TABLE OF CONTENTS




|                                                                                              |                                                                                       |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION (UNAUDITED)                                                   
|                                                                                              | CONSOLIDATED BALANCE SHEETS                                                          
|                                                                                              | CONSOLIDATED STATEMENTS OF INCOME                                                    
|                                                                                              | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                      
|                                                                                              | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                
|                                                                                              | 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
|Item 3. Quantitative and Qualitative Disclosure About Market Risk                            
|PART II  OTHER INFORMATION                                                                  
|SIGNATURES                                                                                   



---



##### 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 the Quarterly Period ended March 31, 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.)











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

Yes X          No

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

|                                    |  |                                                   
|----------------------------------- |  | --------------------------------------------------
|Class:
Common stock, $.01 par value |  | Outstanding at May 7, 2001
1,778,567 common shares





---



##### Table of Contents



WESTERN OHIO FINANCIAL CORPORATION

INDEX

|                                           |  |                                                                                       |    |      |    | 
|------------------------------------------ |  | ------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                           |  |                                                                                       |    | Page
|                                           |  |                                                                                       |    |     
|PART I  FINANCIAL INFORMATION (UNAUDITED)
|                                          
|                                          
|                                          
|                                          
|Item 1.                                    |  | Condensed Financial Statements                                                       
|                                          
|                                          
|                                          
|                                          
|                                           |  | Consolidated Balance Sheets                                                           |    |      | 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 |    |      | 12 | 
|                                          
|                                          
|                                          
|                                          
|Item 3.                                    |  | Quantitative and Qualitative Disclosure About Market Risk                             |    |      | 17 | 
|                                          
|                                          
|                                          
|                                          
|PART II  OTHER INFORMATION               
|                                          
|                                          
|                                          
|                                          
|Item 1.                                    |  | Legal Proceedings                                                                     |    |      | 18 | 
|                                          
|                                          
|                                          
|                                          
|Item 2.                                    |  | Changes in Securities and Use of Proceeds                                             |    |      | 18 | 
|                                          
|                                          
|                                          
|                                          
|Item 3.                                    |  | Defaults Upon Senior Securities                                                       |    |      | 18 | 
|                                          
|                                          
|                                          
|                                          
|Item 4.                                    |  | Submission of Matters to a Vote of Security Holders                                   |    |      | 18 | 
|                                          
|                                          
|                                          
|                                          
|Item 5.                                    |  | Other Information                                                                     |    |      | 18 | 
|                                          
|                                          
|                                          
|                                          
|Item 6.                                    |  | Exhibits and Reports on Form 8-K                                                      |    |      | 18 | 
|                                          
|                                          
|                                          
|                                          
|SIGNATURES                                 |  |                                                                                       | 19 |     

2



---



##### Table of Contents









WESTERN OHIO FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

Item 2. Condensed Financial Statements

(Amounts in thousands, except share data)

|                                     |                                                                                    |                            |                                            |         |           |         |              |         |         |         | 
|------------------------------------ | ---------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------- | --------- | ------- | ------------ | ------- | ------- | ------- | 
|                                     |                                                                                    |                            |                                            |         | March 31, |         | December 31,
|                                     |                                                                                    |                            |                                            |         | 2001      |         | 2000        
|                                     |                                                                                    |                            |                                            |         |           |         |             
|ASSETS                              
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                          |                            | $                                          | 7,771   |           |         | $            | 4,805   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Securities available for sale                                                      |                            |                                            | 43,662  |           |         |              | 48,653  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Federal Home Loan Bank stock                                                       |                            |                                            | 8,157   |           |         |              | 8,014   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Loans, net                                                                         |                            |                                            | 283,332 |           |         |              | 283,604 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Premises and equipment, net                                                        |                            |                                            | 4,483   |           |         |              | 4,566   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other assets                                                                       |                            |                                            | 3,311   |           |         |              | 2,920   |        
|                                     |                                                                                    |                            |                                            |         |           |         |              |        
|                                     |                                                                                    |                            | Total assets                               |         | $         | 350,716 |              |         | $       | 352,562 | 
|                                     |                                                                                    |                            |                                            |         |           |         |              |        
|LIABILITIES AND SHAREHOLDERS EQUITY
|                                    
|                                    
|                                    
|                                    
|                                     | Noninterest bearing deposits                                                       |                            | $                                          | 7,213   |           |         | $            | 8,112   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Interest bearing deposits                                                          |                            |                                            | 205,570 |           |         |              | 200,220 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Borrowed funds                                                                     |                            |                                            | 93,432  |           |         |              | 100,225 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other liabilities                                                                  |                            |                                            | 2,798   |           |         |              | 2,195   |        
|                                     |                                                                                    |                            |                                            |         |           |         |              |        
|                                     |                                                                                    | Total liabilities          |                                            |         | 309,013   |         |              |         | 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                                                         |                            |                                            | 40,622  |           |         |              | 40,617  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive income (loss)                                      |                            |                                            | (313    | )         |         |              | (740    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Unearned employee stock ownership plan shares                                      |                            |                                            | (774    | )         |         |              | (833    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Unearned management recognition plan shares                                        |                            |                                            | (91     | )         |         |              | (102    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Shares held by deferred compensation plan                                          |                            |                                            | (168    | )         |         |              | (168    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock; 866,433 and 829,166 shares, at cost                                |                            |                                            | (17,736 | )         |         |              | (17,055 | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                  |                            |                                            | 20,137  |           |         |              | 20,065  |        
|                                     |                                                                                    |                            |                                            |         |           |         |              |        
|                                     |                                                                                    | Total shareholders equity |                                            |         | 41,703    |         |              |         | 41,810  |        
|                                     |                                                                                    |                            |                                            |         |           |         |              |        
|                                     |                                                                                    |                            | Total liabilities and shareholders equity |         | $         | 350,716 |              |         | $       | 352,562 | 
|                                     |                                                                                    |                            |                                            |         |           |         |              |        

See accompanying notes to condensed consolidated financial statements.

3



---



##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Amounts in thousands, except per share data)

|                                                    |                                               |   |       |       |       |                    |       |       |       |  |       | 
|--------------------------------------------------- | --------------------------------------------- | - | ----- | ----- | ----- | ------------------ | ----- | ----- | ----- |  | ----- | 
|                                                    |                                               |   |       |       |       | Three Months Ended
|                                                    |                                               |   |       |       |       | March 31,         
|                                                    |                                               |   |       |       |       |                   
|                                                    |                                               |   |       |       |       | 2001               |       | 2000 
|                                                    |                                               |   |       |       |       |                    |       |      
|Interest and dividend income                       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Loans, including fees                         |   | $     | 5,679 |       |                    | $     | 5,599 |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Securities                                    |   |       | 767   |       |                    |       | 850   |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest-bearing deposits and overnight funds |   |       | 10    |       |                    |       | 33    |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other interest and dividend income            |   |       | 143   |       |                    |       | 129   |      
|                                                    |                                               |   |       |       |       |                    |       |       |       |  |      
|                                                    |                                               |   |       |       |       |                    | 6,599 |       |       |  | 6,611 | 
|                                                    |                                               |   |       |       |       |                    |       |       |       |  |      
|Interest expense                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Deposits                                      |   |       | 2,716 |       |                    |       | 2,469 |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Borrowed funds                                |   |       | 1,398 |       |                    |       | 1,720 |      
|                                                    |                                               |   |       |       |       |                    |       |       |       |  |      
|                                                    |                                               |   |       |       |       |                    | 4,114 |       |       |  | 4,189 | 
|                                                    |                                               |   |       |       |       |                    |       |       |       |  |      
|Net interest income                                 |                                               |   | 2,485 |       |       |                    | 2,422 |      
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for loan losses                           |                                               |   | 105   |       |       |                    | 84    |      
|                                                    |                                               |   |       |       |       |                    |       |       |       |  |      
|Net interest income after provision for loan losses |                                               |   | 2,380 |       |       |                    | 2,338 |      
|                                                    |                                               |   |       |       |       |                    |       |       |       |  |      
|Noninterest income                                 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Service charges                               |   |       | 375   |       |                    |       | 293   |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Net gain on sale of loans                     |   |       | 22    |       |                    |       | 1     |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Net gain on sale of securities                |   |       | 3     |       |                    |       |      |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other                                         |   |       | 5     |       |                    |       | 5     |      
|                                                    |                                               |   |       |       |       |                    |       |       |       |  |      
|                                                    |                                               |   |       |       |       |                    | 405   |       |       |  | 299   | 
|                                                   
|                                                   
|                                                   
|                                                   
|Noninterest expense                                
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Salaries and employee benefits                |   |       | 1,015 |       |                    |       | 1,021 |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Occupancy and equipment                       |   |       | 211   |       |                    |       | 199   |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Federal deposit insurance                     |   |       | 10    |       |                    |       | 11    |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | State franchise taxes                         |   |       | 135   |       |                    |       | 129   |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Advertising                                   |   |       | 70    |       |                    |       | 81    |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Data processing                               |   |       | 185   |       |                    |       | 244   |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other                                         |   |       | 344   |       |                    |       | 321   |      
|                                                    |                                               |   |       |       |       |                    |       |       |       | 
|                                                    |                                               |   |       |       | 1,970 |                    |       |       | 2,006 | 
|                                                    |                                               |   |       |       |       |                    |       |       |       | 
|Income before income taxes                          |                                               |   | 815   |       |       |                    | 631   |      
|                                                   
|Income tax expense                                  |                                               |   | 293   |       |       |                    | 226   |      
|                                                    |                                               |   |       |       |       |                    |       |       |       | 
|Net income                                          |                                               | $ | 522   |       |       | $                  | 405   |      
|                                                    |                                               |   |       |       |       |                    |       |       |       | 
|Earnings per common share                          
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Basic                                         |   | $     | .30   |       |                    | $     | .22   |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Diluted                                       |   | $     | .30   |       |                    | $     | .22   |      
|                                                   
|Dividends per common share                          |                                               | $ | .25   |       |       | $                  | .25   |      

See accompanying notes to condensed consolidated financial statements.

4



---



##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Amounts in thousands)

|                                               |                                                                                             |   |                    |     |      |   |     |     |  
|---------------------------------------------- | ------------------------------------------------------------------------------------------- | - | ------------------ | --- | ---- | - | --- | --- | -
|                                               |                                                                                             |   | Three Months Ended
|                                               |                                                                                             |   | March 31,         
|                                               |                                                                                             |   | 2001               |     | 2000
|                                               |                                                                                             |   |                    |     |     
|Net income                                     |                                                                                             | $ | 522                |     |      | $ | 405 |    
|                                              
|                                              
|                                              
|                                              
|Other comprehensive income (loss), net of tax:
|                                              
|                                              
|                                              
|                                              
|                                               | Unrealized gain (loss) on securities available
for sale arising during the period           |   |                    | 429 |      |   |     | (63 | )
|                                              
|                                              
|                                              
|                                              
|                                               | Reclassification adjustment for amounts
realized on securities sales included
in net income |   |                    | (2  | )    |   |     |    |  
|                                               |                                                                                             |   |                    |     |      |   |     |    
|                                               | Total other comprehensive income (loss)                                                     |   |                    | 427 |      |   |     | (63 | )
|                                               |                                                                                             |   |                    |     |      |   |     |    
|Comprehensive income (loss)                    |                                                                                             | $ | 949                |     |      | $ | 342 |    
|                                               |                                                                                             |   |                    |     |      |   |     |    

See accompanying notes to condensed consolidated financial statements.

5



---



##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amount in thousands)

|                                                  |                                                               |                                                    |       |                    |        |      |        |        |         |  
|------------------------------------------------- | ------------------------------------------------------------- | -------------------------------------------------- | ----- | ------------------ | ------ | ---- | ------ | ------ | ------- | -
|                                                  |                                                               |                                                    |       | Three Months Ended
|                                                  |                                                               |                                                    |       | March 31,         
|                                                  |                                                               |                                                    |       |                   
|                                                  |                                                               |                                                    |       | 2001               |        | 2000
|                                                  |                                                               |                                                    |       |                    |        |     
|Net cash from operating activities                |                                                               | $                                                  | 1,050 |                    |        | $    | (162   | )     
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from investing activities             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Loans:                                                       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Loan originations, net of payments received        |       |                    | (245   | )    |        |        | (12,188 | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Purchase of loans                                  |       |                    | (773   | )    |        |        |        |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Proceeds from sale of loans                        |       |                    | 1,224  |      |        |        |        |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Securities available for sale:                               
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Maturities and principal payments                  |       |                    | 1,485  |      |        |        | 961     |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Purchases                                          |       |                    | (497   | )    |        |        |        |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Sales                                              |       |                    | 4,622  |      |        |        |        |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Premises and equipment expenditures                           |                                                    |       | (90                | )      |      |        | (473   | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from sale of premises and equipment                  |                                                    |       | 21                 |        |      |        | 9      |        
|                                                  |                                                               |                                                    |       |                    |        |      |        |       
|                                                  |                                                               | Net cash from investing activities                 |       |                    | 5,747  |      |        |        | (11,691 | )
|                                                  |                                                               |                                                    |       |                    |        |      |        |       
|Cash flows from financing activities             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net change in deposits                                        |                                                    |       | 4,451              |        |      |        | 2,527  |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net change in advances from borrowers for taxes and insurance |                                                    |       | (342               | )      |      |        | (313   | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Purchase of treasury stock                                    |                                                    |       | (689               | )      |      |        | (1,147 | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cash dividends paid                                           |                                                    |       | (463               | )      |      |        | (469   | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from exercise of stock options                       |                                                    |       | 5                  |        |      |        |       |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net increase (decrease) in short-term borrowings              |                                                    |       | (8,900             | )      |      |        | 107    |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from FHLB advances                                   |                                                    |       | 2,500              |        |      |        | 7,985  |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Repayments on FHLB advances                                   |                                                    |       | (393               | )      |      |        | (159   | )      
|                                                  |                                                               |                                                    |       |                    |        |      |        |       
|                                                  |                                                               | Net cash from financing activities                 |       |                    | (3,831 | )    |        |        | 8,531   |  
|                                                  |                                                               |                                                    |       |                    |        |      |        |       
|Net change in cash and cash equivalents           |                                                               |                                                    | 2,966 |                    |        |      | (3,322 | )     
|                                                 
|Cash and cash equivalents at beginning of period  |                                                               |                                                    | 4,805 |                    |        |      | 9,614  |       
|                                                  |                                                               |                                                    |       |                    |        |      |        |       
|Cash and cash equivalents at end of period        |                                                               | $                                                  | 7,771 |                    |        | $    | 6,292  |       
|                                                  |                                                               |                                                    |       |                    |        |      |        |       
|                                                 
|Supplemental disclosures of cash flow information
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cash paid during the period for:                             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Interest                                           |       | $                  | 3,889  |      |        | $      | 4,072   |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Income taxes                                       |       |                    |       |      |        |        |        |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Noncash activities                                           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Transfer of loans held for sale to portfolio loans |       |                    |       |      |        |        | 217     |  

See accompanying notes to condensed consolidated financial statements.

6



---



##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles 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 generally accepted accounting
principles 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 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 (the Western) and its wholly-owned subsidiary Cornerstone Bank
(Cornerstone), together referred to as the Corporation. 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 transaction and
balances are eliminated in consolidation.

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

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 is 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 includes 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
which is classified as held to maturity, accordingly, upon adoption of SFAS
133, companies may reclassify any security from held to maturity to available
for sale if they wish to be able to hedge the security in the future. SFAS 133
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.

See accompanying notes to condensed consolidated financial statements.

7



---



##### Table of Contents



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

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
|                  |                            |  |           |        |            |  |            |    |       |  |   |        |   |  |   |       
|March 31, 2001   
|                 
|                 
|                 
|                 
|                  | U.S. government agencies   |  | $         | 10,000 |            |  | $          |   |       |  | $ | (366   | ) |  | $ | 9,634  | 
|                 
|                 
|                 
|                 
|                  | Mortgage-backed securities |  |           | 34,136 |            |  |            | 82 |       |  |   | (190   | ) |  |   | 34,028 | 
|                  |                            |  |           |        |            |  |            |    |       |  |   |        |   |  |   |       
|                  | Total                      |  | $         | 44,136 |            |  | $          | 82 |       |  | $ | (556   | ) |  | $ | 43,662 | 
|                  |                            |  |           |        |            |  |            |    |       |  |   |        |   |  |   |       
|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 three months ended March 31,
2001 were $4,589,000, with gross gains of $3,000 included in earnings. There
were no sales during the three months ended March 31, 2000.

NOTE 3  LOANS

Loans were as follows:

(Amounts in thousands)

|                                 |                                                |             |         |           |         |              |         |         |         | 
|-------------------------------- | ---------------------------------------------- | ----------- | ------- | --------- | ------- | ------------ | ------- | ------- | ------- | 
|                                 |                                                |             |         | March 31, |         | December 31,
|                                 |                                                |             |         | 2001      |         | 2000        
|                                 |                                                |             |         |           |         |             
|First mortgage loans secured by:
|                                
|                                
|                                
|                                
|                                 | One- to four- family residential               |             | $       | 176,540   |         |              | $       | 178,106 |        
|                                
|                                
|                                
|                                
|                                 | Other properties                               |             |         | 68,729    |         |              |         | 67,919  |        
|                                
|                                
|                                
|                                
|                                 | Construction properties                        |             |         | 6,444     |         |              |         | 8,476   |        
|                                 |                                                |             |         |           |         |              |         |        
|                                 |                                                |             | 251,713 |           |         |              | 254,501 |        
|                                
|                                
|                                
|                                
|Consumer and other loans        
|                                
|                                
|                                
|                                
|                                 | Consumer                                       |             |         | 1,463     |         |              |         | 1,608   |        
|                                
|                                
|                                
|                                
|                                 | Commercial                                     |             |         | 15,045    |         |              |         | 14,090  |        
|                                
|                                
|                                
|                                
|                                 | Home equity                                    |             |         | 18,531    |         |              |         | 17,766  |        
|                                 |                                                |             |         |           |         |              |         |        
|                                 |                                                |             | 35,039  |           |         |              | 33,464  |        
|                                 |                                                |             |         |           |         |              |         |        
|                                 |                                                | Total loans |         |           | 286,752 |              |         |         | 287,965 | 
|                                
|                                
|                                
|                                
|Less:                           
|                                
|                                
|                                
|                                
|                                 | Net deferred loan fees, premiums and discounts |             |         | (98       | )       |              |         | (87     | )      
|                                
|                                
|                                
|                                
|                                 | Loans in process                               |             |         | (1,582    | )       |              |         | (2,609  | )      
|                                
|                                
|                                
|                                
|                                 | Allowance for loan losses                      |             |         | (1,740    | )       |              |         | (1,665  | )      
|                                 |                                                |             |         |           |         |              |         |        
|                                 |                                                | $           | 283,332 |           |         | $            | 283,604 |        
|                                 |                                                |             |         |           |         |              |         |        

See accompanying notes to condensed consolidated financial statements.

8



---



##### Table of Contents



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

NOTE 3  LOANS (Continued)

Activity in the allowance for loan losses was as follows:
(Amount in thousands)

|                          |  |                    |       |      |  |   |       |  
|------------------------- |  | ------------------ | ----- | ---- |  | - | ----- | -
|                          |  | Three Months Ended
|                          |  | March 31,         
|                          |  |                   
|                          |  | 2001               |       | 2000
|                          |  |                    |       |     
|Beginning balance         |  | $                  | 1,665 |      |  | $ | 2,781 |  
|                         
|                         
|                         
|                         
|Provision for loan losses |  |                    | 105   |      |  |   | 84    |  
|                         
|                         
|                         
|                         
|Recoveries                |  |                    | 20    |      |  |   | 24    |  
|                         
|                         
|                         
|                         
|Charge-offs               |  |                    | (50   | )    |  |   | (59   | )
|                          |  |                    |       |      |  |   |       |  
|Ending balance            |  | $                  | 1,740 |      |  | $ | 2,830 |  
|                          |  |                    |       |      |  |   |       |  

Nonperforming loans were $2,718,000 and $3,601,000 at March 31, 2001 and
December 31, 2000.

|                                                           |  |      |     |      |  |   |     | 
|---------------------------------------------------------- |  | ---- | --- | ---- |  | - | --- | 
|                                                           |  | 2001 |     | 2000
|                                                           |  |      |     |     
|Year-end loans with no allocated allowance for loan losses |  | $    | 776 |      |  |   | 32  | 
|                                                          
|                                                          
|                                                          
|                                                          
|Year-end loans with allocated allowance for loan losses    |  |      | 204 |      |  |   | 843 | 
|                                                           |  |      |     |      |  |   |     | 
|Total                                                      |  | $    | 980 |      |  | $ | 875 | 
|                                                           |  |      |     |      |  |   |     | 

NOTE 4  DEPOSITS

Deposits were as follows:

(Amounts in thousands)

|                               |  |           |         |              |  |   |         | 
|------------------------------ |  | --------- | ------- | ------------ |  | - | ------- | 
|                               |  | March 31, |         | December 31,
|                               |  | 2001      |         | 2000        
|                               |  |           |         |             
|Checking  Noninterest bearing |  | $         | 7,213   |              |  | $ | 8,112   | 
|                              
|                              
|                              
|                              
|Checking   Interest bearing   |  |           | 11,995  |              |  |   | 10,839  | 
|                              
|                              
|                              
|                              
|Money market accounts          |  |           | 45,209  |              |  |   | 44,859  | 
|                              
|                              
|                              
|                              
|Passbook and savings accounts  |  |           | 10,939  |              |  |   | 10,994  | 
|                              
|                              
|                              
|                              
|Certificates of deposit        |  |           | 137,427 |              |  |   | 133,528 | 
|                               |  |           |         |              |  |   |         | 
|                               |  | $         | 212,783 |              |  | $ | 208,332 | 
|                               |  |           |         |              |  |   |         | 

See accompanying notes to condensed consolidated financial statements.

9



---



##### Table of Contents



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

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
|                                |                                            |  | March 31,         
|                                |                                            |  |                   
|                                |                                            |  | 2001               |       | 2000
|                                |                                            |  |                    |       |     
|Basic earnings per common share
|                               
|                               
|                               
|                               
|                                | Net income                                 |  | $                  | 522   |      |  | $ | 405   |  
|                                |                                            |  |                    |       |      |  |   |      
|                                | Weighted average common shares
outstanding |  |                    | 1,804 |      |  |   | 1,995 |  
|                               
|                               
|                               
|                               
|                                | Less: Average unallocated ESOP
shares      |  |                    | (52   | )    |  |   | (67   | )
|                               
|                               
|                               
|                               
|                                | Less: Average nonvested MRP shares         |  |                    | (4    | )    |  |   | (48   | )
|                                |                                            |  |                    |       |      |  |   |      
|                                | Average shares                             |  |                    | 1,748 |      |  |   | 1,880 |  
|                                |                                            |  |                    |       |      |  |   |      
|                                | Basic earnings per common share            |  | $                  | .30   |      |  | $ | .22   |  
|                                |                                            |  |                    |       |      |  |   |      

|                                  |                                                                                 |  |                    |       |      |  |   |       | 
|--------------------------------- | ------------------------------------------------------------------------------- |  | ------------------ | ----- | ---- |  | - | ----- | 
|                                  |                                                                                 |  | Three Months Ended
|                                  |                                                                                 |  | March 31,         
|                                  |                                                                                 |  |                   
|                                  |                                                                                 |  | 2001               |       | 2000
|                                  |                                                                                 |  |                    |       |     
|Diluted earnings per common share
|                                 
|                                 
|                                 
|                                 
|                                  | Net income                                                                      |  | $                  | 522   |      |  | $ | 405   | 
|                                  |                                                                                 |  |                    |       |      |  |   |      
|                                  | Weighted average common shares
outstanding for basic earnings per
common shares |  |                    | 1,748 |      |  |   | 1,880 | 
|                                 
|                                 
|                                 
|                                 
|                                  | Add: Dilutive effects of average
nonvested MRP shares                           |  |                    |      |      |  |   |      | 
|                                 
|                                 
|                                 
|                                 
|                                  | Add: Dilutive effects of stock options                                          |  |                    | 11    |      |  |   | 1     | 
|                                  |                                                                                 |  |                    |       |      |  |   |      
|                                  | Average shares and dilutive potential
common shares                             |  |                    | 1,759 |      |  |   | 1,881 | 
|                                  |                                                                                 |  |                    |       |      |  |   |      
|                                  | Diluted earnings per common share                                               |  | $                  | .30   |      |  | $ | .22   | 
|                                  |                                                                                 |  |                    |       |      |  |   |      

Stock options covering 105,808 shares of common stock were not considered in
computing diluted earnings per common share for the three months ended March
31, 2001 as they were antidilutive.

See accompanying notes to condensed consolidated financial statements.

10



---



##### Table of Contents



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

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           |  |               | (500    | )           |  |          | 500     |                  |  |   | 18.50 | 
|                 
|                 
|                 
|                 
|Forfeited         |  |               | 4,628   |             |  |          | (4,628  | )                |  |   | 17.50 | 
|                 
|                 
|                 
|                 
|Exercised         |  |               |        |             |  |          | (330    | )                |  |   | 14.75 | 
|                  |  |               |         |             |  |          |         |                  |  |   |       | 
|March 31, 2001    |  |               | 165,660 |             |  |          | 237,218 |                  |  | $ | 18.58 | 
|                  |  |               |         |             |  |          |         |                  |  |   |       | 

See accompanying notes to condensed consolidated financial statements.

11



---



##### Table of Contents



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 Corporation as of March
31, 2001 as compared to December 31, 2000, and the results of operations for
the three months ended March 31, 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 Corporation with the
Securities and Exchange Commission, in the Corporation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 Corporations market area, changes in policies by regulatory
agencies, fluctuations in interest rates, demand for loans in the Corporation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 Corporation 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 Corporations financial
performance and could cause the Corporations actual results for future periods
to differ materially from those anticipated or projected.

The Corporation 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 Corporation totaled $350.7 million at March 31,
2001, a decrease of $1.9 million from the December 31, 2000, total of $352.6
million. The primary decrease in assets is a result of a decrease of $5.0
million in securities available for sale offset by a $3.0 million increase in
cash and cash equivalents. The decrease in securities available for sale is
due to sales to reduce interest rate sensitivity within the investment
portfolio.

Net loans decreased $300,000 during the three months ended March 31, 2001 to
$283.3 from $283.6 million at December 31, 2000. For the period, commercial
loans increased $1.0 million to $15.0 million at March 31, 2001. Other real
estate properties also increased $.8 million from $68.0 million at December 31,
2000 to $68.8 million at March 31, 2001. Traditional one-to-four family
residential mortgage loans decreased $1.6 million to $176.5 at March 31, 2001
from $178.1 million at December 31, 2000. In addition, home equity lines of
credit increased $.7 million from $17.8 million at December 31, 2000 to $18.5
million at March 31, 2001.

See accompanying notes to condensed consolidated financial statements.

12



---



##### Table of Contents



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

Cash and cash equivalents increased by $3.0 million to $7.8 million on March
31, 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 the proceeds
from the sales and maturities of securities during the quarter.

Securities available for sale decreased $5.0 million from $48.7 million at
December 31, 2000, to $43.7 million on March 31, 2001. The decline was due to
the sale of existing mortgage-backed securities available for sale. These
fixed-rate lower coupon securities were sold to reduce interest rate
sensitivity within the investment portfolio.

Deposits at March 31, 2001 totaled $212.8 million, an increase of $4.5 million,
or 2.1% from $208.3 million at December 31, 2000. The increase occurred
primarily in certificates of deposits which increased $3.9 million, or 2.9%.
The Bank continues to offer competitive certificate of deposit rates. Savings
and money market accounts increased $300,000 to $45.2 million as of March 31,
2001 compared to $44.9 on December 31, 2000.

FHLB advances at March 31, 2001 totaled $93.4 million, a decrease of $6.8
million or 6.8% from $100.2 million at December 31, 2000. The majority of
borrowed funds are invested in loans to leverage the Corporations excess
capital and improve the Corporations return on equity over time.

Total shareholders equity decreased $100,000 from $41.8 million at December
31, 2000, to $41.7 million at March 31, 2001. This decrease is primarily due
to the Corporation purchasing approximately $700,000, or 37,600 shares, of its
common stock during the first three months of 2001.

As of March 31, 2001, the Corporation had commitments to make $1.3 million of
residential loans. It is expected that these loans will be funded within 30
days. The Corporation also had $1.6 million in commitments to fund loans on
residential properties under construction as well as $4.8 million in
commitments to disburse on nonresidential loans. These commitments are
anticipated to be filled within three to six months. Unused commercial lines
of credit were $3.9 million and unused home equity lines of credit were $11.0
million. Commitments to originate nonmortgage loans total $600,000.

Results of Operations

Operating results of the Corporation are affected by general economic
conditions, monetary and fiscal policies of federal agencies and policies of
agencies regulating financial institutions. The Corporations cost of funds is
influenced by interest rates on competing investments and general market rates
of interest. Lending activities are influenced by 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 Corporation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 Corporations
net income of $522,000 for the three months ended March 31, 2001, represented
an increase of $117,000 compared to the same period in 2000. Basic earnings
per share increased $.08 per share from $.22 per share for 2000 to $.30 per
share for 2001.

See accompanying notes to condensed consolidated financial statements.

13



---



##### Table of Contents



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

Net interest income is the largest component of the Corporations income and is
affected by the interest rate environment and volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
totaled $2,485,000 for the three months ended March 31, 2001, compared to
$2,422,000 for the same period in 2000. The Corporation remains liability
sensitive whereby its interest-bearing liabilities will generally reprice more
quickly than its interest-earning assets. Therefore, the Corporation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 Corporation may need to increase
rates to attract and retain deposits. Since the Corporation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 $5,679,000 for the three months ended March
31, 2001 compared to $5,599,000 for the three months ended March 31, 2000. The
increase was due primarily to the overall increase in average balances of
commercial and commercial real estate loans.

Interest and dividends on securities totaled $767,000 for the three months
ended March 31, 2001, and $850,000 for the three months ended March 31, 2000.
The decrease was due to principal payments on securities as well as the sale of
securities in the first quarter of 2001.

Interest on deposits totaled $2,716,000 for the three months ended March 31,
2001 and $2,469,000 for the three months ended March 31, 2000. This increase
was due to higher interest rates to attract and retain both certificates of
deposit and money market accounts.

Interest on FHLB advances was $1,398,000 for the three months ended March 31,
2001 compared to $1,720,000 for the three months ended March 31,2000. The
decrease is due to a $6.8 million decrease in borrowings from the FHLB and
lower cost of new advances.

The Corporation maintains an allowance for loan losses in an amount which, in
managements judgment, is adequate to absorb probable losses in the loan
portfolio. While management utilizes its best judgment and information
available, ultimate adequacy of the allowance is dependent on a variety of
factors, including performance of the Corporations loan portfolio, the
economy, changes in real estate values and interest rates and the view of the
regulatory authorities toward loan classifications. The provision for loan
losses is determined by management as the amount to be added to the allowance
for loan losses after net charge-offs have been deducted to bring the allowance
to a level considered adequate to absorb probable losses in the loan portfolio.
The amount of the provision is based on managements regular review of the
loan portfolio and consideration of such 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 losses
totaled $105,000 for the three months ended March 31, 2001, compared to $84,000
for the three months ended March 31, 2000.

Loan charge-offs were $50,000 for the three months ended March 31, 2001
compared to $59,000 for the same period in 2000. Recoveries were $20,000 for
the three months ended March 31, 2001 compared to $24,000 for the three months
ended March 31, 2000. Due to the increase in commercial and commercial real
estate loans, management increased the loan loss provision for the quarter
ended March 31, 2001 by $21,000. The Corporation will continue to review its
allowance for loan losses and make further provisions as economic and asset
quality conditions dictate. The Corporation maintains its allowance for loan
losses at a level that it considers to be adequate to provide for probable
incurred losses.

See accompanying notes to condensed consolidated financial statements.

14



---



##### Table of Contents



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

Noninterest income totaled $405,000 for the three months ended March 31, 2001
compared to $299,000 for the same period in 2000. The increase is primarily
due to an increase in loan service and prepayment fees. Additionally, the
Corporation realized gains on loans sold of approximately $22,000, compared to
only $1,000 for the similar period last year.

Noninterest expense totaled $1,970,000 for the three months ended March 31,
2001 compared to $2,006,000 for the same period in 2000. Noninterest expense
is comprised of employee compensation and benefits, occupancy, deposit
insurance premiums, state franchise taxes and miscellaneous other expenses.
Data processing expenses decreased $59,000 for the three month period ending
March 31, 2001 compared to the same period in 2000.

The Corporation recently announced its intent to open a new full service branch
office. This new office will be located in Centerville, Ohio and is expected
to open during the summer. The branch opening will contribute to an increase
in operating expenses.

The change in income tax is primarily attributable to the change in income
before income taxes. Income tax expense totaled $293,000, or an effective rate
of 35.9%, for the three months ended March 31, 2001, compared to $226,000, or
an effective rate of 35.8% , for the three months ended March 31, 2000.

See accompanying notes to condensed consolidated financial statements.

15



---



##### Table of Contents



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

Liquidity

Office of Thrift Supervision (OTS) regulations presently require 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 of 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 March 31, 2001 Cornerstone had
commitments to originate fixed rate loans totaling $1.3 million. In addition,
Cornerstone had $1.6 million in commitments to fund loans on residential
properties under construction as well as $4.8 million in commitments to fund
nonresidential loans. Unused commercial lines of credit were $3.9 million and
unused home equity lines of credit were $11.0 million. Cornerstone had no
commitments to purchase or sell loans. Cornerstone considers its 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 March 31, 2001.

|                       |  |                |        |                     |  |        |       |         |  |   |        |  |  |  |     |  
|---------------------- |  | -------------- | ------ | ------------------- |  | ------ | ----- | ------- |  | - | ------ |  |  |  | --- | -
|                       |  | Actual capital |        | Current requirement
|                       |  |                |        |                    
|(Dollars in thousands) |  | Amount         |        | Percent             |  | Amount |       | Percent
|                       |  |                |        |                     |  |        |       |        
|Tangible capital       |  | $              | 39,678 |                     |  |        | 11.30 | %       |  | $ | 5,268  |  |  |  | 1.5 | %
|                      
|                      
|                      
|                      
|Core capital           |  |                | 39,678 |                     |  |        | 11.30 |         |  |   | 14,049 |  |  |  | 4.0 |  
|                      
|                      
|                      
|                      
|Risk-based capital     |  |                | 41,005 |                     |  |        | 17.21 |         |  |   | 19,055 |  |  |  | 8.0 |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                       |  |                      |        |         |  |             |      |   |  |            |         | 
|---------------------- |  | -------------------- | ------ | ------- |  | ----------- | ---- | - |  | ---------- | ------- | 
|                       |  | Excess of actual    
|                       |  | capital over current
|                       |  | requirement         
|                       |  |                     
|                       |  |                      |        |         |  |             |      |   |  | Applicable
|(Dollars in thousands) |  | Amount               |        | Percent |  | Asset Total
|                       |  |                      |        |         |  |            
|Tangible capital       |  | $                    | 34,410 |         |  |             | 9.80 | % |  | $          | 351,237 | 
|                      
|                      
|                      
|                      
|Core capital           |  |                      | 25,629 |         |  |             | 7.30 |   |  |            | 351,237 | 
|                      
|                      
|                      
|                      
|Risk-based capital     |  |                      | 21,950 |         |  |             | 9.21 |   |  |            | 238,187 | 

See accompanying notes to condensed consolidated financial statements.

16



---



##### Table of Contents



WESTERN OHIO FINANCIAL CORPORATION
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK




Item 3. Quantitative and Qualitative Disclosure About Market Risk

There have been no material changes in the quantitative and qualitative
disclosures about market risk as of March 31, 2001, from that presented in the
Corporations Annual Report on Form 10-K for the fiscal year ended December 31,
2000.

See accompanying notes to condensed consolidated financial statements.

17



---



##### Table of Contents



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                                       

|               |  |            
|-------------- |  | -----------
|Exhibit Number |  | Description
|              
|              
|              
|              
|Not required  

|    |  |                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------
|(b) |  | No current reports on Form 8-K were filed by the
Registrant during the quarter ended March 31, 2001.

See accompanying notes to condensed consolidated financial statements.

18



---



##### Table of Contents






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)                                
|     
|Date: | 5/11/01 |  |  | /s/  John
Raisbeck  
|      |         |  | 
|      |         |  |  |                      |  | President and Chief Executive Officer
(Principal Executive Officer)            
|     
|     
|     
|     
|     
|Date: | 5/11/01 |  |  | /s/  Craig F.
Fortin
|      |         |  | 
|      |         |  |  |                      |  | Senior Vice President and Chief Financial Officer
(Principal Financial Officer)

See accompanying notes to condensed consolidated financial statements.

19