EXHIBIT 13

<PAGE>

SELECTED FINANCIAL INFORMATION

IBT BANCORP, INC & SUBSIDIARY

<TABLE>
<CAPTION>
                                                                     At or for the Years Ended December 31,
                                                  ------------------------------------------------------------------------
                                                       2000           1999           1998            1997           1996
                                                       ----           ----           ----            ----           ----
                                                               (Dollars in thousands, except per share amounts)
<S>                                              <C>            <C>            <C>             <C>            <C>
Selected Balance Sheet Data:
Assets                                             $ 496,379      $ 445,721      $ 412,366       $ 366,457      $ 331,416
Cash and cash equivalents                             21,746         19,264         43,396          27,700         24,853
Securities available for sale                        167,874        151,063        118,778         107,801         95,343
Securities held to maturity                                -              -          2,569           5,855          7,955
Loans receivable (net)                               291,914        260,502        238,304         216,487        194,677
Deposits                                             409,638        368,680        356,383         324,317        292,699
Repurchase agreements                                  9,022          6,457              -               -              -
Federal funds purchased                                    -          7,000              -               -              -
FHLB advances                                         28,000         22,000         14,000           4,000          4,000
Shareholders' equity                                  44,615         37,905         38,201          34,302         30,090

Selected Results of Operations
Interest income                                       33,787         29,731         27,768          25,349         22,695
Net interest income                                   17,200         16,087         15,182          13,832         12,505
Provision for loan losses                                300            300            300             300            410
Net interest income after provision
       for loan losses                                16,900         15,787         14,882          13,532         12,095
Other income                                           2,946          2,764          2,093           1,733          1,471
Other expense                                         10,181          9,233          8,438           7,683          7,076
Net income                                             6,705          6,336          5,801           5,193          4,458

Per Share Data:
Net Income
       Basic                                        $   2.23       $   2.10       $   1.92        $   1.72       $   1.47
       Diluted                                          2.23           2.10           1.92            1.72           1.47
Cash dividends declared                                 0.92           0.80           0.64            0.51           0.42

Selected Ratios:
Return on average assets                                1.44%          1.49%          1.54%           1.52%          1.44%
Return on average equity                               16.87          16.54          15.97           16.27          15.82
Ratio of average equity to average assets               8.52           8.99           9.63            9.84           9.61
Dividend payout                                        41.26          38.10          33.33           29.65          25.57

</TABLE>


                                      -1-
<PAGE>


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

--------------------------------------------------------------------------------

         The Private  Securities  Litigation  Reform Act of 1995  contains  safe
harbor  provisions  regarding  forward-looking  statements.  When  used  in this
discussion, the words "believes", "anticipate",  "contemplates",  "expects", and
similar expressions are intended to identify  forward-looking  statements.  Such
statements  are  subject to certain  risks and  uncertainties  which could cause
actual  results to differ  materially  from  those  projected.  Those  risks and
uncertainties  include  changes in interest  rates,  risks  associated  with the
effect of opening a new branch,  the ability to control costs and expenses,  and
general  economic  conditions.  IBT Bancorp,  Inc.  undertakes  no obligation to
publicly  release  the  results  of  any  revisions  to  those  forward  looking
statements which may be made to reflect events or  circumstances  after the date
hereof or to reflect the occurrence of unanticipated events.

GENERAL
         IBT Bancorp,  Inc. is a bank holding  company  headquartered  in Irwin,
Pennsylvania,  which  provides a full  range of  commercial  and retail  banking
services  through its wholly owned  banking  subsidiary,  Irwin Bank & Trust Co.
(collectively, the "Company").

FINANCIAL CONDITION

         At December 31, 2000, total assets  increased $50.7 million,  or 11.4%,
to $496.4  million from $445.7  million at December 31, 1999. Of this  increase,
securities  available for sale  increased  $16.8 million,  net loans  receivable
increased  $31.4  million,  federal  funds  sold  increased  $4.1  million,  and
interest-bearing deposits in banks increased $4.6 million.  Increases in federal
funds  sold  and  interest-bearing  deposits  in  banks  will  be  used  to meet
anticipated  future loan demand.  Such increases in assets were primarily offset
by a decrease of $6.3  million in cash and due from banks.  The decrease in cash
and due from banks was used to pay off,  in the first  quarter of 2000,  federal
funds purchased of $7.0 million, that were outstanding at December 31, 1999.

         The growth in total  deposits of $40.9  million was used  primarily  to
fund the growth in the loan and  securities  available for sale  portfolio.  The
increase in the loan portfolio was primarily due to the growth of the fixed rate
one-to four-family mortgage loan, commercial mortgage,  and commercial portfolio
of $8.2 million,  $9.4 million, and $5.4 million,  respectively.  Such increases
were  partially  offset by the sale of the credit card portfolio of $1.8 million
in the second quarter of fiscal 2000. The Company's loan portfolio  continues to
grow due to the Company's offering of competitive market interest rates.

         The increase of $16.8  million in investment  securities  available for
sale was mainly attributable to sales of $6.2 million,  proceeds from maturities
of securities of $12.0 million,  purchases of $30.0 million,  and an increase in
market value (before tax) of $5.0 million.

         At December 31, 2000,  total  liabilities  increased $44.0 million,  or
10.7%,  to $451.8 million from $407.8 million at December 31, 1999. The increase
primarily  related to the increase in total deposits of $40.9  million.  Of this
increase, Interest-bearing deposits increased $33.7 million to $345.3 million at
December 31, 2000 from $311.6 million at December 31, 1999. The most significant
areas of increase  were in the  Certificate  of Deposit  accounts  which reached
$205.3  million at December 31, 2000,  an increase of $36.4  million from $168.9
million at December 31, 1999. Customers continue to be attracted to this product
due to the competitive interest rates paid for these products.

                                      -2-
<PAGE>

         Non  interest-bearing  deposits increased $7.2 million to $64.3 million
at December 31, 2000 from $57.1  million at December 31,  1999.  Such  increases
reflect  additions to non-interest  bearing  deposits of $16.2 million offset by
$9.0 million in  investments  in repurchase  agreements.  Under the terms of the
agreement, deposits in designated demand accounts of the customer are put into a
investment  vehicle  which is used daily to purchase  an interest in  designated
U.S.  Government  or  Agencies'  securities.  The  Company  in  turn  agrees  to
repurchase  these  investments  on a daily basis and pay the customers the daily
interest  earned  based on the current  market rate.  At December 31, 2000,  the
amount  of  repurchase  agreements  totaled  $9.0  million.  See  Note  6 to the
consolidated financial statements.

         At December 31, 2000, total stockholders' equity increased $6.7 million
to $44.6  million  from $37.9  million at December  31,  1999.  The increase was
primarily  due to a $3.3 million  increase in  accumulated  other  comprehensive
income and net income of $6.7 million for the period,  offset by dividends  paid
of $2.8  million.  The  Company  has  repurchased  22,000  shares of stock at an
average cost of  approximately  $31 per share.  During fiscal 2001, based on the
availability, the Company plans to repurchase up to 129,000 of its shares.

         Accumulated other comprehensive income increased as a result of changes
in the  net  unrealized  gain  on  the  available  for  sale  securities  due to
fluctuations  in interest  rates.  Pursuant  to  generally  accepted  accounting
principles,  securities  available for sale are recorded at current market value
and net unrealized  gains or losses on such securities are excluded from current
earnings and  reported net of income  taxes,  as part of  comprehensive  income,
until realized.  Because of interest rate volatility,  the Company's accumulated
other  comprehensive  income could materially  fluctuate for each interim period
and year-end.  The majority of the increase in accumulated  other  comprehensive
income resulted from the Company's  investment in U.S.  Government  agencies and
municipals  available  for  sale.  See  Note  2 to  the  consolidated  financial
statements.

ANALYSIS OF NET INTEREST INCOME

         The Company's results of operations are primarily  dependent on its net
interest income,  which is the difference  between the interest income earned on
assets,   primarily  loans  and   investments,   and  the  interest  expense  on
liabilities,  primarily  deposits and  borrowings.  Net  interest  income may be
affected  significantly  by general  economic  and  competitive  conditions  and
policies  of  regulatory  agencies,  particularly  those with  respect to market
interest  rates.  The results of operations are also  influenced by the level of
non-interest expenses,  such as employee salaries and benefits and other income,
such as loan-related fees and fees on deposit-related services.

                                      -3-
<PAGE>

RESULTS OF OPERATIONS

         Net Income: Net income increased  approximately  $369,000,  or 5.8%, to
$6.7 million for the year ended December 31, 2000 from $6.3 million for the year
ended   December  31,  1999.  At  December  31,  1999,   net  income   increased
approximately  $535,000, or 9.2%, to $6.3 million from $5.8 million for the year
ended  December  31,  1998.  The  increase  in net  income for 2000 and 1999 was
primarily  attributable  to the  increases  in the average  balances of interest
earning assets of $37.6 million and $49.4 million, respectively.

         Net  Interest  Income:  Net  interest  income  is the most  significant
component of the Company's  income from  operations.  Net interest income is the
difference between interest received on interest-earning assets (primarily loans
and investment  securities)  and interest paid on  interest-bearing  liabilities
(primarily  deposits and borrowed  funds).  Net interest  income  depends on the
volume and rate earned on  interest-earning  assets and the volume and  interest
rate paid on interest-bearing liabilities.

         Net interest income  increased $1.1 million,  or 6.8%, to $17.2 million
for 2000 compared to $16.1  million for 1999.  The increase was primarily due to
the increase in average loans of $27.8 million and average investment securities
available  for sale of $14.9 million  coupled with a 30 basis point  increase in
the yield on average  interest  earning  assets to 7.59% for 2000 from 7.29% for
1999. The increase in the yield on average interest earning assets was primarily
the result of yield increases in average loans and average investment securities
of 21 basis points and 28 basis points,  respectively.  Such  increases were the
result  of loans  and  investments  being  made at higher  interest  rates.  The
increase in average loans and average investment  securities  available for sale
were partially funded by the increase in average interest bearing liabilities of
$34.0  million.  Offsetting  the increase in net interest  income was a 43 basis
point  increase in average  cost of funds to 4.58% for 2000 from 4.15% for 1999.
The yield on average  interest bearing  liabilities  increased mainly due to the
increase in the average balance in certificates of deposit and other liabilities
coupled  with higher  interest  rates being paid on total  deposit  products and
other liabilities.

         Net interest income increased  $900,000,  or 5.9%, to $16.1 million for
1999 compared to $15.2  million for 1998.  The increase was primarily due to the
increase in average  loans of $24.6  million and average  investment  securities
available  for sale of $30.4 million  coupled with a 27 basis point  decrease in
average  cost of funds to 4.15% for 1999 from 4.42% for 1998.  The  increase  in
average  loans  and  average  investment  securities  available  for  sale  were
partially  funded by the increase in average  interest  bearing  liabilities  of
$43.7  million.  Offsetting  the increase in net interest  income was a 46 basis
point decline in the yield on average  interest earning assets to 7.29% for 1999
from 7.75% for 1998. The yield on average  interest  earning assets declined for
1999 due to a  decrease  in  yields on loans  receivable  to 7.95% for 1999 from
8.48% for 1998, which was the result of loans refinancing at lower rates.

         The  following  table sets forth  certain  information  relating to the
Company's  average  balance sheet and,  reflects the average yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods presented. Average balances are derived for daily balances.

                                      -4-
<PAGE>
<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                        ------------------------------------------------------------------------------------------------------------
                                         2000                                  1999                                 1998
                        ------------------------------------------------------------------------------------------------------------
                                                    Average                                  Average                         Average
                          Average                   Yield/      Average                      Yield/     Average              Yield/
                          Balance      Interest      Cost       Balance      Interest         Cost      Balance    Interest   Cost
                        ------------------------------------------------------------------------------------------------------------
                                                                     (Dollars in thousands)
<S>                     <C>           <C>          <C>        <C>          <C>             <C>       <C>        <C>         <C>
Interest-
earning assets:
  Loans
    receivable (1) (7)   $ 279,400     $  22,808      8.16%    $ 251,574    $  20,000         7.95%    $226,984   $ 19,259     8.48%
  Investment
    securities
    available
    for sale (2)           159,394        10,578       6.64      144,544        9,195         6.36      114,078      7,606     6.67
  Investment
    securities
    held to
    maturity                     -             -          -        1,208           36         2.98        3,228        143     4.43
  Other interest-
    earning
    assets (5)               6,464           401       6.20       10,319          500         4.85       13,956        760     5.45
      Total
      interest
      earning
      assets             $ 445,258     $  33,787       7.59    $ 407,645    $  29,731         7.29     $358,246   $ 27,768     7.75
                         =========     =========       ====    =========    =========         ====     ========   ========     ====
Non-interest
  earning assets            21,558                                18,655                                 19,033
                          --------                              --------                               --------
      Total
        assets            $466,816                              $426,300                               $377,279
                          ========                              ========                               ========
Interest-bearing
liabilities:
  Money market
    accounts                56,079         2,275       4.06%      56,731        2,069         3.65%      47,023      1,864     3.96%
  Certificates
    of Deposit             182,465        10,364       5.68      162,668        8,418         5.17      149,598      8,322     5.56
  Other
    liabilities            123,928         3,949       3.19      109,061        3,157         2.89       88,180      2,400     2.72
                         ---------     ---------       ----    ---------    ---------         ----     --------   --------     ----
      Total
      interest-
      bearing
      liabilities        $ 362,472     $  16,588       4.58%   $ 328,460    $  13,644         4.15%    $284,801   $ 12,586     4.42%
                         =========     =========       ====    =========    =========         ====     ========   ========     ====
Non-interest-
  bearing
  liabilities               64,591                                59,530                                 56,150
                         ---------                             ---------                               --------
      Total
        liabilities      $ 427,063                             $ 387,990                               $340,951
                         =========                             =========                               ========
Retained
  Earnings (6)              39,753                                38,310                                 36,328
                         ---------                             ---------                               --------
      Total
        liabilities
        and
        stockholders'
        equity           $ 466,816                             $ 426,300                               $377,279
                         =========                             =========                               ========
Net interest
  income                               $  17,199                            $  16,087                             $ 15,182
                                       =========                            =========                             ========
Interest rate
  spread (3)                                           3.01%                                   3.14%                           3.33%
                                                     ======                                  ======                          ======
Net yield on
  interest-
  earning
  assets (4)                                           3.86%                                   3.95%                           4.24%
                                                     ======                                  ======                          ======


Ratio of
  average
  interest-
  earning
  assets to
  average
  interest-
  bearing
  liabilities                                        122.84%                                 124.11%                         125.79%
                                                     ======                                  ======                          ======

</TABLE>

(1)  Average  balances include  non-accrual  loans, and are net of deferred loan
     fees.
(2)  Includes interest-bearing deposits in other financial institutions.
(3)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(4)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest earning assets.
(5)  Includes federal funds sold.
(6)  Includes  capital stock,  surplus and unrealized  holding gains on SFAS 115
     AFS securities.
(7)  For all years presented,  interest income includes business manager income,
     which was previously classified as other non-interest income.

                                      -5-
<PAGE>

         The following table shows the effect of changes in volumes and rates on
interest  income  and  interest  expense.  The  changes in  interest  income and
interest  expense  attributable  to  changes  in both  volume and rate have been
allocated  proportionately  to the  changes due to volume and the changes due to
rate. Tax exempt income was not  recalculated  on a tax equivalent  basis due to
the immateriality of the change to the table resulting from a recalculation.

<TABLE>
<CAPTION>
                                              Year Ended December 31,             Year Ended December 31,
                                            ----------------------------        -----------------------------
                                                      2000 vs. 1999                      1999 vs. 1998
                                            ----------------------------        -----------------------------
                                                 Increase (Decrease)                  Increase (Decrease)
                                                        Due to                              Due to
                                            ----------------------------        -----------------------------
                                             Volume      Rate      Net           Volume      Rate       Net
                                             ------      ----      ---           ------      ----       ---
                                                    (In Thousands)                     (In Thousands)
<S>                                        <C>       <C>       <C>             <C>      <C>          <C>
Interest income:
Loans receivable                             $2,212    $  596    $2,808          $2,086   $(1,345)   $  741
Investment securities available
  for sale                                      945       438     1,383           2,031      (442)    1,589
Investment securities held to maturity          (36)        -       (36)            (89)      (18)     (107)
Other interest earning assets                  (187)       88       (99)           (198)      (62)     (260)
                                             ------    ------    ------          ------   -------    ------
  Total interest-earning assets               2,934     1,122     4,056           3,830    (1,867)    1,963
                                             ------    ------    ------          ------   -------    ------
Interest expense:
Money market accounts                           (24)      230       206             385      (180)      205
Certificates of deposit                       1,024       922     1,946             727      (631)       96
Other liabilities                               430       362       792             568       189       757
                                             ------    ------    ------          ------   -------    ------
  Total interest-bearing liabilities          1,430     1,514     2,944           1,680      (622)    1,058
                                             ------    ------    ------          ------   -------    ------
Net change in interest income                $1,504    $ (392)   $1,112          $2,150   $(1,245)   $  905
                                             ======    ======    ======          ======   =======    ======

</TABLE>
         Provision  for Loan Losses:  The Company  recorded a provision for loan
losses of $300,000 for 2000,  1999, and 1998. The evaluation for determining the
provision   includes   evaluations  of  concentrations  of  credit,   past  loss
experience,  current  economic  conditions,  amount and  composition of the loan
portfolio   (including  loans  being  specifically   monitored  by  management),
estimated fair value of underlying  collateral,  loan  commitments  outstanding,
delinquencies, and other information available at such times.

         The Company will  continue to monitor its allowance for loan losses and
make future  adjustments to the allowance  through the provision for loan losses
as economic conditions dictate. Although the Company maintains its allowance for
loan  losses at a level that it  considers  to be  adequate  to provide  for the
inherent  risk of loss in its loan  portfolio,  there can be no  assurance  that
future losses will not exceed  estimated  amounts or that additional  provisions
for loan losses will not be required in future  periods due to the higher degree
of  credit  risk  which  might  result  from the  change  in the mix of the loan
portfolio.

         Other Income: Total other income increased  approximately  $182,000, or
6.6%, to $2.9 million for the year ended December 31, 2000 from $2.8 million for
the year ended  December 31, 1999. The increases were the result of service fees
and debit card fees totaling $282,000, $115,000 gain from the sale of the credit
card portfolio,  offset by investment security losses of $107,000.  The increase
in service  fees  resulted  from an increase in  overdraft  fees due to a larger
deposit base from the prior year.  The increase in debit card fees resulted from
increased customer usage.

                                      -6-
<PAGE>

         For the year ended  December  31, 1999,  total other  income  increased
approximately $671,000, or 32.0%, to $2.8 million from $2.1 million for the year
ended  December 31, 1998.  This  increase was  primarily the result of overdraft
service charges on deposit  accounts,  a larger deposit base, and ATM surcharges
assessed  on  non-customers  of Irwin  Bank.  The  Company  began to assess  ATM
surcharges in January 1999.

         Other  Expenses:  Total other  expenses  increased  approximately  $1.0
million,  or 10.9%,  to $10.2 million for 2000 from $9.2 million for 1999.  This
increase was  primarily  the result of an increase in salaries of  approximately
$500,000 to $4.1  million for 2000 from $3.6  million  for 1999.  As  previously
disclosed,  the Company  instituted  an across the board salary  increase to all
non-officer  employees and eliminated  the bonus reward program for  non-officer
employees  in  January  2000.  Pension  and other  employee  benefits  increased
approximately  $61,000 to $1.1  million  for 2000 from $1.0  million  for 1999 a
result of  increases  in health  insurance  premiums.  Data  processing  and ATM
expenses  increased  $89,000 to $1.0 million in 2000 from $900,000 in 1999. Such
increases were a result of increased fees from the Company's  processors.  Other
expenses increased $200,000 to $3.0 million for 2000 from $2.8 million for 1999.
The increase in other expenses includes  approximately  $76,000 in aggregate net
losses from the Company's  investments  in IB&T Financial  Services,  LLC ("IB&T
Financial")  and T.A. of Irwin,  L.P..  The investment in IB&T Financial will be
dissolved in the second quarter of 2001.

         Total other expenses increased approximately $800,000, or 9.5%, to $9.2
million for 1999 from $8.4  million for 1998.  This  increase  was the result of
pension and other  employee  benefits  increasing  $176,000 to $995,000 for 1999
from  $819,000  for 1998.  During 1999,  pension  expense  increased  due to the
Company's change in accrual  assumptions  regarding the funding of the plan. ATM
expense increased $49,000 to $348,000 for 1999 from $299,000 for 1998 due to the
increase of seven additional automated teller machines during fiscal 1998. Other
expenses increased $500,000 to $2.8 million for 1999 from $2.3 million for 1998,
primarily as a result of normal costs in running a public company.  It should be
noted that salaries  remained  relatively  unchanged in 1999 as compared to 1998
primarily  due to the  retirement  on January 1, 1999 of two key officers of the
Company.

                                      -7-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         The Company's primary sources of funds include savings,  deposits, loan
repayments and prepayments,  cash from operations and borrowing from the Federal
Home Loan Bank. The Company uses its capital resources  principally to fund loan
originations and purchases, repay maturing borrowings, purchase investments, and
for  short-term  liquidity  needs.  The  Company  expects  to be able to fund or
refinance,  on a timely basis, its commitments and long-term liabilities.  As of
December  31,  2000,  the  Company  had  commitments  to extend  credit of $58.4
million.

         The Company's liquid assets consist of cash and cash equivalents, which
include  investments in short-term  investments.  The levels of these assets are
dependent on the  Company's  operating,  financing,  and  investment  activities
during any given period. At December 31, 2000, cash and cash equivalents totaled
$21.7 million

         Net cash from operating  activities  for 2000 totaled $7.3 million,  as
compared to $6.5 million for 1999 and $5.9 million for 1998.

         Net cash used by investing  activities  for 2000 totaled $44.0 million,
as compared to cash used of $61.8  million for 1999 and $30.3  million for 1998.
The decrease of $17.8 million for 2000 was mainly attributed to net decreases in
purchases of available for sale securities.  Net cash used to purchase available
for sale securities for 2000 decreased $26.0 million.  Net cash used to purchase
available for sale  securities for 1999 totaled $27.1  million.  The decrease of
$2.2  million for 1998 was mainly  attributed  to a net decrease in purchases of
investment securities available for sale.

         Net cash from financing activities for the year ended December 31, 2000
totaled $39.2 million,  as compared to cash from  financing  activities of $31.2
million for 1999 and $40.1 million for 1998.  The $8.0 million  increase in cash
from financing  activities for 2000 was a result of a $28.7 million  increase in
deposits  offset  by a  decrease  of  $3.9  million  in  securities  sold  under
agreements to repurchase and a $7.0 million decrease in federal funds purchased.
The $8.8  million  decrease  in cash from  financing  activities  for 1999 was a
result of a $19.8 million  decrease in deposits and repayment of $2.0 million in
long-term debt. Offsetting such decrease was the introduction of securities sold
under agreements to repurchase totaling $6.5 million and federal funds purchased
which totaled $7.0 million for the year ended December 31, 1999.

         Liquidity  may be adversely  affected by unexpected  deposit  outflows,
excessive  interest rates paid by competitors,  and similar matters.  Management
monitors projected liquidity needs and determines the level desirable,  based in
part on the Company's  commitment to make loans and  management's  assessment of
the Company's  ability to generate funds. The Company is also subject to federal
regulations that impose certain minimum capital requirements.

                                      -8-
<PAGE>

MARKET RISK

         Market risk is the risk of loss from adverse  changes in market  prices
and rates.  The Company's  market risk arises  primarily from interest rate risk
inherent in its lending, investment and deposit taking activities. The Company's
profitability  is  affected by  fluctuations  in  interest  rates.  A sudden and
substantial  increase  in  interest  rates may  adversely  impact the  Company's
earnings to the extent that the interest  rates borne by assets and  liabilities
do not change at the same speed,  to the same  extent or on the same  basis.  To
that end,  management  actively  monitors  and  manages its  interest  rate risk
exposure.

         The principle  objective of the Company's interest rate risk management
is to  evaluate  the  interest  rate risk  inherent  in  certain  balance  sheet
accounts,  determine the level of risk appropriate given the Company's  business
strategy,  operating  environment,   capital  and  liquidity  requirements,  and
performance  objectives,  and  mange  the  risk  consistent  with  the  Board of
Directors' approved  guidelines.  Through such management,  the Company seeks to
minimize the  vulnerability  of its operations to changes in interest rates. The
Company's  Asset/Liability  Committee  is  comprised  of  the  Company's  senior
management under the direction of the Board of Directors, with senior management
responsible  for  reviewing  with the  Board of  Directors  its  activities  and
strategies, the effect of those strategies on the company's net interest margin,
the market value of the portfolio and the effect that changes in interest  rates
will have on the Company's portfolio and the Company's exposure limits.

The Company utilizes the following strategies to manage interest rate risk:

o    When market  conditions  permit,  to  originate  and hold in its  portfolio
     adjustable  rate loans;
o    Sell fixed rate mortgage  loans that conform to Federal  National  Mortgage
     Association guidelines when sales can be achieved on terms favorable to the
     Company;
o    Lengthen  the  maturities  of its  liabilities  when deemed cost  effective
     through the utilization of Federal Home Loan Bank advances;
o    Purchase  mortgage-backed  securities for the available for sale securities
     portfolio  with  cash  flows  that  can be  reinvested  in  higher  earning
     instruments when interest rates rise; and
o    Generally, maintain securities in the available for sale portfolio that are
     short term to offset the risk of long term fixed rate  mortgage  loans in a
     rising rate environment.

                                      -9-
<PAGE>

     The following  table shows the  Company's  financial  instruments  that are
     sensitive to changes in interest rates, categorized by expected maturity or
     repricing maturity,  and the instruments' fair values at December 31, 2000.
     Market  risk  sensitive   instruments   are  generally   defined  as  those
     instruments  that can be adversely  impacted by changes in market  interest
     rates.  The Company  currently does not  participate  in hedging  programs,
     interest rate swaps or other  activities  involving the use of  off-balance
     sheet  derivative  financial  instruments,  but may do so in the  future to
     mitigate interest rate risk. Expected maturities are contractual maturities
     adjusted for prepayments of principle. The Company uses certain assumptions
     to  estimate  fair  values and  expected  maturities.  For asset,  expected
     maturities are based upon  contractual  maturity,  call dates and projected
     repayments of principle.  For interest  earning assets,  no prepayments are
     assumed. For interest bearing  liabilities,  negotiable order of withdrawal
     ("NOW")  accounts,  money market  accounts,  and similar  interest  bearing
     demand  accounts are subject to immediate  withdrawal  or repricing and are
     therefore presented in the earliest period in the table.

Expected Maturity/Principal Repayment at December 31,

<TABLE>
<CAPTION>
                                                                                  Total    Book      Fair
                                2001      2002      2003      2004      2005   Thereafter  Value     Value
                               -------   -------   -------   -------   -------   -------   -------   -------
                                                           (Dollars in thousands)
<S>                          <C>      <C>        <C>       <C>       <C>      <C>       <C>       <C>
Interest-earning assets
-----------------------
Mortgage loans                $  6,732   $10,276   $ 7,191   $ 7,493    $7,966  $113,095  $152,753  $149,406

Home equity loans,
  second mortgage
  loans, student loans,
  other loans                   20,147    11,709    10,330     7,888     6,564    25,999    82,637    85,284

Commercial loans,
  municipal loans               12,575     4,480     3,477     2,835     1,870    33,384    58,621    58,997

Investment securities
  available for sale             7,827    13,996     9,070    13,953     6,237   114,540   165,623   165,910

Interest-bearing liabilities
----------------------------
NOW and other
  transaction accounts          11,786         -         -         -         -         -    11,786    11,786

Money market and other
  savings accounts             127,934         -         -         -         -         -   127,934   127,934

Certificates of deposit        140,949    39,282    14,815     3,824     3,273     3,193   205,336   207,589

Federal home loan bank
  of Pittsburgh advances         6,000     2,000         -    10,000         -    10,000    28,000    28,968

</TABLE>
                                      -10-
<PAGE>

[LOGO]        Certified Public Accountants & Business Advisors
EDWARDS       ------------------------------------------------------------
SAUER &       500 Warner Centre, 332 Fifth Avenue, Pittsburgh, PA 15222
OWENS         Phone: 412-281-9211  Fax: 412-281-2407  A Professional Corporation
              www. esocpa.com


                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors
IBT Bancorp, Inc.
Irwin, Pennsylvania


We have audited the  accompanying  consolidated  balance  sheets of IBT Bancorp,
Inc.  (the  Bancorp),  and  subsidiary  as of December 31, 2000 and 1999 and the
related consolidated  statements of income,  changes in stockholders' equity and
cash flows for each of the three years in the period  ended  December  31, 2000.
These consolidated  financial statements are the responsibility of the Bancorp's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial  position of IBT Bancorp,  Inc.
and  subsidiary  as of  December  31,  2000 and  1999,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.



/s/Edwards Sauer & Owens

Pittsburgh, Pennsylvania
February 1, 2001

                                      -11-
<PAGE>
                          CONSOLIDATED BALANCE SHEETS

                        IBT BANCORP, INC. AND SUBSIDIARY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                December 31,
                                                       ------------------------------
                                                              2000              1999
                                                       -------------    -------------
<S>                                                  <C>              <C>
 ASSETS
      Cash and due from banks                          $  12,877,327    $  19,171,977
      Interest-bearing deposits in banks                   4,740,068           92,590
      Federal funds sold                                   4,129,000                -
      Certificates of deposit                              2,700,000        3,000,000
      Securities available for sale                      165,909,886      149,098,906
      Federal Home Loan Bank stock, at cost                1,964,300        1,964,300
      Loans, net of allowance for loan losses of
           $1,919,327 in 2000 and $2,365,874 in 1999     291,914,060      260,502,270
      Premises and equipment, net                          4,899,777        4,728,702
      Other assets                                         7,245,015        7,162,670
                                                       -------------    -------------
Total Assets                                           $ 496,379,433    $ 445,721,415
                                                       =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
      Deposits
           Non-interest bearing                        $  64,316,265    $  57,097,999
           Interest-bearing                              345,322,197      311,582,486
                                                       -------------    -------------
           Total deposits                                409,638,462      368,680,485

      Repurchase agreements                                9,022,190        6,456,597
      Federal funds purchased                                      -        7,000,000
      Accrued interest and other liabilities               5,104,200        3,679,053
      Long-term debt                                      28,000,000       22,000,000
                                                       -------------    -------------
      Total liabilities                                  451,764,852      407,816,135

Stockholders' Equity
      Capital stock, par value $1.25, 50,000,000
           shares authorized, 3,023,799 shares
           issued, 3,001,923 and 3,021,174
           shares outstanding at December 31, 2000
           and December 31, 1999, respectively             3,779,749        3,779,749
      Surplus                                              2,073,102        2,073,102
      Retained earnings                                   39,261,880       35,318,637
      Accumulated other comprehensive income                 189,326       (3,178,596)
                                                       -------------    -------------
                                                          45,304,057       37,992,892
      Less:  Treasury stock, at cost                        (689,476)         (87,612)
                                                       -------------    -------------
      Total stockholders' equity                          44,614,581       37,905,280
                                                       -------------    -------------
Total Liabilities and Stockholders' Equity             $ 496,379,433    $ 445,721,415
                                                       =============    =============
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      -12-
<PAGE>
                       CONSOLIDATED STATEMENTS OF INCOME

                        IBT BANCORP, INC. AND SUBSIDIARY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                       Years ended December 31,
                                              --------------------------------------------
                                                   2000           1999            1998
                                              ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
Interest Income
        Loans, including fees                 $ 22,807,718    $ 19,999,321    $ 19,259,384
        Investment securities                   10,578,510       9,231,496       7,748,537
        Federal funds sold                         400,886         499,811         760,495
                                              ------------    ------------    ------------
        Total interest income                   33,787,114      29,730,628      27,768,416

Interest Expense
        Deposits                                14,603,671      12,473,855      12,174,469
        Long-term debt                           1,586,859         974,405         411,647
        Repurchase agreements                      362,684         191,193               -
        Federal funds purchased                     34,354           4,135               -
                                              ------------    ------------    ------------
        Total interest expense                  16,587,568      13,643,588      12,586,116
                                              ------------    ------------    ------------
Net Interest Income                             17,199,546      16,087,040      15,182,300

Provision for Loan Losses                          300,000         300,000         300,000
                                              ------------    ------------    ------------
Net Interest Income after Provision
for Loan Losses                                 16,899,546      15,787,040      14,882,300

Other Income (Losses)
        Service fees                             1,645,913       1,497,861       1,190,223
        Investment security gains                        -          53,194          61,312
        Investment security losses                (106,974)        (29,687)        (20,901)
        Debit card fees                            401,080         266,079         162,107
        Other income                             1,006,422         976,619         700,567
                                              ------------    ------------    ------------
        Total other income                       2,946,441       2,764,066       2,093,308

Other Expenses
        Salaries                                 4,084,817       3,566,947       3,573,257
        Pension and other employee benefits      1,056,116         994,960         818,669
        Occupancy expense                        1,020,734         949,662         903,112
        Data processing expense                    588,193         535,108         505,484
        ATM expense                                383,935         348,414         298,843
        Other expenses                           3,047,492       2,837,870       2,338,737
                                              ------------    ------------    ------------
        Total other expenses                    10,181,287       9,232,961       8,438,102
                                              ------------    ------------    ------------
Income Before Income Taxes                       9,664,700       9,318,145       8,537,506

Provision for Income Taxes                       2,959,439       2,982,391       2,736,576
                                              ------------    ------------    ------------
Net income                                    $  6,705,261    $  6,335,754    $  5,800,930
                                              ============    ============    ============
Basic Earnings per Share                      $       2.23    $       2.10    $       1.92
                                              ============    ============    ============
Diluted Earnings per Share                    $       2.23    $       2.10    $       1.92
                                              ============    ============    ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      -13-
<PAGE>
                      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

                                   IBT BANCORP, INC. AND SUBSIDIARY

                             Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                    Accumulated
                                                                                       Other
                                  Capital                            Retained      Comprehensive       Treasury
                                   Stock            Surplus          Earnings          Income            Stock          Total
                               ---------------  ----------------  ---------------  ----------------  ---------------  -------------
<S>                          <C>              <C>               <C>              <C>               <C>              <C>

Balance at
December 31, 1997              $    1,200,000   $     2,400,000   $   29,792,223   $       909,635   $            -   $ 34,301,858

Comprehensive Income
      Net income                                                       5,800,930                                         5,800,930
      Other comprehensive
        income, net of tax:
        Change in net
          unrealized holding
          gains on securities
          available for sale,
          net of deferred
          income tax of
          $43,853                                                                           85,127                          85,127

        Less: reclassification
          adjustment, net of
          deferred income
          tax benefit of
          $25,039                                                                          (48,606)                        (48,606)
                                                                                                                      -------------
                                                                                                                            36,521
                                                                                                                      -------------
            Total
            Comprehensive
            Income                                                                                                       5,837,451

Cash dividends ($0.64)                                                (1,938,380)                                       (1,938,380)

5% stock dividend                      59,916         2,192,935       (2,252,851)

Three-for-one stock split           2,519,833        (2,519,833)
                               ---------------  ----------------  ---------------  ----------------  ---------------  -------------
Balance at
December 31, 1998              $    3,779,749   $     2,073,102   $   31,401,922   $       946,156   $            -   $ 38,200,929

</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      -14-

<PAGE>
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (CONTINUED)

                          IBT BANCORP, INC. AND SUBSIDIARY

                    Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                    Accumulated
                                                                                       Other
                                   Capital                           Retained      Comprehensive       Treasury
                                    Stock           Surplus          Earnings           Income           Stock            Total
                               ---------------- ---------------- -----------------  ---------------  --------------  ---------------
<S>                          <C>              <C>               <C>              <C>               <C>              <C>
Balance at
December 31, 1998              $     3,779,749  $     2,073,102  $     31,401,922   $      946,156   $          -    $  38,200,929

Comprehensive Income
   Net income                                                           6,335,754                                        6,335,754
   Other comprehensive
     income, net of tax:
     Change in net
       unrealized holding
       gains on securities
       available for sale,
       net of deferred
       income tax benefit
       of $2,034,128                                                                    (3,948,601)                     (3,948,601)

     Less: reclassification
       adjustment, net of
       deferred income
       tax benefit of
       $90,744                                                                            (176,151)                       (176,151)
                                                                                                                      -------------
                                                                                                                        (4,124,752)
                                                                                                                      -------------
       Total Comprehensive
         Income                                                                                                          2,211,002

Cash dividends ($0.80)                                                 (2,419,039)                                      (2,419,039)

Purchase of Treasury Stock                                                                                (87,612)         (87,612)
                               ---------------- ---------------- -----------------  ---------------  --------------  --------------
Balance at
December 31, 1999              $     3,779,749  $     2,073,102  $     35,318,637   $   (3,178,596)  $    (87,612)   $  37,905,280
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      -15-

<PAGE>
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (CONTINUED)

                             IBT BANCORP, INC. AND SUBSIDIARY

                       Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                         Accumulated
                                                                                            Other
                                    Capital                              Retained       Comprehensive    Treasury
                                     Stock            Surplus            Earnings           Income         Stock          Total
                               ------------------ -----------------  ---------------- ---------------- ------------- --------------
<S>                          <C>                <C>                <C>              <C>              <C>           <C>
Balance at
December 31, 1999              $       3,779,749  $      2,073,102   $    35,318,637  $   (3,178,596)  $   (87,612)  $  37,905,280

Comprehensive Income
   Net income                                                              6,705,261                                     6,705,261
   Other comprehensive
     income, net of tax:
     Change in net
       unrealized holding
       gains on securities
       available for sale,
       net of deferred
       income tax  of
       $1,722,575                                                                           3,343,822                    3,343,822

     Less: reclassification
       adjustment, net of
       deferred income
       tax of $12,415                                                                          24,100                       24,100
                                                                                                                     --------------
                                                                                                                         3,367,922
                                                                                                                     --------------
       Total Comprehensive
         Income                                                                                                         10,073,183

Cash dividends ($0.92)                                                    (2,762,018)                                   (2,762,018)

Purchase of Treasury Stock                                                                                 (601,864)      (601,864)
                               ------------------ -----------------  ---------------- ---------------- ------------- --------------
Balance at
December 31, 2000              $       3,779,749  $      2,073,102   $    39,261,880  $       189,326  $   (689,476) $  44,614,581
                               =================  ================   ===============  ===============  ============  =============
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      -16-

<PAGE>
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                        IBT BANCORP, INC. AND SUBSIDIARY

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                         Years ended December 31,
                                                                              --------------------------------------------
                                                                                   2000            1999            1998
                                                                              ------------    ------------    ------------
<S>                                                                         <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                              $  6,705,261    $  6,335,754    $  5,800,930
      Adjustments to reconcile net cash
        from operating activities:
          Depreciation                                                             528,335         499,068         482,000
          Net amortization/accretion of premiums and discounts                      (9,800)         20,934             971
          Net investment security losses (gains)                                   106,974         (23,507)        (40,411)
          Provision for loan losses                                                300,000         300,000         300,000
          Increase (decrease) in cash due to
            changes in assets and liabilities:
              Other assets                                                      (1,610,223)       (566,193)       (598,713)
              Accrued interest and other liabilities                             1,327,616        (102,823)        (56,069)
                                                                              ------------    ------------    ------------
      Net Cash From Operating Activities                                         7,348,163       6,463,233       5,888,708

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of certificates of deposit                                       (2,700,000)     (3,000,000)              -
      Proceeds from maturity of certificates of deposit                          3,000,000               -               -
      Proceeds from sales of securities available for sale                       6,153,348       7,579,149       2,166,459
      Proceeds from maturities of securities held to maturity                            -       2,569,215       3,285,760
      Proceeds from maturities of securities available for sale                 12,000,998      50,293,783      48,173,553
      Purchase of securities available for sale                                (29,959,587)    (95,748,942)    (61,085,311)
      Net loans made to customers                                              (31,821,372)    (22,530,641)    (22,289,232)
      Purchases of premises and equipment                                         (699,410)       (348,637)       (433,875)
      Purchase of Federal Home Loan Bank stock                                           -        (656,200)       (137,400)
                                                                              ------------    ------------    ------------
      Net Cash Used By Investing Activities                                    (44,026,023)    (61,842,273)    (30,320,046)

CASH FLOWS FROM FINANCING ACTIVITIES
      Net increase in deposits                                                  40,957,977      12,297,347      32,065,713
      Net increase in securities sold
      under agreements to repurchase                                             2,565,593       6,456,597               -
      Net (decrease) increase in federal
        funds purchased                                                         (7,000,000)      7,000,000               -
      Dividends                                                                 (2,762,018)     (2,419,039)     (1,938,380)
      Proceeds from long-term debt                                               7,000,000      10,000,000      10,000,000
      Repayment of long-term debt                                               (1,000,000)     (2,000,000)              -
      Purchase of treasury stock                                                  (601,864)        (87,612)              -
                                                                              ------------    ------------    ------------
      Net Cash From Financing Activities                                        39,159,688      31,247,293      40,127,333
                                                                              ------------    ------------    ------------
Net Change in Cash and Cash Equivalents                                          2,481,828     (24,131,747)     15,695,995

Cash and Cash Equivalents at Beginning of Year                                  19,264,567      43,396,314      27,700,319
                                                                              ------------    ------------    ------------
Cash and Cash Equivalents at End of Year                                      $ 21,746,395    $ 19,264,567    $ 43,396,314
                                                                              ============    ============    ============
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      -17-

<PAGE>
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                    --------------------------------------------
                                                        2000            1999           1998
                                                    -------------   ------------    ------------
<S>                                                <C>            <C>             <C>
SUPPLEMENTAL DISCLOSURES

       Cash payments for:
           Interest                                  $ 15,052,496   $ 13,736,652    $ 12,629,351

           Income taxes                              $  2,904,000   $  2,987,643    $  2,716,954


NON CASH TRANSACTIONS

       Recorded unrealized gains (losses)
           on securities available for sale
           at December 31                            $    286,857   $ (4,816,056)   $  1,433,568

       Deferred income taxes (benefit) on recorded
           unrealized gains (losses) on securities
           available for sale at December 31         $     97,531   $ (1,637,460)   $    487,412

       Loans transferred to foreclosed real estate
           during the year                           $    320,992   $    211,410    $    178,548

       Capital stock distributed as dividend

           Capital stock                             $          -   $          -     $    59,916
           Surplus                                   $          -   $          -     $ 2,192,935

       Three-for-one stock split in the form of a
           stock dividend

           Capital stock                             $          -   $          -     $ 2,519,833
           Surplus                                   $          -   $          -     $(2,519,833)

</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      -18-

<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations: IBT Bancorp, Inc. (the Bancorp), is a bank holding company
whose  principal  activity is the ownership  and  management of its wholly owned
subsidiary,  Irwin Bank and Trust Company (the Bank). The Bank is a full service
state  chartered  commercial  banking  institution  and  provides  a variety  of
financial  services to  individuals  and  corporate  customers  through its five
branch offices, a loan center, five supermarket branches and main office located
in  Southwestern   Pennsylvania.   The  Bank's  primary  deposit   products  are
non-interest  and  interest-bearing  checking  accounts,  savings  accounts  and
certificates of deposit.  Its primary  lending  products are  single-family  and
multi-family residential loans, installment loans and commercial loans.

Principles of Consolidation:  The consolidated  financial statements include the
accounts of the Bancorp and the Bank. All significant intercompany accounts have
been eliminated in the consolidation.

Use of Estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Material  estimates that are  particularly  susceptible  to  significant  change
relate to the  determination  of the allowance for loan losses and the valuation
of real estate  acquired in connection  with  foreclosures or in satisfaction of
loans.  In connection with the  determination  of the allowances for loan losses
and  foreclosed  real estate,  management  obtains  independent  appraisals  for
significant properties.

Investment  Securities:  All investments in debt and equity securities are to be
classified  into three  categories.  Securities  which  management  has positive
intent and ability to hold until  maturity are  classified  as held to maturity.
Securities  held to maturity are stated at cost,  adjusted for  amortization  of
premium and  accretion of discount  computed on a level yield basis.  Securities
that are bought and held principally for the purpose of selling them in the near
term are classified as trading  securities.  All other securities are classified
as  available  for sale  securities.  Unrealized  holding  gains and  losses for
trading securities are included in earnings. Unrealized holding gains and losses
for available for sale securities are excluded from earnings and reported net of
income taxes as a separate component of stockholders' equity until realized.  At
this time,  management  has no intention of  establishing  a trading  securities
classification.

Interest and dividends on securities are reported as interest income.  Gains and
losses  realized on sales of securities  represent the  differences  between net
proceeds and carrying values determined by the specific identification method.

Loans  and  Allowance  for Loan  Losses:  Loans are  stated at unpaid  principal
balances, less the allowance for loan losses and net deferred loan fees.

Loan  origination  and commitment  fees, as well as certain  direct  origination
costs,  are deferred and amortized as a yield  adjustment  over the lives of the
related loans using the interest  method.  Amortization of deferred loan fees is
discontinued when a loan is placed on nonaccrual status.

                                      -19-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The allowance for loan losses is  maintained at a level which,  in  management's
judgement,  is  adequate  to  absorb  potential  losses  inherent  in  the  loan
portfolio.  The amount of the allowance is based on  management's  evaluation of
the collectibility of the loan portfolio, including the nature of the portfolio,
credit concentrations,  trends in historical loss experience,  specific impaired
loans,  and economic  conditions.  Allowances for impaired  loans  generally are
determined  based on collateral  values or the present  value of estimated  cash
flows.  The  allowance  is increased  by a provision  for loan losses,  which is
charged to expense,  and reduced by  charge-offs,  net of recoveries.  Loans are
placed on  nonaccrual  status  when they are 90 days past due,  unless  they are
adequately collateralized and in the process of collection.

Premises  and  Equipment:  Premises  and  equipment  are  stated  at  cost  less
accumulated  depreciation  computed on both the  straight-line  and  accelerated
methods over the estimated useful lives of the assets. Costs for maintenance and
repairs are expensed  currently.  Cost of major  additions or  improvements  are
capitalized.

Other Real Estate Owned (OREO):  Real estate  properties  acquired through or in
lieu of loan  foreclosure  are  initially  recorded  at the lower of the  Bank's
carrying  amount  or fair  value  less  estimated  selling  cost at the  date of
foreclosure.  Any  write-downs  based on the  asset's  fair value at the date of
acquisition  are charged to the  allowance for loan losses.  After  foreclosure,
these assets are carried at the lower of their new cost basis or fair value less
cost to sell.  Costs  of  significant  property  improvements  are  capitalized,
whereas  costs  relating  to  holding  property  are  expensed.  Valuations  are
periodically  performed  by  management,  and  any  subsequent  write-downs  are
recorded as a charge to operations,  if necessary,  to reduce the carrying value
of a property to the lower of its cost or fair value less cost to sell.

Income  Taxes:  The Bancorp  uses an asset and  liability  approach to financial
accounting and reporting for income taxes.  Deferred tax assets and  liabilities
are  recognized  for the future tax  consequences  attributable  to  differences
between  the  financial  statement  carrying  amounts  of  existing  assets  and
liabilities and their respective tax bases.  Deferred tax assets and liabilities
are measured  using enacted tax rates expected to apply to taxable income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled. Valuation allowances are established, when necessary to reduce deferred
tax assets to the amount expected to be realized.  Income tax expense is the tax
payable or refundable  for the period plus or minus the change during the period
in deferred tax assets and liabilities.  The Bancorp files consolidated  Federal
income tax returns with its subsidiary.

Earnings  per  Share:  Earnings  per  share are  calculated  on the basis of the
weighted  average  number of shares  outstanding.  The weighted  average  shares
outstanding,  giving  retroactive  effect of the stock dividend and stock split,
described in Note 17, was 3,003,334, 3,023,770 and 3,023,799 for the years ended
December 31, 2000, 1999 and 1998, respectively.

Cash  Equivalents:  For purposes of the  Statements  of Cash Flows,  the Bancorp
considers all highly liquid debt instruments  purchased with a maturity of three
months  or less to be cash  equivalents.  The  Bancorp  considers  all  cash and
amounts due from  depository  institutions,  interest-bearing  deposits in other
banks, except certificates of deposit with maturities of more than three months,
and federal funds sold to be cash  equivalents for purposes of the statements of
cash flows.

                                      -20-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Reclassification  of Prior Year's Statements:  Certain previously reported items
have been  reclassified  to conform to the current year's  classifications.  The
reclassifications  have  no  effect  on  total  assets,  total  liabilities  and
stockholders' equity, or net income.

NOTE 2 -- INVESTMENT SECURITIES

Investment securities available for sale consist of the following:

<TABLE>
<CAPTION>
                                                        December 31, 2000
                                 ---------------------------------------------------------------
                                                     Gross           Gross
                                    Amortized      Unrealized       Unrealized         Market
                                      Cost           Gains           Losses            Value
                                 -------------   -------------    --------------   -------------
<S>                            <C>             <C>              <C>              <C>
Obligations of
      U.S. Government Agencies   $  97,470,750   $     340,966    $           -    $  97,811,716
Obligations of State and
      political sub-divisions       18,505,643         404,526                -       18,910,169
Mortgage-backed securities          44,679,971               -         (548,183)      44,131,788
Other securities                       817,265           5,562           (2,200)         820,627
Equity securities                    4,149,400          86,186                -        4,235,586
                                 -------------   -------------    -------------    -------------
                                 $ 165,623,029   $     837,240    $    (550,383)   $ 165,909,886
                                 =============   =============    =============    =============
</TABLE>

<TABLE>
<CAPTION>
                                                        December 31, 1999
                                 ---------------------------------------------------------------
                                                     Gross           Gross
                                    Amortized      Unrealized       Unrealized         Market
                                      Cost           Gains           Losses            Value
                                 -------------   -------------    --------------   -------------
<S>                            <C>             <C>              <C>              <C>
Obligations of
      U.S. Government Agencies   $  93,081,432   $           -    $  (2,337,153)   $  90,744,279
Obligations of State and
      political sub-divisions       10,855,620           3,791         (323,614)      10,535,797
Mortgage-backed securities          49,245,605               -       (2,240,851)      47,004,754
Other securities                       577,895           5,713                -          583,608
Equity securities                      154,410          76,058                -          230,468
                                 -------------   -------------    -------------    -------------
                                 $ 153,914,962   $      85,562    $  (4,901,618)   $ 149,098,906
                                 =============   =============    =============    =============
</TABLE>
                                      -21-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 2 -- INVESTMENT SECURITIES (CONTINUED)

Gross  realized  gains  and  losses  on calls  and  sales of  available-for-sale
securities were:

<TABLE>
<CAPTION>
                                                       Years Ended December 31,
                                                   ------------------------------
                                                     2000       1999       1998
                                                   --------   --------   --------
<S>                                              <C>        <C>        <C>
Gross realized gains:
U.S. Treasury securities                           $      -   $ 21,143   $      -
Obligations of U.S. Government Agencies                   -      9,790     58,191
Obligations of state and political sub-divisions          -          -      3,121
Mortgage-backed securities                                -     22,261          -
                                                   --------   --------   --------
                                                   $      -   $ 53,194   $ 61,312
                                                   ========   ========   ========
Gross realized losses:
Obligations of U.S. Government Agencies            $106,974   $ 29,687   $      -
Mortgage-backed securities                                -          -     20,901
                                                   --------   --------   --------
                                                   $106,974   $ 29,687   $ 20,901
                                                   ========   ========   ========
</TABLE>

The  amortized  cost and  estimated  market value of the  investment  securities
available  for sale at December 31, 2000,  by  contractual  maturity,  are shown
below.  Expected  maturities  will differ from  contractual  maturities  because
issuers  have the right to call or prepay  obligations  with or without  call or
prepayment penalties.

The  amortized  cost and  estimated  market value of the  investment  securities
available for sale at December 31, 2000 are as follows:

                                                   Amortized         Market
                                                      Cost           Value
                                                  ------------   ------------

Due in one year or less                           $  7,827,333   $  7,816,785
Due after one year through five years               43,256,405     43,492,943
Due after five years through ten years              39,670,999     40,015,242
Due after ten years, includes equity securities     74,868,292     74,584,916
                                                  ------------   ------------
                                                  $165,623,029   $165,909,886
                                                  ============   ============

As a member of the  Federal  Home Loan Bank of  Pittsburgh  (FHLB),  the Bank is
required to  maintain a minimum  amount of FHLB  stock.  The  minimum  amount is
calculated  based  on  level  of  assets,  residential  real  estate  loans  and
outstanding  FHLB advances.  The Bank held  $1,964,300 of FHLB stock at December
31, 2000 and 1999.

                                      -22-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 3 -- LOANS

Major classifications of loans are as follows:

                                         December 31,
                                  ---------------------------
                                      2000           1999
                                  ------------   ------------

Mortgage                          $152,752,889   $130,347,599
Home equity credit                  10,067,310      8,885,737
Installment                         65,326,867     61,983,558
Commercial                          52,675,603     47,293,848
PHEAA                                6,631,715      6,166,194
Municipal                            5,945,048      6,346,773
Credit cards                              --        1,780,360
Other                                  611,416        210,097
                                  ------------   ------------
                                   294,010,848    263,014,166
Less:
      Allowance for loan losses      1,919,327      2,365,874
      Deferred loan fees               177,461        146,022
                                  ------------   ------------
                                  $291,914,060   $260,502,270
                                  ============   ============

In 2000, the Bank sold its credit card portfolio for  approximately  $1,760,000.
The realized gain on the sale was  approximately  $115,000  which is included in
other income on the statement of income.

The total  recorded  investment in impaired loans amounted to $0 at December 31,
2000 and  approximately  $150,000 at December 31, 1999.  The  allowance for loan
losses  related to impaired loans  amounted to $0 and  approximately  $22,500 at
December 31, 2000 and 1999, respectively.

Changes in the allowance for loan losses were as follows:


                                         Years Ended December 31,
                                  -----------------------------------------
                                     2000           1999           1998
                                  -----------    -----------    -----------

Balance, beginning of year        $ 2,365,874    $ 2,228,214    $ 2,340,283
Provision charged to operations       300,000        300,000        300,000
Loans charged off                    (767,486)      (175,436)      (526,117)
Recoveries                             20,939         13,096        114,048
                                  -----------    -----------    -----------
Balance, end of year              $ 1,919,327    $ 2,365,874    $ 2,228,214
                                  ===========    ===========    ===========

                                      -23-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998


NOTE 4 -- PREMISES AND EQUIPMENT

Premises and equipment which are stated at cost are as follows:

                                        December 31,
                                  -------------------------
                                      2000          1999
                                  -----------   -----------

Land                              $   450,466   $   450,466
Buildings and improvements          5,053,222     4,814,040
Furniture and equipment             4,780,789     4,320,561
                                  -----------   -----------
                                   10,284,477     9,585,067
Less:  Accumulated depreciation     5,384,700     4,856,365
                                  -----------   -----------
                                  $ 4,899,777   $ 4,728,702
                                  ===========   ===========


Depreciation  expense  was  $528,335 in 2000,  $499,068 in 1999 and  $482,000 in
1998.

Eight of the Bank's branch office  buildings and/or land are leased by the Bank.
These  leases  have  initial  terms of 1 to 20 years,  and all  contain  renewal
options for additional years.

The  following is a summary of the future  minimum  lease  payments  under these
operating leases:

For the year ended December 31,

                              2001                          $    167,257
                              2002                               145,587
                              2003                               120,625
                              2004                               107,050
                              2005 and thereafter                621,911
                                                            -------------
                                                            $  1,162,430
                                                            =============

Rental expense under these operating leases was $149,043,  $130,780 and $100,700
for the years ended December 31, 2000, 1999 and 1998, respectively.

                                      -24-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 5 -- DEPOSITS

Time deposits  maturing in years ending December 31, as of December 31, 2000 are
summarized as follows:


                  2001                          $140,949,056
                  2002                            39,282,196
                  2003                            14,815,296
                  2004                             3,824,302
                  2005 and thereafter              6,465,505
                                                -------------
                                                $205,336,355
                                                =============

The Bank held related party deposits of approximately  $3,272,000 and $4,541,000
at December 31, 2000 and 1999, respectively.

The  Bank  held  time  deposits  that  exceeded   $100,000  of  $36,942,793  and
$34,132,826 at December 31, 2000 and 1999, respectively.

NOTE 6 -- REPURCHASE AGREEMENT

During 1999,  the Bank began  offering  its  corporate  customers an  investment
product fashioned in the form of a repurchase agreement.  Under the terms of the
agreement,  deposits in designated  demand accounts of the customer are put into
an investment  vehicle which is used daily to purchase an interest in designated
U.S.  Government  or Agencies'  securities  owned by the Bank.  The Bank in turn
agrees to repurchase these investments on a daily basis and pay the customer the
daily  interest  earned  on  them.  The  amount  of  repurchase  agreements  was
$9,022,190 and $6,456,597 at December 31, 2000 and 1999, respectively.

NOTE 7 -- PLEDGED ASSETS

At  December  31,  2000  and  1999,  U.S.  Government   obligations  carried  at
approximately $37,000,000 and $32,250,000, respectively, were pledged to qualify
for fiduciary powers, to secure public monies and for other purposes required or
permitted  by law.  At  December  31,  2000 and  1999,  the  carrying  amount of
securities pledged to secure repurchase agreements was approximately $14,000,000
and $11,000,000, respectively.

                                      -25-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 8 -- INCOME TAXES

The provision for income taxes consists of:

                                 Years Ended December 31,
                         ----------------------------------------
                             2000          1999           1998
                         -----------   -----------    -----------
Currently payable        $ 2,815,429   $ 3,012,368    $ 2,618,602
Deferred tax (benefit)       144,010       (29,977)       117,974
                         -----------   -----------    -----------
Total                    $ 2,959,439   $ 2,982,391    $ 2,736,576
                         ===========   ===========    ===========

The significant  components of temporary differences for 2000, 1999 and 1998 are
as follows:

                                 Years Ended December 31,
                            -----------------------------------
                              2000         1999         1998
                            ---------    ---------    ---------
Provision for loan losses   $ 151,347    $ (46,906)   $  38,201
Depreciation                  (12,665)      (5,387)      10,559
Valuation allowance               550          553          550
Pension                        20,168       38,301       67,732
Deferred loan fees            (10,689)        (722)      10,222
Other                          (4,701)     (15,816)      (9,290)
                            ---------    ---------    ---------
Total                       $ 144,010    $ (29,977)   $ 117,974
                            =========    =========    =========

A  reconciliation  of the federal  statutory  tax rate to the effective tax rate
applicable to income before income taxes is as follows:

                                Years Ended December 31,
                             -------------------------------
                                 % of Pretax Income
                             -------------------------------
                              2000         1999         1998
                             ------       ------      ------

Provision at statutory rate   34.0 %       34.0 %       34.0 %
Effect of tax free income     (3.1)        (2.0)        (2.0)
Other                         (0.3)           -           .1
                            ------       ------       ------
Effective tax rate            30.6 %       32.0 %       32.1 %
                            ======       ======       ======

                                      -26-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 8 -- INCOME TAXES (CONTINUED)

The deferred tax assets and  deferred  tax  liabilities  recorded on the balance
sheet as of December 31, 2000 and 1999 are as follows:

                                     2000                     1999
                            ------------------------  ------------------------
                                  Deferred Tax             Deferred Tax
                            ------------------------  ------------------------
                              Assets     Liabilities    Assets     Liabilities
                            ----------   -----------  ----------   -----------
Provision for loan losses   $  448,858   $        -   $ 600,205    $        -
Depreciation                         -      156,528            -      169,192
Pension expense                      -       56,506            -       36,339
Other                          183,056            -      168,216            -
SFAS 115                             -       97,531    1,637,460            -
                            ----------   ----------   ----------   ----------
                            $  631,914   $  310,565   $2,405,881   $  205,531
                            ==========   ==========   ==========   ==========

NOTE 9 -- LONG-TERM DEBT

At December  31, 2000 and 1999,  the Bank had the  following  advances  from the
Federal Home Loan Bank (FHLB).

    2000               1999            Interest Rate              Maturity Date
-----------------  -------------    -------------------------  -----------------

 $ 2,000,000       $ 2,000,000      5.88% Fixed                   March 13, 2001
  10,000,000        10,000,000      5.86% Fixed w/Strike Rate      July 22, 2004
   5,000,000         5,000,000      5.63% Fixed to Float           July 21, 2008
   5,000,000         5,000,000      4.86% Fixed to Float        October 23, 2008
   2,000,000                 -      7.09% Fixed                  August 28, 2001
   2,000,000                 -      7.01% Fixed                   August 8, 2002
   2,000,000                 -      6.83% Fixed                    March 8, 2001
-----------------  -------------
 $28,000,000       $ 22,000,000
=================  =============

Interest only is payable until  maturity on all long-term  debt.  Collateral for
all debt includes all qualifying mortgages.

The Bank had maximum borrowing capacity with FHLB of approximately  $216,665,000
and $136,547,000 at December 31, 2000 and 1999, respectively.

NOTE 10 -- EMPLOYEE BENEFIT PLANS

The Bank  maintained one  non-contributory  defined benefit pension plan for its
employees  prior to 1995 (Plan  #1).  In 1995,  various  plan  assumptions  were
changed  which  resulted in a reduction in benefits for older and  long-standing
employees.  To  compensate  for  this,  a  supplemental  non-qualified  plan was
installed for those  employees so affected  (Plan #2). The Bank's funding policy
is to  contribute  annually the maximum  amount that can be deducted for federal
income tax purposes for Plan #1.  Contributions are intended to provide not only
for  benefits  attributed  to service to date but also for those  expected to be
earned  in the  future.  Assets  for the plans are  primarily  invested  in U.S.
Government  obligations,  corporate  obligations  and  equity  securities  whose
valuations are subject to fluctuations of the securities' market.

                                      -27-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 10 -- EMPLOYEE BENEFIT PLANS (CONTINUED)

The following is a summary of the plans as of December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                      2000           1999           1998
                                                  -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year           $ 1,765,691    $ 2,279,047    $ 1,986,373
Service cost                                          150,403        180,192        160,189
Interest cost                                         122,204        158,453        137,966
Actuarial loss due to settlement                            -        128,760              -
Benefits paid                                         (75,139)       (19,100)       (18,667)
Plan settlement                                             -       (840,928)             -
Other - net                                          (122,751)      (120,733)        13,186
                                                  -----------    -----------    -----------
      Benefit obligation at end of year           $ 1,840,408    $ 1,765,691    $ 2,279,047
                                                  ===========    ===========    ===========
Change in Fair Value of Plan Assets:
Plan assets at estimated
      fair value at beginning of year             $ 2,016,241    $ 2,510,141    $ 2,207,486
Actual return on plan assets                          105,065        177,449        177,907
Plan settlement                                             -       (840,928)             -
Benefits paid                                         (75,139)       (19,100)       (18,667)
Employer contributions                                168,975        188,679        143,415
                                                  -----------    -----------    -----------
      Fair value of plan assets at end of year    $ 2,215,142    $ 2,016,241    $ 2,510,141
                                                  ===========    ===========    ===========

Funded status                                     $   374,734    $   250,550    $   231,094
Unrecognized net loss from actuarial experience        27,502        149,953        134,196
Unrecognized prior service cost                      (238,486)      (256,748)      (275,010)
Unamortized net asset existing at date
      of adoption of SFAS No. 87                      (39,369)       (73,879)       (80,912)
Settlement                                                  -        (17,717)             -
                                                  -----------    -----------    -----------
      Prepaid pension cost                        $   124,381    $    52,159    $     9,368
                                                  ===========    ===========    ===========

</TABLE>

Net pension expense included the following components:

<TABLE>
<CAPTION>
                                                         Years Ended December 31,
                                                   -----------------------------------
                                                        2000         1999         1998
                                                   ---------    ---------    ---------
<S>                                              <C>          <C>          <C>
Service cost - benefits earned during the period   $ 150,403    $ 180,192    $ 160,189
Interest cost on projected benefit obligation        122,204      158,453      137,966
Actual return on plan assets                        (105,065)    (177,449)    (177,907)
Net amortization and deferral                        (70,789)     (33,025)      (6,042)
                                                   ---------    ---------    ---------
Net periodic pension cost                          $  96,753    $ 128,171    $ 114,206
                                                   =========    =========    =========
</TABLE>

The projected  benefit  obligation for Plan #1 was  determined  using an assumed
discount  rate of 7.75% for 2000 and 7.0% for 1999 and 1998 and an expected rate
of increase in compensation  using a graded scale ranging from 3.5% to 5.5%. The
projected  benefit  obligation  for  Plan #2 was  determined  using  an  assumed
discount rate of 7.0% and an expected rate of increase in  compensation  of 3.5%
for 2000,  1999 and 1998.  For both  plans,  the  assumed  rate of return on the
plans' investment earnings was 7.0 % for 2000, 1999 and 1998.

                                      -28-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 10 -- EMPLOYEE BENEFIT PLANS (CONTINUED)

The Bank also maintains  non-qualified  deferred  compensation plans for certain
directors,  which are generally funded by life insurance,  the premiums of which
have been paid for by the Bank.  The present value of these  benefits to be paid
under the programs is being accrued over the estimated  remaining service period
of the participants. The liability for these future obligations was $453,806 and
$447,836 at December 31, 2000 and 1999, respectively.

In addition,  the Bank maintains a qualified 401(k) - deferred compensation plan
for eligible employees. The plan is designed to provide a predetermined matching
contribution by the Bank based on compensation  deferrals by participants in the
plan. The Bank contributions,  including administrative fees, for 2000, 1999 and
1998 amounted to $49,526, $42,228 and $42,753, respectively.


NOTE 11 -- COMMITMENTS AND CONTINGENCIES

In the normal course of business,  there are various outstanding commitments and
certain  contingent  liabilities  which are not  reflected  in the  accompanying
financial  statements.  These commitments and contingent  liabilities  represent
financial  instruments  with  off-balance-sheet  risk.  The contract or notional
amounts of those  instruments  were  comprised of  commitments  to extend credit
approximating  $58,436,000  and  $51,851,000,  as of December 31, 2000 and 1999,
respectively, and approximate fair value.

The instruments  involve,  to varying  degrees,  elements of credit and interest
rate risk in excess of the amount  recognized  in the  balance  sheet.  The same
credit policies are used in making  commitments  and conditional  obligations as
for on-balance-sheet  instruments.  The amount of collateral obtained, if deemed
necessary upon extension of credit,  is based on management's  credit evaluation
of the  counterparty.  The terms are  typically  for a one year period,  with an
annual renewal option subject to prior approval by management.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the loan agreement.  These
commitments are comprised  primarily of available  commercial and personal lines
of credit.

The exposure to loss under these  commitments  is limited by subjecting  them to
credit approval and monitoring procedures.  Substantially all of the commitments
to extend credit are  contingent  upon  customers  maintaining  specific  credit
standards at the time of the loan funding.  Management  assesses the credit risk
associated with certain commitments to extend credit in determining the level of
the allowance  for loan losses.  Since many of the  commitments  are expected to
expire  without  being  drawn  upon,  the  total  contractual   amounts  do  not
necessarily represent future funding requirements.

The Bancorp and Bank are involved in various legal actions from normal  business
activities.  Management  believes that the liability,  if any, arising from such
actions will not have a material adverse effect on the financial position of the
Bancorp and Bank.

                                      -29-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 12 -- RELATED-PARTY TRANSACTIONS

At December 31, 2000 and 1999, certain officers and directors of the Bancorp and
the Bank, and companies in which they have beneficial  ownership,  were indebted
to the Bank in the aggregate amount of approximately  $5,185,000 and $5,651,000,
respectively.  During 2000, new loans to such related parties were approximately
$1,111,000 and repayments approximated $1,577,000.

NOTE 13 -- CONCENTRATION OF CREDIT

The Bank  primarily  grants  loans to  customers  in Western  Pennsylvania,  and
maintains a diversified  loan  portfolio and the ability of its debtors to honor
their  contracts  is not  substantially  dependent  on any  particular  economic
business  sector. A substantial  portion of the Bank's  investments in municipal
securities  are  obligations of state or political  subdivisions  located within
Pennsylvania.  As a whole,  the Bank's loan and investment  portfolios  could be
affected by the general  economic  conditions of Pennsylvania.  In addition,  at
December 31, 2000 and 1999, a significant portion of the Bank's "due from banks"
and "federal  funds sold" is maintained  with two large  financial  institutions
located in  Southwestern  Pennsylvania.  The Bank  maintains a cash  balance and
federal  funds sold at financial  institutions  that exceed the $100,000  amount
that is  insured  by the FDIC.  Amounts  in excess of  insured  limits,  per the
institutions' records, were approximately $12,143,000 and $3,627,000 at December
31, 2000 and 199


NOTE 14 -- DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value.

Cash and cash equivalents:  The carrying amount is a reasonable estimate of fair
value.

Certificates of deposit:  The carrying  amounts of these short term  investments
approximate their fair value.

Investment  securities:  The fair value of  securities is equal to the available
quoted  market  price.  If no quoted  market price is  available,  fair value is
estimated using the quoted market price for similar securities.

Federal  Home  Loan  Bank  stock:  The  carrying  value of the  FHLB  stock is a
reasonable estimate of fair value due to restrictions on the securities.

Loans  receivable:  For certain  homogeneous  categories of loans, fair value is
estimated using the quoted market prices for securities  backed by similar loans
adjusted for differences in loan characteristics.  The fair value of other types
of loans is  estimated  by  discounting  the future cash flows using the current
rates at which similar  loans would be made to borrowers for the same  remaining
maturities.

                                      -30-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 14 -- DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Deposit  liabilities:  The fair value of demand  deposits,  savings accounts and
money market deposits is the amount payable on demand at the reporting date. The
fair value of fixed-maturity certificates of deposit is estimated by discounting
the future cash flows using the rates currently  offered for deposits of similar
remaining maturities.

Short term  borrowings:  The carrying  amounts of federal  funds  purchased  and
borrowings under repurchase agreements are short term borrowings and approximate
their fair values.

Long term debt: The fair value of long term debt (FHLB  advances) was determined
using a discounted  cash flow  analysis  based on current FHLB advance rates for
advances with similar maturities.

The estimated fair value of the Bancorp's  financial  instruments as of December
31, 2000 are as follows:

                                               Carrying           Fair
                                                Amount            Value
                                            -------------     -------------
Financial Assets:
      Cash and cash equivalents             $  21,746,395     $  21,746,395
      Certificates of deposit               $   2,700,000     $   2,700,000
      Investment securities                 $ 165,909,886     $ 165,909,886
      Federal Home Loan Bank Stock          $   1,964,300     $   1,964,300
      Loans receivable                      $ 291,914,060     $ 291,244,826

Financial liabilities:
      Deposits                              $ 409,638,462     $ 410,891,763
      Short term borrowings                 $   9,022,190     $   9,022,190
      Long term debt                        $  28,000,000     $  28,967,532

The market values of investments, which are based upon quoted market prices, are
contained in Note 2.

NOTE 15 -- REGULATORY MATTERS

The Bank is subject to legal  limitations on the amount of dividends that can be
paid to the Bancorp.  The  Pennsylvania  Banking Code  restricts  the payment of
dividends, generally to the extent of its retained earnings.


                                      -31-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 15 -- REGULATORY MATTERS (CONTINUED)

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate  certain  mandatory and possibly  additional  discretionary  actions by
regulators  that,  if  undertaken,  could have a direct  material  effect on the
Bank's  financial   statements.   Under  capital  adequacy  guidelines  and  the
regulatory  framework for prompt corrective  action, the Bank must meet specific
capital  guidelines  that involve  quantitative  measures of the Bank's  assets,
liabilities and certain  off-balance  sheet items as calculated under regulatory
accounting  practices.  The Bank's capital amounts and  classification  are also
subject to  qualitative  judgments  by the  regulators  about  components,  risk
weightings and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain minimum amounts and ratios,  as set forth below, of
total  and Tier 1 capital  (as  defined  in the  regulations)  to  risk-weighted
assets,  and of Tier 1 capital to average  assets.  Management  believes,  as of
December  31,  2000  and  1999,  that  the  Bank  meets  all  capital   adequacy
requirements to which it is subjected.

The Bank's actual  capital  ratios as of December 31, 2000 and 1999, the minimum
ratios  required for capital  adequacy  purposes,  and the ratios required to be
considered  well  capitalized  under the Federal Deposit  Insurance  Corporation
Improvement Act of 1991 provisions are as follows:

<TABLE>
<CAPTION>
                                            December 31,        Minimum           Well
                                       -------------------      Capital        Capitalized
                                          2000      1999      Requirements     Requirements
                                       ---------   -------   ---------------  ---------------
<S>                                     <C>       <C>        <C>            <C>
Risk-based capital ratio                  16.3%     16.5%      8.0%           10.0% or higher
Leverage capital ratio                     9.0%      9.0%      3.0% to 4.0%    5.0% or higher
Tier 1 risk-based capital  ratio          15.6%     15.6%      4.0%            6.0% or higher
</TABLE>

Included in cash and due from banks are required  federal reserves of $3,126,000
and $5,033,000 at December 31, 2000 and 1999, respectively, for facilitating the
implementation  of monetary policy by the Federal  Reserve System.  The required
reserves  are computed by applying  prescribed  ratios to the classes of average
deposit balances. These reserves are held in the form of due from banks.

NOTE 16 -- RECENT ACCOUNTING PRONOUNCEMENTS

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  Hedging  Activities."  This  Statement  establishes  accounting and
reporting standards for derivative  instruments and for hedging  activities.  It
requires  that  an  entity   recognize  all  derivatives  as  either  assets  or
liabilities in the statement of financial position and measure those instruments
at fair value. In addition, certain provisions of this statement will permit, at
the date of initial  adoption  of this  Statement,  the  transfer of any held to
maturity security into either the available for sale or trading category and the
transfer of any available for sale security into the trading category. Transfers
from the held to maturity  portfolio  at the date of initial  adoption  will not
call into question the entity's intent to hold other debt securities to maturity
in the future.  This  Statement is effective  for all fiscal  quarters of fiscal
years  beginning after June 15, 2000, as amended by FASB No. 137 and 138, is not
expected to have any impact on the Bank.  the Bank does not intend to adopt SFAS
No. 133 earlier than required.

                                     -32-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 16 -- RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In November  2000, the FASB issued SFAS No. 140,  "Accounting  for Transfers and
Servicing  of  Financial  Assets  and   Extinguishments  of  Liabilities."  This
statement  replaces  SFAS No. 125  "Accounting  for  Transfers  and Servicing of
Financial Assets and  Extinguishments  of Liabilities." It revises the standards
for accounting for  securitizations  and other transfers of financial assets and
collateral  and  requires  certain  disclosures,  but it  carries  over  most of
Statements 125's provisions without reconsideration.  The Statement is effective
for  transfers  and  servicing  of  financial  assets  and   extinguishments  of
liabilities occurring after March 31, 2001. SFAS No. 140 is not expected to have
any impact on the Bank.

NOTE 17 -- CAPITAL STOCK

In January 1998,  the Bancorp  declared a 5% stock dividend to  stockholders  of
record at January 15, 1998,  payable  February 2, 1998.  Fractional  shares were
paid for in cash,  totaling $3,149.  The Bancorp issued 47,933 shares of capital
stock in conjunction with this dividend.  In addition, on December 28, 1998, the
Bancorp  declared a  three-for-one  stock split on the Bancorp's  capital stock,
which was effected in the form of a 200 percent stock  dividend.  Two additional
shares  were  issued  for each share of capital  stock held by  shareholders  of
record  as of the  close  of  business  on  January  6,  1999.  New  share  were
distributed on January 29, 1999. Par value will remain  unchanged at $1.25.  The
effect of the stock split has been  retroactively  reflected  as of December 31,
1998 in the  consolidated  statement  of changes in  stockholders'  equity.  All
references  to the  number of  shares  and per share  amounts  elsewhere  in the
consolidated  financial  statements and related  footnotes have been restated as
appropriate to reflect the effect of the split for all periods presented.

NOTE 18 -- TREASURY STOCK

In 2000 and 1999, the Bancorp  repurchased  19,251 and 2,625 shares of its stock
for $601,864 and $87,612, respectively, and is being held as treasury stock.

NOTE 19 -- STOCK OPTION PLAN

In 2000, the  stockholders  approved the 2000 Stock Option Plan. Under the terms
of the plan, officers, directors, key employees and other persons may be granted
options to purchase the company's  common stock at no less than 100% of the fair
market value of the common  stock on the date the option is granted.  The Option
Plan  provides  for a term of ten  years,  after  which no  awards  may be made.
Options constitute both Incentive Stock Options or Non-Incentive  Stock Options.
Options  granted to  non-employee  directors  are  immediately  exercisable  and
options granted to employees generally vest over three years. Options granted to
both  non-employee  directors and employees have a maximum term of 10 years.  At
December 31, 2000 a total of 300,000  shares were  reserved for future  issuance
under the plan.  In May 2000,  61,000 stock options were granted under this plan
at an exercise price of $24.50 per share.

                                      -33-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998


NOTE 19 -- STOCK OPTION PLAN (CONTINUED)

A summary of the status of the Bank's stock option plan as of December 31, 2000,
and changes for the year then ended is presented below:

                                                                     Weighted
                                                                     Exercise
                                                                     Average
                                                    Shares            Price
                                                ----------------    ----------
   Outstanding at the beginning of the year                 -       $      -
   Granted                                             61,000          24.50
   Expired/forfeited                                        -              -
   Exercised                                                -              -
                                                ----------------
   Outstanding at December 31, 2000                    61,000       $  24.50
                                                ================
   Exercisable at December 31, 2000                    18,000
                                                ================


The options outstanding at December 31, 2000 had a weighted-average  contractual
maturity of 9.375 years and an exercise price of $24.50.

The per share  weighted-average  fair  value of stock  options  granted  with an
exercise  price equal to market for the year ended  December 31, 2000 was $3.21,
using the Black-Scholes option pricing model with the following weighted-average
assumptions for 2000: expected life of 7 years, expected annual dividend rate of
4.57%, risk-free interest rate of 5.095%, and an expected volatility of 27%.

The Bank  accounts for stock options in accordance  with  Accounting  Principles
Board  Opinion No. 25. Had the Bank  determined  compensation  cost based on the
fair  value at the grant date for its stock  options  under  SFAS No.  123,  the
Bank's net income  would have been  reduced to the  proforma  amounts  indicated
below:

                                                      Year ended
                                                  December 31, 2000
                                                  -----------------
        Net income:
            As reported                           $       6,705,261
            Pro Forma                                     6,667,136

        Net income per share:
            Basic and Diluted as reported
                                                               2.23
            Basic and Diluted Pro Forma
                                                               2.20

                                      -34-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 20 -- CONDENSED CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA  (Unaudited)

                                          QUARTERS ENDED 2000
                             ---------------------------------------------------
                               March 31     June 30   September 30  December 31
                             ----------   ----------  ------------- -----------
Interest income              $7,908,984   $8,265,275   $8,628,150   $8,984,705
Interest expense              3,638,514    3,865,929    4,318,206    4,764,919
                             ----------   ----------   ----------   ----------
Net interest income           4,270,470    4,399,346    4,309,944    4,219,786
Provision for loan losses        75,000       75,000       75,000       75,000
Non-interest income             669,086      742,258      764,567      770,530
Non-interest expense          2,431,387    2,605,445    2,529,051    2,615,404
                             ----------   ----------   ----------   ----------
Income before income taxes    2,433,169    2,461,159    2,470,460    2,299,912
Income tax expense              781,192      804,911      740,248      633,088
                             ----------   ----------   ----------   ----------
Net income                   $1,651,977   $1,656,248   $1,730,212   $1,666,824
                             ==========   ==========   ==========   ==========
Net income per Share of
Capital Stock                $     0.55   $     0.55   $     0.58   $     0.55
                             ==========   ==========   ==========   ==========
Weighted average shares
outstanding:
Basic and Diluted             3,007,597    3,001,923    3,001,923    3,001,923
                             ==========   ==========   ==========   ==========

                                        QUARTERS ENDED 1999
                             --------------------------------------------------
                               March 31    June 30    September 30  December 31
                             ----------   ----------  ------------  -----------

Interest income              $7,080,100   $7,150,406   $7,614,167   $7,885,955
Interest expense              3,228,619    3,189,554    3,547,337    3,678,078
                             ----------   ----------   ----------   ----------
Net interest income           3,851,481    3,960,852    4,066,830    4,207,877
Provision for loan losses        45,000       45,000      105,000      105,000
Non-interest income             601,158      680,365      730,928      751,615
Non-interest expense          2,099,755    2,257,533    2,329,841    2,545,832
                             ----------   ----------   ----------   ----------
Income before income taxes    2,307,884    2,338,684    2,362,917    2,308,660
Income tax expense              741,114      747,492      760,121      733,664
                             ----------   ----------   ----------   ----------
Net income                   $1,566,770   $1,591,192   $1,602,796   $1,574,996
                             ==========   ==========   ==========   ==========
Net income per Share of
Capital Stock                $     0.52   $     0.52   $     0.53   $     0.53
                             ==========   ==========   ==========   ==========
Weighted average shares
outstanding:
Basic                         3,023,799    3,023,799    3,023,799    3,023,684
                             ==========   ==========   ==========   ==========

                                      -35-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 21 -- PARENT COMPANY FINANCIAL INFORMATION

The condensed  financial  information  for IBT Bancorp,  Inc. as of December 31,
2000 and 1999 and for the years ended  December  31,  2000,  1999 and 1998 is as
follows:

BALANCE SHEETS
                                                        December 31
                                                  -------------------------
                                                      2000          1999
                                                  -----------   -----------
ASSETS
     Cash in bank                                 $     3,482   $       770
     Investment in subsidiary                      43,894,268    36,975,372
     Securities available for sale                    457,851       733,363
     Other assets                                     279,780       221,634
                                                  -----------   -----------
     Total Assets                                 $44,635,381   $37,931,139
                                                  ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
     Liabilities                                  $    20,800   $    25,859
     Stockholders' Equity                          44,614,581    37,905,280
                                                  -----------   -----------
     Total Liabilities and Stockholders' Equity   $44,635,381   $37,931,139
                                                  ===========   ===========

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                      Years Ended December 31,
                                               ------------------------------------
                                                  2000         1999         1998
                                               ----------   ----------   ----------
<S>                                          <C>          <C>          <C>
Income
     Dividends from subsidiary                 $3,325,000   $2,500,000   $2,100,000
     Other dividends                               14,141       33,586       32,157

Expenses
     Professional fees                             76,676       84,781       20,979
     Miscellaneous                                 98,356       16,786       14,729
                                               ----------   ----------   ----------
Income Before Income Taxes
     and Equity in Undistributed Earnings of
     Subsidiary                                 3,164,109    2,432,019    2,096,449

Equity in Undistributed
     Earnings of Subsidiary                     3,541,152    3,903,735    3,704,481
                                               ----------   ----------   ----------
Net Income                                     $6,705,261   $6,335,754   $5,800,930
                                               ==========   ==========   ==========
</TABLE>
                                      -36-
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998


NOTE 21 -- PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                     -----------------------------------------
                                                        2000           1999           1998
                                                     -----------    -----------    -----------
<S>                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

      Net income                                     $ 6,705,261    $ 6,335,754    $ 5,800,930
      Adjustments to reconcile net income to
         net cash provided by operating
         activities:
             Decrease in cash due to changes
               in assets and liabilities:
                  Equity in undistributed earnings
                    of subsidiary                     (3,541,152)    (3,903,735)    (3,704,481)
                  Other assets                           (58,146)             -              -
                                                     -----------    -----------    -----------
Net Cash From Operating Activities                     3,105,963      2,432,019      2,096,449

CASH FLOWS FROM INVESTING ACTIVITIES

      Proceeds from sale of securities available
         for sale                                        260,631         74,773              -
      Purchase of securities available for sale                -              -       (158,861)
                                                     -----------    -----------    -----------
Net Cash From (Used By) Investing Activities             260,631         74,773       (158,861)

CASH FLOWS FROM FINANCING ACTIVITIES

      Dividends paid                                  (2,762,018)    (2,419,039)    (1,938,380)
      Purchase of Treasury Stock                        (601,864)       (87,612)             -
                                                     -----------    -----------    -----------
Net Cash Used by Financing Activities                 (3,363,882)    (2,506,651)    (1,938,380)
                                                     -----------    -----------    -----------

Net Change in Cash and Cash Equivalents                    2,712            141           (792)

Cash and Cash Equivalents at Beginning
      of Year                                                770            629          1,421
                                                     -----------    -----------    -----------
Cash and Cash Equivalents at End of Year             $     3,482    $       770    $       629
                                                     ===========    ===========    ===========
</TABLE>
                                      -37-

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 22 -- JOINT VENTURES

In 2000, the Bancorp formed a new subsidiary,  IBT Financial Services,  LLC. The
newly  formed  subsidiary  commenced  operations  in June 2000 and offers a full
range of investment products and insurance services to customers and the general
public.  The  Bancorp  owns fifty  percent of the newly  formed  company  and is
accounting for its investment using the equity method.  As of December 31, 2000,
the  corporate  joint  venture is reflected  in the other assets  section of the
balance sheet at $49,270 which  represents  the Bancorp's  cost in the amount of
$125,000 less equity in the undistributed net losses during the year of $75,730.

Also in 2000, the Bancorp  formed a new  partnership,  T.A. of Irwin,  L.P. This
newly formed partnership commenced operations in October 2000 and provides title
insurance to the general public. The Bancorp's capital  contribution was $13,231
representing  an 85%  limited  partnership  interest.  The  Bancorp is using the
equity method to account for its investment in the  partnership.  As of December
31, 2000,  the  partnership  is  reflected  in the other  assets  section of the
balance sheet at $8,876 which represents the Bancorp's  initial cost less equity
in the undistributed net losses during the year of $4,355.

                                      -38-
<PAGE>
IBT BANCORP, INC.

Corporate Profile
IBT Bancorp,  Inc. (the  "Company"),  a  Pennsylvania  corporation,  is the bank
holding company for Irwin Bank & Trust Company ("Irwin Bank"). Irwin Bank is the
principal subsidiary of the Company.

Irwin  Bank &  Trust  Company  was  incorporated  in  1922  under  the  laws  of
Pennsylvania  as  a  commercial  bank.  The  Bank  is  headquartered  in  Irwin,
Pennsylvania  and  conducts  business  through  6  full  service   branches,   5
supermarket  branches,  a loan office and a trust  office,  in the  Pennsylvania
counties of Westmoreland  and Allegheny.  Irwin Bank is a diversified  financial
services institution providing a broad range of deposits,  commercial and retail
banking  services,  as well as  trust  services  to  consumers  and  businesses.
Deposits in Irwin Bank are insured by the Federal Deposit Insurance  Corporation
to applicable limits.

Stock Market Information
The Company's  common stock is listed on the OTC Bulletin Board under the symbol
"IBTB".  As  of  March  02,  2001,  IBT  Bancorp,  Inc.  had  approximately  648
shareholders  of  record  and  3,001,923  shares  of  common  stock  issued  and
outstanding. The number of shareholders does not reflect persons or entities who
hold their stock in nominee or "street" name through various brokerage firms.

The following  table sets forth high and low bid prices per share for the common
stock for the calendar quarters indicated,  based upon information obtained from
the OTC Bulletin Board. All such bid prices reflect inter-dealer prices, without
retail  mark-up,  mark-down or  commissions  and may not  necessarily  represent
actual  transactions.  On January 29, 1999, the Company paid a 5% stock dividend
and a 200%  stock  dividend  (in  the  form of a three  for  one  stock  split),
respectively.  Cash dividend and market prices set forth in the table below have
also been adjusted for the stock dividends declared and paid by the Company.

                                  Price Range               Cash Dividends
                          High ($)           Low ($)      Declared Per Share ($)
                          --------           -------      ----------------------

    1999
    ----
      First Quarter         40.00             28.33                  .20
      Second Quarter        34.75             32.00                  .20
      Third Quarter         34.00             31.75                  .20
      Fourth Quarter        33.38             29.00                  .20

    2000
    ----
      First Quarter         33.50             24.00                  .23
      Second Quarter        27.00             21.50                  .23
      Third Quarter         22.25             20.00                  .23
      Fourth Quarter        22.25             20.13                  .23

The ability of the Company to pay  dividends  is  dependent  upon the ability of
Irwin Bank to pay  dividends to the Company.  Because Irwin Bank is a depository
institution  insured by the FDIC it may not pay dividends or distribute  capital
assets if it is in default on any assessment due the FDIC.  Additionally,  Irwin
Bank is also subject to certain state banking regulations. Under Federal Reserve
policy,  the Company is required to maintain adequate  regulatory capital and is
expected  to act as a source of  financial  strength to Irwin Bank and to commit
resources to support Irwin Bank in circum-

                                      -39-
<PAGE>

stances  where it might not do so absent such a policy.  This policy  could have
the effect of reducing the amount of dividends declarable by the Company.


                                       40