<PAGE>
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                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549 

                                      FORM 10-K

/X/        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                 EXCHANGE ACT OF 1934
                                           
                     FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
                                           
                                          OR
                                           
/ /            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                                           
             For the transition period from __________ to _______________
                                           
                             Commission File No.: 0-24694
                                                  --------

                            ENTERPRISE FEDERAL BANCORP, INC.              
           ---------------------------------------------------------------
               (Exact name of registrant as specified in its charter) 
                                           
          OHIO                                            31-1396726       
-------------------------                           -----------------------
(State or other jurisdiction                           (I.R.S. Employer
of incorporation or organization)                    Identification Number)

7810 TYLERSVILLE SQUARE DRIVE
   WEST CHESTER, OHIO                                        45069         
-------------------------                            ---------------------
       (Address)                                           (Zip Code)
                                           
         Registrant's telephone number, including area code:  (513) 755-4600
                                           
             Securities registered pursuant to Section 12(b) of the Act:
                                    NOT APPLICABLE
                                           
              Securities registered pursuant to Section 12(g) of the Act
                                           
                       COMMON STOCK (PAR VALUE $.01 PER SHARE)
                       ---------------------------------------
                                   (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes   X   No    
     ---      
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / X /


As of December 27, 1996, the aggregate value of the 1,657,159 shares of Common
Stock of the Registrant issued and outstanding on such date, which excludes
368,669 shares held by all directors and officers of the Registrant as a group,
was approximately $24.9 million.  This figure is based on the mean of the bid
and asked prices of $15.00 per share of the Registrant's Common Stock on
December 27, 1996.
                                           
Number of shares of Common Stock outstanding as of December 31, 1996: 2,025,028
                                           
                         DOCUMENTS INCORPORATED BY REFERENCE
                                           
  List hereunder the following documents incorporated by reference and the
Part of the Form 10-K into which the document is incorporated.
                                           
(1)  Portions of the Annual Report to Stockholders for the year ended September
30, 1996 are incorporated into Part II, Items 5 through 8 of this Form 10-K.
                                           
(2)  Portions of the definitive proxy statement for the 1996 Annual Meeting of
Stockholders to be filed within 120 days of September 30, 1996 are incorporated
into Part III, Items 9 through 13 of this Form 10-K.
<PAGE>
PART I

ITEM 1. BUSINESS
----------------

GENERAL

          ENTERPRISE FEDERAL BANCORP, INC.

          Enterprise Federal Bancorp, Inc. (the "Company") was incorporated 
in the State of Ohio in April, 1994 in connection with the conversion of 
Enterprise Federal Savings and Loan Association from a mutual savings and 
loan association to a stock savings bank to be known as "Enterprise Federal 
Savings Bank" (the "Bank").  The Company sold 2,268,596 shares of common 
stock, $.01 par value per share, in an offering to certain depositors, 
borrowers and members of the general public.  The offering was consummated on 
October 14, 1994 and, as a result, the Company became a unitary savings and 
loan holding company.  The Company owns 100% of the issued and outstanding 
common stock of the Bank, which is the primary asset of the Company. The 
Company does not presently own or operate any subsidiaries except for the 
Bank.

          ENTERPRISE FEDERAL SAVINGS BANK

          The Bank is a federally-chartered stock savings bank conducting 
business from its executive offices located in West Chester,  Ohio and four 
full service offices located in Hamilton, Butler and Warren Counties, Ohio.  
The Bank's deposits are insured by the Savings Association Insurance Fund 
("SAIF"), which is administered by the Federal Deposit Insurance Corporation 
("FDIC"), to the maximum extent permitted by law.
                                           
          Enterprise is a community oriented savings bank which has 
traditionally offered a wide variety of savings products to its retail 
customers while concentrating its lending activities on real estate loans 
secured by one-to-four family residential properties located primarily in 
Hamilton, Butler and Warren Counties, Ohio.  Such loans amounted to $96.6 
million or 60.3% of the total loan portfolio at September 30, 1996.  To a 
significantly lesser extent, the Bank also focuses its lending activities on 
commercial real estate loans, residential construction loans and multi-family 
real estate loans.  The Bank also invests in securities which are issued by 
United States ("U.S.") government agencies or government sponsored 
enterprises.  

          The Bank is subject to examination and comprehensive regulation by 
the Office of Thrift Supervision ("OTS"), which is the Bank's chartering 
authority and primary regulator.  The Bank is also regulated by the FDIC, the 
administrator of the SAIF.  The Bank is also subject to certain reserve 
requirements established by the Board of Governors of the Federal Reserve 
System ("FRB") and is a member of the Federal Home Loan Bank ("FHLB") of 
Cincinnati, which is one of the 12 regional banks comprising the FHLB System.


MARKET AREA

          Enterprise conducts its business through its main office and four 
branch offices located in Hamilton, Butler and Warren Counties, Ohio.  At 
September 30, 1996, management believed that most of the Bank's depositors 
and borrowers were residents of Hamilton, Butler and Warren Counties.

          The Cincinnati metropolitan area is the second largest in Ohio and 
has a stable and diversified labor force and economic base.  While the 
principal industry historically has been manufacturing, in recent years the 
service and wholesale/retail trade industries have overtaken manufacturing in 
terms of employment.  Cincinnati is the headquarters for a number of large 
companies, including Proctor & Gamble, E.W. Scripps, Federated Departments 
Stores and Cincinnati Milacron.  In addition to these companies, the largest 
local employers include the federal government, General Electric Aircraft, 
The University of Cincinnati and the Kroger Co.

                                      -1-
<PAGE>
LENDING ACTIVITIES

          LOAN PORTFOLIO COMPOSITION.  At September 30, 1996, the Bank's 
total loan portfolio before net items ("total loan portfolio"), amounted to 
$160.3 million or 68.1% of the Company's $235.2 million of total assets at 
such time. The Bank has traditionally concentrated its lending activities on 
conventional first mortgage loans secured by residential property.  
Conventional loans are neither insured by the Federal Housing Administration 
("FHA") nor partially guaranteed by the Department of Veterans Affairs 
("VA").   Consistent with such approach, at September 30, 1996, $96.6 million 
or 60.3% of the Bank's total loan portfolio consisted of one to four family 
residential loans.  To a lesser extent, the Bank also originates multi-family 
residential loans, commercial real estate and land loans, construction loans 
and consumer loans.  At September 30, 1996, such loan categories amounted to 
$6.5 million, $35.2 million, $15.6 million and $6.4 million, respectively, or 
4.1%, 21.9%, 9.7% and 4.0% of the total loan portfolio, respectively.  The 
Bank intends to continue its emphasis on all types of mortgage loans.  In 
particular, to the extent permitted by economic and market conditions, the 
Bank has increased its emphasis on the origination of smaller commercial real 
estate and construction loans. Commercial real estate loans increased from 
$19.1 million or 16.6% of the total loan portfolio at September 30, 1995 to 
$35.2 million or 21.9% of the total loan portfolio at September 30, 1996 
while construction loans increased from $5.6 million or 4.8% of the total 
loan portfolio at September 30, 1995 to $15.6 million or 9.7% of the total 
loan portfolio at September 30, 1996.

                                      -2-
<PAGE>
          The following table sets forth the composition of the Bank's loan 
portfolio by type of loan at the dates indicated.

<TABLE>
<CAPTION>
                                                                    September 30,
                                    1996                1995                1994               1993             1992
                                    ----                ----                ----               ----             ----
                              Amount      %       Amount       %      Amount      %       Amount     %     Amount     %
                              -------------------------------------------------------------------------------------------
                                                                     (Dollars in Thousands)
<S>                         <C>        <C>       <C>        <C>      <C>       <C>      <C>        <C>    <C>       <C>
 
Real estate loans:                  
 Single-family               $ 96,605   60.28%   $ 81,603    70.82%  $ 72,139   67.81%  $69,723   74.48%  $66,076  73.24%
 Multi-family                   6,525    4.07       5,270     4.57      3,546    3.33     1,535    1.64     1,134   1.26
 Commercial                    35,162   21.94      19,125    16.60     21,531   20.24    16,603   17.73    18,336  20.33

 Construction                  15,567    9.71       5,579     4.84      8,217    7.72     4,857    5.19     3,494   3.87
                             --------  ------    --------   ------   --------  ------   -------  ------    ------ ------
   Total real estate loans    153,859   96.00     111,577    96.83    105,433   99.10    92,718   99.04    89,040  98.70
                             --------  ------    --------   ------   --------  -------  

Consumer loans                 6,403     4.00       3,654     3.17        954     .91       900     .96    1,173    1.30
   Total loans               160,262   100.00%    115,231   100.00%   106,387  100.00%   93,618  100.00%  90,213  100.00%
                            --------   ------    --------   ------    -------  ------   -------  ------   ------  ------


Less:
 Loans in process              9,928                3,403               5,043             2,612            1,943
 Deferred loan fees              874                  675                 705               603              624
 Allowance for loan losses       410                  323                 323               310              241
 Unearned discounts               --                   --                  28                66              104
                            --------             --------            --------           -------          -------
  Loans receivable, net     $149,050             $110,830            $100,288           $90,027          $87,301
                            --------             --------            --------           -------          -------
                            --------             --------            --------           -------          -------
</TABLE>
                                      -3-
<PAGE>

    CONTRACTUAL MATURITIES.  The following table sets forth the scheduled 
contractual maturities of the Bank's loan portfolio  at September 30, 1996.  
Demand loans, loans having no stated schedule of repayments and no stated 
maturity and overdraft loans are reported as due in one year or less.  The 
amounts shown for each period do not take into account loan prepayments and 
normal amortization of the Bank's loan portfolio.

<TABLE>
<CAPTION>
                                                              Real Estate Loans
                                     -------------------------------------------------------
                                     Single-family  Multi-family     Commercial  Construction   Consumer Loans        Total
                                     -------------  ------------     ----------  ------------   --------------      ---------

                                                                     (In Thousands)
<S>                                  <C>            <C>              <C>         <C>            <C>                 <C>
Amounts due in:
  One year or less                        $ 4,887            ---         $  565       $  1,315         $  146       $  6,913
  After one year through two years          1,332             --            539             --            156          2,027
  After two years through three years       1,783            194          2,567             --            310          4,854
  After three years through five years      4,087            218          1,944             --             --          6,249
  After five years through ten years        7,941            546          2,617          2,470          5,791         19,365
  After ten years through twenty years     29,572          3,335         11,897          2,946             --         47,750
  Over twenty years                        47,003          2,232         15,033          8,836             --         73,104
                                          -------         ------        -------        -------         ------       --------
    Total(1)                              $96,605         $6,525        $35,162        $15,567         $6,403       $160,262
                                          -------         ------        -------        -------         ------       --------
                                          -------         ------        -------        -------         ------       --------
 
Interest rate terms on amounts
  due after one year:
  Fixed                                                                                                            $  68,788
  Adjustable                                                                                                          84,561
                                                                                                                      ------
                                                                                                                    $153,349
                                                                                                                    --------
                                                                                                                    --------
</TABLE>
_______________
(1) Does not include adjustments relating to loans in process, the allowance 
for loan losses, unearned discounts and deferred loan origination fees. 

                                      -4-
<PAGE>
          Scheduled contractual repayment of loans does not reflect the 
expected term of the Bank's loan portfolio.  The expected average life of 
loans is substantially less than their contractual terms because of 
prepayments and due-on-sale clauses, which give Enterprise the right to 
declare a conventional loan immediately due and payable in the event, among 
other things, that the borrower sells the real property subject to the 
mortgage and the loan is not repaid.  The average life of mortgage loans 
tends to increase when current mortgage loan rates are higher than rates on 
existing mortgage loans and, conversely, decrease when current mortgage loan 
rates are lower than rates on existing mortgage loans (due to refinancings of 
adjustable-rate and fixed-rate loans at lower rates).  Under the latter 
circumstance, the weighted-average yield on loans decreases as 
higher-yielding loans are repaid or refinanced at lower rates.
 
          ORIGINATION, PURCHASE AND SALE OF LOANS.  The lending activities of 
the Bank are subject to the written, non-discriminatory underwriting 
standards and loan origination procedures established by the Bank's Board of 
Directors and management.  Loan originations are obtained primarily through 
existing customers, walk-in customers, branch managers and real estate 
brokers.  Property valuations are always performed by independent outside 
appraisers approved by the Bank's Board of Directors.  Title and hazard 
insurance are required on all security property.  Substantially all of the 
Bank's loans are secured by property located in its market area.

          Any two officers are permitted to approve loans up to $350,000, 
while loans over $350,000 require the approval of the Board of Directors or 
the Executive Committee of the Board.  All loans are ratified by the Board, 
including those loans approved by the Executive Committee.

          Historically, the Bank has not been an active purchaser or seller 
of loans. However, the Bank may sell certain long-term fixed-rate loans in 
the secondary market to reduce the percentage of such loans in its loan 
portfolio and to generate liquidity to the extent necessary.

                                      -5-
<PAGE>
          The following table shows origination, purchase and sale activity 
of the Bank with respect to its loans during the periods indicated.

                                                Year Ended September 30,
                                              ----------------------------
                                                 1996        1995     1994
                                               --------   --------  ------
                                                      (In Thousands)
 
 Real estate loan originations:
   Single-family . . . . . . . . . . . .        $18,636   $17,720   $18,790
   Multi-family. . . . . . . . . . . . .          2,969     2,433     2,105
   Commercial. . . . . . . . . . . . . .         17,803     1,900     5,924
   Construction. . . . . . . . . . . . .         15,567     5,579     7,107
                                                -------    ------   -------
       Total real estate loan
      originations . . . . . . . . . . .         54,975    27,632    33,926
                                                -------    ------   -------

 Single-family loan purchases. . . . . .             --        --     1,110
 Consumer loan originations. . . . . . .          6,403     3,581       881
                                                -------    ------   -------
       Total loan originations and
         purchases . . . . . . . . . . .         61,378    31,213    35,917
                                                -------    ------   -------
 Less:
   Principal loan repayments . . . . . .         23,208    20,802    25,808
   Sales of whole loans and
     participations. . . . . . . . . . .             --        --        --
   Transferred to real estate owned. . .             21        --        83
   Other, net. . . . . . . . . . . . . .           (71)     (131)     (235)
                                                -------    ------   -------
   Net increase. . . . . . . . . . . . .        $38,220   $10,542   $10,261
                                                -------    ------   -------
                                                -------    ------   -------

    Although the Bank emphasizes the origination of single-family residential 
ARMs, originations of such loans has decreased due to the preference of the 
Bank's customers for fixed-rate residential mortgage loans in the low 
interest rate environment which has recently prevailed.  As a result, in 
recent years, fixed-rate single-family residential mortgage loans with terms 
of 15 or 30 years have constituted a significant portion of total loan 
originations.  Originations of fixed-rate single-family residential mortgage 
loans (including fixed-rate permanent construction loans) amounted to $14.9 
million, $17.5 million, and $19.4 million during fiscal 1996, 1995, and 1994, 
respectively.  In order to enhance the Bank's ability to manage interest rate 
risk, the Bank is approved by the Federal Home Loan Mortgage Corporation 
("FHLMC") to become a qualified loan seller/servicer for such agency.

    SINGLE-FAMILY RESIDENTIAL REAL ESTATE LOANS.  The Bank has historically 
concentrated its lending activities on the origination of loans secured by 
first mortgage liens on existing single-family residences.  At September 30, 
1996, $96.6 million or 60.3% of the Bank's total loan portfolio consisted of 
single-family residential real estate loans.  The Bank originated $18.6 
million, $17.7 million, and $18.8  million of single-family residential loans 
in fiscal 1996, 1995, and 1994 respectively, and intends to continue to 
emphasize the origination of permanent loans secured by first mortgage liens 
on single-family residential properties in the future.  Of the $96.6 million 
of such loans at September 30, 1996, $30.3 million or 31.4% had 
adjustable-rates of interest and $66.3 million or 68.6% had fixed-rates of 
interest.

                                      -6-
<PAGE>
    The Bank currently originates for its portfolio single-family residential 
mortgage loans which typically provide for an interest rate which adjusts 
every year in accordance with a designated index (One Year Constant Maturity 
Treasury) plus a margin.  Prior to October, 1995, the Bank utilized the 
National Median Cost of Funds Index.  The Bank also offers such loans with 
interest rates which adjust every three years.  Such loans are typically 
based on a 30-year amortization schedule.  The amount of any increase or 
decrease in the interest rate is presently limited to 2% per year, with a 
limit of 6% over the life of the loan.  The Bank's adjustable-rate loans 
currently being originated are not assumable and do not contain prepayment 
penalties.  In October 1995, the Bank began to offer below market initial 
interest rates.  The Bank does not engage in the practice of using a cap on 
the payments that could allow the loan balance to increase rather than 
decrease, resulting in negative amortization.  

    Adjustable-rate loans decrease the risks associated with changes in 
interest rates but involve other risks, primarily because as interest rates 
rise, the payment by the borrower rises to the extent permitted by the terms 
of the loan, thereby increasing the potential for default.  At the same time, 
the marketability of the underlying property may be adversely affected by 
higher interest rates.  The Bank believes that these risks, which have not 
had a material adverse effect on the Bank to date, generally are less than 
the risks associated with holding a significant position of fixed-rate loans 
in an increasing interest rate environment.

    Due to competitive market pressures and historically low interest rates, 
the Bank has continued to originate fixed-rate mortgage loans with terms of 
between 10 and 30 years although substantially all of the Bank's fixed-rate 
loans in its portfolio have terms of 15 or 30 years.  While the Bank has 
historically retained all of its fixed-rate loans in its portfolio, the Bank 
has developed a secondary mortgage market capacity and could sell a portion 
of its fixed-rate loans in the secondary market.

    The Bank is permitted to lend up to 100% of the appraised value of the 
real property securing a residential loan; however, if the amount of a 
residential loan originated or refinanced exceeds 90% of the appraised value, 
the Bank is required by federal regulations to obtain private mortgage 
insurance on the portion of the principal amount that exceeds 80% of the 
appraised value of the security property.  Pursuant to underwriting 
guidelines adopted by the Board of Directors, the Bank will lend up to 95% of 
the appraised value of the property securing a single-family residential 
loan, and generally requires borrowers to obtain private mortgage insurance 
on the portion of the principal amount of the loan that exceeds 80% of the 
appraised value of the security property. Notwithstanding the foregoing, the 
Bank is permitted to originate loans in an amount up to 5% of assets which do 
not otherwise conform to the above-referenced regulatory requirements.  In 
certain circumstances, the Bank has originated loans in an amount up to 95% 
of the property's appraised value without requiring the borrower to obtain 
private mortgage insurance.  As of September 30, 1996, the Bank had $582,000 
or .25% of its assets invested in such loans.  In addition, the Bank has also 
allocated $2.0 million for the origination of low-income, single-family 
housing loans.  The Bank intends to originate such loans in amounts up to 95% 
of the appraised value of the property securing such loans without requiring 
the borrower to obtain private mortgage insurance and will provide 5% of the 
amount of the loan to its allowance for loan losses.

    Certain  of the Bank's single-family residential loans do not conform to 
particular requirements which must be satisfied to sell such loans in the 
secondary market to institutions such as the FHLMC.  However, a majority of 
such loans have a loan-to-value ratio of less than 80% and the retention of 
such loans in the Bank's portfolio has not had a material adverse affect on 
the Bank's financial condition or results of operations.

    MULTI-FAMILY RESIDENTIAL AND COMMERCIAL REAL ESTATE LOANS.  The Bank 
originates mortgage loans for the acquisition and refinancing of existing 
multi-family residential and commercial real estate properties.  At September 
30, 1996, $6.5 million or 4.1% of the Bank's total loan portfolio consisted 
of loans secured by existing multi-family residential real estate properties 
and $35.2 million or 21.9% of such loan portfolio consisted of loans secured 
by existing commercial real estate properties.

                                      -7-
<PAGE>
    The majority of the Bank's multi-family residential loans are secured by 
small apartment buildings, while commercial real estate loans are secured by 
office buildings, small retail establishments, gas stations, warehouses, 
hotels and restaurants.  These types of properties constitute the majority of 
the Bank's commercial real estate loan portfolio.  All of the Bank's 
multi-family and commercial real estate loans are secured by property located 
in the Bank's market area.

    Multi-family and commercial real estate loans are made on terms up to 25 
years.  Although the Bank will originate these loans with fixed interest 
rates, the majority of these loans have interest rates which adjust in 
accordance with a designated index.  Loan to value ratios on the Bank's 
multi-family and commercial real estate loans are limited to 75%.  As part of 
the criteria for underwriting multi-family and commercial real estate loans, 
the Bank generally imposes a debt coverage ratio (the ratio of net cash from 
operations before payment of debt service to debt service) of not less than 
1.1.  It is also the Bank's policy to obtain corporate or personal 
guarantees, as applicable, on its multi-family residential and commercial 
real estate loans from the principals of the borrower.

    Between September 30, 1995 and September 30, 1996, commercial real estate 
loans have increased from $19.1 million or 16.6% of the total loan portfolio 
to $35.2 million or 21.9% of the total loan portfolio.  Originations of such 
loans amounted to $17.8 million in fiscal 1996 compared to $1.9 million in 
fiscal 1995 and $5.9 million in fiscal 1994.  The Bank has increased its 
emphasis on such lending through increased originations, as permitted by 
market and economic conditions.  Any loan participations purchased by the 
Bank are  subject to the same underwriting standards which are applied to the 
Bank's origination of such loans.

    Multi-family and commercial real estate lending entails significant 
additional risks as compared with single-family residential property lending. 
Such loans typically involve large loan balances to single borrowers or 
groups of related borrowers.  The payment experience on such loans is 
typically dependent on the successful operation of the real estate project.  
The success of such projects is sensitive to changes in supply and demand 
conditions in the market for multi-family and commercial real estate as well 
as economic conditions generally.  At September 30, 1996, the Bank did not 
have any non-performing multi-family or commercial real estate loans.

    CONSTRUCTION LENDING.  The Bank presently originates residential 
construction loans to individuals to construct their own homes through a 
pre-approved builder and to a much lesser extent, to selected local builders. 
Although the Bank originates land acquisition and development loans, the Bank 
does not anticipate that this type of lending will represent a significant 
portion of its construction loan portfolio in the future.  The Bank's 
construction lending activities are limited to the Bank's primary market 
area. At September 30, 1996, construction loans amounted to $15.6 million or 
9.7% of the Bank's total loan portfolio compared to $5.6 million or 4.8% of 
the loan portfolio at September 30, 1995.  At September 30, 1996, the Bank's 
construction loans consisted of $8.4 million  of  commercial construction 
loans, $6.6 million of one-to-four family construction loans and $600,000 of 
multi-family construction loans.  The Bank's commercial construction loans 
generally consist of construction loans related to gas stations, small retail 
establishments and office and warehouse buildings.  The Bank intends to 
continue its emphasis on commercial construction lending in the future.

    The Bank's construction loans are generally made in connection with the 
granting of the permanent financing on the property.  Residential 
construction loans convert to a fixed or adjustable rate loan at the end of 
the one-year construction term, while commercial and multi-family 
construction loans generally convert to adjustable rate loans.  Advances are 
generally made to the borrower on a percentage of completion basis.

    Upon application, credit review and analysis of personal and corporate 
financial statements, the Bank will grant construction loans to local 
builders for the purpose of construction of speculative (unsold) residential 
properties. All such properties are inspected by outside appraisers and the 
Bank may conduct follow-up inspections.  Advances are generally made on a 
percentage of completion basis.  At September 30, 1996, the Bank did not have 
any of such loans in its construction loan portfolio.

                                      -8-
<PAGE>

    The Bank's construction loans generally have construction terms of 12 
months, with payments being made monthly on an interest-only basis.  
Residential construction loans are made with a maximum loan to value ratio of 
80.0% of the projected market value of the completed project, while 
commercial and multi-family construction loans are made with maximum loan to 
value ratios of 75% of the projected market value of the completed project.

    Construction lending is generally considered to involve a higher level of 
risk as compared to single-family residential lending, due to the 
concentration of principal in a limited number of loans and borrowers and the 
effects of general economic conditions on developers and builders.  Moreover, 
a construction loan can involve additional risks because of the inherent 
difficulty in estimating both a property's value at completion of the project 
and the estimated cost (including interest) of the project.  The nature of 
these loans is such that they are generally more difficult to evaluate and 
monitor. In addition, speculative construction loans to a builder on 
properties which are not necessarily pre-sold pose a greater potential risk 
to the Bank than construction loans to individuals on their personal 
residences.

    The Bank has attempted to minimize the foregoing risks by, among other 
things, limiting the extent of its construction lending generally and by 
limiting its construction lending to residential properties.  In addition, 
the Bank has adopted underwriting guidelines which impose stringent 
loan-to-value, debt service and other requirements for loans which are 
believed to involve higher elements of credit risk, by limiting the 
geographic area in which the Bank will do business and by working with 
builders with whom it has established relationships.

    CONSUMER LOANS.  To a limited extent, the Bank also offers consumer 
loans. Such loans generally have shorter terms and higher interest rates than 
mortgage loans.  The consumer loans offered by the Bank include automobile, 
boat, recreational vehicle and deposit account secured loans.  Consumer loans 
amounted to $6.4 million or 4.0% of the total loan portfolio at September 30, 
1996.

    Consumer loans increased from $3.7 million or 3.2% of the total loan 
portfolio at September 30, 1995 to $6.4 million or 4.0% of the total loan 
portfolio at September 30, 1996.  Such increase was primarily due to an 
increase in line of credit loans secured by individual residences.  Such 
loans have interest rates which adjust daily based on the prime rate in THE 
WALL STREET JOURNAL.  The Bank increased its emphasis on such lending in 
fiscal 1996 and believes that such lending will increase in the future.

    LOAN FEE INCOME.  In addition to interest earned on loans, the Bank 
receives income from fees in connection with loan originations, loan 
modifications, late payments, prepayments and for miscellaneous services 
related to its loans.  Income from these activities varies from period to 
period with the volume and type of loans made and competitive conditions.

    The Bank charges loan origination fees which are calculated as a 
percentage of the amount borrowed.  Loan origination and commitment fees and 
all incremental direct loan origination costs are deferred and recognized 
over the contractual remaining lives of the related loans on a level yield 
basis. Discounts and premiums on loans purchased are accreted and amortized 
in the same manner.  In accordance with SFAS No. 91, the Bank amortized 
$170,000, $142,000, and $152,000 of deferred loan fees into income during 
fiscal 1996, 1995, and 1994, respectively, in connection with loan 
refinancings, payoffs and ongoing repayments of outstanding loans.  <PAGE>

ASSET QUALITY

    When a borrower fails to make a required payment on a loan, the Bank 
attempts to cure the deficiency by contacting the borrower and seeking the 
payment.  Depending upon the type of loan, late notices are sent and/or 
personal contacts are made.  In most cases, deficiencies are cured promptly.  
While the Bank generally prefers to work with borrowers to resolve such 
problems, when a mortgage loan becomes 90 days delinquent, the Bank 
institutes foreclosure or other proceedings, as necessary, to minimize any 
potential loss.

                                      -9-
<PAGE>

     Loans are placed on non-accrual status when, in the judgment of 
management, the probability of collection of interest is deemed to be 
insufficient to warrant further accrual.  When a loan is placed on 
non-accrual status, previously accrued but unpaid interest is deducted from 
interest income. The Bank does not accrue interest on real estate loans past 
due 90 days or more unless, in the opinion of management, the value of the 
property securing the loan exceeds the outstanding balance of the loan 
(principal, interest and escrows) and collection is probable.  Loans may be 
reinstated to accrual status when all payments are brought current and, in 
the opinion of management, collection of the remaining balance can be 
reasonably expected.  The Bank did not have any accruing loans 90 or more 
days delinquent at September 30, 1996, 1995, or 1994.

     Real estate acquired by the Bank as a result of foreclosure or by 
deed-in-lieu of foreclosure is classified as real estate owned until sold.  
When property is acquired, at the date of acquisition it is recorded at the 
lower of carrying value or estimated fair value less selling expenses and any 
writedown resulting therefrom is charged to the allowance for possible loan 
losses. Between the date a loan becomes delinquent and the date it is 
acquired by the Bank, all costs incurred in maintaining the Bank's interest 
in the property are capitalized in an amount which may not exceed the 
estimated fair value.  After the date of acquisition, all costs incurred in 
maintaining the property are expensed and costs incurred for the improvement 
or development of such property are capitalized in an amount which may not 
exceed the estimated fair value less the estimated disposition costs.

     Under generally accepted accounting principles, the Bank is required to 
account for certain loan modifications or restructurings as "troubled debt 
restructurings."  In general, the modification or restructuring of a debt 
constitutes a troubled debt restructuring if the Bank, for economic or legal 
reasons related to the borrower's financial difficulties, grants a concession 
to the borrower that the Bank would not otherwise consider.  Debt 
restructurings or loan modifications for a borrower do not necessarily always 
constitute troubled debt restructurings, however, and troubled debt 
restructurings do not necessarily result in non-accrual loans.   The Bank did 
not have any troubled debt restructurings at September 30, 1996.

                                     -10-
<PAGE>
     DELINQUENT LOANS.  The following table sets forth information concerning 
delinquent loans at the dates indicated, in dollar amounts and as a 
percentage of each category of the Bank's loan portfolio.  The amounts 
presented represent the total outstanding principal balances of the related 
loans, rather than the actual payment amounts which are past due.

<TABLE>
<CAPTION>
                                           September 30, 1996                                   September 30, 1995
                             ---------------------------------------------------   -----------------------------------------------
                              30-59 Days        60-89 Days      90 or more days    30-59 Days       60-89 Days     90 or more days
                             ----------         ----------        --------------   ----------       ----------     ---------------
                                  Percent          Percent           Percent           Percent            Percent         Percent
                                    of               of                of                of                 of             of
                                   Loan             Loan              Loan              Loan               Loan           Loan
                         Amount  Category  Amount  Category  Amount  Category  Amount  Category   Amount  Category Amount Category
                         ----    --------  ------  --------  ------  --------  ------  --------   ------  -------- ------ --------
                                                                        (Dollars In Thousands)
<S>                      <C>     <C>       <C>     <C>       <C>     <C>       <C>     <C>        <C>     <C>      <C>    <C>
 Real estate loans:
   Residential:.
     Single-family . . .  $332    .34%     $558      .58%     $203    .21%     $465    .57%       $21      .03%     $45    .06%
     Multi-family. . . .   --      --       --        --       --      --       --      --         --       --       --     --
     Commercial. . . . .   --      --       --        --       --      --       --      --         --       --       --     --
     Construction. . . .   --      --       --        --       --      --       --      --         --       --       --     --
 Consumer loans. . . . .   --      --       16       .25%      --      --       --      --          4      .11%      --     --
                         ----             ----               ----             ----                ---               ---       
     Total . . . . . . . $332             $574               $203             $465                $25               $45
                         ----             ----               ----             ----                ---               ---
                         ----             ----               ----             ----                ---               ---
</TABLE>

                                     -11-

<PAGE>
     The following table sets forth the amounts and categories of the Bank's 
non-performing assets and troubled debt restructurings at the dates indicated.

<TABLE>
<CAPTION>

                                                      September 30,
                                         ---------------------------------------
                                         1996   1995    1994      1993      1992
                                         ----   ----    ----      ----      ----
                                                  (Dollars in Thousands)
<S>                                      <C>    <C>     <C>       <C>       <C>
 Non-accruing loans:
   Single-family residential . . . . . . $203    $45    $114      $174      $282
   Multi-family residential. . . . . . .   --     --      --        --        75
   Construction. . . . . . . . . . . . .   --     --      --        --        --
   Commercial real estate. . . . . . . .   --     --      --        --       113
   Consumer and other. . . . . . . . . .   --      4      --        --      --  
     . . . . . . . . . . . . . . . . . .  ---     --     ---       ---      ----
     Total non-performing loans. . . . .  203     49     114       174       470
     . . . . . . . . . . . . . . . . . .  ---     --     ---       ---          
 
 Real estate owned . . . . . . . . . . .   --     --      83       125        --
     . . . . . . . . . . . . . . . . . .  ---     --     ---       ---       ---
     Total non-performing assets . . . .  203     49     197       299       470
     . . . . . . . . . . . . . . . . . .  ---     --     ---       ---

 Troubled debt restructurings. . . . . .   --     --     417       420       423
     . . . . . . . . . . . . . . . . . .  ---     --     ---       ---       ---
    Total. . . . . . . . . . . . . . . . $203    $49    $614      $719      $893
     . . . . . . . . . . . . . . . . . .  ---     --     ---       ---      ----
 
 Total non-performing loans
 and troubled debt
 restructurings as a percentage
   of total loans. . . . . . . . . . . .  .14%   .04%    .50%      .63%      .99%
                                          ---     --     ---       ---      ----
 
 Total non-performing assets
 and troubled debt
 restructurings as a percentage
   of total assets . . . . . . . . . . .  .09%   .02%     37%       55%      .69%
                                           ---     --     ---       ---      ----
</TABLE>

     Interest income which would have been recognized if the above loans had 
been performing pursuant to their contractual terms totaled $12,000 for 
fiscal 1996.

     The $203,000 of non-accruing single-family residential loans at 
September 30, 1996 consisted of five loans secured by single-family 
residential property located in the Bank's market area.  The largest of such 
loans at such date amounted to approximately $130,000 and the average loan 
balance was $41,000. Two such loans totaling $26,000 were to one borrower.

     CLASSIFIED ASSETS.  Federal regulations require that each insured 
savings association classify its assets on a regular basis.  In addition, in 
connection with examinations of insured institutions, federal examiners have 
authority to identify problem assets and, if appropriate, classify them.  
There are three classifications for problem assets: "substandard," "doubtful" 
and "loss." Substandard assets have one or more defined weaknesses and are 
characterized by the distinct possibility that the insured institution will 
sustain some loss if the deficiencies are not corrected.  Doubtful assets 
have the weaknesses of substandard assets with the additional characteristic 
that the weaknesses make collection or liquidation in full on the basis of 
currently existing facts, conditions and values questionable, and there is a 
high possibility 

                                     -12-
<PAGE>
of loss.  An asset classified loss is considered uncollectible and of such 
little value that continuance as an asset of the institution is not 
warranted.  Another category designated "special mention" also must be 
established and maintained for assets which do not currently expose an 
insured institution to a sufficient degree of risk to warrant classification 
as substandard, doubtful or loss.  At September 30, 1996, the Bank had 
$160,000 of classified assets, none of which were classified substandard and 
$160,000 of which were classified special mention.

     ALLOWANCE FOR LOAN LOSSES.  An allowance for loan losses is maintained 
at a level that management considers adequate to provide for potential losses 
based upon an evaluation of known and inherent risks in the loan portfolio. 
Management's periodic evaluation is based upon examination of the portfolio, 
past loan loss experience, adverse situations that may affect the borrower's 
ability to repay, the estimated value of any underlying collateral, and 
current economic conditions.  The allowance is increased by a provision for 
loan losses which is charged against income. 

     Although management uses the best information available to make 
determinations with respect to the provision for loan losses, additional 
provisions for loan losses may be required to be established in the future 
should economic or other conditions change substantially.  In addition, the 
OTS and the FDIC, as an integral part of their examination process, 
periodically review the Bank's allowance for loan losses.  Such agencies may 
require the Bank to recognize additions to such allowance based on their 
judgments about information available to them at the time of their 
examination.

                                     -13-
<PAGE>

     The following table summarizes changes in the allowance for possible 
loan losses and other selected statistics for the periods presented.

<TABLE>
<CAPTION>
                                               Year Ending September 30, 
                                      ------------------------------------------
                                         1996    1995    1994    1993     1992
                                         ----    ----    ----    ----     ----
                                                (Dollars in Thousands)
<S>                                   <C>      <C>      <C>     <C>      <C>
 Average loans, net. . . . . . . . .  $130,399 $102,065 $95,658 $88,664  $84,939
 Allowance for loan losses,
   beginning of period . . . . . . .      $323     $323    $310    $241     $227
 Charged-off loans:
   Consumer. . . . . . . . . . . . .        (3)      --      --      --       --
   Commercial. . . . . . . . . . . .        --       --      (2)     --      (82)
                                      -------- -------- ------- -------  -------
     Total charged-off loans . . . .        (3)      --      (2)     --       (82)
                                      -------- -------- ------- -------  -------
 
 Recoveries on loans previously
   charged-off . . . . . . . . . . .       ---       --      --      --       --
                                       -------- -------- ------- -------  -------

 Net loans charged-off . . . . . . .        (3)      --      (2)     --      (82)
 Provision for loan losses . . . . .        90       --      15      69       96
                                      -------- -------- ------- -------  -------
 Allowance for loan losses,
   end of period . . . . . . . . . .      $410     $323    $323    $310     $241
                                       -------- -------- ------- -------  -------
                                      -------- -------- ------- -------  -------

 Net loans charged-off to average
   loans, net. . . . . . . . . . . .        --%      --%     --%     --%     .10%
 Allowance for loan losses
   to total loans. . . . . . . . . .       .28%     .29%    .32%    .33%     .27%
 Allowance for loan losses
   to non-performing loans . . . . .    201.97%  659.18%  83.33% 178.17%   51.28%
 Net loans charged-off to allowance
   for loan losses . . . . . . . . .       .73%      --%    .62%     --%   34.02%
</TABLE>
                                     -14-
<PAGE>
     The following table presents the allocation of the allowance for loan 
losses to the total amount of loans in each category listed at the dates 
indicated.

<TABLE>
<CAPTION>
                                                  September 30, 
                           -----------------------------------------------------------------------
                                 1996                    1995                    1994
                           ----------------------- -----------------------  ----------------------
                                    % of Loans in           % of Loans in          % of Loans in           
                                  Each Category to        Each Category to         Each Category to        
                           Amount   Total Loans    Amount   Total Loans    Amount    Total Loans
                           ------ ---------------- ------ ---------------- -----   -----------------
                                                   (Dollars in Thousands)
<S>                        <C>    <C>               <C>   <C>             <C>       <C>
 Single-family residential  $140     60.28%          $ 91    70.82%        $ 91      67.80% 
 Multi-family residential     14      4.07              9     4.57            9       3.33  
 Commercial real estate      180     21.94            109    16.60          109      20.24 
 Construction                 12      9.71             10     4.84           10       7.72 
 Consumer                     64      4.00              9     3.17            9        .91 
 Unallocated                  --        --             95      --            95         -- 
                            ----    ------           ----   ------         ----     -------
     Total                  $410    100.00%          $323   100.00%        $323     100.00%
                            ----    ------           ----   ------         ----    -------
</TABLE>


<TABLE>
<CAPTION>
                                             September 30, 
                           -----------------------------------------------
                                     1993                    1992
                           -----------------------   ----------------------- 
                                      % of Loans in                 % of Loans in
                                    Each Category to               Each Category to
                           Amount      Total Loans      Amount         Total Loans
                           ------    ----------------   ------     ----------------- 
                                          (Dollars in Thousands)
<S>                        <C>       <C>                <C>         <C>

 Single-family residential  $ 81        74.48%           $ 77           73.24%
 Multi-family residential      4         1.64               3            1.26
 Commercial real estate       86        17.73              95           20.33
 Construction                  6         5.19               4            3.87
 Consumer                      9          .96              12            1.30
 Unallocated                 124           --              50              --
                            ----       ------            ----          ------
     Total                  $310       100.00%           $241          100.00%
                            ----       ------            ----          ------
</TABLE>
                                     -15-
<PAGE>

INVESTMENT ACTIVITIES

    MORTGAGE-BACKED SECURITIES.  Mortgage-backed securities (which also are 
known as mortgage participation certificates or pass-through certificates) 
typically represent a participation interest in a pool of single-family or 
multi-family mortgages, the principal and interest payments on which are 
passed from the mortgage originators, through intermediaries (generally U.S. 
Government agencies and government sponsored enterprises) that pool and 
repackage the participation interests in the form of securities, to investors 
such as the Bank.  Such U.S. Government agencies and government sponsored 
enterprises, which guarantee the payment of principal and interest to 
investors, primarily include the FHLMC, FNMA and the Government National 
Mortgage Association ("GNMA").  The Bank has also purchased mortgage-backed 
securities issued by the Small Business Administration ("SBA").

    The FHLMC is a public corporation chartered by the U.S. Government.  The 
FHLMC issues participation certificates backed principally by conventional 
mortgage loans.  The FHLMC guarantees the timely payment of interest and the 
ultimate return of principal. The FNMA is a private corporation chartered by 
the U.S. Congress with a mandate to establish a secondary market for 
conventional mortgage loans.  The FNMA guarantees the timely payment of 
principal and interest on FNMA securities.  FHLMC and FNMA securities are not 
backed by the full faith and credit of the United States, but because the 
FHLMC and the FNMA are U.S. Government sponsored enterprises, these 
securities are considered to be among the highest quality investments with 
minimal credit risks.  The GNMA is a government agency within the Department 
of Housing and Urban Development which is intended to help finance government 
assisted housing programs.  GNMA securities are backed by FHA-insured and 
VA-guaranteed loans, and the timely payment of principal and interest on GNMA 
securities are guaranteed by the GNMA and backed by the full faith and credit 
of the U.S. Government.  Because the FHLMC, the FNMA and the GNMA were 
established to provide support for low- and middle-income housing, there are 
limits to the maximum size of loans that qualify for these programs.  For 
example, the FNMA and the FHLMC currently limit their loans secured by a 
single-family, owner-occupied residence to $214,600. To accommodate 
larger-sized loans, and loans that, for other reasons, do not conform to the 
agency programs, a number of private institutions have established their own 
home-loan origination and securitization programs.  The SBA is an agency of 
the U.S. Government.  The SBA issues participation certificates backed 
principally by commercial real estate and/or other business collateral.  The 
SBA was established by the U.S. Congress with a mandate to increase the 
ability of small businesses to borrow money thereby expanding and increasing 
employment.  The timely payment of principal and interest on SBA securities 
are guaranteed by the SBA and are backed by the full faith and credit of the 
U.S. Government.

    Mortgage-backed securities typically are issued with stated principal 
amounts, and the securities are backed by pools of mortgages that have loans 
with interest rates that are within a range and have varying maturities.  The 
underlying pool of mortgages, i.e., fixed rate or adjustable rate, as well as 
the prepayment risk, are passed on to the certificate holder.  Accordingly, 
the life of a mortgage-backed pass-through security approximates the life of 
the underlying mortgages.

    The Bank's mortgage-backed securities include collateralized mortgage 
obligations ("CMOs").  CMOs have been developed in response to investor 
concerns regarding the uncertainty of cash flows associated with the 
prepayment option of the underlying mortgagor and are typically issued by 
governmental agencies, governmental sponsored enterprises and special purpose 
entities, such as trusts, corporations or partnerships, established by 
financial institutions or other similar institutions.  A CMO can be 
collateralized by loans or securities which are insured or guaranteed by the 
FNMA, the FHLMC or the GNMA.  In contrast to pass-through mortgage-backed 
securities, in which cash flow is received pro rata by all security holders, 
the cash flow from the mortgages underlying a CMO is segmented and paid in 
accordance with a predetermined priority to investors holding various CMO 
classes.  By allocating the principal and interest cash flows from the 
underlying collateral among the separate CMO classes, different classes of 
bonds are created, each with its own stated maturity, estimated average life, 
coupon rate and prepayment characteristics.  At September 30, 1996, $37.6 
million or 57.4% of the Bank's mortgage-backed securities consisted of CMO's. 
 All of the Bank's CMO's at September 30, 1996 are collateralized by loans 
which are insured or guaranteed by the FNMA, the FHLMC or the GNMA. 

                                      -16-

<PAGE>


    In May 1993, the Financial Accounting Standards Board ("FASB") adopted 
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for 
Certain Investments in Debt and Equity Securities," affecting the accounting 
for investments in all debt and equity securities, which are to be classified 
in one of three categories for fiscal years beginning after December 15, 
1993. Securities that an institution has the positive intent and ability to 
hold to maturity are to be reported at amortized cost.  Securities that are 
bought and held principally for the purpose of selling them in the near term 
are to be classified as trading securities and reported at fair value, with 
unrealized gains and losses included in earnings.  Other securities are to be 
classified as securities available for sale and reported at fair value, with 
unrealized gains and losses excluded from earnings and reported as a separate 
component of stockholders' equity.  The Company adopted SFAS No. 115 in 
fiscal 1995.  At September 30, 1996, the Company had $65.5 million of 
mortgage-backed securities classified as available for sale.  At such time, 
stockholders' equity included $235,000 of unrealized gains on securities 
designated as available for sale, net of related tax effects.

                                      -17-

<PAGE>

     The following table sets forth the purchases and principle repayments of 
the Bank's mortgage-backed securities for the periods indicated.


                                                   Year Ended September 30,
                                           -----------------------------------
                                               1996        1995          1994
                                           ---------    ---------      --------
                                                      (In Thousands)
 Mortgage-backed securities purchased      $ 51,493     $ 68,464       $ 4,329
 Principal repayments                        (4,178)      (4,108)       (4,996)
 Other, net                                 (53,855)(1)  (18,015) (1)     (170)
   Net                                     $ (6,540)    $ 46,341       $  (837)

_______________________

(1)  Includes $54,552 and $18,776 in net proceeds from the sale of
     mortgage-backed securities for 1996 and 1995, respectively.

          Mortgage-backed securities generally increase the quality of the 
Bank's assets by virtue of the insurance or guarantees that back them, are 
more liquid than individual mortgage loans and may be used to collateralize 
borrowings or other obligations of the Bank.  At September 30, 1996, $4.2 
million of the Bank's mortgage-backed securities were pledged to secure 
obligations of the Bank.  See Note B to the Consolidated Financial Statements.

          The following table sets forth certain information relating to the 
Bank's mortgage-backed securities portfolio at the dates indicated.

                                            September 30,
                    -----------------------------------------------------------
                            1996                 1995                1994
                    ------------------   ------------------   -----------------
                    Amortized  Market    Amortized  Market    Carrying  Market
                       Cost    Value        Cost    Value       Value   Value
                    ---------  -------   ---------  -------   --------  -------
                                      (Dollars in Thousands)

FNMA securities      $23,497   $23,364   $30,299    $30,510   $ 9,170    $8,931
CMO securities        36,988    37,602    35,931     36,298     9,352     9,014
FHLMC 
   securities          3,559     3,398     4,084      4,084     4,609     4,448
GNMA securities          --        --        --         --      1,454     1,403
SBA securities         1,082     1,118     1,120      1,130     1,096     1,096
   Total             $65,126   $65,482   $71,434    $72,022   $25,681   $24,892


          At September 30, 1996, the $65.1 million mortgage-backed securities 
portfolio had a weighted average yield of 6.38%.  Of such amount, $542,000 
with a weighted average yield of 6.86% had contractual maturities within ten 
years and $64.6 million with a weighted average yield of 6.38% had 
contractual maturities over ten years.  However, the actual maturity of a 
mortgage-backed security may be less than its stated maturity due to 
prepayments of the underlying mortgages.  Prepayments that are faster than 
anticipated may shorten the life of the security and adversely affect its 
yield to maturity.  The yield is based upon the interest income and the 
amortization of any premium or discount related to the mortgage-backed 
security.  In accordance with generally accepted accounting principles, 
premiums and discounts are amortized over the estimated lives of the loans, 
which decrease and increase interest income, respectively.  The prepayment 
assumptions used to determine the amortization period for premiums and 
discounts can significantly affect 

                                     -18-

<PAGE>


the yield of the mortgage-backed security, and these assumptions are reviewed 
periodically to reflect actual prepayments.  Although prepayments of 
underlying mortgages depend on many factors, including the type of mortgages, 
the coupon rate, the age of mortgages, the geographical location of the 
underlying real estate collateralizing the mortgages and general levels of 
market interest rates, the difference between the interest rates on the 
underlying mortgages and the prevailing mortgage interest rates generally is 
the most significant determinant of the rate of prepayments.  During periods 
of falling mortgage interest rates, if the coupon rate of the underlying 
mortgages exceeds the prevailing market interest rates offered for mortgage 
loans, refinancing generally increases and accelerates the prepayment of the 
underlying mortgages and the related security. Under such circumstances, the 
Bank may be subject to reinvestment risk because to the extent that the 
Bank's mortgage-backed securities amortize or prepay faster than anticipated, 
the Bank may not be able to reinvest the proceeds of such repayments and 
prepayments at a comparable rate.

          For additional information relating to the Bank's mortgage-backed 
securities, see Notes A-2 and B to the Consolidated Financial Statements.

          INVESTMENT SECURITIES.  The investment policy of the Bank is 
designed primarily to provide and maintain liquidity and to generate a 
favorable return on investments without incurring undue interest rate risk, 
credit risk, and investment portfolio asset concentrations.  Historically, 
the Bank has invested excess funds in mortgage-backed securities rather than 
investment securities due to the higher yield on mortgage-backed securities.  
As a result, investment securities have not comprised a significant portion 
of the Bank's assets.

          The Bank is authorized to invest in obligations issued or fully 
guaranteed by the U.S. Government, certain federal agency obligations, 
certain time deposits, negotiable certificates of deposit issued by 
commercial banks and other insured financial institutions, investment grade 
corporate debt securities and other specified investments.

          The following table sets forth certain information relating to the 
Bank's investment securities portfolio at the dates indicated.


                                            September 30,
                       ----------------------------------------------------
                              1996              1995             1994
                       ----------------  ----------------  ----------------
                       Carrying  Market  Carrying  Market  Carrying  Market
                         Value   Value     Value   Value     Value   Value
                       --------  ------  --------  ------  --------  ------
                                       (Dollars in Thousands)

 U.S. Government and
  agency securities. .   $ --     $--      $ --     $--     $1,000   $1,010

          At September 30, 1994, the $1.0 million of U.S. Government and 
agency securities had a weighted average yield of 3.4% and contractual 
maturities of between one and three years.  

          At September 30, 1996, investments in the debt and/or equity 
securities of any one non-governmental issuer did not exceed more than 10% of 
the Company's stockholders' equity.

SOURCES OF FUNDS

          GENERAL.  Deposits are the primary source of the Bank's funds for 
lending and other investment purposes.  In addition to deposits, the Bank 
derives funds from principal repayments and prepayments on loans and 
mortgage-backed securities.  Repayments on loans and mortgage-backed 
securities are a relatively stable source of funds, while deposit inflows and 
outflows are significantly influenced by general interest rates and money 
market conditions.  Borrowings may be used on a short-term basis to 
compensate for reductions in the availability of funds from other sources.  
They may also be used on a longer term basis for general business purposes. 

                                     -19-

<PAGE>


          DEPOSITS.  The Bank's deposit products include a broad selection of 
deposit instruments, including NOW accounts, money market accounts, regular 
savings accounts and term certificate accounts.  Deposit account terms vary, 
with the principal differences being the minimum balance required, the time 
periods the funds must remain on deposit and the interest rate.

          The Bank considers its primary market area to be Hamilton, Warren 
and Butler Counties, Ohio.  The Bank attracts deposit accounts by offering a 
wide variety of accounts, competitive interest rates, and convenient office 
locations and service hours.  In addition, the Bank maintains automated 
teller machines at its Lebanon, Pisgah and Wyoming offices.  The Bank does 
not advertise for deposits outside of its primary market area or utilize the 
services of deposit brokers.  Management believes that an insignificant 
number of deposit accounts were held by non-residents of Ohio at September 
30, 1996.  

          The Bank has been competitive in the types of accounts and in 
interest rates it has offered on its deposit products but does not 
necessarily seek to match the highest rates paid by competing institutions.  
Due to the significant decline in interest rates paid on deposit products in 
fiscal 1994, the Bank experienced disintermediation of deposits into 
competing investment products during such period.  Beginning in the second 
half of fiscal 1995, the Bank began to experience an inflow of deposits as a 
result of the Bank's pricing strategies, increased marketing efforts and new 
deposit products.  Although market demand generally dictates which deposit 
maturities and rates will be accepted by the public, the Bank intends to 
continue to promote longer term deposits to the extent possible, consistent 
with its asset and liability management goals.  The following table shows the 
increase in net deposits and interest credited on deposits.

 
                                                    Year Ended September 30,
                                                  --------------------------
                                                    1996      1995   1994(1)
                                                  -------    ------  -------
                                                    (Dollars in Thousands)
Increase (decrease) before interest credited      $ 7,721    $  614  $(2,054)
Interest credited                                   4,039     4,827    4,628
Net deposit increase                              $11,760    $5,441  $ 2,574
________________

(1)  In order to present comparability from year to year, funds received in
     connection with the Bank's conversion have not been included for fiscal
     1994. 


                                     -20-

<PAGE>


          The following table sets forth maturities of the Bank's 
certificates of deposit of $100,000 or more at September 30, 1996 by time 
remaining to maturity.

                                               Amounts in
                                               Thousands
                                                --------
 Three months or less                           $  2,533
 Over three months through six months              1,933
 Over six months through 12 months                 3,190
 Over 12 months                                    8,314
                                                --------
   Total                                         $15,970
                                                --------

          The following table shows the distribution of, and certain other
information relating to, the Bank's deposits by type of deposit as of the dates
indicated.

<TABLE>
<CAPTION>

                                                             September 30,
                                     ------------------------------------------------------------
                                            1996                  1995               1994(1)
                                     ------------------    -----------------    -----------------
                                      Amount    Percent     Amount   Percent     Amount   Percent
                                     --------   -------    --------   ------    --------   ------
                                                        (Dollars in Thousands)
<S>                                 <C>          <C>       <C>         <C>      <C>        <C>
Passbook and statement
  savings accounts                  $  17,192     12.33%   $ 17,987    14.09%   $ 21,808   17.84%
Money market accounts                  18,446     13.23      12,351     9.67      12,600   10.30
Certificates of deposit                95,431     68.43      89,603    70.17      79,897   65.36
NOW accounts                            6,538      4.69       6,524     5.11       6,456    5.28
Noninterest-bearing deposits            1,840      1.32       1,222     0.96       1,485    1.22
                                     --------   -------    --------   ------    --------   ------
Total deposits at end of
      period                         $139,447   $100.00%   $127,687   100.00%   $122,246   100.0%
                                     --------   -------    --------   ------    --------   ------
</TABLE>

________________

(1)  In order to present comparability from year to year, funds received in
     connection with the Bank's conversion have not been included for fiscal 
     1994.

                                     -21-

<PAGE>


          The following table presents, by various interest rate categories, 
the amount of certificates of deposit at September 30, 1996 and 1995, and the 
amounts at September 30, 1996 which mature during the periods indicated.


<TABLE>
<CAPTION>
                                                 Amounts at September 30, 1996
                           September 30,                Maturing Within
                          ---------------  --------------------------------------------
 Certificates of 
     Deposit                1996   1995    One Year  Two Years  Three Years  Thereafter
----------------------    ------- -------  --------  ---------  -----------  ----------
                                                            (In Thousands)
<S>                       <C>     <C>      <C>       <C>        <C>            <C>
4.0%  or less             $   166 $   163  $    81   $    57    $    10        $    18
4.01% to  6.0%             71,960  33,710   48,921     8,687     10,089          4,263
6.01% to  8.0%             23,305  55,730    3,808     6,977        ---         12,520
                          ------- -------  --------  ---------  -----------  ----------
Total certificate
 accounts                 $95,431 $89,603  $52,810   $15,721    $10,099        $16,801
                          ------- -------  --------  ---------  -----------  ----------
                          ------- -------  --------  ---------  -----------  ----------
</TABLE>

                                     -22-

<PAGE>



   The following table presents the average balance of each deposit type and
the average rate paid on each deposit type for the periods indicated.

<TABLE>
<CAPTION>
                                                           Year Ended September 30, 
                                           -------------------   -------------------   ------------------
                                                 1996                   1995                1994(1)
                                           -------------------   -------------------   ------------------
                                           Average    Average    Average    Average    Average   Average
                                           Balance   Rate Paid   Balance   Rate Paid   Balance  Rate Paid
                                           -------   ---------   -------   ---------   -------  ---------
                                                                 (Dollars in Thousands)
<S>                                        <C>       <C>         <C>        <C>        <C>      <C>

Passbook and statement savings accounts    $ 17,590   3.00%      $ 17,786     3.00%    $ 20,190   3.00%
Money market accounts                        15,399   4.06         12,506     3.18       12,074   3.10
Certificates of deposit                      95,839   5.82         82,324     5.78       81,520   5.09
NOW accounts                                  6,531   1.73          6,589     1.75        6,971   1.75
Noninterest-bearing  deposits                 1,531    ---          1,255       --          204     --
                                           -------   ---------   -------   ---------   -------- ---------
    Total deposits                         $136,890   5.00%      $120,460     4.85%    $120,959   4.34%
                                           --------  ---------   -------   ---------   -------- ---------
                                           --------  ---------   -------   ---------   -------- ---------
</TABLE>
________________
 

(1)  In order to present comparability from year to year, funds received in
     connection with the Bank's conversion have not been included for fiscal 
     1994. 

                                     -23-

<PAGE>



          BORROWINGS.  While the Bank has not historically utilized 
borrowings as a source of funds, during fiscal 1994, the Bank began borrowing 
funds from the FHLB of Cincinnati in order to leverage its capital.  At 
September 30, 1996, the Bank had $60.0 million in FHLB advances, of which 
$30.0 million were long-term in nature.

          The following table sets forth certain information relating to the 
Bank's borrowings at the dates indicated.

                                          At or For the Year Ended
                                               September 30,
                                         ---------------------------
                                          1996       1995      1994
                                         -------    -------   ------
                                            (Dollars in Thousands)
FHLB advances: 
  Average balance outstanding            $40,000    $11,111   $  417
  Maximum amount outstanding at   
any month-end during the period          $60,000    $30,000   $5,000
Weighted average rate:   
  During the period                         6.39%     6.67%    3.84%
  At end of period                          5.98%     6.58%     -- %


SUBSIDIARIES

          OTS regulations permit the Bank to invest up to 2% of its assets in 
the capital stock of, and secured and unsecured loans to, subsidiary service 
corporations, and an additional 1% of its assets when the additional funds 
are utilized for community or inner-city purposes.  In addition, 
federally-chartered savings institutions which are in compliance with their 
minimum regulatory capital requirements also may make conforming loans to 
service corporations in which the institution owns or holds more than 10% of 
the capital stock or to joint ventures of such service corporations in an 
aggregate amount of up to 50% of the institutions' regulatory capital.  OTS 
regulations also limit the aggregate amount of direct investments, including 
loans, by a SAIF-insured institution in real estate, service corporations, 
operating subsidiaries and equity securities as defined therein.  At 
September 30, 1996, the Bank had one wholly owned subsidiary which has been 
inactive since 1984.

COMPETITION

          The Bank faces significant competition in attracting deposits.  Its 
most direct competition for deposits has historically come from commercial 
banks and other savings institutions located in its market area.  The Bank 
faces additional significant competition for investors' funds from other 
financial intermediaries.  The Bank competes for deposits principally by 
offering depositors a variety of deposit programs, convenient branch 
locations, hours and other services.  The Bank does not rely upon any 
individual group or entity for a material portion of its deposits.

          The Bank's competition for real estate loans comes principally from 
mortgage banking companies, other savings institutions, commercial banks and 
credit unions.  The Bank competes for loan originations primarily through the 
interest rates and loan fees it charges, the efficiency and quality of 
services it provides borrowers and the variety of its products.  Factors 
which affect competition include the general and local economic conditions, 
current interest rate levels and volatility in the mortgage markets.

                                     -24-

<PAGE>

EMPLOYEES

          The Bank had 35 full-time employees and four part-time employees at
September 30, 1996.  None of these employees is represented by a collective
bargaining agreement, and the Bank believes that it enjoys good relations with
its personnel.

                                    REGULATION

          Set forth below is a brief description of certain laws and 
regulations which relate to the regulation of the Company and the Bank.  The 
description of these laws and regulations, as well as descriptions of laws 
and regulations contained elsewhere herein, does not purport to be complete 
and is qualified in its entirety by reference to applicable laws and 
regulations.

REGULATION OF THE COMPANY

          GENERAL.   The Company, as a savings and loan holding company 
within the meaning of the Home Owners' Loan Act ("HOLA"), has registered with 
the OTS and is subject to OTS regulations, examinations, supervision and 
reporting requirements.  As a subsidiary of a savings and loan holding 
company, the Bank is subject to certain restrictions in its dealings with the 
Company and affiliates thereof.

          FEDERAL ACTIVITIES RESTRICTIONS.   There are generally no 
restrictions on the activities of a savings and loan holding company which 
holds only one subsidiary savings association.  However, if the Director of 
the OTS determines that there is reasonable cause to believe that the 
continuation by a savings and loan holding company of an activity constitutes 
a serious risk to the financial safety, soundness or stability of its 
subsidiary savings association, the Director may impose such restrictions as 
deemed necessary to address such risk, including limiting (i) payment of 
dividends by the savings association; (ii) transactions between the savings 
association and its affiliates; and (iii) any activities of the savings 
association that might create a serious risk that the liabilities of the 
holding company and its affiliates may be imposed on the savings association. 
 Notwithstanding the above rules as to permissible business activities of 
unitary savings and loan holding companies, if the savings association 
subsidiary of such a holding company fails to meet the qualified thrift 
lender ("QTL") test, then such unitary holding company also shall become 
subject to the activities restrictions applicable to multiple savings and 
loan holding companies and, unless the savings association requalifies as a 
QTL within one year thereafter, shall register as, and become subject to the 
restrictions applicable to, a bank holding company.  See "- The Bank - 
Qualified Thrift Lender Test."

          If the Company were to acquire control of another savings 
association, other than through merger or other business combination with the 
Bank, the Company would thereupon become a multiple savings and loan holding 
company. Except where such acquisition is pursuant to the authority to 
approve emergency thrift acquisitions and where each subsidiary savings 
association meets the QTL test, as set forth below, the activities of the 
Company and any of its subsidiaries (other than the Bank or other subsidiary 
savings associations) would thereafter be subject to further restrictions.  
No multiple savings and loan holding company or subsidiary thereof which is 
not a savings association shall commence or continue for a limited period of 
time after becoming a multiple savings and loan holding company or subsidiary 
thereof any business activity, other than: (i) furnishing or performing 
management services for a subsidiary savings association; (ii) conducting an 
insurance agency or escrow business; (iii) holding, managing, or liquidating 
assets owned by or acquired from a subsidiary savings association; (iv) 
holding or managing properties used or occupied by a subsidiary savings 
association; (v) acting as trustee under deeds of trust; (vi) those 
activities authorized by regulation as of March 5, 1987 to be engaged in by 
multiple savings and loan holding companies; or (vii) unless the Director of 
the OTS by regulation prohibits or limits such activities for savings and 
loan holding companies, those activities authorized by the Federal Reserve 
Board as permissible for 

                                     -25-

<PAGE>



bank holding companies.  The activities described in (i) through (vi) above 
may only be engaged in after giving the OTS prior notice and being informed 
that the OTS does not object to such activities. In addition, the activities 
described in (vii) above also must be approved by the Director of the OTS 
prior to being engaged in by a multiple savings and loan holding company.

          FEDERAL LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.   Transactions 
between savings associations and any affiliate are governed by Sections 23A 
and 23B of the Federal Reserve Act.  An affiliate of a savings association is 
any company or entity which controls, is controlled by or is under common 
control with the savings association.  In a holding company context, the 
parent holding company of a savings association (such as the Company) and any 
companies which are controlled by such parent holding company are affiliates 
of the savings association.  Generally, Sections 23A and 23B (i) limit the 
extent to which the savings association or its subsidiaries may engage in 
"covered transactions" with any one affiliate to an amount equal to 10% of 
such association's capital stock and surplus, and contain an aggregate limit 
on all such transactions with all affiliates to an amount equal to 20% of 
such capital stock and surplus and (ii) require that all such transactions be 
on terms substantially the same, or at least as favorable, to the association 
or subsidiary as those provided to a non-affiliate.  The term "covered 
transaction" includes the making of loans, purchase of assets, issuance of a 
guarantee and similar transactions.  In addition to the restrictions imposed 
by Sections 23A and 23B, no savings association may (i) loan or otherwise 
extend credit to an affiliate, except for any affiliate which engages only in 
activities which are permissible for bank holding companies, or (ii) purchase 
or invest in any stocks, bonds, debentures, notes or similar obligations of 
any affiliate, except for affiliates which are subsidiaries of the savings 
association.

          In addition, Sections 22(g) and (h) of the Federal Reserve Act 
places restrictions on loans to executive officers, directors and principal 
stockholders.  Under Section 22(h), loans to a director, an executive officer 
and to a greater than 10% stockholder of a savings institution (a "principal 
stockholder"), and certain affiliated interests of either, may not exceed, 
together with all  other outstanding loans to such person and affiliated 
interests, the savings institution's loans to one borrower limit (generally 
equal to 15% of the institution's unimpaired capital and surplus).  Section 
22(h) also requires that loans to directors, executive officers and principal 
stockholders be made on terms substantially the same as offered in comparable 
transactions to other persons and also requires prior board approval for 
certain loans.  In addition, the aggregate amount of extensions of credit by 
a savings institution to all insiders cannot exceed the institution's 
unimpaired capital and surplus.  Furthermore, Section 22(g) places additional 
restrictions on loans to executive officers.  At September 30, 1996, the Bank 
was in compliance with the above restrictions.

          RESTRICTIONS ON ACQUISITIONS.   Except under limited circumstances, 
savings and loan holding companies are prohibited from acquiring, without 
prior approval of the Director of the OTS, (i) control of any other savings 
association or savings and loan holding company or substantially all the 
assets thereof or (ii) more than 5% of the voting shares of a savings 
association or holding company thereof which is not a subsidiary.  Except 
with the prior approval of the Director of the OTS, no director or officer of 
a savings and loan holding company or person owning or controlling by proxy 
or otherwise more than 25% of such company's stock, may acquire control of 
any savings association, other than a subsidiary savings association, or of 
any other savings and loan holding company.

          The Director of the OTS may only approve acquisitions resulting in 
the formation of a multiple savings and loan holding company which controls 
savings associations in more than one state if (i) the multiple savings and 
loan holding company involved controls a savings association which operated a 
home or branch office located in the state of the association to be acquired 
as of March 5, 1987; (ii) the acquirer is authorized to acquire control of 
the savings association pursuant to the emergency acquisition provisions of 
the Federal Deposit Insurance Act, or (iii) the statutes of the state in 
which the association to be acquired is located specifically permit 
institutions to be acquired by the state-chartered associations or savings 
and loan holding companies located in the state where the acquiring entity is 
located (or by a holding company that controls such state-chartered savings 
associations).

                                     -26-

<PAGE>

          FIRREA amended provisions of the Bank Holding Company Act of 1956 
("BHCA") to specifically authorize the Federal Reserve Board to approve an 
application by a bank holding company to acquire control of a savings 
association.  FIRREA also authorized a bank holding company that controls a 
savings association to merge or consolidate the assets and liabilities of the 
savings association with, or transfer assets and liabilities to, any 
subsidiary bank which is a member of the Bank Insurance Fund ("BIF") with the 
approval of the appropriate federal banking agency and the Federal Reserve 
Board.  As a result of these provisions, there have been a number of 
acquisitions of savings associations by bank holding companies in recent 
years.

REGULATION OF THE BANK

          GENERAL.   The OTS has extensive regulatory authority over the 
operations of savings associations.  As part of this authority, savings 
associations are required to file periodic reports with the OTS and are 
subject to periodic examinations by the OTS.  The investment and lending 
authority of savings associations are prescribed by federal laws and 
regulations and they are prohibited from engaging in any activities not 
permitted by such laws and regulations.  Those laws and regulations generally 
are applicable to all federally-chartered savings associations and may also 
apply to state-chartered savings associations.  Such regulation and 
supervision is primarily intended for the protection of depositors.

          FIRREA imposed limitations on the aggregate amount of loans that a 
savings association could make to any one borrower, including related 
entities.  See "Business of the Bank - Lending Activities - Loan Origination, 
Purchase and Sales Activity" for a discussion of such limitations.

          The OTS' enforcement authority over all savings associations and 
their holding companies was substantially enhanced by FIRREA.  This 
enforcement authority includes, among other things, the ability to assess 
civil money penalties, to issue cease and desist or removal orders and to 
initiate injunctive actions.  In general, these enforcement actions may be 
initiated for violations of laws and regulations and unsafe or unsound 
practices.  Other actions or inactions may provide the basis for enforcement 
action, including misleading or untimely reports filed with the OTS.  FIRREA 
significantly increased the amount of and grounds for civil money penalties.  
FIRREA requires, except under certain circumstances, public disclosure of 
final enforcement actions by the OTS.

          INSURANCE OF ACCOUNTS.   The deposits of the Bank are insured up to 
$100,000 per insured member (as defined by law and regulation) by the SAIF 
administered by the FDIC and are backed by the full faith and credit of the 
U. S. Government.  As insurer, the FDIC is authorized to conduct examinations 
of, and to require reporting by, FDIC-insured institutions.  It also may 
prohibit any FDIC-insured institution from engaging in any activity the FDIC 
determines by regulation or order to pose a serious threat to the FDIC.  The 
FDIC also has the authority to initiate enforcement actions against savings 
associations, after giving the OTS an opportunity to take such action.

          The deposits of the Bank are currently insured by the Savings 
Association Insurance Fund ("SAIF").  Both the SAIF and the Bank Insurance 
Fund ("BIF"), the federal deposit insurance fund that covers commercial bank 
deposits, are required by law to attain and thereafter maintain a reserve 
ratio of 1.25% of insured deposits.  The BIF had achieved a fully funded 
status in contrast to the SAIF and, therefore, the Federal Deposit Insurance 
Corporation ("FDIC") substantially reduced the average deposit insurance 
premium paid by commercial banks to a level approximately 75% below the 
average premium paid by savings institutions.

          The underfunded status of the SAIF had resulted in the introduction 
of federal legislation intended to, among other things, recapitalize the SAIF 
and address the resulting premium disparity.  On September 30, 1996, The 
Omnibus Appropriations Act was signed into law.  The legislation authorized a 
one-time charge on SAIF insured deposits at a rate of $.657 per $100.00 of 
March 31, 1995 deposits.  As a result, the Bank's assessment amounted to 
$770,000 ($508,000 net of tax).  Additional provisions of the Act include new 
BIF and SAIF premiums and the merger of BIF and SAIF.  The new BIF and SAIF 
premiums will include a premium for repayment of the Financing Corporation 
("FICO") bonds plus any regular insurance assessment, currently nothing for 
the lowest risk category institutions.  Until full pro-rata FICO 

                                     -27-

<PAGE>

sharing is in effect, the FICO premiums for BIF and SAIF will be 1.3 and 6.4 
basis points, respectively, beginning January 1, 1997.  Full pro-rata FICO 
sharing is to begin no later than January 1, 2000.  BIF and SAIF are to be 
merged on January 1, 1999, provided the bank and savings association charters 
are merged by that date.  While the one-time special assessment had a 
significant impact on the current year earnings, the resulting lower annual 
premiums will benefit future earnings.

          The FDIC may terminate the deposit insurance of any insured 
depository institution, including the Bank, if it determines after a hearing 
that the institution has engaged or is engaging in unsafe or unsound 
practices, is in an unsafe or unsound condition to continue operations, or 
has violated any applicable law, regulation, order or any condition imposed 
by an agreement with the FDIC.  It also may suspend deposit insurance 
temporarily during the hearing process for the permanent termination of 
insurance, if the institution has no tangible capital.  If insurance of 
accounts is terminated, the accounts at the institution at the time of the 
termination, less subsequent withdrawals, shall continue to be insured for a 
period of six months to two years, as determined by the FDIC.  Management is 
aware of no existing circumstances which would result in termination of the 
Bank's deposit insurance.

          REGULATORY CAPITAL REQUIREMENTS.   Federally insured savings 
associations are required to maintain minimum levels of regulatory capital.  
Pursuant to FIRREA, the OTS has established capital standards applicable to 
all savings associations.  These standards generally must be as stringent as 
the comparable capital requirements imposed on national banks.  The OTS also 
is authorized to impose capital requirements in excess of these standards on 
individual associations on a case-by-case basis.

          Current OTS capital standards require savings associations to 
satisfy three different capital requirements.  Under these standards, savings 
associations must maintain "tangible" capital equal to 1.5% of adjusted total 
assets, "core" capital equal to 3% of adjusted total assets and "total" 
capital (a combination of core and "supplementary" capital) equal to 8% of 
"risk-weighted" assets.  For purposes of the regulation, core capital 
generally consists of common stockholders' equity (including retained 
earnings), noncumulative perpetual preferred stock and related surplus, 
minority interests in the equity accounts of fully consolidated subsidiaries, 
certain nonwithdrawable accounts and pledged deposits and "qualifying 
supervisory goodwill."  Tangible capital is given the same definition as core 
capital but does not include qualifying supervisory goodwill and is reduced 
by the amount of all the savings association's intangible assets.

          Both core and tangible capital are further reduced by an amount 
equal to a savings association's debt and equity investments in subsidiaries 
engaged in activities not permissible to national banks (other than 
subsidiaries engaged in activities undertaken as agent for customers or in 
mortgage banking activities and subsidiary depository institutions or their 
holding companies).

          A savings association is allowed to include both core capital and 
supplementary capital in the calculation of its total capital for purposes of 
the risk-based capital requirement, provided that the amount of supplementary 
capital does not exceed the savings association's core capital.  
Supplementary capital generally consists of hybrid capital instruments; 
perpetual preferred stock which is not eligible to be included as core 
capital; subordinated debt and intermediate-term preferred stock; and, 
subject to limitations, general allowances for loan losses.  Assets are 
adjusted under the risk-based guidelines to take into account different risk 
characteristics, with the categories ranging from 0% (requiring no additional 
capital) for assets such as cash to 100% for repossessed assets or loans more 
than 90 days past due.  Single-family residential real estate loans which are 
not past-due or non-performing and which have been made in accordance with 
prudent underwriting standards are assigned a 50% level in the risk-weighting 
system, as are certain privately-issued mortgage-backed securities 
representing indirect ownership of such loans. Off-balance sheet items also 
are adjusted to take into account certain risk characteristics.

          In August 1993, the OTS adopted a final rule incorporating an 
interest-rate risk component into the risk-based capital regulation.  Under 
the rule, an institution with a greater than "normal" level of interest rate 
risk will 


                                     -28-

<PAGE>


be subject to a deduction of its interest rate risk component from total 
capital for purposes of calculating its risk-based capital requirement.  As a 
result, such an institution will be required to maintain additional capital 
in order to comply with the risk-based capital requirement.  An institution 
with a greater than "normal" interest rate risk is defined as an institution 
that would suffer a loss of net portfolio value exceeding 2% of the estimated 
market value of its assets in the event of a 200 basis point increase or 
decrease (with certain minor exceptions) in interest rates.  The interest 
rate risk component will be calculated, on a quarterly basis, as one-half of 
the difference between an institution's measured interest rate risk and 2%, 
multiplied by the market value of its assets.  The rule also authorizes the 
director of the OTS, or his designee, to waive or defer an institution's 
interest rate risk component on a case-by-case basis.  The final rule was to 
be effective as of January 1, 1994, subject however to a two quarter "lag" 
time between the reporting date of the data used to calculate an 
institution's interest rate risk and the effective date of each quarter's 
interest rate risk component.  However, in October 1994 the Director of the 
OTS indicated that it would waive the capital deductions for institutions 
with a greater than "normal" risk until the OTS publishes an appeals process. 
 On August 21, 1995, the OTS released Thrift Bulletin 67 which established 
(i) an appeals process to handle "requests for adjustments" to the interest 
rate risk component and (ii) a process by which "well-capitalized" 
institutions may obtain authorization to use their own interest rate risk 
model to determine their interest rate risk component.  The Director of the 
OTS indicated, concurrent with the release of Thrift Bulletin 67, that the 
OTS will continue to delay the implementation of the capital deduction for 
interest rate risk pending the testing of the appeals process set forth in 
Thrift Bulletin 67.

          The following is a reconciliation of the Bank's equity determined 
in accordance with GAAP to regulatory tangible, core, and risk-based capital 
at September 30, 1996.  


                                                  September 30, 1996
                                           ---------------------------------
                                            Tangible    Core      Risk-based
                                            Capital    Capital     Capital
                                            --------  ---------   ----------
                                                (Dollars in Thousands)

 GAAP equity                                $27,735    $27,735    $27,735
 Unrealized gain on securities                 (235)      (235)      (235)
 Goodwill                                       (50)       (50)       (50)
 General valuation allowances                    --        --         410
 Total regulatory capital                     27,450    27,450     27,860
 Minimum capital requirements                  3,526     7,052      9,997
                                            --------  ---------   ----------
 Excess regulatory capital                   $23,924   $20,398    $17,863
                                            --------  ---------   ----------
                                            --------  ---------   ----------

          PROMPT CORRECTIVE ACTION.   Under Section 38 of the FDIA as added 
by the FDICIA, each federal banking agency is required to implement a system 
of prompt corrective action for institutions which it regulates.  In early 
September 1992, the federal banking agencies, including the OTS, adopted 
substantially similar regulations which are intended to implement Section 38 
of the FDIA.  These regulations became effective December 19, 1992.  Under 
the regulations, an institution shall be deemed to be (i) "well capitalized" 
if it has total risk-based capital of 10.0% or more, has a Tier I risk-based 
capital ratio of 6.0% or more, has a Tier I leverage capital ratio of 5.0% or 
more and is not subject to any order or final capital directive to meet and 
maintain a specific capital level for any capital measure, (ii) "adequately 
capitalized" if it has a total risk-based capital ratio of 8.0% or more, a 
Tier I risk-based capital ratio of 4.0% or more and a Tier I leverage capital 
ratio of 4.0% or more (3.0% under certain circumstances) and does not meet 
the definition of "well capitalized," (iii) "undercapitalized" if it has a 
total risk-based capital ratio that is less than 8.0%, a Tier I risk-based 
capital ratio that is less than 4.0% or a Tier I leverage capital ratio that 
is less than 4.0% (3.0% under certain circumstances), (iv) "significantly 
undercapitalized" if it has a total risk-based capital ratio that is less 
than 6.0%, a Tier I risk-based capital ratio that is less than 3.0% or a Tier 
I leverage capital ratio that is less than 3.0%, and (v) "critically 
undercapitalized" if it 

                                     -29-

<PAGE>


has a ratio of tangible equity to total assets that is equal to or less than 
2.0%.  At September 30, 1996, the Bank was in the "well capitalized" category.

          LIQUIDITY REQUIREMENTS.   All savings associations are required to 
maintain an average daily balance of liquid assets equal to a certain 
percentage of the sum of its average daily balance of net withdrawable 
deposit accounts and borrowings payable in one year or less.  The liquidity 
requirement may vary from time to time (between 4% and 10%) depending upon 
economic conditions and savings flows of all savings associations.  At the 
present time, the required minimum liquid asset ratio is 5%.  The Bank has 
consistently exceeded such regulatory liquidity requirement and, at September 
30, 1996, had a liquidity ratio of 8.6%.

          FEDERAL QUALIFIED THRIFT LENDER TEST.   A savings association that 
does not meet the QTL test set forth in the HOLA and implementing regulations 
must either convert to a bank charter or comply with the following 
restrictions on its operations: (i) the association may not engage in any new 
activity or make any new investment, directly or indirectly, unless such 
activity or investment is permissible for a national bank; (ii) the branching 
powers of the association shall be restricted to those of a national bank; 
(iii) the association shall not be eligible to obtain any advances from its 
FHLB; and (iv) payment of dividends by the association shall be subject to 
the rules regarding payment of dividends by a national bank.  Upon the 
expiration of three years from the date the association ceases to be a QTL, 
it must cease any activity and not retain any investment not permissible for 
a national bank and immediately repay any outstanding FHLB advances (subject 
to safety and soundness considerations).

          Effective December 19, 1991, the definition of Qualified Thrift 
Investments ("QTIs") was amended in its entirety and the QTL Test was amended 
to require that QTIs represent 65% of portfolio assets, rather than 60% and 
70% of tangible assets as previously required before and after July 1, 1991, 
respectively. Portfolio assets are defined as total assets less intangibles, 
property used by a savings association in its business and 20% of liquid 
investments.  Generally, QTIs are residential housing related assets.  At 
September 30, 1996, approximately 87.0% of the Bank's assets were invested in 
QTIs, which was in excess of the percentage required to qualify the Bank 
under the QTL test in effect at that time.  

          RESTRICTIONS ON CAPITAL DISTRIBUTIONS.   OTS regulations govern 
capital distributions by savings associations, which include cash dividends, 
stock redemptions or repurchases, cash-out mergers, interest payments on 
certain convertible debt and other transactions charged to the capital 
account of a savings association to make capital distributions.  Generally, 
the regulation creates a safe harbor for specified levels of capital 
distributions from associations meeting at least their minimum capital 
requirements, so long as such associations notify the OTS and receive no 
objection to the distribution from the OTS.  Savings institutions and 
distributions that do not qualify for the safe harbor are required to obtain 
prior OTS approval before making any capital distributions.

          Generally, savings associations that before and after the proposed 
distribution meet or exceed their fully phased-in capital requirements, or 
Tier 1 associations, may make capital distributions during any calendar year 
equal to the higher of (i) 100% of net income for the calendar year-to-date 
plus 50% of its "surplus capital ratio" at the beginning of the calendar year 
or (ii) 75% of net income over the most recent four-quarter period.  The 
"surplus capital ratio" is defined to mean the percentage by which the 
association's ratio of total capital to assets exceeds the ratio of its fully 
phased-in capital requirement to assets.  "Fully phased-in capital 
requirement" is defined to mean an association's capital requirement under 
the statutory and regulatory standards applicable on December 31, 1994, as 
modified to reflect any applicable individual minimum capital requirement 
imposed upon the association.  Failure to meet fully phased-in or minimum 
capital requirements will result in further restrictions on capital 
distributions including possible prohibition without explicit OTS approval.  
See "--Capital Requirements."

          In order to make distributions under these safe harbors, Tier 1 and 
Tier 2 associations must submit written notice to the OTS 30 days prior to 
making the distribution.  The OTS may object to the distribution during that 
30-day period based on safety and soundness concerns.  In addition, a Tier 1 
association deemed to be in need of more 


                                     -30-

<PAGE>


than normal supervision by the OTS may be downgraded to a Tier 2 or Tier 3 
association as a result of such a determination.  The Bank currently is a 
Tier 1 institution for purposes of the regulation dealing with capital 
distributions.

          OTS regulations also prohibit the Bank from declaring or paying any 
dividends or from repurchasing any of its stock if, as a result, the 
regulatory (or total) capital of the Bank would be reduced below the amount 
required to be maintained for the liquidation account established by it for 
certain depositors in connection with its conversion from mutual to stock 
form.

          In December 1994, the OTS published a notice of proposed rulemaking 
to amend its capital distribution regulation.  Under the proposal, 
institutions would be permitted to only make capital distributions that would 
not result in their capital being reduced below the level required to remain 
"adequately capitalized."  Because the Bank is a subsidiary of a holding 
company, the proposal would require the Bank to provide notice to the OTS of 
its intent to make a capital distribution.  The Bank does not believe that 
the proposal will adversely affect its ability to make capital distributions 
if it is adopted substantially as proposed.

          POLICY STATEMENT ON NATIONWIDE BRANCHING.  Effective May 11, 1992, 
the OTS amended and codified its policy statement on branching by 
federally-chartered savings associations to delete then-existing regulatory 
restrictions on the branching authority of such associations and to permit 
nationwide branching to the extent allowed by federal statute.  (Prior OTS 
policy generally permitted interstate branching for federally-chartered 
savings associations only to the extent allowed state-chartered savings 
associations in the states where the association's home office was located 
and where the branch was sought or if the branching resulted from OTS 
approval of a supervisory interstate acquisition of a troubled institution.)  
Current OTS policy generally permits a federally-chartered savings 
association to establish branch offices outside of its home state if the 
association meets the domestic building and loan test in Section 7701(a)(19) 
of the Code or the asset composition test of subparagraph (c) of that 
section, and if, with respect to each state outside of its home state where 
the association has established branches, the branches, taken alone, also 
satisfy one of the two tax tests.  An association seeking to take advantage 
of this authority would have to have a branching application approved by the 
OTS, which would consider the regulatory capital of the association and its 
record under the Community Reinvestment Act of 1977, as amended, among other 
things.

          FEDERAL HOME LOAN BANK SYSTEM.   The Bank is a member of the FHLB 
of Cincinnati, which is one of 12 regional FHLBs that administers the home 
financing credit function of savings associations.  Each FHLB serves as a 
reserve or central bank for its members within its assigned region.  It is 
funded primarily from proceeds derived from the sale of consolidated 
obligations of the FHLB System.  It makes loans to members (i.e., advances) 
in accordance with policies and procedures established by the Board of 
Directors of the FHLB.  

          As a member, the Bank is required to purchase and maintain stock in 
the FHLB of Cincinnati in an amount equal to at least 1% of its aggregate 
unpaid residential mortgage loans, home purchase contracts or similar 
obligations at the beginning of each year or 5% of its advances from the FHLB 
of Cincinnati, whichever is greater.  At September 30, 1996, the Bank had 
$3.0 million in FHLB stock, which was in compliance with this requirement.

          As a result of FIRREA, the FHLBs are required to provide funds for 
the resolution of troubled savings associations and to contribute to 
affordable housing programs through direct loans or interest subsidies on 
advances targeted for community investment and low- and moderate-income 
housing projects.  These contributions have adversely affected the level of 
FHLB dividends paid and could continue to do so in the future.  These 
contributions also could have an adverse effect on the value of FHLB stock in 
the future.  For the years ended September 30, 1996 and 1995, respectively, 
dividends paid by the FHLB of Cincinnati to the Bank totaled approximately 
$148,000 and $78,000, respectively.


                                     -31-

<PAGE>



          FEDERAL RESERVE SYSTEM.  The Federal Reserve Board requires all 
depository institutions to maintain reserves against their transaction 
accounts (primarily NOW and Super NOW checking accounts) and non-personal 
time deposits.  At September 30, 1996, the Bank was in compliance with 
applicable requirements. However, because required reserves must be 
maintained in the form of vault cash or a noninterest-bearing account at a 
Federal Reserve Bank, the effect of this reserve requirement is to reduce an 
institution's earning assets. 
                                     -32-
<PAGE>
                               TAXATION

TAXATION

    FEDERAL TAXATION.  The Company and the Bank are both subject to the 
federal tax laws and regulations which apply to corporations generally.  
Prior to the enactment of the Small Business Jobs Protection Act (the "Act"), 
which was signed into law on August 21, 1996, certain thrift institutions, 
such as the Bank, were allowed deductions for bad debts under methods more 
favorable than those granted to other taxpayers.  Qualified thrift 
institutions could compute deductions for bad debts using either the specific 
charge off method of Section 166 of the Code or the reserve method of Section 
593 of the Code.

    Under Section 593, a thrift institution annually could elect to deduct 
bad debts under either (i) the "percentage of taxable income" method 
applicable only to thrift institutions, or (ii) the "experience" method that 
also was available to small banks.  Under the "percentage of taxable income" 
method, a thrift institution generally was allowed a deduction for an 
addition to its bad debt reserve equal to 8% of its taxable income 
(determined without regard to this deduction and with additional 
adjustments).  Under the experience method, a thrift institution was 
generally allowed a deduction for an addition to its bad debt reserve equal 
to the greater of (i) an amount based on its actual average experience for 
losses in the current and five preceding taxable years, or (ii) an amount 
necessary to restore the reserve to its balance as of the close of the base 
year.  A thrift institution could elect annually to compute its allowable 
addition to bad debt reserves for qualifying loans either under the 
experience method of the percentage of taxable income method.  For tax years 
1995 and 1994, the Bank used the percentage of taxable income method because 
such method provided a higher bad debt deduction than the experience method. 

    Section 1616(a) of the Act repealed the Section 593 reserve method of 
accounting for bad debts by thrift institutions, effective for taxable years 
beginning after 1995.  Thrift institutions that are treated as small banks 
are allowed to utilize the experience method applicable to such institutions, 
while thrift institutions that are treated as large banks are required to use 
only the specific charge off method.  The percentage of taxable income method 
of accounting for bad debts is no longer available for any financial 
institution.

    A thrift institution required to change its method of computing reserves 
for bad debt will treat such change as a change in the method of accounting, 
initiated by the taxpayer and having been made with the consent of the 
Secretary of the Treasury.  Section 481(a) of the Code requires certain 
amounts to be recaptured with respect to such change.  Generally, the amounts 
to be recaptured will be determined solely with respect to the "applicable 
excess reserves" of the taxpayer.  The amount of the applicable excess 
reserves will be taken into account ratably over a six-taxable year period, 
beginning with the first taxable year beginning after 1995, subject to the 
residential loan requirement described below.  In the case of a thrift 
institution that is treated as a large bank, the amount of the institution's 
applicable excess reserves generally is the excess of (i) the balances of its 
reserve for losses on qualifying real property loans (generally loans secured 
by improved real estate) and its reserve for losses on nonqualifying loans 
(all other types of loans) as of the close of its last taxable year beginning 
before January 1, 1996, over (ii) the balances of such reserves as of the 
close of its last taxable year beginning before January 1, 1988 (i.e., the 
"pre-1988 reserves").  In the case of a thrift institution that is treated as 
a small bank, like the Bank, the amount of the institution's applicable 
excess reserves generally is the excess of (i) the balances of its reserve 
for losses on qualifying real property loans and its reserve for losses on 
nonqualifying loans as of the close of its last taxable year beginning before 
January 1, 1996, over (ii) the greater of the balance of (a) its pre-1988 
reserves or, (b) what the thrift's reserves would have been at the close of 
its last year beginning before January 1, 1996, had the thrift always used 
the experience method.
                                    -33-
<PAGE>

    For taxable years that begin after December 31, 1995, and before January 
1, 1998, if a thrift meets the residential loan requirement for a tax year, 
the recapture of the applicable excess reserves otherwise required to be 
taken into account as a Code Section 481(a) adjustment for the year will be 
suspended.  A thrift meets the residential loan requirement if, for the tax 
year, the principal amount of residential loans made by the thrift during the 
year is not less than its base amount.  The "base amount" generally is the 
average of the principal amounts of the residential loans made by the thrift 
during the six most recent tax years beginning before January 1, 1996.

    A residential loan is a loan as described in Section 7701(a)(19)(C)(v) 
(generally a loan secured by residential or church property and certain 
mobile homes), but only to the extent that the loan is made to the owner of 
the property.

    The balance of the pre-1988 reserves is subject to the provisions of 
Section 593(e), as modified by the Act, which requires recapture in the case 
of certain excessive distributions to shareholders.  The pre-1988 reserves 
may not be utilized for payment of cash dividends or other distributions to a 
shareholder (including distributions in dissolution or liquidation) or for 
any other purpose (except to absorb bad debt losses).  Distribution of a cash 
dividend by a thrift institution to a shareholder is treated as made: first, 
out of the institution's post-1951 accumulated earnings and profits; second, 
out of the pre-1988 reserves; and third, out of such other accounts as may be 
proper. To the extent a distribution by the Bank to the Company is deemed 
paid out of its pre-1988 reserves under these rules, the pre-1988 reserves 
would be reduced and the Bank's gross income for tax purposes would be 
increased by the amount which, when reduced by the income tax, if any, 
attributable to the inclusion of such amount in its gross income, equals the 
amount deemed paid out of the pre-1988 reserves.  As of September 30, 1996, 
The Bank's pre-1988 reserves for tax purposes totaled approximately 2.5 
million.  The Bank believes it had approximately 13.2 million of accumulated 
earnings and profits for tax purposes as of September 30, 1996, which would 
be available for dividend distributions, provided regulatory restrictions 
applicable to the payment of dividends are met. No representation can be made 
as to whether the Bank will have current or accumulated earnings and profits 
in subsequent years.

    In addition to the regular income tax, the Company and the Bank are 
subject to a minimum tax.  An alternative minimum tax is imposed at a minimum 
tax rate of 20% on "alternative minimum taxable income" (which is the sum of 
a corporation's regular taxable income, with certain adjustments, and tax 
preference items), less any available exemption.  Such tax preference items 
include interest on certain tax-exempt bonds issued after August 7, 1986.  In 
addition, 75% of the amount by which a corporation's "adjusted current 
earnings" exceeds its alternative minimum taxable income computed without 
regard to this preference item and prior to reduction by net operating 
losses, is included in alternative minimum taxable income.  Net operating 
losses can offset no more than 90% of alternative minimum taxable income.  
The alternative minimum tax is imposed to the extent it exceeds the 
corporation's regular income tax.  Payments of alternative minimum tax may be 
used as credits against regular tax liabilities in future years.  In 
addition, for taxable years after 1986 and before 1996, the Company and the 
Bank are also subject to environmental tax equal to 0.12% of the excess of 
alternative minimum taxable income for the taxable year (determined without 
regard to net operating losses and the deduction for the environmental tax) 
over $2.0 million.

    The tax returns of the Bank have been audited or closed without audit 
through fiscal year 1992.  In the opinion of management, any examination of 
open returns would not result in a deficiency which could have a material 
adverse effect on the financial condition of the Bank.

    OHIO TAXATION. The Company is subject to the Ohio corporation franchise 
tax, which, as applied to the Company, is a tax measured by both net earnings 
and net worth.  The rate of tax is the greater of (i) 5.1% on the first 
$50,000 of computed Ohio taxable income and 8.9% of computed Ohio taxable 
income in excess of $50,000 or (ii) 0.582% times taxable net worth.
                                    -34-
<PAGE>

    In computing its tax under the net worth method, The Company may exclude 
100% of its investment in the capital stock of the Bank after the Conversion, 
as reflected on the balance sheet of the Company, in computing its taxable 
net worth as long as it owns at least 25% of the issued and outstanding 
capital stock of the Bank.  The calculation of the exclusion from net worth 
is based on the ratio of the excludable investment (net of any appreciation 
or goodwill included in such investment) to total assets multiplied by the 
net value of the stock.  As a holding company, the Bank may be entitled to 
various other deductions in computing taxable net worth that are not 
generally available to operating companies.

    A special litter tax is also applicable to all corporations, including 
the Company, subject to the Ohio corporation franchise tax other than 
"financial institutions."  If the franchise tax is paid on the net income 
basis, the litter tax is equal to .11% of the first $50,000 of computed Ohio 
taxable income and .22% of the computed Ohio taxable income in excess of 
$50,000.  If the franchise tax is paid on the net worth basis, the litter tax 
is equal to .014% times taxable net worth.

    The Bank is a "financial institution" for State of Ohio tax purposes.  As 
such, it is subject to the Ohio corporate franchise tax on "financial 
institutions," which is imposed annually at a rate of 1.5% of the Bank's book 
net worth determined in accordance with generally accepted accounting 
principles.  As a "financial institution," the Bank is not subject to any tax 
based upon net income or net profits imposed by the State of Ohio.    ITEM 2. 

                                    -35-
<PAGE>

ITEM 2. PROPERTIES.

OFFICES AND PROPERTIES

    At September 30, 1996, the Bank conducted its business from its executive 
offices in West Chester, Ohio and four full service offices, all of which are 
located in southwestern Ohio.

    The following table sets forth certain information with respect to the 
Bank's office properties at September 30, 1996.
<TABLE>
<CAPTION>
                                                           Net Book
                                               Leased/     Value of     Amount of
 Description/Address                            Owned      Property     Deposits
 ---------------------                         -------     --------     ---------
                                                            (Dollars in Thousands)
 <S>                                           <C>         <C>           <C>
 Lockland - 117 Mill Street                    Owned       $  126       $ 54,984
 Lebanon - 718 E. Main Street                  Owned          452         23,451
 Kingsgate - 7810-7820 Tylersville Square
 Drive                                         Owned(1)     1,938         14,578
 Pisgah - 9235 Cincinnati - Columbus Road      Owned          331         29,882
 Wyoming - 401 Wyoming Avenue                  Owned          337         16,552
                                                          --------     ---------
                                                           $3,184       $139,447
                                                           --------     ---------
                                                           --------     ---------
</TABLE>
______________

(1)  The Bank closed its branch office at 7731 Tylersville Road and 
     moved its main office to 7810-7820 Tylersville Square Drive during 
     April, 1996.

ITEM 3.  LEGAL PROCEEDINGS.

          The Company is not involved in any pending legal proceedings other 
than nonmaterial legal proceedings occurring in the ordinary course of 
business.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

          Not Applicable.

PART II.

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
         MATTERS.

          The information required herein, to the extent applicable, is 
incorporated by reference from page 48 of the Corporation's 1996 Annual 
Report to Stockholders ("1996 Annual Report").

ITEM 6.  SELECTED FINANCIAL DATA.

          The information required herein is incorporated by reference from 
page three of the 1996 Annual Report.

                                    -36-
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OF OPERATIONS.

          The information required herein is incorporated by reference from 
pages four to 18 of the 1996 Annual Report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

          The information required herein is incorporated by reference from 
pages 19 to 45 of the 1996 Annual Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND      
        FINANCIAL DISCLOSURE.

          Not Applicable.

PART III.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

          The information required herein is incorporated by reference from 
the definitive proxy statement of the Corporation for the Annual Meeting of 
Stockholders to be held on January 29, 1997 ("Definitive Proxy Statement"). 

ITEM 11.  EXECUTIVE COMPENSATION.

          The information required herein is incorporated by reference from 
the Definitive Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

          The information required herein is incorporated by reference from 
the Definitive Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

          The information required herein is incorporated by reference from 
the Definitive Proxy Statement.

PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

          (a)  DOCUMENTS FILED AS PART OF THIS REPORT

  (1) The following financial statements are incorporated by reference from 
Item 8 hereof (see Exhibit 13):

            Independent Auditors' Report
            Consolidated Statements of Financial Condition at September 30,
             1996 and 1995.
            Consolidated Statements of Earnings for Each of the Three Years

                                    -37-
<PAGE>

             in the Period Ended September 30, 1996.
            Consolidated Statements of Changes in Stockholders' Equity for
             Each of the Three Years in the Period Ended September 30, 1996.
            Consolidated Statements of Cash Flows for Each of the Three Years
             in the Period ended September 30, 1996.
            Notes to Consolidated Financial Statements.

  (2) All schedules for which provision is made in the applicable accounting 
regulation of the SEC are omitted because of the absence of conditions under 
which they are required or because the required information is included in 
the financial statements and related notes thereto. 

                                    -38-
<PAGE>

  (3) The following exhibits are filed as part of this Form 10-K and this 
list includes the Exhibit Index. 

                                 Exhibit Index
                                                                         Page
                                                                         ----
2.1       Plan of Conversion                                             *
3.1       Articles of Incorporation of Enterprise Federal Bancorp, Inc.  **
3.2       Code of Regulations of Enterprise Federal Bancorp, Inc.        *
3.3       Bylaws of Enterprise Federal Bancorp, Inc.                     *
4.0       Stock Certificate of Enterprise Federal Bancorp, Inc.          ***
10.1      Enterprise Federal Bancorp, Inc. Recognition and Retention 
           Plan                                                          ***
10.2      Enterprise Federal Bancorp, Inc. 1994 Stock Option Plan        ***
10.3      Enterprise Federal Bancorp, Inc. Employee Stock Ownership      
            Plan and Trust                                               *
10.4      Employment Agreement between Enterprise Federal Bancorp,
            Inc. and Otto L. Keeton                                      ***
10.5      Employment Agreement between Enterprise Federal Bancorp, 
            Inc. and Michael P. Meister                                  ***
10.6      Employment  Agreement between Enterprise Federal Bancorp, 
            Inc. and Thomas J. Noe                                       ***
10.7      Employment Agreement between Enterprise Federal Bancorp, 
            Inc. and Steven M. Pomeroy                                   ***
13.0      1996 Annual Report to Stockholders                             ****
16.0      Letter from Kennedy, Kraft, Dreyer and Noe 
            re: change in accountants                                    *
22.0      Subsidiaries of the Registrant - Reference is made to
            "Item 1 Business - Subsidiaries" for the required 
            information




(*)  Incorporated herein by reference from the Corporation's Registration 
Statement on Form S-1 filed with the SEC on April 21, 1994.

(**) Incorporated herein by reference from the Corporation's Registration 
Statement on Form 8-A filed with the SEC on August 15, 1994.

(***) Incorporated herein by reference from the Corporation's Form 10-K filed 
with the SEC on December 29, 1994.

(****) Previously filed on January 3, 1997.

                                     -39-
<PAGE>

                                  SIGNATURES


          Pursuant to the requirements of Section 13 or 15(d) 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.

                                  ENTERPRISE FEDERAL BANCORP, INC.

                                  By:       /s/ Otto L. Keeton   
                                      ----------------------------------------
                                      Otto L. Keeton
                                      Chairman of the Board, President and
                                       Chief Executive Officer


          Pursuant to the requirements of the Securities Exchange Act of 
1934, this report has been signed below by the following persons on behalf of 
the Registrant and in the capacities and on the dates indicated.


/s/ Otto L. Keeton                                            January 7, 1996
-----------------------
Otto L. Keeton
Chairman of the Board, President
 and Chief Executive Officer                                 


/s/ Michael R. Meister                                        January 7, 1996
-----------------------
Michael R. Meister
Vice President, Chief Operating
 Officer and Director                                        


/s/ Thomas J. Noe                                             January 7, 1996
-----------------------
Thomas J. Noe
Vice President, Treasurer and
 Chief Financial Officer
(principal accounting officer)                                


/s/ William H. Kreeger                                        January 7, 1996
-----------------------
William H. Kreeger
Director                                                      

                                    -40-
<PAGE>


/s/ Terrell G. Marty                                          January 7, 1996
-----------------------
Terrell G. Marty
Director                                                      


/s/ Edith P. Mayer                                            January 7, 1996
-----------------------
Edith P. Mayer
Director                                                      


/s/ Steven A. Wilson                                          January 7, 1996
-----------------------
Steven A. Wilson
Director                                                      




                                    -41-