                      |  |                               
|                                                    |  |                               
|Total interest income                               |  |                               
|                                                    |  |                               
|INTEREST EXPENSE                                    |  |                               
|Deposits                                            |  |                               
|Federal Home Loan Bank advances                     |  |                               
|Short term borrowings                               |  |                               
|                                                    |  |                               
|Total interest expense                              |  |                               
|                                                    |  |                               
|NET INTEREST INCOME                                 |  |                               
|Provision for loan losses                           |  |                               
|                                                    |  |                               
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                               
|                                                    |  |                               
|OTHER INCOME                                        |  |                               
|Service charges on deposit accounts                 |  |                               
|Gain on sale of loans, net                          |  |                               
|Other income                                        |  |                               
|                                                    |  |                               
|Total other income                                  |  |                               
|                                                    |  |                               
|OTHER EXPENSE                                       |  |                               
|Salaries and employee benefits                      |  |                               
|Occupancy expense                                   |  |                               
|Equipment expense                                   |  |                               
|Professional fees                                   |  |                               
|Franchise tax                                       |  |                               
|Other expenses                                      |  |                               
|                                                    |  |                               
|Total other expense                                 |  |                               
|                                                    |  |                               
|INCOME BEFORE INCOME TAXES                          |  |                               
|Income taxes                                        |  |                               
|                                                    |  |                               
|NET INCOME                                          |  | $                             
|                                                    |  |                               
|Earnings per common share                           |  | $                             
|                                                    |  |                               
|Weighted average shares outstanding                 |  |                               
|                                                    |  |                               
|Dividends Declared Per Share                        |  | $                             
|                                                    |  |                               



See accompanying notes
to the unaudited consolidated financial statements.





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Killbuck Bancshares, Inc.

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)



|                                                    |  | Three Months EndedSeptember 30,
|--------------------------------------------------- |  | -------------------------------
|                                                    |  | 2003                           
|INTEREST INCOME                                     |  |                                
|Interest and fees on loans                          |  | $                              
|Federal funds sold                                  |  |                                
|Investment securities:                              |  |                                
|Taxable                                             |  |                                
|Exempt from federal income tax                      |  |                                
|                                                    |  |                                
|Total interest income                               |  |                                
|                                                    |  |                                
|INTEREST EXPENSE                                    |  |                                
|Deposits                                            |  |                                
|Federal Home Loan Bank advances                     |  |                                
|Short term borrowings                               |  |                                
|                                                    |  |                                
|Total interest expense                              |  |                                
|                                                    |  |                                
|NET INTEREST INCOME                                 |  |                                
|Provision for loan losses                           |  |                                
|                                                    |  |                                
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                                
|                                                    |  |                                
|OTHER INCOME                                        |  |                                
|Service charges on deposit accounts                 |  |                                
|Gain on sale of loans, net                          |  |                                
|Other income                                        |  |                                
|                                                    |  |                                
|Total other income                                  |  |                                
|                                                    |  |                                
|OTHER EXPENSE                                       |  |                                
|Salaries and employee benefits                      |  |                                
|Occupancy expense                                   |  |                                
|Equipment expense                                   |  |                                
|Professional fees                                   |  |                                
|Franchise tax                                       |  |                                
|Other expenses                                      |  |                                
|                                                    |  |                                
|Total other expense                                 |  |                                
|                                                    |  |                                
|INCOME BEFORE INCOME TAXES                          |  |                                
|Income taxes                                        |  |                                
|                                                    |  |                                
|NET INCOME                                          |  | $                              
|                                                    |  |                                
|Earnings per common share                           |  | $                              
|                                                    |  |                                
|Weighted average shares outstanding                 |  |                                
|                                                    |  |                                
|Dividends Declared Per Share                        |  | $                              
|                                                    |  |                                



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,
2003



|                                                     |  | CommonStock |           | RetainedEarnings |   |            | AccumulatedOtherComprehensiveIncome |  |   | TreasuryStock |   |  | TotalShareholdersEquity |            |   | ComprehensiveIncome |  
|---------------------------------------------------- |  | ----------- | --------- | ---------------- | - | ---------- | ----------------------------------- |  | - | ------------- | - |  | ------------------------ | ---------- | - | ------------------- | -
|Balance, December 31, 2002                           |  | $           | 8,846,670 |                  | $ | 27,462,762 |                                     |  | $ | 534,990       |   |  | $                        | (2,640,763 | ) |                     | $
|Net income                                           |  |             |           |                  |   | 2,360,404  |                                     |  |   |               |   |  |                          |            |   |                     |  
|Purchase of Treasury stock                           |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          | (646,534   | ) |                     |  
|Other comprehensive income:                          |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                     |  
|Net unrealized loss on available for sale securities |  |             |           |                  |   |            |                                     |  |   | (300,339      | ) |  |                          |            |   |                     |  
|                                                     |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                     |  
|Comprehensive income                                 |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                     |  
|                                                     |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                     |  
|Cash Dividends paid ($.90 per share)                 |  |             |           |                  |   | (609,323   | )                                   |  |   |               |   |  |                          |            |   |                     |  
|                                                     |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                     |  
|Balance, September 30, 2003                          |  | $           | 8,846,670 |                  | $ | 29,213,843 |                                     |  | $ | 234,651       |   |  | $                        | (3,287,297 | ) |                     | $
|                                                     |  |             |           |                  |   |            |                                     |  |   |               |   |  |                          |            |   |                     |  



See accompanying notes
to the unaudited consolidated financial statements.



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Killbuck Bancshares, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)



|                                                                                  |  | Nine Months EndedSeptember 30, |            
|--------------------------------------------------------------------------------- |  | ------------------------------ | -----------
|                                                                                  |  | 2003                           |            
|Operating Activities                                                              |  |                                |            
|Net income                                                                        |  | $                              | 2,360,404  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |            
|Provision for loan losses                                                         |  |                                | 300,000    
|Gain on sale of loans                                                             |  |                                | (220,332   
|Provision for depreciation and amortization                                       |  |                                | 432,042    
|Origination of loans held for sale                                                |  |                                | (19,123,667
|Proceeds from the sale of loans                                                   |  |                                | 19,065,749 
|Federal Home Loan Bank stock dividend                                             |  |                                | (34,100    
|Net change in:                                                                    |  |                                |            
|Accrued interest and other assets                                                 |  |                                | (589,098   
|Accrued expenses and other liabilities                                            |  |                                | (46,248    
|                                                                                  |  |                                |            
|Net cash provided by operating activities                                         |  |                                | 2,144,750  
|                                                                                  |  |                                |            
|INVESTING ACTIVITIES                                                              |  |                                |            
|Investment securities available for sale:                                         |  |                                |            
|Proceeds from maturities and repayments                                           |  |                                | 23,268,318 
|Purchases                                                                         |  |                                | (12,030,700
|Investment securities held to maturity:                                           |  |                                |            
|Proceeds from maturities and repayments                                           |  |                                | 1,869,715  
|Purchases                                                                         |  |                                | (3,906,657 
|Net increase in loans                                                             |  |                                | (20,923,511
|Purchase of premises and equipment                                                |  |                                | (214,767   
|                                                                                  |  |                                |            
|Net cash used in investing activities                                             |  |                                | (11,937,602
|                                                                                  |  |                                |            
|FINANCING ACTIVITIES                                                              |  |                                |            
|Net increase in demand, money market and savings deposits                         |  |                                | 8,404,725  
|Net decrease in time deposits                                                     |  |                                | (6,274,680 
|Repayment of Federal Home Loan Bank advances                                      |  |                                | (580,986   
|Net decrease in short term borrowings                                             |  |                                | (1,554,993 
|Purchase of Treasury stock                                                        |  |                                | (646,534   
|Dividends paid                                                                    |  |                                | (609,323   
|                                                                                  |  |                                |            
|Net cash used in financing activities                                             |  |                                | (1,261,791 
|                                                                                  |  |                                |            
|Net decrease in cash and cash equivalents                                         |  |                                | (11,054,643
|Cash and cash equivalents at beginning of period                                  |  |                                | 20,307,448 
|                                                                                  |  |                                |            
|Cash and cash equivalents at end of period                                        |  | $                              | 9,252,805  
|                                                                                  |  |                                |            
|Supplemental Disclosures of Cash Flows Information                                |  |                                |            
|Cash paid during the period for:                                                  |  |                                |            
|Interest on deposits and borrowings                                               |  | $                              | 3,198,227  
|                                                                                  |  |                                |            
|Income taxes                                                                      |  | $                              | 690,517    
|                                                                                  |  |                                |            



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, 2002 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, 2003 |           |   | Nine MonthsEndedSeptember 30, 2002 |  
|----------------------------------------------------------- |  | ---------------------------------- | --------- | - | ---------------------------------- | -
|Net income                                                  |  | $                                  | 2,360,404 |   |                                    | $
|Other comprehensive income:                                 |  |                                    |           |   |                                    |  
|Net unrealized (loss) gain on available for sale securities |  |                                    | (455,060  | ) |                                    |  
|Tax effect                                                  |  |                                    | 154,721   |   |                                    |  
|                                                            |  |                                    |           |   |                                    |  
|Total comprehensive income                                  |  | $                                  | 2,060,065 |   |                                    | $
|                                                            |  |                                    |           |   |                                    |  



|                                                            |  | Three MonthsEndedSeptember 30, 2003 |          |   | Three MonthsEndedSeptember 30, 2002 |  
|----------------------------------------------------------- |  | ----------------------------------- | -------- | - | ----------------------------------- | -
|Net income                                                  |  | $                                   | 839,000  |   |                                     | $
|Other comprehensive income:                                 |  |                                     |          |   |                                     |  
|Net unrealized (loss) gain on available for sale securities |  |                                     | (218,054 | ) |                                     |  
|Tax effect                                                  |  |                                     | 74,138   |   |                                     |  
|                                                            |  |                                     |          |   |                                     |  
|Total comprehensive income                                  |  | $                                   | 695,084  |   |                                     | $
|                                                            |  |                                     |          |   |                                     |  



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NOTE 4  NEW ACCOUNTING STANDARDS



In August 2001, the Financial Accounting Standards Board (FASB) issued FAS No. 143, Accounting for Asset RetirementObligations, which requires that the fair value of a liability be recognized when incurred for the retirement of a long-lived asset and the value of the asset be increased by that amount. The statement also requires that the liability be
maintained at its present value in subsequent periods and outlines certain disclosures for such obligations. The adoption of this statement, which was effective January 1, 2003, did not have a material effect on the Companys financial position
or results of operations.



In April 2002, the FASB issued FAS No. 145,
Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. FAS No. 145 rescinds FAS No. 4, which required all gains and losses from extinguishment of debt to be aggregated and, if
material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB Opinion No. 30 will now be used to classify those gains and losses. This statement also amends FAS No. 13 to require that certain lease
modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. This statement also makes technical corrections to existing pronouncements, which are not substantive
but in some cases may change accounting practice. The provisions of this statement related to the rescission of FAS No. 4 shall be applied in fiscal years beginning after May 15, 2002. Any gain or loss on extinguishments of debt that was classified
as an extraordinary item in prior periods presented that does not meet the criteria in APB Opinion No. 30 for classification as an extraordinary item shall be reclassified. Early adoption of the provisions of this statement related to FAS No. 13
shall be effective for transactions occurring after May 15, 2002. All other provisions of this statement shall be effective for financial statements issued on or after May 15, 2002. The adoption of this statement did not have a material effect on
the Companys financial position or results of operations.



In July 2002,
the FASB issued FAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. This statement replaces EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring).
The new statement is effective for exit or disposal activities initiated after December 31, 2002. The adoption of this statement did not have a material effect on the Companys financial position or results of operations.



On December 31, 2002, the FASB issued FAS No. 148, Accounting for Stock-Based Compensation
 Transition and Disclosure, which amends FAS No. 123, Accounting for Stock-Based Compensation. FAS No. 148 amends the disclosure requirements of FAS No. 123 to require more prominent and more frequent disclosures in financial
statements about the effects of stock-based compensation. Under the provisions of FAS No. 123, companies that adopted the preferable, fair value based method were required to apply that method prospectively for new stock option awards. This
contributed to a ramp-up effect on stock-based compensation expense in the first few years following adoption, which caused concern for companies and investors because of the lack of consistency in reported results. To address that
concern, FAS No. 148 provides two additional methods of transition that reflect an entitys full complement of stock-based compensation expense immediately upon adoption, thereby eliminating the ramp-up effect. FAS No. 148 also improves the
clarity and prominence of disclosures about the pro forma effects of using the fair value based method of accounting for stock-based compensation for all companiesregardless of the accounting method usedby requiring that the data be
presented more prominently and in a more user-friendly format in the footnotes to the financial statements. In addition, the statement improves the timeliness of those disclosures by requiring that this information be included in interim as well as
annual financial statements. The transition guidance and annual disclosure provisions of FAS No. 148 are effective for fiscal years ending after December 15, 2002, with earlier application permitted in certain circumstances. The interim disclosure
provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. The adoption of this statement did not have a material effect on the Companys financial statements.



In April, 2003, the FASB issued FAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under FAS No. 133. The
amendments set forth in FAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. In particular, this statement clarifies under what circumstances a contract with an initial net
investment meets the characteristic of a derivative as discussed in FAS No. 133.





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NOTE 4  NEW ACCOUNTING STANDARDS (Continued)



In addition, it clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows.
FAS No. 149 amends certain other existing pronouncements. Those changes will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. This
statement is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. The guidance should be applied prospectively. The provisions of this statement
that relate to FAS No. 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, certain provisions
relating to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to existing contracts as well as new contracts entered into after June 30, 2003. The adoption of this statement did not
have a material effect on the Companys financial position or results of operations.



In May 2003, the FASB issued FAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This statement establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Such instruments may
have been previously classified as equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The
adoption of this statement has not and is not expected to have a material effect on the Companys reported equity.



In November, 2002, the FASB issued Interpretation No. 45, Guarantors Accounting and Disclosure requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. This interpretation clarifies
that a guarantor is required to disclose (a) the nature of the guarantee, including the approximate term of the guarantee, how the guarantee arose, and the events or circumstances that would require the guarantor to perform under the guarantee; (b)
the maximum potential amount of future payments under the guarantee; (c) the carrying amount of the liability, if any, for the guarantors obligations under the guarantee; and (d) the nature and extent of any recourse provisions or available
collateral that would enable the guarantor to recover the amounts paid under the guarantee. This interpretation also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the obligations it has
undertaken in issuing the guarantee, including its ongoing obligation to stand ready to perform over the term of the guarantee in the event that the specified triggering events or conditions occur. The objective of the initial measurement of that
liability is the fair value of the guarantee at its inception. The initial recognition and initial measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002,
irrespective of the guarantors fiscal year-end. The disclosure requirements in this interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of this interpretation did not
have a material effect on the Companys financial position or results of operations.



In January, 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities,in an effort to expand upon and strengthen existing accounting guidance that addresses when a company should
include in its financial statements the assets, liabilities and activities of another entity. The objective of this interpretation is not to restrict the use of variable interest entities but to improve financial reporting by companies involved with
variable interest entities. Until now, one company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests. This interpretation changes that by requiring a variable
interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. The
consolidation requirements of this interpretation apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June
15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. In October, 2003, the FASB decided to defer to the fourth quarter from
the third quarter the implementation date for Interpretation No. 46. This deferral only applies to variable interest entities that existed prior to February 1, 2003. The adoption of this interpretation has not and is not expected to have a material
effect on the Companys financial position or results of operations.





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##### Table of Contents

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.



Financial Condition



Total assets at September 30, 2003 were $283,926,000 compared to $283,174,000 at December 31,
2002.



Cash and cash equivalents decreased by $11,055,000 or 54.4% from
December 31, 2002, to September 30, 2003, with federal funds sold decreasing $10,900,000. These funds were used to help fund loan growth.



Investment securities available for sale decreased by $11,678,000 or 30.0% from December 31, 2002, due to maturities, calls, and repayments. Investments held to maturity
increased $1,968,000 or 4.7%.



Net loans increased by $20,623,000 or 12.0% from
December 31, 2002, to September 30, 2003. An increase of $17,166,000 occurred in the real estate loan category, which is attributable primarily to residential and commercial lending activity. The increases in real estate lending are primarily
attributable to the historically low interest rates. Commercial and other loan balances increased by $4,568,000 and consumer loan balances decreased by $1,111,000. The increase in the commercial category is primarily attributable to the purchase of
participation loans of approximately $2,786,000. Due to the increase in net loans, the provision for loan losses increased $150,000.



Total deposits at September 30, 2003 were $241,169,000 compared to $239,039,000 at December 31, 2002, an increase of $2,130,000 or .9%. Time deposits decreased
$6,275,000, demand accounts increased $29,000 and money market and savings accounts increased $8,376,000. Management attributes these changes to maturing time deposits, the volatility of interest rates, and consumer expectations of rising rates.



Federal Home Loan Bank advances and short-term borrowings decreased $581,000
and $1,555,000 respectively at September 30, 2003 from December 31, 2002.





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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Financial
Condition (Continued)



Shareholders Equity increased by $804,000 or
2.4%, which was mainly due to earnings of $2,360,000 for the first nine months of 2003 decreased by a $300,000 unrealized loss on available for sale securities included in other comprehensive income, dividends paid totaling $609,000, and by the
purchase of Treasury stock for $647,000. Treasury stock purchases are monitored against the Companys Strategic Plan and the goals set forth in the plan. The Treasury stock purchases have been within the Strategic Plans guidelines for the
first nine months of 2003. Management monitors risk-based capital and leveraged capital ratios in order to assess compliance of the regulatory guidelines. At September 30, 2003, the total capital ratio was 18.25%; the Tier I capital ratio was
17.00%, and the leverage ratio was 11.71%, 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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##### Table of Contents

RESULTS OF OPERATIONS



Comparison of the Nine Months Ended September 30, 2003 and 2002



Net income for the nine-month period ended September 30, 2003, was $2,360,000, a decrease of
$64,000 or 2.6% from the $2,424,000 reported at September 30, 2002.



Total
interest income of approximately $10,775,000 for the nine-month period ended September 30, 2003, compares to $12,191,000 for the same period in 2002, a decrease of $1,416,000 or 11.6%. The majority of the overall decrease in total interest income is
attributed to a decrease in investment securities  taxable of $903,000 or 63.8%. Investment income decreased $919,000 or 27.4% for the nine-month period ended September 30, 2003 compared to the same period for 2002. The decrease in investment
income is due mainly to a decrease in volume caused by maturities and calls. Average investment balances were $75,699,000 compared to $90,670,000 and the yields were 4.3% compared to 4.9% for the first nine months of 2003 and 2002 respectively, due
to the general decline in the interest rate environment. See Average Balance Sheet for the nine-month periods ended September 30, 2003 and 2002. Interest and fees on loans decreased $404,000 or 4.7% for the nine month period ended
September 30, 2003 compared to the same period for 2002. The decrease in interest and fees on loans is due to a decrease in the yield on loans. Average loan balances were $183,602,000 for the first nine months of 2003 compared to $159,758,000 for
the first nine months of 2002 and the yield on loans decreased to 6.0% for the first nine months of 2003 compared to 7.2% for the first nine months of 2002, due to the general decline in the interest rate environment.



Total interest expense of $3,129,000 for the nine-month period ending September 30, 2003
represents a decrease of $1,502,000 from the $4,631,000 reported for the same nine-month period in 2002. The decrease in interest expense on deposits of $1,454,000 is due mainly to the decreases in the rates of deposit accounts. Average interest
bearing deposits were $205,456,000 for the first nine months of 2003 compared to $204,027,000 for the first nine months of 2002. The cost on interest bearing deposits was 1.9%, compared to 2.9% for the nine-month periods of 2003 and 2002
respectively. See Average Balance Sheet for the nine-month periods ended September 30, 2003 and 2002.



Net interest income of $7,646,000 for the nine months ended September 30, 2003, compares to $7,560,000 for the same nine-month period in 2002, an increase of $86,000 or
1.1%.



Total other income for the nine month period ended September 30, 2003,
of $875,000 compares to $605,000 for the same nine month period in 2002, an increase of $270,000 or 44.6%. Gains on sale of loans increased $160,000 due to increased activity caused by declining fixed loan rates. The increase of $88,000 in service
charges on deposit accounts was attributable to normal activity within the deposit accounts due to an increase in non-time deposit accounts. Also various service charges were increased effective April 1, 2003. Other income increased $22,000 due to
the increases in miscellaneous other service charges.



Total other expense of
$5,223,000 for the nine months ended September 30, 2003, compares to $4,908,000 for the same nine-month period in 2002. This represents an increase of $315,000 or 6.4%. Salary and employee benefits increased approximately $245,000 due to normal
increases in salaries and employee benefits and additional business development staff being hired. The changes in the remaining expense accounts were attributable to the opening of the Loan Annex in Millersburg, Ohio in July 2003 and increases in
items that are normal and recurring in nature.



According to the Financial
Accounting Standards Boards (FASB) Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, Management periodically evaluates goodwill for impairment. At this time, no impairment has been recognized.





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##### Table of Contents

RESULTS OF OPERATIONS



Comparison of the Three Months Ended September 30, 2003 and 2002



Net income for the three-month period ended September 30, 2003, was $839,000, a decrease of
$26,000 or 3.0% from the $865,000 reported at September 30, 2002.



Total
interest income of approximately $3,518,000 for the three-month period ended September 30, 2003, compares to $3,960,000 for the same period in 2002, a decrease of $442,000 or 11.2%. The majority of the overall decrease in total interest income is
attributed to a decrease in investment securities  taxable of $256,000 or 57.9%. The decrease in interest on investment securities of $275,000 was due mainly to a decrease in the average balances outstanding of $72,032,000 for 2003 compared to
$84,086,000 for 2002 caused by maturities and calls and the yield was 4.1% compared to 4.8% for this three-month period of 2003 and 2002 respectively, due to the general decrease in the interest rate environment. See Average Balance
Sheet for the three-month periods ended September 30, 2003 and 2002. Interest and fees on loans decreased $123,000 or 4.3% for the three-month period ended September 30, 2003 compared to the same period for 2002. The decrease in interest and
fees on loans is due to a decrease in the yield on the loan portfolio. Average loan balances were $191,129,000 compared to $165,145,000 and the yield was 5.8% compared to 7.0% for this three-month period of 2003 and 2002 respectively, due to the
general decrease in the interest rate environment.



Total interest expense of
$959,000 for the three-month period ending September 30, 2003, represents a decrease of $475,000 from the $1,434,000 reported for the same three-month period in 2002. The decrease in interest expense on deposits of $458,000 is due mainly to a
decrease in yield. Average interest bearing deposits were $206,750,000 for this three-month period of 2003 compared to $204,864,000 for the same three months of 2002. The cost of interest bearing deposits was 1.7% compared to 2.6% for this
three-month period of 2003 and 2002 respectively. See Average Balance Sheet for the three-month periods ended September 30, 2003 and 2002.



Net interest income of $2,559,000 for the three months ended September 30, 2003, compares to $2,526,000 for the same three-month period in 2002, an increase of $33,000 or
1.3%.



Total other income for the three month period ended September 30, 2003,
of $301,000 compares to $222,000 for the same three month period in 2002, an increase of $79,000 or 35.6%. Gains on sale of loans increased $33,000 due to the Banks increased activity caused by declining fixed loan rates. The service fee
income on deposits increased $41,000 due to an increase in the accounts being serviced and various service charges that were increased effective April 1, 2003.



Total other expense of $1,697,000 for the three months ended September 30, 2003, compares to $1,594,000 for the same three-month period in 2002. This represents an
increase of $103,000 or 6.5%. Salary and employee benefits increased $52,000 in part to new business development staff being hired and normal recurring employee cost increases for salary and employee benefits. The changes in the remaining expense
accounts were attributable to the opening of the Loan Annex in Millersburg, Ohio in July 2003 and increases 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 $9,253,000 at September 30, 2003. These assets provide the
primary source of liquidity for the Company. In addition, management has designated a substantial portion of the investment portfolio, $27,370,000 as available for sale and has an available unused line of credit of $31,615,000 with the Federal Home
Loan Bank of Cincinnati to provide additional sources of liquidity at September 30, 2003. As of September 30, 2003, the Company had commitments to fund loans of approximately $6,321,000 and unused lines of credit totaling $23,327,000.



Cash was provided during the nine month period ended September 30, 2003, mainly from
operating activities of $2.1 million, the maturities and repayments of investment securities of $25.1 million, and net increase in deposits of $2.1 million. Cash was used during the nine month period ended September 30, 2003, mainly to fund a net
increase in loans of $20.9 million, and for the purchase of investment securities of $16.0 million. In addition $2.2 million was also used to reduce Federal Home Loan Bank advances and short-term borrowings during the first nine months of 2003 and
$.7 million was used to purchase Treasury Stock, and $.6 million was used to pay dividends to shareholders. Cash and cash equivalents totaled $9.2 million at September 30, 2003, a decrease of $11.1 million from $20.3 million at December 31, 2002.



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, 2003, and December 31, 2002. A loan is classified as nonaccrual when, in the opinion of management, there are doubts about collectibility of interest and principal. At the
time the accrual of interest is discontinued, future income is recognized only when cash is received. 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 30,2003      |      |   | December 31,2002 |  
|------------------------------------------------- |  | ---------------------- | ---- | - | ---------------- | -
|                                                  |  | (dollars in thousands) |     
|Loans on nonaccrual basis                         |  | $                      | 143  |   |                  | $
|Loans past due 90 days or more                    |  |                        | 14   |   |                  |  
|Renegotiated loans                                |  |                        |     |   |                  |  
|                                                  |  |                        |      |   |                  |  
|Total nonperforming loans                         |  |                        | 157  |   |                  |  
|Other real estate                                 |  |                        |     |   |                  |  
|Repossessed assets                                |  |                        |     |   |                  |  
|                                                  |  |                        |      |   |                  |  
|Total nonperforming assets                        |  | $                      | 157  |   |                  | $
|Nonperforming loans as a percent of total loans   |  |                        | 0.08 | % |                  |  
|Nonperforming loans as a percent of total assets  |  |                        | 0.06 | % |                  |  
|Nonperforming assets as a percent of total assets |  |                        | 0.06 | % |                  |  



Management monitors impaired loans on
a continual basis. As of September 2003, impaired loans had no material effect on the Companys financial position or results from operations.



The allowance for loan losses at September 30, 2003, totaled $2,595,000 or 1.3% of total loans as compared to $2,326,000 or 1.3% at December 31, 2002. Provisions for loan
losses were $300,000 for the nine months ended September 30, 2003 and $150,000 for the nine months ended September 30, 2002. The provisions were increased due to the $20.6 million increase in net loans.



The level of funding for the provision is a reflection of the overall loan portfolio.
Nonperforming loans consist of approximately $134,300 in farm real estate, $2,300 in one to four family residential mortgages, and $20,000 in consumer loans. 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, 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   |            
|------------------------------------------ |  | -------------- | -----------
|                                           |  | 2003           |            
|                                           |  | AverageBalance |            
|Assets                                     |  |                |            
|Interest Earnings Assets:                  |  |                |            
|Loans(1)(2)(3)                             |  | $              | 183,601,710
|Securities-taxable(4)                      |  |                | 32,919,378 
|Securities-nontaxable(4)                   |  |                | 41,315,729 
|Securities-Equity(4,5)                     |  |                | 1,464,312  
|Federal funds sold                         |  |                | 10,056,542 
|                                           |  |                |            
|Total interest earnings assets             |  |                | 269,357,671
|                                           |  |                |            
|Noninterest earning assets:                |  |                |            
|Cash and due from other institutions       |  |                | 8,430,502  
|Premises and equipment, net                |  |                | 5,107,653  
|Accrued interest                           |  |                | 1,322,395  
|Other assets                               |  |                | 2,387,916  
|Less allowance for loan losses             |  |                | (2,468,562 
|                                           |  |                |            
|Total noninterest earnings assets          |  |                | 14,779,904 
|                                           |  |                |            
|Total Assets                               |  | $              | 284,137,575
|                                           |  |                |            
|Liabilities and Shareholders Equity       |  |                |            
|Interest bearing liabilities:              |  |                |            
|Interest bearing demand                    |  | $              | 32,527,531 
|Money market accounts                      |  |                | 18,956,666 
|Savings deposits                           |  |                | 40,438,648 
|Time deposits                              |  |                | 113,533,183
|Short term borrowings                      |  |                | 3,873,926  
|Federal Home Loan Advances                 |  |                | 3,945,768  
|                                           |  |                |            
|Total interest bearing liabilities         |  |                | 213,275,722
|                                           |  |                |            
|Noninterest bearing liabilities:           |  |                |            
|Demand deposits                            |  |                | 35,375,439 
|Accrued expenses and other liabilities     |  |                | 2,270,213  
|                                           |  |                |            
|Total noninterest bearing liabilities      |  |                | 37,645,652 
|                                           |  |                |            
|Shareholders equity                       |  |                | 33,216,201 
|                                           |  |                |            
|Total Liabilities and Shareholders Equity |  | $              | 284,137,575
|                                           |  |                |            
|Net interest income                        |  |                |            
|                                           |  |                |            
|Interest rate spread(6)                    |  |                |            
|                                           |  |                |            
|Net yield on interest earning assets(7)    |  |                |            
|                                           |  |                |            



|(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 $291,754 and $313,060 in 2003 and
2002, 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   |            
|------------------------------------------ |  | -------------- | -----------
|                                           |  | 2003           |            
|                                           |  | AverageBalance |            
|Assets                                     |  |                |            
|Interest Earnings Assets:                  |  |                |            
|Loans(1)(2)(3)                             |  | $              | 191,128,514
|Securities-taxable(4)                      |  |                | 28,211,564 
|Securities-nontaxable(4)                   |  |                | 42,344,560 
|Securities-Equity(4,5)                     |  |                | 1,475,400  
|Federal funds sold                         |  |                | 7,908,925  
|                                           |  |                |            
|Total interest earnings assets             |  |                | 271,068,963
|                                           |  |                |            
|Noninterest earning assets:                |  |                |            
|Cash and due from other institutions       |  |                | 8,935,909  
|Premises and equipment, net                |  |                | 5,083,821  
|Accrued interest                           |  |                | 1,192,293  
|Other assets                               |  |                | 2,489,167  
|Less allowance for loan losses             |  |                | (2,534,144 
|                                           |  |                |            
|Total noninterest earnings assets          |  |                | 15,167,046 
|                                           |  |                |            
|Total Assets                               |  | $              | 286,236,009
|                                           |  |                |            
|Liabilities and Shareholders Equity       |  |                |            
|Interest bearing liabilities:              |  |                |            
|Interest bearing demand                    |  | $              | 32,705,044 
|Money market accounts                      |  |                | 21,697,396 
|Savings deposits                           |  |                | 40,516,340 
|Time deposits                              |  |                | 111,831,637
|Short term borrowings                      |  |                | 3,623,631  
|Federal Home Loan Advances                 |  |                | 3,749,103  
|                                           |  |                |            
|Total interest bearing liabilities         |  |                | 214,123,151
|                                           |  |                |            
|Noninterest bearing liabilities:           |  |                |            
|Demand deposits                            |  |                | 36,490,188 
|Accrued expenses and other liabilities     |  |                | 2,910,870  
|                                           |  |                |            
|Total noninterest bearing liabilities      |  |                | 39,401,058 
|                                           |  |                |            
|Shareholders equity                       |  |                | 32,711,800 
|                                           |  |                |            
|Total Liabilities and Shareholders Equity |  | $              | 286,236,009
|                                           |  |                |            
|Net interest income                        |  |                |            
|                                           |  |                |            
|Interest rate spread(6)                    |  |                |            
|                                           |  |                |            
|Net yield on interest earning assets(7)    |  |                |            
|                                           |  |                |            

|(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 $106,341 and $102,003 in 2003 and
2002, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------



|(3) | Nonaccrual loans are include 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 September2003 Compared to 2002 |      
|---------------------------------- |  | ------------------------------------------------------ | -----
|                                   |  | Increase (Decrease) Due To                             |      
|                                   |  | Volume                                                 |      
|Interest income                    |  |                                                        |      
|Loans                              |  | $                                                      | 1,724
|Securities-taxable                 |  |                                                        | (837 
|Securities-nontaxable              |  |                                                        | 44   
|Securities-equities                |  |                                                        | 2    
|Federal funds sold                 |  |                                                        | (72  
|                                   |  |                                                        |      
|Total interest earning Assets      |  |                                                        | 861  
|                                   |  |                                                        |      
|Interest expense                   |  |                                                        |      
|Interest bearing demand            |  |                                                        | 10   
|Money market accounts              |  |                                                        | 34   
|Savings deposits                   |  |                                                        | 79   
|Time deposits                      |  |                                                        | (225 
|Short-term borrowing               |  |                                                        | 0    
|Federal Home Loan Bank Advances    |  |                                                        | (63  
|                                   |  |                                                        |      
|Total interest bearing Liabilities |  |                                                        | (165 
|                                   |  |                                                        |      
|Net change in net interest income  |  | $                                                      | 1,026
|                                   |  |                                                        |      





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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 September2003 Compared to 2002 |      
|---------------------------------- |  | ------------------------------------------------------- | -----
|                                   |  | Increase (Decrease) Due To                              |      
|                                   |  | Volume                                                  |      
|Interest income                    |  |                                                         |      
|Loans                              |  | $                                                       | 1,811
|Securities-taxable                 |  |                                                         | (657 
|Securities-nontaxable              |  |                                                         | 33   
|Securities-equities                |  |                                                         | 2    
|Federal funds sold                 |  |                                                         | (138 
|                                   |  |                                                         |      
|Total interest earning Assets      |  |                                                         | 1,051
|                                   |  |                                                         |      
|Interest expense                   |  |                                                         |      
|Interest bearing demand            |  |                                                         | 9    
|Money market accounts              |  |                                                         | 57   
|Savings deposits                   |  |                                                         | 52   
|Time deposits                      |  |                                                         | (167 
|Short-term borrowing               |  |                                                         | 0    
|Federal Home Loan Bank Advances    |  |                                                         | (63  
|                                   |  |                                                         |      
|Total interest bearing Liabilities |  |                                                         | (112 
|                                   |  |                                                         |      
|Net change in net interest income  |  | $                                                       | 1,163
|                                   |  |                                                         |      





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##### Table of Contents

Item 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK



Market risk for the Company is comprised primarily from interest rate risk exposure and
liquidity risk. Since virtually all of the interest-earning assets and paying liabilities are at the Bank, virtually all of the interest rate risk and liquidity risk lies at the Bank level. The Bank is not subject to any trading risk. In addition,
the Bank does not participate in hedging transactions such as interest rate swaps and caps. Changes in interest rates will impact both income and expense recorded and also the market values of long-term interest-earnings assets. Interest rate risk
and liquidity risk managements is performed at the Bank level. Although the Bank has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the immediate trade area.



One of the principal functions of the Companys asset/liability
management program is to monitor the level to which the balance sheet is subject to interest rate risk. The goal of the asset/liability program is to manage the relationship between interest rate sensitive assets and liabilities, thereby minimizing
the fluctuations in the net interest margin, which achieves consistent growth of net interest income during periods of changing interest rates.



Interest rate sensitivity is the result of differences in the amounts and repricing dates of a banks rate sensitive assets and rate sensitive liabilities. These
differences, or interest rate repricing gap provide an indication of the extent that the Companys net interest income is affected by future changes in interest rates. During a period of rising interest rates, a positive gap, a
position of more rate sensitive assets than rate sensitive liabilities, is desired. During a falling interest rate environment, a negative gap is desired, that is, a position in which rate sensitive liabilities exceed rate sensitive assets.



At September 30, 2003, the Company had a cumulative positive gap of $79.4
million or 27.7% at the one-year horizon. The gap analysis indicates that if interest rates were to rise 200 basis points (2.00%), the Companys net interest income would improve at the one-year horizon because the Companys rate sensitive
assets would reprice faster than rate sensitive liabilities. Conversely, if rates were to fall 200 basis points, the Companys net interest income would decline.



Management also manages interest rate risk with the use of simulation modeling which measures the sensitivity of future net interest income
as a result of changes in interest rates. The analysis is based on repricing opportunities for variable rate assets and liabilities and upon contractual maturities of fixed rate instruments.



The simulation also calculates net interest income based upon rate increases or decrease of +
or  200 basis points (or 2.00%) in 100 basis point (or 1.00%) increments. The analysis reprices the balance sheet and forecasts future cash flows over a one-year horizon at the net interest rate levels. The cash flows are then totaled to
calculate net interest income. Assumptions are made for loan and investment pre-payment speeds and are incorporated into the simulation as well. Loan and investment pre-payment speeds will increase as interest rates decrease and slow as interest
rates rise. The current model analysis indicates that, given a 200 basis point overnight decrease in interest rates, the Company would experience a potential $458,000 or 14.11% decline in net interest income. If rates were to increase 200 basis
points, the analysis indicates that the Companys net interest income would increase $461,000 or 14.22%. It is important to note, however, that this exercise would be a worst-case scenario. It would be more likely to have incremental changes in
interest rates, rather than a single significant increase or decrease.



When
management believes interest rate movements will occur, it can restructure the balance sheet and thereby the ratio of rate sensitive assets to rate sensitive liabilities which in turn will effect the net interest income. It is important to note;
however, that in gap analysis and simulation modeling not all assets and liabilities with similar maturities and repricing opportunities will reprice at the same time or to the same degree and therefore, could effect forecasted results.



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Much of the Banks deposits have the ability to reprice immediately, however, deposit rates are not tied to an
external index. As a result, although changing market interest rates impact repricing, the Bank retains much of the control over repricing by determining itself the extent and timing of repricing deposit products. In addition, the Bank maintains a
significant portion of its investment portfolio as available for sale securities and also has a significant variable rate loan portfolio, which is used to offset rate sensitive liabilities.



Changes in market interest rates can also affect the Banks liquidity position through
the impact rate change may have on the market value of the available for sale portion of the investment portfolio. Increase in market rates can adversely impact the market values and therefore, make it more difficult for the Bank to sell available
for sale securities needed for general liquidity purposes without incurring a loss on the sale. This issue is addressed by the Bank with the use of borrowings from the Federal Home Loan Bank (FHLB) and the selling of fixed rate mortgages
as a source of liquidity to the Bank.



The Companys liquidity plan allows
for the use of long-term advances or short-term lines of credit with the FHLB as a source of funds. Borrowing from FHLB not only provides a source of liquidity for the Company, but also serves as a tool to reduce interest risk as well. The Company
may structure borrowings from FHLB to match those of customers credit requests, and therefore, lock in interest rate spreads over the lives of the loans.



In addition to borrowing from the FHLB as a source for liquidity, the Company also participates in the secondary mortgage market. Specifically, the Company sells fixed
rate, residential real estate mortgages to the Federal Home Loan Mortgage Corporation (Freddie Mac). The sales to Freddie Mac not only provide an opportunity for the Bank to remain competitive in the market place, by allowing it to offer
a fixed rate mortgage product, but also provide an additional source of liquidity and an additional tool for management to limit interest rate risk exposure. The Bank continues to service all loans sold to Freddie Mac.



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##### Table of Contents

Item 4  CONTROLS AND PROCEDURES



The Company
carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures as of September 30, 2003, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures were effective as of September 30, 2003, 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.



There was no change in the Companys internal control over financial
reporting that occurred during the Companys fiscal quarter ended September 30, 2003, 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 2  Changes in the rights of the Companys security holders



None



Item 3  Defaults by the Company on its senior securities



None



Item 4  Results of votes of security holders



None



Item 5  Other Information



None



Item 6  Exhibits and Reports on Form 8-K



| | a) | The following exhibits are included in this report or incorporated herein by reference:
| | -- | ---------------------------------------------------------------------------------------



| | 3(i) | Articles of Incorporation of Killbuck Bancshares, Inc.*
| | ---- | -------------------------------------------------------



| | 3(ii) | Code of Regulations of Killbuck Bancshares, Inc.*
| | ----- | -------------------------------------------------



| | 31.1 | Section 302 Certification
| | ---- | -------------------------



| | 31.2 | Section 302 Certification
| | ---- | -------------------------



| | 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- | -----------------------------------------------------------------------------------------------------------------------



| | 32.2 | Certification pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- | -----------------------------------------------------------------------------------------------------------------------



| | 99.1 | Independent Accountants Report
| | ---- | -------------------------------



| | b) | No reports on Form 8-K were filed during the quarter of the period covered by this report.
| | -- | ------------------------------------------------------------------------------------------



|* | 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.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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 12, 2003 |  |  |  | By: |  | /s/    LUTHER E. PROPER  
|                        |  |  |  |     | 
|                        |  |  |  |     |  |                          



|                        |  |  |  |     |  |                     
|----------------------- |  |  |  | --- |  | --------------------
|                        |  |  | 
|Date: November 12, 2003 |  |  |  | By: |  | /s/    DIANE KNOWLES
|                        |  |  |  |     | 
|                        |  |  |  |     |  |                     





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