TABLE OF CONTENTS




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



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##### Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For Quarterly Period ended June 30, 2001

Commission File Number 0-24120

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

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

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

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

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

Yes  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:                       |  | Outstanding at August 9, 2001
|Common stock, $.01 par value |  | common shares 1,773,001      





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##### Table of Contents



WESTERN OHIO FINANCIAL CORPORATION

INDEX

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

2.



---



##### Table of Contents









Item 1. Condensed Financial Statements

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



---

(Amounts in thousands, except share data)

|                                     |                                                                                    |                            |                                            |         |          |         |              |         |         |         |  |  |  |  | 
|------------------------------------ | ---------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------- | -------- | ------- | ------------ | ------- | ------- | ------- |  |  |  |  | 
|                                     |                                                                                    |                            |                                            |         | June 30, |         | December 31,
|                                     |                                                                                    |                            |                                            |         | 2001     |         | 2000        
|                                     |                                                                                    |                            |                                            |         |          |         |             
|ASSETS                              
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                          |                            | $                                          | 6,137   |          |         | $            | 4,805   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Securities available for sale                                                      |                            |                                            | 42,487  |          |         |              | 48,653  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Federal Home Loan Bank stock                                                       |                            |                                            | 8,304   |          |         |              | 8,014   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Loans, net                                                                         |                            |                                            | 280,071 |          |         |              | 283,604 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Premises and equipment, net                                                        |                            |                                            | 4,513   |          |         |              | 4,566   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other assets                                                                       |                            |                                            | 2,827   |          |         |              | 2,920   |        
|                                     |                                                                                    |                            |                                            |         |          |         |              |         |        
|                                     |                                                                                    |                            | Total assets                               |         | $        | 344,339 |              |         | $       | 352,562 | 
|                                     |                                                                                    |                            |                                            |         |          |         |              |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY
|                                    
|                                    
|                                    
|                                    
|                                     | Deposits                                                                           |                            | $                                          | 212,475 |          |         | $            | 208,332 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Borrowed funds                                                                     |                            |                                            | 87,616  |          |         |              | 100,225 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other liabilities                                                                  |                            |                                            | 2,455   |          |         |              | 2,195   |        
|                                     |                                                                                    |                            |                                            |         |          |         |              |         |        
|                                     |                                                                                    | Total liabilities          |                                            |         | 302,546  |         |              |         | 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                                                         |                            |                                            | 40,615  |          |         |              | 40,617  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive income                                             |                            |                                            | (203    | )        |         |              | (740    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Unearned employee stock ownership plan shares                                      |                            |                                            | (714    | )        |         |              | (833    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Unearned management recognition plan shares                                        |                            |                                            | (92     | )        |         |              | (102    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Shares held by deferred compensation plan                                          |                            |                                            | (169    | )        |         |              | (168    | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock; 872,833 and 829,166 shares at cost, respectively                   |                            |                                            | (17,842 | )        |         |              | (17,055 | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                  |                            |                                            | 20,172  |          |         |              | 20,065  |        
|                                     |                                                                                    |                            |                                            |         |          |         |              |         |        
|                                     |                                                                                    | Total shareholders equity |                                            |         | 41,793   |         |              |         | 41,810  |        
|                                     |                                                                                    |                            |                                            |         |          |         |              |         |        
|                                     |                                                                                    |                            | Total liabilities and shareholders equity |         | $        | 344,339 |              |         | $       | 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 |       | Six Months Ended
|                                                    |                            |                                               |         |     |       | June 30,           |       | June 30,        
|                                                    |                            |                                               |         |     |       |                    |       |                 
|                                                    |                            |                                               |         |     |       | 2001               |       | 2000             |       | 2001 |        | 2000 
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |      
|Interest income                                    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Loans, including fees                         |         | $   | 5,502 |                    |       | $                | 5,435 |      |        | $     | 11,181 |     |        | $     | 10,409 |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Securities                                    |         |     | 677   |                    |       |                  | 805   |      |        |       | 1,444  |     |        |       | 1,655  |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Interest-bearing deposits and overnight funds |         |     | 31    |                    |       |                  | 24    |      |        |       | 41     |     |        |       | 57     |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Other interest and dividend income            |         |     | 148   |                    |       |                  | 138   |      |        |       | 291    |     |        |       | 269    |    
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|                                                    |                            |                                               | 6,358   |     |       |                    | 6,402 |                  |       |      | 12,957 |       |        |     | 12,390 |      
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|Interest expense                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Deposits                                      |         |     | 2,712 |                    |       |                  | 2,574 |      |        |       | 5,428  |     |        |       | 5,043  |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Borrowed funds                                |         |     | 1,259 |                    |       |                  | 1,313 |      |        |       | 2,657  |     |        |       | 2,409  |    
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|                                                    |                            |                                               | 3,971   |     |       |                    | 3,887 |                  |       |      | 8,085  |       |        |     | 7,452  |      
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|Net interest income                                 |                            |                                               | 2,387   |     |       |                    | 2,515 |                  |       |      | 4,872  |       |        |     | 4,938  |      
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for loan losses                           |                            |                                               | 84      |     |       |                    | 84    |                  |       |      | 189    |       |        |     | 168    |      
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|Net interest income after provision for loan losses |                            |                                               | 2,303   |     |       |                    | 2,431 |                  |       |      | 4,683  |       |        |     | 4,770  |      
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|Noninterest income                                 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Service charges                               |         |     | 327   |                    |       |                  | 293   |      |        |       | 702    |     |        |       | 590    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Gain on sale of loans                         |         |     | 41    |                    |       |                  |      |      |        |       | 63     |     |        |       |       |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Gain on sale of securities                    |         |     |      |                    |       |                  |      |      |        |       | 3      |     |        |       |       |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Other noninterest income                      |         |     | 5     |                    |       |                  | 8     |      |        |       | 10     |     |        |       | 10     |    
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|                                                    |                            |                                               | 373     |     |       |                    | 301   |                  |       |      | 778    |       |        |     | 600    |      
|                                                   
|                                                   
|                                                   
|                                                   
|Noninterest expense                                
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Salaries and employee benefits                |         |     | 1,026 |                    |       |                  | 1,012 |      |        |       | 2,041  |     |        |       | 2,033  |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Occupancy and equipment                       |         |     | 215   |                    |       |                  | 193   |      |        |       | 426    |     |        |       | 392    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | FDIC insurance                                |         |     | 10    |                    |       |                  | 13    |      |        |       | 20     |     |        |       | 23     |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | State Franchise taxes                         |         |     | 132   |                    |       |                  | 130   |      |        |       | 267    |     |        |       | 259    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Advertising                                   |         |     | 63    |                    |       |                  | 86    |      |        |       | 133    |     |        |       | 173    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Professional Services                         |         |     | 100   |                    |       |                  | 78    |      |        |       | 194    |     |        |       | 173    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Data processing                               |         |     | 211   |                    |       |                  | 196   |      |        |       | 396    |     |        |       | 440    |    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            | Other noninterest expense                     |         |     | 261   |                    |       |                  | 272   |      |        |       | 511    |     |        |       | 494    |    
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|                                                    |                            |                                               | 2,018   |     |       |                    | 1,980 |                  |       |      | 3,988  |       |        |     | 3,987  |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Income before income tax   |                                               |         | 658 |       |                    |       | 752              |       |      |        | 1,473 |        |     |        | 1,383 |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Income tax expense         |                                               |         | 226 |       |                    |       | 267              |       |      |        | 519   |        |     |        | 493   |       
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|                                                    | Net income                 |                                               | $       | 432 |       |                    | $     | 485              |       |      | $      | 954   |        |     | $      | 890   |       
|                                                    |                            |                                               |         |     |       |                    |       |                  |       |      |        |       |        |     |        |      
|                                                    | Earnings per common share 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            |                                               | Basic   |     | $     | .25                |       |                  | $     | .26  |        |       | $      | .55 |        |       | $      | .48 | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                            |                                               | Diluted |     | $     | .25                |       |                  | $     | .26  |        |       | $      | .55 |        |       | $      | .48 | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Dividends per common share |                                               | $       | .25 |       |                    | $     | .25              |       |      | $      | .50   |        |     | $      | .50   |       



---

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 |     | Six Months Ended
|                                       |                                                                                             |   | June 30,           |     | June 30,        
|                                       |                                                                                             |   |                    |     |                 
|                                       |                                                                                             |   | 2001               |     | 2000             |   | 2001 |     | 2000
|                                       |                                                                                             |   |                    |     |                  |   |      |     |     
|Net income                             |                                                                                             | $ | 432                |     |                  | $ | 485  |     |      | $ | 954   |     |   | $ | 890   |    
|                                      
|                                      
|                                      
|                                      
|Other comprehensive income net of tax:
|                                      
|                                      
|                                      
|                                      
|                                       | Unrealized gain on securities available
for sale arising during the period                  |   |                    | 110 |                  |   |      | 195 |      |   |       | 539 |   |   |       | 132 | 
|                                      
|                                      
|                                      
|                                      
|                                       | Reclassification adjustment for amounts
realized on securities sales included
in net income |   |                    |    |                  |   |      |    |      |   |       | (2  | ) |   |       |    | 
|                                       |                                                                                             |   |                    |     |                  |   |      |     |      |   |       |     |   |   |       |    
|                                       | Total other comprehensive income                                                            |   |                    | 110 |                  |   |      | 195 |      |   |       | 537 |   |   |       | 132 | 
|                                       |                                                                                             |   |                    |     |                  |   |      |     |      |   |       |     |   |   |       |    
|Comprehensive income                   |                                                                                             | $ | 542                |     |                  | $ | 680  |     |      | $ | 1,491 |     |   | $ | 1,022 |    
|                                       |                                                                                             |   |                    |     |                  |   |      |     |      |   |       |     |   |   |       |    



---

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)

|                                                  |                                                                 |                                                    |       |                  |         |      |        |         |         |   |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------- | -------------------------------------------------- | ----- | ---------------- | ------- | ---- | ------ | ------- | ------- | - |  |  |  | 
|                                                  |                                                                 |                                                    |       | Six Months Ended
|                                                  |                                                                 |                                                    |       | June 30,        
|                                                  |                                                                 |                                                    |       |                 
|                                                  |                                                                 |                                                    |       | 2001             |         | 2000
|                                                  |                                                                 |                                                    |       |                  |         |     
|Net cash from operating activities                |                                                                 | $                                                  | 1,667 |                  |         | $    | 513    |        
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from investing activities             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Loans:                                                         
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Loan originations, net of payments received        |       |                  | 5,009   |      |        |         | (12,791 | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Purchase of loans                                  |       |                  | (1,582  | )    |        |         | (11,928 | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Securities available for sale:                    
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Maturities and principal payments                  |       |                  | 3,742   |      |        |         | 2,418   |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Purchase of securities                             |       |                  | (1,459  | )    |        |         |        |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Sales                                              |       |                  | 4,585   |      |        |         |        |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Premises and equipment expenditures                             |                                                    |       | (273             | )       |      |        | (724    | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from sale of premises and equipment                    |                                                    |       | 20               |         |      |        | 16      |        
|                                                  |                                                                 |                                                    |       |                  |         |      |        |        
|                                                  |                                                                 | Net cash from investing activities                 |       |                  | 10,042  |      |        |         | (23,009 | )
|                                                  |                                                                 |                                                    |       |                  |         |      |        |        
|Cash flows from financing activities             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net change in deposits                                          |                                                    |       | 4,143            |         |      |        | 5,713   |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net decrease in advances from borrowers for taxes and insurance |                                                    |       | (220             | )       |      |        | (118    | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Purchase of treasury stock                                      |                                                    |       | (853             | )       |      |        | (1,365  | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cash dividends paid                                             |                                                    |       | (873             | )       |      |        | (967    | )      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from exercise of stock options                         |                                                    |       | 35               |         |      |        |        |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from FHLB advances                                     |                                                    |       | 24,650           |         |      |        | 41,045  |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Repayments on FHLB advances                                     |                                                    |       | (37,259          | )       |      |        | (24,924 | )      
|                                                  |                                                                 |                                                    |       |                  |         |      |        |        
|                                                  |                                                                 | Net cash from financing activities                 |       |                  | (10,377 | )    |        |         | 19,384  |  
|                                                  |                                                                 |                                                    |       |                  |         |      |        |        
|Net change in cash and cash equivalents           |                                                                 |                                                    | 1,332 |                  |         |      | (3,112 | )      
|                                                 
|                                                 
|                                                 
|                                                 
|Cash and cash equivalents at beginning of period  |                                                                 |                                                    | 4,805 |                  |         |      | 9,614  |        
|                                                  |                                                                 |                                                    |       |                  |         |      |        |        
|Cash and cash equivalents at end of period        |                                                                 | $                                                  | 6,137 |                  |         | $    | 6,502  |        
|                                                  |                                                                 |                                                    |       |                  |         |      |        |        
|Supplemental disclosures of cash flow information
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cash paid during the period for:                               
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Interest                                           |       | $                | 8,153   |      |        | $       | 7,437   |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Income taxes                                       |       |                  | 386     |      |        |         | 535     |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Noncash activities                                             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                 | Transfer of loans held for sale to portfolio loans |       |                  |        |      |        |         | 217     |  



---

See accompanying notes to condensed consolidated
financial statements.

6.



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##### Table of Contents






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



---

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Consolidation Policy: The financial statements include Western Ohio Financial
Corporation (Western) and its wholly-owned subsidiary Cornerstone Bank
(Cornerstone), together referred to as the 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 transactions and
balances are eliminated in consolidation.

Use of Estimates: To prepare financial statements in conformity with
accounting principles generally accepted in the United States, 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.



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7.



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##### Table of Contents



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



---

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

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







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8.



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##### Table of Contents



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



---

NOTE 2  SECURITIES

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

(Amounts in thousands)

|                  |                            |       |   |           |        |            |   |            |    |       |   |      |        |   |   |        |        |  |  |  |  | 
|----------------- | -------------------------- | ----- | - | --------- | ------ | ---------- | - | ---------- | -- | ----- | - | ---- | ------ | - | - | ------ | ------ |  |  |  |  | 
|                  |                            |       |   |           |        |            |   | Gross      |    | Gross
|                  |                            |       |   | Amortized |        | Unrealized |   | Unrealized |    | Fair 
|                  |                            |       |   | Cost      |        | Gains      |   | Loss       |    | Value
|                  |                            |       |   |           |        |            |   |            |    |      
|June 30, 2001    
|                 
|                 
|                 
|                 
|                  | U.S. government agencies   |       | $ | 10,000    |        |            | $ |           |    |       | $ | (369 | )      |   | $ | 9,631  |       
|                 
|                 
|                 
|                 
|                  | Mortgage-backed securities |       |   | 32,794    |        |            |   | 148        |    |       |   | (86  | )      |   |   | 32,856 |       
|                  |                            |       |   |           |        |            |   |            |    |       |   |      |        |   |   |        |       
|                  | Total                      |       | $ | 42,794    |        |            | $ | 148        |    |       | $ | (455 | )      |   | $ | 42,487 |       
|                  |                            |       |   |           |        |            |   |            |    |       |   |      |        |   |   |        |       
|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 six month period ending June 30,
2001 were $4,589,000, with gross gains of $3,000 included in earnings.
There were no sales of securities during the three and six months ended June 30, 2000.

NOTE 3  LOANS

Loans were as follows:

(Amounts in thousands)

|                                 |                                                |             |         |          |         |              |         |         |         |  |  |  |  | 
|-------------------------------- | ---------------------------------------------- | ----------- | ------- | -------- | ------- | ------------ | ------- | ------- | ------- |  |  |  |  | 
|                                 |                                                |             |         | June 30, |         | December 31,
|                                 |                                                |             |         | 2001     |         | 2000        
|                                 |                                                |             |         |          |         |             
|First mortgage loans secured by:
|                                
|                                
|                                
|                                
|                                 | One- to four- family residential               |             | $       | 168,664  |         |              | $       | 178,106 |        
|                                
|                                
|                                
|                                
|                                 | Other properties                               |             |         | 70,234   |         |              |         | 67,919  |        
|                                
|                                
|                                
|                                
|                                 | Construction properties                        |             |         | 5,560    |         |              |         | 8,476   |        
|                                 |                                                |             |         |          |         |              |         |        
|                                 |                                                |             | 244,458 |          |         |              | 254,501 |        
|                                
|                                
|                                
|                                
|Consumer and other loans        
|                                
|                                
|                                
|                                
|                                 | Consumer                                       |             |         | 1,388    |         |              |         | 1,608   |        
|                                
|                                
|                                
|                                
|                                 | Commercial                                     |             |         | 18,576   |         |              |         | 14,090  |        
|                                
|                                
|                                
|                                
|                                 | Home equity                                    |             |         | 19,000   |         |              |         | 17,766  |        
|                                 |                                                |             |         |          |         |              |         |        
|                                 |                                                |             | 38,964  |          |         |              | 33,464  |        
|                                
|                                
|                                
|                                
|                                 |                                                | Total loans |         |          | 283,422 |              |         |         | 287,965 | 
|                                
|                                
|                                
|                                
|Less:                           
|                                
|                                
|                                
|                                
|                                 | Net deferred loan fees, premiums
and discounts |             |         | (89      | )       |              |         | (87     | )      
|                                
|                                
|                                
|                                
|                                 | Loans in process                               |             |         | (1,651   | )       |              |         | (2,609  | )      
|                                
|                                
|                                
|                                
|                                 | Allowance for loan losses                      |             |         | (1,611   | )       |              |         | (1,665  | )      
|                                 |                                                |             |         |          |         |              |         |        
|                                 |                                                | $           | 280,071 |          |         | $            | 283,604 |        
|                                 |                                                |             |         |          |         |              |         |        



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9.



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



---

NOTE 3  LOANS (Continued)

Activity in the allowance for loan losses was as follows:

(Amount in thousands)

|                          |  |                    |       |                  |  |      |        |      |  |   |       |   |  |   |        |   |  |  |  | 
|------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ------ | ---- |  | - | ----- | - |  | - | ------ | - |  |  |  | 
|                          |  | Three Months Ended |       | Six Months Ended
|                          |  | June 30,           |       | June 30,        
|                          |  |                    |       |                 
|                          |  | 2001               |       | 2000             |  | 2001 |        | 2000
|                          |  |                    |       |                  |  |      |        |     
|Beginning balance         |  | $                  | 1,740 |                  |  | $    | 2,830  |      |  | $ | 1,665 |   |  | $ | 2,781  |  
|                         
|                         
|                         
|                         
|Provision for loan losses |  |                    | 84    |                  |  |      | 84     |      |  |   | 189   |   |  |   | 168    |  
|                         
|                         
|                         
|                         
|Recoveries                |  |                    | 16    |                  |  |      | 23     |      |  |   | 36    |   |  |   | 47     |  
|                         
|                         
|                         
|                         
|Charge-offs               |  |                    | (229  | )                |  |      | (1,440 | )    |  |   | (279  | ) |  |   | (1,499 | )
|                          |  |                    |       |                  |  |      |        |      |  |   |       |   |  |   |        |  
|Ending balance            |  | $                  | 1,611 |                  |  | $    | 1,497  |      |  | $ | 1,611 |   |  | $ | 1,497  |  
|                          |  |                    |       |                  |  |      |        |      |  |   |       |   |  |   |        |  

Nonperforming loans were $3,300,268 and $3,601,000 at June 30, 2001 and
December 31, 2000.

Impaired loans were as follows:

|                                                  |  |          |       |              |  |   |       |  |  |  |  | 
|------------------------------------------------- |  | -------- | ----- | ------------ |  | - | ----- |  |  |  |  | 
|                                                  |  | June 30, |       | December 31,
|                                                  |  | 2001     |       | 2000        
|                                                  |  |          |       |             
|Loans with no allocated allowance for loan losses |  | $        | 1,037 |              |  |   | 1,709 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Loans with allocated allowance for loan losses    |  |          | 207   |              |  |   | 352   | 
|                                                  |  |          |       |              |  |   |       | 
|Total                                             |  | $        | 1,244 |              |  | $ | 2,061 | 
|                                                  |  |          |       |              |  |   |       | 
|Amount of the allowance for loan losses allocated |  | $        | 214   |              |  | $ | 241   | 

NOTE 4  DEPOSITS

Deposits were as follows:

(Amounts in thousands)

|                               |  |          |         |              |  |   |         |  |  |  |  | 
|------------------------------ |  | -------- | ------- | ------------ |  | - | ------- |  |  |  |  | 
|                               |  | June 30, |         | December 31,
|                               |  | 2001     |         | 2000        
|                               |  |          |         |             
|Checking  Noninterest bearing |  | $        | 7,669   |              |  | $ | 8,112   | 
|                              
|                              
|                              
|                              
|Checking  Intererst bearing   |  |          | 10,724  |              |  |   | 10,839  | 
|                              
|                              
|                              
|                              
|Money market accounts          |  |          | 47,949  |              |  |   | 44,859  | 
|                              
|                              
|                              
|                              
|Passbook and savings accounts  |  |          | 10,785  |              |  |   | 10,994  | 
|                              
|                              
|                              
|                              
|Certificates of deposit        |  |          | 135,348 |              |  |   | 133,528 | 
|                               |  |          |         |              |  |   |         | 
|                               |  | $        | 212,475 |              |  | $ | 208,332 | 
|                               |  |          |         |              |  |   |         | 



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10.



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##### Table of Contents



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



---

NOTE 5  EARNINGS PER COMMON SHARE

The factors used in the earnings per share computation were as follows:

(Amounts in thousands, except per share data)

|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |   |  |  |  | 
|--------------------------------- | ------------------------------------------------------------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ----- | - |  |  |  | 
|                                  |                                                                                 |  | Three Months Ended |       | Six Months Ended
|                                  |                                                                                 |  | June 30,           |       | June 30,        
|                                  |                                                                                 |  |                    |       |                 
|                                  |                                                                                 |  | 2001               |       | 2000             |  | 2001 |       | 2000
|                                  |                                                                                 |  |                    |       |                  |  |      |       |     
|Basic earnings per common share  
|                                 
|                                 
|                                 
|                                 
|                                  | Net income                                                                      |  | $                  | 432   |                  |  | $    | 485   |      |  | $ | 954   |   |  | $ | 890   |  
|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|                                  | Weighted average common shares
outstanding                                      |  |                    | 1,774 |                  |  |      | 1,916 |      |  |   | 1,789 |   |  |   | 1,935 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Less: Average unallocated ESOP
shares                                           |  |                    | (48   | )                |  |      | (63   | )    |  |   | (50   | ) |  |   | (64   | )
|                                 
|                                 
|                                 
|                                 
|                                  | Less: Average nonvested MRP shares                                              |  |                    | (4    | )                |  |      | (6    | )    |  |   | (4    | ) |  |   | (7    | )
|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|                                  | Average shares                                                                  |  |                    | 1,722 |                  |  |      | 1,847 |      |  |   | 1,735 |   |  |   | 1,864 |  
|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|                                  | Basic earnings per common share                                                 |  | $                  | .25   |                  |  | $    | .26   |      |  | $ | .55   |   |  | $ | .48   |  
|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|                                 
|                                 
|Diluted earnings per common share
|                                 
|                                 
|                                 
|                                 
|                                  | Net income                                                                      |  | $                  | 432   |                  |  | $    | 485   |      |  | $ | 954   |   |  | $ | 890   |  
|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|                                  | Weighted average common shares
outstanding for basic earnings per
common shares |  |                    | 1,722 |                  |  |      | 1,847 |      |  |   | 1,735 |   |  |   | 1,864 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Add: Dilutive effects of average
nonvested MRP shares                           |  |                    |      |                  |  |      |      |      |  |   |      |   |  |   |      |  
|                                 
|                                 
|                                 
|                                 
|                                  | Add: Dilutive effects of stock options                                          |  |                    | 11    |                  |  |      | 3     |      |  |   | 11    |   |  |   | 4     |  
|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|                                  | Average shares and dilutive potential
common shares                             |  |                    | 1,733 |                  |  |      | 1,850 |      |  |   | 1,746 |   |  |   | 1,868 |  
|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|                                  | Diluted earnings per common share                                               |  | $                  | .25   |                  |  | $    | .26   |      |  | $ | .55   |   |  | $ | .48   |  
|                                  |                                                                                 |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  

Stock options covering 105,008 shares of common stock were not considered in
computing diluted earnings per common share for the three and six months ended
June 30, 2001, as they were antidilutive. In addition, nonvested MRP awards for
4,531 and 4,029 shares of common stock were not considered in computing diluted
earnings per common share for the three and six months ended June 30, 2001.



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11.



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##### Table of Contents



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



---

NOTE 6  STOCK OPTION PLANS

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

|                  |  |               |         |             |  |          |         |                  |  |   |       |  |  |  |  | 
|----------------- |  | ------------- | ------- | ----------- |  | -------- | ------- | ---------------- |  | - | ----- |  |  |  |  | 
|                  |  | Stock Options
|                  |  |              
|                  |  | Options       |         |             |  |          |         | Weighted Average
|                  |  | Available     |         | Options     |  | Exercise
|                  |  | for Grant     |         | Outstanding |  | Price   
|                  |  |               |         |             |  |         
|December 31, 2000 |  |               | 161,532 |             |  |          | 241,346 |                  |  | $ | 18.56 | 
|                 
|Granted           |  |               | (5,800  | )           |  |          | 5,800   |                  |  |   | 17.91 | 
|                 
|                 
|                 
|                 
|Forfeited         |  |               | 5,428   |             |  |          | (5,428  | )                |  |   | 18.31 | 
|                 
|                 
|                 
|                 
|Exercised         |  |               |        |             |  |          | (2,333  | )                |  |   | 14.75 | 
|                  |  |               |         |             |  |          |         |                  |  |   |       | 
|June 30, 2001     |  |               | 161,160 |             |  |          | 239,835 |                  |  | $ | 18.59 | 
|                  |  |               |         |             |  |          |         |                  |  |   |       | 







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12.



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

Forward-Looking Statements

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

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

Analysis of Financial Condition

Consolidated assets of the Company totaled $344.3 million at June 30, 2001, a
decrease of $8.3 million from the December 31, 2000, total of $352.6 million.
The decrease in assets is a result of a decrease of $6.2 million in securities
available for sale and a decrease of $3.5 million in net loans receivable.
Funds from securities and loans were primarily used to retire Federal Home Loan
Bank borrowings of $12.5 million.

Net loans decreased $3.5 million, or 1.2% during the six months ended June 30,
2001, decreasing from $283.6 million in December 31, 2000 to $280.1 million on
June 30, 2001. Traditional one-to-four family residential mortgage loans
decreased $9.4 million to $168.7 at June 30, 2001 from $178.1 million at
December 31, 2000, primarily due to amortization and payoffs exceeding new
volume. For the period, this decrease was offset by commercial loan
originations increasing $4.5 million to $18.6 million at June 30, 2001, and
other real estate property originations increasing $2.3 million from $67.9
million at December 31, 2000 to $70.2 million at June 30, 2001. These changes
continue Cornerstones effort to diversify its portfolio into more commercial
type loans.



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



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Cash and cash equivalents increased by $1.3 million to $6.1 million on June 30,
2001, from $4.8 million on December 31, 2000. Cash and cash equivalents
consist of cash, checking deposits and federal funds deposited at other
financial institutions. The increase was primarily the result of selling loans
that were originated in the last quarter and the funding being completed June 28, 2001.

Securities available for sale decreased $6.2 million from $48.7 million at
December 31, 2000, to $42.5 million on June 30, 2001. The decline was due to
sales of securities of $4.6 million in addition to principal repayments on
existing mortgage-backed securities available for sale. The fixed-rate lower
coupon securities were sold to reduce interest rate sensitivity within the
investment portfolio.

Deposits at June 30, 2001 totaled $212.5 million, an increase of $4.2 million,
or 2.0% from $208.3 million at December 31, 2000. The increases occurred in
money market accounts and certificates of deposits. The Bank continues to offer
competitive rates for both products.

FHLB advances at June 30, 2001 totaled $87.6 million, a decrease of
$12.5 million or 12.5% from $100.2 million at December 31, 2000. With the growth in
deposits and liquidity generated by the loan and securities portfolios, the
Bank reduced borrowings from the FHLB during the period. The majority of
borrowed funds are invested in loans to leverage the Companys excess capital
and improve the Companys return on equity over time.

Total shareholders equity decreased $17,000 at December 31, 2000, to
$41.8 million at June 30, 2001. This decrease is primarily due to the Company
purchasing approximately $853,000, or 46,600 shares, of its common stock during
the first six months of 2001 offset by an improvement of $537,000 in
accumulated other comprehensive loss.

As of June 30, 2001, the Company had commitments to make $812,000 of
residential loans. It is expected that these loans will be funded within 30 days.
The Company also had $1.7 million in commitments to fund loans on
residential properties under construction as well as commitments to disburse
$6.6 million on other mortgage loans. These commitments are anticipated to be
filled within three to six months. Unused commercial lines of credit were $3.5 million
and unused home equity lines of credit were $11.1 million. Commitments
to originate nonmortgage loans total $415,000.

Results of Operations

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

The Companys net income is primarily dependent on its net interest income (the
difference between interest income generated on interest-earning assets and
interest expense incurred on interest-bearing liabilities). Net income is also
affected by provisions for loan losses, service charges, gains on sale of
assets, other income, noninterest expense and income taxes. The Companys net
income of $432,000 and $954,000 for the three and six months ended June 30,
2001, represented a decrease of $53,000 for the three months ended June 30,
2001 compared to a $64,000 increase for the six month period ended June 30,
2001. Basic earnings per share decreased $.01 for the three month period ended
June 30, 2001 from $.26 per share for the period ended June 30, 2000 to
$.25 per share for the period ended June 30, 2001. Earnings per



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



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share for the six month period ended June 30, 2001 was $.55 per share compared
to $.48 per share for the same period ended June 2000, an increase of $.07 or
14.6%.

Net interest income is the largest component of the Companys income and is
affected by the interest rate environment and volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
totaled $2,387,000 and $4,872,000 for the three and six months ended June 30,
2001, compared to $2,515,000 and $4,938,000 for the same periods in 2000. The
Company remains liability sensitive whereby its interest-bearing liabilities
will generally reprice more quickly than its interest-earning assets.
Therefore, the Companys net interest margin will generally increase in periods
of falling interest rates in the market and will decrease in periods of rising
interest rates. Accordingly, in a rising interest rate environment, the
Company may need to increase rates to attract and retain deposits. Since the
Companys loans generally mature or reprice over longer time periods than its
deposits, the rise in interest rates may not have such an immediate impact on
interest-earning assets. This lag could negatively affect net interest income
in future periods.

Interest and fees on loans totaled $5,502,000 and $11,181,000 for the three and
six months ended June 30, 2001 compared to $5,435,000 and $10,409,000 the three
and six months ended June 30, 2000. The increases were due primarily to the
increased origination of commercial and commercial real estate loans.

Interest and dividends on securities totaled $677,000 and $1,444,000 for the
three and six months ended June 30, 2001, and $805,000 and $1,655,000 for the
three and six months ended June 30, 2000. The decrease was due to sales on
securities and principal payments on securities available for sale.

Interest on deposits totaled $2,712,000 and $5,428,000 for the three and six
months ended June 30, 2001 and $2,574,000 and $5,043,000 for the three and six
months ended June 30, 2000. This increase was due to increased volume and
rates in certificates of deposit and money market accounts. While general
market rates have decreased with recent Federal Reserve Board actions,
repricing of interest on certificate of deposits lags market trends due to
timing of the certificate maturities.

Interest on FHLB advances was $1,259,000 and $2,657,000 for the three and six
months ended June 30, 2001 compared to $1,313,000 and $2,409,000 for the three
and six months ended June 30, 2000. The decrease for the three months ended
June 30, 2001 is due to the repayment of FHLB advances. For the six month
period ended June 30, 2001, the increase is due to an increase in average
outstanding borrowings from the FHLB to fund loan growth and higher average
rates on the advances.

The Company 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 Companys loan portfolio, the economy,
changes in real estate values and interest rates and the view of the regulatory
authorities toward loan classifications. The provision for loan losses is
determined by management as the amount to be added to the allowance for loan
losses after net charge-offs have been deducted to bring the allowance to a
level considered adequate to absorb probable losses in the loan portfolio. The
amount of the provision is based on managements regular review of the loan
portfolio and consideration of such factors as historical loss experience,
changes in size and composition of the loan portfolio and specific borrower
considerations, including ability of the borrower to repay the loan and the
estimated value of the underlying collateral. The provision for loan losses
totaled $84,000 and $189,000 for the three and six months ended June 30, 2001,
compared to $84,000 and $168,000 for the three and six months ended June 30,
2000.



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



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Loan charge-offs were $229,000 and $279,000 for the three and six months ended
June 30, 2001 compared to $1,440,000 and $1,499,000 for the same periods in
2000. The decrease is primarily due to the Company resolving two large problem
loans and charging-off portions of two others last year.

Noninterest income totaled $374,000 and $778,000 for the three and six months
ended June 30, 2001 compared to $301,000 and $600,000 for the same periods in
2000. The increase is primarily due to an increase in loan service and
prepayment fees as well as increases in checking and savings charges. In
addition, there were $41,000 and $63,000 loan sale gains for the three and six
months ended June 30, 2001, and none for the same periods last year.

Noninterest expense totaled $2,019,000 and $3,988,000 for the three and six
months ended June 30, 2001 compared to $1,980,000 and $3,987,000 for the same
periods in 2000. Noninterest expense is comprised of employee compensation and
benefits, occupancy, deposit insurance premiums, state franchise taxes and
miscellaneous other expenses. No individual component had a significant change
from the same period in 2000.

The Company 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 second half of 2001. 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 $226,000 and $519,000, or an
effective rate of 34.3% and 35.2%, for the three and six months ended June 30,
2001, compared to $267,000 and $493,000, or an effective rate of 35.5% and
35.6%, for the three and six months ended June 30, 2000.



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



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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 or less, sells loans into the secondary market and borrows funds from the
FHLB. These activities are intended to provide a source of relatively liquid
funds on which Cornerstone may rely, if necessary, to fund deposit withdrawals
or other short-term funding needs. At June 30, 2001 Cornerstone had
commitments to originate fixed rate loans totaling $812,000. In addition,
Cornerstone had $1.7 million in commitments to fund loans on residential
properties under construction as well as $6.6 million in commitments to fund
nonresidential loans. Unused commercial lines of credit were $3.5 million and
unused home equity lines of credit were $11.1 million. Cornerstone had no
commitments to purchase or sell loans. Cornerstone considers its liquidity and
capital reserves sufficient to meet its outstanding short and long-term needs.

Capital Resources

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

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

|                       |  |                |        |                     |  |             |      |         |  |        |        |         |  |             |     |   |  |                      |        |  |  |  |      |   |  |            |         |  |  |  |  | 
|---------------------- |  | -------------- | ------ | ------------------- |  | ----------- | ---- | ------- |  | ------ | ------ | ------- |  | ----------- | --- | - |  | -------------------- | ------ |  |  |  | ---- | - |  | ---------- | ------- |  |  |  |  | 
|                       |  |                |        |                     |  |             |      |         |  |        |        |         |  |             |     |   |  | Excess of actual    
|                       |  |                |        |                     |  |             |      |         |  |        |        |         |  |             |     |   |  | capital over current
|                       |  | Actual capital |        | Current requirement |  | requirement
|                       |  |                |        |                     |  |            
|                       |  |                |        |                     |  |             |      |         |  |        |        |         |  |             |     |   |  |                      |        |  |  |  |      |   |  | Applicable
|(Dollars in thousands) |  | Amount         |        | Percent             |  | Amount      |      | Percent |  | Amount |        | Percent |  | Asset Total
|                       |  |                |        |                     |  |             |      |         |  |        |        |         |  |            
|Tangible capital       |  | $              | 40,161 |                     |  |             | 11.7 | %       |  | $      | 5,172  |         |  |             | 1.5 | % |  | $                    | 34,989 |  |  |  | 10.2 | % |  | $          | 344,810 | 
|                      
|                      
|                      
|                      
|Core capital           |  |                | 40,161 |                     |  |             | 11.7 |         |  |        | 13,792 |         |  |             | 4.0 |   |  |                      | 26,369 |  |  |  | 7.7  |   |  |            | 344,810 | 
|                      
|                      
|                      
|                      
|Risk-based capital     |  |                | 41,558 |                     |  |             | 17.4 |         |  |        | 19,090 |         |  |             | 8.0 |   |  |                      | 22,468 |  |  |  | 9.4  |   |  |            | 238,631 | 



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WESTERN OHIO FINANCIAL CORPORATION
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK



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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 June 30, 2001, from that presented in the
Companys Annual Report on Form 10-K for the fiscal year ended December 31,
2000.



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##### Table of Contents






WESTERN OHIO FINANCIAL CORPORATIONPART 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                                                                                 
|        
|         |  | The annual meting of shareholders was held on April 26, 2001.
Two items were presented to
shareholders for consideration and action:
|        
|         |  |                                                                                                                                      |  |                                                                                                     |  |  | 1) |  | The re-election of three directors
David L. Dillahunt, Howard V. Dodds, and John W.
Raisbeck of the Corporation for terms expiring in 2004.
All three directors were re-elected receiving
1,508,355, 1,508,386 and 1,476,982 votes respectively.
The remaining directors continuing after the meeting
are: William N. Scarff, Aristides G. Gianakopoulos,
John E. Field and Jeffrey L. Levine.
|        
|         |  |                                                                                                                                      |  |                                                                                                     |  |  | 2) |  | The ratification of Crowe, Chizek and Company L.L.P. as auditors
for the Corporation for the fiscal year ending December 31, 2001.
The appointment of auditors was ratified with votes cast for
1,518,913 and 11,272 against.                                                                                                                                                                 
|        
|Item 5  |  | Other Information                                                                                                                   
|        
|         |  | None                                                                                                                                
|        
|Item 6  |  | Exhibits and Reports on Form 8-K                                                                                                    
|        
|         |  | (a)                                                                                                                                  |  | Exhibits                                                                                           
|        
|         |  | (b)                                                                                                                                  |  | No current reports on Form 8-K were filed by the
Registrant during the quarter ended June 30, 2001.



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##### 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: |  | 8/9/01 |  | /s/ John W. Raisbeck                                                                           
|      |  |        |  |                                                                                                
|      |  |        |  | John W. Raisbeck
President and Chief Executive Officer
(Principal Executive Officer)           
|     
|     
|Date: |  | 8/9/01 |  | /s/ Craig F. Fortin                                                                            
|      |  |        |  |                                                                                                
|      |  |        |  | Craig F. Fortin
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)



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20.