##### Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For Quarterly Period ended September 30, 2001

Commission File Number 0-24120

WESTERN OHIO FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 31-1403116                       
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer
Identification No.)

28 East Main Street, Springfield, Ohio 45501-0509
(Address of principal executive offices)
(Zip Code)

(937) 325-9990
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes     (XBOX)      No    (BOX)

Indicate the number of shares outstanding of each of the registrants classes
of common stock, as of the latest practicable date.

|                             |  |                                
|---------------------------- |  | -------------------------------
|Class:                       |  | Outstanding at November 9, 2001
|                            
|                            
|                            
|                            
|Common stock, $.01 par value |  | 1,773,168 common shares        





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TABLE OF CONTENTS



|                            |                                                                                               |                                                      |  |  |  |  |  | 
|--------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|                            |                                                                                               | CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION      
|                            | Item 1. Condensed Financial Statements                                                       
|                            |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME                   
|                            |                                                                                               | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME     
|                            |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS               
|                            |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                            | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                            | Item 3. Quantitative and Qualitative Disclosure About Market Risk                            
|PART II  OTHER INFORMATION
|                            | Item 1  Legal Proceedings                                                                   
|                            | Item 2  Changes in Securities and Use of Proceeds                                           
|                            | Item 3  Defaults Upon Senior Securities                                                     
|                            | Item 4  Submission of Matters to a Vote of Security Holders                                 
|                            | Item 5  Other Information                                                                   
|                            | Item 6  Exhibits and Reports on Form 8-K                                                    
|SIGNATURES                 



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##### Table of Contents



WESTERN OHIO FINANCIAL CORPORATION

INDEX

|                                                                                              |                                                      |  |      |   | 
|--------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  | ---- | - | 
|                                                                                              |                                                      |  | Page
|                                                                                              |                                                      |  |     
|PART I  FINANCIAL INFORMATION (UNAUDITED)                                                    |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 1. Condensed Financial Statements                                                        |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statements of Financial Condition       |  |      | 3 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statements of Income                    |  |      | 4 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statements of Comprehensive Income      |  |      | 5 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statements of Cash Flows                |  |      | 6 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Notes to Condensed Consolidated Financial Statements |  |      | 7 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations |                                                      |  | 13   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 3. Quantitative and Qualitative Disclosure About Market Risk                             |                                                      |  | 18   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|PART II  OTHER INFORMATION                                                                   |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 1. Legal Proceedings                                                                     |                                                      |  | 19   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2. Changes in Securities and Use of Proceeds                                             |                                                      |  | 19   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 3. Defaults Upon Senior Securities                                                       |                                                      |  | 19   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 4. Submission of Matters to a Vote of Security Holders                                   |                                                      |  | 19   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 5. Other Information                                                                     |                                                      |  | 19   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                      |  | 19   |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                      |  |      |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|SIGNATURES                                                                                    |                                                      |  | 20   |  

2.



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##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)




Item 1. Condensed Financial Statements
(Amounts in thousands)

|                                     |                                                                                    |                            |                                            |         |               |         |              |         |         |         | 
|------------------------------------ | ---------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------- | ------------- | ------- | ------------ | ------- | ------- | ------- | 
|                                     |                                                                                    |                            |                                            |         | September 30, |         | December 31,
|                                     |                                                                                    |                            |                                            |         | 2001          |         | 2000        
|                                     |                                                                                    |                            |                                            |         |               |         |             
|ASSETS                               |                                                                                    |                            |                                            |         |               |         |              |        
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                          |                            |                                            | 5,891   |               |         |              | 4,805   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Securities available for sale                                                      |                            |                                            | 42,005  |               |         |              | 48,653  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Federal Home Loan Bank stock                                                       |                            |                                            | 8,451   |               |         |              | 8,014   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Loans, net                                                                         |                            |                                            | 272,563 |               |         |              | 283,604 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Premises and equipment, net                                                        |                            |                                            | 4,773   |               |         |              | 4,566   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other assets                                                                       |                            |                                            | 3,148   |               |         |              | 2,920   |        
|                                     |                                                                                    |                            |                                            |         |               |         |              |        
|                                     |                                                                                    |                            | Total assets                               |         | $             | 336,921 |              |         | $       | 352,562 | 
|                                     |                                                                                    |                            |                                            |         |               |         |              |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                    |                            |                                            |         |               |         |              |        
|                                    
|                                    
|                                    
|                                    
|                                     | Deposits                                                                           |                            | $                                          | 210,325 |               |         | $            | 208,332 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Borrowed funds                                                                     |                            |                                            | 81,581  |               |         |              | 100,225 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other liabilities                                                                  |                            |                                            | 2,496   |               |         |              | 2,195   |        
|                                     |                                                                                    |                            |                                            |         |               |         |              |        
|                                     |                                                                                    | Total liabilities          |                                            |         | 294,402       |         |              |         | 310,752 |        
|                                     |                                                                                    |                            |                                            |         |               |         |              |        
|Shareholders equity                 |                                                                                    |                            |                                            |         |               |         |              |        
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $.01 par value, 7,250,000 shares authorized,
2,645,000 shares issued |                            |                                            | 26      |               |         |              | 26      |        
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                         |                            |                                            | 40,613  |               |         |              | 40,617  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive income (loss)                                      |                            |                                            | 425     |               |         |              | (740    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Unearned employee stock ownership plan shares                                      |                            |                                            | (655    | )             |         |              | (833    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Unearned management recognition plan shares                                        |                            |                                            | (82     | )             |         |              | (102    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Shares held by deferred compensation plan                                          |                            |                                            | (173    | )             |         |              | (168    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock; 871,499 and 829,166 shares at cost, respectively                   |                            |                                            | (17,811 | )             |         |              | (17,055 | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                  |                            |                                            | 20,176  |               |         |              | 20,065  |        
|                                     |                                                                                    |                            |                                            |         |               |         |              |        
|                                     |                                                                                    | Total shareholders equity |                                            |         | 42,519        |         |              |         | 41,810  |        
|                                     |                                                                                    |                            |                                            |         |               |         |              |        
|                                     |                                                                                    |                            | Total liabilities and shareholders equity |         | $             | 336,921 |              |         | $       | 352,562 | 
|                                     |                                                                                    |                            |                                            |         |               |         |              |        

See accompanying notes to condensed consolidated financial statements.

3.



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##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |       |        | 
|--------------------------------------------------- | ------------------------------ | --------------------------------------------- | ----- | ------------------ | ----- | ----------------- | ----- | ---- | ----- | ---- | ------ | ----- | ------ | - | ------ | ----- | ------ | 
|                                                    |                                |                                               |       | Three Months Ended |       | Nine Months Ended
|(Amounts in thousands, except per share data)       |                                | September 30,                                 |       | September 30,     
|                                                    |                                |                                               |       | 2001               |       | 2000              |       | 2001 |       | 2000
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |     
|Interest income                                     |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Loans, including fees                         |       | $                  | 5,209 |                   |       | $    | 5,584 |      |        | $     | 16,390 |   |        | $     | 15,993 | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Securities                                    |       |                    | 631   |                   |       |      | 809   |      |        |       | 2,075  |   |        |       | 2,464  | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Interest-bearing deposits and overnight funds |       |                    | 50    |                   |       |      | 14    |      |        |       | 91     |   |        |       | 71     | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Other interest and dividend income            |       |                    | 146   |                   |       |      | 145   |      |        |       | 437    |   |        |       | 414    | 
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                    |                                |                                               | 6,036 |                    |       |                   | 6,552 |      |       |      | 18,993 |       |        |   | 18,942 |      
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|Interest expense                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Deposits                                      |       |                    | 2,556 |                   |       |      | 2,698 |      |        |       | 7,984  |   |        |       | 7,742  | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Borrowed funds                                |       |                    | 1,167 |                   |       |      | 1,438 |      |        |       | 3,824  |   |        |       | 3,847  | 
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                    |                                |                                               | 3,723 |                    |       |                   | 4,136 |      |       |      | 11,808 |       |        |   | 11,589 |      
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|Net interest income                                 |                                |                                               | 2,313 |                    |       |                   | 2,416 |      |       |      | 7,185  |       |        |   | 7,353  |      
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for loan losses                           |                                |                                               | 84    |                    |       |                   | 84    |      |       |      | 273    |       |        |   | 252    |      
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|Net interest income after provision for loan losses |                                |                                               | 2,229 |                    |       |                   | 2,332 |      |       |      | 6,912  |       |        |   | 7,101  |      
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|Noninterest income                                  |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Service charges                               |       |                    | 377   |                   |       |      | 193   |      |        |       | 1,079  |   |        |       | 785    | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Gain on sale of loans                         |       |                    | 75    |                   |       |      | 74    |      |        |       | 138    |   |        |       | 72     | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Gain on sale of securities                    |       |                    |      |                   |       |      |      |      |        |       | 3      |   |        |       |       | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                | Other noninterest income                      |       |                    | 6     |                   |       |      | 85    |      |        |       | 16     |   |        |       | 95     | 
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                    |                                |                                               | 458   |                    |       |                   | 352   |      |       |      | 1,236  |       |        |   | 952    |      
|                                                   
|                                                   
|                                                   
|                                                   
|Noninterest expense                                 |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Salaries and employee benefits |                                               |       | 992                |       |                   |       | 981  |       |      |        | 3,033 |        |   |        | 3,013 |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Occupancy and equipment        |                                               |       | 191                |       |                   |       | 208  |       |      |        | 617   |        |   |        | 600   |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | FDIC insurance                 |                                               |       | 10                 |       |                   |       | 11   |       |      |        | 30    |        |   |        | 34    |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | State franchise taxes          |                                               |       | 132                |       |                   |       | 129  |       |      |        | 399   |        |   |        | 388   |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Professional services          |                                               |       | 108                |       |                   |       | 81   |       |      |        | 302   |        |   |        | 254   |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Advertising                    |                                               |       | 107                |       |                   |       | 116  |       |      |        | 240   |        |   |        | 289   |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Data processing                |                                               |       | 199                |       |                   |       | 187  |       |      |        | 595   |        |   |        | 627   |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other noninterest expense      |                                               |       | 287                |       |                   |       | 211  |       |      |        | 798   |        |   |        | 706   |       
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                    |                                |                                               | 2,026 |                    |       |                   | 1,924 |      |       |      | 6,014  |       |        |   | 5,911  |      
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|Income before income tax                            |                                |                                               | 661   |                    |       |                   | 760   |      |       |      | 2,134  |       |        |   | 2,142  |      
|                                                   
|                                                   
|                                                   
|                                                   
|Income tax expense                                  |                                |                                               | 226   |                    |       |                   | 271   |      |       |      | 745    |       |        |   | 764    |      
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|Net income                                          |                                | $                                             | 435   |                    |       | $                 | 489   |      |       | $    | 1,389  |       |        | $ | 1,378  |      
|                                                    |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|Earnings per common share                           |                                |                                               |       |                    |       |                   |       |      |       |      |        |       |        |   |        |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Basic                          |                                               | $     | .25                |       |                   | $     | .27  |       |      | $      | .80   |        |   | $      | .75   |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Diluted                        |                                               | $     | .25                |       |                   | $     | .27  |       |      | $      | .80   |        |   | $      | .74   |       
|                                                   
|                                                   
|                                                   
|                                                   
|Dividends per common share                          |                                | $                                             | .25   |                    |       | $                 | .25   |      |       | $    | .75    |       |        | $ | .75    |      

See accompanying notes to condensed consolidated financial statements.

4.



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##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

|                                         |                                                                                             |                    |       |                   |      |   |      |     |      |   |       |       |   |   |       |     | 
|---------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------ | ----- | ----------------- | ---- | - | ---- | --- | ---- | - | ----- | ----- | - | - | ----- | --- | 
|(Amounts in thousands)                   |                                                                                             | Three Months Ended |       | Nine Months Ended
|                                         |                                                                                             | September 30,      |       | September 30,    
|                                         |                                                                                             |                    | 2001  |                   | 2000 |   | 2001 |     | 2000
|                                         |                                                                                             |                    |       |                   |      |   |      |     |     
|Net income                               |                                                                                             | $                  | 435   |                   |      | $ | 489  |     |      | $ | 1,389 |       |   | $ | 1,378 |    
|                                        
|                                        
|                                        
|                                        
|Other comprehensive income , net of tax: |                                                                                             |                    |       |                   |      |   |      |     |      |   |       |       |   |   |       |    
|                                        
|                                        
|                                        
|                                        
|                                         | Unrealized gain on securities available
for sale arising during the period                  |                    |       | 628               |      |   |      | 359 |      |   |       | 1,167 |   |   |       | 491 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Reclassification adjustment for amounts
realized on securities sales included
in net income |                    |       |                  |      |   |      |    |      |   |       | (2    | ) |   |       |    | 
|                                         |                                                                                             |                    |       |                   |      |   |      |     |      |   |       |       |   |   |       |    
|                                         | Total other comprehensive income                                                            |                    |       | 628               |      |   |      | 359 |      |   |       | 1,165 |   |   |       | 491 | 
|                                         |                                                                                             |                    |       |                   |      |   |      |     |      |   |       |       |   |   |       |    
|Comprehensive income                     |                                                                                             | $                  | 1,063 |                   |      | $ | 848  |     |      | $ | 2,552 |       |   | $ | 1,869 |    
|                                         |                                                                                             |                    |       |                   |      |   |      |     |      |   |       |       |   |   |       |    

See accompanying notes to condensed consolidated financial statements.

5.



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##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                  |                                                                 |                                              |                                                    |                                    |    |                   |        |        |    |         |         |  
|------------------------------------------------- | --------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------------- | ---------------------------------- | -- | ----------------- | ------ | ------ | -- | ------- | ------- | -
|                                                  |                                                                 |                                              |                                                    |                                    |    | Nine Months Ended
|(Amount in thousands)                             |                                                                 | September 30,                               
|                                                  |                                                                 |                                              |                                                    |                                    |    | 2001              |        | 2000  
|                                                  |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|Net cash from operating activities                |                                                                 | $                                            | 1,740                                              |                                    |    | $                 | 1,572  |       
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from investing activities              |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Loans:                                                          |                                              |                                                    |                                    |    |                   |        |        |   
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 |                                              | Loan originations, net of payments received        |                                    |    | 12,478            |        |        |    | (9,521  | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 |                                              | Purchase of loans                                  |                                    |    | (1,582            | )      |        |    | (11,928 | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Securities available for sale:                                  |                                              |                                                    |                                    |    |                   |        |        |   
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 |                                              | Maturities and principal payments                  |                                    |    | 6,131             |        |        |    | 3,784   |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 |                                              | Purchase of securities                             |                                    |    | (2,469            | )      |        |    | (1,118  | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 |                                              | Sales of securities                                |                                    |    | 4,623             |        |        |    |        |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Premises and equipment expenditures                             |                                              |                                                    | (691                               | )  |                   |        | (941   | ) 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Proceeds from sale of premises and equipment |                                                    |                                    | 20 |                   |        |        | 29 |        
|                                                  |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|                                                  |                                                                 |                                              |                                                    | Net cash from investing activities |    |                   | 18,510 |        |    |         | (19,695 | )
|                                                  |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|Cash flows from financing activities              |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net change in deposits                                          |                                              |                                                    | 1,993                              |    |                   |        | 4,832  |   
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net decrease in advances from borrowers for taxes and insurance |                                              |                                                    | (303                               | )  |                   |        | (338   | ) 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Purchase of treasury stock                                      |                                              |                                                    | (853                               | )  |                   |        | (2,132 | ) 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cash dividends paid                                             |                                              |                                                    | (1,316                             | )  |                   |        | (1,444 | ) 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from exercise of stock options                         |                                              |                                                    | 49                                 |    |                   |        |       |   
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net increase (decrease) in short-term borrowings                |                                              |                                                    | (16,075                            | )  |                   |        | 12,516 |   
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from FHLB advances                                     |                                              |                                                    | 2,500                              |    |                   |        | 960    |   
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Repayments on FHLB advances                                     |                                              |                                                    | (5,069                             | )  |                   |        | (1,377 | ) 
|                                                  |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|                                                  |                                                                 |                                              | Net cash from financing activities                 |                                    |    | (19,074           | )      |        |    | 13,017  |        
|                                                  |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|Net change in cash and cash equivalents           |                                                                 |                                              | 1,176                                              |                                    |    |                   | (5,106 | )     
|                                                 
|                                                 
|                                                 
|                                                 
|Cash and cash equivalents at beginning of period  |                                                                 |                                              | 4,805                                              |                                    |    |                   | 9,614  |       
|                                                  |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|Cash and cash equivalents at end of period        |                                                                 | $                                            | 5,981                                              |                                    |    | $                 | 4,508  |       
|                                                  |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|Supplemental disclosures of cash flow information |                                                                 |                                              |                                                    |                                    |    |                   |        |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cash paid during the period for:                                |                                              |                                                    |                                    |    |                   |        |        |   
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 |                                              | Interest                                           |                                    | $  | 12,186            |        |        | $  | 11,463  |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 |                                              | Income taxes                                       |                                    |    | 646               |        |        |    | 640     |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Noncash activities                                              |                                              |                                                    |                                    |    |                   |        |        |   
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 |                                              | Transfer of loans held for sale to portfolio loans |                                    |    |                  |        |        |    | 217     |        

See accompanying notes to condensed consolidated financial statements.

6.



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##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial reporting and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles in the United States of America for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. These unaudited condensed consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Corporations annual report on
Form 10-K for the year ended December 31, 2000. The financial data and results
of operations for interim periods presented may not necessarily reflect the
results to be anticipated for the entire year. Internal financial information
is primarily reported and aggregated solely in the line of the banking
business.

Consolidation Policy: The financial statements include Western Ohio Financial
Corporation (Western) and its wholly-owned subsidiary Cornerstone Bank
(Cornerstone), together referred to as the Company. The financial statements
of Cornerstone include the accounts of its wholly-owned subsidiaries,
CornerstoneBanc Financial Services, Inc. (CFSI) and West Central Financial
Services, Inc. (WCFS). Intercompany transactions and balances are eliminated
in consolidation.

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

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

Earnings Per Common Share: Basic earnings per common share are based on net
income divided by the weighted average number of common shares outstanding
during the period. Employee Stock Ownership Plan (ESOP) shares are
considered to be outstanding for the calculation unless unearned. Management
Recognition Plan (MRP) shares are considered outstanding as they become
vested. Diluted earnings per common share include the dilutive effect of
additional potential common shares issuable under stock options.

Accounting for Derivative Instruments and Hedging Activities: Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities, requires companies to record derivatives
on the balance sheet as assets or liabilities, measured at fair value. Gains
or losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving offsetting changes
in fair value or cash flow. SFAS 133, does not allow hedging of a security
that is classified as held to maturity, accordingly, upon adoption of SFAS 133,
companies may reclassify any security from held to maturity to

7.



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##### Table of Contents



WESTERN OHIO FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

available for
sale if they wish to be able to hedge the security in the future. SFAS
133 became effective for
the Company beginning January 1, 2001. The adoption of SFAS 133 did not have a
significant impact on the Companys financial statements since no derivatives
are currently held.

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 141, Business Combinations.
SFAS 141 requires all business combinations within its scope to be accounted
for using the purchase method, rather than the pooling-of-interests method.
The provisions of the Statement apply to all business combinations initiated
after June 30, 2001. The adoption of this statement will only impact the
Companys financial statements if it enters into a business combination.

Also, in June 2001, the FASB issued SFAS No. 142, Goodwill and Other
Intangible Assets, which addresses the accounting for such assets arising from
prior and future business combinations. Upon the adoption of this Statement,
goodwill arising from business combinations will no longer be amortized, but
rather will be assessed regularly for impairment, with any such impairment
recognized as a reduction to earnings in the period identified. Other
identified intangible assets, such as core deposit intangible assets, will
continue to be amortized over their estimated useful lives. The Company is
required to adopt this Statement on January 1, 2002 and early adoption is not
permitted. The adoption of this Statement will not materially impact the
Companys financial statements.

8.



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##### Table of Contents



WESTERN OHIO FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 2  SECURITIES

The amortized cost and fair values of securities available for sale were as
follows:

|                       |                            |           |   |            |        |            |   |       |    |       |   |      |        |   |   |        |        | 
|---------------------- | -------------------------- | --------- | - | ---------- | ------ | ---------- | - | ----- | -- | ----- | - | ---- | ------ | - | - | ------ | ------ | 
|(Amounts in thousands) |                            |           |   |            |        | Gross      |   | Gross |    |       |   |     
|                       |                            | Amortized |   | Unrealized |        | Unrealized |   | Fair 
|                       |                            |           |   | Cost       |        | Gains      |   | Loss  |    | Value
|                       |                            |           |   |            |        |            |   |       |    |      
|September 30, 2001     |                            |           |   |            |        |            |   |       |    |       |   |      |        |   |   |       
|                      
|                      
|                      
|                      
|                       | U.S. government agencies   |           | $ | 10,000     |        |            | $ | 16    |    |       | $ |     |        |   | $ | 10,016 |       
|                      
|                      
|                      
|                      
|                       | Mortgage-backed securities |           |   | 31,362     |        |            |   | 630   |    |       |   | (3   | )      |   |   | 31,989 |       
|                       |                            |           |   |            |        |            |   |       |    |       |   |      |        |   |   |       
|                       | Total                      |           | $ | 41,362     |        |            | $ | 646   |    |       | $ | (3   | )      |   | $ | 42,005 |       
|                       |                            |           |   |            |        |            |   |       |    |       |   |      |        |   |   |       
|                       |                            |           |   |            |        |            |   |       |    |       |   |      |        |   |   |       
|                      
|                      
|                      
|                      
|December 31, 2000      |                            |           |   |            |        |            |   |       |    |       |   |      |        |   |   |       
|                      
|                      
|                      
|                      
|                       | U.S. government agencies   |           | $ | 10,000     |        |            | $ |      |    |       | $ | (566 | )      |   | $ | 9,434  |       
|                      
|                      
|                      
|                      
|                       | Mortgage-backed securities |           |   | 39,774     |        |            |   | 39    |    |       |   | (594 | )      |   |   | 39,219 |       
|                       |                            |           |   |            |        |            |   |       |    |       |   |      |        |   |   |       
|                       |                            | Total     |   | $          | 49,774 |            |   | $     | 39 |       |   | $    | (1,160 | ) |   | $      | 48,653 | 
|                       |                            |           |   |            |        |            |   |       |    |       |   |      |        |   |   |       

Gross proceeds from sales of securities during the nine month period ending
September 30, 2001 were $4,623,000, with gross gains of $3,000 included in
earnings. There were no sales of securities during the nine months ended
September 30, 2000.

NOTE 3  LOANS

Loans were as follows:

|                                 |                                                |               |         |              |         |   |         |         |         | 
|-------------------------------- | ---------------------------------------------- | ------------- | ------- | ------------ | ------- | - | ------- | ------- | ------- | 
|(Amounts in thousands)           |                                                | September 30, |         | December 31,
|                                 |                                                | 2001          |         | 2000        
|                                 |                                                |               |         |              |         |  
|First mortgage loans secured by: |                                                |               |         |              |         |   |         |        
|                                
|                                
|                                
|                                
|                                 | One- to four- family residential               |               | $       | 163,456      |         |   | $       | 178,106 |        
|                                
|                                
|                                
|                                
|                                 | Other properties                               |               |         | 66,219       |         |   |         | 67,919  |        
|                                
|                                
|                                
|                                
|                                 | Construction properties                        |               |         | 3,222        |         |   |         | 8,476   |        
|                                 |                                                |               |         |              |         |   |         |        
|                                 |                                                |               | 232,897 |              |         |   | 254,501 |        
|                                
|                                
|                                
|                                
|Consumer and other loans         |                                                |               |         |              |         |   |         |        
|                                
|                                
|                                
|                                
|                                 | Consumer                                       |               |         | 1,300        |         |   |         | 1,608   |        
|                                
|                                
|                                
|                                
|                                 | Commercial                                     |               |         | 22,400       |         |   |         | 14,090  |        
|                                
|                                
|                                
|                                
|                                 | Home equity                                    |               |         | 18,687       |         |   |         | 17,766  |        
|                                 |                                                |               |         |              |         |   |         |        
|                                 |                                                |               | 42,387  |              |         |   | 33,464  |        
|                                 |                                                |               |         |              |         |   |         |        
|                                 |                                                | Total loans   |         |              | 275,284 |   |         |         | 287,965 | 
|                                
|                                
|                                
|                                
|Less:                            |                                                |               |         |              |         |   |         |        
|                                
|                                
|                                
|                                
|                                 | Net deferred loan fees, premiums and discounts |               |         | (97          | )       |   |         | (87     | )      
|                                
|                                
|                                
|                                
|                                 | Loans in process                               |               |         | (1,025       | )       |   |         | (2,609  | )      
|                                
|                                
|                                
|                                
|                                 | Allowance for loan losses                      |               |         | (1,599       | )       |   |         | (1,665  | )      
|                                 |                                                |               |         |              |         |   |         |        
|                                 |                                                | $             | 272,563 |              |         | $ | 283,604 |        
|                                 |                                                |               |         |              |         |   |         |        

9.



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##### Table of Contents



WESTERN OHIO FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 3  LOANS (Continued)

Activity in the allowance for loan losses was as follows:

|                          |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|(Amount in thousands)     |  | Three Months Ended |       | Nine Months Ended
|                          |  | September 30,      |       | September 30,    
|                          |  | 2001               |       | 2000              |  | 2001 |       | 2000
|                          |  |                    |       |                   |  |      |       |     
|Beginning balance         |  | $                  | 1,611 |                   |  | $    | 1,497 |      |  | $ | 1,665 |   |  | $ | 2,781  |  
|                         
|                         
|                         
|                         
|Provision for loan losses |  |                    | 84    |                   |  |      | 84    |      |  |   | 273   |   |  |   | 252    |  
|                         
|                         
|                         
|                         
|Recoveries                |  |                    | 31    |                   |  |      | 52    |      |  |   | 67    |   |  |   | 99     |  
|                         
|                         
|                         
|                         
|Charge-offs               |  |                    | (127  | )                 |  |      | (76   | )    |  |   | (406  | ) |  |   | (1,575 | )
|                          |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Ending balance            |  | $                  | 1,599 |                   |  | $    | 1,557 |      |  | $ | 1,599 |   |  | $ | 1,557  |  
|                          |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  

Nonperforming loans were $3,090,000 and $3,601,000 at September 30, 2001 and
December 31, 2000.

Impaired loans were as follows:

|                                                  |  |               |     |              |  |   |       | 
|------------------------------------------------- |  | ------------- | --- | ------------ |  | - | ----- | 
|                                                  |  | September 30, |     | December 31,
|                                                  |  | 2001          |     | 2000        
|                                                  |  |               |     |             
|Loans with no allocated allowance for loan losses |  | $             | 532 |              |  |   | 1,709 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Loans with allocated allowance for loan losses    |  |               | 226 |              |  |   | 352   | 
|                                                  |  |               |     |              |  |   |       | 
|Total                                             |  | $             | 758 |              |  | $ | 2,061 | 
|                                                  |  |               |     |              |  |   |       | 
|Amount of the allowance for loan losses allocated |  | $             | 79  |              |  | $ | 241   | 

NOTE 4  DEPOSITS

Deposits were as follows:

|                               |  |               |         |              |  |   |         | 
|------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | 
|(Amounts in thousands)         |  | September 30, |         | December 31,
|                               |  | 2001          |         | 2000        
|                               |  |               |         |             
|Checking  Noninterest bearing |  | $             | 7,154   |              |  | $ | 8,112   | 
|                              
|                              
|                              
|                              
|Checking   Interest bearing   |  |               | 11,262  |              |  |   | 10,839  | 
|                              
|                              
|                              
|                              
|Money market accounts          |  |               | 54,214  |              |  |   | 44,859  | 
|                              
|                              
|                              
|                              
|Passbook and savings accounts  |  |               | 10,958  |              |  |   | 10,994  | 
|                              
|                              
|                              
|                              
|Certificates of deposit        |  |               | 126,737 |              |  |   | 133,528 | 
|                               |  |               |         |              |  |   |         | 
|                               |  | $             | 210,325 |              |  | $ | 208,332 | 
|                               |  |               |         |              |  |   |         | 

10.



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##### Table of Contents



WESTERN OHIO FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 5  EARNINGS PER COMMON SHARE

The factors used in the earnings per share computation were as follows:
(Amounts in thousands, except per share data)

|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |       |  
|--------------------------------- | ------------------------------------------------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                  |                                                                                 |  | Three Months Ended |       | Nine Months Ended
|                                  |                                                                                 |  | September 30,      |       | September 30,    
|                                  |                                                                                 |  | 2001               |       | 2000              |  | 2001 |       | 2000
|                                  |                                                                                 |  |                    |       |                   |  |      |       |     
|Basic earnings per common share   |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                 
|                                 
|                                 
|                                 
|                                  | Net income                                                                      |  | $                  | 435   |                   |  | $    | 489   |      |  | $ | 1,389 |   |  | $ | 1,378 |  
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                  | Weighted average common shares
outstanding                                      |  |                    | 1,773 |                   |  |      | 1,922 |      |  |   | 1,784 |   |  |   | 1,958 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Less: Average unallocated ESOP
shares                                           |  |                    | (45   | )                 |  |      | (60   | )    |  |   | (48   | ) |  |   | (63   | )
|                                 
|                                 
|                                 
|                                 
|                                  | Less: Average nonvested MRP shares                                              |  |                    | (4    | )                 |  |      | (47   | )    |  |   | (5    | ) |  |   | (48   | )
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                  | Average shares                                                                  |  |                    | 1,724 |                   |  |      | 1,815 |      |  |   | 1,731 |   |  |   | 1,847 |  
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                  | Basic earnings per common share                                                 |  | $                  | .25   |                   |  | $    | .27   |      |  | $ | .80   |   |  | $ | .75   |  
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                 
|                                 
|                                 
|                                 
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                 
|                                 
|                                 
|                                 
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                 
|                                 
|                                 
|                                 
|Diluted earnings per common share |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                 
|                                 
|                                 
|                                 
|                                  | Net income                                                                      |  | $                  | 435   |                   |  | $    | 489   |      |  | $ | 1,389 |   |  | $ | 1,378 |  
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                  | Weighted average common shares
outstanding for basic earnings per
common shares |  |                    | 1,724 |                   |  |      | 1,815 |      |  |   | 1,731 |   |  |   | 1,847 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Add: Dilutive effects of average
nonvested MRP shares                           |  |                    |      |                   |  |      |      |      |  |   |      |   |  |   |      |  
|                                 
|                                 
|                                 
|                                 
|                                  | Add: Dilutive effects of stock options                                          |  |                    | 11    |                   |  |      | 3     |      |  |   | 11    |   |  |   | 3     |  
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                  | Average shares and dilutive potential
common shares                             |  |                    | 1,735 |                   |  |      | 1,818 |      |  |   | 1,742 |   |  |   | 1,850 |  
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      
|                                  | Diluted earnings per common share                                               |  | $                  | .25   |                   |  | $    | .27   |      |  | $ | .80   |   |  | $ | .74   |  
|                                  |                                                                                 |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |      

Stock options covering 105,808 shares of common stock were not considered in
computing diluted earnings per common share for the three and nine months ended
September 30, 2001 as they were antidilutive. In addition, nonvested MRP awards
for 4,457 and 4,565 shares of common stock were not considered in computing
diluted earnings per common share for the three and nine months ended September
30, 2001.

11.



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WESTERN OHIO FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 6  STOCK OPTION PLANS

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

|                   |  |               |         |             |  |          |         |                  |  |   |       | 
|------------------ |  | ------------- | ------- | ----------- |  | -------- | ------- | ---------------- |  | - | ----- | 
|                   |  | Stock Options
|                   |  |              
|                   |  | Options       |         |             |  |          |         | Weighted Average
|                   |  | Available     |         | Options     |  | Exercise
|                   |  | for Grant     |         | Outstanding |  | Price   
|                   |  |               |         |             |  |         
|December 31, 2000  |  |               | 161,532 |             |  |          | 241,346 |                  |  | $ | 18.56 | 
|                  
|                  
|                  
|                  
|Granted            |  |               | (5,800  | )           |  |          | 5,800   |                  |  |   | 17.91 | 
|                  
|                  
|                  
|                  
|Forfeited          |  |               | 5,428   |             |  |          | (5,428  | )                |  |   | 18.31 | 
|                  
|                  
|                  
|                  
|Exercised          |  |               |        |             |  |          | (3,667  | )                |  |   | 13.86 | 
|                   |  |               |         |             |  |          |         |                  |  |   |       | 
|September 30, 2001 |  |               | 161,160 |             |  |          | 238,051 |                  |  | $ | 18.63 | 
|                   |  |               |         |             |  |          |         |                  |  |   |       | 

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WESTERN OHIO FINANCIAL CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Managements Discussion and Analysis of Financial Condition
             and Results of Operations

The following discusses the financial condition of the Company as of September
30, 2001 as compared to December 31, 2000, and the results of operations for
the three and nine months ended September 30, 2001, compared with the same
periods in 2000. This discussion should be read in conjunction with the
interim financial statements and footnotes included herein.

Forward-Looking Statements

When used in this filing and in future filings by the Company with the
Securities and Exchange Commission, in the Companys press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases would be,
will allow, intends to, will likely result, are expected to, will
continue, is anticipated, estimate, project or similar expressions are
intended to identify forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject
to risks and uncertainties, including but not limited to changes in economic
conditions in the Companys market area, changes in policies by regulatory
agencies, fluctuations in interest rates, demand for loans in the Companys
market area and competition, all or some of which could cause actual results to
differ materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue reliance
on any such forward-looking statements, which speak only as of the date made
and advises readers that various factors, including regional and national
economic conditions, substantial changes in levels of market interest rates,
credit and other risks of lending and investment activities and competitive and
regulatory factors, could affect the Companys financial performance and could
cause the Companys actual results for future periods to differ materially from
those anticipated or projected.

The Company does not undertake, and specifically disclaims any obligation, to
update any forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.

Analysis of Financial Condition

Consolidated assets of the Company totaled $336.9 million at September 30,
2001, a decrease of $15.7 million from the December 31, 2000, total of $352.6
million. The primary decrease in assets is a result of a decrease of $11.0
million in net loans receivable as well as a decrease of $6.6 million in
securities available for sale. Funds from loans and securities were primarily
used to retire Federal Home Loan Bank borrowings of $18.6 million.

Net loans decreased $11.0 million, or 3.9% during the nine months ended
September 30, 2001, decreasing from $283.6 million in December 31, 2000 to
$272.6 million on September 30, 2001. Traditional one-to-four family
residential mortgage loans decreased $14.7 million to $163.4 million at
September 30, 2001 from $178.1 million at December 31, 2000, primarily due to
loan sales, amortization and payoffs exceeding new volume. For the period,
this decrease was offset by commercial loan originations increasing $8.3
million to $22.4 million at September 30, 2001 from $14.1 million at December
31, 2000. These increases were the result of Cornerstones effort to diversify
its portfolio into more commercial type loans.

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WESTERN OHIO FINANCIAL CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cash and cash equivalents increased by $1.1 million to $5.9 million on
September 30, 2001, from $4.8 million on December 31, 2000. Cash and cash
equivalents consist of cash, checking deposits and federal funds deposited at
other financial institutions. The increase was primarily the result of loan
and security sales.

Securities available for sale decreased $6.6 million from $48.7 million at
December 31, 2000, to $42.1 million on September 30, 2001. The decline was due
to sales of securities of $4.6 million in addition to principal repayments on
existing mortgage-backed securities available for sale. The fixed-rate lower
coupon securities were sold to reduce interest rate sensitivity within the
investment portfolio.

Deposits at September 30, 2001 totaled $210.3 million, an increase of $2.0
million from $208.3 million at December 31, 2000. The increase occurred
primarily in money market accounts, which increased $9.3 million to $54.2 at
September 30, 2001 from $44.9 million at December 31, 2000. Certificates of
deposits decreased $6.8 million from $133.5 million at December 31, 2000 to
$126.7 million at September 30, 2001.

FHLB advances at September 30, 2001 totaled $81.6 million, a decrease of $18.6
million or 18.6% from $100.2 million at December 31, 2000. With the liquidity
generated by the loan and securities portfolios, the Bank reduced borrowings
from the FHLB during the period. The majority of borrowed funds are invested
in loans to leverage the Companys excess capital and improve the Companys
return on equity over time.

Total shareholders equity increased $700,000 from $41.8 million at December
31, 2000, to $42.5 million at September 30, 2001. This increase is primarily
due to an improvement of $1.2 million in accumulated other comprehensive income
offset by the Company purchasing approximately $853,000, or 46,600 shares, of
its common stock during the first nine months of 2001.

As of September 30, 2001, the Company had commitments to make $1.5 million of
residential loans; $2.4 million in commitments to fund draws on nonresidential
loans and $3.6 million in commitments to fund commercial loans. It is expected
that these loans will be funded within 30-60 days. The Company also had $1.0
million in commitments to fund loans on residential properties under
construction. These commitments are anticipated to be filled within three to
six months. Unused commercial lines of credit were $8.1 million and unused
home equity lines of credit were $11.4 million.

Results of Operations

Operating results of the Company are affected by general economic conditions,
monetary and fiscal policies of federal agencies and policies of agencies
regulating financial institutions. The Companys cost of funds is influenced
by interest rates on competing investments and general market rates of
interest. Lending activities are influenced by demand for real estate and
other types of loans, which, in turn, is affected by the interest rates at
which such loans are made, general economic conditions and availability of
funds for lending activities.

The Companys net income is primarily dependent on its net interest income (the
difference between interest income generated on interest-earning assets and
interest expense incurred on interest-bearing liabilities). Net income is also
affected by provisions for loan losses, service charges, gains on sale of
assets, other income, noninterest expense and income taxes. The Companys net
income of $435,000 and $1,389,000 for the three and nine months ended September
30, 2001, represented a decrease of $54,000 and an increase of $11,000
respectively when compared to the same periods in 2000. Basic earnings per
share decreased $.02 for the three month period ended September 30, 2001 from
$.27 per share for the

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WESTERN OHIO FINANCIAL CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

period ended September 30, 2000 to $.25 per share for the period ended
September 30, 2001. Earnings per share for the nine-month period ended
September 30, 2001 was $.80 per share compared to $.75 per share for the same
period ended September 30, 2000, an increase of $.05 or 6.6%.

Net interest income is the largest component of the Companys income and is
affected by the interest rate environment and volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
totaled $2,313,000 and $7,185,000 for the three and nine months ended September
30, 2001, compared to $2,416,000 and $7,353,000 for the same periods in 2000.
The Company remains liability sensitive whereby its interest-bearing
liabilities will generally reprice more quickly than its interest-earning
assets. Therefore, the Companys net interest margin will generally increase
in periods of falling interest rates in the market and will decrease in periods
of rising interest rates. Accordingly, in a rising interest rate environment,
the Company may need to increase rates to attract and retain deposits. Since
the Companys loans generally mature or reprice over longer time periods than
its deposits, the rise in interest rates may not have such an immediate impact
on interest-earning assets. This lag could negatively affect net interest
income in future periods

Interest and fees on loans totaled $5,209,000 and $16,390,000 for the three and
nine months ended September 30, 2001 compared to $5,584,000 and $15,993,000 the
three and nine months ended September 30, 2000. The decrease for the
three-month period ending September 30, 2001 is due to the decrease in the
interest rate market during the period. The increase for the nine-month period
was due primarily to the increased origination of commercial loans.

Interest and dividends on securities totaled $631,000 and $2,075,000 for the
three and nine months ended September 30, 2001, and $809,000 and $2,464,000 for
the three and nine months ended September 30, 2000. The decrease was due to
sales of securities and principal payments on securities available for sale.

Interest on deposits totaled $2,556,000 and $7,984,000 for the three and nine
months ended September 30, 2001 and $2,698,000 and $7,742,000 for the three and
nine months ended September 30, 2000. The decrease in the three month period
ended September 30, 2001 is the result of the Federal Reserve Board reducing
interest rates which immediately affected short term money market rates. The
increase in the nine-month period is due to the rate on certificate of deposits
lagging the market due to timing of maturities.

Interest on FHLB advances was $1,168,000 and $3,824,000 for the three and nine
months ended September 30, 2001 compared to $1,438,000 and $3,847,000 for the
three and nine months ended September 30, 2000. The decrease is due to the
repayment of borrowings to the FHLB as well as to a decrease in average rates
on those advances.

The Company maintains an allowance for loan losses in an amount, which, in
managements judgement, is adequate to absorb probable losses in the loan
portfolio. While management utilizes its best judgement and information
available, ultimate adequacy of the allowance is dependent on a variety of
factors, including performance of the Companys loan portfolio, the economy,
changes in real estate values and interest rates and the view of the regulatory
authorities toward loan classifications. The provision for loan losses is
determined by management as the amount to be added to the allowance for loan
losses after net charge-offs have been deducted to bring the allowance to a
level considered adequate to absorb probable losses in the loan portfolio. The
amount of the provision is based on managements regular review of the loan
portfolio and consideration of such factors as historical loss experience,
changes in size and composition of the loan portfolio and specific borrower
considerations, including ability of the borrower to repay the loan and the
estimated value of the underlying collateral. The provision for loan

15.



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WESTERN OHIO FINANCIAL CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

losses totaled $84,000 and $273,000 for the three and nine months ended
September 30, 2001, compared to $84,000 and $252,000 for the three and nine
months ended September 30, 2000.

Loan charge-offs were $127,000 and $407,000 for the three and nine months ended
September 30, 2001 compared to $76,000 and $1,575,000 for the same periods in
2000. The decrease for the nine months is primarily due to the Company
resolving two large problem loans and charging-off portions of two others last
year.

Noninterest income totaled $458,000 and $1,236,000 for the three and nine
months ended September 30, 2001 compared to $352,000 and $952,000 for the same
periods in 2000. The increase is primarily due to an increase in loan service
and prepayment fees as well as increases in checking and savings charges. In
addition there were $141,000 in gains on sale of loans for the nine months
ended September 30, 2001 compared to $72,000 for the period ended September 30,
2000.

Noninterest expense totaled $2,026,000 and $6,014,000 for the three and nine
months ended September 30, 2001 compared to $1,924,000 and $5,911,000 for the
same periods in 2000. Noninterest expense is comprised of employee
compensation and benefits, occupancy, deposit insurance premiums, state
franchise taxes and miscellaneous other expenses. No individual component had
a significant change from the same period in 2000.

The Company opened a new full service branch office located in Centerville,
Ohio. The branch opening will contribute to an increase in operating expenses
beginning in the fourth quarter from additional depreciation of premises and
equipment and additional staffing.

The change in income tax is primarily attributable to the change in income
before income taxes. Income tax expense totaled $226,000 and $745,000, or an
effective rate of 34.2%, for the three months ended September 30, 2001 and
34.9% for the nine months ended September 30, 2001, compared to $271,000 and
$764,000, or an effective rate of 35.7% for the three and nine months ended
September 30, 2000.

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WESTERN OHIO FINANCIAL CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity

Office of Thrift Supervision (OTS) regulations presently requires Cornerstone
Bank to maintain sufficient liquidity to assure its safe and sound operation.
To that end, Cornerstone Bank maintains investments having maturities of 5
years or less, sells loans into the secondary market and borrows funds from the
FHLB. These activities are intended to provide a source of relatively liquid
funds on which Cornerstone may rely, if necessary, to fund deposit withdrawals
or other short-term funding needs. At September 30, 2001 Cornerstone had
commitments to originated fixed rate loans totaling $1.5 million and
commitments to originate $3.6 million in commercial loans. In addition,
Cornerstone had $1.0 million in commitments to fund loans on residential
properties under construction as well as $2.4 million in commitments to fund
nonresidential loans. Unused commercial lines of credit were $8.1 million and
unused home equity lines of credit were $11.4 million. Cornerstone had no
commitments to purchase or sell loans. Cornerstone considers its liquidity and
capital reserves sufficient to meet its outstanding short and long-term needs.

Capital Resources

Cornerstone is required by regulations to meet certain minimum capital
requirements, which must be generally as stringent as standards established for
commercial banks. Current capital requirements call for tangible capital of
1.5% of adjusted total assets, core capital (which, for Cornerstone, consists
solely of tangible capital) of 4.0% of adjusted total assets, except for
institutions with the highest examination rating and acceptable levels of risk,
and risk-based capital (which, for Cornerstone, consists of core capital and
general valuation allowances) of 8.0% of risk-weighted assets (assets are
weighted at percentage levels ranging from 0% to 100% depending on their
relative risk).

The following table summarizes Cornerstones regulatory capital requirements
and actual capital at September 30, 2001.

|                       |  |                |        |                     |  |             |       |            |  |        |        |         |  |             |     |   |  |                      |        |  |  |  |       |   |  |   |         | 
|---------------------- |  | -------------- | ------ | ------------------- |  | ----------- | ----- | ---------- |  | ------ | ------ | ------- |  | ----------- | --- | - |  | -------------------- | ------ |  |  |  | ----- | - |  | - | ------- | 
|                       |  |                |        |                     |  |             |       |            |  |        |        |         |  |             |     |   |  | Excess of actual     |        |  |  | 
|                       |  |                |        |                     |  |             |       |            |  |        |        |         |  |             |     |   |  | capital over current |        |  |  | 
|                       |  | Actual capital |        | Current requirement |  | requirement |       |            |  |       
|                       |  |                |        |                     |  |             |       | Applicable
|(Dollars in thousands) |  | Amount         |        | Percent             |  | Amount      |       | Percent    |  | Amount |        | Percent |  | Asset Total
|                       |  |                |        |                     |  |             |       |            |  |        |        |         |  |            
|Tangible capital       |  | $              | 40,655 |                     |  |             | 12.10 | %          |  | $      | 5,039  |         |  |             | 1.5 | % |  | $                    | 35,616 |  |  |  | 10.60 | % |  | $ | 335,916 | 
|                      
|                      
|                      
|                      
|Core capital           |  |                | 40,655 |                     |  |             | 12.10 |            |  |        | 13,437 |         |  |             | 4.0 |   |  |                      | 27,218 |  |  |  | 8.10  |   |  |   | 335,916 | 
|                      
|                      
|                      
|                      
|Risk-based capital     |  |                | 42,157 |                     |  |             | 18.38 |            |  |        | 18,351 |         |  |             | 8.0 |   |  |                      | 23,710 |  |  |  | 10.38 |   |  |   | 229,388 | 

17.



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WESTERN OHIO FINANCIAL CORPORATION
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The Bank monitors its interest risk using both an internal model and the OTS
model. The Banks internal model indicates a decrease in net portfolio value
(NPV) should rates increase, which is consistent with prior disclosures.
However, the Bank model also indicates potential decreases in NPV in rate
shocks down from todays already historically low interest rate levels.
Increased mortgage loan prepayments and refinancing, the timing of both
certificates of deposit and FHLB advance maturities, and a zero interest rate
floor on other deposit products could adversely affect net portfolio value.

Other than the above exception, there have been no material changes in the
quantitative and qualitative disclosures about market risk as of September 30,
2001, from that presented in the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.

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WESTERN OHIO FINANCIAL CORPORATION
PART II  OTHER INFORMATION




Item 1   Legal Proceedings

None




Item 2   Changes in Securities and Use of Proceeds

None




Item 3   Defaults Upon Senior Securities

None




Item 4   Submission of Matters to a Vote of Security Holders

None




Item 5   Other Information

None




Item 6   Exhibits and Reports on Form 8-K

(a) Exhibits

(b) No current reports on Form 8-K were filed by the
Registrant during the quarter ended September 30, 2001.

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SIGNATURES

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

|      |  |                  |  |                                                                                
|----- |  | ---------------- |  | -------------------------------------------------------------------------------
|      |  |                  |  | WESTERN OHIO FINANCIAL CORPORATION
(Registrant)                                
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|      |  |                  |  |                                                                                
|Date: |  | November 9, 2001 |  | /s/ John W.
Raisbeck                                                           
|      |  |                  |  |                                                                                
|      |  |                  |  | President and Chief Executive Officer
(Principal Executive Officer)            
|      |  |                  |  |                                                                                
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|Date: |  | November 9, 2001 |  | /s/ Craig F.
Fortin                                                            
|      |  |                  |  |                                                                                
|      |  |                  |  | Senior Vice President and Chief Financial Officer
(Principal Financial Officer)

20.