TABLE OF CONTENTS




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|PART I                                                                                        
|ITEM 1. BUSINESS                                                                              
|ITEM 2. PROPERTIES                                                                            
|ITEM 3. LEGAL PROCEEDINGS                                                                     
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   
|ITEM 4a. IDENTIFICATION OF EXECUTIVE OFFICERS                                                 
|PART II.                                                                                      
|ITEM 5. MARKET FOR REGISTRANTS COMMON STOCK AND RELATED SHAREHOLDER MATTERS.                 
|ITEM 6. SELECTED FINANCIAL DATA.                                                              
|ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|ITEM 7a. MARKET RISK MANAGEMENT                                                               
|ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                          
|ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
|PART III                                                                                      
|ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                                  
|ITEM 11. EXECUTIVE COMPENSATION.                                                              
|ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.                      
|ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                                      
|PART IV                                                                                       
|ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.                    



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[Second Bancorp Logo]

SECOND BANCORP INCORPORATED


FORM 10-K

For the Fiscal Year Ended December 31, 1999



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SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)


|      |  |                                                                                                                                   
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------
|[X]   |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
	DECEMBER 31, 1999
|[   ] |  | TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
	FROM       
|      |  | TO                                                                                                                                

Commission File Number: 0-15624

SECOND BANCORP INCORPORATED

(Exact name of registrant as specified in
charter)


OHIO




(State or other jurisdiction of


incorporation or organization)


108 Main Avenue SW, Warren, Ohio




(Address of principal executive offices)







(IRS Employer


Identification No.)


44481




(Zip Code)


Registrants telephone number, including area code:



Securities registered pursuant to Section 12(g) of the Act:

Title of each class






Name of each exchange on which registered






Securities registered pursuant to Section 12(b) of the Act:

Common Stock, no par value






Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter periods that the registrant
was required to file such reports), and (2) has been subject
 to such filing requirements for the past
90 days.     Yes 
[X]     No  [   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
 herein, and will not be contained, to the best of the
registrants knowledge, in definitive proxy of information
statements, incorporated by reference in Part III of this
Form 10-K or any amendment to this
form 10-K.  [X]

The aggregate market value of the Common Stock held by
non-affiliates of the registrant as of March 15, 2000 as
reported on the NASDAQ National Market System, was approximately
$169,664,921. Shares of Common Stock held by each officer and
director and by each person who owns 5% or more of the
outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other
purposes.

As of March 15, 2000, the registrant had outstanding
10,369,850 shares of Common Stock

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the annual shareholders
 meeting to be held on May 9, 2000 are incorporated by
reference into Part III.



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PART I




ITEM 1.  BUSINESS

General

Second Bancorp Incorporated, (Second Bancorp) is a
one-bank holding company which owns the Second National Bank of
Warren (Second National), a Warren, Ohio based
commercial bank. Operating through thirty-five branches and one
loan production office, Second National offers a wide range of
commercial and consumer banking and trust services primarily to
business and individual customers in various communities in a
nine county area in northeastern Ohio. At December 31, 1999,
 Second Bancorp had consolidated total assets of $1.54 billion,
deposits of $1.098 billion and shareholders equity of
$116 million.

Second National focuses its marketing efforts primarily on local
independent commercial and professional firms, the individuals
who are the owners and principals of such firms as well as the
low-to-moderate to upper income retail customers in Second
Nationals trade areas. In recent years, Second Bancorp has
emphasized increased commercial, direct consumer and real estate
lending as well as market area expansion.

The Second National Network of Banking Centers

Second National Bank expanded its network of banking centers in
1999 by successfully converting newly acquired bank branches and
establishing de novo offices.

Fully integrating Trumbull Savings & Loan and Enterprise Bank
 into the Second National Bank system was a major initiative and
significant achievement. With the acquisitions completed, both
institutions and their respective facilities began operating as
Second National Bank. In addition to gaining a 25 percent market
share in Trumbull County, the acquisitions  
along with our own sales activities  significantly
boosted the Banks customer base, deposits, and outstanding
loan balances. From mid-1998 through 1999, total checking and
savings accounts increased by approximately 100 percent,
outstanding home equity loan balances nearly doubled, and the
real estate loan portfolio increased by more than
300 percent.

The acquisition of Trumbull Savings & Loan also helped Second
 National meet a critical need for office space. The Trumbull
Savings headquarters facility in downtown Warren, along with
branches in Howland and Newton Falls, enabled us to expand
efficiently and conveniently. We capitalized on the additional
office space by relocating our very successful Trust Division to
the first floor of the High Street Banking Center. The new
location showcases the nationally recognized Trust Division while
 providing greater access and convenience to our customers. In
addition to a cohesive work space for trust officers and
administrators, the remodeled interior provides a comfortable,
professional environment for this growing division.

To offer more personalized service to customers, the lobby of the
 High Street Banking Center was also remodeled. Additional space
in the building is housing other vital Bank operations, including
 Trust Operations, the Records and Research Department, and a
much expanded Real Estate Division. At the new Howland and Newton
 Falls Banking Centers in Trumbull County, both of which are
among the busiest in the Second National system, we made
improvements to handle the increased volume of business and to
enhance efficiency and customer accessibility.

Second National established de novo offices in the Lake Cable
area of Jackson Township in Stark County and in the growing
suburb of Twinsburg in Summit County. The Banks Lake Cable
Banking Center, which builds on the success of nearby offices in
Akron and Green, offers products and services that are an
excellent match for the small- to medium-sized businesses of
Jackson Township. With a concentration of Second National offices
 around our new Twinsburg Banking Center  our sixth in
 Summit County  we believe we are the most convenient
bank in the area.

Capitalizing on an opportunity to establish a larger presence in
the village of Poland, Second National constructed a new banking
center directly on Boardman-Poland Road (Route 224). Our new
location offers greater visibility, room for expansion, and the
convenience of drive-up services. With 3,000 square feet of
space  nearly triple the size of the original
office  our new banking center not only accommodates
the

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Akron

Second National will strengthen its presence in Summit County in
2000 by expanding the Akron Banking Center. The new center will
be three times the size of our current office space, enabling us
to increase service to retail and corporate customers. With a
total of 3,340 square feet in this prime downtown location, we
will be able to add a Mortgage Loan Originator, Investment
Representative, and Trust Officer to our Akron staff.

Alternative Delivery

With the addition of automated bill payment, Second
Nationals Call Center became a complete alternative
delivery system and a true sales venue in 1999.

Through the Call Center and Interactive Voice Response (IVR),
nearly every transaction that can be completed in a Second
National retail banking center can be accomplished over the
telephone  from transferring funds and verifying
account balances to making loan payments. The automated bill
payment component allows Second National customers to pay any
bill to virtually any merchant from anywhere  all
automatically using a touch-tone telephone. This new service not
only offers the ultimate in convenience to customers, it is also
a major vehicle for shifting routine transactions to a more
efficient automated environment.

The Call Centers personal bankers  who assist
customers in opening new deposit accounts and loans over the
telephone  achieved considerable sales success in
1999, booking more than $1 million in consumer loans. In
2000, we plan to build on that volume and make the Call Center
its own sales and profit center.

Operational improvements  such as a new call volume
tracking and reporting system, call monitoring, time-in-queue
messaging, sales incentives for personal bankers, and the ability
 of non-customers to open new deposit accounts  will
be made to increase sales volume and customer satisfaction in
this important delivery channel. By handling more of the
Banks inquiries and sales calls, the Call Center will not
only increase its own revenue stream, it will also provide Second
 National banking center personnel with more time for
face-to-face selling.

Specialized Financial Services

Building on more than a century of success in traditional banking
 services, Second National continued to expand its specialized
financial services, including Commercial Lending, Corporate
Services, Trust, Investments, and Real Estate. Because of our
increasing strength in each of these service areas, Second
National is able to meet the full range of customer financial
needs. We view one-stop shopping not only as the most convenient
way for our customers to do business, but also as the key to
increased profitability and shareholder return in todays
financial services market.

Commercial Lending

Second National remained committed to small business and was
again a leader in Small Business Administration
(SBA) lending. With a total of 65 loans extended during the
SBAs fiscal year 1999, the Bank ranked third in the
SBAs Cleveland district, just behind two major national
banks.

The addition of management expertise to Commercial Lending and
Corporate Services strengthened the divisions credit
quality and extended the reach of our sales efforts.

In addition to expanding calling efforts into the Banks
western territory, Corporate Services will enhance its
competitiveness in 2000 by upgrading its automated cash
management system to a Windows®-based system, to be more
compatible with the technological environments in most businesses
 today. Corporate Services will also make an important addition
to its product mix that will increase the Banks fee income
and competitiveness. A new equipment lease, offered through
CashFlow LEASE, will be available to creditworthy business
customers

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Trust

Our Trust Division continued to be a standout:  superior
investment performance, customer service, and innovative programs
 have earned Second National Bank an outstanding reputation and
significant new trust business. The Trust Divisions growing
 customer base, together with Institutional Trust Program
customers, have boosted trust assets under management to
$840 million, an increase of 110 percent over the last
five years.

Second Nationals winning investment strategies regularly
outrank much larger money managers, while yielding consistently
high returns for trust customers. In 1999, the Trust
Divisions investment funds continued to be nationally
ranked by industry analysts, including Nelson Information
Company, Pensions & Investments Report (PIPER), and
TIS-PERAscope.

PIPER ranked all three of Second Nationals common trust
funds first or second in their respective categories for the one-
 and five-year periods ending March 31, 1999. The
TIS-PERAscope Universe Performance Report ranked the Banks
employee benefit growth fund second in the nation, based on a
return of 20.1 percent from January 1 through September 30,
1999. The same fund ranked fourth with returns of 18 percent
 and 22.9 percent, respectively, for the three- and
five-year periods ending September 30, 1999. The Trust
Divisions equity fund and fixed-income funds were also
nationally ranked in the report for their returns.

Nurturing the growth and success of this important division in
2000 will include the addition of a new business officer. To
service and further develop trust business in the Banks
southwestern region, we will place the new trust officer in our
Akron Banking Center.

Investments

Second National Banks Investment Center (formerly the
Alternative Investment Center)  offering a variety of
mutual funds, annuities, stocks, bonds, and insurance* through
AAG Securities, Inc.  posted a stellar year,
increasing total sales by 89 percent over 1998 and
significantly expanding its client base.

The investment staff, all Registered Representatives of AAG
Securities, are deployed throughout Second Nationals
marketplace. Two members of the Investment Center received the
1999 Summit Club Chairmans Award by AIM Distributors, Inc.,
 a subsidiary of AIM Management Group, for achieving the highest
level of professional excellence and for being among AIMs
top national producers.

In 2000, the Investment Center will factor prominently in Second
Nationals relationship building strategy and as a
significant contributor to the Banks non-interest income.
In addition to further penetrating the life and long-term care
insurance market, the Center plans to offer comprehensive
financial planning to customers. Written plans by Investment
Representatives will address client needs for asset allocation,
insurance, and estate and retirement planning.

Real Estate Division

Second National took major steps to bolster the foundation of the
 Real Estate Division in 1999. With a new organizational
structure and an experienced management team, Second National
expanded this division and made operational improvements to
increase market share and efficiency. As a result of acquired
loan balances and sales efforts throughout 1998-99, we
experienced more than a 300 percent increase in the real
estate portfolio.





|  |                                                                                                                                                                                                                                                                                                                                                                                      
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Non-deposit products such as mutual funds, annuities, stocks,
	bonds and insurance are (i) not insured by the Federal
	Deposit Insurance Corporation (FDIC); (ii) not
	deposits or other obligations of the financial institution and
	are not guaranteed by the financial institution; and
	(iii) subject to investment risks, including possible loss
	of the principal invested.

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The division leveraged its Trumbull County mortgage loan
leadership position in other Ohio communities by expanding its
corps of mortgage originators. Second National recruited and
deployed several additional originators throughout Northeast
Ohio, moving closer to our 2000 goal of 15 originators.

To complement our direct loan origination, Second National
established a Correspondent Lending Department and began
successfully increasing mortgage volume with minimal overhead.
Combined with mortgages originated in the banking centers,
indirect loans secured through correspondent lending are adding
critical mass to the total volume Second National is able to
produce and sell in the secondary market.

To protect the mortgage interest rate risk associated with our
increased mortgage activity, Second National hired an experienced
 professional to establish a full-fledged Secondary Marketing
Department. This department monitors the market to maximize
Second Nationals interest rate spread and competitiveness
through optimal pricing.

The Real Estate Division streamlined the mortgage loan process by
 implementing the automated underwriting systems Loan
Prospector® and Desktop Underwriter®. To improve the
processing and tracking of loans, laptop computers were deployed
to all originators.

The pipeline management system will be upgraded to the fully
integrated, Windows®-based MortgageFlex module to enhance
the flow between processing and servicing, as well as the
execution of loan sales. The new system will eliminate manual
processes, minimize data entry, and facilitate the tracking of
documents. By establishing a new Escrow Department, which will
solicit our servicing portfolio for credit life, disability, and
accidental insurance, the Real Estate Division will create a new
source of non-interest income.

Second Nationals Real Estate Division forges into the 21st
century with a broad range of services, strong management, and
aggressive sales goals. To increase efficiency and profitability
levels in 2000, the division will focus on increased government
lending, system enhancements, and further expansion.

Technology

Second National continued to successfully employ technology to
assist in meeting our strategic business goals  from
efficient day-to-day operations to sophisticated management
analysis to new means of delivering products and services. With
the completion of our five-year technology migration plan, we are
 pleased to report that a nationally recognized financial
services consultant positively evaluated Second Nationals
current technological position.

Two major accomplishments in 1999 included upgrades to Maxsys
(the document preparation system for deposit accounts) and the
completion of our imaging project.

The internally developed software, Maxsys, eliminates the manual
writing of information on multiple forms, prepares all account
documentation, and reduces the time required to open a new
deposit account. Software upgrades to Maxsys further automated
the process by offering even more time- and cost-saving features
and functions.

Second Nationals imaging project was a significant
achievement, and highly successful in terms of cost savings,
functionality, and acceptance. All three facets of the
project  statement, research, and report
imaging  resulted in significant savings in personnel
and material costs. New check imaging statements were accepted by
 more than 99 percent of all customers, making this a
technological advancement that immediately contributed to the
Banks bottom line while adding value to our customers.

Second Nationals new three-year technology migration plan,
commencing in the year 2000, creates the appropriate
infrastructure to support our sales goals. It is also designed to
 help Second National realize greater efficiencies, reduce costs,
 and create new products and services.

Major initiatives of the technology migration plan include the
development of PC-based delivery channels and additional
automated processing modules to increase the number of routine
transactions performed in automated environments. Our plan also
calls for the creation of an additional document preparation
system for

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In 2000, we will take full advantage of our analytical
capabilities to build strong customer relationships and to ensure
 the delivery of our products and services is strategic, focused,
 and profitable.

We will implement a new sales tracking system to expand the scope
 of our sales measurement. By comprehensively measuring all
facets of Second National business, the new system will assist in
 developing individual business plans, employee evaluations, and
ultimately, quantifying our 2000 sales achievement.

ALLTELs new Relationship Management System (RMS) will
enable Second National staff to take customer financial needs
analysis to a higher level. With a more comprehensive picture of
customer relationships at their disposal, our personal bankers
will be better equipped to identify customer needs and match them
 with Second National products and services. Using bank-wide
information, including the RMS database, our new Profitvision
application will continue to assist us in analyzing profitability
 at multiple levels and from various viewpoints.

Community Development

With the help of a new Community Development Officer, Second
National Bank continued to make a significant impact on the
communities it serves through loans, investments, and education.
In concert with recently revised Community Reinvestment Act
legislation, Second National placed a strong emphasis on lending
activity, extending more than $4 million in community
development loans throughout the year.

The Bank orchestrated two community development loans totaling
more than $1 million that will help finance the construction
 of brand new, low-to-moderate income housing in the Mahoning
Valley. A $420,000 loan commitment to Sunshine, Inc. of Warren
will help fund $4 million to construct 40 new homes in
Southwest Warren that will be available for rent and, eventually,
 for sale. A similar loan in the amount of $620,000 was committed
 to the Youngstown community development organization CHOICE,
Inc., which plans to construct and rent single-family homes in
that area.

Second National also made a $1 million investment with the
Ohio Capital Corporation for Housing, which provides capital for
the construction of homes in low-to-moderate income areas
throughout Ohio. The investment not only helps create more
affordable housing, it also provides the Bank with both
short-term tax savings and a long-term yield. Second
Nationals contribution will immediately increase the
housing stock in Portage and Summit counties through the $800,000
 Portage Housing I project, which intends to build 30
single-family homes in Kent, Ravenna, and Windham.

Recognizing the importance of education and business ownership,
Second National continued offering Youngstown State
Universitys Entrepreneurship Program, as well as other
seminars on financial topics.

2000

We have determined a singular focus for Second National Bank in
the year 2000: providing solutions to our customers
financial needs and strengthening customer relationships.
Building multi-dimensional relationships with a continually
expanding customer base will enable us to maximize our return to
both customers and Second Bancorp shareholders. At the same time,
 we will complete a company-wide efficiency analysis, to ensure
Second National Bank continues to operate as efficiently and
profitably as possible.

In the coming year, we will continue our dedication to knowing
and working with customers, meeting their requests without delay,
 and offering the best products and services available. We will
strive for exceptional customer service, introduce new products,
launch a year-long advertising campaign, and deploy specialized
financial professionals throughout our marketplace.

In the area of product development, we will strive to offer more
to more people. This year, we will introduce a unique,
specialized leasing program for small businesses, as well as a
new investment account for Private Banking clients. This new
personal sweep account will enhance the
competitiveness of the Private Banking Program by meeting
customer demand for a liquid, high-yield deposit account.

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With an eye toward continual expansion, we will uncover immediate
 opportunities throughout our marketplace with the help of an
expert sales staff. Additional specialists in Private Banking,
Corporate Services, and Trust are assisting our core staff in
serving our growing client base throughout our service area and
beyond.

In combination, we believe our relationship building, customer
service, and operational initiatives will yield positive results
in 2000 and beyond.

With our vision and commitment to meeting our strategic business
goals and building on our past success, we, at Second Bancorp and
 Second National Bank, will continue our vigilant dedication to
establishing more meaningful relationships with our stakeholders
and leveraging our value-added advantage to make us truly unique
in the banking industry.

Second Bancorp has no significant industry segments which require
 disclosure.

Market Area

Second Nationals primary market area consists of Trumbull,
Ashtabula, Portage, Jefferson, Mahoning, Summit, Medina, Stark
and the southeast portion of Cuyahoga counties in the
northeastern corner of Ohio, to the east and south of the
Cleveland metropolitan area. The market areas economy is
heavily influenced by the manufacturing sector with an emphasis
on steel, auto manufacturing and a variety of related and smaller
 industries. The area has benefited from an extensive
transportation system comprised mainly of railroad and trucking
systems.

Competition

There is significant competition in the financial services
industry in northeastern Ohio among commercial banks. As a result
 of deregulation of the financial services industry, Second
Bancorp also competes with other providers of financial services
such as savings and loan associations, credit unions, commercial
finance companies, brokerage and securities firms, insurance
companies, commercial finance and leasing companies and the
mutual fund industry. Some of Second Bancorps competitors,
including certain regional bank holding companies which have
operations in Second Bancorps market area, have
substantially greater resources than Second Bancorp, and as such,
 may have higher lending limits and may offer other services not
available through Second National. Second Bancorp also faces
significant competition, particularly with respect to interest
rates paid on deposit accounts, from well-capitalized local
thrift institutions. Second National competes on the basis of
rates of interest charged on loans, the rates of interest paid on
 funds, the availability of services and responsiveness to the
needs of its customers.

Regulation

Second Bancorp is a one bank holding company and is regulated by
the Federal Reserve Bank (the FRB). Second National
is a national bank and is regulated by the Office of the
Comptroller of the Currency (the OCC), as well as the
 Federal Deposit Insurance Corporation (the FDIC).
Dramatic changes have developed over the past several years
regarding minimum capital requirements for financial
institutions. A listing of the minimum requirements for capital
and Second Bancorps capital position as of
December 31, 1999 and 1998 are presented in footnote 13 of
Item 8; Financial Statements and Supplementary Data and is
hereby incorporated by reference.

Second Bancorp is subject to regulation under the Bank Holding
Company Act of 1956, as amended (the Act). The Act
requires the prior approval of the Federal Reserve Board for a
bank holding company to acquire or hold more than a 5% voting
interest in any bank, and restricts interstate banking
activities. The Act allows interstate bank acquisitions anywhere
in the country and interstate branching by acquisition and
consolidation in those states that have not opted out by
January 1, 1997. Among the states where Second Bancorp may
acquire banks are Ohio and Pennsylvania. The Act restricts
nonbanking activities to those which are determined by the
Federal Reserve Board to be closely related to banking and a
proper incident thereto. The Act does not place territorial
restrictions on the activities of nonbank subsidiaries of bank
holding companies. The Act also regulates

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Second National is subject to regulation under the National
Banking Act and is periodically examined by the OCC and is
subject, as a member bank, to the rules and regulations of the
FRB. Second National is an insured institution and member of the
Bank Insurance Fund (BIF) and also has approximately
$430 million in deposits acquired through acquisitions of
savings and loan institutions that are insured through the
Savings Association Insurance Fund (SAIF). As such,
Second National is also subject to regulation by the FDIC.
Establishment of branches is subject to approval of the OCC and
geographic limits established by state law.

The Graham-Leach-Bliley Act

The enactment of the Graham-Leach-Bliley Act of 1999 (the
GLB Act) represents a pivotal point in the history of
 the financial services industry. The GLB Act sweeps away large
parts of a regulatory framework that had its origins in the
Depression Era of the 1930s. Effective March 11, 2000, new
opportunities will be available for banks, other depository
institutions, insurance companies and securities firms to enter
into combinations that permit a single financial services
organization to offer customers a more complete array of
financial products and services. The GLB Act provides a new
regulatory framework for regulation through the financial holding
 company, which will have as its umbrella regulator the Federal
Reserve Board. Functional regulation of the financial holding
companys separately regulated subsidiaries will be
conducted by their primary functional regulator. The GLB Act
makes satisfactory or above Community Reinvestment Act compliance
 for insured depository institutions and their financial holding
companies necessary in order for them to engage in new financial
activities. The GLB Act provides a federal right to privacy of
non-public personal information of individual customers.

FIRREA

FIRREA restructures the regulation, supervision and deposit
insurance of savings and loan associations and federal savings
banks whose deposits were formerly insured by the Federal Savings
 and Loans Insurance Corporation (FSLIC). FSLIC was
replaced by the Savings Association Insurance Fund
(SAIF) administered by the FDIC. A separate fund, the
 Bank Insurance Fund (BIF), which was essentially a
continuation of the FDICs then existing fund, was
established for banks and state savings banks. An acquired thrift
 generally would be required to continue its deposit insurance
with the SAIF unless significant exit and entrance fees were paid
 in connection with a conversion to BIF insurance.

FDICIA

The Federal Deposit Insurance Corporation Improvement Act of 1991
 (FDICIA) substantially revised the bank regulatory
and funding provisions of the Federal Deposit Insurance Act and
several other federal banking statutes. Among other things,
FDICIA requires federal banking agencies to broaden the scope of
regulatory corrective action taken with respect to banks that do
not meet minimum capital requirements and to take such actions
promptly in order to minimize losses to the FDIC. FDICIA
established five capital tiers: well capitalized;
adequately capitalized; undercapitalized;
 significantly capitalized; and critically
undercapitalized and imposes significant restrictions on
the operations of a depository institution that is not in either
of the first two of such categories. A depository
institutions capital tier will depend upon the relationship
 of its capital to various capital measures. A depository
institution will be deemed to be well capitalized if
it significantly exceeds the minimum level required by regulation
 for each relevant capital measure, adequately
capitalized if it meets each such measure,
undercapitalized if it is significantly below any
such measure and critically undercapitalized if it
fails to meet any critical capital level set forth in
regulations. An depository institution may be deemed to be in a
capitalization category that is lower than is indicated by its
actual capital position if it receives an unsatisfactory
examination rating or is deemed to be in an unsafe or unsound
condition or to be engaging in unsafe or unsound practices.

Under regulations adopted under these provisions, for a
depository institution to be well capitalized it must have a
total risk-based capital ratio of at least 10%, a Tier I
risk-based capital ratio of at least 6% and a Tier I

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FDICIA generally prohibits a depository institution from making a
 capital distribution (including payment of dividends) or paying
management fees to any entity that controls the institution if it
 thereafter would be undercapitalized. If a depository
institution becomes undercapitalized, it will be generally
restricted from borrowing from the Federal Reserve, increasing
its average total assets, making any acquisitions, establishing
any branches or engaging in any new line of business. An
undercapitalized institution must submit an acceptable capital
restoration plan to the appropriate federal banking agency, which
 plan must, in the opinion of such agency, be based on realistic
assumptions and be likely to succeed in restoring the
 depository institutions capital. In connection with the
approval of such a plan, the holding company of the depository
institution must guarantee that the institution will comply with
the plan, subject to a limitation of liability equal to a portion
 of the depository institutions assets. If an
undercapitalized depository institution fails to submit an
acceptable plan or fails to implement such a plan, it will be
treated as if it is significantly undercapitalized.

Under FDICIA, bank regulators are directed to require
significantly undercapitalized depository
institutions, among other things, to restrict business
activities, raise capital through a sale of stock, merge with
another depository institution and/or take any other action which
 the agency determines would better carry out the purposes of
FDICIA.

Within 90 days after a depository institution is determined
to be critically undercapitalized, the appropriate
federal banking agency must, in most cases, appoint a receiver or
 conservator for the institution or take such other action as the
 agency determines would better achieve the purposes of FDICIA.
In general, critically undercapitalized depository
institutions will be prohibited from paying principal or interest
 on their subordinated debt and will be subject to other
substantial restrictions.

FDICIA also contains a variety of other provisions that could
affect the operations of Second Bancorp, including new reporting
requirements, regulatory standards for real estate lending,
truth in savings provisions, the requirement that a
depository institution give 90 days prior notice to
customers and regulatory authorities before closing any branch,
limitations on credit exposure between banks, restrictions on
loans to a banks insiders and guidelines governing
regulatory examinations.

Deposit Insurance Assessments

The FDIC is authorized to establish separate annual assessment
rates for deposit insurance for members of the BIF and the SAIF.
The FDIC may increase assessment rates for either fund if
necessary to restore the funds ratio of reserves to insured
 deposits to its target level within a reasonable time and may
decrease such rates if such target level has been met. The FDIC
has established a risk-based assessment system for both BIF and
SAIF members. Under this system, assessments vary based on the
risk the institution poses to its deposit insurance fund. The
risk level is determined based on the institutions capital
level and the FDICs level of supervisory concern about the
depository institution.

Based upon its respective level of deposits at December 31,
1999, the projected BIF and SAIF assessments for Second National
for 2000 will be approximately $240,000.

Interstate Banking and Branching Legislation

The Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the IBBEA) authorized interstate
acquisitions of banks and bank holding companies without
geographic constraint beginning Septem-

8



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##### Table of Contents





If a state opts out of interstate branching, no bank
from another state may establish a branch in that state, whether
through a merger or by a de novo establishment. Pennsylvania, the
 state in closest proximity to Second National, has opted to
permit interstate branching, creating the possibility of
branching into that state. To date, Second National has taken no
action to branch into Pennsylvania or any other state, however
Second National may do so in the future.

Employees

The number of full time equivalent employees of Second Bancorp as
 of December 31, 1999 was approximately 527. Second Bancorp
considers its employee relations to be good. None of the
employees are covered by a collective bargaining agreement.




ITEM 2.  PROPERTIES

Second Bancorps executive offices are located at Second
Nationals main office building in Warren, Ohio, which is
leased by Second National under a long-term triple net lease
agreement with a term, including optional renewals, expiring on
October 31, 2029. Second National has the option to purchase
 the main office facility before two optional renewal periods at
the fair market value in existence at that time. Second National
owns 11 of its branch locations, while Second Nationals 25
other branch and loan production office locations are leased
under lease and sublease agreements with remaining terms of 1 to
18 years. Second National also has leases for record retention
and office space with remaining lease terms of one and seven
years, respectively.




ITEM 3.  LEGAL PROCEEDINGS

Second Bancorp is subject to various pending and threatened
lawsuits in which claims for monetary damages are asserted in the
 ordinary course of business. While any litigation involves an
element of uncertainty, in the opinion of management,
liabilities, if any, arising from such litigation or threat
thereof will not have a material effect on the financial position
 or results of operations of Second Bancorp.




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

There were no special meetings for shareholders since last
years annual meeting.

9



---



##### Table of Contents






ITEM 4a.  IDENTIFICATION OF EXECUTIVE OFFICERS

The following table sets forth the names and ages and business
experience for the last five years of each of the executive
officers of the Corporation. Each executive officer of the
Corporation is appointed by the Board of Directors on an annual
basis, and serves at the pleasure of the Board.

|                     |  |     |    |                         |  |                                                                                                                                                                                                                                                                                                             |  |  |      | 
|-------------------- |  | --- | -- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|                     |  |     |    |                         |  | Year                                                                                                                                                                                                                                                                                                       
|Name                 |  | Age |    | Position and Experience |  | Appointed                                                                                                                                                                                                                                                                                                  
|                     |  |     |    |                         |  |                                                                                                                                                                                                                                                                                                            
|Alan G. Brant        |  |     | 67 |                         |  | Chairman and Chief Executive Officer of Second Bancorp and
	previously President of Second Bancorp and Director, President
	and Chief Executive Officer of Second National.                                                                                                                                 |  |  | 1987 | 
|                    
|                    
|                    
|                    
|R. L. (Rick) Blossom |  |     | 52 |                         |  | President and Chief Operating Officer of Second Bancorp and
	President, Chief Executive Officer and Director of Second
	National. Former Chief Executive Officer and Director of First
	National Bank of Southwestern Ohio and Senior Vice President and
	Chief Lending Officer of First Financial Bancorp. |  |  | 1999 | 
|                    
|                    
|                    
|                    
|David L. Kellerman   |  |     | 42 |                         |  | Treasurer of Second Bancorp and Executive Vice President and
	Chief Financial Officer of Second National.                                                                                                                                                                                                   |  |  | 1987 | 
|                    
|                    
|                    
|                    
|Christopher Stanitz  |  |     | 51 |                         |  | Senior Vice President of Second Bancorp and Vice President of
	Second National.                                                                                                                                                                                                                             |  |  | 1992 | 
|                    
|                    
|                    
|                    
|Diane C. Bastic      |  |     | 56 |                         |  | Executive Officer of Second Bancorp and Senior Vice President of
	Second National.                                                                                                                                                                                                                          |  |  | 1985 | 
|                    
|                    
|                    
|                    
|Mike Filarski        |  |     | 51 |                         |  | Executive Officer of Second Bancorp and Senior Vice President of
	Second National. Former President for Signal Mortgage (1998-99),
	previously President for National Auto Credit (1996-1997),
	previously Executive Vice President for The Leader Mortgage
	Company (1992-1996).                           |  |  | 1999 | 
|                    
|                    
|                    
|                    
|William Hanshaw      |  |     | 47 |                         |  | Executive Officer of Second Bancorp and Senior Vice President of
	Second National.                                                                                                                                                                                                                          |  |  | 1989 | 
|                    
|                    
|                    
|                    
|Darryl E. Mast       |  |     | 49 |                         |  | Executive Officer of Second Bancorp and Senior Vice President of
	Second National.                                                                                                                                                                                                                          |  |  | 1986 | 
|                    
|                    
|                    
|                    
|Terry L. Myers       |  |     | 50 |                         |  | Executive Officer of Second Bancorp and Senior Vice President of
	Second National.                                                                                                                                                                                                                          |  |  | 1986 | 

10



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##### Table of Contents






PART II.






|        |                                                                       
|------- | ----------------------------------------------------------------------
|ITEM 5. | MARKET FOR REGISTRANTS COMMON STOCK AND RELATED
	SHAREHOLDER MATTERS.

Second Bancorps Common Stock trades on The Nasdaq National
Market tier of The Nasdaq Stock Market under the trading symbol
SECD. As of March 15, 2000, the number of shareholders of
record of the Common Stock totaled 2,729. The detail of stock
prices and dividend payments are incorporated herein by reference
 from Item 7; Managements Discussion and Analysis of
Financial Condition and Results of Operations. Dividend
restrictions are detailed in footnote 13 of Item 8; Second
Bancorps Financial Statements and Supplementary Data are
incorporated herein by reference.




ITEM 6.  SELECTED FINANCIAL DATA.

This Managements Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction
 with the Consolidated Financial Statements and Accompanying
Footnotes beginning on page 13.

|                          |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |           |            | 
|------------------------- | -------------------------------------- | --------------------------------------------- | - | ---------- | ---------- | ---- | - | ---------- | ---------- | ---- | - | ---------- | ---------- |  | - | ---------- | ---------- |  | - | --------- | ---------- | 
|                          |                                        |                                              
|                          |                                        | Year ended December 31                       
|                          |                                        |                                              
|                          |                                        | 1999                                          |   | 1998       |            | 1997 |   | 1996       |            | 1995
|                          |                                        |                                               |   |            |            |      |   |            |            |     
|                          |                                        |                                              
|                          |                                        | (dollars in thousands, except per share data)
|                         
|                         
|                         
|                         
|Selected Financial Data   |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |          
|                         
|                         
|                         
|                         
|Results of Operations:    |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |          
|                         
|                         
|                         
|                         
|                          | Interest income                        |                                               | $ | 104,582    |            |      | $ | 106,997    |            |      | $ | 104,990    |            |  | $ | 101,158    |            |  | $ | 97,110    |           
|                         
|                         
|                         
|                         
|                          | Interest expense                       |                                               |   | 55,310     |            |      |   | 55,888     |            |      |   | 55,707     |            |  |   | 54,153     |            |  |   | 53,180    |           
|                          |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |          
|                          | Net interest income                    |                                               |   | 49,272     |            |      |   | 51,109     |            |      |   | 49,283     |            |  |   | 47,005     |            |  |   | 43,930    |           
|                         
|                         
|                         
|                         
|                          | Provision for loan losses              |                                               |   | 3,195      |            |      |   | 10,579     |            |      |   | 4,205      |            |  |   | 5,072      |            |  |   | 3,176     |           
|                         
|                         
|                         
|                         
|                          | Other income                           |                                               |   | 14,792     |            |      |   | 12,754     |            |      |   | 11,101     |            |  |   | 10,008     |            |  |   | 9,431     |           
|                         
|                         
|                         
|                         
|                          | Other expense                          |                                               |   | 39,330     |            |      |   | 46,248     |            |      |   | 39,198     |            |  |   | 39,279     |            |  |   | 36,736    |           
|                          |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |          
|                          | Income before federal income taxes     |                                               |   | 21,539     |            |      |   | 7,036      |            |      |   | 16,981     |            |  |   | 12,662     |            |  |   | 13,449    |           
|                         
|                         
|                         
|                         
|                          | Federal tax expense                    |                                               |   | 5,361      |            |      |   | 1,403      |            |      |   | 3,745      |            |  |   | 2,993      |            |  |   | 3,818     |           
|                          |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |          
|                          | Net income                             |                                               | $ | 16,178     |            |      | $ | 5,633      |            |      | $ | 13,236     |            |  | $ | 9,669      |            |  | $ | 9,631     |           
|                          |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |          
|Per Common Share Data:(1) |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |          
|                         
|                         
|                         
|                         
|                          | Basic earnings                         |                                               | $ | 1.52       |            |      | $ | 0.53       |            |      | $ | 1.25       |            |  | $ | 0.93       |            |  | $ | 0.97      |           
|                         
|                         
|                         
|                         
|                          | Diluted earnings                       |                                               |   | 1.51       |            |      |   | 0.52       |            |      |   | 1.25       |            |  |   | 0.92       |            |  |   | 0.92      |           
|                         
|                         
|                         
|                         
|                          | Cash dividends                         |                                               |   | 0.56       |            |      |   | 0.48       |            |      |   | 0.40       |            |  |   | 0.34       |            |  |   | 0.29      |           
|                         
|                         
|                         
|                         
|                          | Book value, December 31                |                                               |   | 11.12      |            |      |   | 11.53      |            |      |   | 11.34      |            |  |   | 10.40      |            |  |   | 10.03     |           
|                         
|                         
|                         
|                         
|                          | Market value, December 31              |                                               |   | 22.38      |            |      |   | 22.25      |            |      |   | 25.38      |            |  |   | 15.69      |            |  |   | 14.38     |           
|                          | Weighted-average shares outstanding(1) |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |           |           
|                         
|                         
|                         
|                         
|                          |                                        | Basic                                         |   |            | 10,635,852 |      |   |            | 10,665,597 |      |   |            | 10,555,921 |  |   |            | 9,876,174  |  |   |           | 8,852,511  | 
|                         
|                         
|                         
|                         
|                          |                                        | Diluted                                       |   |            | 10,698,717 |      |   |            | 10,742,622 |      |   |            | 10,616,752 |  |   |            | 10,555,060 |  |   |           | 10,481,653 | 
|                         
|                         
|                         
|                         
|                          | Shares outstanding at year-end(1)      |                                               |   | 10,458,450 |            |      |   | 10,688,450 |            |      |   | 10,606,749 |            |  |   | 10,503,660 |            |  |   | 8,927,490 |           
|                         
|                         
|                         
|                         
|Per Preferred Share Data: |                                        |                                               |   |            |            |      |   |            |            |      |   |            |            |  |   |            |            |  |   |          
|                         
|                         
|                         
|                         
|                          | Cash dividends                         |                                               |   | n/a        |            |      |   | n/a        |            |      |   | n/a        |            |  | $ | 0.75       |            |  | $ | 1.50      |           
|                         
|                         
|                         
|                         
|                          | Market value, December 31              |                                               |   | n/a        |            |      |   | n/a        |            |      |   | n/a        |            |  |   | n/a        |            |  |   | 31.50     |           

11



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##### Table of Contents



|                    |                                                                         |                                               |  |       |           |      |  |       |           |      |  |       |           |  |  |       |           |  |  |       |           | 
|------------------- | ----------------------------------------------------------------------- | --------------------------------------------- |  | ----- | --------- | ---- |  | ----- | --------- | ---- |  | ----- | --------- |  |  | ----- | --------- |  |  | ----- | --------- | 
|                    |                                                                         |                                              
|                    |                                                                         | Year ended December 31                       
|                    |                                                                         |                                              
|                    |                                                                         | 1999                                          |  | 1998  |           | 1997 |  | 1996  |           | 1995
|                    |                                                                         |                                               |  |       |           |      |  |       |           |     
|                    |                                                                         |                                              
|                    |                                                                         | (dollars in thousands, except per share data)
|                   
|                   
|                   
|                   
|Balance Sheet Data: |                                                                         |                                               |  |       |           |      |  |       |           |      |  |       |           |  |  |       |           |  |  |      
|                   
|                   
|                   
|                   
|                    | As of December 31:                                                      |                                               |  |       |           |      |  |       |           |      |  |       |           |  |  |       |           |  |  |       |          
|                   
|                   
|                   
|                   
|                    |                                                                         | Total assets                                  |  | $     | 1,537,278 |      |  | $     | 1,430,233 |      |  | $     | 1,438,193 |  |  | $     | 1,397,194 |  |  | $     | 1,359,828 | 
|                   
|                   
|                   
|                   
|                    |                                                                         | Loans, net                                    |  |       | 1,060,493 |      |  |       | 960,114   |      |  |       | 858,321   |  |  |       | 808,396   |  |  |       | 753,095   | 
|                   
|                   
|                   
|                   
|                    |                                                                         | Deposits                                      |  |       | 1,097,589 |      |  |       | 1,102,590 |      |  |       | 1,115,044 |  |  |       | 1,076,947 |  |  |       | 1,066,319 | 
|                   
|                   
|                   
|                   
|                    |                                                                         | Shareholders equity                          |  |       | 116,347   |      |  |       | 123,273   |      |  |       | 120,318   |  |  |       | 106,415   |  |  |       | 102,818   | 
|                   
|                   
|                   
|                   
|                    | Averages:                                                               |                                               |  |       |           |      |  |       |           |      |  |       |           |  |  |       |           |  |  |       |          
|                   
|                   
|                   
|                   
|                    |                                                                         | Total assets                                  |  |       | 1,498,946 |      |  |       | 1,464,803 |      |  |       | 1,424,211 |  |  |       | 1,384,343 |  |  |       | 1,342,786 | 
|                   
|                   
|                   
|                   
|                    |                                                                         | Earning assets                                |  |       | 1,405,195 |      |  |       | 1,386,894 |      |  |       | 1,351,117 |  |  |       | 1,301,032 |  |  |       | 1,263,023 | 
|                   
|                   
|                   
|                   
|                    |                                                                         | Loans                                         |  |       | 1,005,998 |      |  |       | 938,408   |      |  |       | 869,333   |  |  |       | 797,174   |  |  |       | 730,622   | 
|                   
|                   
|                   
|                   
|                    |                                                                         | Deposits                                      |  |       | 1,092,260 |      |  |       | 1,086,074 |      |  |       | 1,079,809 |  |  |       | 1,072,583 |  |  |       | 1,036,869 | 
|                   
|                   
|                   
|                   
|                    |                                                                         | Shareholders equity                          |  |       | 121,369   |      |  |       | 126,748   |      |  |       | 112,127   |  |  |       | 103,725   |  |  |       | 95,610    | 
|                   
|                   
|                   
|                   
|Ratios:             |                                                                         |                                               |  |       |           |      |  |       |           |      |  |       |           |  |  |       |           |  |  |      
|                   
|                   
|                   
|                   
|                    | Return on average assets                                                |                                               |  | 1.08  | %         |      |  | 0.38  | %         |      |  | 0.93  | %         |  |  | 0.70  | %         |  |  | 0.72  | %        
|                   
|                   
|                   
|                   
|                    | Return on average assets  before merger costs(2)                       |                                               |  | 1.08  |           |      |  | 0.73  |           |      |  | 0.93  |           |  |  | 0.70  |           |  |  | 0.72  |          
|                   
|                   
|                   
|                   
|                    | Return on average common shareholders equity                           |                                               |  | 13.33 |           |      |  | 4.44  |           |      |  | 11.80 |           |  |  | 9.32  |           |  |  | 10.38 |          
|                   
|                   
|                   
|                   
|                    | Return on average common shareholders equity 
	before merger costs(2) |                                               |  | 13.33 |           |      |  | 8.39  |           |      |  | 11.80 |           |  |  | 9.32  |           |  |  | 10.38 |          
|                   
|                   
|                   
|                   
|                    | Net interest margin                                                     |                                               |  | 3.68  |           |      |  | 3.84  |           |      |  | 3.78  |           |  |  | 3.73  |           |  |  | 3.58  |          
|                   
|                   
|                   
|                   
|                    | Efficiency ratio                                                        |                                               |  | 59.45 |           |      |  | 70.11 |           |      |  | 63.04 |           |  |  | 67.11 |           |  |  | 67.26 |          
|                   
|                   
|                   
|                   
|                    | Efficiency ratio  before merger costs(2)                               |                                               |  | 59.45 |           |      |  | 60.95 |           |      |  | 63.04 |           |  |  | 67.11 |           |  |  | 67.26 |          
|                   
|                   
|                   
|                   
|                    | Dividend pay-out                                                        |                                               |  | 36.68 |           |      |  | 91.53 |           |      |  | 32.29 |           |  |  | 35.77 |           |  |  | 31.09 |          
|                   
|                   
|                   
|                   
|                    | Average loans to average deposits                                       |                                               |  | 92.10 |           |      |  | 86.40 |           |      |  | 80.51 |           |  |  | 74.32 |           |  |  | 70.46 |          
|                   
|                   
|                   
|                   
|                    | Allowance for loan losses as a percent of loans                         |                                               |  | 1.04  |           |      |  | 1.11  |           |      |  | 1.02  |           |  |  | 1.13  |           |  |  | 1.14  |          
|                   
|                   
|                   
|                   
|                    | Net charge-offs as a percent of average loans                           |                                               |  | 0.27  |           |      |  | 0.76  |           |      |  | 0.79  |           |  |  | 0.45  |           |  |  | 0.34  |          
|                   
|                   
|                   
|                   
|                    | Non-performing loans to total loans                                     |                                               |  | 0.55  |           |      |  | 0.71  |           |      |  | 0.80  |           |  |  | 1.17  |           |  |  | 0.74  |          
|                   
|                   
|                   
|                   
|                    | Allowance for loans losses to non-performing loans                      |                                               |  | 188   |           |      |  | 155   |           |      |  | 128   |           |  |  | 96    |           |  |  | 155   |          
|                   
|                   
|                   
|                   
|                    | Tier I leverage ratio                                                   |                                               |  | 8.15  |           |      |  | 8.65  |           |      |  | 7.87  |           |  |  | 7.49  |           |  |  | 7.12  |          






|    |                                                                                                 
|--- | ------------------------------------------------------------------------------------------------
|(1) | Prior period amounts have been restated for stock splits and
	pooling-of-interests transactions.
|   
|(2) | Merger costs for 1998 are discussed in Note 3 to the
	Consolidated Financial Statements.        






|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
	CONDITION AND RESULTS OF OPERATIONS.

Further discussion on loan quality and credit risk are presented
in Note 1h, 7 and 21 of Item 8; Second Bancorps
Financial Statements and Supplementary Data are incorporated
herein by reference.

Results of Operations

Net income for 1999 totaled a record $16,178. Net income in 1998
was $5,633 and was affected by the merger activity completed in
1998. The 1998 acquisition of Trumbull Financial Corporation,
headquartered in Warren, Ohio, and Enfin Corporation,
headquartered in Solon, Ohio, greatly increased the
Corporations asset

12



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##### Table of Contents





Diluted earnings per share, which takes into effect the dilutive
impact of the preferred stock which was present through mid-1996
and other dilutive securities, was $1.51 in 1999, $.52 in 1998
and $1.25 in 1997. The Corporation declared a two-for-one stock
split for the common stock effective May 1, 1997. The
Corporations common stock, trading under the Nasdaq symbol
of SECD, has generally followed the path of most bank stocks
during 1998 and 1999, peaking at $37.25 per share in the second
quarter of 1998 and finishing 1999 at $22.375 per share. The
stock price at year-end 1999 represents a price of 201% of book
value (up from 193% the prior year-end). Dividends declared in
1999 totaled $.56 per share compared to $.48 per share the prior
year.

Revenue continues to be provided primarily from interest and fees
 on loans, which totaled $81,464, $79,963 and $74,145 in 1999,
1998 and 1997, respectively. This represents 68%, 67%, and 64% of
 total revenues for those years. Interest income on securities is
 also a major source of revenue, contributing 19%, 22% and 26% of
 revenues in 1999, 1998, and 1997, respectively. The Corporation
is making steady improvement in diversifying its revenue source
away from net interest income. Non-interest income has increased
as a percent of net revenues (net interest income plus
non-interest income) from 18% in 1997 to 20% in 1998 to 23% in
1999.

Net Interest Income

Net interest income declined in 1999, accompanied by a decline in
 net interest margin. Significantly impacting both net interest
income and net interest margin was a lower yield on loans. Loan
yields declined by more than 40 basis points in 1999 and created
over $4 million in reduced earnings to net interest income
(See Rate/ Volume Analysis table). The net interest margin
declined to 3.68% from 3.84% in 1998. The net interest margin was
 3.78% in 1997. Average earning assets increased by 1.3% in 1999
to $1,405,195 after increasing 2.6% to $1,386,894 in 1998. The
Corporation continues to face tightening pressures on the net
interest margin due to the existing trend of rising interest
rates and a liability sensitive interest rate risk position.

The relationship between net interest income, FTE net interest
income, earning assets and net interest margin for the past three
 years follows:

|                                               |  |      |           |      |  |      |           |   |  |   |           |  
|---------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | -
|                                               |  | 1999 |           | 1998 |  | 1997
|                                               |  |      |           |      |  |     
|Net interest income  per financial statements |  | $    | 49,272    |      |  | $    | 51,109    |   |  | $ | 49,283    |  
|                                              
|                                              
|                                              
|                                              
|Tax equivalent adjustment                      |  |      | 2,403     |      |  |      | 2,102     |   |  |   | 1,798     |  
|                                               |  |      |           |      |  |      |           |   |  |   |           |  
|Net interest income  FTE                      |  | $    | 51,675    |      |  | $    | 53,211    |   |  | $ | 51,081    |  
|                                               |  |      |           |      |  |      |           |   |  |   |           |  
|Average earning assets                         |  | $    | 1,405,195 |      |  | $    | 1,386,894 |   |  | $ | 1,351,117 |  
|                                              
|                                              
|                                              
|                                              
|Net interest margin                            |  |      | 3.68      | %    |  |      | 3.84      | % |  |   | 3.78      | %

Net interest income can be analyzed through the use of the Yields
 Analysis table. The table shows a three-year comparison of the
average balance of interest earning assets and interest bearing
liabilities along with interest and yields associated with them.

13



---



##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY

YIELDS ANALYSIS

|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |      |      | 
|------------------------------------ | --------------------------------------------------------------------------- | ----------------------------- | --------- | -------- | --------- | ------ | ------ | ------- | ------- | -------- | ---- | ------ | ---- | - | --------- | ------- | --------- | - | ------ | ------ | ------- |  | ---- | ---- | ---- | 
|                                     |                                                                             |                              
|                                     |                                                                             | Year Ended December 31,      
|                                     |                                                                             |                              
|                                     |                                                                             |                               |           |         
|                                     |                                                                             | 1999                          |           | 1998    
|                                     |                                                                             |                               |           |         
|                                     |                                                                             | Average                       |           |          |           | Yield/ |        | Average |         |          |      | Yield/
|                                     |                                                                             | Balance                       |           | Interest |           | Rate   |        | Balance |         | Interest |      | Rate  
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |       
|ASSETS                               |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|Interest earning assets:             |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Taxable loans(1)(3)                                                         |                               | $         | 992,643  |           |        | $      | 80,783  |         |          |      | 8.14   | %    |   | $         | 924,823 |           |   | $      | 79,229 |         |  |      | 8.57 | %   
|                                    
|                                    
|                                    
|                                    
|                                     | Tax-exempt loans(2)                                                         |                               |           | 13,355   |           |        |        | 1,048   |         |          |      | 7.84   |      |   |           | 13,585  |           |   |        | 1,112  |         |  |      | 8.19 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Taxable securities                                                          |                               |           | 304,199  |           |        |        | 18,446  |         |          |      | 6.06   |      |   |           | 368,421 |           |   |        | 22,945 |         |  |      | 6.23 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Tax-exempt securities                                                       |                               |           | 78,783   |           |        |        | 5,817   |         |          |      | 7.38   |      |   |           | 68,994  |           |   |        | 5,071  |         |  |      | 7.35 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Federal funds sold                                                          |                               |           | 16,215   |           |        |        | 891     |         |          |      | 5.49   |      |   |           | 11,071  |           |   |        | 742    |         |  |      | 6.70 |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|                                     |                                                                             | Total interest earning assets |           |          | 1,405,195 |        |        |         | 106,985 |          |      |        | 7.61 |   |           |         | 1,386,894 |   |        |        | 109,099 |  |      |      | 7.87 | 
|                                    
|                                    
|                                    
|                                    
|Non-interest earning assets          |                                                                             |                               | 93,751    |          |           |        |        |         |         |          |      |        |      |   | 77,909    |         |           |   |        |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|TOTAL                                |                                                                             | $                             | 1,498,946 |          |           |        |        |         |         |          |      |        |      | $ | 1,464,803 |         |           |   |        |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|Interest bearing liabilities:        |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Demand deposits                                                             |                               | $         | 92,350   |           |        |        | 1,395   |         |          |      | 1.51   |      |   | $         | 91,310  |           |   |        | 1,488  |         |  |      | 1.63 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Savings deposits                                                            |                               |           | 279,305  |           |        |        | 8,252   |         |          |      | 2.95   |      |   |           | 263,855 |           |   |        | 7,494  |         |  |      | 2.84 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Time deposits                                                               |                               |           | 611,827  |           |        |        | 32,291  |         |          |      | 5.28   |      |   |           | 626,440 |           |   |        | 34,589 |         |  |      | 5.52 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Federal funds purchased and securities sold under agreements to
	repurchase |                               |           | 136,382  |           |        |        | 5,781   |         |          |      | 4.24   |      |   |           | 138,652 |           |   |        | 6,525  |         |  |      | 4.71 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Note payable                                                                |                               |           | 921      |           |        |        | 64      |         |          |      | 6.95   |      |   |           |         |           |   |        |        |         |  |      |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Other borrowed funds                                                        |                               |           | 2,696    |           |        |        | 155     |         |          |      | 5.75   |      |   |           | 3,008   |           |   |        | 170    |         |  |      | 5.65 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Federal Home Loan Bank advances                                             |                               |           | 136,484  |           |        |        | 7,372   |         |          |      | 5.40   |      |   |           | 99,462  |           |   |        | 5,622  |         |  |      | 5.65 |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|Total interest bearing liabilities   |                                                                             |                               | 1,259,965 |          |           |        | 55,310 |         |         |          | 4.39 |        |      |   | 1,222,727 |         |           |   | 55,888 |        |         |  | 4.57 |     
|                                    
|                                    
|                                    
|                                    
|Non-interest bearing liabilities:    |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Demand deposits                                                             |                               |           | 108,778  |           |        |        |         |         |          |      |        |      |   |           | 104,469 |           |   |        |        |         |  |      |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued expenses and other liabilities                                      |                               |           | 8,834    |           |        |        |         |         |          |      |        |      |   |           | 10,859  |           |   |        |        |         |  |      |      |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|Other liabilities                    |                                                                             |                               | 117,612   |          |           |        |        |         |         |          |      |        |      |   | 115,328   |         |           |   |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|Shareholders equity                 |                                                                             |                               | 121,369   |          |           |        |        |         |         |          |      |        |      |   | 126,748   |         |           |   |        |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|TOTAL                                |                                                                             | $                             | 1,498,946 |          |           |        |        |         |         |          |      |        |      | $ | 1,464,803 |         |           |   |        |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|Net interest earnings (FTE)          |                                                                             |                               |           |          |           |        | 51,675 |         |         |          |      |        |      |   |           |         |           |   | 53,211 |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|Taxable equivalent adjustment        |                                                                             |                               |           |          |           |        | 2,403  |         |         |          |      |        |      |   |           |         |           |   | 2,102  |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|Net interest income                  |                                                                             |                               |           |          |           | $      | 49,272 |         |         |          |      |        |      |   |           |         |           | $ | 51,109 |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     
|Net yield on interest earning assets |                                                                             |                               |           |          |           |        |        |         |         |          | 3.68 | %      |      |   |           |         |           |   |        |        |         |  | 3.84 | %   
|                                     |                                                                             |                               |           |          |           |        |        |         |         |          |      |        |      |   |           |         |           |   |        |        |         |  |      |     

[Additional columns below]

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

|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |      |      | 
|------------------------------------ | --------------------------------------------------------------------------- | ----------------------------- | --------- | -------- | --------- | ------ | ------ | ------ | ------- |  | ---- | ---- | ---- | 
|                                     |                                                                             |                              
|                                     |                                                                             | Year Ended December 31,      
|                                     |                                                                             |                              
|                                     |                                                                             |                              
|                                     |                                                                             | 1997                         
|                                     |                                                                             |                              
|                                     |                                                                             | Average                       |           |          |           | Yield/
|                                     |                                                                             | Balance                       |           | Interest |           | Rate  
|                                     |                                                                             |                               |           |          |           |       
|ASSETS                               |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|Interest earning assets:             |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Taxable loans(1)(3)                                                         |                               | $         | 856,186  |           |        | $      | 73,509 |         |  |      | 8.59 | %   
|                                    
|                                    
|                                    
|                                    
|                                     | Tax-exempt loans(2)                                                         |                               |           | 13,147   |           |        |        | 964    |         |  |      | 7.33 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Taxable securities                                                          |                               |           | 411,075  |           |        |        | 27,142 |         |  |      | 6.60 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Tax-exempt securities                                                       |                               |           | 56,926   |           |        |        | 4,324  |         |  |      | 7.60 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Federal funds sold                                                          |                               |           | 13,783   |           |        |        | 849    |         |  |      | 6.16 |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|                                     |                                                                             | Total interest earning assets |           |          | 1,351,117 |        |        |        | 106,788 |  |      |      | 7.90 | 
|                                    
|                                    
|                                    
|                                    
|Non-interest earning assets          |                                                                             |                               | 73,094    |          |           |        |        |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|TOTAL                                |                                                                             | $                             | 1,424,211 |          |           |        |        |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|Interest bearing liabilities:        |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Demand deposits                                                             |                               | $         | 88,324   |           |        |        | 1,533  |         |  |      | 1.74 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Savings deposits                                                            |                               |           | 266,500  |           |        |        | 7,563  |         |  |      | 2.84 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Time deposits                                                               |                               |           | 621,847  |           |        |        | 34,552 |         |  |      | 5.56 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Federal funds purchased and securities sold under agreements to
	repurchase |                               |           | 130,298  |           |        |        | 6,172  |         |  |      | 4.74 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Note payable                                                                |                               |           | 3,647    |           |        |        | 276    |         |  |      | 7.57 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Other borrowed funds                                                        |                               |           | 2,851    |           |        |        | 163    |         |  |      | 5.72 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Federal Home Loan Bank advances                                             |                               |           | 85,664   |           |        |        | 5,448  |         |  |      | 6.36 |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|Total interest bearing liabilities   |                                                                             |                               | 1,199,131 |          |           |        | 55,707 |        |         |  | 4.65 |     
|                                    
|                                    
|                                    
|                                    
|Non-interest bearing liabilities:    |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Demand deposits                                                             |                               |           | 103,138  |           |        |        |        |         |  |      |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued expenses and other liabilities                                      |                               |           | 9,815    |           |        |        |        |         |  |      |      |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|Other liabilities                    |                                                                             |                               | 112,953   |          |           |        |        |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|Shareholders equity                 |                                                                             |                               | 112,127   |          |           |        |        |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|TOTAL                                |                                                                             | $                             | 1,424,211 |          |           |        |        |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|Net interest earnings (FTE)          |                                                                             |                               |           |          |           |        | 51,081 |        |         |  |      |     
|                                    
|                                    
|                                    
|                                    
|Taxable equivalent adjustment        |                                                                             |                               |           |          |           |        | 1,798  |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|Net interest income                  |                                                                             |                               |           |          |           | $      | 49,283 |        |         |  |      |     
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     
|Net yield on interest earning assets |                                                                             |                               |           |          |           |        |        |        |         |  | 3.78 | %   
|                                     |                                                                             |                               |           |          |           |        |        |        |         |  |      |     






|    |                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For purposes of these computations, non-accruing
	loans are included in the daily average loan amounts outstanding.                                                             
|   
|(2) | The tax-exempt income and yields are shown on a
	tax equivalent basis using the 35%, 34% and 34% marginal Federal
	tax rates in effect during 1999, 1998 and 1997, respectively.
|   
|(3) | Loan fees are included in the interest reported
	for loans. Those fees amounted to $2,193 in 1999, $2,636 in 1998,
	 and $2,906 in 1997.                                        

14



---



##### Table of Contents



You can further analyze the change in net interest income by
separating the volume and rate impact of the change. The
following table details the breakdown of the major categories
affecting the change:

|                                            |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |        |   |   |       |        |   |   |        |        |   |   |       |        |  
|------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------- | ----- | --------------------- | - | --- | ------ | ------ | - | ---- | ------ | ------ | - | - | ----- | ------ | - | - | ------ | ------ | - | - | ----- | ------ | -
|                                            |                                                                             |                                               |       |                      
|                                            |                                                                             | 1999 Compared To 1998                         |       | 1998 Compared To 1997
|                                            |                                                                             | Due To Change In                              |       | Due To Change In     
|                                            |                                                                             |                                               |       |                      
|Rate/ Volume Analysis(1)                    |                                                                             | Volume                                        |       | Rate                  |   | Net |        | Volume |   | Rate |        | Net   
|                                            |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |       
|                                            |                                                                             |                                              
|                                            |                                                                             | (dollars in thousands, except per share data)
|                                           
|                                           
|                                           
|                                           
|Increase (decrease) in FTE interest income: |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |        |   |   |       |        |   |   |        |        |   |   |       |       
|                                           
|                                           
|                                           
|                                           
|                                            | Taxable loans                                                               |                                               | $     | 5,810                 |   |     | $      | (4,256 | ) |      | $      | 1,554  |   |   | $     | 5,893  |   |   | $      | (173   | ) |   | $     | 5,720  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Tax-exempt loans                                                            |                                               |       | (19                   | ) |     |        | (45    | ) |      |        | (64    | ) |   |       | 31     |   |   |        | 117    |   |   |       | 148    |  
|                                           
|                                           
|                                           
|                                           
|                                            | Taxable securities                                                          |                                               |       | (4,000                | ) |     |        | (499   | ) |      |        | (4,499 | ) |   |       | (2,816 | ) |   |        | (1,381 | ) |   |       | (4,197 | )
|                                           
|                                           
|                                           
|                                           
|                                            | Tax-exempt securities                                                       |                                               |       | 720                   |   |     |        | 26     |   |      |        | 746    |   |   |       | 917    |   |   |        | (170   | ) |   |       | 747    |  
|                                           
|                                           
|                                           
|                                           
|                                            | Federal funds sold                                                          |                                               |       | 345                   |   |     |        | (196   | ) |      |        | 149    |   |   |       | (167   | ) |   |        | 60     |   |   |       | (107   | )
|                                            |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |        |   |   |       |        |   |   |        |        |   |   |       |       
|Total interest bearing assets               |                                                                             | $                                             | 2,856 |                       |   | $   | (4,970 | )      |   | $    | (2,114 | )      |   | $ | 3,858 |        |   | $ | (1,547 | )      |   | $ | 2,311 |       
|                                            |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |        |   |   |       |        |   |   |        |        |   |   |       |       
|Interest bearing liabilities:               |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |        |   |   |       |        |   |   |        |        |   |   |       |       
|                                           
|                                           
|                                           
|                                           
|                                            | Demand deposits  interest bearing                                          |                                               | $     | 17                    |   |     | $      | (110   | ) |      | $      | (93    | ) |   | $     | 52     |   |   | $      | (97    | ) |   | $     | (45    | )
|                                           
|                                           
|                                           
|                                           
|                                            | Savings deposits                                                            |                                               |       | 439                   |   |     |        | 319    |   |      |        | 758    |   |   |       | (75    | ) |   |        | 6      |   |   |       | (69    | )
|                                           
|                                           
|                                           
|                                           
|                                            | Time deposits                                                               |                                               |       | (807                  | ) |     |        | (1,491 | ) |      |        | (2,298 | ) |   |       | 255    |   |   |        | (218   | ) |   |       | 37     |  
|                                           
|                                           
|                                           
|                                           
|                                            | Federal funds purchased and securities sold under agreements to
	repurchase |                                               |       | (107                  | ) |     |        | (637   | ) |      |        | (744   | ) |   |       | 396    |   |   |        | (43    | ) |   |       | 353    |  
|                                           
|                                           
|                                           
|                                           
|                                            | Note payable                                                                |                                               |       | 64                    |   |     |        | 0      |   |      |        | 64     |   |   |       | (276   | ) |   |        | 0      |   |   |       | (276   | )
|                                           
|                                           
|                                           
|                                           
|                                            | Other borrowed funds                                                        |                                               |       | (18                   | ) |     |        | 3      |   |      |        | (15    | ) |   |       | 9      |   |   |        | (2     | ) |   |       | 7      |  
|                                           
|                                           
|                                           
|                                           
|                                            | Federal Home Loan Bank Advances                                             |                                               |       | 2,093                 |   |     |        | (343   | ) |      |        | 1,750  |   |   |       | 878    |   |   |        | (704   | ) |   |       | 174    |  
|                                            |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |        |   |   |       |        |   |   |        |        |   |   |       |       
|Total interest bearing liabilities          |                                                                             | $                                             | 1,681 |                       |   | $   | (2,259 | )      |   | $    | (578   | )      |   | $ | 1,239 |        |   | $ | (1,058 | )      |   | $ | 181   |       
|                                            |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |        |   |   |       |        |   |   |        |        |   |   |       |       
|Total effect on net interest income         |                                                                             | $                                             | 1,175 |                       |   | $   | (2,711 | )      |   | $    | (1,536 | )      |   | $ | 2,619 |        |   | $ | (489   | )      |   | $ | 2,130 |       
|                                            |                                                                             |                                               |       |                       |   |     |        |        |   |      |        |        |   |   |       |        |   |   |        |        |   |   |       |       






|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The change in interest due to both rate and volume has been
	allocated to volume and rate changes in proportion to the
	relationship of the absolute dollar amounts of the change in
	each.

Provision for Loan Losses

The provision for loan losses totaled $3,195 in 1999,
representing .32% of loans. This represents a significant decline
 from the prior years provision of $10,579 (.92% of average
 loans). The provision for loan losses was $4,205 in 1997, $5,072
 in 1996 and $3,176 in 1995. The increase in 1998 can be
attributed to higher than historically normal levels of net
charge-offs for the commercial loan portfolio. Net charge-offs as
 a percent of average commercial loans were .40% in 1999 and
1.55% in 1998.

Non-Interest Income

Non-interest income increased by 16% from the prior year and
totaled $14,792 for 1999. Increases were realized in deposit
service charges (up 4%), trust income (up 25%) and other income
(up 39%). Trust income was strongly influenced by both increased
sales and increased returns on investments. Other income was
influenced by an additional $15 million investment in bank
owned life insurance at the end of 1998. Included in other income
 is the gain realized on the sale of real estate mortgage and SBA
 loans. Loan sale gains totaled $2,066 in 1999 compared to $2,150
 in 1998. Non-interest income in 1998 increased by 15% over 1997
increases. Service charges on deposit accounts improved by 5% to
$4,145 in 1998. The increase is attributable to the increase in
revenue from ATM services provided and improvements on the
collection of return check and overdraft fees. Trust fee income
totaled $2,820 in 1998, a 10% improvement over the prior year.
The revenue increase was partly

15



---



##### Table of Contents





Included in non-interest income over the past three years were
pre-tax gains on the sale of securities. During 1999, the
security portfolio realized gains in the amount of $312. Security
 gains in 1998 totaled $1,007. During 1997, the Corporation
established a charitable foundation to carry on the
Corporations many charitable and civic activities. The gain
 realized on the appreciated stock donated to the foundation was
$352, which represented a significant portion of the total gains
realized in 1997 of $595.

Non-Interest Expense

The Corporation continues to emphasize expense control and to be
efficient in its utilization of resources to manage assets. Non-
interest expenses as a percentage of average assets were 2.62% in
 1999, compared to 2.70% in 1998 (excluding merger costs). The
table below details the percentage change in each non-interest
expense category over the past three years:

|                                               |  |                   |     |                |  |  |     |  
|---------------------------------------------- |  | ----------------- | --- | -------------- |  |  | --- | -
|                                               |  |                  
|                                               |  | Percentage Change
|                                               |  |                  
|                                               |  | 1999 over 1998    |     | 1998 over 1997
|                                               |  |                   |     |               
|Salaries and benefits                          |  |                   | 0   | %              |  |  | 4   | %
|                                              
|                                              
|                                              
|                                              
|Net occupancy                                  |  |                   | 4   |                |  |  | 2   |  
|                                              
|                                              
|                                              
|                                              
|Equipment                                      |  |                   | 11  |                |  |  | 13  |  
|                                              
|                                              
|                                              
|                                              
|Professional services                          |  |                   | 3   |                |  |  | 8   |  
|                                              
|                                              
|                                              
|                                              
|Assessment on deposits and other taxes         |  |                   | 2   |                |  |  | (8  | )
|                                              
|                                              
|                                              
|                                              
|Amortization of goodwill and other intangibles |  |                   | (14 | )              |  |  | (15 | )
|                                              
|                                              
|                                              
|                                              
|Other expenses                                 |  |                   | (8  | )              |  |  | (5  | )

Equipment expense increased by 11% in 1999 and 13% in 1998 due
primarily to the costs associated with automation efforts during
the past two years, including year 2000 expenditures. During
1997, the Corporation migrated to an in-house data processing
environment, while in 1998, the Corporation continued
implementing new technologies and upgraded the acquired
companies equipment to newer technologies. Otherwise,
expense categories either rose by a modest amount or declined
versus the prior year, realizing the efficiencies planned during
the 1998 acquisitions.

Income Taxes

The provision for income taxes was $5,361, $1,403 and $3,745 in
1999, 1998 and 1997, respectively. The effective tax rate for the
 Corporation was 24.9%, 19.9% and 22.1% during the same periods.
The reduction in the effective tax rate in 1998 was due to the
continuation of the accumulation of tax-exempt securities and the
 realization of investment tax credits through the Banks
participation in low-income housing projects as well as reduced
net income due to merger activities.

Balance Sheet

Average assets grew at a 2.4% pace in 1999 after increasing by
2.9% in 1998. The growth rate is impacted by low deposit growth
rates. As an industry, financial institutions are experiencing
slower deposit growth rates due to increased competition from
non-traditional alternatives, especially mutual funds. Deposit
balances averaged $1.09 billion in 1999, up 1% from 1998.

Earning Assets

Securities:

The securities portfolio of the Corporation is used to provide an
 adequate rate of return to the Corporation along with
appropriate levels of liquidity, and as a tool for efficient tax
management and interest rate risk

16



---



##### Table of Contents





The securities portfolio totaled $367,587 as of December 31,
 1999 and is classified entirely as available-for-sale. That
balance represents a 4% increase over the prior year-end.
Security balance growth was limited to leveraging activities that
 coupled like- term FHLB advances with securities purchases
designed to enhance net income, earnings per share, and return on
 equity. Growth in securities had previously been concentrated in
 tax-exempt issues.

The average yield on the portfolio is 6.4% as of
December 31, 1999, down .1% from the prior year-end. During
the past year, the Corporation realized $312 in net gains on the
sale of securities. In 1998 and 1997, net security gains totaled
$1,007 and $515, respectively. As interest rates have increased
significantly over the past year, the Corporation now has an
unrealized loss position net of tax for the portfolio of $7,791.

17



---



##### Table of Contents



Summary yield and maturity information regarding the securities
portfolios on December 31 follows. Yields are calculated on
a fully taxable equivalent basis using the marginal federal
income tax rate of 35% for 1999.

|                                                                    |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |       |       | 
|------------------------------------------------------------------- | ------------- | --------------------------------------------- | ------- | ------ | ------ | ---------- | --- | ---------- | --- | -------- | ------- | ------ | ------ | - | ------- | ------ | ------ | - | ------- | ----- | ----- | 
|                                                                    |               |                                              
|                                                                    |               | Book Value                                   
|                                                                    |               |                                              
|                                                                    |               | 1999                                          |         |        |        | 1998       |     | 1997       |     | 1997    
|                                                                    |               | Available-                                    |         | 1999   |        | Available- |     | Available- |     | Held-To-
|                                                                    |               | For-Sale                                      |         | Yield  |        | For-Sale   |     | For-Sale   |     | Maturity
|                                                                    |               |                                               |         |        |        |            |     |            |     |         
|                                                                    |               |                                              
|                                                                    |               | (dollars in thousands, except per share data)
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|U.S. Treasury and other U.S. Government agencies and
	corporations: |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Under 1 year  |                                               | $       | 3,180  |        |            |     | 5.5        | %   |          | $       | 24,363 |        |   | $       | 40,270 |        |   | $       | 250   |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | 1 to 5 years  |                                               |         | 60,349 |        |            |     | 5.7        |     |          |         | 56,520 |        |   |         | 37,479 |        |   |         | 0     |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | 5 to 10 years |                                               |         | 17,802 |        |            |     | 6.4        |     |          |         | 8,769  |        |   |         | 17,500 |        |   |         | 7,959 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Over 10 years |                                               |         | 0      |        |            |     | 0.0        |     |          |         | 0      |        |   |         | 0      |        |   |         | 0     |      
|                                                                    |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |      
|                                                                    |               | Total                                         |         |        | 81,331 |            |     |            | 5.8 |          |         |        | 89,652 |   |         |        | 95,249 |   |         |       | 8,209 | 
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Obligations of states and political subdivisions:                   |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Under 1 year  |                                               |         | 259    |        |            |     | 6.9        |     |          |         | 2,758  |        |   |         | 2,686  |        |   |         | 0     |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | 1 to 5 years  |                                               |         | 11,065 |        |            |     | 8.1        |     |          |         | 18,154 |        |   |         | 20,905 |        |   |         | 0     |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | 5 to 10 years |                                               |         | 41,497 |        |            |     | 7.5        |     |          |         | 34,360 |        |   |         | 32,631 |        |   |         | 0     |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Over 10 years |                                               |         | 24,334 |        |            |     | 7.1        |     |          |         | 21,705 |        |   |         | 6,809  |        |   |         | 0     |      
|                                                                    |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |      
|                                                                    |               | Total                                         |         |        | 77,155 |            |     |            | 7.5 |          |         |        | 76,977 |   |         |        | 63,031 |   |         |       | 0     | 
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Corporate:                                                          |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Under 1 year  |                                               |         | 0      |        |            |     | 0.0        |     |          |         | 0      |        |   |         | 0      |        |   |         | 0     |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | 1 to 5 years  |                                               |         | 3,163  |        |            |     | 6.3        |     |          |         | 10,446 |        |   |         | 10,288 |        |   |         | 0     |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | 5 to 10 years |                                               |         | 0      |        |            |     | 0.0        |     |          |         | 0      |        |   |         | 0      |        |   |         | 0     |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Over 10 years |                                               |         | 18,781 |        |            |     | 7.9        |     |          |         | 0      |        |   |         | 0      |        |   |         | 0     |      
|                                                                    |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |      
|                                                                    |               | Total                                         |         |        | 21,944 |            |     |            | 7.7 |          |         |        | 10,446 |   |         |        | 10,288 |   |         |       | 0     | 
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Mortgage-backed securities                                          |               |                                               | 173,750 |        |        |            | 6.1 |            |     |          | 164,262 |        |        |   | 131,529 |        |        |   | 161,249 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Equity securities                                                   |               |                                               | 13,407  |        |        |            | 6.7 |            |     |          | 13,078  |        |        |   | 12,231  |        |        |   | 0       |      
|                                                                    |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |      
|                                                                    |               | $                                             | 367,587 |        |        |            | 6.4 | %          |     | $        | 354,415 |        |        | $ | 312,328 |        |        | $ | 169,458 |      
|                                                                    |               |                                               |         |        |        |            |     |            |     |          |         |        |        |   |         |        |        |   |         |      

Mortgage-backed securities have various stated maturities through
 July 2027. The estimated weighted-average maturity of this
segment of the portfolio is 6.5 years.

Loans:

Listed below is the Corporations loan distribution at the
end of each of the last 5 years:

|                     |  |                                               |           |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|-------------------- |  | --------------------------------------------- | --------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                     |  | 1999                                          |           | 1998 |  | 1997 |         | 1996 |  | 1995
|                     |  |                                               |           |      |  |      |         |      |  |     
|                     |  |                                              
|                     |  | (dollars in thousands, except per share data)
|                    
|                    
|                    
|                    
|Commercial           |  | $                                             | 413,097   |      |  | $    | 373,244 |      |  | $    | 347,173 |  |  | $ | 332,127 |  |  | $ | 301,870 | 
|                    
|                    
|                    
|                    
|Consumer             |  |                                               | 216,173   |      |  |      | 230,561 |      |  |      | 238,245 |  |  |   | 261,487 |  |  |   | 239,991 | 
|                    
|                    
|                    
|                    
|Real estate mortgage |  |                                               | 442,392   |      |  |      | 367,048 |      |  |      | 281,729 |  |  |   | 224,017 |  |  |   | 219,949 | 
|                     |  |                                               |           |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Balance December 31  |  | $                                             | 1,071,662 |      |  | $    | 970,853 |      |  | $    | 867,147 |  |  | $ | 817,631 |  |  | $ | 761,810 | 
|                     |  |                                               |           |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 

18



---



##### Table of Contents



An analysis of maturity and interest rate sensitivity of
commercial loans as of December 31, 1999 follows:

|                       |  |                                               |        |            |  |            |         |       |  |   |         |  |  |   |         | 
|---------------------- |  | --------------------------------------------- | ------ | ---------- |  | ---------- | ------- | ----- |  | - | ------- |  |  | - | ------- | 
|                       |  | One Year                                      |        | One to     |  | Over       |         |      
|                       |  | or Less                                       |        | Five Years |  | Five Years |         | Total
|                       |  |                                               |        |            |  |            |         |      
|                       |  |                                              
|                       |  | (dollars in thousands, except per share data)
|                      
|                      
|                      
|                      
|Fixed rate             |  | $                                             | 15,338 |            |  | $          | 129,121 |       |  | $ | 114,245 |  |  | $ | 258,704 | 
|                      
|                      
|                      
|                      
|Variable rate          |  |                                               | 58,327 |            |  |            | 43,111  |       |  |   | 52,955  |  |  |   | 154,393 | 
|                       |  |                                               |        |            |  |            |         |       |  |   |         |  |  |   |         | 
|Total commercial loans |  | $                                             | 73,665 |            |  | $          | 172,232 |       |  | $ | 167,200 |  |  | $ | 413,097 | 
|                       |  |                                               |        |            |  |            |         |       |  |   |         |  |  |   |         | 

The Corporation has recently focused on growth in real estate
loans and commercial balances. The Corporation emphasizes real
estate lending through its retail banking centers, loan
originators and correspondent relationships, reaching a broad
range of customers. Generally, the loans sold into the secondary
mortgage market make funds available for reuse in mortgage or
other lending activities; generate a net gain (including
origination fee income and origination costs) from the sale;
limit the interest rate risk caused by holding long-term,
fixed-rate loans; and build a portfolio of serviced loans which
generate fee income for the Corporation. The serviced portfolio
of mortgages totaled $344 and $295 million as of
December 31, 1999 and 1998, respectively.

Commercial loans are generated through a calling program
targeting medium size companies. The Corporation is also
generating an increasing volume of Small Business Administration
(SBA) loans. The Corporation sells the guaranteed portion of the
SBA loans originated. The sales generated $423 and $658 in net
revenues, including $150 and $173 in revenues from the value of
the servicing retained in 1999 and 1998, respectively. The amount
 of SBA loans being serviced by the Corporation totaled
approximately $11.5 and $10.4 million at December 31,
1999 and 1998, respectively.

The Bank de-emphasized its indirect lending program with
automobile dealers within the Banks primary market areas in
 1996, choosing to permit more funds to be available to allow for
 commercial and real estate loan growth. In 1996, the Bank
shifted its focus on indirect lending, strictly limiting the
acquisition of lower-quality C and D type
 paper. Prior to that, the Bank accepted a higher volume of
lower-quality paper utilizing a tiered pricing system designed to
 compensate the Bank for the higher risk associated with the
loans. The Bank is still active in generating loans from
automobile dealers within the Banks market area; however,
future growth is targeted in higher-quality loans.

The Corporations loans are granted to customers within the
immediate trade area of the Corporation. The mix is diverse,
covering a wide range of borrowers. The Corporation monitors and
controls concentrations within a particular industry or segment.
As of December 31, 1999, the Corporation had a concentration
 in commercial real estate loans totaling approximately
$279 million, approximately 60.8% of which were
owner-occupied businesses, including medical office buildings and
 retail and fast-food restaurants within the Corporations
market area.

19



---



##### Table of Contents



Asset Quality

The reserve for loan losses is analyzed in the table below:

|                                                                 |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |       | 
|---------------------------------------------------------------- | --------------------- | --------------------------------------------- | ------ | ----- |  | ---- | ------ | ------ |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                                                 |                       |                                              
|                                                                 |                       | Year Ended December 31                       
|                                                                 |                       |                                              
|                                                                 |                       | 1999                                          |        | 1998  |  | 1997 |        | 1996   |  | 1995
|                                                                 |                       |                                               |        |       |  |      |        |        |  |     
|                                                                 |                       |                                              
|                                                                 |                       | (dollars in thousands, except per share data)
|                                                                
|                                                                
|                                                                
|                                                                
|Balance at January 1                                             |                       | $                                             | 10,739 |       |  | $    | 8,837  |        |  | $    | 9,235 |       |  | $ | 8,715 |       |  | $ | 7,963 |      
|                                                                
|                                                                
|                                                                
|                                                                
|Charge-offs:                                                     |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Commercial            |                                               |        | 2,430 |  |      |        | 6,734  |  |      |       | 2,435 |  |   |       | 2,051 |  |   |       | 775   | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Real estate           |                                               |        | 86    |  |      |        | 820    |  |      |       | 12    |  |   |       | 56    |  |   |       | 26    | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer              |                                               |        | 1,961 |  |      |        | 3,055  |  |      |       | 2,992 |  |   |       | 3,497 |  |   |       | 2,474 | 
|                                                                 |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |      
|                                                                 |                       |                                               | 4,477  |       |  |      | 10,609 |        |  |      | 5,439 |       |  |   | 5,604 |       |  |   | 3,275 |      
|                                                                
|                                                                
|                                                                
|                                                                
|Recoveries:                                                      |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Commercial            |                                               |        | 901   |  |      |        | 1,213  |  |      |       | 108   |  |   |       | 155   |  |   |       | 312   | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Real estate           |                                               |        | 4     |  |      |        | 50     |  |      |       | 0     |  |   |       | 46    |  |   |       | 18    | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer              |                                               |        | 807   |  |      |        | 669    |  |      |       | 717   |  |   |       | 851   |  |   |       | 521   | 
|                                                                 |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |      
|                                                                 |                       |                                               | 1,712  |       |  |      | 1,932  |        |  |      | 825   |       |  |   | 1,052 |       |  |   | 851   |      
|                                                                 |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |      
|Net charge-offs                                                  |                       |                                               | 2,765  |       |  |      | 8,677  |        |  |      | 4,614 |       |  |   | 4,552 |       |  |   | 2,424 |      
|                                                                
|                                                                
|                                                                
|                                                                
|Additions:                                                       |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Charged to operations |                                               |        | 3,195 |  |      |        | 10,579 |  |      |       | 4,205 |  |   |       | 5,072 |  |   |       | 3,176 | 
|                                                                 |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |      
|Balance at December 31                                           |                       | $                                             | 11,169 |       |  | $    | 10,739 |        |  | $    | 8,826 |       |  | $ | 9,235 |       |  | $ | 8,715 |      
|                                                                 |                       |                                               |        |       |  |      |        |        |  |      |       |       |  |   |       |       |  |   |       |      
|Reserve for loan losses as a percentage of year-end loans        |                       |                                               | 1.04   | %     |  |      | 1.11   | %      |  |      | 1.02  | %     |  |   | 1.13  | %     |  |   | 1.14  | %    
|                                                                
|                                                                
|                                                                
|                                                                
|Reserve for loan losses as a percentage of non-performing assets |                       |                                               | 188    | %     |  |      | 155    | %      |  |      | 128   | %     |  |   | 96    | %     |  |   | 155   | %    

Net charge-offs as a percent of average loans by major loan
category are shown below:

|                                       |  |                        |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |  
|-------------------------------------- |  | ---------------------- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                       |  |                       
|                                       |  | Year Ended December 31
|                                       |  |                       
|                                       |  | 1999                   |      | 1998 |  | 1997 |      | 1996 |  | 1995
|                                       |  |                        |      |      |  |      |      |      |  |     
|Commercial                             |  |                        | 0.40 | %    |  |      | 1.55 | %    |  |      | 0.68 | % |  |  | 0.61 | % |  |  | 0.17 | %
|                                      
|                                      
|                                      
|                                      
|Real estate                            |  |                        | 0.02 | %    |  |      | 0.23 | %    |  |      | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
|                                      
|                                      
|                                      
|                                      
|Consumer                               |  |                        | 0.53 | %    |  |      | 0.98 | %    |  |      | 0.85 | % |  |  | 1.08 | % |  |  | 0.82 | %
|                                      
|                                      
|                                      
|                                      
|Total net charge-offs to average loans |  |                        | 0.27 | %    |  |      | 0.92 | %    |  |      | 0.53 | % |  |  | 0.57 | % |  |  | 0.33 | %

Net charge-offs declined significantly in 1999 and totaled
$2,765, representing .27% of average loans. The asset quality
position was strengthened during 1999 even though the reserve for
 loan losses declined to 1.04% of period-end loans. The reserve
now covers 188% of non-performing loans which declined to .55% of
 loans at year-end. Significantly impacting the reserve for loan
losses in 1998 was net charge-off activity totaling
$8.7 million, substantially from the commercial lending
portfolio. The losses and additional provision for loan losses
were associated with analysis of specific credits. Additionally,
the majority of the charge- offs occurred in the fourth quarter
of 1998 following a detailed review of all problem credits and
additional adverse information regarding the charged-off credits.
 Included in 1997s activity was the reclassification of
$2.4 million from loans to other assets. During 1997, one of
 the Banks borrowers whose loan balance was included in
non-performing loans as of December 31, 1996 settled all
their obligations with the Bank by placing approximately
$2.7 million in a third party trust. The balance was
substantially collected during 1998.

20



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##### Table of Contents



The following presents a breakdown of the allocation of the loan
loss allowance by loan category for each of the last five years:

|              |  |                                               |        |      |  |      |     |      |  |      |        |  |  |  |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |  
|------------- |  | --------------------------------------------- | ------ | ---- |  | ---- | --- | ---- |  | ---- | ------ |  |  |  | --- | - |  | - | ----- |  |  |  | --- | - |  | - | ----- |  |  |  | --- | - |  | - | ----- |  |  |  | --- | -
|              |  |                                              
|              |  | December 31                                  
|              |  |                                              
|              |  |                                               |        |      |  |      |     |      |  |     
|Loan Category |  | 1999                                          |        | 1998 |  | 1997 |     | 1996 |  | 1995
|              |  |                                               |        |      |  |      |     |      |  |     
|              |  |                                              
|              |  | (dollars in thousands, except per share data)
|             
|             
|             
|             
|Commercial    |  | $                                             | 7,449  |      |  |      | 67  | %    |  | $    | 7,351  |  |  |  | 69  | % |  | $ | 4,817 |  |  |  | 54  | % |  | $ | 5,296 |  |  |  | 57  | % |  | $ | 4,477 |  |  |  | 51  | %
|             
|             
|             
|             
|Consumer      |  |                                               | 2,587  |      |  |      | 23  |      |  |      | 1,952  |  |  |  | 18  |   |  |   | 3,311 |  |  |  | 38  |   |  |   | 3,327 |  |  |  | 36  |   |  |   | 3,635 |  |  |  | 42  |  
|             
|             
|             
|             
|Real Estate   |  |                                               | 1,133  |      |  |      | 10  |      |  |      | 1,436  |  |  |  | 13  |   |  |   | 698   |  |  |  | 8   |   |  |   | 612   |  |  |  | 7   |   |  |   | 603   |  |  |  | 7   |  
|              |  |                                               |        |      |  |      |     |      |  |      |        |  |  |  |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |  
|              |  | $                                             | 11,169 |      |  |      | 100 | %    |  | $    | 10,739 |  |  |  | 100 | % |  | $ | 8,826 |  |  |  | 100 | % |  | $ | 9,235 |  |  |  | 100 | % |  | $ | 8,715 |  |  |  | 100 | %
|              |  |                                               |        |      |  |      |     |      |  |      |        |  |  |  |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |  

The determination of the reserve for loan losses is based on
Managements evaluation of the losses inherent in the loan
portfolio considering, among other relevant factors, repayment
status, borrowers ability to repay, collateral, and current
 economic conditions. The Bank utilizes its internal loan
gradings for commercial loans in conjunction with historical loss
 experience for loans of each grade level and current economic
trends as parts of its analysis in determining the adequacy of
its reserve for loan losses.

Below is a table listing the non-accrual, past due and
restructured loans at the end of the last five years:

|                             |                         |                                               |       |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |    | 
|---------------------------- | ----------------------- | --------------------------------------------- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | - |  | - | ----- | -- | 
|                             |                         |                                              
|                             |                         | December 31                                  
|                             |                         |                                              
|                             |                         | 1999                                          |       | 1998 |  | 1997 |       | 1996 |  | 1995
|                             |                         |                                               |       |      |  |      |       |      |  |     
|                             |                         |                                              
|                             |                         | (dollars in thousands, except per share data)
|                            
|                            
|                            
|                            
|Non-accrual loans            |                         | $                                             | 2,743 |      |  | $    | 4,130 |      |  | $    | 5,819 |   |  | $ | 7,271 |   |  | $ | 3,957 |   
|                            
|                            
|                            
|                            
|Past due loans               |                         |                                               | 3,132 |      |  |      | 2,725 |      |  |      | 1,075 |   |  |   | 2,158 |   |  |   | 1,635 |   
|                            
|                            
|                            
|                            
|Restructured loans           |                         |                                               | 52    |      |  |      | 61    |      |  |      | 13    |   |  |   | 171   |   |  |   | 25    |   
|                             |                         |                                               |       |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |   
|Total                        |                         | $                                             | 5,927 |      |  | $    | 6,916 |      |  | $    | 6,907 |   |  | $ | 9,600 |   |  | $ | 5,617 |   
|                             |                         |                                               |       |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |   
|Percent of loans at year end |                         |                                               | .55   | %    |  |      | .71   | %    |  |      | .80   | % |  |   | 1.17  | % |  |   | .74   | % 
|                            
|                            
|                            
|                            
|                             | Other real estate owned |                                               | $     | 281  |  |      | $     | 79   |  |      | $     | 0 |  |   | $     | 0 |  |   | $     | 27 | 

Loans 30 to 89 days past due, excluding non-accrual and
restructured loans included in the table above, amounted to
$6,215, or .58% of outstanding loans, as of December 31,
1999, as compared to $8,706, or .90% of loans on
December 31, 1998. Loans then current where some concerns
existed as to ability of the borrower to comply with loan
repayment terms approximated $16,843 on December 31, 1999 and
$28,352 on December 31, 1998. Such loans have been and are
being closely monitored by Management. The reductions in
non-performing loans from 1996 to 1999 and in past due and
accruing and watch loans over the past year are the
result of a concentrated effort by Management to improve the
credit quality of the loan portfolios and substantially reduce
the risk of adjustments to the provision for loan losses in the
future.

Funding Sources

Deposits:

The average amounts of deposits are summarized below:

|                                       |  |                                               |           |      |  |      |           |  |  |   |           | 
|-------------------------------------- |  | --------------------------------------------- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                       |  | 1999                                          |           | 1998 |  | 1997
|                                       |  |                                               |           |      |  |     
|                                       |  |                                              
|                                       |  | (dollars in thousands, except per share data)
|                                      
|                                      
|                                      
|                                      
|Demand deposits  non-interest bearing |  | $                                             | 108,778   |      |  | $    | 104,469   |  |  | $ | 103,138   | 
|                                      
|                                      
|                                      
|                                      
|Demand deposits  interest bearing     |  |                                               | 92,350    |      |  |      | 91,310    |  |  |   | 88,324    | 
|                                      
|                                      
|                                      
|                                      
|Savings deposits                       |  |                                               | 279,305   |      |  |      | 263,855   |  |  |   | 266,500   | 
|                                      
|                                      
|                                      
|                                      
|Time deposits                          |  |                                               | 611,827   |      |  |      | 626,440   |  |  |   | 621,847   | 
|                                       |  |                                               |           |      |  |      |           |  |  |   |           | 
|                                       |  | $                                             | 1,092,260 |      |  | $    | 1,086,074 |  |  | $ | 1,079,809 | 
|                                       |  |                                               |           |      |  |      |           |  |  |   |           | 

21



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##### Table of Contents



Average deposits increased by 1% in 1999 with slight increases in
 average savings deposits and both interest bearing and non-
interest bearing demand deposits. Average time deposits declined
during 1999 as the Corporation utilized FHLB advances to
supplement funding at rates and maturity structures more
favorable than what was available in the retail market. During
1998 average savings deposits declined modestly, while the
remaining deposit categories experienced modest increases.

On December 31, 1999 time deposits over $100 totaled
$79,611. The Bank continues to maintain strong relationships with
 the various public entities centered in the primary markets of
the Bank which contribute to the balance of time deposits over
$100. The maturity schedule for time deposits over $100 as of
December 31 is given in the table below:

|                 |  |                        |        |      |  |   |        | 
|---------------- |  | ---------------------- | ------ | ---- |  | - | ------ | 
|                 |  | 1999                   |        | 1998
|                 |  |                        |        |     
|                 |  |                       
|                 |  | (dollars in thousands,
|                 |  | except per share data)
|                
|                
|                
|                
|Maturing in:     |  |                        |        |      |  |   |        | 
|                
|                
|                
|                
|3 months or less |  | $                      | 39,081 |      |  | $ | 28,595 | 
|                
|                
|                
|                
|3 to 6 months    |  |                        | 14,609 |      |  |   | 15,621 | 
|                
|                
|                
|                
|6 to 12 months   |  |                        | 18,150 |      |  |   | 19,525 | 
|                
|                
|                
|                
|Over 12 months   |  |                        | 7,771  |      |  |   | 15,693 | 
|                 |  |                        |        |      |  |   |        | 
|                 |  | $                      | 79,611 |      |  | $ | 79,434 | 
|                 |  |                        |        |      |  |   |        | 

Other Sources of Funds:

The repurchase agreement program provides a sweep feature on the
customers primary business account along with competitive
market rates of interest for their excess funds. The success of
this product reflects the strong emphasis the Bank places on
offering competitive products coupled with personalized service
to the small- to mid-size businesses operating in the Banks
 various markets. Federal funds purchased and securities sold
under agreements to repurchase averaged $136 million in 1999
 with the majority of the average balances representing the
retail sweep product.

The Corporation also has available to it unsecured lines of
credit with correspondent banks totaling $20 million. The
lines of credit are renewable annually and bear interest at a
floating rate based on several indices. As of December 31,
1999, the Corporation had utilized $4 million in borrowings
under these lines. There were no outstanding borrowings under
these lines as of December 31, 1998.

The Corporation also has access to federal tax deposits on a
daily basis. After being deposited by customers, the tax deposits
 are held at the Corporation up to a self-imposed limit of
$6 million until they are drawn upon by the federal
government. The balance of these funds was $5,739 and $861 as of
December 31, 1999 and 1998, respectively. The Corporation
occasionally uses federal funds purchased from other financial
institutions as a source of short-term funding. The Corporation
had no federal funds purchased as of December 31, 1999 or
1998.

The Bank also is a member of the Federal Home Loan Bank
(FHLB) system and utilizes the various advance programs
offered by the FHLB. The funds are drawn from the FHLB for
various terms through 2007 and are utilized to provide long-term
funding to offset the interest rate risk inherent with holding
long-term, fixed-rate mortgages. The balances of these advances
were $200,276 and $72,782 as of December 31, 1999 and 1998,
respectively.

Capital

Shareholders equity decreased to $116,347 at
December 31, 1999 from $123,273 a year earlier. The decrease
 was attributable to the decline in market values for the
available-for-sale securities along with treasury repurchase
activities. The impact of the change in unrealized market value
adjustment on securities available-for-sale, net of tax (SFAS
No. 115 adjustment of $10,888 in 1999), resulted in a net
unrealized loss position of $7,791 at December 31, 1999
versus a net unrealized gain position of $3,097 at
December 31, 1998. Earnings retained in 1999 amounted to
$10,244. In 1998, the Corporation also increased common stock by
$1,547 through

22



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##### Table of Contents





In 1997, $474 of treasury stock was repurchased. As of
December 31, 1998, the Corporation had 50,400 shares
held in treasury. On August 10, 1999, the Board of Directors
 authorized the discretionary buy-back of up to 500,000 shares of
 common stock. As of December 31, 1999, 254,100 shares had
been repurchased bringing the total shares in treasury to
304,500.

The Corporation has consistently had qualifying capital under the
 risk-based capital requirements in excess of those required to
meet the well-capitalized standards. For further
details on capital ratios, see Note 13.

The Corporation trades under the symbol SECD on the Nasdaq
National Market System. The total market capitalization of the
Corporation was approximately $234 million on
December 31, 1999. The table below lists the high and low
trading prices for the common stock by quarter for the last three
 years. The price ranges and per share dividend figures set forth
 below have been adjusted to reflect the two-for-one stock split
effective May 1, 1997.

|                   |  |       |       |        |  |       |       |        |  |      |       |  |  |   |       |  |  |   |       | 
|------------------ |  | ----- | ----- | ------ |  | ----- | ----- | ------ |  | ---- | ----- |  |  | - | ----- |  |  | - | ----- | 
|Quarter            |  | First |       | Second |  | Third |       | Fourth |  | Year
|                   |  |       |       |        |  |       |       |        |  |     
|1999               |  |       |       |        |  |       |       |        |  |      |       |  |  |   |       |  |  |   |       | 
|                  
|                  
|                  
|                  
|High               |  | $     | 24.00 |        |  | $     | 29.50 |        |  | $    | 30.75 |  |  | $ | 27.00 |  |  | $ | 29.50 | 
|                  
|                  
|                  
|                  
|Low                |  |       | 19.06 |        |  |       | 21.00 |        |  |      | 24.00 |  |  |   | 22.38 |  |  |   | 19.06 | 
|                  
|                  
|                  
|                  
|Dividends Declared |  |       | .14   |        |  |       | .14   |        |  |      | .14   |  |  |   | .14   |  |  |   | .56   | 
|                  
|                  
|                  
|                  
|1998               |  |       |       |        |  |       |       |        |  |      |       |  |  |   |       |  |  |   |       | 
|                  
|                  
|                  
|                  
|High               |  | $     | 34.75 |        |  | $     | 37.25 |        |  | $    | 31.50 |  |  | $ | 26.00 |  |  | $ | 37.25 | 
|                  
|                  
|                  
|                  
|Low                |  |       | 24.88 |        |  |       | 27.00 |        |  |      | 25.75 |  |  |   | 19.75 |  |  |   | 19.75 | 
|                  
|                  
|                  
|                  
|Dividends Declared |  |       | .11   |        |  |       | .12   |        |  |      | .12   |  |  |   | .13   |  |  |   | .48   | 
|                  
|                  
|                  
|                  
|1997               |  |       |       |        |  |       |       |        |  |      |       |  |  |   |       |  |  |   |       | 
|                  
|                  
|                  
|                  
|High               |  | $     | 18.50 |        |  | $     | 22.25 |        |  | $    | 24.50 |  |  | $ | 28.00 |  |  | $ | 28.00 | 
|                  
|                  
|                  
|                  
|Low                |  |       | 15.06 |        |  |       | 17.75 |        |  |      | 20.75 |  |  |   | 21.88 |  |  |   | 15.06 | 
|                  
|                  
|                  
|                  
|Dividends Declared |  |       | .10   |        |  |       | .10   |        |  |      | .10   |  |  |   | .10   |  |  |   | .40   | 

The Corporations price for its common stock increased to a
trading range of $24.00 to $30.75 per share in the third quarter
of 1999 and subsequently closed the year at $22.375. The
Corporations stock has generally followed the market trend
for traded bank stocks. Bank stock prices in general were subject
 to downward pressure with the increase in market rates
associated with Federal Open Market Committee activities. The
common stock closed at $22.25 at December 31, 1998. Book
value per common share was $11.12 and $11.53 at December 31,
 1999 and 1998, respectively. The Corporations common stock
 was also included in the Russell 2000 and 3000 indexes in
June 1999. The increase in price at that time can be
attributed to purchasing activity by various index funds.

The Corporation has historically paid cash dividends on a
quarterly basis and has periodically paid stock dividends at the
discretion of the Board of Directors. The payment and amount of
future dividends on the common stock will be determined by the
Board of Directors. The payment will depend on, among other
things, earnings, financial condition and cash requirements of
the Corporation at the time that such payment is considered and
on the ability of the Corporation to receive dividends from the
Bank, the amount of which is subject to regulatory limitations.
For 1999, 1998, and 1997, the dividend-payout ratio for the
Corporation was 38.7%, 91.5% and 32.3%, respectively. The
abnormally high dividend payout ratio for 1998 was attributable
to the impact of merger related costs.

Liquidity

Management of the Corporations liquidity position is
necessary to ensure that funds are available to meet the cash
flow needs of depositors and borrowers as well as the operating
cash needs of the Corporation. Funds are

23



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##### Table of Contents





Additional discussion regarding Second Bancorps liquidity
and capital resources are set forth in Notes 10, 11, 12 and
13 of Item 8; Second Bancorps Financial Statements and
 Supplementary Data are incorporated herein by reference.

Forward-Looking Statements

The sections that follow, Market Risk Management and Other,
contain certain forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995). These
forward-looking statements may involve significant risks and
uncertainties. Although the Corporation believes that the
expectations reflected in such forward-looking statements are
reasonable, actual results may differ materially from these
results discussed in these forward-looking statements.




ITEM 7a.  MARKET RISK MANAGEMENT

Market risk is the risk of economic loss from adverse changes in
the fair value of financial instruments due to changes in
(a) interest rates, (b) foreign exchange rates, or
(c) other factors that relate to market volatility of the
rate, index, or price underlying the financial instrument. The
Corporations market risk is composed primarily of interest
rate risk. The Corporations Asset/ Liability Committee
(ALCO) is responsible for reviewing the interest rate
sensitivity position of the Corporation and establishing policies
 to monitor and limit the exposure to interest rate risk. Since
nearly all of the Corporations interest rate risk exposure
relates to the financial instrument activity of the Bank, the
Banks Board of Directors review the policies and guidelines
 established by ALCO.

The primary objective of asset/liability management is to provide
 an optimum and stable net interest margin, after-tax return on
assets and return on equity capital, as well as adequate
liquidity and capital. Interest rate risk is monitored through
the use of two complementary measures: dynamic gap analysis and
earnings simulation models. While each of the measurement
techniques has limitations, taken together they represent a
reasonably comprehensive tool for measuring the magnitude of
interest rate risk inherent in the Corporation.

The dynamic gap analysis measures the amount of repricing risk
associated with the balance sheet at a specific point in time.
Expected cash flows from fixed rate instruments are defined
utilizing contractual maturities and anticipated cash flows
through early repayment of loans, early calls and paydowns of
securities and early withdrawals of deposits. Variable rate
instruments repricing frequencies are categorized according to
their earliest repricing opportunity. Core deposits with
noncontractual maturities are included in the gap repricing
distributions based on historical patterns of pricing behavior.

The earnings simulation model forecasts earnings for a one-year
horizon frame under a variety of interest rate scenarios.
Management evaluates the impact of the various rate simulations
against earnings in a stable interest rate environment. The most
recent model projects net income would increase by 7.5% if
interest rates would immediately fall by 200 basis points and
decrease by 9.3% if interest rates would immediately rise by 200
basis points. This represents a shift from the prior year when
the model projected net income would increase by 6.5% if interest
 rates would immediately rise by 200 basis points and would
decrease by 3.8% if interest rates would immediately fall by 200
basis points. Management believes this liability sensitive
position for the one-year time horizon is outside of prudent
levels and is enacting strategies designed to decrease the level
of earnings at risk. These strategies include extending liability
 maturities and shortening asset maturities either through on- or
 off-balance sheet activities. The earnings simulation model
includes assumptions about how the various components of the
balance sheet and rate structure are likely to react through time
 in different interest rate environments. These assumptions are
derived from historical analysis and Managements outlook.

24



---



##### Table of Contents



Interest rate sensitivity is managed through the use of security
portfolio management techniques, the use of fixed-rate, long-term
 borrowings from the FHLB, the establishment of rate and term
structures for time deposits and loans and the sale of
fixed-rate, long-term mortgages through the secondary mortgage
market. Although the Corporation has available to it the use of
off-balance sheet swap instruments to manage interest rate risk,
these instruments are historically rarely utilized.

Other

Year 2000:

During 1999, Management completed the process of preparing for
the Year 2000 date change. The Corporation has successfully
managed the transition. The process included modifying or
replacing certain hardware and software used by the Corporation,
communicating with third party hardware and software providers to
 ensure that appropriate steps were being taken, and developing
contingency plans to remedy any Year 2000 issues.

Although considered unlikely, unanticipated problems in the
Corporations core business processes, including problems
associated with non-compliant third parties and disruptions to
the economy in general, could still occur despite efforts to date
 to remediate affected systems and develop contingency plans.
Management will continue to monitor all business processes
throughout 2000 to address any issues and to ensure all processes
 function properly.

Total cost associated with the process, including the cost of
acquiring certain hardware and software and the internal and
external costs relating to modifying the systems totaled
approximately $1.5 million, including $1.4 million in
capitalized costs. Purchased hardware and software was
capitalized in accordance with normal policy. Personnel and all
other costs related to the process were expensed as incurred.

25



---



##### Table of Contents






ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
 DATA.

SECOND BANCORP INCORPORATED AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |         |           | 
|--------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | ------- | --------- | - | ------- | ------- | --------- | 
|                                                                            |                                                                                                                                    |                                           
|                                                                            |                                                                                                                                    | December 31                               
|                                                                            |                                                                                                                                    |                                           
|                                                                            |                                                                                                                                    | 1999                                       |           | 1998   
|                                                                            |                                                                                                                                    |                                            |           |        
|                                                                            |                                                                                                                                    |                                           
|                                                                            |                                                                                                                                    | (Dollars in thousands)                    
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Assets                                                                      |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Cash and demand balances due from banks                                     |                                                                                                                                    | $                                          | 35,238    |         |           | $ | 45,478  |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Federal funds sold                                                          |                                                                                                                                    |                                            | 0         |         |           |   | 4,000   |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Securities: Available-for-sale (at market value)                            |                                                                                                                                    |                                            | 367,587   |         |           |   | 354,415 |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Loans                                                                       |                                                                                                                                    |                                            | 1,071,662 |         |           |   | 970,853 |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Less reserve for loan losses                                                |                                                                                                                                    |                                            | 11,169    |         |           |   | 10,739  |        
|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                            |                                                                                                                                    | Net loans                                  |           |         | 1,060,493 |   |         |         | 960,114   | 
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Premises and equipment                                                      |                                                                                                                                    |                                            | 18,575    |         |           |   | 17,119  |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Accrued interest receivable                                                 |                                                                                                                                    |                                            | 9,277     |         |           |   | 8,709   |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Goodwill and intangible assets                                              |                                                                                                                                    |                                            | 5,931     |         |           |   | 5,749   |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Other assets                                                                |                                                                                                                                    |                                            | 40,177    |         |           |   | 34,649  |        
|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                            |                                                                                                                                    | Total assets                               |           | $       | 1,537,278 |   |         | $       | 1,430,233 | 
|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |        
|Liabilities and Shareholders Equity                                        |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Deposits:                                                                   |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Demand  non-interest bearing                                                                                                      |                                            | $         | 110,811 |           |   | $       | 115,624 |          
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Demand  interest bearing                                                                                                          |                                            |           | 90,570  |           |   |         | 101,080 |          
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Savings                                                                                                                            |                                            |           | 270,544 |           |   |         | 274,728 |          
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Time deposits                                                                                                                      |                                            |           | 625,664 |           |   |         | 611,158 |          
|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                            |                                                                                                                                    | Total deposits                             |           |         | 1,097,589 |   |         |         | 1,102,590 | 
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Federal funds purchased and securities sold under agreements to
	repurchase |                                                                                                                                    |                                            | 106,532   |         |           |   | 122,482 |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Note payable                                                                |                                                                                                                                    |                                            | 4,000     |         |           |   | 0       |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Other borrowed funds                                                        |                                                                                                                                    |                                            | 5,739     |         |           |   | 861     |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Federal Home Loan Bank advances                                             |                                                                                                                                    |                                            | 200,276   |         |           |   | 72,782  |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Accrued expenses and other liabilities                                      |                                                                                                                                    |                                            | 6,795     |         |           |   | 8,245   |        
|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                            |                                                                                                                                    | Total liabilities                          |           |         | 1,420,931 |   |         |         | 1,306,960 | 
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Shareholders equity:                                                       |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Common stock, no par value; 30,000,000 shares authorized;
	10,762,950 and 10,738,850 shares issued in 1999 and 1998,
	respectively |                                            |           | 36,966  |           |   |         | 36,901  |          
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Treasury stock, 304,500 and 50,400 shares, respectively                                                                            |                                            |           | (7,140  | )         |   |         | (793    | )        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Net unrealized holding (losses) gains on available-for-sale
	securities, net of tax                                                |                                            |           | (7,791  | )         |   |         | 3,097   |          
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Retained earnings                                                                                                                  |                                            |           | 94,312  |           |   |         | 84,068  |          
|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                            |                                                                                                                                    | Total shareholders equity                 |           |         | 116,347   |   |         |         | 123,273   | 
|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |        
|                                                                            |                                                                                                                                    | Total liabilities and shareholders equity |           | $       | 1,537,278 |   |         | $       | 1,430,233 | 
|                                                                            |                                                                                                                                    |                                            |           |         |           |   |         |        

See Notes To Consolidated Financial Statements.

26



---



##### Table of Contents



SECOND BANCORP INCORPORATED AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |            |         | 
|--------------------------------------------------------------------------- | -------------------------------- | --------------------------------------------- | ------ | ---------- | ------- | ---- | ------ | ---------- | ------- | - | ------ | ---------- | ------- | 
|                                                                            |                                  |                                              
|                                                                            |                                  | For the Calendar Year                        
|                                                                            |                                  |                                              
|                                                                            |                                  | 1999                                          |        | 1998       |         | 1997
|                                                                            |                                  |                                               |        |            |         |     
|                                                                            |                                  |                                              
|                                                                            |                                  | (Dollars in thousands, except per share data)
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Interest Income                                                             |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Loans (including fees):                                                     |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Taxable                          |                                               | $      | 80,783     |         |      | $      | 79,229     |         |   | $      | 73,509     |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Exempt from federal income taxes |                                               |        | 681        |         |      |        | 734        |         |   |        | 636        |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Securities:                                                                 |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Taxable                          |                                               |        | 18,446     |         |      |        | 22,945     |         |   |        | 27,142     |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Exempt from federal income taxes |                                               |        | 3,781      |         |      |        | 3,347      |         |   |        | 2,854      |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Federal funds sold                                                          |                                  |                                               | 891    |            |         |      | 742    |            |         |   | 849    |           
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                            |                                  | Total interest income                         |        |            | 104,582 |      |        |            | 106,997 |   |        |            | 104,990 | 
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Interest Expense                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Deposits                                                                    |                                  |                                               | 41,938 |            |         |      | 43,571 |            |         |   | 43,648 |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Federal funds purchased and securities sold under agreements to
	repurchase |                                  |                                               | 5,781  |            |         |      | 6,525  |            |         |   | 6,172  |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Note payable                                                                |                                  |                                               | 64     |            |         |      | 0      |            |         |   | 276    |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Other borrowed funds                                                        |                                  |                                               | 155    |            |         |      | 170    |            |         |   | 163    |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Federal Home Loan Bank advances                                             |                                  |                                               | 7,372  |            |         |      | 5,622  |            |         |   | 5,448  |           
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                            |                                  | Total interest expense                        |        |            | 55,310  |      |        |            | 55,888  |   |        |            | 55,707  | 
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|Net interest income                                                         |                                  |                                               | 49,272 |            |         |      | 51,109 |            |         |   | 49,283 |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Provision for loan losses                                                   |                                  |                                               | 3,195  |            |         |      | 10,579 |            |         |   | 4,205  |           
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|Net interest income after provision for loan losses                         |                                  |                                               | 46,077 |            |         |      | 40,530 |            |         |   | 45,078 |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Non-Interest Income                                                         |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Service charges on deposit accounts                                         |                                  |                                               | 4,309  |            |         |      | 4,145  |            |         |   | 3,963  |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Trust fees                                                                  |                                  |                                               | 3,534  |            |         |      | 2,820  |            |         |   | 2,562  |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Security gains                                                              |                                  |                                               | 312    |            |         |      | 1,007  |            |         |   | 515    |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Other                                                                       |                                  |                                               | 6,637  |            |         |      | 4,782  |            |         |   | 4,061  |           
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                            |                                  | Total non-interest income                     |        |            | 14,792  |      |        |            | 12,754  |   |        |            | 11,101  | 
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|Non-Interest Expense                                                        |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Salaries and employee benefits                                              |                                  |                                               | 19,054 |            |         |      | 19,080 |            |         |   | 18,422 |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Merger costs                                                                |                                  |                                               | 0      |            |         |      | 6,657  |            |         |   | 0      |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Net occupancy                                                               |                                  |                                               | 4,134  |            |         |      | 3,966  |            |         |   | 3,888  |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Equipment                                                                   |                                  |                                               | 3,418  |            |         |      | 3,073  |            |         |   | 2,731  |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Professional services                                                       |                                  |                                               | 2,192  |            |         |      | 2,137  |            |         |   | 2,070  |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Assessment on deposits and other taxes                                      |                                  |                                               | 1,689  |            |         |      | 1,660  |            |         |   | 1,811  |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Amortization of goodwill and other intangibles                              |                                  |                                               | 685    |            |         |      | 799    |            |         |   | 937    |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Other                                                                       |                                  |                                               | 8,158  |            |         |      | 8,876  |            |         |   | 9,339  |           
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                            |                                  | Total non-interest expense                    |        |            | 39,330  |      |        |            | 46,248  |   |        |            | 39,198  | 
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|Income before federal income taxes                                          |                                  |                                               | 21,539 |            |         |      | 7,036  |            |         |   | 16,981 |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Income tax expense (benefit):                                               |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Current                          |                                               |        | 4,516      |         |      |        | 1,864      |         |   |        | 3,356      |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Deferred                         |                                               |        | 845        |         |      |        | (461       | )       |   |        | 389        |        
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                            |                                  | Total federal income tax expense              |        |            | 5,361   |      |        |            | 1,403   |   |        |            | 3,745   | 
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|Net Income                                                                  |                                  | $                                             | 16,178 |            |         | $    | 5,633  |            |         | $ | 13,236 |           
|                                                                            |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|Net Income Per Common Share                                                 |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Basic                            |                                               | $      | 1.52       |         |      | $      | .53        |         |   | $      | 1.25       |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Diluted                          |                                               | $      | 1.51       |         |      | $      | .52        |         |   | $      | 1.25       |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Weighted-average common shares outstanding:                                 |                                  |                                               |        |            |         |      |        |            |         |   |        |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Basic                            |                                               |        | 10,635,852 |         |      |        | 10,665,597 |         |   |        | 10,555,921 |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Diluted                          |                                               |        | 10,698,717 |         |      |        | 10,742,622 |         |   |        | 10,616,752 |        

See Notes To Consolidated Financial Statements.

27



---



##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |   | 
|----------------------------------------------------------------------------------------------------------------------- | ----------------------------- | --------------------------------------------- | -- | ------ |  | -------- | ------ | ---------- |  | -------- | ------ | ----- |  | ------------- | ------- | - |  | - | ------ | ------ | - | - | ------- | ------ | - | - | ------- | - | 
|                                                                                                                        |                               |                                               |    |        |  |          |        | Unrealized |  |          |        |       |  |              
|                                                                                                                        |                               |                                               |    |        |  |          |        | Holding    |  |          |        |       |  |              
|                                                                                                                        |                               | Preferred                                     |    | Common |  | Treasury |        | (Loss)     |  | Retained |        |       |  | Comprehensive
|                                                                                                                        |                               | Stock                                         |    | Stock  |  | Stock    |        | Gain       |  | Earnings |        | Total |  | Income       
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |              
|                                                                                                                        |                               |                                              
|                                                                                                                        |                               | (dollars in thousands, except per share data)
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Balance, January 1, 1997                                                                                                |                               | $                                             | 6  |        |  | $        | 33,450 |            |  | $        | (319   | )     |  | $             | (704    | ) |  | $ | 73,982 |        |   | $ | 106,415 |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Comprehensive income:                                                                                                   |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Net income                                                                                                              |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   | 13,236 |        |   |   | 13,236  |        |   | $ | 13,236  |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Unrealized Gain on Securities of $3,857, net of reclassification
	adjustment for gains included in net income of $340   |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               | 3,517   |   |  |   |        |        |   |   | 3,517   |        |   |   | 3,517   |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Comprehensive income                                                                                                    |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   | $ | 16,753  |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Cash dividends declared:                                                                                                |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Common stock ($.40 per share) |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        | (4,274 | ) |   |         | (4,274 | ) |   |         |   | 
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Common stock issued  dividend reinvestment and stock
	option plans                                                     |                               |                                               |    |        |  |          | 1,900  |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   | 1,900   |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Conversion of preferred stock to common stock                                                                           |                               |                                               | (6 | )      |  |          | 4      |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   | (2      | )      |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Purchase of treasury stock                                                                                              |                               |                                               |    |        |  |          |        |            |  |          | (474   | )     |  |               |         |   |  |   |        |        |   |   | (474    | )      |   |   |         |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Balance, December 31, 1997                                                                                              |                               | $                                             | 0  |        |  |          | 35,354 |            |  |          | (793   | )     |  |               | 2,813   |   |  |   | 82,944 |        |   |   | 120,318 |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Adjustment to conform pooled companys fiscal year-end                                                                  |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               | 19      |   |  |   | 646    |        |   |   | 665     |        |   | $ | 934     |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Comprehensive income:                                                                                                   |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Net income                                                                                                              |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   | 5,633  |        |   |   | 5,633   |        |   | $ | 5,633   |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Unrealized Gain on Securities of $930, net of reclassification
	adjustment for gains included in net income of $665     |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               | 265     |   |  |   |        |        |   |   | 265     |        |   |   | 265     |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Comprehensive income                                                                                                    |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   | $ | 5,898   |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Cash dividends declared:                                                                                                |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Common stock ($.48 per share) |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        | (5,155 | ) |   |         | (5,155 | ) |   |         |   | 
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Common stock issued  dividend reinvestment and stock
	option
	plans                                                    |                               |                                               |    |        |  |          | 1,547  |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   | 1,547   |        |   |   |         |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Balance, December 31, 1998                                                                                              |                               |                                               |    |        |  |          | 36,901 |            |  |          | (793   | )     |  |               | 3,097   |   |  |   | 84,068 |        |   |   | 123,273 |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Comprehensive income:                                                                                                   |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Net income                                                                                                              |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   | 16,178 |        |   |   | 16,178  |        |   | $ | 16,178  |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Unrealized Loss on Securities of $10,634, net of reclassification
	 adjustment for gains included in net income of $254 |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               | (10,888 | ) |  |   |        |        |   |   | (10,888 | )      |   |   | (10,888 | )
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Comprehensive income                                                                                                    |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   | $ | 5,290   |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Cash dividends declared:                                                                                                |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Common stock ($.56 per share) |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        | (5,934 | ) |   |         | (5,934 | ) |   |         |   | 
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Common stock issued  dividend reinvestment and stock
	option
	plans                                                    |                               |                                               |    |        |  |          | 65     |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   | 65      |        |   |   |         |  
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Purchase of treasury stock                                                                                              |                               |                                               |    |        |  |          |        |            |  |          | (6,347 | )     |  |               |         |   |  |   |        |        |   |   | (6,347  | )      |   |   |         |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  
|Balance, December 31, 1999                                                                                              |                               |                                               |    |        |  | $        | 36,966 |            |  | $        | (7,140 | )     |  | $             | (7,791  | ) |  | $ | 94,312 |        |   | $ | 116,347 |        |   |   |         |  
|                                                                                                                        |                               |                                               |    |        |  |          |        |            |  |          |        |       |  |               |         |   |  |   |        |        |   |   |         |        |   |   |         |  

See Notes To Consolidated Financial Statements.

28



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                       |  |                        |          |      |  |      |          |   |  |   |          |  
|------------------------------------------------------------------------------------------------------ |  | ---------------------- | -------- | ---- |  | ---- | -------- | - |  | - | -------- | -
|                                                                                                       |  |                       
|                                                                                                       |  | For the Calendar Year 
|                                                                                                       |  |                       
|                                                                                                       |  | 1998                   |          | 1997 |  | 1996
|                                                                                                       |  |                        |          |      |  |     
|                                                                                                       |  |                       
|                                                                                                       |  | (dollars in thousands)
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Operating Activities                                                                                   |  |                        |          |      |  |      |          |   |  |   |          |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net income                                                                                             |  | $                      | 16,178   |      |  | $    | 5,633    |   |  | $ | 13,236   |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Adjustments to reconcile net income to net cash provided by
	operating activities:                     |  |                        |          |      |  |      |          |   |  |   |          |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Provision for loan losses                                                                              |  |                        | 3,195    |      |  |      | 10,579   |   |  |   | 4,205    |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Provision for depreciation                                                                             |  |                        | 2,985    |      |  |      | 2,614    |   |  |   | 2,317    |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Provision for amortization of intangibles                                                              |  |                        | 685      |      |  |      | 799      |   |  |   | 937      |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|(Accretion) amortization of investment discount and premium                                            |  |                        | (293     | )    |  |      | (1,811   | ) |  |   | 657      |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Provision for loss on servicing rights                                                                 |  |                        | (451     | )    |  |      | 380      |   |  |   | 18       |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Deferred income taxes                                                                                  |  |                        | 845      |      |  |      | (461     | ) |  |   | 389      |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Securities gains                                                                                       |  |                        | (312     | )    |  |      | (1,007   | ) |  |   | (515     | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Other gains, net                                                                                       |  |                        | (2,112   | )    |  |      | (2,104   | ) |  |   | (1,272   | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|(Increase) decrease in interest receivable                                                             |  |                        | (568     | )    |  |      | 73       |   |  |   | (1,118   | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Increase (decrease) in interest payable                                                                |  |                        | 609      |      |  |      | (220     | ) |  |   | (170     | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Originations of loans held-for-sale                                                                    |  |                        | (119,047 | )    |  |      | (118,838 | ) |  |   | (49,770  | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Proceeds from sales of loans held-for-sale                                                             |  |                        | 121,159  |      |  |      | 120,948  |   |  |   | 50,341   |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net change in other assets and other liabilities                                                       |  |                        | (3,037   | )    |  |      | (12,653  | ) |  |   | (2,588   | )
|                                                                                                       |  |                        |          |      |  |      |          |   |  |   |          |  
|Net cash provided by operating activities                                                              |  |                        | 19,836   |      |  |      | 3,932    |   |  |   | 16,667   |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Investing Activities                                                                                   |  |                        |          |      |  |      |          |   |  |   |          |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Proceeds from maturities of securities 
	held-to-maturity                                             |  |                        | 0        |      |  |      | 87,945   |   |  |   | 31,315   |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Proceeds from maturities of securities 
	available-for-sale                                           |  |                        | 163,240  |      |  |      | 166,019  |   |  |   | 61,794   |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Proceeds from sales of securities  available-for-sale                                                 |  |                        | 52,415   |      |  |      | 86,245   |   |  |   | 62,794   |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Donation of securities to charitable foundation                                                        |  |                        | 0        |      |  |      | 202      |   |  |   | 824      |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Purchases of securities  held-to-maturity                                                             |  |                        | 0        |      |  |      | (12,384  | ) |  |   | (3,249   | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Purchases of securities  available-for-sale                                                           |  |                        | (244,921 | )    |  |      | (201,734 | ) |  |   | (142,017 | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net increase in loans                                                                                  |  |                        | (103,574 | )    |  |      | (94,526  | ) |  |   | (52,957  | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net increase in premises and equipment                                                                 |  |                        | (4,441   | )    |  |      | (4,817   | ) |  |   | (3,039   | )
|                                                                                                       |  |                        |          |      |  |      |          |   |  |   |          |  
|Net cash (used for) provided by investing activities                                                   |  |                        | (137,281 | )    |  |      | 26,950   |   |  |   | (44,535  | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Financing Activities                                                                                   |  |                        |          |      |  |      |          |   |  |   |          |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net (decrease) increase in demand, interest bearing demand
	and savings deposits                       |  |                        | (19,507  | )    |  |      | 21,745   |   |  |   | 8,225    |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net increase (decrease) in time deposits                                                               |  |                        | 14,506   |      |  |      | (36,850  | ) |  |   | 29,972   |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net (decrease) increase in federal funds purchased and
	securities sold under agreements to repurchase |  |                        | (15,950  | )    |  |      | 405      |   |  |   | 44,405   |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Increase (decrease) in note payable                                                                    |  |                        | 4,000    |      |  |      | 0        |   |  |   | (5,000   | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net increase (decrease) in borrowings                                                                  |  |                        | 4,878    |      |  |      | (2,696   | ) |  |   | (497     | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Net advances (repayments) from Federal Home Loan Bank                                                  |  |                        | 127,494  |      |  |      | (3,324   | ) |  |   | (48,586  | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Cash dividends                                                                                         |  |                        | (5,934   | )    |  |      | (5,155   | ) |  |   | (4,274   | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Redemption/conversion of preferred stock                                                               |  |                        | 0        |      |  |      | 0        |   |  |   | (2       | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Purchase of treasury stock                                                                             |  |                        | (6,347   | )    |  |      | 0        |   |  |   | (474     | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Issuance of common stock                                                                               |  |                        | 65       |      |  |      | 1,547    |   |  |   | 1,900    |  
|                                                                                                       |  |                        |          |      |  |      |          |   |  |   |          |  
|Net cash provided by (used for) financing activities                                                   |  |                        | 103,205  |      |  |      | (24,328  | ) |  |   | 25,669   |  
|                                                                                                       |  |                        |          |      |  |      |          |   |  |   |          |  
|(Decrease) increase in cash and cash equivalents                                                       |  |                        | (14,240  | )    |  |      | 6,554    |   |  |   | (2,199   | )
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Cash and cash equivalents at beginning of year                                                         |  |                        | 49,478   |      |  |      | 42,924   |   |  |   | 45,553   |  
|                                                                                                       |  |                        |          |      |  |      |          |   |  |   |          |  
|Cash and cash equivalents at end of year                                                               |  | $                      | 35,238   |      |  | $    | 49,478   |   |  | $ | 43,354   |  
|                                                                                                       |  |                        |          |      |  |      |          |   |  |   |          |  

Supplementary Cash Flow Information:

Cash paid for 1) Federal income taxes  $3,924, $2,885
and $3,745 for the twelve months ended December 31, 1999,
1998 and 1997, respectively; and 2) Interest  $55,310,
 $56,108 and $55,533 for the twelve months ended
December 31,1999, 1998 and 1997, respectively. Conforming
adjustments for the pooled company for the fiscal quarter ending
December 31, 1997 included $746, $(12,276) and $11,100 for
operating, investing and financing activities, respectively.

See Notes To Consolidated Financial Statements.

29



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

December 31, 1998

1.  Statement of Accounting Policies

Nature of Operations:  Second Bancorp Incorporated
(the Corporation) is a one bank holding company with its sole
subsidiary being The Second National Bank of Warren (the Bank),
headquartered in Warren, Ohio, with 35 branches and one loan
production office operating in Northeast Ohio. In addition to
general commercial banking, the Bank engages in trust and
mortgage banking activities, as well as other financially related
 businesses.

The accounting policies followed by Second Bancorp Incorporated
conform to generally accepted accounting principles and to
general practices within the banking industry. The following is a
 description of the more significant accounting policies:



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | Principles of Consolidation:  Significant
	intercompany balances and transactions between the Corporation
	and the Bank have been eliminated. The consolidated financial
	statements have been prepared to give retroactive effect to the
	August 20, 1998 acquisition of Enfin, Inc. (Enfin) and to
	the November 19, 1998 acquisition of Trumbull Financial
	Corporation (Trumbull). In accordance with the rules of the
	Securities and Exchange Commission, Trumbulls financial
	statements and selected financial data for the years ended
	September 30, 1995 through 1997 have been combined with the
	Corporations financial statements and selected financial
	data for the years ended December 31, 1995 through 1997,
	respectively. Certain prior year amounts have been reclassified
	to conform with the current year presentation.



| |    |                                                                                                                                                                                                                                                                                                                             
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | Use of Estimates:  The preparation of the financial
	statements in conformity with generally accepted accounting
	principles requires Management to make estimates and assumptions
	that affect the amounts reported in the financial statements and
	accompanying notes. Actual results could differ from these
	estimates.



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | Business Combinations:  Business combinations which
	have been accounted for under the pooling-of-interests method of
	accounting, which requires the assets, liabilities and
	shareholders equity of the merged entity to be
	retroactively combined with the Corporations respective
	accounts at recorded value. Prior period financial statements
	have been restated to give effect to business combinations
	accounted for under this method.



| |    |                                                                                                                                                                               
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | d. | Cash Equivalents:  Cash equivalents include amounts
	due from banks and federal funds sold. Generally, federal funds
	are purchased and sold for periods of less than 30 days.



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | e. | Securities:  Debt and equity securities are
	classified as held-to-maturity, available-for-sale, or trading.
	Securities classified as held-to-maturity are measured at
	amortized or historical cost, securities available-for-sale, and
	trading at fair value. Adjustments to fair value of the
	securities available-for-sale in the form of unrealized holding
	gains and losses are excluded from earnings and reported net of
	tax as a separate component of shareholders equity.
	Adjustments to fair value of securities classified as trading are
	 included in earnings. Management determines the appropriate
	classification of debt securities at the time of purchase and
	reevaluates such designation as of each balance sheet date. Debt
	securities are classified as held-to-maturity when the
	Corporation has the positive intent and ability to hold the
	securities to maturity. Classifying securities as
	available-for-sale allows the Corporation to sell securities to
	fund liquidity and manage the Corporations interest rate
	risk. The Corporation does not maintain a trading account.
	Securities previously classified as held-to-maturity by Trumbull
	were reclassified to available-for-sale at the consummation of
	the transaction. The amortized cost of the debt securities
	classified as held-to-maturity or available-for-sale is adjusted
	for amortization of premiums and accretion of discounts to
	maturity or, in the case of mortgage-backed securities, over the
	estimated life of the security. Such

30



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



| |  |                                                                                                                                                                                                                                                                                                                                                                  
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | amortization is included in interest income from investments.
	Interest and dividends are included in interest income from
	investments. Realized gains and losses, as well as declines in
	value judged to be other than temporary, are included in net
	securities gains (losses). The cost of securities sold is based
	on the specific identification method.



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | f. | Revenue Recognition:  Interest on loans is accrued
	and credited to operations based upon the principal amount
	outstanding. Premiums on acquired loans have been deducted from
	the related interest income and are amortized over the remaining
	useful life of the loans acquired. Discounts and premiums on
	acquired deposits have been deducted or added respectively from
	the related interest expense and are being accreted or amortized
	over the remaining useful life of the deposits. The accrual of
	interest income generally is discontinued when a loan becomes, in
	 Managements opinion, doubtful of being collectible. When
	interest accruals are discontinued, interest credited to income
	for the current year is reversed, and interest accrued in prior
	years is charged to the reserve for loan losses. The Corporation
	accounts for loan origination and commitment fees, as well as
	certain direct loan origination costs by deferring the net fees
	or net costs, and amortizing them as an adjustment of the related
	 loans yield. The Corporation is amortizing these amounts
	over the contractual life of the related loans. Net unamortized
	deferred costs, primarily representing costs of acquiring
	indirect automobile loans, were $3,558 and $2,055 at
	December 31, 1999 and 1998, respectively.



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | g. | Loans Available-for-Sale:  From time to time, the
	Corporation will sell loans it originated, mostly mortgages. The
	loans are reclassified as available-for-sale and are recorded at
	the aggregate cost or market value by loan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | h. | Reserve for Loan Losses:  The reserve for loan losses
	 is maintained at a level believed adequate by Management to
	absorb potential losses in the loan portfolio. Managements
	determination of the adequacy of the reserve is based upon an
	evaluation of the collectibility of the loans. These evaluations
	take into consideration such factors as changes in the nature and
	 volume of the loan portfolio, current economic conditions that
	may affect the borrowers ability to pay, overall quality,
	and a review of specific problem loans. Certain loans are
	accounted for under Statement of Financial Accounting Standards
	(SFAS) No. 114, Accounting by Creditors for
	Impairment of a Loan, as amended by SFAS No. 118,
	Accounting by Creditors for Impairment of a
	Loan  Income Recognition and Disclosures. These
	standards address the accounting for certain loans when it is
	probable that amounts due pursuant to the contractual terms of
	the loan will not be collected. This evaluation is inherently
	subjective and requires Management to make estimates regarding
	the amounts and timing of future cash flows expected to be
	received on impaired loans, that could be susceptible to change.
	To determine the amount of impaired loans, the Corporation
	analyzes the expected cash flows of non-accrual loans. To the
	extent that the net present value of expected cash flows is less
	than the carrying amount of an individual loan, the loan balance
	is included as impaired loans, and an allowance is maintained.



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | i. | Premises and Equipment:  Premises and equipment are
	stated at cost, less accumulated depreciation and amortization.
	The provision for depreciation and amortization for premises and
	equipment, including costs related to developing or obtaining
	software for internal use, is computed generally by the
	straight-line method over their useful lives. Leasehold
	improvements are amortized over the shorter of the terms of the
	respective leases or the estimated useful lives.                                                                                                                                                                                                                                      
|
| | j. | Intangible Assets:  Intangible assets resulting from
	the excess of the purchase price over net identifiable tangible
	assets acquired through acquisitions are specifically identified
	when determinable. The excess goodwill is amortized based on the
	estimated useful life of the long-term assets acquired and on an
	accelerated basis. The core deposit intangible is amortized both
	on an accelerated basis and on a straight-line basis over the
	estimated useful life. Original estimated useful lives for the
	core deposit intangible and goodwill range from 10 to
	14 years and 8 to 22 years, respectively. Accumulated
	amortization as of December 31, 1999 and 1998 were $9,401
	and $8,716, respectively.

31



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | k. | Mortgage Servicing Rights:  The Corporation
	recognizes as separate assets the value of mortgage servicing
	rights, whether those rights are acquired through loan
	origination activities or through purchase activities. Management
	 stratifies servicing rights based on term or method of
	acquisition. Capitalized mortgage servicing rights are amortized
	on an accelerated basis over the estimated life of the loans
	sold. Management evaluates the recoverability of the mortgage
	servicing rights in relation to the impact of actual and
	anticipated loan portfolio prepayments, foreclosures, and
	delinquency experience.



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | l. | Interest Rate Risk Management: As part of managing the
	Corporations interest rate risk, a variety of financial
	instruments may, from time to time, be used to hedge market
	values and to alter the cash flow characteristics of certain
	on-balance sheet instruments. The derivative financial
	instruments used primarily consist of interest rate caps and
	swaps. The derivative instruments used to manage interest rate
	risk are linked with a specific asset or liability or a group of
	related assets or liabilities at the inception of the derivative
	contract and have a high degree of correlation with the
	associated balance sheet item during the hedge period. Net
	interest income or expense on derivative contracts used for
	interest rate risk management is accrued. Deferred amounts are
	amortized into interest income or expense over either the
	remaining original life of the derivative instrument or the
	expected life of the associated asset or liability. Unrealized
	gains or losses are not recognized on the balance sheet.
|
| | m. | Federal Income Taxes: Deferred federal income taxes are
	provided for differences between tax and financial statement
	bases of assets and liabilities at year-end. Deferred taxes are
	recognized using the liability method, whereby tax rates are
	applied to cumulative temporary differences based on when and how
	 they are expected to affect the tax return. Deferred tax assets
	and liabilities are adjusted for tax rate changes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | n. | Per Share Data: The Corporation computes both basic and
	diluted earnings per share in accordance with SFAS No. 128,
	Earnings per Share. The Corporation had a two-for-one
	 stock split on May 1, 1997 and all of the share and per
	share data have been restated to reflect this stock split.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | o. | Treasury Stock: Acquisitions of treasury stock are
	recorded on the cost method with the full amount of the cash paid
	 deducted from shareholders equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

2.  Recent Accounting Pronouncements

Accounting for Derivative Instruments and Hedging Activities: SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS
No. 137, Accounting for Derivative Instruments and
Hedging Activities  Deferral of the Effective Date of
FASB Statement No. 133, requires derivative
instruments be carried at fair market value on the balance sheet.
 The statement continues to allow derivative instruments to be
used to hedge various risks and sets forth specific criteria to
be used to determine when hedge accounting can be used. The
statement also provides for offsetting changes in fair value or
cash flows of both the derivative and the hedged asset or
liability to be recognized in earnings in the same period;
however, any changes in fair value or cash flow that represent
the ineffective portion of a hedge are required to be recognized
in earnings and cannot be deferred. For derivative instruments
not accounted for as hedges, changes in fair value are required
to be recognized in earnings.

The Corporation plans to adopt the provisions of this statement,
as amended, for its quarterly and annual reporting beginning
January 1, 2001, the statements effective date. The
impact of adopting the provisions of this statement on the
Corporations financial position, results of operations and
cash flow subsequent to the effective date is not expected to be
material.

3.  Mergers and Acquisitions

On August 20, 1998, Second Bancorp acquired Enfin, Inc.
(Enfin), a $44 million asset bank holding company
headquartered in Solon, Ohio, in a transaction accounted for as a
 pooling of interests. Second Bancorp

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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

issued .5 million shares of common stock to the shareholders
 of Enfin based upon an exchange ratio of .95 shares of Second
Bancorp common stock for each outstanding share of Enfin common
stock. The historical consolidated financial statements have been
 restated to reflect this transaction.

On November 19, 1998, Second Bancorp acquired Trumbull
Financial Corporation (Trumbull), a $462 million asset
unitary thrift holding company headquartered in Warren, Ohio, in
a transaction accounted for as a pooling of interests. Second
Bancorp issued 3.3 million shares of common stock to the
shareholders of Trumbull based upon an exchange ratio of 3.78
shares of Second Bancorp common stock for each outstanding share
of Trumbull common stock. The historical consolidated financial
statements have been restated to reflect this transaction.

Prior to the merger, Trumbull used a fiscal year end of
September 30. The 1998 financial statements combine each
companys year ended December 31. The restated
financial statements for the years ended December 31, 1997
combine Second Bancorps and Enfins financial
statements for the years ended December 31, 1997 with
Trumbulls financial statements for the years ended
September 30, 1997. Due to the different fiscal year ends,
Trumbulls results for the three months ended
December 31, 1997 are reflected as an adjustment in the
accompanying statement of shareholders equity. Net income
for Trumbull for the period totaled $915, with dividends declared
 of $269 and a net change in unrealized gains on securities
available-for-sale of $19.

The net interest income, net income, and diluted net income per
common share for the period October 1, 1997 through
December 31, 1997 that were excluded from the results of
operations were $3,177, $915 and $.09, respectively.
Trumbulls net interest income, net income, and diluted
income per share for the period January 1, 1998 through
September 30, 1998 was $10,204, $2,861 and $.27,
respectively.

Merger expenses incurred in 1998 as a result of the Enfin and
Trumbull acquisitions totaled $6,657 and consisted of:
personnel-related costs of 2,931; professional fees of $1,917;
system conversion expenses of $810; and miscellaneous expenses of
 $999.

4.  Restrictions on Cash and Due From Bank Accounts

The Bank is required to maintain average reserve balances with
the Federal Reserve Bank. The average amount of those reserve
balances for the year ended December 31, 1999 was
approximately $1,750, which represents compensating balances for
services provided by the Federal Reserve Bank during 1999.

5.  Securities

The following is a summary of securities:

|                                                                                              |                       |           |         |            |  |            |     |           |  |   |        |         |   |   |         |         | 
|--------------------------------------------------------------------------------------------- | --------------------- | --------- | ------- | ---------- |  | ---------- | --- | --------- |  | - | ------ | ------- | - | - | ------- | ------- | 
|                                                                                              |                       |           |         | Gross      |  | Gross      |     | Estimated
|                                                                                              |                       | Amortized |         | Unrealized |  | Unrealized |     | Market   
|December 31, 1999                                                                             |                       | Cost      |         | Gains      |  | Losses     |     | Value    
|                                                                                              |                       |           |         |            |  |            |     |          
|Available-for-Sale:                                                                           |                       |           |         |            |  |            |     |           |  |   |        |         |   |   |         |        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|U.S. Treasury securities and obligations of other U.S. Government
	 agencies and corporations |                       | $         | 84,021  |            |  | $          | 1   |           |  | $ | (2,691 | )       |   | $ | 81,331  |        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Obligations of states and political subdivisions                                              |                       |           | 78,691  |            |  |            | 392 |           |  |   | (1,928 | )       |   |   | 77,155  |        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Corporate securities                                                                          |                       |           | 23,135  |            |  |            | 0   |           |  |   | (1,191 | )       |   |   | 21,944  |        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Mortgage-backed securities                                                                    |                       |           | 180,312 |            |  |            | 99  |           |  |   | (6,661 | )       |   |   | 173,750 |        
|                                                                                              |                       |           |         |            |  |            |     |           |  |   |        |         |   |   |         |        
|                                                                                              | Total debt securities |           |         | 366,159    |  |            |     | 492       |  |   |        | (12,471 | ) |   |         | 354,180 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Equity securities                                                                             |                       |           | 13,414  |            |  |            | 144 |           |  |   | (151   | )       |   |   | 13,407  |        
|                                                                                              |                       |           |         |            |  |            |     |           |  |   |        |         |   |   |         |        
|                                                                                              | Total securities      |           | $       | 379,573    |  |            | $   | 636       |  |   | $      | (12,622 | ) |   | $       | 367,587 | 
|                                                                                              |                       |           |         |            |  |            |     |           |  |   |        |         |   |   |         |        

33



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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

|                                                                                              |                       |           |         |            |  |            |       |           |  |   |      |      |   |   |         |         | 
|--------------------------------------------------------------------------------------------- | --------------------- | --------- | ------- | ---------- |  | ---------- | ----- | --------- |  | - | ---- | ---- | - | - | ------- | ------- | 
|                                                                                              |                       |           |         | Gross      |  | Gross      |       | Estimated
|                                                                                              |                       | Amortized |         | Unrealized |  | Unrealized |       | Market   
|December 31, 1998                                                                             |                       | Cost      |         | Gains      |  | Losses     |       | Value    
|                                                                                              |                       |           |         |            |  |            |       |          
|Available-for-Sale:                                                                           |                       |           |         |            |  |            |       |           |  |   |      |      |   |   |         |        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|U.S. Treasury securities and obligations of other U.S. Government
	 agencies and corporations |                       | $         | 88,739  |            |  | $          | 984   |           |  | $ | (70  | )    |   | $ | 89,653  |        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Obligations of states and political subdivisions                                              |                       |           | 74,218  |            |  |            | 2,855 |           |  |   | (97  | )    |   |   | 76,976  |        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Corporate securities                                                                          |                       |           | 10,247  |            |  |            | 199   |           |  |   | 0    |      |   |   | 10,446  |        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Mortgage-backed securities                                                                    |                       |           | 163,787 |            |  |            | 818   |           |  |   | (343 | )    |   |   | 164,262 |        
|                                                                                              |                       |           |         |            |  |            |       |           |  |   |      |      |   |   |         |        
|                                                                                              | Total debt securities |           |         | 336,991    |  |            |       | 4,856     |  |   |      | (510 | ) |   |         | 341,337 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Equity securities                                                                             |                       |           | 12,729  |            |  |            | 406   |           |  |   | (57  | )    |   |   | 13,078  |        
|                                                                                              |                       |           |         |            |  |            |       |           |  |   |      |      |   |   |         |        
|                                                                                              | Total securities      |           | $       | 349,720    |  |            | $     | 5,262     |  |   | $    | (567 | ) |   | $       | 354,415 | 
|                                                                                              |                       |           |         |            |  |            |       |           |  |   |      |      |   |   |         |        

The amortized cost and estimated market value of securities on
December 31, 1999 by contractual maturity are shown below.
Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.

|                           |  |           |         |           |  |   |         | 
|-------------------------- |  | --------- | ------- | --------- |  | - | ------- | 
|                           |  |           |         | Estimated
|                           |  | Amortized |         | Market   
|                           |  | Cost      |         | Value    
|                           |  |           |         |          
|Under 1 year               |  | $         | 3,439   |           |  | $ | 3,439   | 
|                          
|                          
|                          
|                          
|1 to 5 years               |  |           | 76,179  |           |  |   | 74,577  | 
|                          
|                          
|                          
|                          
|5 to 10 years              |  |           | 60,578  |           |  |   | 59,299  | 
|                          
|                          
|                          
|                          
|Over 10 years              |  |           | 45,651  |           |  |   | 43,115  | 
|                           |  |           |         |           |  |   |         | 
|                           |  |           | 185,847 |           |  |   | 180,430 | 
|                          
|                          
|                          
|                          
|Mortgage-backed securities |  |           | 180,312 |           |  |   | 173,750 | 
|                          
|                          
|                          
|                          
|Equity securities          |  |           | 13,414  |           |  |   | 13,407  | 
|                           |  |           |         |           |  |   |         | 
|                           |  | $         | 379,573 |           |  | $ | 367,587 | 
|                           |  |           |         |           |  |   |         | 

Information relating to sales of available-for-sale securities
for the three years ended December 31, 1999 is as follows:

|                                      |  |      |        |      |  |      |        |   |  |   |        |  
|------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                      |  | 1999 |        | 1998 |  | 1997
|                                      |  |      |        |      |  |     
|Proceeds from sales of securities     |  | $    | 52,415 |      |  | $    | 96,971 |   |  | $ | 62,794 |  
|                                     
|                                     
|                                     
|                                     
|Gross realized gains                  |  | $    | 351    |      |  | $    | 1,024  |   |  | $ | 708    |  
|                                     
|                                     
|                                     
|                                     
|Gross realized losses                 |  |      | (39    | )    |  |      | (17    | ) |  |   | (193   | )
|                                     
|                                     
|                                     
|                                     
|Income tax associated with net gains  |  |      | 109    |      |  |      | 342    |   |  |   | 175    |  
|                                      |  |      |        |      |  |      |        |   |  |   |        |  
|After tax gain                        |  | $    | 203    |      |  | $    | 665    |   |  | $ | 340    |  
|                                      |  |      |        |      |  |      |        |   |  |   |        |  
|Impact on dilutive earnings per share |  | $    | 0.02   |      |  | $    | 0.06   |   |  | $ | 0.03   |  
|                                      |  |      |        |      |  |      |        |   |  |   |        |  

On December 31, 1999 and 1998, securities with a carrying
value of $254,941 and $156,078, respectively, were pledged to
secure repurchase agreements, deposits of public funds, and for
other purposes.

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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

6.  Loans

Loans consist of the following:

|                           |  |              |           |      |  |   |         | 
|-------------------------- |  | ------------ | --------- | ---- |  | - | ------- | 
|                           |  |             
|                           |  | December 31,
|                           |  |             
|                           |  | 1999         |           | 1998
|                           |  |              |           |     
|Commercial                 |  | $            | 413,097   |      |  | $ | 373,244 | 
|                          
|                          
|                          
|                          
|Consumer                   |  |              | 216,173   |      |  |   | 230,561 | 
|                          
|                          
|                          
|                          
|Real estate                |  |              | 402,468   |      |  |   | 346,081 | 
|                          
|                          
|                          
|                          
|Real estate  construction |  |              | 39,924    |      |  |   | 20,967  | 
|                           |  |              |           |      |  |   |         | 
|                           |  | $            | 1,071,662 |      |  | $ | 970,853 | 
|                           |  |              |           |      |  |   |         | 

At December 31, 1999 and 1998, the Corporation serviced
mortgage loans for others totaling $343,756 and $295,423,
respectively. Following is an analysis of the activity for
capitalized mortgage loan servicing rights acquired during the
years ending December 31:

|                              |  |      |       |      |  |   |       |  
|----------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|                              |  | 1999 |       | 1998
|                              |  |      |       |     
|Balance at January 1          |  | $    | 2,683 |      |  | $ | 3,544 |  
|                             
|                             
|                             
|                             
|Additions                     |  |      | 1,302 |      |  |   | 1,019 |  
|                             
|                             
|                             
|                             
|Sales                         |  |      | 0     |      |  |   | (925  | )
|                             
|                             
|                             
|                             
|Amortization                  |  |      | (946  | )    |  |   | (575  | )
|                             
|                             
|                             
|                             
|Change in valuation allowance |  |      | 451   |      |  |   | (380  | )
|                              |  |      |       |      |  |   |       |  
|Balance at December 31        |  | $    | 3,490 |      |  | $ | 2,683 |  
|                              |  |      |       |      |  |   |       |  

Following is an analysis of the aggregate changes in the
valuation allowances for mortgage servicing rights for the years
ended December 31:

|                       |  |      |      |      |  |   |     | 
|---------------------- |  | ---- | ---- | ---- |  | - | --- | 
|                       |  | 1999 |      | 1998
|                       |  |      |      |     
|Balance at January 1   |  | $    | 451  |      |  | $ | 71  | 
|                      
|                      
|                      
|                      
|Additions              |  |      | 0    |      |  |   | 380 | 
|                      
|                      
|                      
|                      
|Reductions             |  |      | (451 | )    |  |   | 0   | 
|                       |  |      |      |      |  |   |     | 
|Balance at December 31 |  | $    | 0    |      |  | $ | 451 | 
|                       |  |      |      |      |  |   |     | 

The Corporation also services Small Business Administration
(SBA) loans for others totaling $11,484 and $10,394 as of
December 31, 1999 and 1998, respectively. Amounts
capitalized as originated servicing rights were $143 and $225 in
1999 and 1998, respectively. Capitalized servicing rights
amortized were $83 and $66 in 1999 and 1998, respectively.

The Bank has granted loans to the officers and directors of both
the Corporation and the Bank and their associates. Related-party
loans are made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time
for comparable transactions with unrelated persons. The aggregate
 dollar amounts of these loans were $16,407 and $10,904 at
December 31, 1999 and 1998, respectively. New loans and
advances totaled $34,204 and payments were $28,702 in 1999.

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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

7.  Asset Quality

Reserve for loan losses:

Changes in the reserve for loan losses for each of the last three
 years ended December 31 were as follows:

|                                                    |                 |      |        |        |   |      |         |        |   |   |        |        |  
|--------------------------------------------------- | --------------- | ---- | ------ | ------ | - | ---- | ------- | ------ | - | - | ------ | ------ | -
|                                                    |                 | 1999 |        | 1998   |   | 1997
|                                                    |                 |      |        |        |   |     
|Balance at beginning of year                        |                 | $    | 10,739 |        |   | $    | 8,837   |        |   | $ | 9,235  |       
|                                                   
|                                                   
|                                                   
|                                                   
|Charge-offs                                         |                 |      | (4,477 | )      |   |      | (10,609 | )      |   |   | (5,368 | )     
|                                                   
|                                                   
|                                                   
|                                                   
|Recoveries                                          |                 |      | 1,712  |        |   |      | 1,932   |        |   |   | 754    |       
|                                                    |                 |      |        |        |   |      |         |        |   |   |        |       
|                                                    | Net charge-offs |      |        | (2,765 | ) |      |         | (8,677 | ) |   |        | (4,614 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for loan losses                           |                 |      | 3,195  |        |   |      | 10,579  |        |   |   | 4,205  |       
|                                                    |                 |      |        |        |   |      |         |        |   |   |        |       
|Balance at end of year                              |                 | $    | 11,169 |        |   | $    | 10,739  |        |   | $ | 8,826  |       
|                                                    |                 |      |        |        |   |      |         |        |   |   |        |       
|Reserve for loan losses as a percent of total loans |                 |      | 1.04   | %      |   |      | 1.11    | %      |   |   | 1.02   | %     

Conforming adjustments for the pooled company for the fiscal
quarter ending December 31, 1997 included recoveries of $5,
charge-offs of $54 and provision for loan losses of $60.

Non-accrual, past-due and restructured
loans (non-performing loans):

Non-accrual loans are loans that are no longer accruing interest
at the discretion of Management. This occurs when Management
determines that the borrower can no longer service the debt, but
the loan is adequately secured with collateral or the borrower is
 able to repay the principal portion of the loan in the future.
Past-due loans are loans with principal payments more than
90 days past due. Both interest and principal are expected
to be repaid. Restructured loans include loans whose original
terms were redesigned to allow the customer to remain current and
 repay the loan. Also listed is other real estate owned which
represents real estate acquired through the default of loans. The
 Banks practice is to carry other real estate owned at the
lower of cost or fair market value, less estimated costs to sell.

|                                         |                                    |             |       |      |   |   |       |     |  
|---------------------------------------- | ---------------------------------- | ----------- | ----- | ---- | - | - | ----- | --- | -
|                                         |                                    |            
|                                         |                                    | December 31
|                                         |                                    |            
|                                         |                                    | 1999        |       | 1998
|                                         |                                    |             |       |     
|Non-accrual loans                        |                                    | $           | 2,743 |      |   | $ | 4,130 |    
|                                        
|                                        
|                                        
|                                        
|Past-due loans                           |                                    |             | 3,132 |      |   |   | 2,725 |    
|                                        
|                                        
|                                        
|                                        
|Restructured loans                       |                                    |             | 52    |      |   |   | 61    |    
|                                         |                                    |             |       |      |   |   |       |    
|Total                                    |                                    | $           | 5,927 |      |   | $ | 6,916 |    
|                                         |                                    |             |       |      |   |   |       |    
|                                         | Percent of total loans at year end |             |       | .55  | % |   |       | .71 | %
|                                        
|                                        
|                                        
|                                        
|Other real estate owned (net of reserve) |                                    | $           | 281   |      |   | $ | 79    |    

For the year ended December 31, 1999, interest income that
would have been earned under the original terms of the loans
classified in non-accrual and restructured loans in the above
schedule amounted to $235. No interest income was realized on
these loans for 1999. Loans that were considered to be impaired
under SFAS No. 114 totaled $542 and $2,367 as of
December 31, 1999 and 1998, respectively, all of which were
included in non-performing assets as of those dates. The related
allowance allocated to impaired loans for 1999 and 1998 was $280
and $340, respectively.

8.  Fair Values of Financial Instruments

SFAS No. 107, Disclosures about Fair Value of
Financial Instruments, requires that the Corporation
disclose estimated fair values for its financial instruments. The
 market value of securities, as presented in Note 5,

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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

is based primarily upon quoted market prices. For substantially
all other financial instruments, the fair values are
Managements estimates of the values at which the
instruments could be exchanged in a transaction between willing
parties. In accordance with SFAS No. 107, fair values are
based on estimates using present value and other valuation
techniques in instances where quoted prices are not available.
These techniques are significantly affected by the assumptions
used, including discount rates and estimates of future cash
flows. As such, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, further,
may not be realizable in an immediate settlement of the
instruments. SFAS No. 107 also excludes certain items from
its disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent, and should not be
construed to represent, the underlying value of the Corporation.

The following table presents the estimates of fair value of
financial instruments:

|                   |                                                                             |                   |   |                   |   |          |   |           |  |  |   |         |   |  |   |         |  
|------------------ | --------------------------------------------------------------------------- | ----------------- | - | ----------------- | - | -------- | - | --------- |  |  | - | ------- | - |  | - | ------- | -
|                   |                                                                             |                   |   |                  
|                   |                                                                             | December 31, 1999 |   | December 31, 1998
|                   |                                                                             |                   |   |                  
|                   |                                                                             | Carrying          |   | Fair              |   | Carrying |   | Fair     
|                   |                                                                             | Value             |   | Value             |   | Value    |   | Value    
|                   |                                                                             |                   |   |                   |   |          |   |          
|Assets:            |                                                                             |                   |   |                   |   |          |   |           |  |  |   |         |   |  |   |        
|                  
|                  
|                  
|                  
|                   | Cash and cash equivalents                                                   |                   | $ | 35,238            |   |          | $ | 35,238    |  |  | $ | 49,478  |   |  | $ | 49,478  |  
|                  
|                  
|                  
|                  
|                   | Securities                                                                  |                   |   | 367,587           |   |          |   | 367,587   |  |  |   | 354,415 |   |  |   | 354,415 |  
|                  
|                  
|                  
|                  
|                   | Loans                                                                       |                   |   | 1,071,662         |   |          |   | 1,051,975 |  |  |   | 970,853 |   |  |   | 986,236 |  
|                  
|                  
|                  
|                  
|                   | Allowance for loan losses                                                   |                   |   | (11,169           | ) |          |   |           |  |  |   | (10,739 | ) |  |   |         |  
|                  
|                  
|                  
|                  
|                   | Cost of mortgage servicing rights                                           |                   |   | 3,490             |   |          |   | 4,152     |  |  |   | 2,683   |   |  |   | 2,753   |  
|                  
|                  
|                  
|                  
|                  
|Liabilities:       |                                                                             |                   |   |                   |   |          |   |           |  |  |   |         |   |  |   |        
|                  
|                  
|                  
|                  
|                   | Demand deposits  non-interest bearing                                      |                   |   | 110,811           |   |          |   | 110,811   |  |  |   | 115,624 |   |  |   | 115,624 |  
|                  
|                  
|                  
|                  
|                   | Demand deposits  interest bearing                                          |                   |   | 90,570            |   |          |   | 90,570    |  |  |   | 101,080 |   |  |   | 101,080 |  
|                  
|                  
|                  
|                  
|                   | Savings deposits                                                            |                   |   | 270,544           |   |          |   | 270,544   |  |  |   | 274,728 |   |  |   | 274,728 |  
|                  
|                  
|                  
|                  
|                   | Time deposits                                                               |                   |   | 625,664           |   |          |   | 623,534   |  |  |   | 611,158 |   |  |   | 621,081 |  
|                  
|                  
|                  
|                  
|                   | Federal funds purchased and securities sold under agreements to
	repurchase |                   |   | 106,532           |   |          |   | 106,532   |  |  |   | 122,482 |   |  |   | 122,482 |  
|                  
|                  
|                  
|                  
|                   | Note payable                                                                |                   |   | 4,000             |   |          |   | 4,000     |  |  |   | 0       |   |  |   | 0       |  
|                  
|                  
|                  
|                  
|                   | Other borrowed funds                                                        |                   |   | 5,739             |   |          |   | 5,739     |  |  |   | 861     |   |  |   | 861     |  
|                  
|                  
|                  
|                  
|                   | FHLB advances                                                               |                   |   | 200,276           |   |          |   | 199,282   |  |  |   | 72,782  |   |  |   | 72,383  |  
|                  
|                  
|                  
|                  
|                  
|Off-balance sheet: |                                                                             |                   |   |                   |   |          |   |           |  |  |   |         |   |  |   |        
|                  
|                  
|                  
|                  
|                   | Interest rate caps                                                          |                   |   |                   |   |          |   | 262       |  |  |   |         |   |  |   | (228    | )

Fair value estimates, methods, and assumptions are set forth
below for the Corporations financial instruments:

Cash and cash equivalents: The carrying amounts reported
in the balance sheet for cash and cash equivalents approximate
those assets fair value.

Securities:Fair values for securities are based on quoted
 market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of
comparable instruments.

Loans: Variable-rate loans that reprice frequently are
assumed to have a short-duration period, yielding a fair value
that approximates the carrying value. The fair values for other
loans are estimated using a discounted cash flow calculation.

37



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Cost of mortgage servicing rights: The fair value for the
cost of mortgage servicing rights was determined via an
independent quote from a third party. Included in the valuation
of fair value were assumptions regarding prepayment speeds,
discount rates, servicing costs, delinquency, ancillary income
and foreclosure costs arrived at from third party sources and
internal historical records.

Deposit liabilities:The fair values disclosed for demand
deposits, insured money market, interest checking accounts, and
savings accounts are, by definition, equal to the amount payable
on demand at the reporting date (i.e., their carrying amounts).
The carrying amounts for time deposits are estimated using a
discounted cash flow calculation. Variable-rate time deposits
that reprice frequently are assumed to have a short-duration
period, yielding a fair value that approximates the carrying
value.

Federal funds purchased, securities sold under agreements to
repurchase, and other short-term borrowings: The carrying
amounts of federal funds purchased, securities sold under
agreements to repurchase, and other short-term borrowings
approximate their fair values.

9.  Premises and Equipment

The following is a summary of bank premises and equipment
accounts as of December 31:

|                                          |  |      |        |      |  |   |        | 
|----------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                          |  | 1999 |        | 1998
|                                          |  |      |        |     
|Land and buildings                        |  | $    | 6,456  |      |  | $ | 5,486  | 
|                                         
|                                         
|                                         
|                                         
|Leasehold improvements                    |  |      | 8,932  |      |  |   | 8,570  | 
|                                         
|                                         
|                                         
|                                         
|Furniture and equipment                   |  |      | 23,103 |      |  |   | 20,223 | 
|                                          |  |      |        |      |  |   |        | 
|                                          |  |      | 38,491 |      |  |   | 34,279 | 
|                                         
|                                         
|                                         
|                                         
|Less:                                     |  |      |        |      |  |   |        | 
|                                         
|                                         
|                                         
|                                         
|Accumulated depreciation and amortization |  |      | 19,916 |      |  |   | 17,160 | 
|                                          |  |      |        |      |  |   |        | 
|                                          |  | $    | 18,575 |      |  | $ | 17,119 | 
|                                          |  |      |        |      |  |   |        | 

10.  Federal Funds Purchased and Securities Sold
Under Agreements to Repurchase

The Corporation has available to it the ability to borrow in
excess of $37 million from correspondent banks as overnight
federal funds purchased. There were no federal funds purchased at
 December 31, 1999, 1998 or 1997. The Corporation has
repurchase agreements with corporate customers and local
municipalities. These borrowings have an overnight maturity and
are collateralized with U. S. Treasury and government agency
securities, including agency-issued mortgage-backed securities
with a market value of $84,882 and $101,832 as of
December 31, 1999 and 1998, respectively. The securities are
 held in the Corporations safekeeping account at the
Federal Reserve Bank. The Corporation also maintains repurchase
agreements with approved brokers and are collateralized by U. S.
Treasury and government agency securities held by the broker. The
 following table summarizes certain information relative to these
 borrowings:

|                                                           |  |      |         |      |  |      |         |   |  |   |         |  
|---------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                           |  | 1999 |         | 1998 |  | 1997
|                                                           |  |      |         |      |  |     
|Outstanding at December 31                                 |  | $    | 106,532 |      |  | $    | 122,482 |   |  | $ | 131,127 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Weighted-average interest rate at December 31              |  |      | 4.46    | %    |  |      | 4.23    | % |  |   | 4.67    | %
|                                                          
|                                                          
|                                                          
|                                                          
|Maximum amount outstanding as of any month end             |  | $    | 133,951 |      |  | $    | 166,043 |   |  | $ | 138,830 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Average amount outstanding                                 |  | $    | 136,382 |      |  | $    | 135,259 |   |  | $ | 124,652 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Approximate weighted-average interest rate during the year |  |      | 4.24    | %    |  |      | 4.61    | % |  |   | 4.78    | %

38



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

11.  Notes Payable

As of December 31, 1999, the Corporation had $4 million
 in notes payable to a correspondent bank. The Corporation also
has an additional $16 million in unsecured lines of credit
with two correspondent banks. The lines are renewable annually
and bear interest at a floating rate based on several indices
including LIBOR, Federal funds or prime rate.

12.  Other Borrowed Funds and Federal Home Loan Bank
 Advances

The Corporation has a Treasury Note Option Agreement with the
Federal Government which allows the Corporation to hold funds
deposited by customers for treasury and tax payments to the
Government up to a self-imposed limit of $6,000,000. Federal Home
 Loan Bank (FHLB) advances are collateralized by all shares
of FHLB stock and a portion of the Corporations qualified
mortgage loan portfolio, and are used to fund mortgage loan
originations of the Corporation and as a regular funding source.
The detail of these borrowings on December 31, 1999 and 1998
 is as follows:

|                                                                       |                           |          |       |                |  |      |       |         |  |   |     |        | 
|---------------------------------------------------------------------- | ------------------------- | -------- | ----- | -------------- |  | ---- | ----- | ------- |  | - | --- | ------ | 
|                                                                       |                           |          |       |               
|                                                                       |                           | Current  |       | Balance       
|                                                                       |                           | Interest |       |               
|Description                                                            |                           | Rates    |       | 1999           |  | 1998
|                                                                       |                           |          |       |                |  |     
|Treasury note option account                                           |                           |          | 4.47% |                |  | $    | 5,739 |         |  | $ | 861 |       
|Fixed rate FHLB advances with monthly interest payments                |                           |          |       |                |  |      |       |         |  |   |     |       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Advances due in 2000      |          |       | 5.21% to 5.82% |  |      | $     | 78,000  |  |   | $   | 17,000 | 
|Fixed rate FHLB advances with monthly principal and interest
	payments |                           |          |       |                |  |      |       |         |  |   |     |       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Advances due 2001 to 2007 |          |       | 4.90% to 6.95% |  |      | $     | 122,276 |  |   | $   | 55,782 | 

13.  Shareholders Equity

On February 27, 1998, the Board of Directors rescinded the
authorization to repurchase any shares of common stock. As of
December 31, 1998, the Corporation had 50,400 shares held in
 treasury. On August 10, 1999, the Board of Directors
authorized the discretionary buy-back of up to 500,000 shares of
common stock. As of December 31, 1999, 254,100 shares had
been repurchased bringing the total shares in treasury to
304,500.

Dividends are paid by the Corporation from its assets, which are
mainly provided by dividends from the Bank. However, certain
restrictions exist regarding the ability of the Bank to transfer
funds to the Corporation in the form of cash dividends, loans, or
 advances. The approval of the Comptroller of the Currency is
required to pay dividends in excess of the Banks earnings
retained in the current year plus retained net profits from the
preceding two years. As of December 31, 1999, the Bank had
retained earnings of $89,204, of which $17,772 was available for
distribution to the Corporation as dividends without prior
regulatory approval.

The Corporation and the Bank are subject to various regulatory
capital requirements administered by 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
Corporations and the Banks financial statements.
Under capital adequacy guidelines and the regulatory framework
for prompt corrective action, the Corporation and 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 Corporations and 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 Corporation and the Bank to maintain
minimum amounts and ratios (set forth on the next page) of total
and Tier I capital (as defined by the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as
defined) to average assets (as

39



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

defined). Management believes, as of December 31, 1999, that
 the Corporation and the Bank meet all capital adequacy
requirements to which it is subject.

As of December 31, 1999, the most recent notification from
the Office of the Comptroller of the Currency categorized the
Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized,
the Bank must maintain minimum total risk-based, Tier I
risk-based and Tier I leverage ratios as set forth in the table.
There are no conditions or events since that notification which
Management believes have changed the Banks category.

The consolidated Corporations and the subsidiary
Banks actual capital amounts and ratios are also presented
in the table.

|                                          |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |      |  
|----------------------------------------- | -------------------- | ------ |  | -------- |  | ----------------- |  | ----------------- | - | ----------- | -- | ------- |  | ----- | - | --- | - |  | - | -------- |  |  | --- |  | - | ---- | -
|                                          |                      |        |  |          |  |                   |  |                   |   |            
|                                          |                      |        |  |          |  |                   |  |                   |   | To Be Well-
|                                          |                      |        |  |          |  |                   |  | Capitalized Under
|                                          |                      |        |  |          |  | For Capital       |  | Prompt Corrective
|                                          |                      |        |  |          |  | Adequacy Purposes |  | Action Provisions
|                                          |                      | Actual |  |          |  |                   |  |                  
|                                          |                      | Amount |  | Ratio    |  | Amount            |  | Ratio             |   | Amount      |    |         |  | Ratio
|                                          |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |      
|As of December 31, 1999:                  |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |     
|                                         
|                                         
|                                         
|                                         
|Total capital (to risk-weighted assets):  |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |     
|                                         
|                                         
|                                         
|                                         
|                                          | Second Bancorp       |        |  | $133,150 |  |                   |  | 12.8              | % |             | *$ | 82,958  |  |       | * | 8.0 | % |  |   |          |  |  | n/a |  |   |      |  
|                                         
|                                         
|                                         
|                                         
|                                          | Second National Bank |        |  | 130,460  |  |                   |  | 12.6              |   |             |    | *82,819 |  |       | * | 8.0 |   |  | * | $103,523 |  |  |     |  | * | 10.0 | %
|                                         
|                                         
|                                         
|                                         
|Tier I capital (to risk-weighted assets): |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |     
|                                         
|                                         
|                                         
|                                         
|                                          | Second Bancorp       |        |  | 121,981  |  |                   |  | 11.8              |   |             |    | *41,479 |  |       | * | 4.0 |   |  |   |          |  |  | n/a |  |   |      |  
|                                         
|                                         
|                                         
|                                         
|                                          | Second National Bank |        |  | 113,211  |  |                   |  | 10.9              |   |             |    | *41,409 |  |       | * | 4.0 |   |  | * | 62,114   |  |  |     |  | * | 6.0  |  
|                                         
|                                         
|                                         
|                                         
|Tier I leverage:                          |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |     
|                                         
|                                         
|                                         
|                                         
|                                          | Second Bancorp       |        |  | 121,981  |  |                   |  | 8.2               |   |             |    | *59,872 |  |       | * | 4.0 |   |  |   |          |  |  | n/a |  |   |      |  
|                                         
|                                         
|                                         
|                                         
|                                          | Second National Bank |        |  | 113,211  |  |                   |  | 7.6               |   |             |    | *59,760 |  |       | * | 4.0 |   |  | * | 74,700   |  |  |     |  | * | 5.0  |  
|                                         
|                                         
|                                         
|                                         
|As of December 31, 1998:                  |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |     
|                                         
|                                         
|                                         
|                                         
|Total capital (to risk-weighted assets):  |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |     
|                                         
|                                         
|                                         
|                                         
|                                          | Second Bancorp       |        |  | 127,967  |  |                   |  | 13.5              |   |             |    | *75,573 |  |       | * | 8.0 |   |  |   |          |  |  | n/a |  |   |      |  
|                                         
|                                         
|                                         
|                                         
|                                          | Second National Bank |        |  | 120,914  |  |                   |  | 12.8              |   |             |    | *75,421 |  |       | * | 8.0 |   |  | * | 94,276   |  |  |     |  | * | 10.0 |  
|                                         
|                                         
|                                         
|                                         
|Tier I capital (to risk-weighted assets): |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |     
|                                         
|                                         
|                                         
|                                         
|                                          | Second Bancorp       |        |  | 117,228  |  |                   |  | 12.4              |   |             |    | *37,787 |  |       | * | 4.0 |   |  |   |          |  |  | n/a |  |   |      |  
|                                         
|                                         
|                                         
|                                         
|                                          | Second National Bank |        |  | 102,295  |  |                   |  | 10.9              |   |             |    | *37,710 |  |       | * | 4.0 |   |  | * | 56,565   |  |  |     |  | * | 6.0  |  
|                                         
|                                         
|                                         
|                                         
|Tier I leverage:                          |                      |        |  |          |  |                   |  |                   |   |             |    |         |  |       |   |     |   |  |   |          |  |  |     |  |   |     
|                                         
|                                         
|                                         
|                                         
|                                          | Second Bancorp       |        |  | 117,228  |  |                   |  | 8.2               |   |             |    | *57,091 |  |       | * | 4.0 |   |  |   |          |  |  | n/a |  |   |      |  
|                                         
|                                         
|                                         
|                                         
|                                          | Second National Bank |        |  | 102,295  |  |                   |  | 7.0               |   |             |    | *58,263 |  |       | * | 4.0 |   |  | * | 72,829   |  |  |     |  | * | 5.0  |  

*  Greater than or equal to symbol.

40



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

14.  Earnings Per Share

The following table sets forth the computation of basic and
diluted earnings per share:

|                                                    |                                                                     |                                                                                |      |            |            |      |     |            |            |   |      |            |            | 
|--------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ---- | ---------- | ---------- | ---- | --- | ---------- | ---------- | - | ---- | ---------- | ---------- | 
|                                                    |                                                                     | 1999                                                                           |      | 1998       |            | 1997
|                                                    |                                                                     |                                                                                |      |            |            |     
|Numerator for basic and diluted earnings per share: |                                                                     |                                                                                |      |            |            |      |     |            |            |   |      |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Net income                                                          |                                                                                | $    | 16,178     |            |      | $   | 5,633      |            |   | $    | 13,236     |           
|                                                    |                                                                     |                                                                                |      |            |            |      |     |            |            |   |      |           
|Denominator:                                        |                                                                     |                                                                                |      |            |            |      |     |            |            |   |      |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Denominator for basic earnings per share 
	weighted-average shares |                                                                                |      | 10,635,852 |            |      |     | 10,665,597 |            |   |      | 10,555,921 |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Effect of dilutive securities:                                      |                                                                                |      |            |            |      |     |            |            |   |      |            |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                     | Employee stock options                                                         |      |            | 62,865     |      |     |            | 77,025     |   |      |            | 60,831     | 
|                                                    |                                                                     |                                                                                |      |            |            |      |     |            |            |   |      |           
|                                                    |                                                                     | Denominator for diluted earnings per share  adjusted
	weighted-average shares |      |            | 10,698,717 |      |     |            | 10,742,622 |   |      |            | 10,616,752 | 
|                                                    |                                                                     |                                                                                |      |            |            |      |     |            |            |   |      |           
|Basic earnings per share                            |                                                                     | $                                                                              | 1.52 |            |            | $    | .53 |            |            | $ | 1.25 |           
|                                                    |                                                                     |                                                                                |      |            |            |      |     |            |            |   |      |           
|Diluted earnings per share                          |                                                                     | $                                                                              | 1.51 |            |            | $    | .52 |            |            | $ | 1.25 |           
|                                                    |                                                                     |                                                                                |      |            |            |      |     |            |            |   |      |           

15.  Federal Income Taxes

The Corporations federal income tax provision in the
accompanying statements of income differs from the statutory rate
 as follows:

|                                   |  |      |        |      |  |      |        |   |  |   |        |  
|---------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                   |  | 1999 |        | 1998 |  | 1997
|                                   |  |      |        |      |  |     
|Statutory rate                     |  |      | 35     | %    |  |      | 34     | % |  |   | 34     | %
|                                  
|                                  
|                                  
|                                  
|Income before federal income taxes |  | $    | 21,539 |      |  | $    | 7,036  |   |  | $ | 16,981 |  
|                                  
|                                  
|                                  
|                                  
|Tax at statutory rate              |  | $    | 7,539  |      |  | $    | 2,392  |   |  | $ | 5,774  |  
|                                  
|                                  
|                                  
|                                  
|Tax effect of non-taxable interest |  |      | (1,558 | )    |  |      | (1,388 | ) |  |   | (1,187 | )
|                                  
|                                  
|                                  
|                                  
|Merger costs                       |  |      | 0      |      |  |      | 603    |   |  |   | 0      |  
|                                  
|                                  
|                                  
|                                  
|Other items, net                   |  |      | (620   | )    |  |      | (204   | ) |  |   | 142    |  
|                                   |  |      |        |      |  |      |        |   |  |   |        |  
|                                   |  | $    | 5,361  |      |  | $    | 1,403  |   |  | $ | 3,745  |  
|                                   |  |      |        |      |  |      |        |   |  |   |        |  

41



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Significant components of the Corporations deferred tax
liabilities and assets as of December 31 are as follows:

|                          |                                      |                                |       |       |       |   |       |       |       | 
|------------------------- | ------------------------------------ | ------------------------------ | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                          |                                      | 1999                           |       | 1998 
|                          |                                      |                                |       |      
|Deferred tax liabilities: |                                      |                                |       |       |       |   |       |      
|                         
|                         
|                         
|                         
|                          | SFAS No. 115 adjustment              |                                | $     | n/a   |       |   | $     | 1,576 |      
|                         
|                         
|                         
|                         
|                          | FHLB dividends                       |                                |       | 1,540 |       |   |       | 1,198 |      
|                         
|                         
|                         
|                         
|                          | Other                                |                                |       | 1,420 |       |   |       | 1,168 |      
|                          |                                      |                                |       |       |       |   |       |      
|                          |                                      | Total deferred tax liabilities |       |       | 2,960 |   |       |       | 3,942 | 
|                         
|                         
|                         
|                         
|Deferred tax assets:      |                                      |                                |       |       |       |   |       |      
|                         
|                         
|                         
|                         
|                          | SFAS No. 115 adjustment              |                                |       | 4,195 |       |   |       | n/a   |      
|                         
|                         
|                         
|                         
|                          | Provision for loan losses            |                                |       | 3,578 |       |   |       | 3,222 |      
|                         
|                         
|                         
|                         
|                          | Goodwill and intangible amortization |                                |       | 745   |       |   |       | 711   |      
|                         
|                         
|                         
|                         
|                          | Non-accrual interest                 |                                |       | 82    |       |   |       | 528   |      
|                         
|                         
|                         
|                         
|                          | Other                                |                                |       | 1,285 |       |   |       | 1,458 |      
|                          |                                      |                                |       |       |       |   |       |      
|                          |                                      | Total deferred tax assets      |       |       | 9,885 |   |       |       | 5,919 | 
|                          |                                      |                                |       |       |       |   |       |      
|Net deferred tax assets   |                                      | $                              | 6,925 |       |       | $ | 1,977 |      
|                          |                                      |                                |       |       |       |   |       |      

16.  Employee Benefit Plans

The Corporation has a non-contributory, defined-benefit pension
plan covering substantially all of its employees. The benefits
are based on a percentage of the employees average annual
earnings multiplied by completed years of continuous service. The
 Corporations funding policy is to contribute annually an
amount between the minimum required and the maximum amount that
can be deducted for federal income tax purposes. 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.

The plan assets at December 31, 1999 are invested primarily
in common stock, preferred stock, and corporate bonds. The Bank
also has a supplemental retirement deferred benefit plan for
certain employees, which provides benefits in excess of the
defined benefit plan.

42



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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The following table sets forth the plans pension benefits
as of December 31:

|                                                |                                                |      |        |            |   |   |        |            |  
|----------------------------------------------- | ---------------------------------------------- | ---- | ------ | ---------- | - | - | ------ | ---------- | -
|                                                |                                                | 1999 |        | 1998      
|                                                |                                                |      |        |           
|Change in benefit obligation:                   |                                                |      |        |            |   |   |        |           
|                                               
|                                               
|                                               
|                                               
|                                                | Benefit obligation at beginning of year        |      | $      | 7,672      |   |   | $      | 6,024      |  
|                                               
|                                               
|                                               
|                                               
|                                                | Service cost                                   |      |        | 798        |   |   |        | 571        |  
|                                               
|                                               
|                                               
|                                               
|                                                | Interest cost                                  |      |        | 541        |   |   |        | 447        |  
|                                               
|                                               
|                                               
|                                               
|                                                | Actuarial (gain) loss                          |      |        | (1,197     | ) |   |        | 725        |  
|                                               
|                                               
|                                               
|                                               
|                                                | Disbursements                                  |      |        | (341       | ) |   |        | (95        | )
|                                                |                                                |      |        |            |   |   |        |           
|Benefit obligation at end of year               |                                                | $    | 7,473  |            |   | $ | 7,672  |           
|                                                |                                                |      |        |            |   |   |        |           
|Change in plan assets:                          |                                                |      |        |            |   |   |        |           
|                                               
|                                               
|                                               
|                                               
|                                                | Fair value of plan assets at beginning of year |      | $      | 8,707      |   |   | $      | 6,979      |  
|                                               
|                                               
|                                               
|                                               
|                                                | Actual return on plan assets                   |      |        | 1,931      |   |   |        | 1,823      |  
|                                               
|                                               
|                                               
|                                               
|                                                | Employer contribution                          |      |        | 64         |   |   |        | 0          |  
|                                               
|                                               
|                                               
|                                               
|                                                | Disbursements                                  |      |        | (341       | ) |   |        | (95        | )
|                                                |                                                |      |        |            |   |   |        |           
|Fair value of plan assets at end of year        |                                                | $    | 10,361 |            |   | $ | 8,707  |           
|                                                |                                                |      |        |            |   |   |        |           
|Funded status                                   |                                                | $    | 2,888  |            |   | $ | 1,035  |           
|                                               
|                                               
|                                               
|                                               
|Unrecognized net actuarial gain                 |                                                |      | (4,541 | )          |   |   | (2,092 | )         
|                                               
|                                               
|                                               
|                                               
|Unrecognized prior service cost                 |                                                |      | 12     |            |   |   | 18     |           
|                                               
|                                               
|                                               
|                                               
|Unrecognized initial net obligation             |                                                |      | (70    | )          |   |   | (92    | )         
|                                                |                                                |      |        |            |   |   |        |           
|Net amount recognized                           |                                                | $    | (1,711 | )          |   | $ | (1,131 | )         
|                                                |                                                |      |        |            |   |   |        |           
|Accrued benefit liability recognized            |                                                | $    | (1,711 | )          |   | $ | (1,131 | )         
|                                                |                                                |      |        |            |   |   |        |           
|Weighted-average assumptions as of December 31: |                                                |      |        |            |   |   |        |           
|                                               
|                                               
|                                               
|                                               
|                                                | Discount rate                                  |      |        | 8.00       | % |   |        | 6.88       | %
|                                               
|                                               
|                                               
|                                               
|                                                | Expected return on plan assets                 |      |        | 9.75       | % |   |        | 9.75       | %
|                                               
|                                               
|                                               
|                                               
|                                                | Rate of compensation increase (1)              |      |        | Age-graded |   |   |        | Age-graded |  
|                                               
|                                               
|                                               
|                                               
|Components of net periodic benefit cost:        |                                                |      |        |            |   |   |        |           

|                                     |  |      |      |      |  |      |      |   |  |   |      |  
|------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                     |  | 1999 |      | 1998 |  | 1997
|                                     |  |      |      |      |  |     
|Service cost                         |  | $    | 798  |      |  | $    | 571  |   |  | $ | 524  |  
|                                    
|                                    
|                                    
|                                    
|Interest cost                        |  |      | 541  |      |  |      | 447  |   |  |   | 368  |  
|                                    
|                                    
|                                    
|                                    
|Expected return on plan assets       |  |      | (685 | )    |  |      | (594 | ) |  |   | (531 | )
|                                    
|                                    
|                                    
|                                    
|Amortization of prior service cost   |  |      | 6    |      |  |      | 6    |   |  |   | 11   |  
|                                    
|                                    
|                                    
|                                    
|Amortization of initial net asset    |  |      | (22  | )    |  |      | (22  | ) |  |   | (20  | )
|                                    
|                                    
|                                    
|                                    
|Recognized net actuarial loss (gain) |  |      | 6    |      |  |      | (4   | ) |  |   | (18  | )
|                                     |  |      |      |      |  |      |      |   |  |   |      |  
|Net periodic pension expense         |  | $    | 644  |      |  | $    | 404  |   |  | $ | 334  |  
|                                     |  |      |      |      |  |      |      |   |  |   |      |  



| | 
| | 
| | 



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | A 5% rate of compensation increase was assumed for the
	supplemental retirement deferred benefit plan. The projected
	benefit obligation, accumulated benefit obligation, and fair
	value of plan assets for the nonqualified pension plan with
	accumulated benefit obligations in excess of plan assets were
	$785, $785, and $0, respectively, as of December 31, 1999,
	and $737, $737, and $0, respectively as of December 31,
	1998.

Prior to its acquisition, Trumbull had a noncontributory defined
benefit retirement plan covering substantially all of its
employees. The plan was a multi-employer plan and separate
actuarial valuations were not made with respect to each employer,
 nor were plan assets so segregated. The multi-employer plan
still covers the

43



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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

benefit obligation for the former Trumbull employees who are now
employed by the Corporation. Amounts contributed to the plan were
 $0 and $71 in 1998 and 1997, respectively.

The Bank had a stock appreciation rights plan that was used to
grant certain officers stock appreciation rights upon their
employ. The Corporation has not issued any rights since 1987 and
all rights were fully exercised by the end of 1999. As of
December 31, 1998, the accumulated obligation for these
rights recorded in the financial statements was $168. The plan
expense for 1999, 1998 and 1997 was $7, $56, and $190,
respectively.

The Bank also sponsors a defined contribution benefit plan
covering substantially all eligible employees of the Bank. The
Bank voluntarily contributes 75% of the participants
contribution to a maximum of 4.5% of the participants
compensation. Participants, at their discretion, may invest in
several investment funds or a stock fund consisting solely of the
 Corporations common stock. The Banks contribution is
 limited solely to the stock fund. Contributions in 1999, 1998,
and 1997 were $416, $410, and $395, respectively. The Board of
Directors of the Corporation has authorized the issuance of
99,000 shares of the Corporations common stock for use in
the Banks defined contribution benefit plan. As of
December 31, 1999, none of the shares authorized has been
issued.

17.  Stock Options

The Corporation maintains incentive and non-qualified stock
option plans that allow for stock based awards to eligible
employees and directors. Through February 1998, the
Corporation issued incentive stock options that were exercisable
in one year after issuance and expire after 10 years. The
maximum annual grant was 7,500 shares per employee. The plan was
terminated in May 1998 when the non-qualified stock option plan
was approved. The non-qualified plan authorizes 650,000 shares of
 common stock to be reserved and subject to issuance. The maximum
 annual grant is 10,000 shares per employee and 1,000 shares per
director. The options are also exercisable one year after
issuance and expire after ten years.

Pro forma information regarding net income and earnings per share
 is required by SFAS No. 123, Accounting for
Stock-Based Compensation and has been determined as if the
Corporation had accounted for its employee stock options under
the fair-value method of that Statement. Under the fair-value
based method, compensation cost is measured at the grant date
based upon the value of the award and recognized over the service
 period. The Corporation has elected, as the standard allows, to
continue to measure compensation costs for its plans as
prescribed in Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees
 because the alternative fair value accounting provided under
SFAS No. 123 requires use of option valuation models that
were not developed for use in valuing employee stock options.
Under APB No. 25, because the exercise price of the
Corporations employee stock options equals the market price
 of the underlying stock on the date of grant, no compensation
expense is recognized. Pro forma disclosure of net income and
earnings per share is made in the accompanying footnotes as if
the fair-value method of accounting, as defined by SFAS
No. 123, had been adopted.

The fair value for these options was estimated at the date of
grant using a Black-Scholes option pricing model with the
following weighted-average assumptions:

|                                                                          |  |      |         |      |  |      |         |   |  |  |         |  
|------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                                          |  | 1999 |         | 1998 |  | 1997
|                                                                          |  |      |         |      |  |     
|Risk-free interest rate                                                   |  |      | 6.5     | %    |  |      | 4.6     | % |  |  | 5.5     | %
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Dividend yield                                                            |  |      | 3.0     | %    |  |      | 3.0     | % |  |  | 3.0     | %
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Volatility factor of expected market price of Corporations
	common stock |  |      | .274    |      |  |      | .214    |   |  |  | .161    |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Weighted-average expected life                                            |  |      | 6 years |      |  |      | 6 years |   |  |  | 6 years |  

The Black-Scholes option valuation model was developed for use in
 estimating the fair value of traded options which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require

44



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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

the input of highly subjective assumptions including the expected
 stock price volatility. Because the Corporations employee
stock options have characteristics significantly different from
those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate,
in Managements opinion, the existing models do not
necessarily provide a reliable single measure of the fair value
of its employee stock options.

For purposes of the pro forma disclosures, the estimated fair
value of the options is amortized to expense over the
options vesting period. The Corporations pro forma
information follows:

|                              |         |      |        |      |  |      |       |     |  |   |        |      | 
|----------------------------- | ------- | ---- | ------ | ---- |  | ---- | ----- | --- |  | - | ------ | ---- | 
|                              |         | 1999 |        | 1998 |  | 1997
|                              |         |      |        |      |  |     
|Pro forma net income          |         | $    | 15,583 |      |  | $    | 5,447 |     |  | $ | 13,112 |     
|                             
|                             
|                             
|                             
|Pro forma earnings per share: |         |      |        |      |  |      |       |     |  |   |        |     
|                             
|                             
|                             
|                             
|                              | Basic   |      | $      | 1.47 |  |      | $     | .51 |  |   | $      | 1.24 | 
|                             
|                             
|                             
|                             
|                              | Diluted |      | $      | 1.46 |  |      | $     | .51 |  |   | $      | 1.24 | 

Due to the inclusion of only the 1996 and subsequent option
grants, the effects of applying FSAS No. 123 to the years
presented above may not be representative of the pro forma impact
 in future years.

A summary of stock option activity is as follows:

|                                 |           |                  |         |                        |   |       |               |               |  |   |       |       |  
|-------------------------------- | --------- | ---------------- | ------- | ---------------------- | - | ----- | ------------- | ------------- |  | - | ----- | ----- | -
|                                 |           | Number of Shares |         | Option Price Per Share |   | Total
|                                 |           |                  |         |                        |   |      
|Outstanding at December 31, 1996 |           |                  | 206,800 |                        |   | $     | 4.33 - $13.44 |               |  | $ | 2,241 |      
|                                
|                                
|                                
|                                
|                                 | Granted   |                  |         | 62,000                 |   |       |               | 22.13 - 24.19 |  |   |       | 1,380 |  
|                                
|                                
|                                
|                                
|                                 | Exercised |                  |         | (75,400                | ) |       |               | 4.33 - 13.44  |  |   |       | (716  | )
|                                 |           |                  |         |                        |   |       |               |               |  |   |       |      
|Outstanding at December 31, 1997 |           |                  | 193,400 |                        |   |       | 7.33 - 24.19  |               |  |   | 2,905 |      
|                                
|                                
|                                
|                                
|                                 | Granted   |                  |         | 114,200                |   |       |               | 23.88 - 25.44 |  |   |       | 2,860 |  
|                                
|                                
|                                
|                                
|                                 | Exercised |                  |         | (31,150                | ) |       |               | 10.56 - 13.44 |  |   |       | (377  | )
|                                 |           |                  |         |                        |   |       |               |               |  |   |       |      
|Outstanding at December 31, 1998 |           |                  | 276,450 |                        |   |       | 7.33 - 25.44  |               |  |   | 5,388 |      
|                                
|                                
|                                
|                                
|                                 | Granted   |                  |         | 108,400                |   |       |               | 22.72 - 24.22 |  |   |       | 2,478 |  
|                                
|                                
|                                
|                                
|                                 | Exercised |                  |         | (24,100                | ) |       |               | 9.21 - 22.13  |  |   |       | (273  | )
|                                 |           |                  |         |                        |   |       |               |               |  |   |       |      
|Outstanding at December 31, 1999 |           |                  | 360,750 |                        |   | $     | 7.33 - $25.44 |               |  | $ | 7,593 |      
|                                 |           |                  |         |                        |   |       |               |               |  |   |       |      
|Exercisable at December 31, 1999 |           |                  | 252,350 |                        |   | $     | 7.33 - $25.44 |               |  | $ | 5,115 |      

The weighted-average fair value of the options granted during
1999, 1998 and 1997 were $7.03, $5.41 and $4.05, respectively.
The weighted-average remaining contractual life of the
outstanding options is 8.0 years.

45



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

18.  Parent Company

Condensed financial information of Second Bancorp Incorporated
(Parent Company only) is as follows:

Condensed Balance Sheets

|                                      |                                                                                               |                                                                                                                  |                                            |         |        |         |   |         |        |         | 
|------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------ | ------- | - | ------- | ------ | ------- | 
|                                      |                                                                                               |                                                                                                                 
|                                      |                                                                                               | December 31                                                                                                     
|                                      |                                                                                               |                                                                                                                 
|                                      |                                                                                               | 1999                                                                                                             |                                            | 1998   
|                                      |                                                                                               |                                                                                                                  |                                            |        
|Assets:                               |                                                                                               |                                                                                                                  |                                            |         |        |         |   |        
|                                     
|                                     
|                                     
|                                     
|                                      | Cash                                                                                          |                                                                                                                  | $                                          | 134     |        |         | $ | 3,685   |       
|                                     
|                                     
|                                     
|                                     
|                                      | Available-for-sale securities                                                                 |                                                                                                                  |                                            | 1,229   |        |         |   | 1,708   |       
|                                     
|                                     
|                                     
|                                     
|                                      | Loans                                                                                         |                                                                                                                  |                                            | 638     |        |         |   | 661     |       
|                                     
|                                     
|                                     
|                                     
|                                      | Investment in and advances to subsidiary, at equity in underlying
	 value of their net assets |                                                                                                                  |                                            | 118,585 |        |         |   | 119,154 |       
|                                     
|                                     
|                                     
|                                     
|                                      | Fixed assets                                                                                  |                                                                                                                  |                                            | 17      |        |         |   | 74      |       
|                                     
|                                     
|                                     
|                                     
|                                      | Other assets                                                                                  |                                                                                                                  |                                            | 1,597   |        |         |   | 3,195   |       
|                                      |                                                                                               |                                                                                                                  |                                            |         |        |         |   |        
|                                      |                                                                                               |                                                                                                                  | Total assets                               |         | $      | 122,200 |   |         | $      | 128,477 | 
|                                      |                                                                                               |                                                                                                                  |                                            |         |        |         |   |        
|Liabilities and Shareholders Equity: |                                                                                               |                                                                                                                  |                                            |         |        |         |   |        
|                                     
|                                     
|                                     
|                                     
|                                      | Accrued and other liabilities                                                                 |                                                                                                                  | $                                          | 1,853   |        |         | $ | 5,204   |       
|                                     
|                                     
|                                     
|                                     
|                                      | Note payable                                                                                  |                                                                                                                  |                                            | 4,000   |        |         |   | 0       |       
|                                     
|                                     
|                                     
|                                     
|                                      | Shareholders Equity:                                                                         |                                                                                                                  |                                            |         |        |         |   |         |       
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                               | Common stock, no par value; 30,000,000 shares authorized;
	10,762,950 and 10,738,850 shares issued, respectively |                                            |         | 36,966 |         |   |         | 36,901 |        
|                                     
|                                     
|                                     
|                                     
|                                      | Treasury stock, 304,500 and 50,400 shares, respectively                                       |                                                                                                                  |                                            | (7,140  | )      |         |   | (793    | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Net unrealized holding (losses) gains on available-for-sale
	securities                       |                                                                                                                  |                                            | (7,791  | )      |         |   | 3,097   |       
|                                     
|                                     
|                                     
|                                     
|                                      | Retained earnings                                                                             |                                                                                                                  |                                            | 94,312  |        |         |   | 84,068  |       
|                                      |                                                                                               |                                                                                                                  |                                            |         |        |         |   |        
|                                      |                                                                                               |                                                                                                                  | Total Liabilities and Shareholders Equity |         | $      | 122,200 |   |         | $      | 128,477 | 
|                                      |                                                                                               |                                                                                                                  |                                            |         |        |         |   |        

46



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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Condensed Statements of Income

|                                                                               |                                |                         |                |       |        |       |       |       |       |       |       |       |        |       | 
|------------------------------------------------------------------------------ | ------------------------------ | ----------------------- | -------------- | ----- | ------ | ----- | ----- | ----- | ----- | ----- | ----- | ----- | ------ | ----- | 
|                                                                               |                                |                        
|                                                                               |                                | Years ended December 31
|                                                                               |                                |                        
|                                                                               |                                | 1999                    |                | 1998  |        | 1997 
|                                                                               |                                |                         |                |       |        |      
|Income:                                                                        |                                |                         |                |       |        |       |       |       |       |       |       |      
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Cash dividends from subsidiary |                         | $              | 6,345 |        |       | $     | 8,767 |       |       | $     | 7,722 |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Interest income                |                         |                | 939   |        |       |       | 1,000 |       |       |       | 865   |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Gains on sale of securities    |                         |                | 101   |        |       |       | 41    |       |       |       | 352   |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Other income                   |                         |                | 0     |        |       |       | 32    |       |       |       | 26    |       
|                                                                               |                                |                         |                |       |        |       |       |       |       |       |       |      
|                                                                               |                                |                         | Total income   |       |        | 7,385 |       |       |       | 9,840 |       |       |        | 8,965 | 
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Expenses:                                                                      |                                |                         |                |       |        |       |       |       |       |       |       |      
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Interest expense               |                         |                | 64    |        |       |       | 0     |       |       |       | 276   |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Merger costs                   |                         |                | 0     |        |       |       | 6,657 |       |       |       | 0     |       
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Other expenses                 |                         |                | 1,468 |        |       |       | 1,162 |       |       |       | 1,700 |       
|                                                                               |                                |                         |                |       |        |       |       |       |       |       |       |      
|                                                                               |                                |                         | Total expenses |       |        | 1,532 |       |       |       | 7,819 |       |       |        | 1,976 | 
|                                                                               |                                |                         |                |       |        |       |       |       |       |       |       |      
|Income before income taxes and equity in undistributed earnings
	of subsidiary |                                |                         | 5,853          |       |        |       | 2,021 |       |       |       | 6,989 |      
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Income tax benefit                                                             |                                |                         | 252            |       |        |       | 1,777 |       |       |       | 429   |      
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Income before and equity in undistributed earnings of subsidiary               |                                |                         | 6,105          |       |        |       | 3,798 |       |       |       | 7,418 |      
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Equity in undistributed earnings of subsidiary                                 |                                |                         | 10,073         |       |        |       | 1,835 |       |       |       | 5,818 |      
|                                                                               |                                |                         |                |       |        |       |       |       |       |       |       |      
|                                                                               |                                | Net income              |                | $     | 16,178 |       |       | $     | 5,633 |       |       | $     | 13,236 |      
|                                                                               |                                |                         |                |       |        |       |       |       |       |       |       |      

47



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SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Condensed Statements of Cash Flows

|                                                |                                                        |                         |        |         |   |      |        |        |   |   |        |        |  
|----------------------------------------------- | ------------------------------------------------------ | ----------------------- | ------ | ------- | - | ---- | ------ | ------ | - | - | ------ | ------ | -
|                                                |                                                        |                        
|                                                |                                                        | Years ended December 31
|                                                |                                                        |                        
|                                                |                                                        | 1999                    |        | 1998    |   | 1997
|                                                |                                                        |                         |        |         |   |     
|Operating Activities:                           |                                                        |                         |        |         |   |      |        |        |   |   |        |       
|                                               
|                                               
|                                               
|                                               
|                                                | Net income                                             |                         | $      | 16,178  |   |      | $      | 5,633  |   |   | $      | 13,236 |  
|                                               
|                                               
|                                               
|                                               
|                                                | Less: Equity in undistributed net income of subsidiary |                         |        | (10,073 | ) |      |        | (1,835 | ) |   |        | (5,818 | )
|                                               
|                                               
|                                               
|                                               
|                                                | Provision for depreciation                             |                         |        | 30      |   |      |        | 31     |   |   |        | 29     |  
|                                               
|                                               
|                                               
|                                               
|                                                | Gain on sale of securities                             |                         |        | (101    | ) |      |        | (41    | ) |   |        | (352   | )
|                                               
|                                               
|                                               
|                                               
|                                                | Loss on disposal of fixed assets                       |                         |        | 2       |   |      |        | 0      |   |   |        | 0      |  
|                                               
|                                               
|                                               
|                                               
|                                                | Other (net)                                            |                         |        | (1,627  | ) |      |        | 1,444  |   |   |        | 300    |  
|                                                |                                                        |                         |        |         |   |      |        |        |   |   |        |       
|Cash provided by operations                     |                                                        |                         | 4,409  |         |   |      | 5,232  |        |   |   | 7,395  |       
|                                               
|                                               
|                                               
|                                               
|Investing Activities:                           |                                                        |                         |        |         |   |      |        |        |   |   |        |       
|                                               
|                                               
|                                               
|                                               
|                                                | Increase in loan to subsidiary                         |                         |        | 0       |   |      |        | 0      |   |   |        | (2,000 | )
|                                               
|                                               
|                                               
|                                               
|                                                | Net decrease in loans                                  |                         |        | 23      |   |      |        | 22     |   |   |        | 20     |  
|                                               
|                                               
|                                               
|                                               
|                                                | Sale of securities                                     |                         |        | 251     |   |      |        | 0      |   |   |        | 0      |  
|                                               
|                                               
|                                               
|                                               
|                                                | Purchase of securities                                 |                         |        | (43     | ) |      |        | (191   | ) |   |        | (903   | )
|                                               
|                                               
|                                               
|                                               
|                                                | Donation of securities to charitable foundation        |                         |        | 0       |   |      |        | 202    |   |   |        | 824    |  
|                                               
|                                               
|                                               
|                                               
|                                                | Sale of premises and equipment                         |                         |        | 25      |   |      |        | 0      |   |   |        | 0      |  
|                                               
|                                               
|                                               
|                                               
|Purchase of premises and equipment              |                                                        |                         | 0      |         |   |      | (63    | )      |   |   | (8     | )     
|                                                |                                                        |                         |        |         |   |      |        |        |   |   |        |       
|Cash provided by (used by) investing activities |                                                        |                         | 256    |         |   |      | (30    | )      |   |   | (2,067 | )     
|                                               
|                                               
|                                               
|                                               
|Financing Activities:                           |                                                        |                         |        |         |   |      |        |        |   |   |        |       
|                                               
|                                               
|                                               
|                                               
|                                                | Issuance of note payable                               |                         |        | 4,000   |   |      |        | 0      |   |   |        | 65     |  
|                                               
|                                               
|                                               
|                                               
|                                                | Repayment of note payable                              |                         |        | 0       |   |      |        | (65    | ) |   |        | (5,000 | )
|                                               
|                                               
|                                               
|                                               
|                                                | Redemption and conversion of preferred stock           |                         |        | 0       |   |      |        | 0      |   |   |        | (2     | )
|                                               
|                                               
|                                               
|                                               
|                                                | Issuance of common stock                               |                         |        | 65      |   |      |        | 1,547  |   |   |        | 1,900  |  
|                                               
|                                               
|                                               
|                                               
|                                                | Purchase of treasury stock                             |                         |        | (6,347  | ) |      |        | 0      |   |   |        | (474   | )
|                                               
|                                               
|                                               
|                                               
|                                                | Payment of dividend                                    |                         |        | (5,934  | ) |      |        | (5,155 | ) |   |        | (3,248 | )
|                                                |                                                        |                         |        |         |   |      |        |        |   |   |        |       
|Cash used by financing activities               |                                                        |                         | (8,216 | )       |   |      | (3,673 | )      |   |   | (6,759 | )     
|                                               
|                                               
|                                               
|                                               
|(Decrease) increase in cash                     |                                                        |                         | (3,551 | )       |   |      | 1,529  |        |   |   | (1,431 | )     
|                                               
|                                               
|                                               
|                                               
|Cash at beginning of year                       |                                                        |                         | 3,685  |         |   |      | 2,156  |        |   |   | 3,611  |       
|                                                |                                                        |                         |        |         |   |      |        |        |   |   |        |       
|Cash at end of year                             |                                                        | $                       | 134    |         |   | $    | 3,685  |        |   | $ | 2,180  |       
|                                                |                                                        |                         |        |         |   |      |        |        |   |   |        |       

Conforming adjustments for the pooled company for the fiscal
quarter ending December 31, 1997 included $244, $0 and
$(268) for operating, investing and financing activities,
respectively.

19.  Off-Balance Sheet Instruments

The Corporation utilizes off-balance sheet financial instruments,
 frequently called interest rate derivatives, to efficiently
manage its exposure to interest rate risk. As with any financial
instrument, derivatives have inherent risks. Market risk includes
 the risk of gains and losses that result from changes in
interest rates. These gains and losses may be offset by other on-
 or off-balance sheet transactions. Credit risk is the risk that
the counter-party fails to perform according to the terms of the
contract. Credit risk can be measured as the cost of acquiring a
new derivative contract with identical cash flows as those of the
 defaulted agreement.

The Corporation uses interest rate cap contracts to help protect
its net interest margin in periods of extremely high interest
rates. As of December 31, 1999, the Corporations
interest rate cap contracts utilized for interest rate risk
management purposes had a notional amount of $30,900, unrealized
gain of $262, an average strike rate of 6.0% and an average life
of 2.3 years. As of December 31, 1998, the
Corporations interest rate cap contracts had

48



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

a notional amount of $30,900, unrealized loss of $228, an average
 strike rate of 6.0% and an average life of 3.3 years.

20. COMMITMENTS AND CONTINGENT LIABILITIES

Loan Commitments:

Loan commitments are made to accommodate the financial needs of
the Banks customers; however, there are no long-term,
fixed-rate loan commitments that result in market risk. Standby
letters of credit commit the Bank to make payments on behalf of
customers when certain specified future events occur. They
primarily are issued to facilitate customers trade
transactions.

Both arrangements have credit risk essentially the same as that
involved in extending loans to customers and are subject to the
Banks normal credit policies. Collateral (e.g., securities,
 receivables, inventory, and equipment) is obtained based on
Managements credit assessment of the customer.

The Banks maximum obligation to extend credit for loan
commitments (unfunded loans and unused lines of credit) and
standby letters of credit outstanding on December 31 was as
follows:

|                          |  |      |         |      |  |   |         | 
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                          |  | 1999 |         | 1998
|                          |  |      |         |     
|Commercial                |  | $    | 89,808  |      |  | $ | 111,897 | 
|                         
|                         
|                         
|                         
|Real Estate               |  |      | 26,292  |      |  |   | 9,054   | 
|                         
|                         
|                         
|                         
|Consumer                  |  |      | 35,562  |      |  |   | 32,563  | 
|                         
|                         
|                         
|                         
|Standby Letters of Credit |  |      | 4,504   |      |  |   | 4,428   | 
|                          |  |      |         |      |  |   |         | 
|                          |  | $    | 156,166 |      |  | $ | 157,942 | 
|                          |  |      |         |      |  |   |         | 

Lease Agreements:

The Bank has entered into lease agreements covering its main
office, several branch locations, and equipment for various
periods through 2013, with options to renew. Also, the Bank has
the option to purchase the main office facility before two
optional renewal periods at the fair market value in existence at
 that time.

Future minimum commitments under non-cancelable operating leases
and future estimated commitments are as follows:

|           |  |   |       | 
|---------- |  | - | ----- | 
|          
|          
|          
|          
|2000       |  | $ | 2,089 | 
|          
|          
|          
|          
|2001       |  |   | 1,967 | 
|          
|          
|          
|          
|2002       |  |   | 1,893 | 
|          
|          
|          
|          
|2003       |  |   | 1,731 | 
|          
|          
|          
|          
|2004       |  |   | 1,547 | 
|          
|          
|          
|          
|Thereafter |  |   | 7,490 | 

Rentals under operating leases and data processing costs amounted
 to $2,893, $3,501, and $2,762 in 1999, 1998, and 1997,
respectively.

Low Income Housing Project:In 1993, the Bank began
investing in low-income housing tax credit projects designed to
provide affordable housing for Ohio communities. The Bank has
invested $1,197 to date and has begun to realize tax credits and
tax savings from the investments. The Bank is committed to invest
 another $1,303 to the fund over the next several years.

49



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

21.  Significant Concentration of Credit Risk

Most of the Banks business activity is with customers
located within the state of Ohio. As of December 31, 1999,
the Bank had a concentration in commercial real estate loans
totaling approximately $279,181, approximately 60.8% of which
were owner-occupied businesses, including medical office
buildings and retail and fast-food restaurants within the
Banks market area. Of the $279,181 of commercial real
estate loans, $2,120 or 0.76% were on non-accrual status as of
December 31, 1999.

50



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY

Report of Independent Auditors

To the Shareholders and Board of Directors of Second Bancorp
Incorporated:

We have audited the accompanying consolidated balance sheets of
Second Bancorp Incorporated and Subsidiary as of
December 31, 1999 and 1998, and the related consolidated
statements of income, shareholders equity, and cash flows
for each of the three years in the period ended December 31,
 1999. These financial statements are the responsibility of the
Corporations Management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Second Bancorp Incorporated and Subsidiary
at December 31, 1999 and 1998, and the consolidated results
of their operations and their cash flows for each of the three
years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted within the United
States.



| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP

Cleveland, Ohio



51



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##### Table of Contents



SECOND BANCORP, INC. AND SUBSIDIARY

Supplementary Data  Unaudited Quarterly Results of
Operations

December 31, 1999


The following is a summary of the quarterly results of operations
 for the years ended December 31, 1999 and 1998.

|                                   |         |                                               |        |         |  |          |        |         |  |   |        |      |  |   |        |       |  
|---------------------------------- | ------- | --------------------------------------------- | ------ | ------- |  | -------- | ------ | ------- |  | - | ------ | ---- |  | - | ------ | ----- | -
|                                   |         |                                              
|                                   |         | Three Months Ended                           
|                                   |         |                                              
|                                   |         | Mar. 31                                       |        | June 30 |  | Sept. 30 |        | Dec. 31
|                                   |         |                                               |        |         |  |          |        |        
|                                   |         |                                              
|                                   |         | (Dollars in thousands, except per share data)
|                                  
|                                  
|                                  
|                                  
|1999                               |         |                                               |        |         |  |          |        |         |  |   |        |      |  |   |        |      
|                                  
|                                  
|                                  
|                                  
|Interest income                    |         | $                                             | 25,512 |         |  | $        | 25,405 |         |  | $ | 26,414 |      |  | $ | 27,251 |      
|                                  
|                                  
|                                  
|                                  
|Interest expense                   |         |                                               | 12,997 |         |  |          | 13,282 |         |  |   | 14,066 |      |  |   | 14,965 |      
|                                  
|                                  
|                                  
|                                  
|Net interest income                |         |                                               | 12,515 |         |  |          | 12,123 |         |  |   | 12,348 |      |  |   | 12,286 |      
|                                  
|                                  
|                                  
|                                  
|Provision for loan losses          |         |                                               | 829    |         |  |          | 844    |         |  |   | 757    |      |  |   | 765    |      
|                                  
|                                  
|                                  
|                                  
|Other income                       |         |                                               | 3,214  |         |  |          | 3,962  |         |  |   | 3,890  |      |  |   | 3,414  |      
|                                  
|                                  
|                                  
|                                  
|Security gains                     |         |                                               | 111    |         |  |          | 64     |         |  |   | 55     |      |  |   | 82     |      
|                                  
|                                  
|                                  
|                                  
|Other expenses                     |         |                                               | 9,516  |         |  |          | 9,426  |         |  |   | 9,618  |      |  |   | 10,770 |      
|                                  
|                                  
|                                  
|                                  
|Income before federal income taxes |         |                                               | 5,495  |         |  |          | 5,879  |         |  |   | 5,918  |      |  |   | 4,247  |      
|                                  
|                                  
|                                  
|                                  
|Federal income taxes               |         |                                               | 1,380  |         |  |          | 1,541  |         |  |   | 1,506  |      |  |   | 934    |      
|                                  
|                                  
|                                  
|                                  
|Net income                         |         |                                               | 4,115  |         |  |          | 4,338  |         |  |   | 4,412  |      |  |   | 3,313  |      
|                                  
|                                  
|                                  
|                                  
|Earnings per common share:         |         |                                               |        |         |  |          |        |         |  |   |        |      |  |   |        |      
|                                  
|                                  
|                                  
|                                  
|                                   | Basic   |                                               | $      | 0.38    |  |          | $      | 0.41    |  |   | $      | 0.41 |  |   | $      | 0.32  |  
|                                  
|                                  
|                                  
|                                  
|                                   | Diluted |                                               | $      | 0.38    |  |          | $      | 0.40    |  |   | $      | 0.41 |  |   | $      | 0.32  |  
|                                  
|                                  
|                                  
|                                  
|1998                               |         |                                               |        |         |  |          |        |         |  |   |        |      |  |   |        |      
|                                  
|                                  
|                                  
|                                  
|Interest income                    |         | $                                             | 27,113 |         |  | $        | 27,166 |         |  | $ | 26,811 |      |  | $ | 25,907 |      
|                                  
|                                  
|                                  
|                                  
|Interest expense                   |         |                                               | 14,224 |         |  |          | 14,300 |         |  |   | 14,121 |      |  |   | 13,243 |      
|                                  
|                                  
|                                  
|                                  
|Net interest income                |         |                                               | 12,889 |         |  |          | 12,866 |         |  |   | 12,690 |      |  |   | 12,664 |      
|                                  
|                                  
|                                  
|                                  
|Provision for loan losses          |         |                                               | 859    |         |  |          | 881    |         |  |   | 1,951  |      |  |   | 6,888  |      
|                                  
|                                  
|                                  
|                                  
|Other income                       |         |                                               | 2,486  |         |  |          | 2,860  |         |  |   | 3,356  |      |  |   | 3,045  |      
|                                  
|                                  
|                                  
|                                  
|Security gains (losses)            |         |                                               | 128    |         |  |          | 35     |         |  |   | 850    |      |  |   | (6     | )    
|                                  
|                                  
|                                  
|                                  
|Other expenses                     |         |                                               | 9,646  |         |  |          | 10,178 |         |  |   | 10,915 |      |  |   | 15,509 |      
|                                  
|                                  
|                                  
|                                  
|Income before federal income taxes |         |                                               | 4,998  |         |  |          | 4,702  |         |  |   | 4,030  |      |  |   | (6,694 | )    
|                                  
|                                  
|                                  
|                                  
|Federal income taxes               |         |                                               | 1,333  |         |  |          | 1,317  |         |  |   | 1,195  |      |  |   | (2,442 | )    
|                                  
|                                  
|                                  
|                                  
|Net income (loss)                  |         |                                               | 3,665  |         |  |          | 3,385  |         |  |   | 2,835  |      |  |   | (4,252 | )    
|                                  
|                                  
|                                  
|                                  
|Earnings per common share:         |         |                                               |        |         |  |          |        |         |  |   |        |      |  |   |        |      
|                                  
|                                  
|                                  
|                                  
|                                   | Basic   |                                               | $      | 0.34    |  |          | $      | 0.32    |  |   | $      | 0.27 |  |   | $      | (0.40 | )
|                                  
|                                  
|                                  
|                                  
|                                   | Diluted |                                               | $      | 0.34    |  |          | $      | 0.32    |  |   | $      | 0.26 |  |   | $      | (0.40 | )

52



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##### Table of Contents






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

Not Applicable.




PART III




ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT.

In accordance with General Instruction G(3), the information
called for in this Item 10 is incorporated herein by
reference to Second Bancorps definitive proxy statement for
 the annual meeting of shareholders to be held May 9, 2000
(the Proxy Statement). Such Proxy Statement will be
filed with the Securities and Exchange Commission within
120 days of December 31, 1999. Information regarding
executive officers is included under item 4a hereof.




ITEM 11.  EXECUTIVE COMPENSATION.

In accordance with General Instruction G(3), the information
called for in this Item 11 is incorporated herein by
reference to Second Bancorps definitive proxy statement for
 the annual meeting of shareholders to be held May 9, 2000
(the Proxy Statement). Such Proxy Statement will be
filed with the Securities and Exchange Commission within
120 days of December 31, 1999. Information regarding
executive officers is included under item 4a hereof.




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

In accordance with General Instruction G(3), the information
called for in this Item 12 is incorporated herein by
reference to Second Bancorps definitive proxy statement for
 the annual meeting of shareholders to be held May 9, 2000
(the Proxy Statement). Such Proxy Statement will be
filed with the Securities and Exchange Commission within
120 days of December 31, 1999. Information regarding
executive officers is included under item 4a hereof.




ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.

In accordance with General Instruction G(3), the information
called for in this Item 13 is incorporated herein by
reference to Second Bancorps definitive proxy statement for
 the annual meeting of shareholders to be held May 9, 2000
(the Proxy Statement). Such Proxy Statement will be
filed with the Securities and Exchange Commission within
120 days of December 31, 1999. Information regarding
executive officers is included under item 4a hereof.




PART IV




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

(a) (1)  The following consolidated financial
statements of Second Bancorp, Incorporated and its subsidiary are
 incorporated herein by reference from Item 8:

Consolidated Balance Sheets  December 31, 1999
and 1998.



| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Consolidated Statements of Income  years ended
	December 31, 1999, 1998 and 1997.              
|
| | Consolidated Statements of Shareholders Equity 
	years ended December 31, 1999, 1998 and 1997.
|
| | Consolidated Statement of Cash Flows  years ended
	December 31, 1999, 1998 and 1997.           
|
| | Notes to Consolidated Financial Statements.                                                     
|
| | Report of Independent Auditors.                                                                 

53



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| |                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2)  Schedules to the consolidated financial statements
	required by Article 9 of Regulation S-X are not
	required under the related instructions or are inapplicable, and
	therefore have been omitted.            
|
| | (3)  Listing of Exhibits. The exhibits listed on the
	accompanying Index to Exhibits immediately following the
	financial statement schedules are filed as part of, or
	incorporated by reference into, this report.

| |       |  |  |     |  |                                                                                                                                                                                                          
| | ----- |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.1   |  |  | (1) |  | Amended and Restated Articles of Incorporation of the Registrant.
	 (As updated to include Amendments dated March  17, 1987;
	January 7, 1991; June 20, 1997; September 18,
	1998; and November 10, 1998)
| | 3.3   |  |  | (2) |  | Code of Regulations of the Registrant.                                                                                                                                                                   
| | 10.1  |  |  | (3) |  | 1998 Non-qualified Stock Option Plan                                                                                                                                                                     
| | 10.1  |  |  | (2) |  | Amended Stock Option Incentive Plan.                                                                                                                                                                     
| | 10.2  |  |  | (2) |  | Form of Incentive Stock Option Agreement.                                                                                                                                                                
| | 10.3  |  |  | (2) |  | Stock Appreciation Rights Agreement by and between Second Bancorp
	 and Alan G. Brant, dated April 1, 1987, as amended.                                                                                  
| | 10.4  |  |  | (4) |  | Form of Amendment to April 1, 1987 Stock Appreciation Rights
	 Agreement by and between Second Bancorp and Alan G. Brant,
	effective December 18, 1996.                                                  
| | 10.5  |  |  | (2) |  | Employment Agreement by and between Second Bancorp and Alan G.
	Brant, dated April 1, 1985.                                                                                                              
| | 10.6  |  |  | (5) |  | Amendments to Employment Agreement by and between Second Bancorp
	and Alan G. Brant, dated April 1, 1985.                                                                                                
| | 10.7  |  |  | (2) |  | Consulting Agreement by and between Second Bancorp and Alan G.
	Brant, dated April 1, 1985.                                                                                                              
| | 10.8  |  |  | (5) |  | Amendment to Consulting Agreement by and between Second Bancorp
	and Alan G. Brant, dated April 1, 1985.                                                                                                 
| | 10.9  |  |  | (5) |  | Deferred Compensation Agreement between Second Bancorp and Alan
	G. Brant, dated November 9,1995.                                                                                                        
| | 10.10 |  |  | (2) |  | Lease Agreement between Arden Associates Limited Partnership and
	Second National, dated October 1, 1979.                                                                                                
| | 10.11 |  |  | (5) |  | Amendment to Lease Agreement between Arden Associates Limited
	Partnership and Second National.                                                                                                          
| | 10.12 |  |  | (5) |  | Form of Amended Management Severance Agreement with executive
	officers.                                                                                                                                 
| | 10.13 |  |  | (6) |  | Revolving Credit Agreement (excluding exhibits), dated
	September 15, 19998, between Second Bancorp and The Northern
	 Trust Company.                                                                    
| | 10.14 |  |  | (6) |  | First Amendment to Revolving Credit Agreement (excluding
	exhibits), dated March 11, 1997, between Second Bancorp and
	The Northern Trust Company.                                                       
| | 10.15 |  |  | (1) |  | Form of Non-qualified Stock Option Agreement.                                                                                                                                                            
| | 10.16 |  |  |     |  | Employment Agreement by and between Second Bancorp and Rick L.
	Blossom, dated December 6, 1999.                                                                                                         
| | 10.17 |  |  |     |  | Deferred Compensation Agreement by and between Second Bancorp and
	 Rick L. Blossom, dated December 6, 1999.                                                                                             
| | 10.18 |  |  |     |  | Management Severance Agreement by and between Second Bancorp and
	Rick L. Blossom, dated December 6, 1999.                                                                                               
| | 11    |  |  | (7) |  | Statement Re: Computation of Per Share Earnings                                                                                                                                                          
| | 21    |  |  |     |  | Subsidiaries of the registrant.                                                                                                                                                                          
| | 23.1  |  |  |     |  | Consent of Ernst & Young.                                                                                                                                                                                
| | 27    |  |  |     |  | Financial Data Schedule                                                                                                                                                                                  

54



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---



| |     |                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to the exhibit filed with Second
	Bancorps annual report on Form 10-K for the year ended
	 December 31, 1998.                                                                           
|
| | (2) | Incorporated by reference to the exhibit filed with Second
	Bancorps annual report on Form 10-K for the year ended
	 December 31, 1994.                                                                           
|
| | (3) | Incorporated by reference to Exhibit A of the
	Registrants proxy statement dated April 1, 1998, as
	filed with the Securities and Exchange Commission in April, 1998.                                             
|
| | (4) | Incorporated by reference to the exhibit filed with Second
	Bancorps annual report on Form 10-K for the year ended
	 December 31, 1997.                                                                           
|
| | (5) | Incorporated by reference to the exhibit filed with Second
	Bancorps annual report on Form 10-K for the year ended
	 December 31, 1995.                                                                           
|
| | (6) | Incorporated by reference to the Exhibit filed with the
	Registrants registration statement on Form S-4
	(registration No. 333-62365) as filed on September 21,
	1998 with the Securities and Exchange Commission.
|
| | (7) | Page x (Included in Note 14 of the Notes to the Consolidated
	Financial Statements of Registrant in the financial statements
	portion of this annual report on Form 10-K).                                         



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The Corporation filed one report on Form 8-K during the
	three months ended December 31, 1999. A Form 8-K was filed
	on November 12, 1999 to disclose hiring of R. L. (Rick)
	Blossom as President and Chief Operating Officer of Second
	Bancorp and President and Chief Executive Officer of Second
	National. A Form 8-K was also filed on March 15, 2000
	to disclose an increase in the amount of dividend per share
	declared March 9, 2000 to $.16 per share.



|    |                                                                                                   
|--- | --------------------------------------------------------------------------------------------------
|(c) | Exhibits  The response to this portion of Item 14
	 is included at Item  14(a)(3) of this report.

(d)  Financial Statement Schedules  None.

55



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

| |  |                               |  |               
| |  | ----------------------------- |  | --------------
| |  | SECOND BANCORP, INCORPORATED 
|
| |  | /s/ DAVID L. KELLERMAN        |  | March 24, 2000
| |  |                              
| |  | David L. Kellerman, Treasurer |  | (date)        

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

|                                                                                                           |  |               
|---------------------------------------------------------------------------------------------------------- |  | --------------
|By: /s/ ALAN G. BRANTA. G. Brant, Chairman and CEO                                                         |  | March 24, 2000
|                                                                                                          
|By: /s/ DAVID L. KELLERMAND. L. Kellerman, Principal Financial
	  Officer and Principal Accounting Officer |  | March 24, 2000
|                                                                                                          
|By: /s/ R. L. (RICK) BLOSSOMR. L. (Rick) Blossom, President,
	  COO and Director                           |  | March 27, 2000
|                                                                                                          
|By: /s/ JOHN L. POGUEJohn L. Pogue, Director                                                               |  | March 27, 2000
|                                                                                                          
|By: /s/ JAMES R. IZANTJames R. Izant, Director                                                             |  | March 27, 2000
|                                                                                                          
|By: /s/ JACK GIBSONJack Gibson, Director                                                                   |  | March 27, 2000
|                                                                                                          
|By: /s/ ROBERT J. WEBSTERRobert J. Webster, Director                                                       |  | March 28, 2000

56