SELECTED FINANCIAL INFORMATION

                                      IBT BANCORP, INC. & SUBSIDIARY

<TABLE>
<CAPTION>

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

                                                             At or for the Years Ended December 31,
                                                   --------------------------------------------------------
                                                     2001        2000        1999        1998        1997
                                                   --------    --------    --------    --------    --------
                                                        (Dollars in thousands, except per share amounts)
<S>                                              <C>         <C>         <C>         <C>         <C>
Selected Balance Sheet Data:
Assets                                             $524,044    $496,379    $445,721    $412,366    $366,457
Cash and cash equivalents                            25,219      21,746      19,264      43,396      27,700
Securities available for sale                       162,968     167,874     151,063     118,778     107,801
Securities held to maturity                              --          --          --       2,569       5,855
Loans receivable (net)                              315,132     291,914     260,502     238,304     216,487
Deposits                                            422,462     409,638     368,680     356,383     324,317
Repurchase agreements                                11,207       9,022       6,457          --          --
Federal funds purchased                                  --          --       7,000          --          --
FHLB advances                                        35,000      28,000      22,000      14,000       4,000
Shareholders' equity                                 49,725      44,615      37,905      38,201      34,302

Selected Results of Operations:
Interest income                                    $ 35,185    $ 33,787    $ 29,731    $ 27,768    $ 25,349
Net interest income                                  18,226      17,200      16,087      15,182      13,832
Provision for loan losses                               500         300         300         300         300
Net interest income after provision
   for loan losses                                   17,726      16,900      15,787      14,882      13,532
Other income                                          4,009       2,946       2,764       2,093       1,733
Other expense                                        11,284      10,181       9,233       8,438       7,683
Net income                                            7,465       6,705       6,336       5,801       5,193

Per Share Data:
Net Income
   Basic                                           $   2.49    $   2.23    $   2.10    $   1.92    $   1.72
   Diluted                                             2.49        2.23        2.10        1.92        1.72
Cash dividends declared                                1.04        0.92        0.80        0.64        0.51

Selected Ratios:
Return on average assets                               1.45%       1.44%       1.49%       1.54%       1.52%
Return on average equity                              15.57%      16.87%      16.54%      15.97%      16.27%
Ratio of average equity to average assets              9.31%       8.52%       8.99%       9.63%       9.84%
Dividend payout                                       41.77%      41.26%      38.10%      33.33%      29.65%
</TABLE>

<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, 2001, total assets  increased $27.6 million,  or 5.56%,
to $524.0  million from $496.4  million at December  31,  2000.  The increase in
total assets was primarily  the result of a $23.2 million  increase in net loans
receivable and a net increase of $8.8 million in other assts.

         The increase in the loan  portfolio was mainly due to the growth of the
fixed rate  one-to  four-family  mortgage  loan,  multi-family  properties,  and
commercial   mortgage  of  $5.1  million,   $6.8  million,   and  $9.2  million,
respectively. The loan portfolio continues to grow due to the Company's offering
of  competitive  market  interest  rates.  The growth in total deposits of $12.9
million and additional FHLB advances of $7.0 million were used primarily to fund
the growth in the loan portfolio.

         In the fourth  quarter  of fiscal  2001,  Irwin  Bank & Trust Co.  (the
"Bank")  purchased $10.0 million of premium life insurance  policies on officers
of the Bank.  Due to such  purchases,  other  assets  increased  $8.8 million at
December  31,  2001.  These life  insurance  policies  were funded  through $3.0
million in federal funds sold,  $2.6 million in  certificates  of deposits,  and
$5.0 million of proceeds from sales of available for sale securities.

         At December 31, 2001,  total  liabilities  increased $22.5 million,  or
5.0%, to $474.3  million from $451.8  million at December 31, 2000. The increase
primarily  related to the increase in total deposits of $12.9  million.  Of this
increase,  non-interest  bearing and  interest-bearing  deposits  increased $5.8
million  and  $7.0  million,  respectively.  The  increase  in  interest-bearing
deposits resulted mainly from increases in savings and interest-bearing checking
accounts of $6.8 million and $5.6 million, respectively, offset by a decrease of
$5.2 million in  certificates  of deposit.  Such  increases were the result of a
growing deposit base and competitive interest rates.

         Non  interest-bearing  deposits increased $5.8 million to $70.1 million
at December 31, 2001 from $64.3  million at December 31,  2000.  Such  increases
reflect  additions to non-interest  bearing  deposits of $17.0 million offset by
$11.2 million in  investments in repurchase  agreements.  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

                                       1
<PAGE>

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, 2001,  the amount of repurchase  agreements  totaled $11.2 million.
See Note 6 to the consolidated financial statements.

         At December 31, 2001, total stockholders' equity increased $5.1 million
to $49.7  million  from $44.6  million at December  31,  2000.  The increase was
primarily  due to net income of $7.5  million for the period and a $1.1  million
increase in accumulated other comprehensive income (net of income taxes), offset
by the  purchase  of  $396,000  of Company  stock,  and  dividends  paid of $3.1
million. 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.  Because of  interest  rate  volatility,  the
Company's  accumulated other comprehensive income could materially fluctuate for
each  interim  period and  year-end.  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.

RESULTS OF OPERATIONS

         Net Income: Net income increased  approximately  $760,000, or 11.3%, to
$7.5 million for the year ended December 31, 2001 from $6.7 million for the year
ended  December 31, 2000. The increase in net income for fiscal 2001 compared to
fiscal 2000 was  primarily  due to an $800,000  increase in net interest  income
after provision for loan losses.  Such increase was primarily  attributable to a
$49.9 million increase in the average balances of interest earning assets offset
by a 16-bassis point decline in the interest rate spread.

         At December 31, 2000, net income increased  approximately  $369,000, or
5.8%,  to $6.7 million  from $6.3 million for the year ended  December 31, 1999.
The  increase  in net  income  for 2000 was  primarily  attributable  to a $37.6
million increase in the average balance of interest earning assets.

         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 $1.0 million,  or 5.8%, to $18.2 million
for 2001 compared to $17.2  million for 2000.  The increase was primarily due to
the increase in average loans of $24.6 million and average investment securities
available for sale of $17.9 million  offset by a 48 basis point  decrease in the
yield on average  interest earning assets to 7.11% for 2001 from 7.59% for 2000.
The decrease in the yield on average  interest  earning assets was primarily the
result of yield decreases in average loans and average investment  securities of
16 basis points and 81 basis points,  respectively.  The decrease in the average
yields  reflects  effects of the  interest  rate  environment  and

                                       2
<PAGE>

the multiple  Federal  Reserve  easings of interest  rates  during  fiscal 2001.
Though average  interest-bearing  liabilities  increased $35.2 million in fiscal
2001, interest expense remained  relatively  unchanged from fiscal 2000 due to a
32-basis point decline in average cost of funds in fiscal 2001.

         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.
Cost of funds 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.

         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 from daily balances.

                                       3
<PAGE>
<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                        --------------------------------------------------------------------------------------------
                                                       2001                           2000                          1999
                                        -------------------------------    --------------------------    ---------------------------
                                                                Average                       Average                        Average
                                             Average            Yield/     Average            Yield/     Average             Yield/
                                             Balance Interest   Cost       Balance   Interest Cost       Balance   Interest  Cost
                                             ------- --------   -------    -------   -------- -------    -------   --------  -------
<S>                                       <C>        <C>       <C>      <C>          <C>     <C>     <C>         <C>        <C>

Interest-earning assets:
Loans receivable    (1)                    $ 304,080  $24,320     8.00%  $ 279,400    $22,808   8.16%   $251,574    $20,000    7.95%
Investment securities available
   for sale (2)                              177,263   10,337     5.83%    159,394     10,578   6.64%    144,544      9,195    6.36%
Investment securities held to maturity                                                                     1,208         36    2.98%
Other interest-earning assets (5)             13,850      527     3.81%      6,464        401   6.20%     10,319        500    4.85%
                                           ---------  -------     ----   ---------    -------   ----    --------    -------    ----
  Total interest earning assets            $ 495,193  $35,184     7.11%  $ 445,258    $33,787   7.59%   $407,645    $29,731    7.29%
                                           =========  =======     ====   =========    =======   ====    ========    =======    ====

Non-interest earning assets                   19,667                        21,558                        18,655
                                           ---------                     ---------                      --------
Total assets                               $ 514,860                     $ 466,816                      $426,300
                                           =========                     =========                      ========

Interest-bearing liabilities:
Money market accounts                         55,020    1,751     3.18%     56,079      2,275   4.06%     56,731      2,069    3.65%
Certificates of Deposit                      205,242   11,286     5.50%    182,465     10,364   5.68%    162,668      8,418    5.17%
Other liabilities                            137,481    3,921     2.85%    123,928      3,949   3.19%    109,061      3,157    2.89%
                                           ---------  -------     ----   ---------    -------   ----    --------    -------    ----
Total interest-bearing liabilities         $ 397,743  $16,958     4.26%  $ 362,472    $16,588   4.58%   $328,460    $13,644    4.15%
                                           =========  =======   ======   =========    ======= ======    ========    =======  ======

Non-interest-bearing liabilities              69,167                        64,591                        59,530
                                           ---------                     ---------                      --------
    Total liabilities                      $ 466,910                     $ 427,063                      $387,990
                                           =========                     =========                      ========
Retained Earnings (6)                         47,950                        39,753                        38,310
                                           ---------                     ---------                      --------
Total liabilities and
    stockholders' equity                   $ 514,860                     $ 466,816                      $426,300
                                           =========                     =========                      ========
Net interest income                                   $18,226                         $17,199                       $16,087
                                                      =======                         =======                       =======
Interest rate spread (3)                                          2.85%                         3.01%                          3.14%
                                                                ======                        ======                         ======
Net yield on interest-earning assets (4)                          3.68%                         3.86%                          3.95%
                                                                ======                        ======                         ======
Ratio of average interest-earning
   assets to average interest-
   bearing liabilities                                          124.50%                       122.84%                        124.11%
                                                                ======                        ======                         ======
</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.

                                       4



<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 to 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,
                                     -----------------------------   --------------------------
                                              2001 vs. 2000                 2000 vs. 1999
                                     -----------------------------   --------------------------
                                            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                     2,014      (502)    1,512     2,212       596     2,808
   Investment securities
      available for sale                1,186    (1,427)     (241)      945       438     1,383

   Investment securities held to
     maturity                              --        --        --       (36)       --       (36)
   Other interest earning assets          458      (332)      126      (187)       88       (99)
                                        -----      ----     -----     -----      ----     -----
     Total interest-earning assets      3,658    (2,261)    1,397     2,934     1,122     4,056
                                        =====    ======     =====     =====     =====     =====

Interest expense:
   Money market accounts                  (43)     (481)     (524)      (24)      230       206
   Certificates of deposit              1,294      (372)      922     1,024       922     1,946
   Other liabilities                      432      (460)      (28)      430       362       792
                                        -----      ----     -----     -----      ----     -----
  Total interest-bearing liabilities    1,683    (1,313)      370     1,430     1,514     2,944
                                        -----      ----     -----     -----      ----     -----
Net change in interest income           1,975      (948)    1,027     1,504      (392)    1,112
                                        =====      ====     =====     =====      ====     =====
</TABLE>

         Provision  for Loan Losses:  The Company  recorded a provision for loan
losses of  $500,000  for 2001 and  $300,000  for 2000,  and 1999.  The  $200,000
increase in the provision  for loan losses for the year ended  December 31, 2001
was  precipitated  by the  increase  in  non-accrual  loans of $1.0  million  at
December 31, 2001.  Such increase in non-accrual  loans was primarily the result
of an increase in loans secured by real estate.

         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
time.  The Company  continues to monitor its  allowance for loan losses and make
economic  conditions dictate.  Management

                                       5
<PAGE>

continues to offer a wider variety of loan  products  coupled with the continued
success of changing the mix of the products  offered in the loan  portfolio from
lower yielding loans (i.e.,  one-to-four  family loans) to higher yielding loans
(i.e., equity loans,  multi-family (five or more units buildings, and commercial
(nonresidential  mortgages).  Although the Company  maintains  its allowance for
loan losses at a level that it  considers  to be  adequate at the balance  sheet
date, there can be no assurance that 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 $1.1 million,
or 37.9%, to $4.0 million for the year ended December 31, 2001 from $2.9 million
for the year ended  December 31, 2000.  The  increases  were the result of gains
from  available  for sale  securities,  originally  purchased at a discount,  of
$453,000,  where  the  issuing  agencies  exercised  their  option  to call  the
securities prior to their maturity.  Also,  service fees increased  $300,000 due
primarily  to a $122,000  increase in  miscellaneous  loan fee income  generated
through  rate  modification  fees  on  existing  loans,  $78,000  in  additional
overdraft  fees due to the increased  deposit base,  and $43,000 in service fees
from the "extra" checking product.  Debit card fees increased  $119,000 a result
of increased usage.  Other income increased  $200,000 primarily due to income of
$102,000  from T.A.  of Irwin,  L.P.,  a  partnership  formed by the  Company in
October  2000 to provide  title  insurance  to the  general  public,  $43,000 in
additional income generated through the Company's Trust Department,  and $49,000
in  commissions  received  from the sale of  investment  products  through UVest
Financial Services.

         For the year ended  December  31, 2000,  total other  income  increased
approximately  $182,000, or 6.6%, to $2.9 million 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.

         Other  Expenses:  Total other  expenses  increased  approximately  $1.1
million,  or 10.8%,  to $11.3 million for 2001 from $10.2 million for 2000. This
increase was  primarily  the result of an increase in salaries of  approximately
$300,000 to $4.4 million for 2001 from $4.1  million for 2000.  Such an increase
was mainly due to normal merit  increases  and  additional  staff of 5 full-time
employees.  Occupancy  expense  increased  $200,000 to $1.2 million in 2001 from
$1.0 million in 2000  primarily  due to  increased  depreciation,  rental,  real
estate tax  expense,  and  building  maintenance  expense of  $80,000,  $27,000,
$24,000, and $28,000,  respectively.  Data processing and ATM expenses increased
$178,000 to $1.2 million in 2001 from $972,000 in 2000.  Such  increases  were a
result of increased fees from the Company's processors. Other expenses increased
$500,000 to $3.5 million for 2001 from $3.0 million for 2000.  Such increase was
primarily  due to  increased  legal fees of $76,000,  increased  losses from bad
checks of $59,000,  increased costs related to debit card usage of $53,000,  and
increased postage expense of $41,000. All of these increases are due to the cost
of doing business.

         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

                                       6
<PAGE>

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  was
dissolved in the second quarter of 2001.

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,  2001,  the  Company  had  commitments  to extend  credit of $73.4
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, 2001, cash and cash equivalents totaled
$25.3 million

         Net cash used by operating  activities  for 2001 totaled  $377,000,  as
compared to net cash from operating activities of $7.3 million for 2000 and $6.5
million for 1999.

         Net cash used by investing  activities  for 2001 totaled $14.7 million,
as compared to cash used of $44.0  million for 2000 and $61.8  million for 1999.
The  decrease  of $29.3  million for 2001 was mainly  attributed  to an increase
$86.6 million in proceeds from  maturities of securities  held to maturity and a
decrease of $8.0 million in net loans made to customer,  offset by $69.8 million
in purchases of securities available for sale. 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 from financing activities for the year ended December 31, 2001
totaled $18.5 million,  as compared to cash from  financing  activities of $39.2
million for 2000 and $31.2 million for 1999. The $20.7 million  decrease in cash
from financing  activities for 2001 was a result of a $28.2 million  decrease in
deposits offset by an increase of $7.0 million in federal funds  purchased.  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,  a $14.0 million  decrease in
federal  funds  purchased,  and a decrease of $2.0 million in net proceeds  from
FHLB advances.

                                       7
<PAGE>

         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.

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 appropriate level of risk given the Company's  business
strategy, operating environment, capital and liquidity requirements, performance
objectives, and manage 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.

         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,  2001.
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

                                       8
<PAGE>

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 assets,  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.

                                       9
<PAGE>

               IBT BANCORP, INC., & SUBSIDIARY 2001 ANNUAL REPORT

Expected Maturity/Principal Repayment at December 31,

<TABLE>
<CAPTION>
                                                                               Total      Book      Fair
                              2002      2003      2004      2005      2006   Thereafter   Value     Value
                             -------   -------   -------   -------  -------  ----------  -------   -------
                                                              (Dollars in thousands)
<S>                        <C>       <C>       <C>        <C>        <C>       <C>       <C>      <C>
Interest-earning assets
-----------------------
Mortgage loans               10,447     7,484     7,888     8,437    10,631   128,327   173,214   174,796
Home equity loans,
    second mortgage
    Loans, student loans,
    Other loans              23,251    11,198     9,184     7,792     6,553    25,773    83,751    87,145
Commercial loans,
    municipal loans          15,031     4,077     4,575     2,416     1,503    32,952    60,554    62,479
Investment securities
    available for sale       38,738    15,123     8,424     2,646     5,138    88,763   158,832   160,867


Interest-bearing
----------------
liabilities
-----------
NOW and other
    Transaction accounts     11,792         -         -         -         -         -    11,792    11,792
Money market and
    other savings
    accounts                140,118         -         -         -         -         -   140,118   140,118
Certificates of
    deposits                139,069    30,444    13,524    10,242     3,712     3,438   200,429   202,331
Federal home loan
    bank of Pittsburgh
    advances                  2,000         -    10,000         -         -    23,000    35,000    41,156
</TABLE>

                                       10
<PAGE>
EDWARDS
SAUER & OWENS
------------------------------
Certified Public Accountants &
Business Advisors



                          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, 2001 and 2000,  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, 2001.
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 consolidated
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,  2001 and 2000,  and the  results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.


/s/Edwards Sauer & Owens

Pittsburgh, Pennsylvania
January 25, 2002

                                       11
<PAGE>
                          CONSOLIDATED BALANCE SHEETS

                        IBT BANCORP, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
                                                                December 31,
                                                       ------------------------------
                                                            2001             2000
                                                       -------------    -------------
<S>                                                  <C>              <C>
 ASSETS
      Cash and due from banks                          $  16,751,407    $  12,877,327
      Interest-bearing deposits in banks                   7,373,528        4,740,068
      Federal funds sold                                   1,094,000        4,129,000
      Certificates of deposit                                100,000        2,700,000
      Securities available for sale                      160,866,698      165,909,886
      Federal Home Loan Bank stock, at cost                2,101,800        1,964,300
      Loans, net of allowance for loan losses of
           $2,113,806 in 2001 and $1,919,327 in 2000     315,131,774      291,914,060
      Premises and equipment, net                          4,655,510        4,899,777
      Other assets                                        15,969,430        7,245,015
                                                       -------------    -------------
Total Assets                                           $ 524,044,147    $ 496,379,433
                                                       =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
      Deposits
           Non-interest bearing                        $  70,121,716    $  64,316,265
           Interest-bearing                              352,340,377      345,322,197
                                                       -------------    -------------
           Total deposits                                422,462,093      409,638,462

      Repurchase agreements                               11,207,072        9,022,190
      Accrued interest and other liabilities               5,650,276        5,104,200
      FHLB advances                                       35,000,000       28,000,000
                                                       -------------    -------------
      Total liabilities                                  474,319,441      451,764,852

Stockholders' Equity
      Capital stock, par value $1.25, 50,000,000
           shares  authorized,  3,023,799 shares
           issued, 2,985,695 and 3,001,923
           shares outstanding at December 31, 2001
           and December 31, 2000, respectively             3,779,749        3,779,749
      Surplus                                              2,073,102        2,073,102
      Retained earnings                                   43,613,936       39,261,880
      Accumulated other comprehensive income               1,342,672          189,326
                                                       -------------    -------------
                                                          50,809,459       45,304,057
      Less:  Treasury stock, at cost                      (1,084,753)        (689,476)
                                                       -------------    -------------
      Total stockholders' equity                          49,724,706       44,614,581
                                                       -------------    -------------
Total Liabilities and Stockholders' Equity             $ 524,044,147    $ 496,379,433
                                                       =============    =============
</TABLE>

                                       12

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

<PAGE>
                       CONSOLIDATED STATEMENTS OF INCOME

                        IBT BANCORP, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
                                                      Years ended December 31,
                                              --------------------------------------------
                                                  2001            2000            1999
                                              ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
Interest Income
        Loans, including fees                 $ 24,320,407    $ 22,807,718    $ 19,999,321
        Investment securities                   10,337,309      10,578,510       9,231,496
        Federal funds sold                         527,021         400,886         499,811
                                              ------------    ------------    ------------
        Total interest income                   35,184,737      33,787,114      29,730,628

Interest Expense
        Deposits                                14,773,560      14,603,671      12,473,855
        FHLB advances                            1,833,212       1,586,859         974,405
        Repurchase agreements                      351,473         362,684         191,193
        Federal funds purchased                          -          34,354           4,135
                                              ------------    ------------    ------------
        Total interest expense                  16,958,245      16,587,568      13,643,588
                                              ------------    ------------    ------------
Net Interest Income                             18,226,492      17,199,546      16,087,040

Provision for Loan Losses                          500,000         300,000         300,000
                                              ------------    ------------    ------------
Net Interest Income after Provision
for Loan Losses                                 17,726,492      16,899,546      15,787,040

Other Income (Losses)
        Service fees                             1,854,595       1,645,913       1,497,861
        Investment security gains                  452,890               -          53,194
        Investment security losses                 (60,792)       (106,974)        (29,687)
        Debit card fees                            520,393         401,080         266,079
        Other income                             1,241,736       1,006,422         976,619
                                              ------------    ------------    ------------
        Total other income                       4,008,822       2,946,441       2,764,066

Other Expenses
        Salaries                                 4,359,468       4,084,817       3,566,947
        Pension and other employee benefits      1,081,027       1,056,116         994,960
        Occupancy expense                        1,209,779       1,020,734         949,662
        Data processing expense                    750,896         588,193         535,108
        ATM expense                                398,986         383,935         348,414
        Other expenses                           3,484,000       3,047,492       2,837,870
                                              ------------    ------------    ------------
        Total other expenses                    11,284,156      10,181,287       9,232,961
                                              ------------    ------------    ------------
Income Before Income Taxes                      10,451,158       9,664,700       9,318,145

Provision for Income Taxes                       2,985,824       2,959,439       2,982,391
                                              ------------    ------------    ------------
Net income                                    $  7,465,334    $  6,705,261    $  6,335,754
                                              ============    ============    ============
Basic Earnings per Share                      $       2.49    $       2.23    $       2.10
                                              ============    ============    ============
Diluted Earnings per Share                    $       2.49    $       2.23    $       2.10
                                              ============    ============    ============
</TABLE>

                                       13

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

<PAGE>
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999

<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)

       Reclassification
         adjustment, net of
         deferred income
         tax 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>

                                       14

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

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


<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

       Reclassification
        adjustment, net of
        deferred income
        tax benefit
        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>

                                       15

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

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999

<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, 2000              $ 3,779,749       $ 2,073,102       $ 39,261,880         $ 189,326        $ (689,476)  $ 44,614,581

Comprehensive Income
   Net income                                                         7,465,334                                          7,465,334
   Other comprehensive
    income, net of tax:
    Change in net
      unrealized holding
      gains on securities
      available for sale,
      net of deferred
      income tax  of
      $1,034,101                                                                        1,450,626                        1,450,626

    Reclassification
      adjustment, net of
      deferred income
      tax of $153,144                                                                    (297,280)                        (297,280)
                                                                                                                     --------------
                                                                                                                         1,153,346
                                                                                                                     --------------
      Total Comprehensive
       Income                                                                                                            8,618,680

Cash dividends ($1.04)                                               (3,113,278)                                        (3,113,278)

Purchase of
    Treasury Stock                                                                                         (395,277)      (395,277)
                           ---------------- ------------------------------------ ----------------------------------- --------------

Balance at
December 31, 2001               $3,779,749        $2,073,102       $ 43,613,936        $1,342,672       $(1,084,753)  $ 49,724,706
                           ================ ==================================== =================================== ==============
</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,
                                                                  --------------------------------------------
                                                                       2001            2000            1999
                                                                  ------------    ------------    ------------
<S>                                                             <C>             <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                  $  7,465,334    $  6,705,261    $  6,335,754
      Adjustments to reconcile net cash
      from operating activities:
      Depreciation                                                     607,993         528,335         499,068
      Net amortization/accretion of
      premiums and discounts                                           102,482          (9,800)         20,934
      Net investment security (gains) losses                          (392,098)        106,974         (23,507)
      Provision for loan losses                                        500,000         300,000         300,000
      Increase (decrease) in cash due to
      changes in assets and liabilities:
      Other assets                                                  (8,613,031)     (1,610,223)       (566,193)
      Accrued interest and other liabilities                           (48,024)      1,327,616        (102,823)
                                                                  ------------    ------------    ------------

Net Cash (Used By) From Operating Activities                          (377,344)      7,348,163       6,463,233

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of certificates of deposit                           (2,606,400)     (2,700,000)     (3,000,000)
      Proceeds from maturity of certificates of deposit              5,206,400       3,000,000               -
      Proceeds from sales of securities available for sale           8,128,240       6,153,348       7,579,149
      Proceeds from maturities of securities held to maturity                -               -       2,569,215
      Proceeds from maturities of securities available for sale     98,681,479      12,000,998      50,293,783
      Purchase of securities available for sale                    (99,729,469)    (29,959,587)    (95,748,942)
      Net loans made to customers                                  (23,829,098)    (31,821,372)    (22,530,641)
      Purchases of premises and equipment                             (363,726)       (699,410)       (348,637)
      Purchase of Federal Home Loan Bank stock                        (137,500)              -        (656,200)
                                                                  ------------    ------------    ------------

Net Cash Used By Investing Activities                              (14,650,074)    (44,026,023)    (61,842,273)

CASH FLOWS FROM FINANCING ACTIVITIES
      Net increase in deposits                                      12,823,631      40,957,977      12,297,347
      Net increase in securities sold
      under agreements to repurchase                                 2,184,882       2,565,593       6,456,597
      Net (decrease) increase in federal
      funds purchased                                                        -      (7,000,000)      7,000,000
      Dividends                                                     (3,113,278)     (2,762,018)     (2,419,039)
      Proceeds from FHLB advances                                    9,000,000       7,000,000      10,000,000
      Repayment of FHLB advances                                    (2,000,000)     (1,000,000)     (2,000,000)
      Purchase of treasury stock                                      (395,277)       (601,864)        (87,612)
                                                                  ------------    ------------    ------------

Net Cash From Financing Activities                                  18,499,958      39,159,688      31,247,293
                                                                  ------------    ------------    ------------

Net Change in Cash and Cash Equivalents                              3,472,540       2,481,828     (24,131,747)

Cash and Cash Equivalents at Beginning of Year                      21,746,395      19,264,567      43,396,314
                                                                  ------------    ------------    ------------

Cash and Cash Equivalents at End of Year                          $ 25,218,935    $ 21,746,395    $ 19,264,567
                                                                  ============    ============    ============
</TABLE>
                                       17

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

<PAGE>
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY


<TABLE>
<CAPTION>
                                                               Years Ended December 31,
                                                     ------------------------------------------
                                                         2001           2000           1999
                                                     ------------   ------------   ------------
<S>                                                <C>            <C>            <C>
SUPPLEMENTAL DISCLOSURES

       Cash payments for:
           Interest                                  $ 18,089,680   $ 15,052,496   $ 13,736,652

           Income taxes                              $  3,003,600   $  2,904,000   $  2,987,643


NON CASH TRANSACTIONS

       Recorded unrealized gains (losses)
           on securities available for sale          $  2,034,303   $    286,857   $ (4,816,056)
           at December 31

       Deferred income taxes (benefit) on recorded
           unrealized gains (losses) on securities
           available for sale at December 31         $    691,631   $     97,531   $ (1,637,460)

       Loans transferred to foreclosed real estate
           during the year                           $    432,376   $    320,992   $    211,410

       Recorded nonmonetary gain on
           securities available for sale
           at December 31                            $     81,092   $          -   $          -

       Recorded increase in cash
           surrender value of
           life insurance policies                   $     31,161   $          -   $          -
</TABLE>

                                       18

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

<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


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.

Advertising  Costs:  Advertising  costs are  expensed as  incurred.  Advertising
expense totaled $340,513 for 2001, $301,686 for 2000 and $313,421 for 1999.

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

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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 was 2,993,693,  3,003,334 and 3,023,770 for the years ended December
31, 2001, 2000 and 1999, respectively.

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

IBT BANCORP, INC. AND SUBSIDIARY

Years Ended December 31, 2001, 2000 and 1999


NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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, 2001
                                           ----------------------------------------------------------------------------------------
                                                                             Gross                 Gross
                                                   Amortized              Unrealized             Unrealized            Market
                                                      Cost                   Gains                 Losses               Value
                                           ---------------------   --------------------   -------------------   -------------------
<S>                                      <C>                     <C>                    <C>                   <C>
Obligations of
      U.S. Government Agencies             $         61,214,870    $         1,380,083    $          (50,859)   $       62,544,094
Obligations of State and
      political sub-divisions                        31,530,177                510,233              (196,927)           31,843,483
Mortgage-backed securities                           55,151,710                502,991              (128,591)           55,526,110
Other securities                                        700,745                 38,458                     -               739,203
Equity securities                                    10,234,892                 69,873               (90,957)           10,213,808
                                           ---------------------   --------------------   -------------------   -------------------

                                           $        158,832,394    $         2,501,638    $         (467,334)   $      160,866,698
                                           =====================   ====================   ===================   ===================
</TABLE>

<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>

                                       21

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

IBT BANCORP, INC. AND SUBSIDIARY

Years Ended December 31, 2001, 2000 and 1999


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,
                                                   ------------------------------
                                                     2001       2000       1999
                                                   --------   --------   --------
<S>                                              <C>        <C>        <C>
Gross realized gains:
U.S. Treasury securities                           $      -   $      -   $ 21,143
Obligations of U.S. Government Agencies             358,639          -      9,790
Obligations of state and political sub-divisions      5,348          -          -
Mortgage-backed securities                              606          -     22,261
Equity securities                                    88,297          -          -
                                                   --------   --------   --------
                                                   $452,890   $      -   $ 53,194
                                                   ========   ========   ========

Gross realized losses:
Obligations of U.S. Government Agencies            $  2,616   $106,974   $ 29,687
Mortgage-backed securities                           58,176          -          -
                                                   --------   --------   --------

                                                   $ 60,792   $106,974   $ 29,687
                                                   ========   ========   ========
</TABLE>


The  amortized  cost and  estimated  market value of the  investment  securities
available  for sale at December 31, 2001,  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, 2001 are as follows:

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

Due in one year or less                           $  7,000,000   $  7,075,340
Due after one year through five years               32,949,485     33,621,669
Due after five years through ten years              21,058,289     21,681,133
Due after ten years, includes equity securities     97,824,620     98,488,556
                                                  ------------   ------------
                                                  $158,832,394   $160,866,698
                                                  ============   ============

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 2 -- INVESTMENT SECURITIES (CONTINUED)

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 $2,101,800 and $1,964,300 of FHLB stock
at December 31, 2001 and 2000.


NOTE 3 -- LOANS

Major classifications of loans are as follows:

                                         December 31,
                                  ---------------------------
                                       2001           2000
                                  ------------   ------------

Mortgage                          $173,213,532   $152,752,889
Home equity credit                  11,001,475     10,067,310
Installment                         64,053,168     65,326,867
Commercial                          55,185,161     52,675,603
PHEAA                                6,949,783      6,631,715
Municipal                            5,368,664      5,945,048
Credit cards                            31,940              -
Other                                1,715,479        611,416
                                  ------------   ------------
                                   317,519,202    294,010,848
Less:
      Allowance for loan losses      2,113,806      1,919,327
      Deferred loan fees               273,622        177,461
                                  ------------   ------------
                                  $315,131,774   $291,914,060
                                  ============   ============



The total  recorded  investment  in impaired  loans  amounted to  $1,026,975  at
December  31, 2001 and $0 at December 31, 2000.  The  allowance  for loan losses
related to impaired  loans  amounted to $154,069 and $0 at December 31, 2001 and
2000, respectively.

Changes in the allowance for loan losses were as follows:

                                            Years Ended December 31,
                                 ------------------------------------------
                                      2001           2000           1999
                                  -----------    -----------    -----------

Balance, beginning of year        $ 1,919,327    $ 2,365,874    $ 2,228,214
Provision charged to operations       500,000        300,000        300,000
Loans charged off                    (344,909)      (767,486)      (175,436)
Recoveries                             39,388         20,939         13,096
                                  -----------    -----------    -----------

Balance, end of year              $ 2,113,806    $ 1,919,327    $ 2,365,874
                                  ===========    ===========    ===========

                                       23

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 4 -- PREMISES AND EQUIPMENT

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

                                         December 31,
                                  -------------------------
                                      2001          2000
                                  -----------   -----------

Land                              $   450,466   $   450,466
Buildings and improvements          5,053,222     5,053,222
Furniture and equipment             5,144,515     4,780,789
                                  -----------   -----------
                                   10,648,203    10,284,477
Less:  Accumulated depreciation     5,992,693     5,384,700
                                  -----------   -----------

                                  $ 4,655,510   $ 4,899,777
                                  ===========   ===========


Depreciation  expense  was  $607,993 in 2001,  $528,335 in 2000 and  $499,068 in
1999.

Eight of the Bank's  commercial  branch  office  buildings  and/or  land and the
Bank's trust division  office 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,
                  2002                       $          184,805
                  2003                                  184,662
                  2004                                  178,470
                  2005                                  132,135
                  2006                                   70,285
                  2007 and thereafter                   476,252
                                             -------------------
                                             $        1,226,609
                                             ===================


Rental expense under these operating leases was $178,437,  $149,043 and $130,780
for the years ended December 31, 2001, 2000 and 1999, respectively.


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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 5 -- JOINT VENTURES

In 2000, the Bancorp formed a new subsidiary,  IB&T 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.
During 2001, the corporate  joint venture was terminated and the corporation was
dissolved.  The  Bancorp  received  a  distribution  of  $21,799  as part of the
dissolution.

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, 2001 and 2000 the  partnership  is reflected in the other assets  section of
the balance sheet at $53,704 and $8,876.


NOTE 6 -- BANK OWNED LIFE INSURANCE

In 2001, the Bank purchased  single premium life insurance  policies on officers
of the Bank at a cost of  $10,000,000.  At December 31, 2001, the cash surrender
value of these  policies  was  $10,031,160  and is included in the other  assets
section of the balance  sheet.  The  increase in cash  surrender  value of these
policies is recorded as other non-interest income.

NOTE 7 -- DEPOSITS

Time deposits  maturing in years ending December 31, as of December 31, 2001 are
summarized as follows:


                   2002                          $          138,623,075
                   2003                                      30,444,149
                   2004                                      13,524,284
                   2005                                      10,241,929
                   2006 and thereafter                        7,242,617
                                                 -----------------------

                                                 $          200,076,054
                                                 =======================

The Bank held related party deposits of approximately  $3,166,000 and $3,272,000
at December 31, 2001 and 2000, respectively.

The  Bank  held  time  deposits  that  exceeded   $100,000  of  $35,499,455  and
$36,942,793 at December 31, 2001 and 2000, respectively.


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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 8 -- REPURCHASE AGREEMENT

The Bank offers 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  $11,207,072  and
$9,022,190 at December 31, 2001 and 2000, respectively.


NOTE 9 -- PLEDGED ASSETS

At  December  31,  2001  and  2000,  U.S.  Government   obligations  carried  at
approximately $35,250,000 and $37,000,000, respectively, were pledged to qualify
for fiduciary powers, to secure public monies and for other purposes required or
permitted  by law.  At  December  31,  2001 and  2000,  the  carrying  amount of
securities pledged to secure repurchase agreements was approximately $17,000,000
and $14,000,000, respectively.


NOTE 10 -- INCOME TAXES

The provision for income taxes consists of:

                                                Years Ended December 31,
                                        ---------------------------------------
                                          2001          2000         1999
                                        -----------   -----------   -----------

Currently payable                       $ 3,072,885    $ 2,815,429  $ 3,012,368
Deferred tax (benefit)                      (87,061)       144,010      (29,977)
                                        -----------   ------------  -----------

Total                                   $ 2,985,824    $ 2,959,439  $ 2,982,391
                                        ===========   ============  ===========

The significant  components of temporary differences for 2001, 2000 and 1999 are
as follows:

                                   Years Ended December 31,
                            -------------------------------------
                               2001         2000         1999
                            ---------    ---------    -----------


Provision for loan losses   $ (86,543)   $ 151,347    $   (46,906)
Depreciation                  (30,397)     (12,665)        (5,387)
Valuation allowance                 -          550            553
Pension                        37,532       20,168         38,301
Deferred loan fees            (32,695)     (10,689)          (722)
Other                          25,042       (4,701)       (15,816)
                            ---------    ---------    -----------

Total                       $ (87,061)   $ 144,010    $   (29,977)
                            =========    ===========  ===========


                                       26

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999

NOTE 10 -- INCOME TAXES (CONTINUED)

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
                                                  -----------------------------
                                                     2001     2000       1999
                                                  --------  --------   --------
         Provision at statutory rate                34.0 %    34.0 %     34.0 %
         Effect of tax free income                  (4.3)     (3.1)      (2.0)
         Other                                      (1.2)     (0.3)         -
                                                  --------  --------   --------

         Effective tax rate                         28.5 %    30.6 %     32.0 %
                                                  ========  ========   ========


The deferred tax assets and  deferred  tax  liabilities  recorded on the balance
sheet as of December 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                       2001                        2000
                              -------------------------   -------------------------
                                     Deferred Tax              Deferred Tax
                              -------------------------   -------------------------
                                Assets      Liabilities      Assets     Liabilities
                              ----------   ------------   ----------    -----------
<S>                         <C>           <C>           <C>           <C>
Provision for loan losses     $  534,922    $        -    $  448,858    $        -
Depreciation                           -       126,131             -       156,528
Pension expense                        -        94,039             -        56,506
Other                            190,709             -       183,056             -
SFAS 115                               -       691,631             -        97,531
                              -----------   -----------   -----------   -----------

                              $  725,631    $  911,801    $  631,914    $  310,565
                              ===========   ===========   ===========   ===========
</TABLE>

NOTE 11 -- FHLB ADVANCES

At December  31, 2001 and 2000,  the Bank had the  following  advances  from the
Federal Home Loan Bank (FHLB).

<TABLE>
<CAPTION>
         2001               2000           Interest Rate                      Maturity Date
   ----------------  ----------------  ---------------------------------   ------------------

<S> <C>                 <C>           <C>                               <C>
     $         -         $  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            2,000,000    7.01% Fixed                       August 8, 2002
               -            2,000,000    6.83% Fixed                       March 8, 2001
       4,000,000                       5.18% Fixed w/Strike Rate           February 23, 2011
       4,000,000                       4.98% Fixed to Float                March 23, 2011
       5,000,000                       4.947% Fixed w/Strike Rate          August 29, 2011
     -----------         ------------
     $35,000,000         $ 28,000,000
     ===========         ============
</TABLE>

Interest only is payable until maturity on all FHLB advances. Collateral for all
advances includes all qualifying mortgages.

The Bank had maximum borrowing capacity with FHLB of approximately  $245,229,000
and $216,665,000 at December 31, 2001 and 2000, respectively.

                                       27

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 12 -- 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.

The actuarial  measurement period of October 15, through October 14, was used to
determine  the  components  of the net periodic  pension cost and the  financial
disclosures  for both plans.  The actuarial  measurement  date of October 15 was
used in determining the plans' liabilities and asset information.  The following
is a combined summary of the plans' components as of December 31, 2001, 2000 and
1999,  even  though  the  information  has  been  compiled  on the  basis of the
actuarial measurement period.

<TABLE>
<CAPTION>
                                                                             2001                 2000                 1999
                                                                      ------------------   ------------------   -------------------
<S>                                                                 <C>                  <C>                  <C>
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year                               $       1,840,408    $       1,765,691    $        2,279,047
Service cost                                                                    151,433              150,403               180,192
Interest cost                                                                   141,430              122,204               158,453
Actuarial loss due to settlement                                                      -                    -               128,760
Benefits paid                                                                   (68,612)             (75,139)              (19,100)
Plan settlement                                                                       -                    -              (840,928)
Other - net                                                                     188,917             (122,751)             (120,733)
                                                                      ------------------   ------------------   -------------------
      Benefit obligation at end of year                               $       2,253,576    $       1,840,408    $        1,765,691
                                                                      ==================   ==================   ===================

Change in Fair Value of Plan Assets:
Plan assets at estimated
      fair value at beginning of year                                 $       2,215,142    $       2,016,241    $        2,510,141
Actual return on plan assets, net of expenses                                     4,280              105,065               177,449
Plan settlement                                                                       -                    -              (840,928)
Benefits paid                                                                   (68,612)             (75,139)              (19,100)
Employer contributions                                                          199,434              168,975               188,679
                                                                      ------------------   ------------------   -------------------
      Fair value of plan assets at end of year                        $       2,350,244    $       2,215,142    $        2,016,241
                                                                      ==================   ==================   ===================

Funded status                                                         $          96,668    $         374,734    $          250,550
Unrecognized net loss from actuarial experience                                 377,432               27,502               149,953
Unrecognized prior service cost                                                (220,224)            (238,486)             (256,748)
Unamortized net asset existing at date
      of adoption of SFAS No. 87                                                (35,271)             (39,369)              (73,879)
Settlement                                                                            -                    -               (17,717)
                                                                      ------------------   ------------------   -------------------
      Prepaid pension cost                                            $         218,605    $         124,381    $           52,159
                                                                      ==================   ==================   ===================
</TABLE>

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 12 -- EMPLOYEE BENEFIT PLANS (CONTINUED)

Net pension expense included the following components:

<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                    ---------------------------------------------------------
                                                           2001                2000               1999
                                                    -----------------   -----------------  ------------------
<S>                                               <C>                 <C>                <C>
Service cost - benefits earned during the period    $        151,433    $        150,403   $         180,192
Interest cost on projected benefit obligation                141,430             122,204             158,453
Actual return on plan assets, net of expenses                 (4,280)           (105,065)           (177,449)
Net amortization and deferral                               (183,373)            (70,789)            (33,025)
                                                    -----------------   -----------------  ------------------

Net periodic pension cost                           $        105,210    $         96,753   $         128,171
                                                    =================   =================  ==================
</TABLE>


The projected  benefit  obligation for Plan #1 was  determined  using an assumed
discount  rate of  7.25%  for  2001,  7.75%  for  2000  and 7.0% for 1999 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 2001,  2000 and 1999. For both plans,  the assumed rate of return on
the plans' investment earnings was 7.0% for 2001, 2000 and 1999.

In the months of December 2001,  2000 and 1999, the Bank  contributed  $219,868,
$199,434 and $168,975,  respectively,  to the plans  subsequent to the actuarial
measurement  dates of October 15, 2001,  2000 and 1999.  Because these  employer
contributions were paid after the actuarial measurement period ended, the Bank's
prepaid pension cost at December 31, 2001, 2000 and 1999 is $406,868,  $301,896,
and $200,977, respectively.

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 $461,618 and
$453,806 at December 31, 2001 and 2000, 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 2001, 2000 and
1999 amounted to $53,404, $49,526 and $42,228, respectively.


NOTE 13 -- 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  $73,406,000  and  $58,436,000,  as of December 31, 2001 and 2000,
respectively, and approximate fair value.

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 13 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)

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.


NOTE 14 -- RELATED-PARTY TRANSACTIONS

At December 31, 2001 and 2000, 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  $5,010,000 and $5,185,000,
respectively.  During 2001, new loans to such related parties were approximately
$1,616,000 and repayments approximated $1,791,000.


NOTE 15 -- 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, 2001 and 2000, 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 $8,993,000 and $12,341,000 at December
31, 2001 and 2000, respectively.

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 16 -- 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.

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.

FHLB advances: The fair value of 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, 2001 are as follows:

                                       Carrying        Fair
                                        Amount         Value
                                     ------------   ------------
Financial Assets:
      Cash and cash equivalents      $ 25,218,935   $ 25,218,935

      Certificates of deposit        $    100,000   $    100,000

      Investment securities          $160,866,698   $160,866,698

      Federal Home Loan Bank stock   $  2,101,800   $  2,101,800

      Loans receivable               $315,131,774   $324,419,774

Financial liabilities:
      Deposits                       $422,462,093   $424,363,093

      Short term borrowings          $ 11,207,072   $ 11,207,072

      FHLB advances                  $ 35,000,000   $ 41,156,000

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


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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 17 -- 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.

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,  2001  and  2000,  that  the  Bank  meets  all  capital   adequacy
requirements to which it is subjected.

The Bank's actual  capital  ratios as of December 31, 2001 and 2000, 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
                                        2001      2000   Requirements         Requirements
                                    ----------  -------- -------------   ------------------------

<S>                                   <C>       <C>     <C>             <C>
Risk-based capital ratio                15.8%     16.3%   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        15.1%     15.6%   4.0%            6.0% or higher
</TABLE>

Included in cash and due from banks are required  federal reserves of $3,886,000
and $3,126,000 at December 31, 2001 and 2000, 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 18 -- 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, 2001 and 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.  In May  2001,  33,000
additional  stock  options were  granted  under the 2000 Stock Option Plan at an
exercise  price of $23.00 per share.  As of  December  31,  2001,  94,000  stock
options have been granted,  of which,  41,333 are exercisable;  32,333 at $24.50
per share and 9,000 at $23.00 per share.

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 18 -- STOCK OPTION PLAN (CONTINUED)

A summary of the status of the Bank's stock option plan is presented below:

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                           ----------------------------------------------------
                                                                     2001                     2000
                                                           ---------------------------  -----------------------
                                                                          Weighted                    Weighted
                                                                           Average                    Average
                                                                          Exercise                    Exercise
                                                              Shares        Price        Shares       Price
                                                              ------      --------       ------       --------
<S>                                                       <C>          <C>             <C>        <C>

        Outstanding at beginning of year                       61,000    $  24.50             -            -
        Granted                                                33,000    $  23.00        61,000     $   24.50
        Expired/forfeited                                           -          -              -            -
        Exercised                                                   -          -              -            -
                                                              -------                   -------

        Outstanding at December 31,                            94,000    $  23.97        61,000     $   24.50
                                                              =======                   =======

        Exercisable at December 31,                            41,333    $  24.17        18,000     $   24.50
                                                              =======                   =======
</TABLE>

The options  outstanding  at December  31, 2001 and 2000 had a  weighted-average
contractual maturity of 9.375 and 8.375 years, respectively.

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions:


                                              December 31,
                                      -------------------------------
                                          2001              2000
                                      -------------     -------------
        Dividend yield                   3.59%              4.57%
        Expected life                   7 years            7 years
        Expected volatility               18%                27%
        Risk-free interest rate          4.95%              5.10%

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 and  earnings  per share  would have been  adjusted to the pro
forma amounts indicated below: Years ended

                                                        December 31,
                                               -------------------------------
                                                   2001               2000
                                               ---------------    ------------
        Net income:
            As reported                         $7,465,334         $6,705,261
            Pro Forma                           $7,351,115         $6,667,136

        Net income per share:
            Basic and Diluted as reported         $2.49               $2.23
            Basic and Diluted Pro Forma           $2.45               $2.22

Weighted-average  number of shares  outstanding  assuming  dilution of exercised
stock  options  using the treasury  stock method was  2,994,088,  3,003,334  and
3,023,770 for the years ended December 31, 2001, 2000 and 1999, respectively.

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 19 -- TREASURY STOCK

In 2001 and 2000, the Bancorp  repurchased 16,228 and 19,251 shares of its stock
for $395,277 and $601,864, respectively, and is being held as treasury stock.


NOTE 20 -- RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 141, "Business Combinations".  This
statement   addresses   financial   accounting   and   reporting   for  business
combinations.  This statement requires all business combinations in the scope of
this  statement  to  be  accounted  for  using  the  Purchase  Method,  thereby,
eliminating the Pooling Method of accounting for business combinations.  Is also
requires recognizing intangible assets separately from goodwill. In addition, it
requires certain  disclosures  concerning the reason for the combination and the
methodology of allocating the purchase price to assets  acquired and liabilities
assumed.  This  statement is effective for all business  combinations  initiated
after June 30, 2001,  and applies to all  business  combinations  accounted  for
using the purchase  method for which the date of acquisition is July 1, 2001, or
later. This statement has no current impact on the Bank.

In June 2001,  the FASB  issued  SFAS No. 142,  "Goodwill  and Other  Intangible
Assets".  This  statement  addresses  financial  accounting  and  reporting  for
acquired  goodwill and other intangible  assets.  The statement is effective for
fiscal years beginning after December 15, 2001.  Management does not believe the
statement will have a material impact on the Bank or its operations.

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment or
Disposal of Long-Lived Assets".  This statement  addresses financial  accounting
and reporting for the impairment or disposal of long-lived assets. It eliminates
the exception to  consolidating  a subsidiary  for which control is likely to be
temporary and addresses the accounting for a segment of a business accounted for
as a discontinued operation. The statement is effective for financial statements
issued for fiscal years  beginning  after December 15, 2001, and interim periods
within those fiscal years. Management does not believe the statement will have a
material impact on the Bank or its operations.

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999

NOTE 21 -- PARENT COMPANY FINANCIAL INFORMATION

The condensed  financial  information  for IBT Bancorp,  Inc. as of December 31,
2001 and 2000 and for the years ended  December  31,  2001,  2000 and 1999 is as
follows:

BALANCE SHEETS
                                                        December 31
                                                  -------------------------
                                                      2001          2000
                                                  -----------   -----------
ASSETS
     Cash in bank                                 $   245,690   $     3,482
     Investment in subsidiary                      48,787,607    43,894,268
     Securities available for sale                    436,935       457,851
     Other assets                                     275,338       279,780
                                                  -----------   -----------

     Total Assets                                 $49,745,570   $44,635,381
                                                  ===========   ===========


LIABILITIES AND STOCKHOLDERS' EQUITY
     Liabilities                                  $    20,864   $    20,800

     Stockholders' Equity                          49,724,706    44,614,581
                                                  -----------   -----------

     Total Liabilities and Stockholders' Equity   $49,745,570   $44,635,381
                                                  ===========   ===========

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                                          ------------------------------------
                                                             2001         2000         1999
                                                          ----------   ----------   ----------
<S>                                                     <C>          <C>          <C>
Income
     Dividends from subsidiary                            $3,650,000   $3,325,000   $2,500,000
     Other dividends                                          16,978       14,141       33,586
     Investment security gains                                88,297            -            -
     Income from joint ventures                              102,124            -            -

Expenses
     Professional fees                                        87,923       76,676       84,781
     Loss on joint ventures                                   27,471       80,085         --
     Miscellaneous                                            16,880       18,271       16,786
                                                          ----------   ----------   ----------
Income Before Income Taxes
     and Equity in Undistributed Earnings of Subsidiary    3,725,125    3,164,109    2,432,019

Equity in Undistributed
     Earnings of Subsidiary                                3,740,209    3,541,152    3,903,735
                                                          ----------   ----------   ----------

Net Income                                                $7,465,334   $6,705,261   $6,335,754
                                                          ==========   ==========   ==========
</TABLE>

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

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 21 -- PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 Years Ended December 31,
                                                        -----------------------------------------
                                                            2001           2000           1999
                                                        -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

      Net income                                        $ 7,465,334    $ 6,705,261    $ 6,335,754
      Adjustments to reconcile net income to
         net cash provided by operating activities:
         Net undistributed earnings of joint ventures       (74,652)             -              -
         Investment security gains                          (88,297)             -              -
             Decrease in cash due to changes
                in assets and liabilities:
                  Equity in undistributed earnings
                    of subsidiary                        (3,740,209)    (3,541,152)    (3,903,735)
                  Other assets                                    -        (58,146)             -
                                                        -----------    -----------    -----------

Net Cash From Operating Activities                        3,562,176      3,105,963      2,432,019

CASH FLOWS FROM INVESTING ACTIVITIES

      Distributions from joint ventures                      79,095              -              -
      Proceeds from sale of securities
         available for sale                                 478,554        260,631         74,773
      Purchase of securities available for sale            (369,062)             -              -
                                                        -----------    -----------    -----------

Net Cash From Investing Activities                          188,587        260,631         74,773


CASH FLOWS FROM FINANCING ACTIVITIES
      Dividends paid                                     (3,113,278)    (2,762,018)    (2,419,039)
      Purchase of Treasury Stock                           (395,277)      (601,864)       (87,612)
                                                        -----------    -----------    -----------

Net Cash Used by Financing Activities                    (3,508,555)    (3,363,882)    (2,506,651)
                                                        -----------    -----------    -----------

Net Change in Cash and Cash Equivalents                     242,208          2,712            141


Cash and Cash Equivalents at Beginning
      of Year                                                 3,482            770            629
                                                        -----------    -----------    -----------

Cash and Cash Equivalents at End of Year                $   245,690    $     3,482    $       770
                                                        ===========    ===========    ===========
</TABLE>

                                       36

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        IBT BANCORP, INC. AND SUBSIDIARY

                  Years Ended December 31, 2001, 2000 and 1999


NOTE 22 -- CONDENSED CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA  (Unaudited)

                                       Quarters ended 2001
                          --------------------------------------------------
                           March 31      June 30   September 30  December 31
                          ----------   ----------  ------------  -----------

Interest income           $8,871,456   $8,885,862   $8,864,164   $8,563,255
Interest expense           4,470,686    4,426,058    4,237,634    3,823,867
                          ----------   ----------   ----------   ----------
Net interest income        4,400,770    4,459,804    4,626,530    4,739,388
Provision for loan
losses                        75,000      100,000       90,000      235,000
Non-interest income          799,414    1,026,347    1,041,765    1,141,282
Non-interest expense       2,600,794    2,776,724    2,785,829    3,120,808
                          ----------   ----------   ----------   ----------
Income before income
taxes                      2,524,390    2,609,427    2,792,466    2,524,862
Income tax expense           759,238      726,053      808,084      692,449
                          ----------   ----------   ----------   ----------

Net income                $1,765,152   $1,883,374   $1,984,382   $1,832,413
                          ==========   ==========   ==========   ==========

Net income per Share of
Capital Stock             $     0.59   $     0.63   $     0.66   $     0.61
                          ==========   ==========   ==========   ==========



                                       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
                          ==========   ==========   ==========   ==========

                                       37

<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 business.  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 01, 2002, IBT Bancorp, Inc. had approximately 647
shareholders  of  record  and  2,985,695  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.

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

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

2001
    First Quarter    22.25           20.13                   .26
    Second Quarter   25.00           21.37                   .26
    Third Quarter    26.50           24.55                   .26
    Fourth Quarter   29.00           25.10                   .26

         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
circumstances  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.

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