<PAGE>
 
   As filed with the Securities and Exchange Commission on September 9, 1998
                                                     Registration No. 333-
                                                                           -----

================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                    FORM S-1

                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933
                          FIRST PLACE FINANCIAL CORP.
                   FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
                         OF WARREN 401(K) SAVINGS PLAN
  (exact name of registrant as specified in its certificate of incorporation)
<TABLE>
<S>                                <C>                          <C>
DELAWARE                                   6035                       BEING APPLIED FOR
(state or other jurisdiction of    (Primary Standard            (IRS Employer Identification No.)
 incorporation or organization)    Classification Code Number)
 
</TABLE>

                             185 EAST MARKET STREET
                              WARREN, OHIO  44482
                                 (330) 373-1221
              (Address, including zip code, and telephone number,
       including area code, of registrant's principal executive offices)

                                STEVEN R. LEWIS
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
              FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                             185 EAST MARKET STREET
                               WARREN, OHIO 44482
                                 (330) 373-1221
           (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                                   Copies to:
                        JOSEPH G. PASSAIC, JR., ESQUIRE
                           GEOFFREY W. RYAN, ESQUIRE
                                PATTON BOGGS LLP
                              2550 M STREET, N.W.
                             WASHINGTON, D.C. 20037
                                 (202) 457-6000

     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:  As soon as
practicable after this Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / X /
                               ---- 

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  /   /
                                                         ---- 

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.   /   /
            ---- 

     If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.   /   /
            ---- 

 
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.    /   /
                                   ----

<TABLE>
<CAPTION>
 
   Title of each Class of           Amount to       Purchase Price        Aggregate       Registration
 Securities to be Registered      be Registered       Per Share            Offering            Fee
                                                                           Price(2)
<S>                               <C>               <C>                  <C>                <C>
-------------------------------------------------------------------------------------------------------
        Common Stock               14,812,000 (1)
        $.01 par Value                 Shares           $10.00           $148,120,000        $43,696
=======================================================================================================
Participation                             
Interests                               --                --                $908,275           (3)
=======================================================================================================
</TABLE>

(1)  Includes shares of Common Stock to be issued to the First Federal of Warren
     Community Foundation, a private foundation.
(2)  Estimated solely for the purpose of calculating the registration fee.
(3)  The securities of First Place Financial Corp. to be purchased by First
     Federal Savings and Loan Association of Warren 401(k) Plan are included in
     the amount shown for Common Stock. Accordingly, no separate fee is required
     for the participation interests. In accordance with Rule 457(h) of the
     Securities Act, as amended, the aggregate offering amount has been
     calculated on the basis of the number of shares of Common Stock that may be
     purchased with the current assets of such Plan.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
 
[To be used in connection with the Syndicated Community Offering only]

SYNDICATED PROSPECTUS SUPPLEMENT


                          FIRST PLACE FINANCIAL CORP.
              (PROPOSED HOLDING COMPANY FOR FIRST FEDERAL SAVINGS
                        AND LOAN ASSOCIATION OF WARREN)

                       __________ SHARES OF COMMON STOCK


     First Place Financial Corp. (the "Company"), a Delaware corporation, is
offering for sale in a syndicated community offering (the "Syndicated Community
Offering") __________ shares, at a per share price of $10.00, of its common
stock, par value $.01 per share (the "Common Stock"), to be issued in connection
with the conversion of First Federal Savings and Loan Association of Warren,
Ohio (the "Association") from a federally-chartered mutual savings and loan
association to a federally-chartered stock savings and loan association and the
issuance of all of the Association's capital stock to the Company pursuant to
the Association's Plan of Conversion (the "Plan").  The remaining __________
shares of the Common Stock have been subscribed for in subscription and
community offerings (the "Subscription and Community Offerings") by the Bank's
holders of deposit accounts with a balance of $50 or more as of March 31, 1997,
by the First Federal Savings and Loan Association of Warren Employee Stock
Ownership Plan, a tax-qualified employee benefit plan, and related trust (the
"ESOP"), by holders of deposit accounts with a balance of $50 or more as of
___________, 1998, by certain other members of the Association, consisting of
holders of deposit accounts of the Association as of ____________________, 1998
(the "Voting Record Date") and borrowers with loans outstanding as of _______,
1998, which continue to be outstanding as of the Voting Record Date and then by
certain members of the general public.  See "The Conversion -General."
Contained herein is the Prospectus in the form used in the Subscription and
Community Offerings.  The purchase price for all shares purchased in the
Syndicated Community Offering will be the same as the price paid by subscribers
in the Subscription and Community Offerings (the "Purchase Price").  The
Purchase Price of $10.00 per share is the amount to be paid for each share at
the time a purchase order is submitted.  See the cover page of the Prospectus
and the table below for information as to the method by which the range within
which the number of shares offered may vary and the method of subscribing for
shares of the Common Stock.

     Funds submitted to the Association with purchase orders will earn interest
at the Association's passbook rate of interest from the date of receipt until
completion or termination of the Conversion.  The Syndicated Community Offering
will expire no later than _______________, 1998, unless extended by the
Association and the Company with the approval of the Office of Thrift
Supervision (the "OTS").  Such extensions may not go beyond _______________,
2000.  If an extension of time has been granted, all subscribers will be
notified of such extension, and of their rights to confirm their subscriptions,
or to modify or rescind their subscriptions and have their funds returned
promptly with interest, and of the time period within which the subscriber must
<PAGE>
 
notify the Association of his intention to confirm, modify or rescind his
subscription.  If an affirmative response to any resolicitation is not received
by the Association and the Company from subscribers, such orders will be
rescinded and all funds will be returned promptly with interest.  The minimum
number of shares which may be purchased is 25 shares.  Except for the ESOP,
which may purchase up to 10% of the total number of shares of Common Stock
issued in the Conversion, including shares issued to the First Federal of Warren
Community Foundation (the "Foundation"), no person, together with associates of
and persons acting in concert with such person, may purchase more than the total
number of shares offered in the Community Offering and the Syndicated Community
Offering that could be purchased for $250,000 at the Purchase Price and no
person, together with associates of and persons acting in concert with such
person, may purchase more than 1.0% of the total number of shares issued in the
Conversion.  See "The Conversion - Subscription Offering and Subscription
Rights," and " - Limitations on Conversion Stock Purchases."  The Company
reserves the right, in its absolute discretion, to accept or reject, in whole or
in part, any or all subscriptions in the Syndicated Community Offering.

     The Company and the Association have engaged Charles Webb & Company
("Webb"), a Division of Keefe, Bruyette & Woods, Inc., as financial advisors to
assist them in the sale of the Common Stock in the Syndicated Community
Offering.  It is anticipated that Webb will use the services of other registered
broker-dealers ("Selected Dealers") and that fees to Webb and such Selected
Dealers will be ____% of the aggregate Purchase Price of the shares sold in the
Syndicated Community Offering.  Neither Webb nor any Selected Dealer shall have
any obligation to take or purchase any shares of Common Stock in the Syndicated
Community Offering.

     The Company has applied to have its Common Stock quoted on the Nasdaq
National Market under the symbol "FPFC."  Prior to this offering, there has not
been a public market for the Common Stock, and there can be no assurance that an
active and liquid trading market for the Common Stock will develop.  The absence
or discontinuance of a market may have an adverse impact on both the price and
liquidity of the stock.



THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE OFFICE OF THRIFT SUPERVISION, OR ANY OTHER FEDERAL
AGENCY OR ANY STATE SECURITIES COMMISSION, NOR HAS SUCH COMMISSION, OFFICE,
DEPARTMENT OR OTHER AGENCY OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY, NOR ARE THEY INSURED OR GUARANTEED BY THE ASSOCIATION OR THE
COMPANY.

                                       2
<PAGE>
 
<TABLE>
<CAPTION>
                                                    Estimated                      Estimated Net Pro-
                                                  Underwriting    Estimated Net    ceeds of Subscrip-
                                                   Commissions     Proceeds of      tion, Community
                                   Syndicated       and Other      Syndicated        and Syndicated
                                   Community        Fees and        Community          Community
                                 Offering Price    Expenses(1)      Offering        Offerings(2)(3)
=====================================================================================================
<S>                              <C>             <C>              <C>            <C>
 
Minimum Per Share                $10.00          $                $              $
----------------------------------------------------------------------------------------------------- 
Midpoint Per Share               $10.00          $                $              $
-----------------------------------------------------------------------------------------------------  
Maximum Per Share                $10.00          $                $              $
-----------------------------------------------------------------------------------------------------  
Total Minimum(5)                 $               $                $              $
-----------------------------------------------------------------------------------------------------  
Total Midpoint                   $               $                $              $
-----------------------------------------------------------------------------------------------------  
Total Maximum(5)                 $               $                $              $
----------------------------------------------------------------------------------------------------- 
Total Maximum, As Adjusted(6)    $               $                $              $
=====================================================================================================
</TABLE>

______________________________
(1) Consists of a pro rata allocation of estimated expenses of the Association
    and the Company in connection with the Conversion (other than estimated fees
    to be paid to Webb for services in connection with the Subscription and
    Community Offerings) and estimated compensation of Webb and Selected Dealers
    in connection with the sale of the remaining shares in the Syndicated
    Community Offering which fees are estimated to be $__________ million and
    $__________ million at the minimum and the maximum of the estimated price
    range and may be deemed to be underwriting fees.  The information under "Pro
    Forma Data" in the Prospectus was based on the assumptions stated therein,
    which may differ from the estimates used for this table.  See "The
    Conversion - Marketing and Underwriting Arrangements" for a more detailed
    discussion of fee arrangements.
(2) The Company applied to retain up to 50% of the net proceeds.  The balance of
    the net proceeds will be transferred to the Association in exchange for all
    of the outstanding common stock of the Association.
(3) The net proceeds of the Subscription and Community Offerings (based upon the
    sale of the __________ shares subscribed for at a price of $10.00 per share
    and after allocation of a pro rata portion of the estimated expenses
    relating to the Conversion) are estimated to be $__________.
(4) Based on an estimated price range of $__________ to $__________ at $10.00
    per share (the "Estimated Price Range).  The Total Minimum reflects the sale
    of __________ shares at a per share price of $10.00, leaving a total of
    __________ shares to be sold in the Syndicated Community Offering.
(5) Gives effect to an increase in the number of shares which could occur due to
    an increase in the Estimated Price Range of up to 15% to reflect changes in
    market and financial conditions following commencement of the offerings.
    See "The Conversion - Stock Pricing."  For a discussion of the distribution
    and allocation of the additional shares, see "The Conversion - Subscription
    Offerings and Subscription Rights," and " -Limitations on Conversion Stock
    Purchases."


                            CHARLES WEBB & COMPANY

                       _________________________________


      The date of this Prospectus Supplement is _______________, 199___.

                                       3
<PAGE>
 
PROSPECTUS
                          FIRST PLACE FINANCIAL CORP.
  (Proposed Holding Company for First Federal Savings and Loan Association of
                                    Warren)
                       11,960,000 Shares of Common Stock

     First Place Financial Corp. (the "Company" or "First Place"), a Delaware
corporation, is offering up to 11,960,000 shares of its common stock, par value
$.01 per share (the "Common Stock"), in connection with the conversion of First
Federal Savings and Loan Association of Warren (the "Association" or "First
Federal") from a federally-chartered mutual savings and loan association to a
federally-chartered stock savings and loan association and the issuance of the
Association's capital stock to the Company pursuant to the Association's plan of
conversion (the "Plan" or "Plan of Conversion").  The simultaneous conversion of
the Association to stock form, the issuance of the Association's stock to the
Company and the offer and sale of the Common Stock by the Company are herein
referred to as the "Conversion."  In certain circumstances, the Company may
increase the amount of Common Stock offered hereby up to 13,754,000 shares.  See
Footnote 4 to the table below.

                                                   (continued on following page)
                            
                             ---------------------

     FOR ADDITIONAL INFORMATION ON HOW TO SUBSCRIBE FOR COMMON STOCK, PLEASE
CALL THE CONVERSION CENTER AT (330) ___-____.

     FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY EACH
PROSPECTIVE INVESTOR, SEE "RISK FACTORS" ON PAGES ___ THROUGH ___.

     THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT SUPERVISION ("OTS") OR ANY OTHER
FEDERAL AGENCY OR ANY STATE SECURITIES COMMISSION, OR ANY OTHER AGENCY, NOR HAS
SUCH COMMISSION, OFFICE OR OTHER AGENCY OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

     THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS  ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE BANK INSURANCE FUND ("BIF") OR
THE SAVINGS ASSOCIATION INSURANCE FUND ("SAIF") OF THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC") OR ANY OTHER GOVERNMENT AGENCY AND ARE NOT GUARANTEED BY
THE COMPANY OR ASSOCIATION.  THE COMMON STOCK IS SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL INVESTED.

<TABLE> 
<CAPTION> 
----------------------------------------------------------------------------------------------------------------------------- 
                                                                Estimated Underwriting 
                                                              Commissions and Other Fees                            
                               Subscription Price(1)               and Expenses(2)               Estimated Net Proceeds(3)
----------------------------------------------------------------------------------------------------------------------------- 
<S>                         <C>                               <C>                                <C>
Minimum Per Share                     $10.00                             $0.22                               $9.78
-----------------------------------------------------------------------------------------------------------------------------     
Midpoint Per Share                    $10.00                             $0.20                               $9.80
-----------------------------------------------------------------------------------------------------------------------------     
Maximum Per Share                     $10.00                             $0.19                               $9.81
-----------------------------------------------------------------------------------------------------------------------------     
Total Minimum(1)                 $88,400,000                        $1,975,000                         $86,425,000
-----------------------------------------------------------------------------------------------------------------------------     
Total Midpoint(1)               $104,000,000                        $2,100,000                        $101,900,000
-----------------------------------------------------------------------------------------------------------------------------     
Total Maximum(1)                $119,600,000                        $2,275,000                        $117,325,000
----------------------------------------------------------------------------------------------------------------------------- 
Total Maximum, as adjusted(4)   $137,540,000                        $2,275,000                        $135,265,000
-----------------------------------------------------------------------------------------------------------------------------     
</TABLE>

(1)      Determined in accordance with an independent appraisal prepared by
         Keller & Company, Inc. ("Keller") dated August 14, 1998, which states
         that the aggregate estimated pro forma market value of the Common Stock
         being issued in the Conversion ranged from $95.2 million to $128.8
         million with a midpoint of $112.0 million taking into account the
         contribution to the First Federal of Warren Community Foundation of an
         amount of Common Stock equal to 7.7% of the Common Stock sold in the
         Conversion (the "Valuation Range").  The independent appraisal of
         Keller is based upon estimates and projections that are subject to
         change and the valuation must not be construed as a recommendation as
         to the advisability of purchasing the Common Stock nor an assurance
         that a purchaser of Common Stock will thereafter be able to sell the
         Common Stock at prices within the Valuation Range.  Based on the
         Valuation Range, the Board of Directors of the Company and the Board of
         Directors of the Association established an estimated price range of
         the Common Stock being offered for sale in the Conversion within the
         Valuation Range of $88.4 million to $119.6 million (the "Estimated
         Price Range") or between 8,840,000 and 11,960,000 shares of Common
         Stock issued at the $10.00 per share price (the "Purchase Price") to be
         paid for each share of Common Stock subscribed for or purchased in the
         Offering.  See "The Conversion - Stock Pricing."
(2)      Consists of the estimated costs to the Association and the Company
         arising from the Conversion, including estimated fixed expenses of
         approximately $1.1 million, and marketing fees to be paid to Charles
         Webb & Company ("Webb"), a Division of Keefe, Bruyette & Woods, Inc.
         ("KBW"), estimated to be between $875,000  and $1.2 million at the
         minimum and maximum of the Estimated Price Range, respectively.  See
         "The Conversion - Marketing and Underwriting Arrangements."  The actual
         fees and expenses may vary from the estimates.  See "Pro Forma Data"
         for the assumptions used to arrive at these estimates.
(3)      Actual net proceeds may vary substantially from estimated amounts
         depending upon the number of shares sold in the Offerings and other
         factors.  Includes the purchase of shares of Common Stock by the First
         Federal Savings and Loan Association of Warren Employee Stock Ownership
         Plan and related trust (the "ESOP") which is intended to be funded by a
         loan to the ESOP from the Company or from a third party, which will be
         deducted from the Company's stockholders' equity.  See "Use of
         Proceeds" and "Pro Forma Data."
(4)      As adjusted to reflect the sale of up to an additional 15% of the
         Common Stock which may be offered at the Purchase Price, without
         resolicitation of subscribers or any right of cancellation, due to
         regulatory considerations, changes in market conditions or general
         financial and economic conditions.  See "Pro Forma Data" and "The
         Conversion - Stock Pricing."  For a discussion of the distribution and
         allocation of the additional shares, if any, see "The Conversion -
         Subscription Offering and Subscription Rights," "- Community Offering"
         and  "- Limitations on Common Stock Purchases."

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

                             Charles Webb & Company
                  a Division of Keefe, Bruyette & Woods, Inc.
                       
                            -----------------------

                The date of this Prospectus is _________, 1998.
<PAGE>
 
(continued from previous page)

     NON-TRANSFERABLE RIGHTS TO SUBSCRIBE FOR THE COMMON STOCK IN A SUBSCRIPTION
OFFERING (THE "SUBSCRIPTION OFFERING") HAVE BEEN GRANTED IN THE FOLLOWING ORDER
OF PRIORITY TO: (1) THE ASSOCIATION'S ELIGIBLE ACCOUNT HOLDERS (DEFINED AS
HOLDERS OF DEPOSIT ACCOUNTS TOTALLING $50 OR MORE AS OF MARCH 31, 1997) (2) THE
COMPANY'S AND ASSOCIATION'S TAX-QUALIFIED EMPLOYEE BENEFIT PLANS (COLLECTIVELY,
THE "EMPLOYEE PLANS"), INCLUDING THE ESOP WHICH INTENDS TO SUBSCRIBE FOR UP TO
8% OF THE COMMON STOCK ISSUED IN CONNECTION WITH THE CONVERSION (INCLUDING
SHARES ISSUED TO THE FIRST FEDERAL OF WARREN COMMUNITY FOUNDATION (THE
"FOUNDATION")); (3) THE ASSOCIATION'S SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS
(DEFINED AS HOLDERS OF DEPOSIT ACCOUNTS TOTALLING $50 OR MORE AS OF ________,
1998); AND (4) OTHER MEMBERS OF THE ASSOCIATION (DEFINED AS DEPOSITORS OF THE
ASSOCIATION AS OF __________, 1998, THE VOTING RECORD DATE (THE "VOTING RECORD
DATE") FOR THE SPECIAL MEETING (AS DEFINED HEREIN), AND BORROWERS WITH LOANS
OUTSTANDING AS OF __________, OTHER THAN THOSE MEMBERS WHO OTHERWISE QUALIFY AS
ELIGIBLE ACCOUNT HOLDERS AND SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS).
SUBSCRIPTION RIGHTS ARE NON-TRANSFERABLE.  PERSONS FOUND TO BE TRANSFERRING
SUBSCRIPTION RIGHTS WILL BE SUBJECT TO FORFEITURE OF SUCH RIGHTS AND POSSIBLE
FURTHER SANCTIONS AND PENALTIES IMPOSED BY THE OTS.  Concurrently, and subject
to the prior rights of holders of subscription rights, the Company is offering
the shares of Common Stock not subscribed for in the Subscription Offering for
sale in a community offering to certain members of the general public (the
"Community Offering") with a preference given to natural persons residing in
Trumbull and Mahoning Counties, Ohio (the Association's "Local Community") (such
natural persons herein referred to as "Preferred Subscribers").  Shares not
subscribed for in the Subscription and Community Offerings will be offered to
certain members of the general public in a syndicated community offering (the
"Syndicated Community Offering") (the Subscription Offering, Community Offering
and the Syndicated Community Offering are referred to collectively as the
"Offerings").  For a description of limitations on the amount of Common Stock
that can be purchased in the Offerings, see "Summary of the Conversion and the
Offerings - Purchase Limitations" and "The Conversion - Subscription Offering
and Subscription Rights," "-Community Offering" and "- Limitation on Common
Stock Purchases."

     The Plan provides that the Association and the Company will create the
Foundation, which will be incorporated under Delaware law as a non-stock
corporation, and fund the Foundation with shares of Common Stock contributed by
the Company from authorized but unissued shares, in an amount equal to 7.7% of
the number of shares of Common Stock sold in the Conversion.  For a discussion
of the Foundation and its effects on the Conversion, including if the members do
not approve the establishment of the Foundation, see "Risk Factors -
Establishment of the Charitable Foundation," "Pro Forma Data," and "The
Conversion - Establishment of Charitable Foundation."

     The Association has engaged Webb to consult with and advise the Company and
the Association in the Offerings and Webb has agreed to use its best efforts to
assist the Company with the solicitation of subscriptions and purchase orders
for shares of Common Stock in the Offerings.  Webb is not obligated to take or
purchase any shares of Common Stock in the Offerings.  The Association and the
Company will pay a fee to Webb which will be based on the aggregate Purchase
Price of the Common Stock sold in the Offerings.  The Company and the
Association have agreed to indemnify Webb against certain liabilities arising
under the Securities Act of 1933, as amended (the "Securities Act").  See "The
Conversion - Marketing and Underwriting Arrangements."

     THE SUBSCRIPTION AND COMMUNITY OFFERINGS WILL TERMINATE AT 12:00 NOON,
EASTERN TIME, ON __________, 1998 (THE "EXPIRATION DATE") UNLESS EXTENDED BY THE
ASSOCIATION AND THE COMPANY, WITH THE APPROVAL OF THE OTS, IF NECESSARY.  Orders
submitted are irrevocable until the completion of the Conversion; provided, that
if the Conversion is not completed within 45 days after the close of the
Subscription and Community Offerings, unless such period has been extended with
the consent of the OTS, if necessary, all subscribers will have their funds
returned promptly with interest, and all withdrawal authorizations will be
cancelled.  Such extensions may not go beyond _________, 2000.  See "The
Conversion - Procedure for Purchasing Shares in Subscription and Community
Offerings."  The Company and the Association reserve the right, in their
absolute discretion, to accept or reject, in whole or in part, any and all
subscriptions in the Community Offering and the Syndicated Community Offering,
either at the time of receipt of an order or as soon as practicable following
the termination of the Offerings.

     The Company has applied to have its Common Stock quoted on the Nasdaq
National Market ("Nasdaq")  under the symbol "FPFC" upon completion of the
Conversion.  Prior to this offering there has not been a public market for the
Common Stock, and there can be no assurance that an active and liquid trading
market for the Common Stock will develop, or that the Common Stock will trade at
or above the Purchase Price.  To the extent an active and liquid trading market
does not develop, the liquidity and market value of the Common Stock may be
adversely affected.  See "Risk Factors - Absence of Market for Common Stock" and
"Market for the Common Stock."

                                       2
<PAGE>
 
     Explanatory Note:  This Prospectus contains certain forward looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company and the Association.
Prospective investors are cautioned that such forward looking statements are not
guarantees of future performance and are subject to various factors which could
cause actual results to differ materially from these estimates.  These factors
include changes in general, economic and market conditions, and the development
of an interest rate environment that adversely affects the interest rate spread
or other income anticipated from the Company's and the Association's operations
and investments.  See "Risk Factors" for a discussion of other factors that
might cause actual results to differ from such estimates.

                                       3
<PAGE>
 
                                [MAP GOES HERE]
<PAGE>
 
                  SUMMARY OF THE CONVERSION AND THE OFFERINGS
 
     The following summary of the Conversion and the Offerings is qualified in
its entirety by the more detailed information appearing elsewhere in this
Prospectus.
 
Risk Factors...........  A purchase of the Common Stock involves a substantial
                         degree of risk. Eligible Account Holders, Supplemental
                         Eligible Account Holders, Other Members and other
                         prospective investors should carefully consider the
                         matters set forth under "Risk Factors." THE SHARES OF
                         COMMON STOCK OFFERED HEREBY ARE NOT INSURED OR
                         GUARANTEED BY THE FDIC, BIF OR SAIF OR ANY OTHER
                         GOVERNMENT AGENCY AND ARE NOT GUARANTEED BY THE COMPANY
                         OR ASSOCIATION.


First Place Financial   
 Corp..................  The Company is a Delaware corporation organized at the
                         direction of the Association to become a savings and
                         loan holding company and own all of the Association's
                         capital stock to be issued upon its conversion from
                         mutual form to stock form. To date, the Company has not
                         engaged in any business. Its executive office is
                         located at 185 East Market Street, Warren, Ohio 44482
                         and its telephone number is (330) 373-1221.


First Federal Savings  
 and Loan Association    
 of Warren.............  The Association is a federally-chartered mutual savings
                         association. At June 30, 1998, the Association had
                         total assets of $609.4 million, total deposits of
                         $435.5 million and retained earnings of $59.4 million.
                         The Association is located at 185 East Market Street,
                         Warren, Ohio 44482 and its telephone number is (330)
                         373-1221.

                         The Association is a community-oriented savings
                         institution whose principal business consists of
                         accepting retail deposits from the general public in
                         its primary market area and investing those deposits,
                         together with funds generated from operations and
                         borrowings, primarily in one- to four-family
                         residential mortgage loans, automobile and home equity
                         loans and, to a much lesser extent, multi-family and
                         commercial real estate loans, construction loans,
                         commercial loans and passbook savings loans. The
                         Association also invests in government issued and
                         sponsored mortgage-backed securities, securities issued
                         by the U.S. Government and agencies thereof, and other
                         investments permitted by applicable laws and
                         regulations. See "Business of the Association."


The Conversion and
 Reasons for        
 Conversion............  The Board of Directors of the Association has adopted a
                         Plan of Conversion pursuant to which the Association
                         intends to convert to a federally-chartered stock
                         savings association and issue all of its stock to the
                         Company. The Company is offering shares of its Common
                         Stock in the Offerings in connection with the
                         Association's Conversion. Management believes the
                         Conversion offers a number of advantages, including:
                         (i) providing a larger capital base on which to
                         operate; (ii) providing enhanced future access to
                         capital markets; (iii) providing enhanced ability to
                         diversify into other financial services related
                         activities; and (iv) providing enhanced ability to
                         increase its presence in the communities it serves
                         through the acquisition or establishment of branch
                         offices or the acquisition of other financial
                         institutions. The Conversion and the Offerings are
                         subject to approval by the OTS, and approval of members
                         of the Association eligible to vote at a special
                         meeting to be held on __________, 1998 (the "Special
                         Meeting"). The OTS issued an approval letter on
                         _______, 1998. See "The Conversion--General."

                                       5
<PAGE>
 
First Federal of        
 Warren Community        The Association's Plan of Conversion provides for the
 Foundation............  establishment of a charitable foundation in connection
                         with the Conversion. The Foundation, which will be
                         incorporated under Delaware law as a non-stock
                         corporation, will be funded concurrent with the sale of
                         Common Stock of the Company with a contribution by the
                         Company equal to 7.7% of the Common Stock sold in the
                         Conversion. The authority for the affairs of the
                         Foundation will be vested in the Board of Directors of
                         the Foundation, all of whom are existing Directors of
                         the Company and the Association. See "The Conversion -
                         Establishment of the Charitable Foundation."
                          
 
Terms of the             The shares of Common Stock to be sold in connection
 Offering..............  with the Conversion are being offered at a fixed price
                         of $10.00 per share in the Subscription Offering
                         pursuant to subscription rights in the following order
                         of priority to: (i) Eligible Account Holders; (ii) the
                         ESOP; (iii) Supplemental Eligible Account Holders; and
                         (iv) Other Members. Concurrently, and subject to the
                         prior rights of holders of subscription rights, any
                         shares of Common Stock not subscribed for in the
                         Subscription Offering are being offered in the
                         Community Offering at $10.00 per share to certain
                         members of the general public with a preference given
                         to Preferred Subscribers. Subscription rights will
                         expire if not exercised by Noon, Eastern time, on
                         __________, 1998, unless extended by the Association
                         and the Company, with the approval of the OTS, if
                         necessary. See "The Conversion - Subscription Offering
                         and Subscription Rights" and " - Community Offering."
                          
                       
Procedure for Ordering 
 Shares and Prospectus   Forms to order Common Stock offered in the Subscription
 Delivery..............  Offering and the Community Offering will only be
                         distributed with or preceded by a Prospectus.  Any 
                         person receiving a stock order and certification form
                         who desires to subscribe for shares must do so prior to
                         the Expiration Date by delivering to the Association a
                         properly executed stock order form and certification
                         form together with full payment. ONCE TENDERED,
                         SUBSCRIPTION ORDERS CANNOT BE REVOKED OR MODIFIED
                         WITHOUT THE CONSENT OF THE ASSOCIATION. To ensure that
                         each purchaser receives a prospectus at least 48 hours
                         prior to the Expiration Date in accordance with Rule
                         15c2-8 of the Securities Exchange Act of 1934, as
                         amended (the "Exchange Act"), no prospectus will be
                         mailed any later than five days prior to the Expiration
                         Date or hand delivered any later than two days prior to
                         such date. The Company and the Association are not
                         obligated to accept subscriptions not submitted on an
                         original stock order form. See "The Conversion -
                         Procedure for Purchasing Shares in Subscription and
                         Community Offerings."

                         IMPORTANT: TO ENSURE THAT YOUR SUBSCRIPTION RIGHTS ARE
                         PROPERLY IDENTIFIED, YOU MUST LIST ALL QUALIFYING
                         DEPOSIT ACCOUNTS AND LOANS, AS OF THE RESPECTIVE
                         QUALIFYING DATES ON THE STOCK ORDER FORM. PERSONS WHO
                         DO NOT LIST ALL QUALIFYING DEPOSIT ACCOUNTS AND LOANS
                         MAY BE SUBJECT TO REDUCTION OR REJECTION OF THEIR
                         SUBSCRIPTION.
                          

Form of Payment for      Payment for subscriptions may be made:  (i) in cash 
 Shares................  (if delivered in person); (ii) by check, bank draft 
                         or money order; or (iii) by authorization of withdrawal
                         from deposit accounts maintained at the Association.
                         Orders for Common Stock submitted by subscribers in the
                         Subscription Offering which aggregate $50,000 or more
                         must be paid by official bank or certified check or by
                         withdrawal authorization from a deposit account at the
                         Association. No wire transfers will be accepted. See
                         "Conversion - Procedure for Purchasing Shares in
                         Subscription and Community Offerings."

                                       6
<PAGE>
 
Nontransferability of                           
 Subscription Rights...  The subscription rights of Eligible Account Holders,
                         Supplemental Eligible Account Holders, Other Members
                         and the Employee Plans, including the ESOP, are
                         nontransferable. THE ASSOCIATION AND THE COMPANY WILL
                         PURSUE ANY AND ALL LEGAL AND EQUITABLE REMEDIES
                         (INCLUDING FORFEITURE) IN THE EVENT THEY BECOME AWARE
                         OF THE TRANSFER OF SUBSCRIPTION RIGHTS AND WILL NOT
                         HONOR ORDERS KNOWN BY THEM TO INVOLVE THE TRANSFER OF
                         SUCH RIGHTS. Certificates representing shares of Common
                         Stock purchased in the Subscription Offering must be
                         registered in the name of the Eligible Account Holder,
                         Supplemental Eligible Account Holder or Other Member,
                         as the case may be. Joint stock registration will be
                         allowed only if the qualifying deposit account is so
                         registered. See "The Conversion -Restrictions on
                         Transfer of Subscription Rights and Shares."
 

Purchase Limitations...  No Eligible Account Holder, Supplemental Eligible
                         Account Holder or Other Member may purchase in the
                         Subscription Offering more than $250,000 of Common
                         Stock. No person, together with associates and persons
                         acting in concert with such person, may purchase in the
                         Community Offering and the Syndicated Community
                         Offering more than $250,000 of Common Stock. No person,
                         together with associates and persons acting in concert
                         with such person, may purchase in the aggregate more
                         than 1% of the Common Stock offered. However, the ESOP
                         may purchase up to 10% of the Common Stock issued,
                         including shares issued to the Foundation. Pursuant to
                         the Plan of Conversion, it is the intent of the ESOP to
                         purchase 8% of the Common Stock issued, including
                         shares issued to the Foundation. The minimum purchase
                         is 25 shares of Common Stock. At any time during the
                         Conversion and without approval of the Association's
                         depositors or a resolicitation of subscribers, the
                         Association and the Company may, in their sole
                         discretion, decrease the maximum purchase limitation
                         below $250,000 of Common Stock; however, such amount
                         may not be reduced to less than 0.10% of the Common
                         Stock offered. Additionally, at any time during the
                         Conversion, the Association and the Company may, in
                         their sole discretion, increase the maximum purchase
                         limitation in the Subscription and Community Offerings
                         to an amount in excess of $250,000 up to a maximum of
                         5% of the shares to be issued in the Conversion.
                         Similarly, the 1% overall maximum purchase limitation
                         may be increased up to 5% of the total shares of Common
                         Stock offered in the Conversion.
                          
                        
Securities Offered and  
 Purchase Price........  The Company is offering between 8,840,000 and
                         11,960,000 shares of Common Stock at a Purchase Price
                         of $10.00 per share. The maximum of the Estimated Price
                         Range may be increased by up to 15% and the maximum
                         number of shares of Common Stock to be offered may be
                         increased up to 13,754,000 shares due to regulatory
                         considerations and changes in market or general
                         financial or economic conditions. See "The Conversion -
                         Stock Pricing" and "- Number of Shares to be Issued."


Appraisal..............  The Purchase Price per share has been fixed at $10.00.
                         The total number of shares to be issued in the
                         Conversion is based upon an independent appraisal
                         prepared by Keller, dated as of August 14, 1998, which
                         states that the estimated pro forma market value of the
                         Common Stock ranged from $95.2 million to $128.8
                         million, taking into account shares to be issued to the
                         Foundation. The final aggregate value will be
                         determined at the time of closing of the Offerings and
                         is subject to change due to changing market conditions
                         and other factors. See "The Conversion - Stock
                         Pricing."
                                                       

Use of Proceeds........  The Company will use 50% of the net proceeds of the
                         Offerings to purchase all of the outstanding common
                         stock of the Association to be issued in the
                         Conversion. A 

                                       7
<PAGE>
 
                         portion of net proceeds retained by the Company will be
                         used for general business activity, including a loan of
                         funds by the Company directly to the ESOP to enable the
                         ESOP to purchase up to 8% of the stock issued in
                         connection with the Conversion, including shares issued
                         to the Foundation. The Company intends to initially
                         invest the remaining net proceeds primarily in 
                         mortgage-backed and mortgage-related securities and
                         investment grade debt and equity securities. The
                         Association intends to utilize net proceeds from the
                         sale of its stock to the Company for general business
                         purposes, including investment in loans and securities,
                         as well as the possible expansion of its facilities and
                         operations through marketing, business development, or
                         the acquisition or establishment of branch offices,
                         although the Company and the Association have no
                         current arrangements, understanding or agreements
                         regarding any such transactions. The Association may
                         also use a portion of the net proceeds to renovate or
                         rebuild its main office building. The renovation or
                         reconstruction of the Association's main office is
                         currently estimated to cost up to $15.0 million. See
                         "Use of Proceeds."


Dividend Policy........  Upon Conversion, the Board of Directors of the Company
                         will have the authority to declare dividends on the
                         Common Stock, subject to statutory and regulatory
                         requirements. In the future, the Board of Directors of
                         the Company may consider a policy of paying cash
                         dividends on the Common Stock. However, no decision has
                         been made with respect to such dividends, if any. See
                         "Dividend Policy."
 
                        
Benefits of the         
 Conversion to                                   
 Management............  Among the benefits to the Association and the Company
                         anticipated from the Conversion is the ability to
                         attract and retain personnel through the use of stock
                         options and other stock related benefit programs.
                         Subsequent to the Conversion, the Company intends to
                         adopt a Stock Program (as defined herein) and Stock
                         Option Plan (as defined herein) for the benefit of
                         directors, officers and employees. If such benefit
                         plans are adopted within one year after the Conversion,
                         such plans will be subject to stockholders' approval at
                         a meeting of stockholders which may not be held earlier
                         than six months after the Conversion. The Company
                         intends to adopt a stock benefit plan which would
                         provide for the granting of Common Stock to officers,
                         directors and employees of the Association and Company
                         in an amount equal to 4% of the Common Stock issued in
                         the Conversion, including shares issued to the
                         Foundation (the "Stock Program"). The Company also
                         intends to adopt a stock option plan which would
                         provide the Company with the ability to grant options
                         to officers, directors and employees of the Association
                         and Company to purchase Common Stock equal to 10% of
                         the number of shares of Common Stock issued in the
                         Conversion, including shares issued to the Foundation
                         (the "Stock Option Plan"). Additionally, certain
                         officers of the Company and the Association will be
                         provided with employment agreements or change in
                         control agreements which provide such officers with
                         employment rights and/or payments upon their
                         termination of service following a change in control.
                         For a further description of the Stock Program and
                         Stock Option Plan, see "Risk Factors-Stock Based
                         Benefits to Management, Employment Contracts and Change
                         in Control Payments" and "Management of the 
                         Association - Benefit Plans." See "Management of the 
                         Association - Subscriptions of Executive Officers and
                         Directors," "Restrictions on Acquisition of the Company
                         and the Association -Restrictions in the Company's
                         Certificate of Incorporation and Bylaws," and "The
                         Conversion -Establishment of the Charitable
                         Foundation."
                        
                        
Expiration Date for the 
 Subscription and    
 Community Offerings...  The Expiration Date for the Subscription and Community
                         Offerings is 12:00 Noon, Eastern time on
                         _______________, 1998 unless extended by the
                         Association and the Company. See "The Conversion -
                         Subscription Offering and Subscription Rights."
 
                                      8 
<PAGE>
 
Market for Stock.......  As a mutual institution, the Association has never
                         issued capital stock and, consequently, there is no
                         existing market for the Common Stock. The Company has
                         applied to have its Common Stock quoted on the Nasdaq
                         under the symbol "FPFC" subject to the completion of
                         the Conversion and compliance with certain conditions,
                         including the presence of at least three registered and
                         active market makers. KBW has advised the Company that
                         it intends to make a market in the Common Stock
                         following completion of the Conversion, but it is under
                         no obligation to do so. See "Market for the Common
                         Stock."
                          
No Board                 
 Recommendations.......  The Association's Board of Directors and the Company's
                         Board of Directors are not making any recommendations
                         to depositors or other potential investors regarding
                         whether such persons should purchase the Common Stock.
                         An investment in the Common Stock must be made pursuant
                         to each investor's evaluation of his or her best
                         interests.


Conversion Center......  If you have any questions regarding Conversion, please
                         call the Conversion Center at (330) _____.
 
 
Voting Control of
 Officers                 
 and Directors.........  Directors and executive officers of the Association and
                         the Company expect to purchase approximately 4.6% or
                         3.4% of shares of Common Stock outstanding, based upon
                         the minimum and the maximum of the Estimated Price
                         Range, including shares issued to the Foundation
                         respectively. Additionally, assuming the implementation
                         of the ESOP, Stock Program and Stock Option Plan,
                         directors, executive officers and employees have the
                         potential to control the voting of approximately 24.2%
                         or 23.1% of the Common Stock at the minimum and the
                         maximum of the Estimated Price Range, respectively,
                         including shares issued to the Foundation, on a fully
                         diluted basis. See "The Conversion -Establishment of
                         the Charitable Foundation," "Management of the
                         Association -Subscriptions of Executive Officers and
                         Directors," and "Restrictions on Acquisition of the
                         Company and the Association -Restrictions in the
                         Company's Certificate of Incorporation and Bylaws."


Risk Factors...........  For a discussion of certain factors to be considered by
                         prospective investors, see "Risk Factors."

                                       9
<PAGE>
 
              SELECTED FINANCIAL AND OTHER DATA OF THE ASSOCIATION

     Set forth below are selected financial and other data of the Association.
These financial data are derived in part from, and should be read in conjunction
with, the Financial Statements of the Association and Notes thereto presented
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
                                                                    At June 30,                     
                                             -------------------------------------------------------
                                                 1998       1997       1996       1995       1994   
                                             -------------------------------------------------------
      <S>                                      <C>        <C>        <C>        <C>        <C>      
                                                                  (In thousands)                    
      Selected Financial Data:                                                         
      Total assets...........................   $609,398   $548,870   $523,131   $481,192   $480,317
      Loans receivable, net..................    353,012    285,212    254,435    239,457    217,574
      Securities available for sale(1).......    211,185    202,677    202,176    148,273    158,243
      Securities held to maturity(1).........     28,295     44,875     47,918     74,006     81,707
      Deposits...............................    435,462    412,934    391,715    376,541    382,710
      Federal Home Loan Bank advances........     44,820     58,398     76,078     52,436     47,265
      Repurchase agreements..................     60,430     16,000          -          -      5,062
      Total retained earnings................     59,357     53,747     48,823     46,209     40,107 

<CAPTION>
                                                                                 For the Years Ended June 30,
                                                                     --------------------------------------------------
                                                                         1998      1997      1996      1995      1994
                                                                     --------------------------------------------------
<S>                                                                     <C>       <C>       <C>       <C>       <C>
                                                                                        (In thousands)
Selected Operating Data:
Total interest income................................................   $42,482   $38,413   $36,436   $34,362   $32,208
Total interest expense...............................................    25,512    22,929    21,858    20,150    18,558
                                                                        -------   -------   -------   -------   -------
   Net interest income...............................................    16,970    15,484    14,578    14,212    13,650
Provision for loan losses............................................     1,779       590       238       313       360
                                                                        -------   -------   -------   -------   -------
   Net interest income after provision for loan losses...............    15,191    14,894    14,340    13,899    13,290
Total noninterest income.............................................     1,751       444     1,220       565     1,240
Total noninterest expense............................................    10,372    11,898     9,149     8,396     8,039
                                                                        -------   -------   -------   -------   -------
   Income before income tax..........................................     6,570     3,440     6,411     6,068     6,491
Provision for income tax.............................................     2,498     1,216     2,262     2,039     2,249
                                                                        -------   -------   -------   -------   -------
    Net income.......................................................   $ 4,072   $ 2,224   $ 4,149   $ 4,029   $ 4,242
                                                                        =======   =======   =======   =======   =======
</TABLE>

                                                   (Continued on following page)

                                      10
<PAGE>
 
<TABLE>
<CAPTION>
                                             For the Years Ended June 30,
                                  ---------------------------------------------------
                                      1998      1997      1996      1995      1994
                                  ---------------------------------------------------
<S>                                 <C>       <C>       <C>       <C>       <C>
                                               (Dollars in thousands)
Selected Financial Ratios and
 Other Data(2):
Performance Ratios:
 Return on average assets.........     0.70%     0.42%     0.82%     0.84%     0.87%
 Return on average retained                                                         
  earnings........................     7.16      4.26      8.34      8.75     10.39 
 Average retained earnings to                                                       
  average assets..................     9.71      9.81      9.83      9.57      8.41 
 Retained earnings to total                                                         
  assets at end of period.........     9.48      9.78      9.84      9.82      9.01 
 Net interest rate spread(3)......     2.55      2.52      2.48      2.49      2.39
 Net interest margin(4)...........     3.00      2.97      2.94      2.88      2.70
 Average interest-earning            
  assets to average interest-    
  bearing liabilities.............   110.46    109.90    109.94    109.08    108.07 
 Total noninterest expense to          
  average assets..................     1.77      2.23      1.81      1.75      1.66 
 Efficiency ratio(5)..............    55.40     74.70     57.91     56.82     53.99
 Net interest income to           
  operating expenses..............   163.60    130.13    159.35    169.27    169.79 
Regulatory Capital Ratios(6):    
 Tangible capital.................     9.52%     9.80%     9.79%     9.81%     8.05%
 Core capital.....................     9.52      9.80      9.79      9.81      8.05
 Total risk-based capital.........    21.84     23.85     25.64     24.87     22.50
Asset Quality Data and Ratios: : 
 Total nonperforming loans(7).....   $2,143    $2,480    $1,126    $  992    $  731
 Real estate owned, net...........        -         -         -         -       140
 Total nonperforming assets(8).)..    2,143     2,480     1,126       992       871
 Allowance for loan losses........    3,027     1,723     1,259     1,186     1,034
 Nonperforming loans as a              
  percent of total loans(7)(9)....     0.60%     0.86%     0.44%     0.41%     0.33% 
 Nonperforming assets as a                                                          
  percent of total assets(8)......     0.35      0.45      0.22      0.21      0.18 
 Allowance for loan losses                                                        
  as a percent of loans(9)........     0.85      0.60      0.49      0.49      0.47 
 Allowance for loan losses                                                        
  as a percent of nonperforming 
  loans(7)........................   141.25     69.48    111.81    119.56    141.45 
</TABLE>
-------------------
(1)  The Association adopted Statement of Financial Accounting Standards
     ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
     Securities," ("SFAS No. 115"), as of June 30, 1994.
(2)  Asset Quality Ratios and Regulatory Capital Ratios are end of period
     ratios. With the exception of end of period ratios, all ratios are based on
     average daily balances during the indicated periods and are annualized
     where appropriate.
(3)  The net interest rate spread represents the difference between the weighted
     average yield on average interest-earning assets and the weighted average
     cost of average interest-bearing liabilities.
(4)  The net interest margin represents net interest income as a percent of
     average interest-earning assets.
(5)  The efficiency ratio represents the ratio of noninterest expense divided by
     the sum of net interest income and noninterest income.
(6)  For definitions and further information relating to the Association's
     regulatory capital requirements, see "Regulation and Supervision -
     Regulations - Capital Requirements." See "Regulatory Capital Compliance"
     for the Association's pro forma capital levels as a result of the
     Offerings.
(7)  Nonperforming loans consist of all non-accrual loans and all other loans 90
     days or more past due. It is the Association's policy to generally cease
     accruing interest on all loans 90 days or more past due when, in
     management's opinion, the collection of all or a portion of the loan
     principal has become doubtful. See "Business of the Association -
     Delinquent Loans, Classified Assets and Real Estate Owned."
(8)  Nonperforming assets consist of nonperforming loans and real estate owned,
     net ("REO").
(9)  Loans represent loans receivable, net, excluding the allowance for loan
     losses.

                                      11
<PAGE>
 
                                  RISK FACTORS

     The following special considerations, in addition to those discussed
elsewhere in this Prospectus, should be considered by investors in deciding
whether to purchase the Common Stock offered hereby.

Sensitivity to Increases in Interest Rates

     The Association's profitability, like that of most financial institutions,
is dependent to a large extent upon its net interest income, which is the
difference between its interest income on interest-earning assets, such as loans
and securities, and its interest expense on interest-bearing liabilities, such
as its deposits and borrowed funds.  Accordingly, the Association's results of
operations and financial condition are largely dependent on movements in market
interest rates and its ability to manage its assets and liabilities in response
to such movements.

     At June 30, 1998, the Association had $185.5 million of long-term, fixed-
rate mortgage loans, or 51% of the Association's total loan portfolio, all of
which the Association maintains in its portfolio.  At that date, $111 million,
or 30.5% of the Association's total loan portfolio consisted of adjustable-rate
mortgage ("ARM") loans.  As of June 30, 1998, $60.6 million, or 25.3% of the
Association's securities had adjustable rates and its securities portfolio had a
weighted average life of 6.4 years.  The Association's certificates of deposit
with maturities of less than one year totaled $167.8 million, and certificates
of deposit over $100,000 ("jumbo certificates of deposit") totaled $53.2
million.  Such jumbo certificates of deposit tend to be less stable sources of
funding as compared to money market, savings, retail checking/negotiable order
of withdrawal ("NOW") accounts and commercial checking accounts (collectively,
"core deposits"), and at June 30, 1998, represented 10.3% of the Association's
interest-bearing liabilities.

     Management monitors the Association's interest rate sensitivity through the
use of an internally generated  Net Portfolio Value Model which generates
estimates of the change in the Association's net portfolio value ("NPV") over a
range of interest rate scenarios.  NPV is the present value of expected cash
flows from assets, liabilities and off-balance sheet contracts.  The NPV ratio,
under any interest rate scenario, is defined as the NPV in that scenario divided
by the market value of assets in the same scenario.  As of June 30, 1998, the
Association's NPV was $72.2 million, or 11.7% of the market value of assets.  A
200 basis point increase in interest rates would result in a decrease in the
Association's NPV to $53.4 million, representing a 26.0% reduction in the value
of the Association's discounted cash flows.  Conversely, a 200 basis point
decrease in interest rates would result in a decrease in the Association's NPV
to $66.6 million, representing only a 7.7% decrease in the value of the
Association's discounted cash flows.  Consequently, an increase in interest
rates will have a significantly greater impact on the Association's NPV than a
corresponding decrease in interest rates.

     Significant increases in the level of market interest rates also may
adversely affect the fair value of the Association's securities and other
interest-earning assets.  At June 30, 1998, $178.9 million, or 74.7%, of the
Association's securities had fixed interest rates.  Generally, the value of
fixed-rate instruments fluctuates inversely with changes in interest rates.  As
a result, increases in interest rates could result in decreases in the market
value of interest-earning assets which could adversely affect the Association's
results of operations if sold or, in the case of interest-earning assets
classified as available-for-sale, the Association's retained earnings if
retained.  Increases in market interest rates also can affect the type (fixed-
rate or adjustable-rate) and amount of loans originated by the Association and
the average life of loans and securities, which can adversely impact the yields
earned on the Association's loan and securities portfolio.  In periods of
decreasing interest rates, the average life of loans held by the Association may
be shortened to the extent increased prepayment activity occurs during such
periods which, in turn, may result in the Association investing funds from such
prepayments in lower yielding assets.  See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Management of Interest Rate
Risk."

Risks Associated with Economic Conditions in the Association's Primary Market
Area

     The Association's primary market area consists of Trumbull and Mahoning
Counties in Northeastern Ohio.  Nine of the Association's offices are located in
Trumbull County, including the Association's main office in the City of Warren
and two offices are in Mahoning County.  With regard to several important
economic factors, statistics for the Association's primary market area in recent
years have trailed both the State of Ohio and the United States.

                                      12
<PAGE>
 
     In 1997, the per capita annual income of $14,953 for the Association's
primary market area was lower than the $17,244 and $18,100 per capita annual
income for Ohio and the United States, respectively.  The median annual
household income for the Association's primary market area was $31,060 in 1996,
compared to $36,165 for the State of Ohio and $36,961 for the United States.
The unemployment rates for the Association's market area and the City of Warren
have exceeded both the Ohio and national rates in the recent past.  For 1998,
through May, the unemployment rate in the Association's primary market area
averaged 5.0%, compared to 4.2% for Ohio and 3.9% for the United States.  The
City of Warren experienced a significantly higher unemployment rate of 9.3% in
January 1998.

     There have been published reports that General Motors ("GM") is considering
closing its Lordstown, Ohio, plant, which employs approximately 6,400 people in
the Warren/Youngstown area.  While GM has not commented on such reports, and the
possibility of such a closure cannot be determined, if the plant were to be shut
down, the resulting unemployment would have a major adverse impact on the
economy in the region, and therefore on the Association's results of operations.
Additionally, a number of businesses in the Warren/Youngstown area are dependent
on the Lordstown plant and/or its employees and the impact of a plant closing
would have a ripple effect on other businesses in the area, which in turn would
exacerbate the adverse impact of the closing on the Association.  The reports
estimate that a closure would be effective in 2003.  The reports state that
decision on the future of the Lordstown plant could be made as early as November
of 1998.  The Association is unable to estimate the extent of the impact that
such a closure would have on its results of operations.

     A decline in the local economy could result in an increase in the level of
defaults by borrowers in the repayment of existing loans and could suppress
demand for new loans.  Similarly, a decline in the local economy could result in
a decline in core deposits as customers would have fewer discretionary funds for
savings.  If these conditions occurred, they could adversely affect the
Association's net income.  Moreover, the absence of a robust local economy could
limit the Association's potential for growth in its primary market area.

Lending and Deposit Concentrations

     At June 30, 1998, the majority of the Association's total real estate loans
were secured by properties in Trumbull and Mahoning Counties, located in
northeastern Ohio.  A concentration of loans secured by properties in any single
area presents the risk that any adverse change in the local economic or
employment conditions may result in increased loan delinquencies and loan
losses.  The Association attempts to address this risk by relying upon
conservative underwriting practices when considering loans and frequently
reviewing general economic information relating to northeastern Ohio.  See
"Business of the Association--Lending Activities."

Increased Lending Risks Associated with Automobile Loans

     In recent years, the Association has increased its emphasis on automobile
loans.  At June 30, 1998, the Association's consumer loan portfolio totaled
$64.1 million, or 17.6% of the Association's total loans, and consisted
primarily of new and used automobile loans.  At that date, automobile loans
totaled $52.8 million, or 14.5% of total loans and 82.5% of consumer loans.
Loans secured by rapidly depreciable assets such as automobiles entail greater
risks than one- to four-family residential mortgage loans.  In such cases,
repossessed collateral for a defaulted loan may not provide an adequate source
of repayment of the outstanding loan balance, since there is a greater
likelihood of damage, loss or depreciation of the underlying collateral.
Further, collections on these loans are dependent on the borrower's continuing
financial stability and, therefore, are more likely to be adversely affected by
job loss, divorce, illness or personal bankruptcy.  Finally, the application of
various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount which can be recovered on such loans in
the event of a default.  See "Business of the Association--Lending Activities--
Consumer Lending."

Potential Low Return on Equity Following the Conversion

     At June 30, 1998, the Association's ratio of average retained earnings to
average assets was 9.71%.  The Company's equity position will be significantly
increased as a result of the Conversion.  On a pro forma basis as of June 30,
1998, assuming the sale of Common Stock at the midpoint of the Estimated Price
Range, the Company's ratio of equity to assets would exceed 21.5%.  The
Company's ability to deploy this new capital through investments in interest-

                                      13
<PAGE>
 
bearing assets, such as loans and securities, which bear rates of return
comparable to its current investments, will be significantly affected by
industry competition for such investments. The Company currently anticipates
that it will take time to prudently deploy such capital. In addition, the
issuance of authorized but unissued shares of Common Stock to the Foundation
will adversely impact the Company's earnings per share on a going-forward basis.
As a result, the Company's return on equity initially is expected to be below
its historical return on equity and may be below peer group institutions after
the Conversion.

Year 2000 Compliance

     As the year 2000 approaches, a critical business issue has emerged
regarding how existing application software programs and operating systems can
accommodate this date value.  In brief, many existing application software
products in the marketplace were designed to only accommodate a two digit date
position which represents the year  (e.g., '95 is stored on the system and
represents the year 1995).  The Association has been identifying potential
problems associated with the year 2000 issue and is in the process of
implementing a plan designed to ensure that all software used in connection with
the Association's business will manage and manipulate data involving the
transition with dates from 1999 to 2000 without functional or data abnormality
and without inaccurate results related to such data.  In addition, the
Association recognizes that its ability to be "Year 2000" compliant, to some
extent, is dependent upon the cooperation of its vendors.  The Association is
requiring its computer systems and software vendors to represent that the
products provided are or will be Year 2000 compliant and has planned a program
of testing for compliance.  There can be no assurances that such plan or the
performance by the Association's vendors will be effective to remedy all
potential problems.  To the extent the Association's systems are not fully Year
2000 compliant, there can be no assurance that potential systems interruptions
or the cost necessary to update software would not have a material adverse
effect on the Company's business, financial condition, results of operations and
business prospects.  Further, any Year 2000 failures on the part of the
Association's customers could result in additional expense or loss to the
Association.  The Association's plan also contemplates working with its
customers to address any potential Year 2000 problems.

Highly Competitive Industry and Geographic Area

     The Association faces significant competition in its primary market area
both in attracting deposits and in originating loans.  All of the Association's
offices are located in Trumbull and Mahoning Counties in northeastern Ohio.  The
Association's share of deposits in Trumbull and Mahoning Counties amounts to
approximately 7.3%.  The Association faces direct competition from a significant
number of financial institutions operating in its market area, many with a
state-wide or regional presence, and, in some cases, a national presence.  This
competition arises from commercial banks, savings banks, mortgage banking
companies, credit unions and other providers of financial services, many of
which are significantly larger than the Association and, therefore, have greater
financial and marketing resources than those of the Association.  As the
Trumbull and Mahoning Counties area continues to develop, the continued
profitability of the Association will depend, in part, upon its ability to
compete successfully in its primary market area.  See "Business of the
Association - Primary Market Area."

Provisions Which May Discourage Takeover Attempt

     Provisions in the Company's and the Association's Governing Instruments.
Certain provisions of the Company's Certificate of Incorporation and Bylaws,
particularly a provision limiting voting rights, and the Association's Stock
Charter and Bylaws, as well as certain federal regulations, assist the Company
in maintaining its status as an independent publicly owned corporation.  These
provisions provide for, among other things, supermajority voting on certain
matters, staggered boards of directors, noncumulative voting for directors,
limits on the calling of special meetings of shareholders, limits on the ability
to vote Common Stock in excess of 10% of outstanding shares, and certain uniform
price provisions for certain business combinations.  The Association's Stock
Charter also prohibits, for five years, the acquisition or offer to acquire,
directly or indirectly, the beneficial ownership of more than 10% of the
Association's equity securities.  Any person, or group acting in concert,
violating this restriction may not vote the Association's securities in excess
of 10%.  These provisions in the Association's and the Company's governing
instruments may discourage potential proxy contests and other potential takeover
attempts, particularly those which have not been negotiated with the Boards of
Directors, and thus, generally may serve to perpetuate current management.  For
a more detailed discussion of these provisions, see "Restrictions on Acquisition
of the Company and the Association."

                                      14
<PAGE>
 
     Voting Control of Officers and Directors.  Directors and executive officers
of the Association and the Company expect to purchase approximately 4.6% or 3.4%
of the shares of Common Stock to be issued in the Conversion, including shares
issued to the Foundation, based upon the minimum and the maximum of the
Estimated Price Range, respectively, and exclusive of shares that may be
attributable to directors and officers through the Stock Program, the Stock
Option Plan and the ESOP, which plans may give directors, executive officers and
employees the potential to control the voting of an additional 20.0% of the
Company's Common Stock on a fully diluted basis at the maximum of the Estimated
Price Range.  In addition, the Foundation will be funded with a contribution by
the Company equal to 7.7% of the Common Stock sold in the Conversion, which if a
waiver of the voting restriction imposed on such Common Stock is obtained from
the OTS, may be voted as determined by the Directors of the Foundation who also
will be Directors of the Company or the Association.  Management's potential
voting control could, together with additional stockholder support, defeat
stockholder proposals requiring 80% approval of stockholders.  As a result, this
potential voting control may preclude takeover attempts that certain
stockholders deem to be in their best interest and may tend to perpetuate
existing management.  See "Restrictions on Acquisition of the Company and the
Association - Restrictions in the Company's Certificate of Incorporation and
Bylaws" and "The Conversion - Establishment of the Charitable Foundation."

Absence of Market For Common Stock

     The Company, as a newly organized company, has never issued capital stock,
and consequently, there is no established market for its Common Stock at this
time.  The Company has applied to have its Common Stock quoted on the Nasdaq
under the symbol "FPFC" upon completion of the Conversion.  A public trading
market having the desirable characteristics of depth, liquidity and orderliness
depends upon the existence of willing buyers and sellers at any given time, the
presence of which is dependent upon the individual decisions of buyers and
sellers over which the Company has no control.  Accordingly, there can be no
assurance that an active and liquid trading market for the Common Stock will
develop or that, if developed, will continue, nor is there any assurance that
purchasers of the Common Stock will be able to sell their shares at or above the
Purchase Price.  The absence or discontinuance of a market for the Common Stock
would have an adverse impact on both the price and liquidity of the Common
Stock.  See "Market for Common Stock."

Possible Dilutive Effect of Stock Program and Stock Options

     Following the Conversion, the Stock Program will acquire an amount of
shares equal to 4% of the shares of Common Stock issued in the Conversion,
including shares issued to the Foundation, either through open market purchases
or the issuance of authorized but unissued shares of Common Stock from the
Company.  If the Stock Program is funded by the issuance of authorized but
unissued shares, the voting interests of existing shareholders will be diluted
by approximately 3.8%.  Also following the Conversion, the Company intends to
implement the Stock Option Plan which will provide directors and selected
employees of the Company and the Association with Stock Options to purchase
authorized but unissued shares in an amount equal to 10% of the Common Stock
issued in the Conversion, including shares issued to the Foundation.  If all of
the Stock Options intended to be granted were to be exercised using authorized
but unissued Common Stock and if the Stock Program were funded with authorized
but unissued shares, the voting interests of existing stockholders would be
diluted by approximately 12.3%.

Possible Adverse Income Tax Consequences of the Distribution of Subscription
Rights

     The Association has received an opinion of Keller that subscription rights
granted to Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members have no value.  However, this opinion is not binding on the IRS.
If the subscription rights granted to Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are deemed to have an ascertainable
value, such recipients could be taxed upon receipt of such subscription rights.
Additionally, the Association could recognize a gain for tax purposes on such
distribution.  Whether subscription rights are considered to have ascertainable
value is an inherently factual determination.  See "The Conversion - Effects of
Conversion" and "- Tax Aspects."

                                      15
<PAGE>
 
Possible Increase in Estimated Price Range and Number of Shares Issued

     The number of shares to be sold in the Conversion may be increased as a
result of an increase in the Estimated Price Range of up to 15% to reflect
changes in market and financial conditions following the commencement of the
Subscription and Community Offerings. In the event that the Estimated Price
Range is so increased, it is expected that the Company will sell up to
13,754,000 shares of Common Stock at the Purchase Price for an aggregate
purchase price of up to $137.5 million. An increase in the number of shares
issued will decrease a subscriber's pro forma net earnings per share and
stockholders' equity per share and will increase the Company's pro forma
consolidated stockholders' equity and net earnings. Such an increase will also
increase the Purchase Price as a percentage of pro forma stockholders' equity
per share and net earnings per share.

No Fairness Opinion

     The Association has engaged Webb as a financial and marketing advisor, and
Webb has agreed to assist the Association and the Company in its solicitation of
subscriptions and purchase orders for Common Stock in the Offerings.  Webb has
not prepared any report or opinion constituting recommendations or advice to the
Association.  In addition, Webb has expressed no opinion as to the prices at
which Common Stock to be issued in the Offerings may trade.  Furthermore, Webb
has not verified the accuracy or completeness of the information contained in
the Prospectus or the Proxy Statement.  See "The Conversion - Marketing and
Underwriting Arrangements."

Potential Delays of Consummation of the Conversion

     Orders submitted in the Subscription Offering, Community Offering and/or
Syndicated Community Offering are irrevocable.  The Company and the Association
expect to complete the Conversion within the time periods indicated in this
Prospectus.  Nevertheless, it is possible that several factors, including, but
not limited to, a delay in receiving regulatory approval of the final updated
appraisal prepared by Keller, a delay in processing orders in the event the
Offerings are oversubscribed or a delay caused by a regulatory or legal
challenge to the establishment and funding of the Foundation or other actions
taken in connection with the Conversion could significantly delay the completion
of the Conversion.  Subscribers will have no access to subscription funds and/or
shares of Common Stock until the Conversion is completed or terminated.  In the
event the Conversion is terminated, subscribers will be refunded their
subscription funds, together with interest at a rate equal to the Association's
interest rate paid on passbook accounts, or will have their withdrawal
authorization terminated.  See "The Conversion."

Effects of the Establishment of the Charitable Foundation

     Pursuant to the Plan, the Company intends to voluntarily establish a
charitable foundation in connection with the Conversion.  The Foundation will be
incorporated under Delaware law as a non-stock corporation and will be funded
with shares of Common Stock contributed by the Company.  Establishment of the
Foundation is subject to the approval of the Association's members at the
Special Meeting.  If approved by members, the establishment of the Foundation
and the contribution of Common Stock to the Foundation will be dilutive to the
interests of stockholders and will have an adverse impact on the reported
earnings of the Company in fiscal 1999, the year in which the Foundation will be
funded.

     Dilution of Stockholders' Interests.  The Company proposes to fund the
Foundation with Common Stock of the Company in an amount equal to 7.7% of the
Common Stock to be sold in the Conversion.  At the minimum, midpoint and maximum
of the Estimated Price Range, the contribution to the Foundation would equal
680,000,  800,000 and 920,000 shares, with a value of $6.8 million, $8.0 million
and $9.2 million, respectively, based on the Purchase Price of $10.00 per share.
Assuming the sale of Common Stock at the maximum of the Estimated Price Range,
upon completion of the Conversion and establishment of the Foundation, the
Company will have 12,880,000 shares issued and outstanding of which the
Foundation will own 920,000 shares, or 7.1%.  AS A RESULT, PERSONS PURCHASING
SHARES OF COMMON STOCK IN THE CONVERSION WILL HAVE THEIR OWNERSHIP AND VOTING
INTERESTS IN THE COMPANY DILUTED BY 7.1%, AS COMPARED TO COMPLETING THE
CONVERSION WITHOUT THE FOUNDATION.  SEE "PRO FORMA DATA."

     Adverse Impact on Earnings.  Assuming receipt of approval of the
Association's members, the contribution of Common Stock to the Foundation will
have an adverse impact on the Company's earnings in the year in which the

                                      16
<PAGE>
 
contribution is made. The Company will recognize the full expense in the amount
of the contribution of Common Stock to the Foundation in the quarter in which it
occurs, which is expected to be the second quarter of fiscal 1999. The amount of
the contribution will range from $6.8 million to $9.2 million, based on the
minimum and maximum of the Estimated Price Range. The contribution expense will
be partially offset by the tax benefit related to the expense. The Company and
the Association have been advised by their independent tax advisors that the
contribution to the Foundation will be tax deductible, subject to an annual
limitation based on 10% of the Company's annual taxable income. Assuming a
contribution of $9.2 million in Common Stock (based on the maximum of the
Estimated Price Range), the Company estimates a net tax effected expense of $6.1
million (based upon a 34% tax rate). If the Foundation had been established at
June 30, 1998, the Association would have reported a net loss of $2.0 million,
rather than reporting net income of $4.1 million for the year ended June 30,
1998. Management cannot predict earnings for fiscal 1999, but expects that the
establishment and funding of the Foundation will have an adverse impact on the
Company's earnings for the quarter in which the Foundation is funded. Due to the
contribution to the Foundation, the Association expects in the future to reduce
the amount of its current charitable contributions within its community. The
Company and the Association do not currently anticipate making additional
contributions to the Foundation within the first five years following the
initial contribution.

     Tax Considerations.  The Company and the Association have been advised by
Crowe, Chizek and Company LLP that an organization created for the above
purposes would qualify as a Section 501(c)(3) exempt organization under the
Internal Revenue Code of 1986, as amended (the "Code"), and would be classified
as a private foundation.  The Foundation will submit a request to the Internal
Revenue Service ("IRS") to be recognized as an exempt organization.  The Company
and the Association have received an opinion of Crowe, Chizek and Company LLP
that the Foundation would qualify as a Section 501(c)(3) exempt organization
under the Code, except that such opinion does not consider the impact of the
regulatory condition agreed to by the Foundation that Common Stock issued to the
Foundation be voted in the same ratio as all shares of the Company's Common
Stock voted on all proposals considered by stockholders of the Company.  See
"The Conversion - Establishment of the Charitable Foundation."  Consistent with
this condition, in the event that the Company or the Foundation receives an
opinion of their legal counsel that compliance with the voting restriction would
have the effect of causing the Foundation to lose its tax-exempt status, or
otherwise have a material and adverse tax consequence on the Foundation or
subject the Foundation to an excise tax under Section 4941 of the Code, the OTS
will waive such voting restriction upon submission of a legal opinion by the
Company or the Foundation that is satisfactory to the OTS.  The independent tax
advisors' opinion further provides that the Company's contribution of its own
stock to the Foundation will not constitute an act of self-dealing, and that the
Company will be entitled to a deduction in the amount of the fair market value
of the stock at the time of the contribution less the nominal par value that the
Foundation is required to pay to the Company for such stock, subject to an
annual limitation based on 10% of the Company's annual taxable income.  The
Company, however, would be able to carry forward any unused portion of the
deduction for five years following the contribution subject to the 10% annual
limitation.  Thus, while the Company would have received a charitable
contribution deduction of approximately $700,000 in fiscal 1998 (based upon the
sale of stock at the maximum of the Estimated Price Range and a contribution of
$9.2 million of Common Stock and the Association's pre-tax income for fiscal
1998), the Company is permitted under the Code to carryover the excess
contribution in the five following years.  Assuming the sale of Common Stock at
the midpoint of the Estimated Price Range, the Company estimates that
substantially all of the deduction should be deductible over the six-year
period.  Although the Company and the Association have received an opinion of
Crowe, Chizek and Company LLP that the Company will be entitled to the deduction
for the charitable contribution, there can be no assurances that the IRS will
recognize the Foundation as a Section 501(c)(3) exempt organization or that the
deduction will be permitted.  In such event, the Company's tax benefit related
to the Foundation would have to be fully expensed, resulting in a further
reduction in earnings in the year in which the IRS makes such a determination.

     Comparison of Valuation and Other Factors Assuming the Foundation is Not
Established as Part of the Conversion.  The establishment of the Foundation was
taken into account by Keller in determining the estimated pro forma market value
of the Common Stock of the Company.  The aggregate price of the shares of Common
Stock being offered in the Subscription and Community Offerings is based upon
the independent appraisal conducted by Keller of the estimated pro forma market
value of the Common Stock of the Company. The pro forma aggregate price of the
Common Stock being offered for sale in the Conversion is currently estimated to
be between $88.4 million and $119.6 million, with a midpoint of $104.0 million.
Based on the appraisal, the pro forma market capitalization of the Association
at the midpoint of the Estimated Price Range, including shares issued to the
Foundation, is $112.0 million.  

                                      17
<PAGE>
 
The pro forma price to book ratio and the pro forma price to earnings ratio, at
and for the year ended June 30, 1998, are 74.40% and 16.95x, respectively, at
the midpoint of the Estimated Price Range. In the event that the Conversion did
not include the Foundation, Keller has estimated that the estimated pro forma
market capitalization of the Association would be approximately $122.0 million
at the midpoint based on a pro forma price to book ratio and the pro forma price
to earnings ratio that are approximately the same as the independent appraisal
at 74.26% and 16.95x, respectively. If the Foundation was not part of the
Conversion, the pro forma market value of the shares being offered is estimated
to be between $103.7 million and $140.3 million. See "Comparison of Valuation
and Pro Forma Information with No Foundation." This estimate by Keller was
prepared at the request of the OTS and is solely for purposes of providing
depositors and subscribers with information with which to make an informed
decision on the Conversion. There is no assurance that if the Foundation was not
approved the appraisal prepared at that time would conclude that the pro forma
market value of the Company would be the same as the amount estimated herein.
Any appraisal prepared at that time would be based on the facts and
circumstances existing at that time, including, among other things, market and
economic conditions.

     The Association believes that the establishment of the Foundation is in the
best interests of the Association, its depositors, its prospective stockholders
and the communities in which it operates.  The Foundation is integrally tied to
the Association's business of operating a community banking institution and the
Association believes that the Foundation will have a positive impact on the
Association's long-term franchise value.  The amount of Common Stock being
offered in the Conversion at the midpoint of the Estimated Price Range is
approximately $18.0 million less than the estimated amount of Common Stock that
would be offered in the Conversion without the Foundation based on the estimate
provided by Keller.  Accordingly, certain depositors of the Association who
subscribe to purchase Common Stock in the Subscription Offering may receive
fewer shares depending on the appraisal valuation at that time, the number of
shares sold based on that appraisal, the size of a depositor's stock order, the
amount of his or her qualifying deposits in the Association and the overall
level of subscriptions.  The decrease in the amount of Common Stock being
offered as a result of the contribution of Common Stock to the Foundation will
not have a significant effect on the Company or the Association's capital
position.  The Association's regulatory capital is significantly in excess of
its regulatory capital requirements and will further exceed such requirements
following the Conversion.  The Association's tangible, core and risk-based
capital ratios at June 30, 1998 were 9.5%, 9.5% and 21.8%, respectively.
Assuming the sale of shares at the midpoint of the Estimated Price Range, the
Association's pro forma tangible, core and risk-based capital ratios at June 30,
1998 would be 14.8%, 14.8% and 33.3%, respectively.  On a consolidated basis,
the Company's pro forma stockholders' equity would be $150.5 million, or
approximately 21.6% of pro forma consolidated assets, assuming the sale of
shares at the midpoint of the Estimated Price Range.  Pro forma stockholders'
equity per share and pro forma net earnings per share would be $13.44 and $0.59,
respectively.  If the Foundation was not being established in the Conversion,
based on the Keller estimate, the Company's pro forma stockholders' equity would
be approximately $169.2 million, or approximately 23.5% of pro forma
consolidated assets at the midpoint of the estimate, and pro forma stockholder's
equity per share and pro forma net earnings per share would be substantially
similar with the Foundation as without the establishment of the Foundation.
See "Comparison of Valuation and Pro Forma Information with No Foundation."

     Potential Anti-Takeover Effect.  If approved by members, upon completion of
the Conversion, the Foundation will own 7.1% of the total shares of the
Company's Common Stock outstanding.  Such shares will be owned solely by the
Foundation; however pursuant to the terms of the contribution as mandated by the
OTS, the shares of Common Stock held by the Foundation must be voted in the same
ratio as all other shares of the Company's Common Stock on all proposals
considered by the stockholders of the Company.  See "The Conversion--
Establishment of the Charitable Foundation--Regulatory Conditions Imposed on the
Foundation."  The Company and the Foundation will take the necessary steps to
provide such requirement in the Foundation's corporate governance documents.  As
such, the Company does not believe the Foundation will have an anti-takeover
effect on the Company.  In the event that the OTS were to waive this voting
restriction, the Foundation's board of directors would exercise sole voting
power over such shares and would no longer be subject to the restriction.
However, the OTS could impose additional conditions at that time on the
composition of the board of directors of the Foundation or which otherwise
relate to control of the Common Stock held by the Foundation.  See "The
Conversion--Establishment of the Foundation--Regulatory Conditions Imposed on
the Foundation."  If a waiver of the voting restriction were granted by the OTS
and no further conditions were imposed on the Foundation at that time,
management of the Company and the Association may benefit to the extent that the
Board of Directors of the Foundation determines to vote the shares of Common
Stock held by the Foundation in 

                                      18
<PAGE>
 
favor of proposals supported by the Company and the Association. Furthermore, in
such an event, when the Foundation's shares are combined with shares purchased
directly by officers and directors of the Company, shares held by the Stock
Program trust, and shares held by the ESOP trust, the aggregate of such shares
could exceed 20% of the Company's outstanding Common Stock, which could enable
management to defeat stockholder proposals requiring 80% approval. Consequently,
in the event the voting restriction was waived, the potential voting control
might preclude takeover attempts that certain stockholders deem to be in their
best interest, and might tend to perpetuate management. However, since the ESOP
shares are allocated to all eligible employees of the Association, and any
unallocated shares will be voted by an independent trustee, and because the
Stock Program must first be approved by stockholders no sooner than six months
following completion of the Conversion, and awards under such proposed plans may
be granted to employees other than executive officers and Directors, management
of the Company does not expect to have voting control of all shares covered by
the ESOP and other stock-based benefit plans. See " -Certain Anti-Takeover
Provisions - Voting Control of Officers and Directors."

     Further, there will be no agreements or understandings, written or tacit,
with respect to the exercise of either direct or indirect control over the
management or policies of the Company by the Foundation which may discourage
takeover attempts, including agreements related to voting, acquisition or
disposition of the Company's Common Stock.  Finally, as the Foundation sells its
shares of Common Stock over time, its ownership interest and voting power in the
Company is expected to decrease.

     Potential Challenges.  The establishment and funding of a charitable
foundation as part of a conversion of a mutual savings institution to stock form
is innovative and has been done in a limited number of instances.  As such, the
Foundation may be subject to potential challenges notwithstanding that the Board
of Directors of the Company and the Board of Directors of the Association have
carefully considered the various factors involved in the establishment of the
Foundation in reaching their determination to establish the Foundation as part
of the Conversion.  See "The Conversion - Establishment of the Charitable
Foundation - Purpose of the Foundation."  In conjunction with its approval of
the Conversion, the Association determined to submit the Foundation for a vote
of members so that members have a right to vote on whether the Foundation should
be established as part of the Conversion.  If certain parties were to institute
an action seeking to require the Association to eliminate establishment of the
Foundation in connection with the Conversion, no assurances can be made that the
resolution of such challenges would not result in a delay in the consummation of
the Conversion or that any objecting persons would not be ultimately successful
in obtaining such removal or other equitable relief or monetary damages against
the Company or the Association.  Additionally, if the Company and the
Association are forced to eliminate the Foundation, the Company may be required
to resolicit subscribers in the Offerings.

     Approval of Members.  Establishment of the Foundation is subject to the
approval of a majority of the total outstanding votes of the Association's
members eligible to be cast the Special Meeting.  The Foundation will be
considered as a separate matter from approval of the Plan of Conversion.  If the
Association's members approve the Plan of Conversion, but not the establishment
of the Foundation, the Association intends to complete the Conversion without
the establishment of the Foundation.  Failure to approve the Foundation may
materially increase the pro forma market value of the Common Stock being offered
for sale in the Offerings since the Valuation Range, as set forth herein, takes
into account the dilutive impact of the issuance of shares to the Foundation.
If the pro forma market value of the Common Stock without the Foundation is
either greater than $137.5 million or less than $88.4 million, the Association
will establish a new Estimated Price Range and commence a resolicitation of
subscribers (i.e., subscribers will be permitted to continue their orders, in
which case they will need to affirmatively reconfirm their subscriptions prior
to the expiration of the resolicitation offering or their subscriptions funds
will be promptly refunded with interest at the Association's passbook rate of
interest, or be permitted to increase, decrease, or cancel their subscriptions).
Any change in the Estimated Price Range must be approved by the OTS.  See "The
Conversion--Stock Pricing."  A resolicitation, if any, following the conclusion
of the Subscription and Community Offerings would not exceed 45 days unless
further extended by the OTS for periods of up to 90 days not to extend beyond
__________, 2000.


                                      19
<PAGE>
 
Stock-Based Benefits to Management, Employment Contracts and Change in Control
Payments

     Stock Program.  The Company intends to adopt the Stock Program which would
provide stock grants of Common Stock to non-employee directors and selected
officers and employees of the Company and Association and intends to seek
stockholder approval of such plans at a meeting of stockholders following the
Conversion, which may be held no earlier than six months after completion of the
Conversion.  The Company expects to acquire Common Stock on behalf of the Stock
Program in an amount equal to 4% of the Common Stock issued in connection with
the Conversion, including shares issued to the Foundation, or 380,800 shares and
515,200 shares at the minimum and maximum of the Estimated Price Range,
respectively.  These shares will be acquired either through open market
purchases or from authorized but unissued Common Stock.  See "- Possible
Dilutive Effect of Stock Program and Stock Options." Although no specific award
determinations have been made, the Company anticipates that it will provide
awards under the Stock Program to the directors and selected officers and
employees of the Company and Association to the extent permitted by applicable
regulations. See "Management of the Association - Benefit Plans - Stock
Program." These shares granted under the Stock Program will be awarded at no
cost to the recipients. The implementation of such Stock Program may result in
increased compensation expenses to the Company and may have a dilutive effect on
existing stockholders. See "Management of the Association - Benefit Plans -Stock
Program" and "- Possible Dilutive Effect of Stock Program and Stock Options."

     Stock Option Plan.  The Company also intends to adopt stock-based benefit
plans which would provide options to purchase Common Stock ("Stock Options") to
officers, employees and non-employee directors of the Company and Association
(the "Stock Option Plan") and intends to seek stockholder approval of such plans
at a meeting of stockholders following the Conversion, which may be held no
earlier than six months after completion of the Conversion.  Although no
specific determinations have been made, the Company expects that non-employee
directors and selected officers and employees of the Company and Association
will be granted options to purchase Common Stock in an amount equal to 10% of
the Common Stock issued in connection with the Conversion, including shares
issued to the Foundation, or 952,000 shares and 1,288,000 shares at the minimum
and maximum of the Estimated Price Range, respectively.  It is currently
intended that the exercise price of the Stock Options will be equal to the fair
market value of the underlying Common Stock on the date of grant.  Recipients of
Stock Options will not be required to pay for the shares until the date of
exercise.  The implementation of such Stock Option Plan may have a dilutive
effect upon existing stockholders of the Company to the extent option exercises
are satisfied with authorized but unissued shares.  See "- Possible Dilutive
Effect of Stock Program and Stock Options" and "Management of the Association -
Benefit Plans - Stock Option Plan."

     Change In Control Provisions.  The Company and the Association intend to
enter into employment or change in control agreements with certain officers of
the Association and Company which will provide for benefits and cash payments in
the event of their involuntary or, in certain circumstances, voluntary
termination following a change in control of the Company or Association.  These
provisions may have the effect of increasing the cost of acquiring the Company
or Association, thereby discouraging future attempts to take over the Company or
the Association.  Additionally, the Association intends to adopt an employee
severance compensation plan, which similarly provides a cash payment and
benefits to eligible employees upon such employees' termination following a
change in control of the Company or Association, which, in addition to any
payments which may be made under the Stock Program and Stock Option Plan, also
may have the effect of increasing the cost of acquiring the Company or
Association.  Based on current salaries, cash payments to be paid in the event
of a change in control pursuant to the terms of the employment agreements, and
change in control agreements would be approximately $___ million.  However, the
actual amount to be paid in the event of a change in control of the Association
or the Company cannot be estimated at this time because the actual amount is
based on the average salary of the employee and other factors existing at the
time of the change in control.  See "Restrictions on Acquisition of the Company
and the Association - Restrictions in the Company's Certificate of Incorporation
and Bylaws," "Management of the Association - Employment Agreements," "- Change
in Control Agreements," "- Employee Severance Compensation Plan," "- Benefit
Plans - Stock Option Plan" and "- Benefit Plans - Stock Program."


                                      20
<PAGE>
 
                          FIRST PLACE FINANCIAL CORP.

     First Place Financial Corp. is a Delaware corporation recently organized at
the direction of the Board of Directors of the Association for the purpose of
acquiring all of the capital stock of the Association to be issued in the
Conversion.  The Company expects to receive approval from the Office of Thrift
Supervision ("OTS") to become a savings and loan holding company and, upon
completion of the Conversion, will be subject to regulation by the OTS.  See
"The Conversion - General" and "Regulation - Holding Company Regulation."  Upon
consummation of the Conversion, the Company will have no significant assets
other than all of the shares of the Association's capital stock acquired in the
Conversion and an amount equal to 50% of the net proceeds of the Conversion,
including the loan to the ESOP, and will have no significant liabilities.  The
Company intends to use a portion of the net proceeds it retains to loan to the
ESOP funds to enable the ESOP to purchase up to 8% of the stock issued in
connection with the Conversion, including shares issued to the Foundation.  The
Company and the Association may, however, alternatively choose to fund the ESOP
through a loan to the ESOP trust by a third-party financial institution.  The
management of the Holding Company is set forth under "Management of the
Company."  Initially, the Company will neither own nor lease any property, but
will instead use the premises, equipment and furniture of the Association.  At
the present time, the Company does not intend to employ any persons other than
certain officers who are currently officers of the Association but will utilize
the support staff of the Association from time to time.  Additional employees
will be hired as appropriate to the extent the Company expands its business in
the future.

     Management believes that the holding company structure will provide the
Company additional flexibility to diversify its business activities through
existing or newly formed subsidiaries (which subsidiaries could be financial
institutions), or through acquisitions of or mergers with other financial
institutions and financial services related companies.  Although there are no
current arrangements, understandings or agreements regarding any such
opportunities, the Company will be in a position after the Conversion, subject
to regulatory limitations and the Company's financial position, to take
advantage of any such acquisition and expansion opportunities that may arise.
The initial activities of the Company are anticipated to be funded by the
proceeds to be retained by the Company, income thereon and through dividends
from the Association.

     The Company's executive office is located at the administrative offices of
the Association, 185 East Market Street, Warren, Ohio 44482.  Its telephone
number is (330) 373-1221.


              FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN

     The Association was originally organized in 1922 as an Ohio-chartered
savings and loan association, and converted to a federally-chartered savings and
loan association in 1936.  The Association's deposit accounts are insured to the
maximum allowable amount by the SAIF as administered by the FDIC.  Including the
Association's principal office, which is located in Warren, Ohio, the
Association serves its customers from 11 full-service banking facilities and 2
loan service centers located in Warren, Ohio and its surrounding areas.  At June
30, 1998, the Association had total assets of $609.4 million, total deposits of
$435.5 million, retained earnings of $59.4 million and had a tangible capital
ratio of 9.52%, a core capital ratio of 9.52% and a total risk-based capital
ratio of 21.84%.  See "Regulation--Federal Savings Institution Regulation--
Capital Requirements."

     The Association is a community-oriented savings institution whose principal
business consists of accepting retail deposits from the general public in its
primary market area, consisting of those areas surrounding its full-service
branch offices, and investing those deposits, together with funds generated from
operations and borrowings, primarily in one- to four-family residential mortgage
loans, automobile and home equity loans and, to a much lesser extent, multi-
family and commercial real estate loans, construction loans, commercial loans
and passbook savings loans.  The Association also invests in government issued
and sponsored mortgage-backed securities, securities issued by the U.S.
Government and agencies thereof, and other investments permitted by applicable
laws and regulations.  The Association's primary market area for lending
consists of Trumbull and Mahoning Counties.  See "Business of the Association."

                                      21
<PAGE>
 
     At June 30, 1998, the Association's gross loan portfolio totaled $363.4
million, or 59.6% of total assets, of which $268.0 million were one- to four-
family residential mortgage loans, $4.5 million were multi-family real estate
loans, $8.8 million were commercial real estate loans, $6.3 million were
construction loans, $9.2 were home equity loans and $64.1 million were consumer
loans, consisting primarily of automobile loans.  The Association originates
one- to four-family mortgage loans generally secured by properties located in
the Association's primary market area.  See "Business of the Association."

     The Association's investment activities primarily consist of investments in
mortgage-backed securities and U.S. Government obligations.  At June 30, 1998,
the Association's securities portfolio totaled $239.5 million, or 39.3% of total
assets, of which $211.2 million was categorized as available-for-sale.  At June
30, 1998, the Association's mortgage-backed securities portfolio totaled $207.9
million, or 34.1% of total assets, of which $190.1 million was classified as
available-for-sale and consisted almost entirely of mortgage-backed securities,
guaranteed or issued by Governmental-sponsored and federal agencies such as the
Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation ("FHLMC") and Government National Mortgage Association ("GNMA"). The
Association's investment securities generally consist of United States
Government or federal agency obligations.  See "Business of the Association -
Investment Activities."

     At June 30, 1998, the Association's deposit accounts totaled $435.5 million
or 79.2% of total liabilities, of which $175.5 million, or 40.3%, were comprised
of passbook saving accounts, retail checking/NOW accounts, money market accounts
and commercial checking accounts.  In addition to core deposits, the Association
had $260.0 million of certificate accounts, or 59.7% of total deposits, of which
$167.8 million  were certificates of deposit with maturities of one year or less
and $53.2 million were certificates of deposit with balances of $100,000 or more
("jumbo deposits").

     The Association's executive office is located at 185 East Market Street,
Warren, Ohio 44482.  Its telephone number is (330) 373-1221.


                                      22
<PAGE>
 
                         REGULATORY CAPITAL COMPLIANCE

     At June 30, 1998, the Association exceeded each of its regulatory capital
requirements. Set forth below is a summary of the Association's compliance with
the OTS capital standards as of June 30, 1998, on an historical and pro forma
basis assuming that the indicated number of shares were sold as of such date and
receipt by the Association of 50% of the net proceeds. For purposes of the table
below, the amount expected to be borrowed by the ESOP and the cost of its shares
expected to be acquired by the Stock Program are deducted from pro forma
regulatory capital.

<TABLE>
<CAPTION>

                                                            Pro Forma at June 30, 1998 Based Upon the Sale at $10.00 Per Share
                                                            ------------------------------------------------------------------
                                                                8,840,000 Shares            10,400,000 Shares  
                                                                (Minimum of the             (Midpoint of the   
                                     Historical at                 Estimated                    Estimated       
                                     June 30, 1998                Price Range)                 Price Range)     
                                -------------------------   -------------------------    -------------------------
                                                Percent                     Percent                      Percent   
                                                  of                          of                           of     
                                  Amount       Assets(2)      Amount       Assets(2)       Amount       Assets(2)  
                                -----------   -----------   -----------   -----------    -----------   -----------
                                                              (Dollars in thousands)             
<S>                             <C>           <C>           <C>           <C>            <C>           <C> 
GAAP Capital(3)..............     $59,357         9.7%        $91,146        14.2%          $96,867        15.0%   
                                  =======        ====         =======        ====           =======        ====    
Tangible Capital:                                                                                                 
   Capital Level(4)..........     $57,763         9.5%        $89,552        14.0%          $95,273        14.8%   
   Requirement(5)............       9,117         1.5           9,594         1.5             9,680         1.5    
                                  -------        ----         -------        ----           -------        ----    
   Excess....................     $48,646         8.0%        $79,958        12.5%          $85,593        13.3%   
                                  =======        ====         =======        ====           =======        ====    
Core Capital:                                                                                                     
   Capital Level(4)..........     $57,763         9.5%        $89,552        14.0%          $95,273        14.8%   
   Requirement(5)............      18,234         3.0          19,188         3.0            19,359         3.0    
                                  -------        ----         -------        ----           -------        ----    
   Excess....................     $39,529         6.5%        $70,364        11.0%          $75,914        11.8%   
                                  =======        ====         =======        ====           =======        ====    
Risk-Based Capital:                                                                                               
   Capital Level(4)(6).......     $60,418(7)     21.8%        $92,207        31.7%          $97,928        33.3%   
   Requirement...............      22,134         8.0          23,288         8.0            23,496         8.0    
                                  -------        ----         -------        ----           -------        ----    
   Excess....................     $38,284        13.8%        $68,919        23.7%          $74,432        25.3%   
                                  =======        ====         =======        ====           =======        ====    

<CAPTION> 

                                Pro Forma at June 30, 1998 Based Upon the Sale at $10.00 Per Share
                                ------------------------------------------------------------------
                                                               13,754,000 Shares
                                   11,960,000 Shares          (15% Above Maximum
                                     (Maximum of the                of the
                                        Estimated                 Estimated
                                       Price Range)             Price Range)(1)
                                -------------------------   -------------------------    
                                                Percent                     Percent
                                                  of                          of
                                   Amount      Assets(2)      Amount       Assets(2)
                                -----------   -----------   -----------   -----------    
                                                (Dollars in thousands)                                               
<S>                             <C>           <C>           <C>           <C> 
GAAP Capital(3)..............    $102,564        15.7%       $109,215        16.6%
                                 ========        ====        ========        ====
Tangible Capital:                 
   Capital Level(4)..........    $100,970        15.5%       $107,621        16.4%
   Requirement(5)............       9,765         1.5           9,865         1.5
                                 --------        ----        --------        ----
   Excess....................    $ 91,205        14.0%       $ 97,756        14.9%
                                 ========        ====        ========        ====
Core Capital:                                                          
   Capital Level(4)..........    $100,970        15.5%       $107,621        16.4%
   Requirement(5)............      19,530         3.0          19,730         3.0
                                 --------        ----        --------        ----
   Excess....................    $ 81,440        12.5%       $ 87,891        13.4%
                                 ========        ====        ========        ====
Risk-Based Capital:                                                    
   Capital Level(4)(6).......    $103,625        35.0%       $110,276        36.8%
   Requirement...............      23,703         8.0          23,945         8.0
                                 --------        ----        --------        ----
   Excess....................    $ 79,922        27.0%       $ 86,331        28.8%
                                 ========        ====        ========        ====
</TABLE>

---------------------
(1) As adjusted to give effect to an increase in the number of shares which
    could occur due to an increase in the Estimated Price Range of up to 15% as
    a result of regulatory considerations as changes in market or general
    financial or economic conditions following the commencement of the
    Subscription and Community Offerings.
(2) Tangible capital levels are shown as a percentage of total adjusted assets
    of $609.4 million. Core capital levels are shown as a percentage of total
    adjusted assets of $609.4 million. Risk-based capital levels are calculated
    on the basis of a percentage of risk-weighted assets of $276.7 million.
(3) GAAP defined as Generally Accepted Accounting Principles.
(4) Pro forma capital levels assume receipt by the Association of 50% of the net
    proceeds from the shares of Common Stock sold at the minimum, midpoint and
    maximum of the Estimated Price Range. These levels also assume funding by
    the Association of the Stock Program equal to 4% of the Common Stock issued
    and repayment of the Company's loan to the ESOP to enable the ESOP to
    purchase 8% of the Common Stock issued valued at the minimum, midpoint and
    maximum of the Estimated Price Range. See "Management of the Association -
    Benefit Plans" for a discussion of the Stock Program and ESOP.
(5) The current OTS core capital requirement for savings associations is 3% of
    total adjusted assets. The OTS has proposed core capital requirements which
    would require a core capital ratio of 3% of total adjusted assets for
    thrifts that receive the highest supervisory rating for safety and soundness
    and that are not experiencing or anticipating significant growth, and a 4%
    to 5% core capital ratio requirement for all other thrifts. See 
    "Regulation - Regulations - Capital Requirements." The Company will not be
    subject to regulatory capital requirements.
(6) Assumes net proceeds are invested in assets that carry a risk-weighting of
    45.4%, the average risk weighting of the Association's assets as of June 30,
    1998.
(7) Historical risk-based capital is comprised of tangible capital of $57.8
    million plus the Association's general valuation allowance of $2.7 million
    at June 30, 1998.


                                      23
<PAGE>
 
                                USE OF PROCEEDS

     Although the actual net proceeds from the sale of the Common Stock cannot
be determined until the Conversion is completed, it is presently anticipated
that the net proceeds from the sale of the Common Stock will be between $75.0
million and $101.9 million (or $117.5 million if the Estimated Price Range is
increased by 15%).  See "Pro Forma Data" and "The Conversion - Stock Pricing" as
to the assumptions used to arrive at such amounts.  The Company will be unable
to utilize any of the net proceeds of the Offerings until the consummation of
the Conversion.

     The Company will purchase all of the outstanding capital stock of the
Association to be issued upon Conversion in exchange for 50% of the net proceeds
of the Offerings, with the remaining net proceeds to be retained by the Company.
Based on net proceeds of $75.0 million to $101.9 million, the Company expects to
utilize between $37.5 million and $50.9 million of net proceeds to purchase the
common stock of the Association.  Such portion of net proceeds received by the
Association from the Company will be added to the Association's general funds
which the Association currently intends to utilize for general corporate
purposes, including investment in loans and securities, as well as the possible
expansion of its facilities and operations through marketing, business
development, or the acquisition or establishment of branch offices, although the
Company and the Association have no current arrangements, understandings or
agreements regarding any such transactions.  The Association may also use a
portion of the net proceeds to renovate or rebuild its main office building.
The renovation or reconstruction of the Association's main office building is
currently estimated to cost up to $15.0 million.  To the extent that the stock-
based benefit programs which the Company or the Association intend to adopt
subsequent to the Conversion are not funded with authorized but unissued common
stock of the Company, the Company or Association may use net proceeds from the
Conversion to fund the purchase of stock to be awarded under such stock benefit
programs.  The Association has not yet determined the approximate amount of net
proceeds to be used for any of the purposes mentioned above.  See "Risk Factors
- Stock-Based Benefits to Management, Employment Contracts and Change in Control
Payments" and "Management of the Association - Benefit Plans - Stock Option
Plan" and " - Stock Program."

     The Company intends to use a portion of the net proceeds it retains (i.e.,
50% of the net proceeds, which based on net proceeds of $75.0 million to $101.9
million will be between $37.5 million and $50.9 million) to make a loan directly
to the ESOP to enable the ESOP to purchase in the Conversion 8% of the Common
Stock issued in connection with the Conversion, including shares issued to the
Foundation.  Based upon the sale of 8,840,000 shares or 11,960,000 shares at the
minimum and maximum of the Estimated Price Range, and the issuance of shares to
the Foundation, the amount of the loan to the ESOP would be $7.6 million or
$10.3 million, respectively (or $11.8 million if the Estimated Price Range is
increased by 15%), with a term of 15 years at the prevailing prime rate of
interest.  The Company and Association may alternatively choose to fund the
ESOP's stock purchases through a loan by a third party financial institution.
See "Management of the Association - Benefit Plans - ESOP."  The remaining net
proceeds retained by the Company will initially be invested in mortgage-backed
and investment securities.

     The net proceeds retained by the Company may also be used to support the
future expansion of operations through branch acquisitions, the establishment of
branch offices and the acquisition of savings associations and commercial banks
or their assets, including those located within the Association's market area or
diversification into other banking related businesses.  The Company and the
Association have no current arrangements, understandings or agreements regarding
any such transactions.  The Company, upon the Conversion, will be a unitary
savings and loan holding company, which under existing laws would not be
restricted as to the types of business activities in which it may engage.  See
"Regulation - Holding Company Regulation" for a description of certain
regulations applicable to the Company.

     Upon completion of the Conversion, the Board of Directors of the Company
will have the authority to adopt stock repurchase plans, subject to statutory
and regulatory requirements.  Unless approved by the OTS, the Company, pursuant
to OTS regulations, will be prohibited from repurchasing any shares of Common
Stock for three years except (i) for an offer to all stockholders on a pro rata
basis, or (ii) for the repurchase of qualifying shares of a director.
Notwithstanding the foregoing and except as provided below, beginning one year
following completion of the Conversion, the OTS regulations permit the Company
to repurchase its Common Stock so long as: (i) the repurchases within the
following two years are part of an open-market program not involving greater
than 5% of its outstanding capital stock during a 12-month period; (ii) the
repurchases do not cause the Association to become "undercapitalized" 

                                      24
<PAGE>
 
within the meaning of the OTS prompt corrective action regulation; and (iii) the
Company provides to the Regional Director of the OTS no later than 10 days prior
to the commencement of a repurchase program written notice containing a full
description of the program to be undertaken and such program is not disapproved
by the Regional Director. See "Regulation--Prompt Corrective Regulatory Action."
In addition, under current OTS policies, repurchases may be allowed in the first
year following Conversion and in amounts greater than 5% in the second and third
years following Conversion provided there are valid and compelling business
reasons for such repurchases and the OTS does not object to such repurchases.

     Based upon facts and circumstances following the Conversion and subject to
applicable regulatory requirements, the Board of Directors may determine to
repurchase stock in the future.  Such facts and circumstances may include but
not be limited to:  (i) market and economic factors such as the price at which
the stock is trading in the market, the volume of trading, the attractiveness of
other investment alternatives in terms of the rate of return and risk involved
in the investment, the ability to increase the book value and/or earnings per
share of the remaining outstanding shares, and the opportunity to improve the
Company's return on equity; (ii) the avoidance of dilution to stockholders by
not having to issue additional shares to cover the exercise of stock options or
to fund employee stock benefit plans; and (iii) any other circumstances in which
repurchases would be in the best interests of the Company and its shareholders.
In the event the Company determines to repurchase stock, such repurchases may be
made at market prices which may be in excess of the Purchase Price in the
Conversion and in excess of the per share book value.  To the extent that the
Company repurchases stock at market prices in excess of the per share book
value, such repurchases may have a dilutive effect upon the interests of
existing stockholders.  Any stock repurchases will be subject to the
determination of the Board of Directors that both the Company and the
Association will be capitalized in excess of all applicable regulatory
requirements after any such repurchases and that such capital will be adequate,
taking into account, among other things, the level of non-performing and other
risk assets, the Company's and the Association's current and projected results
of operations and asset/liability structure, the economic environment, tax and
other considerations.  See "The Conversion - Certain Restrictions on Purchase or
Transfer of Shares after Conversion."

                                DIVIDEND POLICY

     Upon Conversion, the Board of Directors of the Company will have the
authority to declare dividends on the Common Stock, subject to statutory and
regulatory requirements.  In the future, the Board of Directors intends to
consider a policy of paying cash or stock dividends on the Common Stock.
However, no decision has been made with respect to the payment of dividends.
Declarations of dividends by the Board of Directors, if any, will depend upon a
number of factors, including the amount of net proceeds retained by the Company
in the Conversion, investment opportunities available to the Company or the
Association, capital requirements, regulatory limitations, the Company's and the
Association's financial condition and results of operations, tax considerations
and general economic conditions.  No assurances can be given, however, that any
dividends will be paid or, if commenced, will continue to be paid.  Special cash
dividends, stock dividends or returns of capital may be paid in addition to, or
in lieu of, regular cash dividends (however, the Company and the Association
have committed to the OTS that they will take no action to further the payment
of any return of capital during the one-year period following consummation of
the Conversion).

     The Association will not be permitted to pay dividends to the Company on
its capital stock if its stockholders' equity would be reduced below the amount
required for the liquidation account.  See "The Conversion--Liquidation Rights."
For information concerning federal regulations which apply to the Association in
determining the amount of proceeds which may be retained by the Company and
regarding a savings institution's ability to make capital distributions,
including payment of dividends to its holding company, see "Federal and State
Taxation--Distributions" and "Regulation--Federal Savings Institution
Regulation--Limitations on Capital Distributions."

     Unlike the Association, the Company is not subject to OTS regulatory
restrictions on the payment of dividends to its stockholders, although the
source of such dividends will be, in part, dependent upon dividends from the
Association in addition to the net proceeds retained by the Company and earnings
thereon.  The Company is subject, however, to the requirements of Delaware law,
which generally limit dividends to an amount equal to the excess of the net
assets of the Company (the amount by which total assets exceed total
liabilities) over its statutory capital (generally defined as the aggregate par
value of the outstanding shares of the Company's capital stock having a par
value plus the amount of the consideration paid for shares of the Company's
capital stock without par value) or, if there is no such excess, to its net
profits for the current and/or immediately preceding fiscal year.

                                      25
<PAGE>
 
                          MARKET FOR THE COMMON STOCK

     The Company and the Association have never issued capital stock, and
consequently, there is no established market for the Common Stock at this time.
The Company has applied to have its Common Stock quoted on the Nasdaq National
Market under the symbol "FPFC".  Making a market involves maintaining bid and
ask quotations and being able, as principal, to effect transactions in
reasonable quantities at these quoted prices, subject to various securities laws
and other regulatory requirements.  Additionally, the development of a liquid
public market depends on the existence of willing buyers and sellers, the
presence of which is not within the control of the Company, the Association or
any market maker.  Accordingly, the number of active buyers and sellers of the
Common Stock at any particular time may be limited.  Under such circumstances,
investors in the Common Stock could have difficulty disposing of their shares
and should not view the Common Stock as a short-term investment.  Accordingly,
there can be no assurance that an active and liquid trading market for the
Common Stock will develop or that, if developed, it will continue, nor is there
any assurance that persons purchasing shares of Common Stock will be able to
sell them at or above the Purchase Price.  In order to be quoted on the Nasdaq
National Market, among other criteria, there must be at least three market
makers for the Common Stock, the Company must satisfy certain minimum
capitalization requirements, and there must be at least 400 round lot
shareholders.  KBW has indicated its intention to act as a market maker in the
Common Stock following the consummation of the Conversion, depending on trading
volume and subject to compliance with applicable laws and regulatory
requirements.  Furthermore, Webb has agreed to use its best efforts to assist
the Company in obtaining at least two additional market makers for the Common
Stock.  There can be no assurance there will be two additional market makers for
the Common Stock.  There can be no assurance that purchasers will be able to
sell their shares at or above the Purchase Price.

                                      26
<PAGE>
 
                                CAPITALIZATION

     The following table presents the unaudited historical capitalization of the
Association at June 30, 1998, and the pro forma consolidated capitalization of
the Company after giving effect to the Conversion, including the issuance of
shares to the Foundation, based upon the sale of the number of shares indicated
in the table and the other assumptions set forth under "Pro Forma Data."

<TABLE>
<CAPTION>
                                                                        Company Pro Forma Based Upon Sale at $10.00 Per Share
                                                                      --------------------------------------------------------------

                                                                                                                      13,754,000
                                                                          8,840,000      10,400,00    11,960,000        Shares
                                                                           Shares         Shares        Shares        (15% above
                                                                         (Minimum of   (Midpoint of   (Maximum of     Maximum of
                                                            Association   Estimated     Estimated      Estimated      Estimated
                                                             Historical  Price Range   price Range)   Price Range)  Price Range)(1)
                                                            -----------  -----------   ------------   ------------  ---------------
                                                                                         (In thousands)
  <S>                                                         <C>        <C>            <C>          <C>           <C>
  Borrowings:
     Deposits (2).......................................      $435,462     $435,462       $435,462      $435,462        $435,462
     Repurchase agreements..............................        60,430       60,430         60,430        60,430          60,430
     FHLB Advances......................................        44,820       44,820         44,820        44,820          44,820
                                                              --------     --------       --------      --------        --------
     Total deposits and borrowed funds..................      $540,712     $540,712       $540,712      $540,712        $540,712
                                                              ========     ========       ========      ========        ========
  Stockholders' equity:
     Preferred Stock, $.01 par value,                          
        3,000,000 shares authorized;                           
        none to be issued...............................      $      -     $      -       $      -      $      -        $      - 
     Common Stock, $.01 par value,                                                                                               
        33,000,000 shares authorized;                                                                                            
        shares to be issued as reflected(3).............              -           95            112           129             148
     Additional paid-in capital(3)......................              -       86,330        101,788       117,196         135,117
     Retained earnings(4)...............................         57,763       57,763         57,763        57,763          57,763
     Net unrealized gain (loss) on                                                                                               
        securities available-for-sale, net of taxes.....          1,594        1,594          1,594         1,594           1,594
     Shares issued to Foundation........................              -        6,800          8,000         9,200          10,580
  Less:                                                                                                                          
     Foundation contribution expense, net (5)...........              -        4,488          5,280         6,072           6,983
     Common Stock acquired by the                                                                                                
       ESOP(6)..........................................              -        7,616          8,960        10,304          11,850
     Common Stock acquired by the                                                                                                
       Stock Program(7).................................              -        3,808          4,480         5,152           5,925
                                                               --------     --------       --------      --------        --------
  Total stockholders' equity............................       $ 59,357     $136,670       $150,537      $164,354        $180,444
                                                               ========     ========       ========      ========        ======== 
</TABLE>

-----------------------
(1)  As adjusted to give effect to an increase in the number of shares which
     could occur due to an increase in the Estimated Price Range of up to 15% as
     a result of regulatory considerations or changes in market or general
     financial and economic conditions following the commencement of the
     Subscription and Community Offerings.
(2)  Does not reflect withdrawals from deposit accounts for the purchase of
     Common Stock in the Conversion.  Such withdrawals would reduce pro forma
     deposits by the amount of such withdrawals.
(3)  Reflects the issuance of shares sold in the Offerings and the issuance of
     additional shares of Common Stock to the Foundation in an amount of
     680,000, 800,000, 920,000 and 1,058,000 shares at the minimum, midpoint,
     maximum and maximum, as adjusted, of the Estimated Price Range, at a
     value of $10.00 per share.  No effect has been given to the issuance of
     additional shares of Common Stock pursuant to the Company's Stock Option
     Plan intended to be adopted by the Company and presented for approval of
     stockholders at a meeting of stockholders following the Conversion.  The
     Stock Option Plan would provide the grant of stock options to purchase an
     amount of Common Stock equal to 10% of the shares of Common Stock issued
     in the Conversion, including shares issued to the Foundation.  See
     "Management of the Association - Benefit Plans - Stock Option Plan."
(4)  The retained earnings of the Association will be substantially restricted
     after the Conversion.  See "The Conversion - Liquidation Rights."
(5)  Represents the tax effect of the contribution of Common Stock to the
     Foundation based on a 34% tax rate.  The realization of the deferred tax
     benefit is limited annually to 10% of the Company's annual taxable
     income, subject to the ability of the Company to carry forward any unused
     portion of the deduction for five years following the year in which the
     contribution is made.
(6)  Assumes that 8% of the shares issued in connection with the Conversion,
     including shares issued to the Foundation, will be purchased by the ESOP
     and the funds used to acquire the ESOP shares will be borrowed from the
     Company.  The Common Stock acquired by the ESOP is reflected as a
     reduction of stockholders' equity.  See "Management of the Association -
     Benefit Plans - ESOP" and "- Benefit Plans -Stock Program."
(7)  Assumes that, subsequent to the Conversion, an amount equal to 4% of the
     shares of Common Stock sold in the Conversion, including shares issued to
     the Foundation, is purchased by the Stock Program through open market
     purchases.  The Common Stock purchased by the Stock Program is reflected
     as a reduction of stockholder's equity.  See "Risk Factors - Possible
     Dilutive Effect of Stock Program and Stock Options," Footnote 2 to the
     tables under "Pro Forma Data" and "Management of the Association -
     Benefit Plans - Stock Program."

                                      27
<PAGE>
 
                                PRO FORMA DATA

        The actual net proceeds from the sale of the Common Stock cannot be
determined until the Conversion is completed.  However, net proceeds are
currently estimated to be between $75.0 million and $101.9 million based upon
the following assumptions:  (i) $5.0 million will be sold to executive officers,
Directors and employees of the Association and Company, the ESOP will purchase
8% of the Common Stock issued in connection with the Conversion, including
shares issued to the Foundation, and the remaining shares will be sold in the
Subscription and Community Offerings; (ii) Webb will receive a fee equal to
1.25% of the aggregate Purchase Price of the shares sold in the Subscription
Offering and Community Offering, up to the maximum of the estimated price range,
except that no fee will be paid with respect to shares purchased by the Employee
Plans, including the ESOP, officers, employees, Directors of the Association and
Company and members of their immediate families; (iii) the Company will issue to
the Foundation an amount of Common Stock of equal to 7.7% of the Common Stock
sold in the Conversion from authorized but unissued shares; and (iv) Conversion
expenses, excluding the marketing fees paid to Webb, will be approximately $1.1
million.  Actual Conversion expenses may vary from those estimated.

        Pro forma consolidated net income of the Company for the year ended June
30, 1998 has been calculated as if the Common Stock had been sold at the
beginning of the fiscal year and the net proceeds had been invested at 5.23%,
which is the arithmetic average of the weighted average yield earned by the
Association on its interest-earning assets and the weighted average rate paid on
its deposits during such period (as required by OTS regulations).  The tables do
not reflect the effect of withdrawals from deposit accounts for the purchase of
Common Stock.  The pro forma after-tax yield for the Company and the Association
is assumed to be 3.45% for the year ended June 30, 1998 (based on an assumed tax
rate of 34%).  Historical and pro forma per share amounts have been calculated
by dividing historical and pro forma amounts by the indicated number of shares
of Common Stock, as adjusted to give effect to the purchase of shares by the
ESOP and the effect of the issuance of shares to the Foundation.  No effect has
been given in the pro forma stockholders' equity calculations for the assumed
earnings on the net proceeds.  As discussed under "Use of Proceeds," the Company
will retain 50% of the net Conversion proceeds.

        The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations.  Pro forma consolidated stockholders' equity represents
the difference between the stated amount of assets and liabilities of the
Company.  The pro forma stockholders' equity is not intended to represent the
fair market value of the Common Stock and may be greater than amounts that would
be available for distribution to stockholders in the event of liquidation.

        The following table summarizes historical data of the Association and
pro forma data of the Company at or the year ended June 30, 1998, based on the
assumptions set forth above and in the table and should not be used as a basis
for projections of market value of the Common Stock following the Conversion.
The table below gives effect to the Stock Program, which are expected to be
adopted by the Company following the Conversion and presented to stockholders
for approval at a meeting of stockholders.  See Footnote 2 to the table and
"Management of the Association - Benefit Plans - Stock Program."  No effect has
been given in the table to the possible issuance of additional shares reserved
for future issuance pursuant to the Stock Option Plan to be adopted by the Board
of Directors of the Company and presented to stockholders for approval at a
meeting of stockholders, nor does book value as presented give any effect to the
liquidation account to be established for the benefit of Eligible Account
Holders or Supplemental Eligible Account Holders or, in the event of liquidation
of the Association, to the tax effect of the bad debt reserve and other factors.
See Footnote 3 to the tables below, "The Conversion - Liquidation Rights" and
"Management of the Association - Benefit Plans - Stock Option Plan."  THE
FOLLOWING TABLES GIVE EFFECT TO THE ISSUANCE OF AUTHORIZED BUT UNISSUED SHARES
OF THE COMPANY'S COMMON STOCK TO THE FOUNDATION CONCURRENTLY WITH THE COMPLETION
OF THE CONVERSION.  THE VALUATION RANGE, AS SET FORTH HEREIN AND IN THE TABLES
BELOW, TAKES INTO ACCOUNT THE DILUTIVE IMPACT OF THE ISSUANCE OF SHARES TO THE
FOUNDATION.

                                      28
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                     At or For the Year Ended June 30, 1998                       
                                                 -------------------------------------------------------------------------------   
                                                    8,840,000          10,400,000                                  13,754,000      
                                                   Shares Sold       Shares Sold at          11,960,000          Shares Sold at   
                                                   at $10.00 Per       $10.00 Per          Shares Sold at       $10.00 Per Share  
                                                      Share              Share            $10.00 Per Share        (15% above      
                                                    (Minimum           (Midpoint            (Maximum of            Maximum of       
                                                   of Estimated       of Estimated        Estimated Price        Estimated Price   
                                                   Price Range)       Price Range)             Range)               Range)(7)      
                                                 ---------------    ---------------       -----------------    -----------------  
                                                                   (In Thousands, Except Per Share Amounts)                        
<S>                                              <C>                <C>                   <C>                  <C> 
Gross proceeds.............................       $  88,400         $   104,000              $   119,600         $   137,540
Plus:  Shares issued to the Foundation               
        (equal to 7.7% of stock issued in
        Conversion)........................           6,800               8,000                    9,200              10,580
                                                  ---------         -----------              -----------         ----------- 
Pro forma market capitalization............       $  95,200         $   112,000              $   128,800         $   148,120
                                                  =========         ===========              ===========         ===========
Gross proceeds.............................       $  88,400         $   104,000              $   119,600         $   137,540
Less:  Offering expenses and                                                                                                
          commissions......................          (1,975)             (2,100)                  (2,275)             (2,275)
                                                  ---------         -----------              -----------         ----------- 
Estimated net proceeds.....................          86,425             101,900                  117,325             135,265
Less:  Common Stock purchased
          by ESOP..........................          (7,616)             (8,960)                 (10,304)            (11,850)
       Common Stock purchased by
         Stock Program.....................          (3,808)             (4,480)                  (5,152)             (5,925)
                                                  ---------         -----------              -----------         ----------- 

    Estimated net proceeds, as adjusted....       $  75,001         $    88,460              $   101,869         $   117,490
                                                  =========         ===========              ===========         ===========
Net income(1):     
    Historical.............................       $   4,072         $     4,072              $     4,072         $     4,072
    Pro forma income on net proceeds,
       as adjusted.........................           2,589               3,053                    3,516               4,056
Less:  Pro forma ESOP adjustment(2)........            (335)               (394)                    (453)               (521)
       Pro forma Stock Program
        adjustment(3)......................            (503)               (591)                    (680)               (782)
                                                  ---------         -----------              -----------         ----------- 
         Pro forma net income..............       $   5,823         $     6,140              $     6,455         $     6,825
                                                  =========         ===========              ===========         ===========
Per share net income(1):
    Historical.............................       $    0.47         $      0.40              $      0.34         $      0.30
    Pro forma income on net proceeds,
       as adjusted.........................            0.29                0.29                     0.29                0.30
Less:  Pro forma ESOP adjustment(2)........           (0.04)              (0.04)                   (0.04)              (0.04)
       Pro forma Stock Program
        adjustment(3)......................           (0.06)              (0.06)                   (0.06)              (0.06)
                                                  ---------         -----------              -----------         ----------- 
         Pro forma net income per share....       $    0.66         $      0.59              $      0.54         $      0.50
                                                  =========         ===========              ===========         ===========
Stockholders' equity(4): 
   Historical..............................       $  59,357         $    59,357              $    59,357         $    59,357
   Estimated net proceeds..................          86,425             101,900                  117,325             135,265
   Plus:  Shares issued to Foundation......           6,800               8,000                    9,200              10,580
   Less:   After tax cost of Foundation....          (4,488)             (5,280)                  (6,072)             (6,983)
   Less:   Common Stock acquired 
            by ESOP(2).....................          (7,616)             (8,960)                 (10,304)            (11,850)
   Less:   Common Stock acquired
            by Stock Program(3)............          (3,808)             (4,480)                  (5,152)             (5,925)
                                                  ---------         -----------              -----------         ----------- 
       Pro forma stockholders'                 
        equity(3)(5)(6)....................       $ 136,670         $   150,537              $   164,354         $   180,444 
                                                  =========         ===========              ===========         ===========
 Stockholders' equity per share(4)(7):            
    Historical.............................       $    6.24         $      5.30              $      4.61         $      4.01
    Estimated net proceeds.................            9.08                9.10                     9.11                9.13
    Plus:  Shares issued to Foundation.....            0.71                0.71                     0.71                0.71
    Less:  After tax cost of Foundation....           (0.47)              (0.47)                   (0.47)              (0.47)
    Less:  Common Stock acquired                                                                          
             by ESOP(2)....................           (0.80)              (0.80)                   (0.80)              (0.80)
           Common Stock acquired by                                                                         
             Stock Program(3)..............           (0.40)              (0.40)                   (0.40)              (0.40)
                                                  ---------         -----------              -----------         ----------- 
       Pro forma stockholders' equity              
           per share(3)(5)(6)..............       $   14.36         $     13.44              $     12.76         $     12.18
                                                  =========         ===========              ===========         ===========
Offering price as a percentage of                                                                       
    pro forma stockholders' equity                                                                       
    per share..............................           69.66%              74.40%                   78.37%              82.09%
Offering price to pro forma net                                                                          
    earnings per share(8)..................           15.15x              16.95x                   18.52x              20.00x
</TABLE>

                                                    (See footnotes on next page)

                                      29
<PAGE>
 
---------------------
(1)    Does not give effect to the non-recurring expense that will be recognized
       in fiscal 1999 as a result of the establishment of the Foundation.  The
       Company will recognize an after-tax expense for the amount of the
       contribution to the Foundation which is expected to be $4.5 million, $5.3
       million, $6.1 million and $7.0 million at the minimum, midpoint, maximum
       and maximum as adjusted, of the Estimated Price Range, respectively.
       Assuming the contribution to the Foundation was expensed during the year
       ended June 30, 1998, pro forma net loss per share would be $0.05, $0.12,
       $0.17 and $0.21, at the minimum, midpoint, maximum and maximum, as
       adjusted, respectively.  Per share net income data is based on 8,809,173,
       10,363,733, 11,918,293 and 13,706,037 shares outstanding which represents
       shares sold in the Conversion, shares contributed to the Foundation and
       shares to be allocated or distributed under the ESOP and Stock Program
       for the period presented.
(2)    It is assumed that 8% of the shares of Common Stock issued in connection
       with the Conversion, including shares issued to the Foundation, will be
       purchased by the ESOP. For purposes of this table, the funds used to
       acquire such shares are assumed to have been borrowed by the ESOP from
       the Company. The amount to be borrowed is reflected as a reduction of
       stockholders' equity. The Association intends to make annual
       contributions to the ESOP in an amount at least equal to the principal
       and interest requirement of the debt. The Association's total annual
       payment of the ESOP debt is based upon fifteen equal annual installments
       of principal. The pro forma net earnings assumes: (i) that the
       Association's contribution to the ESOP is equivalent to the debt service
       requirement for the year ended June 30, 1998, and was made at the end of
       the period; (ii) that 50,773, 59,733, 68,693 and 78,997 shares at the
       minimum, midpoint, maximum and 15% above the maximum of the range,
       respectively, were committed to be released during the year ended June
       30, 1998 at an average fair value of $10.00 per share in accordance with
       SOP 93-6; and (iii) only the ESOP shares committed to be released were
       considered outstanding for purposes of the net earnings per share
       calculations. See "Management of the Association - Benefit Plans -ESOP."
(3)    Gives effect to the Stock Program expected to be adopted by the Company
       following the Conversion and presented for approval at a meeting of
       stockholders. If the Stock Program are approved by stockholders, the
       Stock Program intend to acquire an amount of Common Stock equal to 4% of
       the shares of Common Stock issued in connection with the Conversion,
       including shares issued to the Foundation, or 380,800, 448,000, 515,200
       and 592,480 shares of Common Stock at the minimum, midpoint, maximum and
       15% above the maximum of the Estimated Price Range, respectively, either
       through open market purchases, if permissible, or from authorized but
       unissued shares of Common Stock or treasury stock of the Company, if any.
       Funds used by the Stock Program to purchase the shares will be
       contributed to the Stock Program by the Association. In calculating the
       pro forma effect of the Stock Program, it is assumed that the shares were
       acquired by the Stock Program at the beginning of the period presented in
       open market purchases at the Purchase Price and that 20% of the amount
       contributed was an amortized expense during such period. The issuance of
       authorized but unissued shares of the Company's Common Stock to the Stock
       Program instead of open market purchases would dilute the voting
       interests of existing stockholders by approximately 3.8% and pro forma
       net earnings per share would be $0.65, $0.58, $0.53 and $0.49 at the
       minimum, midpoint, maximum and 15% above the maximum of the range,
       respectively and pro forma stockholders' equity per share would be
       $14.19, $13.31, $12.65 and $12.10 at the minimum, midpoint, maximum and
       15% above the maximum of the range, respectively. There can be no
       assurance that stockholder approval of the Stock Program will be
       obtained, or that the actual purchase price of the shares granted under
       the Stock Program will be equal to the Purchase Price. See "Management of
       the Association - Benefit Plans - Stock Program."
(4)    No effect has been given to the issuance of additional shares of Common
       Stock pursuant to the Stock Option Plan expected to be adopted by the
       Company following the Conversion. The Company expects to present the
       Stock Option Plan for approval at a meeting of stockholders. If the Stock
       Option Plan are approved by stockholders, an amount equal to 10% of the
       Common Stock issued in connection with the Conversion, including shares
       issued to the Foundation, or 952,000, 1,120,000, 1,288,000 and 1,481,200
       shares at the minimum, midpoint, maximum and 15% above the maximum of the
       Estimated Price Range, respectively, will be reserved for future issuance
       upon the exercise of options to be granted under the Stock Option Plan.
       The issuance of Common Stock pursuant to the exercise of options under
       the Stock Option Plan will result in the dilution of existing
       stockholders' interests. Assuming all options were exercised at the end
       of the period at an exercise price of $10.00 per share, the pro forma net
       earnings per share would be $0.63, $0.57, $0.52 and $0.48, respectively,
       and the pro forma stockholders' equity per share would be $13.96, $13.13,
       $12.51 and $11.98, respectively. See "Management of the Association -
       Benefit Plans - Stock Option Plan."
(5)    The retained earnings of the Association will continue to be
       substantially restricted after the Conversion. See "Dividend Policy,"
       "The Conversion - Liquidation Rights."
(6)    Stockholders' equity per share data is based upon 9,520,000, 11,200,000,
       12,880,000 and 14,812,000 shares outstanding representing shares sold in
       the conversion, shares contributed to the Foundation and shares purchased
       by the ESOP and Stock Program.
(7)    As adjusted to give effect to an increase in the number of shares which
       could occur due to an increase in the Estimated Price Range of up to 15%
       as a result of regulatory considerations or changes in market or general
       financial and economic conditions following the commencement of the
       Subscription and Community Offerings.


                                      30
<PAGE>
 
     COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH NO FOUNDATION

     In the event that the Foundation was not being established as part of the
Conversion, Keller has estimated that the pro forma aggregate market
capitalization of the Company would be approximately $122.0 million, at the
midpoint, which is approximately $10.0 million greater than the pro forma
aggregate market capitalization of the Company if the Foundation is approved by
members of the Association, and would result in approximately an $18.0 million
increase, or 17.31%, in the amount of Common Stock offered for sale in the
Conversion. The pro forma price to book ratio and pro forma price to earnings
ratio would be approximately the same under both the current appraisal and the
estimate of the value of the Company without the Foundation. Further, assuming
the midpoint of the Estimated Price Range, pro forma stockholders' equity per
share and pro forma earnings per share would be substantially the same with the
Foundation as without the Foundation. In this regard, pro forma stockholders'
equity and pro forma net income per share would be $13.47 and $0.59,
respectively, at the midpoint of the estimate, assuming no Foundation, and
$13.44 and $0.59, respectively, with the Foundation. The pro forma price to book
ratio and the pro forma price to earnings ratio are 74.26% and 16.95x,
respectively, at the midpoint of the estimate, assuming no Foundation and are
74.40% and 16.95x, respectively, with the Foundation. This estimate by Keller
was prepared at the request of the OTS and is solely for the purposes of
providing members with sufficient information with which to make an informed
decision on the Foundation. There is no assurance that in the event the
Foundation is not approved by members of the Association that the appraisal
prepared at that time would conclude that the pro forma market value of the
Company would be the same as that estimated herein. Any appraisal prepared at
that time would be based on the facts and circumstances existing at that time,
including, among other things, market and economic conditions.

     For comparative purposes only, set forth below are certain pricing ratios
and financial data and ratios, at the minimum, midpoint, maximum and maximum, as
adjusted, of the Estimated Price Range, assuming the Conversion was completed at
June 30, 1998.

<TABLE>
<CAPTION>

                                                                                                               At the Maximum,
                                  At the Minimum           At the Midpoint            At the Maximum             as Adjusted
                           --------------------------  ------------------------  ------------------------  -----------------------
                                With          No          With          No          With          No          With          No
                             Foundation   Foundation   Foundation   Foundation   Foundation   Foundation   Foundation   Foundation
                           -------------  -----------  -----------  -----------  -----------  -----------  -----------  ----------
                                                       (Dollars in thousands except per share information) 
<S>                        <C>            <C>          <C>          <C>          <C>          <C>          <C>          <C>
Estimated offering amount..    $ 88,400     $103,700     $104,000     $122,000     $119,600     $140,300     $137,540     $161,345
Pro forma market                 
 capitalization............      95,200      103,700      112,000      122,000      128,800      140,300      148,120      161,345
Total assets...............     686,711      702,574      700,578      719,211      714,395      735,848      730,485      754,981
Total liabilities..........     550,041      550,041      550,041      550,041      550,041      550,041      550,041      550,041
Pro forma stockholders'         
 equity....................     136,670      152,534      150,537      169,171      164,354      185,808      180,444      204,940
Pro forma consolidated net        
 earnings..................       5,823        6,233        6,140        6,620        6,455        7,008        6,825        7,455
Pro forma stockholders'           
 equity per share..........       14.36        14.31        13.44        13.47        12.76        12.84        12.18        12.30
Pro forma consolidated net         
 earnings per share........        0.66         0.66         0.59         0.59         0.54         0.54         0.50         0.50
Pro Forma Pricing Ratios:
 Offering price as a              
  percentage of pro
    forma stockholders'
     equity per share......       69.66%       69.89%       74.40%       74.26%       78.37%       77.86%       82.09%       81.29%
 Offering price to pro      
  forma net earnings per 
  share....................       15.15x       15.15x       16.95x       16.95x       18.52x       18.52x       20.00x       20.00x
 Pro Forma Market                 
  Capitalization to assets.       13.86%       14.76%       15.99%       16.96%       18.03%       19.07%       20.28%       21.37%
Pro Forma Financial Ratios:
 Return on assets..........        0.85%        0.89%        0.88%        0.92%        0.90%        0.95%        0.93%        0.99%
 Return on stockholders'           
  equity...................        4.26         4.09         4.08         3.91         3.93         3.77         3.78         3.64
 Stockholders' equity to          
  assets...................       19.90        21.71        21.49        23.52        23.01        25.25        24.70        27.15
</TABLE>


                                      31
<PAGE>
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

    The Association's results of operations are dependent primarily on net
interest income, which is the difference ("spread") between the interest income
earned on its loans, mortgage-backed securities, and investment portfolio and
its cost of funds, consisting of interest paid on its deposits and borrowed
funds.  The interest rate spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit
flows.  The Association's net income is also affected by, among other things,
loan fee income, provisions for loan losses, service charges, operating expenses
and franchise and income taxes.  The Association's revenues are derived
primarily from interest on mortgage loans, consumer loans, mortgage-backed
securities and investments, as well as income from service charges and loan
originations.  The Association's operating expenses principally consist of
employee compensation and benefits, occupancy and other general and
administrative expenses.  The Association's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory authorities.

    The Association has been, and intends to continue to be, a community-
oriented financial institution offering a variety of financial services to meet
the needs of the communities it serves.  The Association attracts deposits from
the general public and uses such deposits, together with borrowings and other
funds, to originate one- to four-family residential mortgage loans and short-
term consumer loans.  To a lesser extent, the Association also originates
residential construction loans in its market area and a limited amount of
commercial business loans and loans secured by multi-family and non-residential
real estate.  The Association's deposits are insured up to the maximum allowable
amount by the SAIF as administered by the FDIC.  The Association also invests in
mortgage-backed securities, most of which are insured or guaranteed by federal
agencies, as well as securities issued by the U.S. government or agencies
thereof.

    The Association is not aware of any market or institutional trends, events
or uncertainties that are expected to have a material effect on liquidity,
capital resources or operations, except as discussed below.  The Association is
also not aware of any current recommendations by its regulators which would have
a material effect if implemented, except as discussed below.

Management Strategy

    The Association operates as a consumer-oriented savings association,
offering traditional savings deposit and loan products to its local community.
Management's primary goal has been to improve profitability and its capital
position, so that the Association can have greater flexibility in providing the
products and services desired by the customers in the communities it serves.  To
accomplish this, the Association has employed an operating strategy which has:
(1) emphasized the increased origination of one- to four-family residential
mortgage loans secured by properties located in its primary market area; (2)
emphasized the increased origination of consumer loans, consisting primarily of
home equity and automobile loans, in an effort to diversify the loan portfolio;
(3) sought to maintain asset quality and manage credit risk by limiting its
investment in commercial real estate and multi-family lending; (4) invested
funds not utilized for lending in investment securities primarily consisting of
U.S. Government Agency and mortgage-backed  securities; and (5) focused on
increasing its loan and deposit market share and the retention of existing
deposit accounts by offering competitive rates on its deposit and loan products
and expanding the number of deposit and loan products and services offered.  In
addition, while the Association has not done so in the past, it may in the
future sell long-term, fixed-rate mortgage loans in an effort to better manage
interest rate risk and add flexibility to balance sheet management policy.

    Management periodically engages in arbitrage strategies as a means of
augmenting the earnings of the Association by leveraging  the balance sheet
while helping to insulate against interest rate risk.  The leveraging is done in
such a manner to ensure that the cash flows of both the assets and the
liabilities are closely matched.  The assets used in the arbitrage strategies
are mortgage-backed securities issued or guaranteed by FNMA, FHLMC or GNMA,
while funding is obtained through FHLB advances or through reverse repurchase
agreements.  Historically, the Association has looked to achieve spreads of
between 100 to 120 basis points with its arbitrage positions.

                                      32
<PAGE>
 
    Average Balances, Interest Rates and Yields.  The following table presents
for the periods indicated the total dollar amount of interest income from
average interest-earning assets and the resultant yields, as well as the
interest expense on average interest-bearing liabilities, expressed in both
dollars and rates.

<TABLE>
<CAPTION>
                                                                  For the Years Ended June 30,
                                      --------------------------------------------------------------------------------------------
                                                     1998                           1997                           1996
                                      --------------------------------------------------------------------------------------------
                                                              Average                        Average                       Average
                                         Average               Yield/    Average              Yield/   Average              Yield/
                                         Balance    Interest    Cost     Balance   Interest    Cost    Balance   Interest    Cost
                                      --------------------------------------------------------------------------------------------
                                                                     (Dollars in thousands)
<S>                                     <C>         <C>       <C>       <C>        <C>       <C>       <C>       <C>       <C>
Assets:
 Interest-earning assets:
   Interest-bearing deposits in other     
    financial institutions............    $  4,107   $   306     7.45%  $ 10,452    $   623     5.96%  $  3,110   $   191     6.14% 

   Taxable securities(1)..............      40,264     2,441     6.04     47,337      2,751     5.71     45,785     2,691     5.80
   Nontaxable securities(1)(2)........       1,234        66     8.29        437         32    11.09        457        32    10.61
   Mortgage-backed securities(1)......     200,866    13,581     6.84    188,362     12,805     6.76    193,599    13,124     6.73
   Loans receivable - net.............     315,726    25,736     8.15    267,928     21,872     8.16    247,699    20,135     8.13
   FHLB stock.........................       4,869       352     7.23      4,683        330     7.05      3,749       263     7.02
                                          --------   -------            --------    -------            --------   -------
     Total interest-earning assets....     567,066    42,482     7.52    519,199     38,413     7.37    494,399    36,436     7.34
 Noninterest-earning assets:
   Cash and amounts due from                
    depository institutions...........       9,780                         9,366                          4,953 
   Premises and equipment, net........       6,183                         5,589                          4,958
   Other noninterest-earning assets...       2,304                        (1,727)                         2,023
                                          --------                      --------                       --------
      Total assets....................    $585,333                      $532,427                       $506,333
                                          ========                      ========                       ========
 Interest-bearing liabilities:
   NOW and money market accounts......    $ 95,871     3,300     3.44   $ 84,388      2,701     3.20   $ 70,183     1,942     2.77
   Savings accounts...................      68,945     1,661     2.41     72,132      1,782     2.47     77,953     2,013     2.58
   Time deposits......................     251,130    14,898     5.93    238,859     14,013     5.87    232,955    13,927     5.98
   Repurchase agreements..............      45,044     2,596     5.76      8,470        480     5.67          -         -        -
   FHLB advances......................      52,396     3,057     5.83     68,596      3,953     5.76     68,615     3,976     5.79
                                          --------   -------            --------    -------            --------   -------
      Total interest-bearing               
       liabilities....................     513,386    25,512     4.97    472,445     22,929     4.85    449,706    21,858     4.86 
    Noninterest-bearing liabilities...      13,739                         9,368                          7,944
                                          --------                      --------                       --------
   Total liabilities..................     527,125                       481,813                        457,650
   Retained earnings..................      58,208                        50,614                         48,683
                                          --------                      --------                       --------
      Total liabilities and retained      
       earnings.......................    $585,333                      $532,427                       $506,333 
                                          ========                      ========                       ======== 
Net interest income/interest rate                  
 spread...............................               $16,970     2.55%              $15,484     2.52%             $14,578     2.48%
                                                     =======   ======               =======   ======              =======   ======  

Net interest margin (net interest
 income as a percent of average                               
 interest-earning assets).............                           3.00%                          2.97%                         2.94%
                                                               ======                         ======                        ======
 
Average interest-earning assets to                             110.46%                        109.90%                       109.94%
 interest-bearing liabilities.........                         ======                         ======                        ======
</TABLE>
--------
(1) Includes unamortized discounts and premiums. Average balance is computed
    using the carrying value of securities. The average yield has been computed
    using the historical amortized cost average balance for available for sale
    securities.

(2) Average yields are stated on a fully taxable equivalent basis.


                                                                              
                                      33
<PAGE>
 
     Rate/Volume Analysis of Net Interest Income.  The following table presents
the dollar amount of changes in interest income and interest expense for major
components of interest-earning assets and interest-bearing liabilities. It
distinguishes between the increase or decrease related to changes in balances
and/or changes in interest rates. For each category of interest-earning assets
and interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (i.e., changes in volume multiplied by old
rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume).
For purposes of this table, changes attributable to both rate and volume, which
cannot be segregated, have been allocated proportionately to the change due to
volume and the change due to rate.


<TABLE>
<CAPTION>
                                                                          Year Ended                        Year Ended
                                                                         June 30, 1998                     June 30, 1997
                                                                          Compared to                       Compared to
                                                                          Year Ended                        Year Ended
                                                                         June 30, 1997                     June 30, 1996
                                                                -------------------------------  --------------------------------
                                                                  Increase (Decrease)            Increase (Decrease)
                                                                         Due to                         Due to
                                                                ----------------------           --------------------
                                                                    Volume      Rate      Net      Volume      Rate       Net
                                                                ------------ --------- --------  ---------- --------- -----------
                                                                                          (In thousands)
<S>                                                              <C>         <C>      <C>       <C>        <C>       <C>
Interest-earning assets:
  Interest-bearing deposits in other financial institutions..       $ (445)     $128    $ (317)   $  438     $  (6)    $  432
  Taxable securities.........................................         (460)      150      (310)      102       (42)        60
  Nontaxable securities......................................           67       (33)       34        (2)        2          -
  Mortgage-backed securities.................................          637       139       776      (385)       66       (319)
  Loans receivable - net.....................................        3,896       (32)    3,864     1,651        86      1,737
  FHLB stock.................................................           13         9        22        66         1         67
                                                                    ------      ----    ------    ------     -----     ------
    Total interest-earning assets............................        3,708       361     4,069     1,870       107      1,977
                                                                    ------      ----    ------    ------     -----     ------
Interest-bearing liabilities:                                                                                        
  NOW and money market accounts..............................          385       214       599       428       331        759
  Savings accounts...........................................          (77)      (44)     (121)     (146)      (85)      (231)
  Time deposits..............................................          727       158       885       349      (262)        87
  Repurchase agreements......................................        2,108         8     2,116       480         -        480
  FHLB advances..............................................         (945)       49      (896)       (1)      (22)       (23)
                                                                    ------      ----    ------    ------     -----     ------
    Total interest-bearing liabilities.......................        2,210       373     2,583     1,111       (39)     1,072
                                                                    ------      ----    ------    ------     -----     ------
  Net change in net interest income..........................       $1,498      $(12)   $1,486    $  759     $ 146     $  905
                                                                    ======      ====    ======    ======     =====     ======
</TABLE>                                                          
                                                                  

Asset and Liability Management and Market Risk

     General.  The principal market risk affecting the Association is interest-
rate risk.  The Association does not maintain a trading account for any class of
financial instrument, and the Association is not affected by foreign currency
exchange rate risk or commodity price risk.  Because the Association does not
hold any equity securities other than stock in the FHLB of Cincinnati, the
Association is not subject to equity price risk.

     The Association, like other financial institutions, is subject to interest
rate risk to the extent that its interest-earnings assets reprise differently
than its interest-bearing liabilities.  As part of its efforts to monitor and
manage the interest-rate risk of the Association, the Board of Directors has
adopted an interest-rate risk policy which charges the Board with reviewing
quarterly reports related to interest-rate risk and to set exposure limits for
the Association as a guide to senior management in setting and implementing day
to day operating strategies.

     Quantitative Aspects of Market Risk.  As part of its efforts to monitor and
manage interest rate risk, the Association uses the "net portfolio value"
("NPV") methodology adopted by the OTS as part of its capital regulations.  See
"Regulation - Federal Savings Institution Regulation - Capital Requirements."
In essence, NPV is the difference between the present value of expected cash
flows from assets and the present value of expected cash flows from

                                      34
<PAGE>
 
liabilities.  The Association uses a net portfolio value simulation model
prepared in-house as the primary method of managing interest-rate risk.  The
model utilizes the actual cash flows and repricing characteristics of its assets
and liabilities and incorporates market-based assumptions regarding the impact
of changing interest rates on future volumes and prepayment rates.  For purposes
of valuing core deposit products, valuations derived by the OTS for the
Association each quarter are utilized.

     Presented below, as of June 30, 1998, is an analysis of the Association's
interest rate risk as measured by changes in NPV for instantaneous and sustained
parallel shifts of 100 basis point increments in market interest rates.  The
percentage changes fall within the policy limits set forth by the Board of
Directors of the Association.

                  
                                                         NPV as % of Portfolio
   Change in                 Net Portfolio Value             Value of Assets
 Interest Rates    ----------------------------------- ------------------------
 In Basis Points                               %
  (Rate Shock)       Amount    $ Change      Change      NPV Ratio     Change 
------------------ ---------- ----------- ------------ ------------- ----------
                                        (Dollars in thousands)
 
     400            $32,658    ($39,530)    -54.76%        5.99%      -571 bp
     300             43,056     (29,132)    -40.36         7.65       -405
     200             53,449     (18,739)    -25.96         9.19       -251
     100             63,770      (8,418)    -11.66        10.63       -107
       0             72,188          --         --        11.70         --
    (100)            71,122      (1,066)     -1.48        11.40        -30
    (200)            66,614      (5,574)     -7.72        10.64       -106
    (300)            65,500      (6,688)     -9.26        10.37       -133
    (400)            64,447      (7,741)    -10.72        10.13       -157


     As illustrated in the table, the Association's NPV is more sensitive to
increases in interest rates than to decreases.  This sensitivity arises because
as interest rates rise borrowers become less likely to prepay fixed-rate loans
than when rates are falling.  Since a majority of the Association's assets have
longer terms and its liabilities have shorter terms, an increase in market
interest rates results in the cash flow characteristics of the Association's
liabilities changing more rapidly than the cash flow characteristics of its
assets resulting in a decrease in NPV from the base.

     In evaluating the Association's exposure to interest rate risk, certain
shortcomings inherent in the method of analysis presented in the foregoing table
must be considered.  For example, although certain assets and liabilities may
have similar maturities or period to repricing, they may react in varying
degrees to changes in market interest rates.  In addition, the interest rates on
certain types of assets and liabilities may fluctuate in advance of changes in
market interest rates, while interest rates on other types may lag behind
changes in market rates.  Furthermore, in the event of a change in interest
rates, prepayments on loans and mortgage-backed securities and early withdrawals
of certificates of deposit would likely deviate significantly from those assumed
in calculating the table.  Therefore, the actual effect of changing interest
rates may differ from that presented in the foregoing table.

     The Board of Directors and management of the Association believe that
certain factors afford the Association the ability to operate successfully
despite its exposure to interest rate risk.  The Association manages its
interest rate risk by maintaining capital and liquidity well in excess of
regulatory requirement.  For the year ended June 30, 1998, the Association's
tangible capital was 9.5% of total assets and its liquidity ratio was 9.35%.

                                      35
<PAGE>
 
Financial Condition at June 30, 1998 and 1997

     Total assets of the Association were $609.4 million at June 30, 1998,
compared to $548.9 million at June 30, 1997, representing an increase of $60.5
million, or 11.0%.  The growth was primarily attributable to increases in loans,
which was partially offset by decreases in investment and mortgage-backed
securities.  The increase was funded from an increase in deposits and repurchase
agreements.  The changes in the balance sheets and the factors that caused the
changes are discussed below.

     Investment and Mortgage-Backed Securities.  Total investment and mortgage-
backed securities decreased $8.1 million, or 3.3%, from $247.6 million at June
30, 1997 to $239.5 million at June 30, 1998.  The decrease was the result of the
Association investing funds obtained through sales and maturities of investment
securities to partially fund loan growth.

     At June 30, 1998 the Association's mortgage-backed securities portfolio was
comprised primarily of agency-issued securities.  The net unrealized gain on
these securities totaled $2.5 million at June 30, 1998.  Of the $207.9 million
mortgage-backed securities, $190.1 million, or 91.4%, are classified as
available for sale, however, the Association does not anticipate the need to
sell these securities in the near future.  Management's strategy emphasizes
investment in securities guaranteed by the U.S. Government and its agencies in
order to minimize credit risk.  The investment strategy also includes purchasing
an established level of variable rate mortgage-backed securities with monthly
and annually adjusting interest rates in order to minimize interest rate risk.
These securities provide the Association a continued cash flow stream through
principal paydowns and help reduce the Association's exposure to interest rate
risk.  Investment securities totaled $31.6 million at June 30, 1998 and included
U.S. government and government agency securities as well as a small portfolio of
municipal securities.

     At June 30, 1997, the Association's mortgage-backed and investment
securities were comprised of $202.7 million in available-for-sale securities and
$44.9 million in held-for-maturity securities.

     Loans.  Loans increased from $285.2 million at June 30, 1997 to $353.0
million at June 30, 1998.  Average loans comprised 55.7% of interest-earning
assets in 1998 compared to 51.6% in 1997.  Real estate loans increased $56.7
million, or 23.7%, from $239.8 million at June 30, 1997 to $296.6 million at
June 30, 1998.  The increase in one-to four-family loans represented $52.4
million, or 92.4%, of the increase in real estate loans as the Association
continued to increase its core lending product.  At June 30, 1998, one-to four-
family loans of $268.0 million represented 73.8% of gross loans.

     Consumer loans increased $14.4 million, or 29.0%, from $49.7 million at
June 30, 1997 to $64.1 million at June 30, 1998.  The increases were primarily
due to management's increased emphasis on originating consumer loans, which
resulted in a $9.7 million increase in automobile loans and a $4.7 million
increase in other loans.

     Deposits and Borrowings.  The Association's deposits are obtained primarily
from individuals and businesses in its primary market area.  Total deposits
increased $22.6 million, or 5.5%, from $412.9 million at June 30, 1997 to $435.5
million at June 30, 1998.  The growth was primarily in certificates of deposits,
which increased $12.8 million, or 5.2% during the period and money market
accounts which increased $10.9 million, or 18.9%.  Repurchase agreements
increased $44.4 million, or 277.7%, from $16.0 million at June 30, 1997 to $60.4
million at June 30, 1998, due to the Association's arbitrage positions taken
during the year.

Comparison of Results of Operations for the Years Ended June 30, 1998 and 1997

     General.  Net income for the year ended June 30, 1998 increased by $1.9
million or 83.1% from $2.2 million for the year ended June 30, 1997 to $4.1
million for the year ended June 30, 1998.   The increase was primarily due to a
decrease in noninterest expense, due to the one-time special assessment to
recapitalize the SAIF, which was recorded in fiscal 1997, as well as the
increase in net interest income and noninterest income, including an increase in
gains on sales of securities.  The increase in net income was partially offset
by increases in the provision for loan losses and federal income tax expense.

                                      36
<PAGE>
 
     Net Interest Income.  Net interest income is the largest component of the
Association's net income, and consists of the difference between interest income
generated on interest-earnings assets and interest expense incurred on interest-
bearing liabilities.  Net interest income is primarily affected by the volume,
interest rates and composition of interest-earning assets and interest-bearing
liabilities.

     Net interest income increased approximately $1.5 million, or 9.6%, from
$15.5 million in 1997 to $17.0 million in fiscal 1998.  The primary component of
this change was a $3.9 million, or 17.7%, increase in interest income on loans.
The increase in interest income on loans consisted of a $3.9 million increase
due to increased average volume in the loan portfolio and a $32,000 decrease due
to decreasing average interest rates.  The increase in interest income of $4.1
million was partially offset by a $2.6 million, or 11.3%, increase in interest
expense, primarily due to the $2.1 million increase in repurchase agreements.

     Average loans outstanding during fiscal 1998 increased $47.8 million, or
17.8%, compared to fiscal 1997, while average mortgage-backed securities
increased $12.5 million, or 6.6%, compared to the prior year.  In fiscal 1998,
the Association experienced increases in yield on assets and cost of liabilities
of 15 and 12 basis points, resulting in the $4.1 million increase in interest
income and $2.6 million increase in interest expense.  Net interest margin
increased 3 basis points from 2.97% in 1997 to 3.00% in 1998.  The Association's
average interest rate spread increased 3 basis points from 2.52% in 1997 to
2.55% in 1998.

     The tables appearing elsewhere in this discussion provide a more detailed
analysis of the changes in average balances, yields/rates and net interest
income identifying that portion of change in average volume versus that portion
due to change in average rates.  See "-Average Balances, Interest Rates and
Yields," "-Rate/Volume Analysis of Net Interest Income" and "-Weighted Average
Yields."

     Provision for Loan Losses.  The provision for loan losses is based on
management's regular review of the loan portfolio, which considers factors such
as past experience, prevailing general economic conditions and considerations
applicable to specific loans, such as the ability of the borrower to repay the
loan and the estimated value of the underlying collateral, as well as changes in
the size and growth of the loan portfolio

     The provision for loan losses increased $1.2 million from $590,000 for 1997
to $1.8 million for 1998.  At June 30, 1998, the allowance for loan losses
represented .85% of loans, net of unearned and deferred income, compared to .60%
at June 30, 1997.  The increased provision and resulting increased allowance for
loan losses was due to several factors including an increase in the level of
consumer loan charge-offs, the approximately 25% growth in total loans, the
continued trend of increased non-performing loans over the Association's
historical levels as well as local economic conditions including significant
recent layoffs at GM's Lordstown plant caused by a strike at two of GM's other
facilities.  Management believes the allowance for loan losses is adequate to
absorb potential losses; however, future additions to the allowance may be
necessary based on changes in economic conditions.  In addition, the OTS, as an
integral part of its examination process, periodically reviews the Association's
allowance for loan losses.  Such agency may require the Association to make
additional provisions for loan losses based on judgements different from those
of management.

     Noninterest Income.  The Association experienced a $1.3 million, or 294.5%,
increase in noninterest income during 1998.  The increase was primarily due to
sales of securities which generated net gains of $135,000 in 1998, resulting in
an increase of $1.1 million over the loss on sale of securities of $934,000
recognized in fiscal 1997.  The increase was due to management's decision to
restructure a portion of its investment portfolio which accrued in 1997.  In 
addition, service charges provided an increase in noninterest income of
$156,000, or 16.8% from $929,000 in fiscal 1997 to $1.1 million in fiscal 1998,
due to the increase in the average balance of deposit accounts.

     Noninterest Expense.  Noninterest expense decreased $1.5 million, or 12.8%,
primarily due to the special assessment to recapitalize the SAIF recorded in
fiscal 1997. Salaries and benefits increased $607,000, or 12.5%, for 1998,
compared to 1997 due primarily to the staffing requirements for opening two new
offices. The Association expects that salaries and benefits may increase after
the Conversion, primarily as a result of the adoption of various employee
benefit plans contemplated in connection with the Conversion. See "Management of
the Association - Benefit Plans." In addition, noninterest expense may increase
in future periods as a result of the possible renovation or reconstruction of
the Association's main office, the cost of which is currently estimated to be up
to $11.6 million.

                                      37
<PAGE>
 
     Income Taxes.  The provision for income taxes totaled $2.5 million in
fiscal 1998 compared to $1.2 million in fiscal 1997, due to the increase in
income before income taxes.  The effective tax rate was 38.0% for fiscal 1998 as
compared to 35.3% for fiscal 1997.

Comparison of Results of Operations for the Years Ended June 30, 1997 and 1996

     General.  Net income for the year ended June 30, 1997 decreased by $1.9
million or 46.4% from $4.1 million for the year ended June 30, 1996 to $2.2
million for the year ended June 30, 1997.   The decrease was primarily due to
the increase in noninterest expense, due to the special assessment to
recapitalize the SAIF recorded in 1997, and the provision for loan losses and
the decrease in noninterest income, which was partially offset by increases in
net interest income and a decrease in federal income tax expense.

     Net Interest Income.  Net interest income increased approximately $906,000,
or 6.2%, from $14.6 million in 1996 to $15.5 million in 1997.  In fiscal 1997,
the Association experienced an increased yield on assets of three basis points
and a decreased cost of funds of one basis point.  Interest income increased by
$2.0 million, primarily due to increased interest earning assets and to a lesser
extent due to the increase in weighted average yields.  Interest expense
increased $1.1 million due to increases in average interest bearing liabilities
which was slightly offset by the modest one basis point decrease in the weighted
average cost of funds.

     The primary component of the increase in interest income was a $1.7
million, or 8.6%, increase in interest income on loans.  Average loans
outstanding during fiscal 1997 increased $20.2 million, or 8.2% compared to
fiscal 1996, while average investment and mortgage-backed securities decreased
$2.8 million, or 1.1%, compared to the prior year.  The increase in interest
income on loans consisted of a $1.7 million increase due to increased average
volume in the loan portfolio and an $86,000 increase due to rising average
interest rates in the loan portfolio.  The increase in interest income was also
due to a $559,000 increase in interest income on securities which was partially
offset by a $319,000 decrease in interest income on mortgage-backed securities.
The increase in interest income on securities and decrease in interest income on
mortgage-backed securities were substantially due to the changes in the average
balance of the respective portfolios.

     The increase in interest income was partially offset by a $1.1 million, or
5.0%, increase in interest expense, primarily on NOW and money market accounts
and FHLB advances.  Interest expense on NOW and money market accounts increased
both due to a $14.9 million increase in the average balance of NOW and money
market accounts and a 43 basis point increase in the weighted average rate paid
on NOW and money market accounts from 2.77% in 1996 to 3.20% in 1997, as part of
management's strategy to increase core deposit accounts  In addition, interest
expense on repurchase agreements increased $480,000 as the Association utilized
retail repurchase agreements as a source of funding in 1997.  During 1997, the
Association experienced a $5.9 million increase in the balance of average
certificates, while reducing the weighted average rate paid on those deposits by
11 basis points, resulting in a modest overall increase of $86,000 in interest
expense on certificates.

     The tables appearing elsewhere in this report provide a more detailed
analysis of the changes in average balances, yields/rates and net interest
income identifying that portion of change in average volume versus that portion
due to change in average rates.  See "Average Balances, Interest Rates and
Yields," "Rate/Volume Analysis of Net Interest Income" and "Weighted Average
Yields."

     Provision for Loan Losses.  The provision for loan losses increased from
$238,000 in 1996 to $590,000 in 1997.  The increase was based on management's
evaluation of the loan portfolio and real estate market conditions.  In
particular, management considered delinquencies, current market conditions and
the size and mix of the loan portfolio.  At June 30, 1997, the allowance for
loan losses represented .60% of loans, net of unearned and deferred income,
compared to .49% at June 30, 1996.

     During fiscal year 1997, the Association adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment
of a Loan," and SFAS No. 118 which require the carrying value of an impaired
loan be determined by calculating the present value of estimated future cash
flows discounted using the loan's effective interest yield. The adoption of
these pronouncements did not have a significant impact on the Association's

                                      38
<PAGE>
 
financial statements.

     Noninterest Income.  The Association experienced a $776,000, or 63.6%,
decrease in noninterest income during 1997.  The decrease was primarily due to
increases in losses on the sale of securities as the Association continued its
strategy to use the sale of securities as a source of funding to support loan
growth and to increase the yield on earnings assets by shifting assets from
lower yielding securities to higher yielding loans.  The decrease in noninterest
income was slightly offset by a $126,000 increase in service charges, from
$803,000 for fiscal 1996 to $929,000 for fiscal 1997, an increase of 15.7%.  The
increase was due to the increase in the average balance of deposit accounts.

     Noninterest Expense.  Noninterest expense increased $2.8 million, or 30.1%,
primarily due to the assessment to recapitalize the SAIF recorded in 1997.  The
SAIF assessment represented 65.7 basis points of deposits held as of March 31,
1995, and amounted to $2.5 million, which was paid in October 1996.  Occupancy
and equipment expense increased by $136,000, or 10.4%, in fiscal 1997, due to
the conversion to a new computer system in October 1996.

     Income Taxes.  The provision for income taxes totaled $1.2 million in
fiscal 1997 compared to $2.3 million in fiscal 1996.  The decrease was primarily
the result of a decrease in pretax income.

Liquidity and Capital Resources

     Liquidity.  The Association's liquidity, primarily represented by cash and
cash equivalents, is a result of its operating, investing and financing
activities.  These activities are summarized below for the years ended June 30,
1998 and 1997.

                                                         Year Ended June 30,
                                                        ---------------------
                                                           1998       1997
                                                        ----------  ---------
                                                           (in thousands)
 
Net income............................................   $  4,072   $  2,224
Adjustments to reconcile net income to net cash from
  operating activities................................      2,699      2,233
                                                         --------   --------
Net cash from operating activities....................      6,771      4,457
Net cash used in investing activities.................    (60,522)   (24,762)
Net cash from financing activities....................     53,662     19,504
                                                         --------   --------
Net change in cash and cash equivalents...............        (89)      (801)
Cash and cash equivalents at beginning of period......      6,757      7,558
                                                         --------   --------
Cash and cash equivalents at end of period............   $  6,668   $  6,757

     The Association's sources of funds include customer deposits, other
borrowings including FHLB advances and repurchase agreements, loan and mortgage-
backed securities repayments and other funds provided by operations.  The
Association also has the ability to borrow additional funds from the FHLB of
Cincinnati.  The Association maintains investments in liquid assets based upon
management's assessment of (i) the Association's need for funds, (ii) expected
deposit flows, (iii) the yields available on short-term liquid assets, and (iv)
the objectives of the Association's asset/liability management program.  The OTS
requires savings associations to maintain minimum levels of liquid assets.  OTS
regulations currently require the Association to maintain an average daily
balance of liquid assets equal to at least 4.0% of the sum of its average daily
balance of net withdrawable deposit accounts and borrowings payable in one year
or less.  At June 30, 1998, the Association's regulatory liquidity ratio was
9.4% compared to 13.0% at June 30, 1997.  At June 30, 1998 and 1997, the
Association had commitments to originate loans or fund outstanding lines of
credit totaling $23.9 million and $13.9 million, respectively.  The Association
considers its liquidity sufficient to meet its outstanding short- and long-term
needs.  The Association expects to be able to fund or refinance, on a timely
basis, its material commitments and long-term liabilities.

     Capital Resources.  Federally insured savings institutions, such as the
Association, are required to meet a 1.5% tangible capital requirement, a 4.0%
leverage ratio (core capital to risk weighted assets) requirement, a 4.0%
leverage ratio (core capital to adjusted total assets) requirement and an 8.0%
risk-based capital requirement.  At June 30, 1998, 

                                      39
<PAGE>
 
the Association exceeded these requirements with tangible capital ratio of 9.5%,
a core capital to risk weighted assets ratio of 20.9%, a core capital to
adjusted total assets of 9.5% and a risk-based capital ratio of 21.8%. See
"Regulatory Capital Compliance" for the Association's pro forma capital levels
as a result of the Offerings.

Year 2000

     The Association's operations, like those of most financial institutions,
depend almost entirely on computer systems.  The Association is addressing the
potential problems associated with the possibility that the computers which
control or operate the Association's operating systems, facilities and
infrastructure may not be programmed to read four-digit date codes and, upon
arrival of the year 2000, may recognize the two-digit code of "00" as the year
1900, causing systems to fail to function or to generate erroneous data.  The
Association is working with the companies that supply or service its computer-
operated or dependent systems to identify and remedy any year-2000 related
problems.

     It is anticipated that all reprogramming efforts will be complete by
December 31, 1998, allowing adequate time for testing.  The Association has not
identified any material expenses which are reasonably likely to be incurred in
connection with year-2000 issues and the Association does not expect to incur
significant expense to implement corrective measures.  No assurance can be
given, however, that significant expense will not be incurred in future periods.
In the event that the Association is ultimately required to purchase replacement
computer systems, programs and equipment, or that substantial expense must be
incurred to make the Association's current systems, programs and equipment year-
2000 compliant, the Association's net income and financial condition could be
adversely affected.  While the Association is working to ensure that its
computer-dependent operations are year-2000 compliant, no assurance can be given
that some year-2000 problems will not occur.

     In addition to possible expense related to its own systems, the Association
could incur losses if year-2000 issues adversely affect the Association's
depositors or borrowers.  Such problems could include delayed loan payments due
to year-2000 problems affecting any of the Association's significant borrowers
or impairing the payroll systems of large employers in the Association's market
area.  Because the Association is not dependent on a small number of large
commercial customers, the Association does not expect any significant or
prolonged year-2000 related difficulties due to year-2000 problems on the part
of its customers that will affect net earnings or cash flows.

Recent Accounting Developments

     Recent pronouncements by the Financial Accounting Standards Board ("FASB")
will have an impact on financial statements issued in subsequent periods.  Set
forth below are summaries of such pronouncements.

     SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," was issued in 1996.  It revises the
accounting for transfers of financial assets, such as loans and securities, and
for distinguishing between sales and secured borrowings.  SFAS No. 125 was
originally effective for some transactions occurring after December 31, 1996,
and was effective for others in 1998.  SFAS No. 127, "Deferral of the Effective
Date of Certain Provisions of FASB Statement No. 125," which was issued in
December 1996, defers for one year the effective date of provisions relating to
securities lending, repurchase agreements and other similar transactions.  The
impact of partial adoption in 1997 was not material to the 1997 financial
statements and the impact of the complete adoption in 1998 was not material to
the 1998 financial statements.

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income."  This Statement establishes standards for reporting and display of
comprehensive income and its components (revenue, expenses, gains and losses) in
a full set of general-purpose financial statements.  This Statement requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.  Income tax
effects must also be shown.  This Statement is effective for fiscal years
beginning after December 15, 1997.

                                      40
<PAGE>
 
     In June 1997, the FASB issued SFAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information."  SFAS No. 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders.  It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
This statement is effective for financial statements for periods beginning after
December 15, 1997.

     In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities."  SFAS No. 133 addresses the accounting for
derivative instruments and certain derivative instruments embedded in other
contracts, and hedging activities.  The statement standardizes the accounting
for derivative instruments by requiring that an entity recognize those items as
assets or liabilities in the statement of financial position and measure them at
fair value.  This statement is effective for all fiscal years beginning after
June 15, 1999, although the Company may elect to adopt the statement earlier.

     These statements are not expected to have a material effect on the
Association's consolidated financial position or results of operation.

Impact on Inflation and Changing Prices

     The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and results of operations
primarily in terms of historical dollars without considering changes in the
relative purchasing power of money over time due to inflation.  Unlike most
industrial companies, virtually all of the assets and liabilities of the
Association are monetary in nature.  Therefore, interest rates have a more
significant impact on a financial institution's performance than the effects of
general levels of inflation.  Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services.  The
liquidity, maturity structure and quality of the Association's assets and
liabilities are critical to the maintenance of acceptable performance levels.


                            BUSINESS OF THE COMPANY

General

     The Company was organized in August 1998 at the direction of the Board of
Directors of the Association for the purpose of becoming a holding company to
own all of the outstanding capital stock of the Association.  Upon consummation
of the Conversion, it is anticipated that the Association will become a wholly-
owned subsidiary of the Company.  Upon the consummation of the Conversion, the
Company will be a savings and loan holding company regulated by the OTS.  See
"Regulation - Holding Company Regulation."

     The Company is currently not an operating company.  Following the
Conversion, in addition to directing, planning and coordinating the business
activities of the Association, the Company will initially invest net proceeds it
retains primarily in mortgage-backed and mortgage-related securities and other
investment-grade marketable securities.  In addition, the Company intends to
fund the loan to the ESOP to enable the ESOP to subscribe for 8% of the Common
Stock issued in connection with the Conversion, including shares issued to the
Foundation; however, a third-party lender may be utilized to lend funds to the
ESOP.  See "Use of Proceeds."  In the future, the Company may acquire or
organize operating subsidiaries, including other financial institutions and
financial services companies.  There are presently no agreements, understandings
or plans for an expansion of the Company's operations.  Initially, the Company
will neither own nor lease any property from any third party, but will instead
use the premises, equipment and furniture of the Association.  At the present
time, the Company does not intend to employ any persons other than certain
officers of the Association, who will not be separately provided cash
compensation by the Company.  The Company may utilize the support staff of the
Association from time to time, if needed.  Additional employees will be hired as
appropriate to the extent the Company expands its business in the future.

                                      41
<PAGE>
 
                          BUSINESS OF THE ASSOCIATION
General

     The Association is a community-oriented savings institution which was
originally organized in 1922 as an Ohio-chartered savings and loan association,
and which converted to a federally-chartered savings and loan association in
1936.  The Association's principal business consists of the acceptance of retail
deposits from the general public in its primary market area, consisting of those
areas surrounding its full-service branch offices, and investing those deposits,
together with funds generated from operations and borrowings, primarily in one-
to four-family residential mortgage loans, automobile and home equity loans and,
to a much lesser extent, multi-family and commercial real estate loans,
construction loans, commercial loans, and passbook savings loans.  The
Association originates all of its loans for investment.  Management may consider
in the future selling long-term, fixed-rate mortgage loans in an effort to
better manage interest rate risk and add flexibility to balance sheet management
policy.  The Association also invests in government issued and sponsored
mortgage-backed securities, securities issued by the U.S. Government and
agencies thereof, and other investments permitted by applicable laws and
regulations.  See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Management Strategy."  The Association's revenues
are derived principally from the interest on its mortgage and consumer loans and
mortgage-backed and investment securities.  The Association's primary sources of
funds are retail savings deposits and, to a lesser extent, advances from the
FHLB-Cincinnati and reverse repurchase agreements.

Primary Market Area

     Headquartered in Trumbull County, Ohio, the Association has been, and
intends to continue to be, a community-oriented financial institution offering a
variety of financial services to meet the needs of the communities it serves.
The Association currently operates 11 full-service banking facilities and two
loan origination centers in Trumbull and Mahoning Counties of Ohio.  See "--
Properties."  The Association's primary lending and deposit gathering area is
concentrated around the areas where its full-service banking facilities are
located which the Association generally considers to be its primary market area.

     Warren is located in northeastern Ohio, in proximity to Youngstown, Ohio
and approximately half way between the cities of Cleveland, Ohio and Pittsburgh,
Pennsylvania.  The Association's primary market area is characterized by a
higher current unemployment rate than in both Ohio and the United States.  For
1998, through May, the primary market area continues to have a decreased yet
still higher unemployment rate of 5.0%, as compared to Ohio at 4.2% and the
United States at 3.9%.  In Warren, the unemployment rate was 9.3% in January
1998.  Overall, the primary market area's population decreased by 1.5% from 1990
to 1997, while Ohio's population increased by 3.4% and the United States'
population increased by 7.7% for the same period.  Median household income in
the primary market area has increased by 19.6% from 1990 to 1997, while it has
increased by 26.0% and 30.8% in Ohio and the United States, respectively, over
the same period.  According to the Youngstown/Warren Regional Chamber of
Commerce, major employers in the Youngstown/Warren metropolitan area include
Delphi Packard Electric Systems, General Motors and HM Health Systems.  See
"Risk Factors--Risks Associated with Economic Conditions in the Association's
Primary Market Area."

Competition

     The Association faces significant competition both in making loans and in
attracting deposits.  The State of Ohio has a high density of financial
institutions, many of which are branches of significantly larger institutions
which have greater financial resources than the Association, all of which are
competitors of the Association to varying degrees.  The Association's
competition for loans comes principally from savings banks, savings and loan
associations, commercial banks, mortgage banking companies, credit unions,
insurance companies and other financial service companies.  Its most direct
competition for deposits has historically come from savings and loan
associations, savings banks, commercial banks and credit unions.  The
Association faces additional competition for deposits from non-depository
competitors such as the mutual fund industry, securities and brokerage firms and
insurance companies.  Competition may also increase as a result of the lifting
of restrictions on the interstate operations of financial institutions.  There
are approximately seventeen different financial institutions with operations in
Trumbull and Mahoning counties.

                                      42
<PAGE>
 
Lending Activities

     Loan Portfolio Composition.  The types of loans that the Association may
originate are subject to federal and state laws and regulations.  Interest rates
charged by the Association on loans are affected principally by the demand for
such loans, the supply of money available for lending purposes and the rates
offered by its competitors.  These factors are, in turn, affected by general and
economic conditions, monetary policies of the federal government, including the
Board of Governors of the Federal Reserve System ("FRB"), legislative tax
policies and governmental budgetary matters.

     The Association's loan portfolio primarily consists of first mortgage loans
secured by one- to four-family residences most of which are located in its
primary market area.  At June 30, 1998, the Association's total loans receivable
were $363.2 million, of which $268.0 million were one- to four-family
residential mortgage loans, or 73.7% of total loans receivable.  At such date,
the remainder of the loan portfolio consisted of $4.5 million of multi-family
loans, or 1.2% of total loans receivable; $8.6 million of commercial real estate
loans, or 2.4% of total loans receivable; $6.3 million of construction loans, or
1.7% of total loans receivable; $9.2  million of home equity loans, or 2.5% of
total loans receivable; $2.6 million of commercial loans, or 0.7% of total loans
receivable; and $64.1 million of consumer  loans, or 17.6% of total loans
receivable, consisting of $52.9 million of automobile loans and $11.2 million of
other consumer loans.  The Association has not sold loans in recent years and
had no loans held for sale at each of the five years ended June 30, 1998.  At
June 30, 1998, 37.4% of the Association's real estate mortgage loans had
adjustable interest rates, most of which were indexed to the one year Constant
Maturity Treasury ("CMT") Index.  


                                      43
<PAGE>
 
     The following table sets forth the composition of the Association's loan
portfolio in dollar amounts and in percentages of the respective portfolios at
the dates indicated.


<TABLE>
<CAPTION>
                                                                             At June 30,
                                ---------------------------------------------------------------------------------------------------
                                       1998                 1997                1996                1995                1994
                                -------------------   -----------------   -----------------   -----------------   -----------------
                                           Percent             Percent             Percent             Percent             Percent
                                 Amount    of Total   Amount   of Total   Amount   of Total   Amount   of Total   Amount   of Total
                                --------  ---------   ------  ---------   -------  --------   -------  --------   -------  --------
                                                                        (Dollars in thousands)
<S>                             <C>        <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Real estate mortgage loans:
  One- to four-family........   $267,950     73.77%  $215,549    73.92%  $202,697    78.14%  $185,270    76.15%  $185,039    83.32%
  Multi-family...............      4,482      1.23      2,293     0.79      1,397     0.54      1,515     0.62      1,719     0.77
  Commercial real estate.....      8,626      2.37      6,789     2.33      7,159     2.76      8,516     3.50      7,063     3.18
  Construction...............      6,301      1.73      5,376     1.84      2,515     0.97      1,859     0.76      2,363     1.06
  Home equity................      9,189      2.53      9,822     3.37      6,531     2.52      4,309     1.77      1,545     0.70
                                --------    ------   --------   ------   -------- --------   --------   ------   --------   ------
    Total real estate            296,548     81.64    239,829    82.25    220,299    84.93    201,469    82.80    197,729    89.03
     mortgage loans..........
Consumer loans:             
  Automobiles................     52,847     14.55     43,172    14.80     31,234    12.04     32,212    13.24     14,679     6.61
  Other(1)...................     11,243      3.10      6,521     2.24      6,675     2.57      8,262     3.40      7,863     3.54
                                --------    ------   --------   ------   -------- --------   --------   ------   --------   ------
    Total consumer loans.....     64,090     17.65     49,693    17.04     37,909    14.61     40,474    16.64     22,542    10.15
Commercial loans.............      2,586      0.71      2,068     0.71      1,188     0.46      1,358     0.56      1,813     0.82
                                --------    ------   --------   ------   -------- --------   --------   ------   --------   ------
Total loans receivable.......    363,224    100.00%   291,590   100.00%   259,396  100.00%    243,301   100.00%   222,084   100.00%
                                            ======              ======             ======               ======              ======
                            
Less:                       
  Net deferred loan                1,319                1,316               1,517               1,228               1,776
   origination fees..........
  Loans in process...........      5,866                3,339               1,837               1,221               1,693
  Allowance for loan losses..      3,027                1,723               1,259               1,186               1,034
                                --------             --------            --------            --------            --------
Loans receivable, net........   $353,012             $285,212            $254,783            $239,666            $217,581
                                ========             ========            ========            ========            ========
</TABLE>

----------
(1) Other consumer loans consist of home equity lines of credit and secured and
    unsecured personal loans.

                                      44
<PAGE>
 
     Loan Originations.   The Association's mortgage lending activities are
conducted primarily by its loan personnel operating at its executive and 10
other full-service branch offices and its two loan origination centers.  All
loans originated by the Association are underwritten by the Association pursuant
to the Association's policies and procedures.  The Association originates both
adjustable-rate and fixed-rate mortgage loans, commercial loans and consumer
loans.  The Association's ability to originate fixed- or adjustable-rate loans
is dependent upon the relative customer demand for such loans, which is affected
by the current and expected future level of interest rates.  It is the general
policy of the Association to retain all loans originated in its portfolio.

     During the years ended June 30, 1998, 1997 and 1996, the Association
originated $105.2 million, $49.9 million and $54.6 million of one- to four-
family and home equity loans, respectively, and $33.5 million, $31.6 million and
$18.7 million of consumer loans, respectively.  During the three years ended
June 30, 1998, the Association neither sold nor purchased any loans, and no
loans were held for sale at June 30, 1998.

                                      45
<PAGE>
 
     The following tables set forth the Association's loan originations and
principal repayments for the periods indicated.  All loans originated by the
Association are held for investment.  The Association neither purchased nor sold
any loans during these periods.


<TABLE>
<CAPTION>
                                               For the Years Ended June 30,
                                              ------------------------------
                                                  1998      1997      1996
                                              ------------------------------
                                                       (In thousands)
<S>                                             <C>       <C>       <C>
Total loans receivable(1):
 Balance outstanding at beginning of period...  $288,251  $257,559  $242,080
 Loans originated(2):
  Real estate mortgage loans:
     One-to four-family and home equity.......   105,184    49,913    54,644
     Multi-family and commercial real estate..     4,515     5,494       316
     Construction.............................     7,882     6,415     3,127
  Consumer loans(3)...........................    33,457    31,610    18,683
  Commercial loans............................        62        92        87
                                                --------  --------  --------
     Total loans originated...................   151,100    93,524    76,857
  Less:
   Principal repayments.......................    79,466    61,330    60,762
   Change in loans in process.................     2,527     1,502       616
                                                --------  --------  --------
Total loans receivable at end of period.......  $357,358  $288,251  $257,559
                                                ========  ========  ========
</TABLE>

____________________
(1)  Total loans receivable does not include unearned discounts, deferred loan
     fees and the allowance for loan losses.
(2)  Amounts for each period include loans in process at period end.
(3)  Consists primarily of originations of automobile loans.

                                      46
<PAGE>                                          
                                                
     Loan Maturity and Repricing.  The following table shows the contractual
maturity of the Association's loan portfolio at June 30, 1998.  The table does
not include prepayments or scheduled principal amortization.  Prepayments and
scheduled principal amortization on mortgage loans totaled $79.3 million, $61.3
million, and $60.8 million for the years ended June 30, 1998, 1997 and 1996,
respectively.  All loans originated by the Association are held for investment.
                                                
                                                
                                                  At June 30, 1998
                                  ----------------------------------------------
                                                
                                      Real                              Total
                                     Estate                             Loans
                                    Mortgage   Consumer   Commercial  Receivable
                                  ----------------------------------------------
                                                   (In thousands)
Amounts due:
 Within one year..................   $ 10,971    $ 1,114    $1,662      $ 13,747
                                     --------    -------    ------      --------
 After one year:                                                    
   More than one year to three          2,879     11,859        63        14,801
    years.........................                                  
   More than three years to five        8,682     34,390        64        43,136
    years.........................                                  
   More than five years to 10          27,670      7,380       328        35,378
    years.........................                                  
   More than 10 years to 20 years.     95,294      9,137       470       104,901
   More than 20 years.............    151,052        209         -       151,261
                                     --------    -------    ------      --------
                                                                    
Total due after June 30, 1999.....    296,548     64,089     2,587       349,477
                                                                        --------
     Total amount due.............                                       363,224
                                                                        --------
 
Less:
   Net deferred loan origination                                           1,319
    fees..........................
     Loans in process.............                                         5,866
     Allowance for loan losses....                                         3,027
                                                                        --------
Loans receivable, net.............                                      $353,012
                                                                        ========

                                      47
<PAGE>
 
     The following table sets forth at June 30, 1998, the dollar amount of total
loans receivable contractually due after June 30, 1999, and whether such loans
have fixed interest rates or adjustable interest rates.


                                              Due After June 30, 1999
                                   --------------------------------------------
                                     Fixed          Adjustable         Total
                                   ----------      ------------      ----------
                                                  (In thousands)
                                                               
Real estate mortgage loans........  $180,267          $105,310        $285,577
Consumer loans....................    53,737             9,238          62,975
Commercial loans..................       105               821             926
                                    --------          --------        --------
      Total loans.................  $234,109          $115,369        $349,478
                                    ========          ========        ========


     One- to Four-Family Lending.  The Association currently offers both fixed-
rate and adjustable-rate mortgage ("ARM") loans with maturities up to 30 years
secured by one- to four-family residences substantially all of which are located
in the Association's primary market area. One- to four-family mortgage loan
originations are generally obtained from the Association's in-house loan
representatives, from existing or past customers, through advertising, and
through referrals from local builders, real estate brokers and attorneys.  At
June 30, 1998, the Association's one- to four-family mortgage loans totaled
$268.0 million, or 73.8%, of total loans.  Of the one- to four-family mortgage
loans outstanding at that date, 63.2% were fixed-rate mortgage loans and 36.8%
were ARM loans.

     The Association currently offers fixed-rate one-to four-family mortgage
loans with terms of up to 30 years.  These loans have generally been priced
competitively with current market rates for such loans.  The Association
currently offers a number of ARM loans with terms of up to 30 years and interest
rates which adjust every year from the outset of the loan or which adjust
annually after a three, five or seven  year initial fixed period.  The interest
rates for the Association's ARM loans are indexed to the one year U.S. Treasury
Index.  The Association's ARM loans generally provide for periodic (not more
than 2%) and overall (not more than 6%) caps on the increase or decrease in the
interest rate at any adjustment date and over the life of the loan.

     The origination of adjustable-rate one-to four-family mortgage loans, as
opposed to fixed-rate one-to four-family mortgage loans, helps reduce the
Association's exposure to increases in interest rates.  However, adjustable-rate
loans generally pose credit risks not inherent in fixed-rate loans, primarily
because as interest rates rise, the underlying payments of the borrower rise,
thereby increasing the potential for default.  Periodic and lifetime caps on
interest rate increases help to reduce the risks associated with adjustable-rate
loans but also limit the interest rate sensitivity of such loans.

     The Association currently originates all one- to four-family mortgage loans
for its own portfolio.  Management may consider in the future selling long-term,
fixed-rate one-to four-family mortgage loans in an effort to better manage
interest-rate risk.  Generally, the Association originates one- to four-family
residential mortgage loans in amounts up to 97% of the appraised value or
selling price of the property, whichever is lower, securing the loan.  Private
mortgage insurance ("PMI") may be required for such loans with a loan-to-value
("LTV") ratio of greater than 85%.  One-to four-family mortgage loans originated
by the Association generally include due-on-sale clauses which provide the
Association with the contractual right to deem the loan immediately due and
payable in the event the borrower transfers ownership of the property without
the Association's consent.  Due-on-sale clauses are an important means of
adjusting the yields on the Association's fixed-rate one- to four-family
mortgage loan portfolio.  The Association requires fire, casualty, and, in
required cases, flood insurance on all properties securing real estate loans
made by the Association.

     Home Equity Lending.  The Association originates home equity loans secured
by one- to four-family residences.  These loans are generally originated as
fixed-rate loans with terms of up to 15 years.  Home equity loans are primarily
made on owner-occupied, one- to four-family residences and primarily to the
Association's first mortgage 

                                      48
<PAGE>
 
customers. These loans are generally subject to a 90% loan-to-value limitation,
including any other outstanding mortgages or liens. Generally, the Association's
minimum equity loan is $5,000 and the maximum equity loan, if the loan-to-value
ratio exceeds 90%, is $40,000. As of June 30, 1998, the Association had $9.2
million in fixed-rate home equity loans outstanding and no adjustable-rate home
equity loans outstanding.

     Multi-family and Commercial Real Estate Lending.  The Association
originates multi-family and commercial real estate loans on a limited basis.
Such loans are generally secured by five or more unit apartment buildings and
properties used for business purposes such as small office buildings or retail
facilities located in the Association's primary market area.  The Association's
multi-family and commercial real estate underwriting policies provide that such
real estate loans may be made in amounts up to 75% of the appraised value of the
property or sales price, when applicable, whichever is lower.  The Association's
multi-family and commercial real estate loans may be made with terms up to 15
years and are offered with interest rates that adjust periodically.  In reaching
its decision on whether to make a multi-family or commercial real estate loan,
the Association considers the net operating income of the property, the
borrower's expertise, credit history and profitability and the value of the
underlying property.  Generally, all multi-family and commercial real estate
loans made to corporations, partnerships and other business entities require
personal guarantees by the principals.  On an exception basis, the Association
may not require a personal guarantee on such loans depending on the
creditworthiness of the borrower and the amount of the downpayment and other
mitigating circumstances.  The Association's multi-family real estate loan
portfolio at June 30, 1998 was $4.5 million, or 1.2% of total loans and the
Association's commercial real estate loan portfolio at such date was $8.6
million, or 2.4% of total loans.  The largest multi-family or commercial real
estate loan in the Association's portfolio (excluding loan participation
interests) at June 30, 1998 was a performing $900,000 commercial real estate
loan secured by real estate, accounts receivable and other corporate assets.

     Loans secured by multi-family and commercial real estate properties
generally involve larger principal amounts and a greater degree of risk than
one- to four-family residential mortgage loans. Because payments on loans
secured by multi-family and commercial real estate properties are often
dependent on successful operation or management of the properties, repayment of
such loans may be subject to adverse conditions in the real estate market or the
economy.  The Association seeks to minimize these risks through its underwriting
standards.

     Construction Lending.  The Association originates construction loans for
the development of residential property primarily located in the Association's
primary market area.  Construction loans are offered primarily to individuals
for the construction of their residence and, to a lesser extent, to experienced
local developers operating in the Association's primary market area.  The
majority of the Association's construction loans are originated primarily to
finance the construction of one- to four-family, owner-occupied residential real
estate and, to a lesser extent, multi-family  real estate properties located in
the Association's primary market area.  Construction loans are generally offered
with terms up to 30 years, if the loan converts to a permanent mortgage loan,
and may be made in amounts up to 85% of the appraised value of the property, as
improved.  Construction loan proceeds are disbursed periodically in increments
as construction progresses and as inspections by the Association's lending
officers warrant.

     At June 30, 1998, the Association's largest construction loan was a
performing loan with a $1.0 million carrying balance secured by land and
condominium units for single-family residences located in Howland Township.  At
June 30, 1998, the Association had $6.3 million of construction loans which
amounted to 1.7% of the Association's total loans.

     Speculative construction financing is generally considered to involve a
higher degree of credit risk than long-term financing on improved, owner-
occupied real estate.  Risk of loss on a construction loan is dependent largely
upon the accuracy of the initial estimate of the property's value at completion
of construction or development compared to the estimated cost (including
interest) of construction and other assumptions, including the estimated time to
sell residential properties.  If the estimate of value proves to be inaccurate,
the Association may be confronted with a project, when completed, having a value
which is insufficient to assure full repayment.

     Commercial Lending.  The Association also originates on a very limited
basis commercial loans in the forms of term loans and lines of credit to small-
and medium-sized businesses operating in the Association's primary market area.
Since commercial loans are made on such an infrequent basis, the Association
handles each such loan request on 


                                      49
<PAGE>
 
an individual basis. At June 30, 1998, the Association had $2.6 million of
commercial loans, which amounted to 0.7% of the Association's total loans.

     Unlike mortgage loans, which generally are made on the basis of the
borrower's ability to make repayment from his or her employment or other income,
and which are secured by real property whose value tends to be more easily
ascertainable, commercial loans are of higher risk and typically are made on the
basis of the borrower's ability to make repayment from the cash flow of the
borrower's business.  As a result, the availability of funds for the repayment
of commercial loans may be substantially dependent on the success of the
business itself.  Further, any collateral securing such loans may depreciate
over time, may be difficult to appraise and may fluctuate in value based on the
success of the business.

     Consumer Lending.  Consumer loans at June 30, 1998 amounted to $64.1
million, or 17.6% of the Association's total loans, and consisted primarily of
new and used automobile loans, and to a lesser extent, secured and unsecured
personal loans.  Such loans are generally originated in the Association's
primary market area and generally are secured by real estate, deposit accounts,
personal property and automobiles.  Secured personal loans are generally secured
by personal assets.  Unsecured personal loans generally may not exceed $10,000
and must be approved by an executive officer of the Association.  In recent
years, the Association has increased its emphasis on the origination of new and
used automobile loans.  Such loans are only available to Ohio and Pennsylvania
residents.  Approximately half of the Association's automobile loans are made on
used vehicles; the Association will generally not make a loan on a vehicle
manufactured before 1991.  The average automobile loan is for $13,000.  The
Association originates automobile loans through an automobile dealer network,
primarily composed of new car dealers located in the Association's primary
market area.  At June 30, 1998, the Association had sixty dealers participating
in the dealer network.  The dealer takes the application and forwards it to the
Association for underwriting.  The Association will loan up to 100% of the
manufacturer's suggested retail price on new automobiles and 100% of the average
retail value of used cars.  The typical loan term is sixty-six months.  At June
30, 1998, personal loans (both secured and unsecured) totalled $2.0 million, or
0.6% of the Association's total loans and 3.1% of consumer loans; and automobile
loans totalled $52.8 million, or 14.5% of total loans and 82.5% of consumer
loans.

     The Association also offers a variable rate home equity line of credit
which extends a credit line based on the applicant's income and equity in the
home.  Generally, the credit line, when combined with the balance of the prior
mortgage liens, may not exceed 90% of the appraised value of the property at the
time of the loan commitment.  Home equity lines of credit are secured by a
mortgage on the underlying real estate.  The Association holds the first
mortgage on a substantial majority of the properties securing such lines of
credit.  The Association presently charges no origination fees for these loans.
A borrower is required to make monthly payments of principal and interest.
Generally, the interest rate charged is the prime rate of interest (as published
in The Wall Street Journal) plus up to 0.49%.  The interest rate adjusts when
the prime rate adjusts. At June 30, 1998, the Association had outstanding home
equity lines of credit of $9.2 million, against total available credit lines of
$21.6 million.

     Loans secured by rapidly depreciable assets such as automobiles or that are
unsecured entail greater risks than one- to four-family residential mortgage
loans.  In such cases, repossessed collateral for a defaulted loan may not
provide an adequate source of repayment of the outstanding loan balance, since
there is a greater likelihood of damage, loss or depreciation of the underlying
collateral.  Further, collections on these loans are dependent on the borrower's
continuing financial stability and, therefore, are more likely to be adversely
affected by job loss, divorce, illness or personal bankruptcy.  Finally, the
application of various federal and state laws, including federal and state
bankruptcy and insolvency laws, may limit the amount which can be recovered on
such loans in the event of a default.

     Loan Approval Procedures and Authority.  The Board of Directors of the
Association establishes the lending policies and loan approval limits of the
Association.  The Board of Directors has established the Loan Committee (the
"Committee") of the Board which considers and approves all loans within its
designated authority as established by the Board.  In addition, the Board of
Directors has authorized certain officers of the Association (the "designated
officers") to consider and approve all loans within their designated authority
as established by the Board.

     The Board of Directors has authorized the following persons and groups of
persons to approve loans up to the amounts indicated: one- to four-family
mortgage loans up to $200,000 may be approved by any of the designated 

                                      50
<PAGE>
 
officers; one- to four-family mortgage loans in excess of $200,000 and up to
$300,000 may be approved by two of the designated officers; one- to four-family
mortgage loans in excess of $300,000 must be approved by the Board of Directors.
Home equity loans and lines of credit up to $200,000 may be approved by any of
the designated officers. Home equity loans and lines of credit over $200,000
must be approved by the Board of Directors. Multi-family and commercial real
estate loans less than $100,000 may be approved by the Lending Division; any
multi-family and commercial real estate loan greater than $100,000 must be
approved by the Board of Directors. Construction loans are subject to the
approval limits applicable to the type of property being constructed. Consumer
loans may be approved by certain officers up to $50,000, and the President must
approve loans in excess of $50,000 to $100,000. Consumer loans over $100,000
must approved by the Board of Directors. Commercial loans up to $50,000 may be
approved by any member of the Commercial Loan Committee; commercial loans up to
$100,000 must be approved by two members of that committee; commercial loans up
to $250,000 must be approved by the Commercial Loan Committee and one member of
the Board of Directors of the Association, and commercial loans in excess of
$250,000 must be approved by the Board of Directors.

     With respect to all loans originated by the Association, upon receipt of a
completed loan application from a prospective borrower, a credit report is
ordered and certain other information is verified by an independent credit
agency.  If necessary, additional financial information may be required.  An
appraisal of real estate intended to secure a proposed loan generally is
required to be performed by the Association's "in-house" appraisers or outside
appraisers approved by the Association.  The Board annually approves independent
appraisers used by the Association.  The Association's policy is to obtain
hazard insurance on all mortgage loans and flood insurance when necessary and
the Association may require borrowers to make payments to a mortgage escrow
account for the payment of property taxes and insurance premiums.

Delinquent Loans, Classified Assets and Real Estate Owned

     Delinquencies, Classified Assets and Real Estate Owned.  Reports listing
all delinquent accounts are generated and reviewed by management on a monthly
basis and the Board of Directors performs a monthly review of all loans or
lending relationships delinquent 30 days or more.  The procedures taken by the
Association with respect to delinquencies vary depending on the nature of the
loan, period and cause of delinquency and whether the borrower is habitually
delinquent.  When a borrower fails to make a required payment on a loan, the
Association takes a number of steps to have the borrower cure the delinquency
and restore the loan to current status.  The Association generally sends the
borrower a written notice of non-payment after the loan is first past due.  The
Association's guidelines provide that telephone, written correspondence and/or
face-to-face contact will be attempted to ascertain the reasons for delinquency
and the prospects of repayment once a loan becomes 60 days past due.  When
contact is made with the borrower at any time prior to foreclosure, the
Association will attempt to obtain full payment, offer to work out a repayment
schedule with the borrower to avoid foreclosure or, in some instances, accept a
deed in lieu of foreclosure.  In the event payment is not then received or the
loan not otherwise satisfied, additional letters and telephone calls generally
are made.  Once the loan becomes 90 days past due, the Association notifies the
borrower in writing that if the loan is not brought current within two weeks,
the Association will commence foreclosure proceedings against any real property
that secured the loan.  If a foreclosure action is instituted and the loan is
not brought current, paid in full, or refinanced before the foreclosure sale,
the property securing the loan generally is sold at foreclosure and, if
purchased by the Association, becomes real estate owned.

     Federal regulations and the Association's internal policies require that
the Association utilize an internal asset classification system as a means of
reporting problem and potential problem assets.  The Association currently
classifies problem and potential problem assets as "Substandard," "Doubtful" or
"Loss" assets.  An asset is considered Substandard if it is inadequately
protected by the current net worth and paying capacity of the obligor or of the
collateral pledged, if any.  Substandard assets include those characterized by
the distinct possibility that the Association will sustain some loss if the
deficiencies are not corrected.  Assets classified as Doubtful have all of the
weaknesses inherent in those classified Substandard with the added
characteristic that the weaknesses present make collection or liquidation in
full, on the basis of currently existing facts, conditions and values, highly
questionable and improbable.  Assets classified as Loss are those considered
uncollectible and of such little value that their continuance as assets, without
the establishment of a specific loss reserve, is not warranted.  Assets which do
not currently expose the Association  to a sufficient degree of risk to warrant
classification in one of the aforementioned categories but possess weaknesses
are 

                                      51
<PAGE>
 
required to be designated "Special Mention."

     When the Association classifies one or more assets, or portions thereof, as
Substandard or Doubtful, it is required to establish an allowance for possible
loan losses in an amount deemed prudent by management unless the loss of
principal appears to be remote. When the Association classifies one or more
assets, or portions thereof, as Loss, it is required either to establish a
specific allowance for losses equal to 100% of the amount of the assets so
classified or to charge off such amount.

     The Association's determination as to the classification of its assets and
the amount of its valuation allowances is subject to review by the OTS which can
order the establishment of additional general or specific loss allowances.  The
OTS, in conjunction with the other federal banking agencies, recently adopted an
interagency policy statement on the allowance for loan and lease losses.  The
policy statement provides guidance for financial institutions on both the
responsibilities of management for the assessment and establishment of adequate
allowances and guidance for banking agency examiners to use in determining the
adequacy of general valuation guidelines.  Generally, the policy statement
recommends that institutions have effective systems and controls to identify,
monitor and address asset quality problems; that management has analyzed all
significant factors that affect the collectibility of the portfolio in a
reasonable manner; and that management has established acceptable allowance
evaluation processes that meet the objectives set forth in the policy statement.
While the Association believes that it has established an adequate allowance for
possible loan losses, there can be no assurance that regulators, in reviewing
the Association's loan portfolio, will not request the Association to materially
increase at that time its allowance for possible loan losses, thereby negatively
affecting the Association's financial condition and earnings at that time.
Although management believes that adequate specific and general loan loss
allowances have been established, future provisions are dependent upon future
events such as loan growth and portfolio diversification and, as such, further
additions to the level of specific and general loan loss allowances may become
necessary.

     The Association reviews and classifies its assets on a quarterly basis and
the Board of Directors reviews the results of the reports on a quarterly basis.
The Association classifies its assets in accordance with the management
guidelines described above.  At June 30, 1998, the Association had $1.6 million,
or 0.27%, of assets designated as Substandard, consisting of primarily mortgage
loans secured by single-family owner-occupied residences.  Assets classified as
Doubtful totaled $231,000, consisting of automobile loans, and assets classified
as Loss totaled $100,000 at June 30, 1998.  At June 30, 1998, the Association
had $933,000, or 0.15%, of assets designated as Special Mention, consisting
primarily of automobile loans.  At June 30, 1998, these classified assets
totaled $2.8 million, representing 0.77% of loans receivable.

                                      52
<PAGE>
 
     The following tables set forth delinquencies in the Association's loan
portfolio past due 30 days or more:

<TABLE>
<CAPTION>
                                                  At June 30, 1998                                    At June 30, 1997
                               --------------------------------------------------   -----------------------------------------------
                                      30-89 Days             90 Days or More              30-89 Days            90 Days or More  
                               ----------------------  --------------------------   ------------------------  ---------------------
                                           Principal                 Principal                    Principal               Principal
                                 Number     Balance     Number        Balance         Number       Balance      Number     Balance
                                of Loans    of Loans   of Loans      of Loans        of Loans      of Loans    of Loans    of Loans
                               ---------   ---------   --------   ---------------   ----------   ----------   ----------  ---------
                                                                      (Dollars in thousands)
<S>                            <C>         <C>         <C>       <C>                <C>          <C>          <C>        <C>  
Real estate mortgage loans...      39        $1,298       59          $1,673               51      $1,380             82    $1,767  
Consumer loans...............     138         1,287       58             470              108       1,053             87       713  
Commercial loans.............       -             -        -               -                -           -              -         -  
                                  ---        ------      ---          ------         --------      ------       --------    ------  
  Total delinquent loans(1)..     177        $2,585      117          $2,143              159      $2,433            169    $2,480  
                                             ======                   ======                       ======                   ======  
Delinquent loans to total                                                                                                           
 loans(1)....................                 0.73%                    0.60%                        0.85%                    0.86%
                                                                                                   ======                   ====== 
<CAPTION> 
                                                 At June 30,  1996                 
                                --------------------------------------------------
                                      30-89 Days            90 Days or More   
                                ---------------------   -------------------------- 
                                            Principal                 Principal     
                                  Number     Balance      Number        Balance      
                                 of Loans   of Loans     of Loans       of Loans     
                                ---------   ---------   ---------   --------------
                                              (Dollars in thousands)               
<S>                            <C>          <C>         <C>         
Real estate mortgage loans...      (2)       $  939        (2)          $  825        
Consumer loans...............      (2)          588        (2)             200        
Commercial loans.............      (2)          140        (2)             101        
                                             ------                     ------        
  Total delinquent loans(1)..                $1,667                     $1,126        
                                             ======                     ======        
Delinquent loans to total                                                             
 loans(1)....................                 0.66%                      0.44%        
                                             ======                     ======        
</TABLE>
____________________
(1) Total loans represent gross loans receivable less deferred loan fees and
    loans in process.
(2) Information not available.

                                      53
<PAGE>
 
     Nonperforming Assets.  The following table sets forth information regarding
nonperforming loans and REO.  At June 30, 1998, the Association had no troubled-
debt restructured loans within the meaning of SFAS 15, and no REO properties.
It is the general policy of the Association to cease accruing interest on loans
90 days or more past due when, in management's opinion, the collection of all or
a portion of the loan principal has become doubtful and to fully reserve for all
previously accrued interest.  For the years ended June 30, 1998, 1997, 1996,
1995 and 1994 the amount of additional interest income that would have been
recognized on non-accrual loans if such loans had continued to perform in
accordance with their contractual terms was $94,000, $172,000, $109,000, $88,000
and $59,000, respectively.


<TABLE>
<CAPTION>
                                                      At June 30,
                                     -------------------------------------------
                                        1998     1997      1996     1995    1994
                                     -------------------------------------------
<S>                                    <C>      <C>      <C>       <C>     <C>
                                                    (In thousands)
Nonperforming loans:
 Real estate mortgage loans..........  $1,673   $1,767    $  825   $ 665   $ 516
 Consumer loans......................     470      713       200     256      64
 Commercial loans....................       -        -       101      71     151
                                       ------   ------    ------   -----   -----
  Total nonperforming loans..........   2,143    2,480     1,126     992     731
                                       ------   ------    ------   -----   -----
  Real estate owned, net.............       -        -         -       -     140
                                       ------   ------    ------   -----   -----
Total nonperforming assets...........  $2,143   $2,480    $1,126   $ 992   $ 871
                                       ======   ======    ======   =====   =====
Nonperforming loans as a percent of      0.60%    0.86%     0.44%   0.41%   0.33%
 total loans (1).....................
Nonperforming assets as a percent of     0.35     0.45      0.22    0.21    0.18
 total assets(2).....................
</TABLE>

__________
(1) Loans represent loans receivable, net, excluding the allowance for
    loan losses.
(2) Nonperforming assets consist of nonperforming loans and REO.

     Nonperforming loans totaled $2.1 million as of June 30, 1998, and included
59 mortgage loans with an aggregate balance of $1.7 million and $470,000 in
consumer loans.

Allowance for Loan Losses

     The allowance for loan losses is maintained through provisions for loan
losses based on management's on-going evaluation of the risks inherent in its
loan portfolio in consideration of the trends in its loan portfolio, the
national and regional economies and the real estate market in the Association's
primary lending area. The allowance for loan losses is maintained at an amount
management considers adequate to cover estimated losses in its loan portfolio
which are deemed probable and estimable based on information currently known to
management. The Association's loan loss allowance determinations also
incorporate factors and analyses which consider the potential principal loss
associated with the loan, costs of acquiring the property securing the loan
through foreclosure or deed in lieu thereof, the periods of time involved with
the acquisition and sale of such property, and costs and expenses associated
with maintaining and holding the property until sale and the costs associated
with the Association's inability to utilize funds for other income producing
activities during the estimated holding period of the property.

     As of June 30, 1998, the Association's allowance for loan losses was $3.0
million, or 0.9% of total loans and 141.3% of nonperforming loans as compared to
$1.7 million, or 0.6%, of total loans and 69.5% of nonperforming loans as of
June 30, 1997.  The increased allowance for loan losses was due to several
factors including an increase in the level of consumer loan charge-offs, the
approximately 25% growth in total loans, the continued trend of increased non-
performing loans over the Association's historical levels as well as local
economic conditions including significant recent layoffs at GM's Lordstown plant
caused by a strike at two of GM's other facilities.  The Association had total
nonperforming loans of $2.1 million at June 30, 1998, and nonperforming loans to
total loans of 0.6%.  The Association will continue to monitor and modify its
allowance for loan losses as conditions dictate.  Management believes that,
based on information currently available, the Association's allowance for loan
losses is sufficient to cover losses inherent in 

                                      54
<PAGE>
 
its loan portfolio at this time. Based upon the Association's recent increased
emphasis in consumer lending, the Association expects to increase its allowance
for loan losses over future periods depending upon the then current conditions.
However, no assurances can be given that the Association's level of allowance
for loan losses will be sufficient to cover future loan losses incurred by the
Association or that future adjustments to the allowance for loan losses will not
be necessary if economic and other conditions differ substantially from the
economic and other conditions used by management to determine the current level
of the allowance for loan losses. In addition, the OTS, as an integral part of
its examination process, periodically reviews the Association's allowance for
loan losses. Such agency may require the Association to make additional
provisions for estimated loan losses based upon judgments different from those
of management.

     The following table sets forth activity in the Association's allowance for
loan losses for the periods set forth in the table.

<TABLE>
<CAPTION>
                                              At or For the Years Ended June 30,        
                                        ----------------------------------------------  
                                          1998     1997      1996      1995      1994   
                                        --------  -------  --------  --------  -------  
                                                        (In thousands)                  
<S>                                     <C>       <C>      <C>       <C>       <C>      
Balance at beginning of period......    $ 1,723   $1,259   $ 1,186   $ 1,034   $ 1,087  
Provision for loan losses...........      1,779      590       238       313       360  
Charge-offs:                                                                            
  Real estate mortgage loans:                                                           
   One-to four-family...............         32        -         -         -        50  
   Commercial real estate...........          -        -         -         -       325  
  Consumer..........................        484      138       236       205        75  
  Commercial........................          -        -         -         -        11  
                                        -------   ------   -------   -------   -------  
    Total charge-offs...............        516      138       236       205       461  
Recoveries:                                                                             
  Real estate mortgage loans:                                                           
   One-to four-family...............          3        3         -        12         -  
  Consumer..........................         38        9        71        32        10  
  Commercial........................          -        -         -         -        38  
                                        -------   ------   -------   -------   -------  
    Total recoveries................         41       12        71        44        48  
                                        -------   ------   -------   -------   -------  
Balance at end of period............    $ 3,027   $1,723   $ 1,259   $ 1,186   $ 1,034  
                                        =======   ======   =======   =======   =======  
Allowance for loan losses as a                                                          
 percent of loans(1)................       0.85%    0.60%     0.49%     0.49%     0.47% 
Allowance for loan losses as a                                                          
 percent of nonperforming loans(2)..     141.25%   69.48%   111.81%   119.56%   141.45%  
</TABLE>
______________
(1) Loans receivable, net, excluding the allowance for loan losses.
(2) Nonperforming loans consist of all nonaccrual loans and all other
    loans 90 days or more past due.

                                      55
<PAGE>
 
     The following tables set forth the Association's percent of allowance for
loan losses to total allowance and the percent of loans to total loans in each
of the categories listed at the dates indicated.


<TABLE>
<CAPTION>
                                                                        At June 30,
                              -----------------------------------------------------------------------------------------------
                                            1998                           1997                            1996              
                              -----------------------------------------------------------------------------------------------
                                                      Percent                        Percent                         Percent 
                                                     of Loans                       of Loans                        of Loans 
                                         Percent of   in Each           Percent of   in Each            Percent of   in Each  
                                         Allowance   Category           Allowance   Category            Allowance   Category 
                                         to Total     to Total           to Total    to Total             to Total   to Total 
                                Amount   Allowance     Loans   Amount   Allowance     Loans     Amount  Allowance     Loans  
                               -------- ----------- --------- -------- ----------- ---------- --------- ---------- ---------- 
                                                                       (Dollars in thousands)                                
<S>                            <C>      <C>         <C>       <C>      <C>         <C>        <C>       <C>        <C>       
Real estate mortgage loans..    $1,458      48.17%     81.64%  $  911      52.87%     82.25%  $  836      66.40%     84.86%  
Consumer loans..............       901      29.77      17.65      432      25.07      17.04      275      21.84      14.62   
Commercial loans............         9       0.30       0.71        7       0.41       0.71       11       0.87       0.52   
Unallocated.................       659      21.76          -      373      21.65          -      137      10.89          -   
                                ------     ------     ------   ------     ------     ------   ------     ------     ------   
                                                                                                                             
Total allowance for loan        $3,027     100.00%    100.00%  $1,723     100.00%    100.00%  $1,259     100.00%    100.00%  
 losses.....................    ======     ======     ======   ======     ======     ======   ======     ======     ======   

<CAPTION> 
                                                         At June 30,                  
                               --------------------------------------------------------------
                                           1995                           1994
                               --------------------------------------------------------------
                                                      Percent                        Percent  
                                                     of Loans                       of Loans  
                                         Percent of   in Each           Percent of   in Each  
                                         Allowance   Category           Allowance   Category  
                                         to Total     to Total           to Total    to Total  
                                Amount   Allowance     Loans   Amount   Allowance     Loans   
                               -------- ----------- --------- -------- ----------- ---------- 
<S>                            <C>      <C>         <C>       <C>      <C>         <C>        
Real estate mortgage loans..    $  779      65.68%     82.74%  $  839      81.14%     88.62%
Consumer loans..............       286      24.11      16.63      145      14.02      10.49
Commercial loans............        12       1.01       0.63        6       0.58       0.89
Unallocated.................       109       9.20          -       44                     -
                                ------     ------     ------   ------       4.26     ------
                                                                          ------           
Total allowance for loan        $1,186     100.00%    100.00%  $1,034     100.00%    100.00%
 losses.....................    ======     ======     ======   ======     ======     ====== 
</TABLE>

                                      56
<PAGE>
 
     Real Estate Owned.  At June 30, 1998, the Association had no REO in its
portfolio.  When the Association does acquire property through foreclosure or
deed in lieu of foreclosure, it is initially recorded at fair value of the
related assets at the date of foreclosure, less costs to sell.  Any initial loss
is recorded as a charge to the allowance for loan losses before being
transferred to REO.  Thereafter, if there is a further deterioration in value,
the Association provides for a specific valuation allowance and charges
operations for the diminution in value.

Investment Activities

     The Board of Directors of the Association sets the investment policy and
procedures of the Association.  This policy generally provides that investment
decisions will be made based on the safety of the investment, liquidity
requirements of the Association and, to a lesser extent,  potential return on
the investments.  In pursuing these objectives, the Association considers the
ability of an investment to provide earnings consistent with factors of quality,
maturity, marketability and risk diversification.  While the Board of Directors
has final authority and responsibility for the securities investment portfolio,
the Association has established an Investment Committee comprised of the Chief
Executive Officer, the Chief Financial Officer and at least one member of the
Board of Directors to supervise the Association's investment activities.  A
chief investment officer is appointed annually to oversee daily investment
activities.  The Association's Investment Committee meets quarterly and
evaluates all investment activities for safety and soundness, adherence to the
Association's investment policy, and assurance that authority levels are
maintained.

     The Association currently does not participate in hedging programs,
interest rate swaps, or other activities involving the use of off-balance sheet
derivative financial instruments.  Similarly, the Association does not invest in
mortgage-related securities which are deemed to be "high risk," or purchase
bonds which are not rated investment grade.

     Mortgage-Backed Securities.  The Association currently purchases mortgage-
backed securities in order to:  (i) generate positive interest rate spreads with
minimal administrative expense; and (ii) lower its credit risk as a result of
the guarantees provided by FHLMC, FNMA, and GNMA.  The Association invests in
mortgage-backed securities issued or guaranteed by FNMA, FHLMC and GNMA.  At
June 30, 1998, mortgage-backed securities totaled $207.9 million, or 34.1%, of
total assets, of which $190.1 million was classified as available-for-sale.  At
June 30, 1998, 29.1% of the mortgage-backed securities were backed by
adjustable-rate loans and 70.9% were backed by fixed-rate loans.  The mortgage-
backed  securities portfolio had coupon rates ranging from 4.7% to 10.25% and
had a weighted average yield of 6.75% at June 30, 1998.  The estimated fair
value of the Association's mortgage-backed securities at June 30, 1998, was
$208.0 million, which is $2.5 million more than the amortized cost of $205.6
million.

     Mortgage-backed securities are created by the pooling of mortgages and
issuance of a security with an interest rate which is less than the interest
rate on the underlying mortgage.  Mortgage-backed securities typically represent
a participation interest in a pool of single-family or multi-family mortgages,
although the Association focuses its investments on mortgage-backed securities
backed by single-family mortgages.  The issuers of such securities (generally
U.S. Government agencies and government sponsored enterprises, including FNMA,
FHLMC and GNMA) pool and resell the participation interests in the form of
securities to investors such as the Association and guarantee the payment of
principal and interest to investors.  Mortgage-backed securities generally yield
less than the loans that underlie such securities because of the cost of payment
guarantees and credit enhancements.  In addition, mortgage-backed securities are
usually more liquid than individual mortgage loans and may be used to
collateralize certain liabilities and obligations of the Association.
Investments in mortgage-backed securities involve a risk that actual prepayments
will be greater than estimated prepayments over the life of the security, which
may require adjustments to the amortization of any premium or accretion of any
discount relating to such instruments thereby reducing the net yield on such
securities.  There is also reinvestment risk associated with the cash flows from
such securities or in the event such securities are redeemed by the issuer.  In
addition, the market value of such securities may be adversely affected by
changes in interest rates.  The Association estimates prepayments for its
mortgage-backed securities at purchase to ensure that prepayment assumptions are
reasonable considering the underlying collateral for the mortgage-backed
securities at issue and current mortgage interest rates and to determine the
yield and estimated maturity of its mortgage-backed security portfolio excluding
FHLB stock.  Of the Association's $207.9 million mortgage-backed securities
portfolio at June 30, 1998, $715,000 with a weighted average yield of 6.23% had
contractual maturities within five years and $207.2 million with a weighted
average yield of 6.75% had contractual maturities over five years.  However, the
actual maturity of a mortgage-backed security may be less than its stated
maturity due to prepayments of the underlying mortgages.  

                                      57
<PAGE>
 
Prepayments that are faster than anticipated may shorten the life of the
security and may result in a loss of any premiums paid and thereby reduce the
net yield on such securities. Although prepayments of underlying mortgages
depend on many factors, the difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates generally is the
most significant determinant of the rate of prepayments. During periods of
declining mortgage interest rates, refinancing generally increases and
accelerates the prepayment of the underlying mortgages and the related security.
Under such circumstances, the Association may be subject to reinvestment risk
because, to the extent that the Association's mortgage-backed securities prepay
faster than anticipated, the Association may not be able to reinvest the
proceeds of such repayments and prepayments at a comparable rate.

     Investment Securities.  At June 30, 1998, the Association's investment
securities portfolio totaled $31.6 million, of which $21.1 million were
classified as available-for-sale.  Such portfolio primarily consists of short-
to medium-term (maturities of one to five years) U.S. Treasury and agency
securities.


     The following table sets forth the composition of the Association's
investment and mortgage-backed securities portfolios in dollar amounts and in
percentages at the dates indicated:

<TABLE>
<CAPTION>
                                                                                         At June 30,
                                                        --------------------------------------------------------------------------
                                                                  1998                    1997                    1996
                                                        ----------------------- ------------------------- ------------------------
                                                                    Percent of                Percent of              Percent of   
                                                           Amount      Total      Amount         Total      Amount       Total     
                                                        ---------- ------------ ----------- ------------- --------- -------------- 
                                                                                   (Dollars in thousands)                          
<S>                                                     <C>        <C>          <C>         <C>           <C>       <C>            
Available for sale:                                                                                                                
   U.S. Government agencies.............................  $ 15,797        6.60%  $ 33,678          13.60%  $ 25,012        10.00%  
   Obligations of states and political subdivisions.....       853        0.36        838           0.34          -                
   FHLB stock...........................................     4,415        1.84      4,893           1.98      4,563         1.82   
   Marketable equity securities.........................         -           -      2,980           1.20      2,920         1.17   
                                                          --------      ------   --------         ------   --------       ------   
       Total investment securities......................    21,065        8.80     42,389          17.12     32,495        12.99   
                                                          --------               --------                  --------                
Mortgage-backed securities:                                                                                                        
   GNMA.................................................    37,714       15.75     39,823          16.09     31,075        12.43   
   FNMA.................................................    50,518       21.09     57,888          23.38     63,959        25.57   
   FHLMC................................................   100,898       42.13     60,891          24.60     72,092        28.83   
   Other mortgage-backed securities.....................       990        0.41      1,686           0.68      2,555         1.02   
                                                          --------      ------   --------         ------   --------       ------   
              Total mortgage-backed securities..........   190,120       79.38    160,288          64.75    169,681        67.85   
                                                          --------      ------   --------         ------   --------       ------   
Total securities available for sale.....................   211,185       88.18    202,677          81.87    202,176        80.84   
                                                          --------               --------                  --------                
Held to maturity:                                                                                                                  
   U.S.Treasury securities..............................     6,005        2.52     14,005           5.66     11,984         4.79   
   U.S. Government agencies.............................     4,147        1.73      4,239           1.71      6,000         2.40   
   Obligations of states and political subdivisions.....       364        0.15        405           0.16        446         0.18   
                                                          --------      ------   --------         ------   --------       ------   
       Total investment securities......................    10,516        4.40     18,649           7.53     18,430         7.37   
                                                          --------               --------                  --------                
 Mortgage backed securities:                                                                                                     
       GNMA.............................................     1,512        0.63      1,943           0.78      2,386         0.95   
       FNMA.............................................    16,267        6.79     24,283           9.82     27,102        10.84   
                                                          --------      ------   --------         ------   --------       ------   
          Total mortgaged-backed securities.............    17,779        7.42     26,226          10.60     29,488        11.79   
                                                          --------      ------   --------         ------   --------       ------   
Total securities held to maturity.......................    28,295       11.82     44,875          18.13     47,918        19.16   
                                                          --------      ------   --------         ------   --------       ------   
Total securities........................................  $239,480      100.00%  $247,552         100.00%  $250,094       100.00%  
                                                          ========      ======   ========         ======   ========       ======   
</TABLE>

                                      58
<PAGE>
 
     The following table sets forth at the dates indicated certain information
regarding the amortized cost and market values of the Association's investment
and mortgage-backed securities.

<TABLE>
<CAPTION>
                                                                                      At June 30,
                                                             -------------------------------------------------------------
                                                                    1998                 1997                 1996
                                                             -------------------  -------------------  -------------------

                                                             Amortized   Market   Amortized   Market   Amortized   Market
                                                               Cost      Value      Cost      Value      Cost      Value
                                                             ---------  --------  ---------  --------  ---------  --------
                                                                                    (In thousands)
<S>                                                          <C>        <C>       <C>        <C>       <C>        <C>
Available for sale:
   U.S. Government agencies................................   $ 15,734  $ 15,797   $ 34,012  $ 33,678   $ 25,938  $ 25,012
   Obligations of states and political subdivisions........        826       853        825       838         --        --
   FHLB stock..............................................      4,415     4,415      4,893     4,893      4,563     4,563
   Marketable equity securities............................         --        --      3,216     2,980      3,216     2,920
                                                              --------  --------   --------  --------   --------  --------
       Total investment securities.........................     20,975    21,065     42,946    42,389     33,717    32,495
                                                              --------  --------   --------  --------   --------  --------
Mortgage-backed securities:
   GNMA....................................................     37,355    37,714     39,493    39,823     31,507    31,075
   FNMA....................................................     49,959    50,518     57,604    57,888     65,065    63,959
   FHLMC...................................................     99,494   100,898     60,893    60,891     73,428    72,092
   Other mortgage-backed securities........................        987       990      1,655     1,686      2,465     2,555
                                                              --------  --------   --------  --------   --------  --------
              Total mortgage-backed securities.............    187,795   190,120    159,645   160,288    172,465   169,681
                                                              --------  --------   --------  --------   --------  --------
Total securities available for sale........................   $208,770  $211,185   $202,591  $202,677   $206,182  $202,176
                                                              ========  ========   ========  ========   ========  ========
Held to maturity:
   U.S.Treasury securities.................................   $  6,005  $  6,014   $ 14,005  $ 13,951   $ 11,984  $ 12,061
   U.S. Government agencies................................      4,147     4,181      4,239     4,236      6,000     5,932
   Obligations of states and political subdivisions........        364       396        405       439        446       472
                                                              --------  --------   --------  --------   --------  --------
       Total investment securities.........................     10,516    10,591     18,649    18,626     18,430    18,465
                                                              --------  --------   --------  --------   --------  --------
   Mortgage backed securities:
       GNMA................................................      1,512     1,561      1,943     1,993      2,386     2,324
       FNMA................................................     16,267    16,367     24,283    24,180     27,102    26,597
                                                              --------  --------   --------  --------   --------  --------
       Total mortgaged-backed securities...................     17,779    17,928     26,226    26,173     29,488    28,921
                                                              --------  --------   --------  --------   --------  --------
Total securities held to maturity..........................   $ 28,295  $ 28,519   $ 44,875  $ 44,799   $ 47,918  $ 47,386
                                                              ========  ========   ========  ========   ========  ========
</TABLE>

                                      59
<PAGE>
 
          The table below sets forth certain information regarding the carrying
value, weighted average yields and contractual maturities of the Association's
securities portfolio, excluding FHLB stock.

<TABLE>
<CAPTION>

                                                                                 At June 30, 1998                
                                                 ---------------------------------------------------------------------------------
                                                                                  More than One               More than Five    
                                                     One Year or Less           Year to Five Years          Years to Ten Years   
                                                 -------------------------   -------------------------   -------------------------
                                                                Weighted                    Weighted                    Weighted   
                                                  Carrying       Average      Carrying       Average      Carrying       Average   
                                                    Value         Yield         Value         Yield         Value         Yield    
                                                 -----------   -----------   -----------   -----------   -----------   -----------
                                                                               (Dollars in thousands)             
<S>                                              <C>           <C>           <C>           <C>           <C>           <C>  
Available for sale:                                                                                
                                                                                                   
U.S. Government agencies.......................    $ 9,575        6.36%        $ 6,222         5.96%        $     -            -%  
Obligations of state and political subdivisions          -           -             429         6.85             424         7.05   
                                                                                                          
Mortgage-backed securities:                                                                                   
      GNMA.....................................          -           -               -            -               -            -   
      FNMA.....................................          -           -               -            -           2,972         6.84   
      FHLMC....................................          -           -               -            -          17,647         6.68   
      Other mortgage-backed securities.........          -           -               -            -               -            -   
                                                   -------                     -------                      -------                
        Total securities available for sale....    $ 9,575        6.36         $ 6,651         6.02         $21,043         6.71   
                                                   =======                     =======                      =======                
                                                                                                              
Held to maturity:                                                                                             
U.S. Treasury securities.......................    $ 6,005        5.73     $         -            -         $     -            -   
U.S. Government agencies.......................          -           -           4,147         6.17               -            -   
Obligations of state and political subdivisions         40        6.80             161         6.80             163         6.80   
Mortgage-backed securities:                                                                                   
  GNMA.........................................          -           -               -                        1,462         7.88   
  FNMA.........................................          -           -             710         6.23           4,174         6.78   
                                                   -------                     -------                      -------                
      Total securities held to maturity........    $ 6,045        5.74         $ 5,018         6.20         $ 5,799         7.06  
                                                   =======                     =======                      =======                
Total securities...............................    $15,620        6.12         $11,669         6.10         $26,842         6.79   
                                                   =======                     =======                      =======                

<CAPTION>                                                                                                     
                                                                                                    
                                                                    At June 30, 1998                
                                                 -----------------------------------------------------
                                                    More than Ten Years              Total
                                                 -------------------------   -------------------------   
                                                                Weighted                    Weighted
                                                  Carrying       Average      Carrying       Average
                                                    Value         Yield         Value         Yield
                                                 -----------   -----------   -----------   -----------   
                                                                 (Dollars in thousands)             
<S>                                              <C>           <C>           <C>           <C>           
Available for sale:           
                              
U.S. Government agencies.......................    $      -            -%     $ 15,797          6.20%
Obligations of state and political subdivisions           -            -           853          6.95
   
Mortgage-backed securities:   
      GNMA.....................................      37,714         7.09        37,714          7.09
      FNMA.....................................      47,546         6.32        50,518          6.35
      FHLMC....................................      83,251         6.79       100,898          6.77
      Other mortgage-backed securities.........         990        10.04           990         10.04
                                                   --------                   --------
        Total securities available for sale....    $169,501         6.74      $206,770          6.70
                                                   ========                   ========
                              
Held to maturity:             
U.S. Treasury securities.......................    $      -            -      $  6,005          5.73
U.S. Government agencies.......................           -            -         4,147          6.17
Obligations of state and political subdivisions           -            -           364          6.80
   
Mortgage-backed securities:   
  GNMA.........................................          50         7.22         1,512          7.86
  FNMA.........................................      11,383         6.77        16,267          6.75
                                                   --------                   --------      
      Total securities held to maturity........    $ 11,433         6.77      $ 28,295          6.51
                                                   ========                   ========      
Total securities...............................    $180,934         6.74      $235,065          6.68
                                                   ========                   ========      
</TABLE>

                                      60
<PAGE>
 
Sources of Funds

     General.  Deposits, loan repayments, cash flows generated from operations
and FHLB advances are the primary sources of the Association's funds for use in
lending, investing and for other general purposes.

     Deposits.  The Association offers a variety of deposit accounts with a
range of interest rates and terms. The Association's deposit accounts consist of
savings, retail checking/NOW accounts, business checking accounts, money market
accounts, club accounts and certificate of deposit accounts. The Association
offers certificate of deposit accounts with balances in excess of $100,000 at
preferential rates (jumbo certificates) and also offers Individual Retirement
Accounts ("IRAs") and other qualified plan accounts.

     At June 30, 1998, the Association's deposits totaled $435.5 million, or
81.3%, of interest-bearing liabilities. For the year ended June 30, 1998, the
average balance of core deposits totaled $169.3 million, or 40.3% of total
average deposits. At June 30, 1998, the Association had a total of $260.0
million in certificates of deposit, of which $167.8 million had maturities of
one year or less reflecting the shift in deposit accounts from savings accounts
to shorter-term certificate accounts that has occurred in recent years. Although
the Association has a significant portion of its deposits in core deposits,
management monitors activity on the Association's core deposits and, based on
historical experience and the Association's current pricing strategy, believes
it will continue to retain a large portion of such accounts. The Association is
not limited with respect to the rates it may offer on deposit products.

     The flow of deposits is influenced significantly by general economic
conditions, changes in money market rates, prevailing interest rates and
competition. The Association's deposits are obtained predominantly from the
areas in which its branch offices are located. The Association relies primarily
on customer service and long-standing relationships with customers to attract
and retain these deposits; however, market interest rates and rates offered by
competing financial institutions affect the Association's ability to attract and
retain deposits. The Association uses traditional means of advertising its
deposit products, including radio and print media and generally does not solicit
deposits from outside its primary market area. While certificate accounts in
excess of $100,000 are accepted by the Association, and may be subject to
preferential rates, the Association does not actively solicit such deposits as
such deposits are more difficult to retain than core deposits. The Association's
policies do not permit the use of brokered deposits.


                                      61
<PAGE>
 
     The following table presents the deposit activity of the Association for
the periods indicated.

                                                        For the Years Ended
                                                             June 30,
                                                   -----------------------------
                                                     1998      1997      1996
                                                   --------  --------  ---------
                                                         (In thousands)
       Beginning balance......................     $412,934  $391,715  $376,541

       Net deposits (withdrawals).............        2,579     2,538    (3,154)

       Interest credited on deposit accounts..       19,949    18,681    18,328
                                                   --------  --------  --------

       Total increase in deposit accounts.....       22,528    21,219    15,174
                                                   --------  --------  --------

       Ending balance.........................     $435,462  $412,934  $391,715
                                                   ========  ========  ========



     At June 30, 1998, the Association had outstanding $53.2 million in
certificate of deposit accounts in amounts of $100,000 or more, maturing as
follows:

                                                                  Weighted
             Maturity Period                   Amount           Average Rate
     -------------------------------------   ----------     --------------------
                                                  (Dollars in thousands)

     Three months or less.................     $ 5,374             6.24%

     Over three through six months........      10,585             6.17

     Over six through 12 months...........      17,735             5.91

     Over 12 months.......................      19,531             5.64
                                               -------       

     Total................................     $53,225             5.89


                                      62
<PAGE>
 
     The following table sets forth the distribution of the Association's
deposit accounts at June 30, 1998 and the distribution of the average deposit
accounts for the periods indicated and the weighted average interest rates on
each category of deposits presented.

<TABLE>
<CAPTION>
                                               At June 30, 1998           For the Year Ended June 30, 1998 
                                      ---------------------------------  ---------------------------------- 
                                                   Percent    Weighted               Percent      Weighted  
                                                  of Total     Average    Average    of Total      Average  
                                       Balance    Deposits      Rate      Balance    Deposits       Rate    
                                      ---------  ----------  ----------  ---------  ----------  -----------  
<S>                                   <C>         <C>        <C>        <C>         <C>        <C>        
                                                          (Dollars in thousands)    
Noninterest bearing demand....         $  5,217      1.20%        --%    $  4,560      1.08%        --% 
NOW and money market..........          102,875     23.62       3.51       95,871     22.80       3.44  
Savings.......................           67,401     15.48       2.24       68,945     16.40       2.41  
Certificates of deposit.......          259,969     59.70       5.88      251,130     59.72       5.93  
                                       --------    ------                --------    ------             
    Total deposits............         $435,462    100.00%      4.69     $420,506    100.00%      4.72  
                                       ========    ======                ========    ======             

<CAPTION> 

                                       For the Year Ended June 30, 1997   For the Year Ended June 30, 1996
                                      ---------------------------------  ----------------------------------
                                                   Percent   Weighted                 Percent    Weighted
                                       Average    of Total    Average     Average    of Total     Average
                                       Balance    Deposits      Rate      Balance    Deposits       Rate
                                      ---------  ----------  ----------  ---------  ----------  -----------  
<S>                                   <C>         <C>        <C>         <C>          <C>        <C>        
                                                          (Dollars in thousands) 
Noninterest bearing demand....         $  3,681      0.92%        --%   $  3,033        0.79%        --%
NOW and money market..........           84,388     21.15       3.20      70,183       18.27       2.77
Savings.......................           72,132     18.08       2.47      77,953       20.29       2.58
Certificates of deposit.......          238,859     59.86       5.87     232,955       60.65       5.98
                                       --------    ------               --------      ------       
    Total deposits............         $399,060    100.00%      4.64    $384,124      100.00%      4.66
                                       ========    ======               ========      ======
</TABLE>     


     The following table presents, by various rate categories, the amount of
certificate of deposit accounts outstanding at the dates indicated.


<TABLE>
<CAPTION>
                                                                     Period to Maturity from June 30, 1998
                                                ---------------------------------------------------------------------------------
                                                                                                                 Over    Total at
                                                  Less than    One to      Two to      Three to      Four to     Five     June 30,
                                                   One Year   Two Years  Three Years  Four Years    Five Years   Years      1998   
                                                ---------------------------------------------------------------------------------
<S>                                              <C>        <C>          <C>         <C>           <C>        <C>       <C>
                                                                                  (Dollars in thousands)
Certificate accounts:          
    0 to 4.00%.........................              $1,241     $1,503          $71         $19         $ -       $ -       $2,834
    4.01 to 5.00%......................              15,072        969          681       2,006          41        414      19,183
    5.01 to 6.00%......................             109,434     29,629       13,664       3,022       1,017      4,110     160,876
    6.01 to 7.00%......................              25,359     18,244        3,268       1,646         569     10,415      59,501
    7.01 to 8.00%......................               3,160        759           20           -           -          -       3,939
    8.01 to 9.00%......................               3,036         56            -          22           6          -       3,120
    Over 9.01%.........................              10,516          -            -           -           -          -      10,516
                                                   --------    -------      -------      ------      ------    -------    --------
        Total at June 30, 1998.........            $167,818    $51,160      $17,704      $6,715      $1,633    $14,939    $259,969
                                                   ========    =======      =======      ======      ======    =======    ========
</TABLE>

                                      63
<PAGE>
 
     Borrowings.  The Association's policy has been to utilize borrowings as an
alternative and/or less costly source of funds.  The Association obtains
advances from the FHLB-Cincinnati, which are collateralized by the capital stock
of the FHLB-Cincinnati held by the Association, and certain mortgage loans of
the Association.  The Association also borrows funds through reverse repurchase
agreements with the FHLB-Cincinnati and primary broker/dealers.  Advances from
the FHLB-Cincinnati are made pursuant to several different credit programs, each
of which has its own interest rate and maturity.  The maximum amount that the
FHLB-Cincinnati will advance to member institutions, including the Association,
for purposes of other than meeting withdrawals, fluctuates from time to time in
accordance with the policies of the FHLB-Cincinnati and the OTS.  The maximum
amount of FHLB-Cincinnati advances permitted to a member institution generally
is reduced by borrowings from any other source.  At June 30, 1998, the
Association's FHLB-Cincinnati advances totaled $44.8 million, representing 8.1%
of total liabilities.

     During the year ended June 30, 1998, the Association continued to borrow
funds from primary broker/dealers.  The borrowings are collateralized by
designated mortgage-backed securities and investment securities.  The total of
these borrowings at June 30, 1998, was $60.4 million, representing 11.0% of
total liabilities.  The Association has the right to freely substitute
collateral as long as the margin is at least 95% of all outstanding borrowings,
including accrued interest.  The Association has used these repurchase
agreements in arbitrage strategies, using the funds to purchase a mix of fixed
and adjustable rate mortgage-backed securities, to generate a spread of
approximately 100 to 120 basis points, as well as to help reduce the
Association's interest rate risk.  See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Management Strategy."

     The Association also has an available overnight line-of-credit with the
FHLB-Cincinnati for a maximum of $20.0 million.  There was no fee for the line-
of-credit for the year ended June 30, 1998.  The Association may continue to
increase borrowings in the future to fund asset growth.  To the extent it does
so, the Association may experience an increase in its cost of funds.

     The following table sets forth certain information regarding the
Association's borrowed funds at or for the periods ended on the dates indicated:


                                                  At or For the Years Ended
                                                           June 30,
                                              ---------------------------------
                                                  1998       1997        1996
                                              ---------------------------------
                                                    (Dollars in thousands)
FHLB advances:
     Average balance outstanding..............   $52,396    $68,596     $68,615
     Maximum amount outstanding at any           
      month-end during the period.............    65,705     87,001      88,054
     Balance outstanding at end of period.....    44,820     58,398      76,078
     Weighted average interest rate during          5.83%      5.76%       5.79%
      the period..............................   
     Weighted average interest rate at end of       5.71%      5.84%       5.70%
      period..................................   
Repurchase agreements:                           
     Average balance outstanding..............   $45,044    $ 8,470     $     -
     Maximum amount outstanding at any           
      month-end during the period.............    60,430     16,000           -
     Balance outstanding at end of period.....    60,430     16,000           -
     Weighted average interest rate during          
      the period..............................      5.76%      5.67%          -%
     Weighted average interest rate at end of       
      period..................................      5.69%      5.60%          -%
Total borrowings:                                
     Average balance outstanding..............   $97,440    $77,066     $68,615
     Maximum amount outstanding at any
      month-end during the period.............   109,089     87,001      88,054
     Balance outstanding at end of period.....   105,250     74,398      76,078
     Weighted average interest rate during          
      the period..............................      5.80%      5.75%       5.79%
     Weighted average interest rate at end of       
      period..................................      5.70%      5.79%       5.70%

                                      64
<PAGE>
 
Properties

     The Association conducts its business through an executive and 10 other
full-service branch offices.  The Association currently is considering plans to
renovate or rebuild its main office, which includes its administrative offices.
The Board of Directors is currently considering options presented to it by an
outside consultant, which range from renovation of the existing facility to
razing the existing facility and building a new office at that location.  The
cost of renovation or rebuilding is currently estimated to be up to $15.0
million, exclusive of land acquisition costs.
 

                                         Original              Net Book Value
                                           Year                of Property or
                                 Leased   Leased    Date of       Leasehold
                                   or       or       Lease     Improvements at
           Location              Owned   Acquired  Expiration   June 30, 1998
------------------------------  ------- ---------- ---------- ------------------
Executive/Main/Branch Office:

185 East Market St.              Owned     1940        N/A         $353,581
Warren, OH 44482                                               
    
Branch Offices:                                                    

201 Elm Road NE                  Leased    1970       2002            8,128
Warren, OH 44483                                                   

8226 East Market Street          Leased    1973       2004           35,051
Warren, OH 44484                                                   

4460 Mahoning Ave NW             Owned     1976        N/A          376,401
Warren, OH 44483                                                   

325 S. High Street               Owned     1979        N/A          167,281
Cortland, OH 44410                                                 

7290 Sharon Warren Rd.           Owned     1981        N/A          144,813
Brookfield, OH 44403                                               

Village Center Plaza,            Leased    1986       2006          237,358
Unit 530                                                           
6002 Warren-Youngstown Rd.                                         
Niles, OH 44446                                                    

8228 East Market St.             Leased    1994       2003          154,682
Warren, OH 44484                                                   
(Loan Center)                                                      

2104 Niles Cortland Rd, SE       Leased    1995       2000          202,796
Warren, OH 44484                                                   
(Inside Super Kmart)                                               

2790 Mahoning Ave NW             Leased    1995       1999            3,009
Warren, OH 44483                                                   

486 Boardman Canfield Rd.        Leased    1996       2001          118,082
Youngstown, OH 44512                                               

5220 Mahoning Avenue, Suite A    Leased    1997       2002           99,647
Youngstown, OH 44515                                               

45 Manor Drive, Suite 400        Leased    1998       2003           57,579
Canfield, OH 44406
(Loan Center)

     The Association also owns an office building located at 159 E. Market
Street in Warren, Ohio, which is partially occupied by four commercial business
tenants.  The Association presently receives aggregate annual rental income of
approximately $101,000 from its tenants.  The largest tenant has a lease which
expires in December 1999, with a 3 year option to renew.  The other leases
expire in the years 2000 and 2001.

                                      65
<PAGE>
 
Legal Proceedings

     The Association is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business.  Such
routine legal proceedings, in the aggregate, are believed by management to be
immaterial to the financial condition and results of operations of the
Association.

Personnel

     As of June 30, 1998, the Association had 150 full-time employees and 25
part-time employees.  The employees are not represented by a collective
bargaining unit and the Association considers its relationship with its
employees to be good.  See "Management of the Association - Benefit Plans" for a
description of certain compensation and benefit programs offered to the
Association's employees.

                           FEDERAL AND STATE TAXATION
                                        
Federal Taxation

     General.  The Company and the Association will report their income on a
June 30 fiscal year basis using the accrual method of accounting and will be
subject to federal income taxation in the same manner as other corporations with
some exceptions, including particularly the Association's reserve for bad debts
discussed below.  The following discussion of tax matters is intended only as a
summary and does not purport to be a comprehensive description of the tax rules
applicable to the Association or the Company.  The Association has been audited
by the IRS for the 1992 and 1993 tax years.

     Bad Debt Reserve.  Historically, savings institutions such as the
Association which met certain definitional tests primarily related to their
assets and the nature of their business ("qualifying thrifts") were permitted to
establish a reserve for bad debts and to make annual additions thereto, which
are deducted in arriving at their taxable income.  The Association's deductions
with respect to "qualifying real property loans," which are generally loans
secured by certain interest in real property, were computed using an amount
based on the Association's actual loss experience, or a percentage equal to 8%
of the Association's taxable income, computed with certain modifications and
reduced by the amount of any permitted addition to the non-qualifying reserve.
Due to the Association's loss experience, the Association generally recognized a
bad debt deduction equal to 8% of taxable income.

     In August 1996, the provisions repealing the above thrift bad debt rules
were passed by Congress as part of "The Small Business Job Protection Act of
1996." The new rules eliminate the 8% of taxable income method for deducting
additions to the tax bad debt reserves for all thrifts for tax years beginning
after December 31, 1995.  These rules also require that all thrift institutions
recapture all or a portion of their bad debt reserves added since the base year
(last taxable year beginning before January 1, 1988).  The Association has
previously recorded a deferred tax liability equal to the bad debt recapture and
as such, the new rules will have no effect on net income or federal income tax
expense.  For taxable years beginning after December 31, 1995, the Association's
bad debt deduction will be equal to net charge-offs.  The new rules allow an
institution to suspend the bad debt reserve recapture for the 1996 and 1997 tax
years if the institution's lending activity for those years is equal to or
greater than the institution's average mortgage lending activity for the six
taxable years preceding 1996.  For this purpose, only home purchase and home
improvement loans are included and the institution can elect to have the tax
years with the highest and lowest lending activity removed from the average
calculation.  If an institution is permitted to postpone the reserve recapture,
it must begin its six year recapture no later than the 1998 tax year.  The
unrecaptured base year reserves will not be subject to recapture as long as the
institution continues to carry on the business of banking.  In addition, the
balance of the pre-1988 bad debt reserves continue to be subject to a provision
of present law referred to below that require recapture in the case of certain
excess distributions to shareholders.

     Distributions.  To the extent that the Association makes "non-dividend
distributions" to the Company that are considered as made (i) from the reserve
for losses on qualifying real property loans, to the extent the reserve for such
losses exceeds the amount that would have been allowed under the experience
method, or (ii) from the supplemental reserve for losses on loans ("Excess
Distributions"), then an amount based on the amount distributed will be included

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in the Association's taxable income. Non-dividend distributions include
distributions in excess of the Association's current and accumulated earnings
and profits, distributions in redemption of stock, and distributions in partial
or complete liquidation. However, dividends paid out of the Association's
current or accumulated earnings and profits, as calculated for federal income
tax purposes, will not be considered to result in a distribution from the
Association's bad debt reserve. Thus, any dividends to the Company that would
reduce amounts appropriated to the Association's bad debt reserve and deducted
for federal income tax purposes would create a tax liability for the
Association. The amount of additional taxable income created from an Excess
Distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution. Thus, if, after the
Conversion, the Association makes a "non-dividend distribution," then
approximately one and one-half times the amount so used would be includable in
gross income for federal income tax purposes, assuming a 34% corporate income
tax rate (exclusive of state and local taxes). See "Regulation" and "Dividend
Policy" for limits on the payment of dividends of the Association. The
Association does not intend to pay dividends that would result in a recapture of
any portion of its bad debt reserve.

     Corporate Alternative Minimum Tax.  The Code imposes a tax on alternative
minimum taxable income ("AMTI") at a rate of 20%.  The excess of the bad debt
reserve deduction claimed by the Association over the deduction that would have
been allowable under the experience method is treated as a preference item for
purposes of computing the AMTI.  Only 90% of AMTI can be offset by net operating
loss carryovers of which the Association currently has none.  AMTI is increased
by an amount equal to 75% of the amount by which the Association's adjusted
current earnings exceeds its AMTI (determined without regard to this preference
and prior to reduction for net operating losses).

     Dividends Received Deduction and Other Matters.  The Company may exclude
from its income 100% of dividends received from the Association as a member of
the same affiliated group of corporations.  The corporate dividends received
deduction is generally 70% in the case of dividends received from unaffiliated
corporations with which the Company and the Association will not file a
consolidated tax return, except that if the Company or the Association own more
than 20% of the stock of a corporation distributing a dividend then 80% of any
dividends received may be deducted.

Ohio Taxation

     The Company is subject to the Ohio corporation franchise tax, which, as
applied to the Company, is a tax measured by both net earnings and net worth.
The rate of tax is the greater of (i) 5.1% on the first $50,000 of computed Ohio
taxable income and 8.9% of computed Ohio taxable income in excess of $50,000 and
(ii) 0.582% times taxable net worth.  Under these alternative measures of
computing tax liability, the states to which a taxpayer's adjusted total net
income and adjusted total net worth are apportioned or allocated are determined
by complex formulas.  The minimum tax is $50 per year.

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

     Ohio corporation franchise tax law is scheduled to change markedly as a
consequence of legislative reforms enacted July 1, 1997.  Tax liability,
however, continues to be measured by both net income and net worth.  In general,
tax liability will be the greater of (i) 5.1% on the first $50,000 of computed
Ohio taxable income and 8.5% of computed Ohio taxable income in excess of
$50,000 or (ii) 0.40% of taxable net worth.  Under these alternative measures of
computing tax liability, the states to which total net income and total net
worth will be apportioned or allocated will continue to be determined by complex
formulas, but the formulas change.  The minimum tax will still be $50 per year
and maximum tax liability as measured by net worth will be limited to $150,000
per year.  The special litter taxes remain in effect.  Various other changes in
the tax law may affect the Company.

     The Association is a "financial institution" for State of Ohio tax
purposes. As such, it is subject to the Ohio

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corporation franchise tax on "financial institutions," which is imposed annually
at a rate of 1.5% of the Association's apportioned book net worth, determined in
accordance with GAAP, less any statutory deduction. This rate of tax is
scheduled to decrease in each of the years 1999 and 2000. As a "financial
institution," the Association is not subject to any tax based upon net income or
net profits imposed by the State of Ohio.

Delaware Taxation

     As a Delaware holding company not earning income in Delaware, the Company
is exempted from Delaware corporate income tax but is required to file an annual
report with and pay an annual franchise tax to the State of Delaware.


                                   REGULATION
                                        
General

     The Association is subject to extensive regulation, examination and
supervision by the OTS, as its chartering agency, and the FDIC, as the deposit
insurer.  The Association is a member of the FHLB System.  The Association's
deposit accounts are insured up to applicable limits by the SAIF managed by the
FDIC.  The Association must file reports with the OTS and the FDIC concerning
its activities and financial condition in addition to obtaining regulatory
approvals prior to entering into certain transactions such as mergers with, or
acquisitions of, other financial institutions.  There are periodic examinations
by the OTS and the FDIC to test the Association's compliance with various
regulatory requirements.  This regulation and supervision establishes a
comprehensive framework of activities in which an institution can engage and is
intended primarily for the protection of the insurance fund and depositors.  The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes.  Any
change in such policies, whether by the OTS, the FDIC or the Congress, could
have a material adverse impact on the Company, the Association and their
operations.  Assuming that the holding company form of organization is utilized,
the Company, as a savings and loan holding company, will also be required to
file certain reports with, and otherwise comply with the rules and regulations
of the OTS and of the SEC under the federal securities laws.

     Certain of the regulatory requirements applicable to the Association and to
the Company are referred to below or elsewhere herein.  The description of
statutory provisions and regulations applicable to savings associations set
forth in this Prospectus do not purport to be complete descriptions of such
statutes and regulations and their effects on the Association and the Company
and is qualified in its entirety by reference to such statutes and regulations.

Federal Savings Institution Regulation

     Business Activities.  The activities of federal savings institutions are
governed by the Home Owners' Loan Act, as amended (the "HOLA") and, in certain
respects, the Federal Deposit Insurance Act ("FDI Act") and the regulations
issued by the agencies to implement these statutes.  These laws and regulations
delineate the nature and extent of the activities in which federal associations
may engage.  In particular, many types of lending authority for federal
associations, e.g., commercial, non-residential real property loans and consumer
loans, are limited to a specified percentage of the institution's capital or
assets.

     Loans-to-One Borrower.  Under the HOLA, savings institutions are generally
subject to the national bank limit on loans-to-one borrower.  Generally, this
limit is 15% of the Association's unimpaired capital and surplus, plus an
additional 10% of unimpaired capital and surplus, if such loan is secured by
readily-marketable collateral, which is defined to include certain financial
instruments and bullion.  At June 30, 1998, the Association's largest aggregate
amount of loans-to-one borrower consisted of a $3.4 million real estate loan
for a community development project.

     Qualified Thrift Lender Test.  The HOLA requires savings institutions to
meet a qualified thrift lender ("QTL") test.  Under the QTL test, a savings
association is required to qualify as a "domestic building and loan 

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association" as that term is defined in the Code or maintain at least 65% of its
"portfolio assets" (total assets less: (i) specified liquid assets up to 20% of
total assets; (ii) intangibles, including goodwill; and (iii) the value of
property used to conduct business) in certain "qualified thrift investments"
(primarily residential mortgages and related investments, including certain
mortgage-backed and related securities) in at least 9 months out of each 12-
month period. A savings association that fails the QTL test must either convert
to a bank charter or operate under certain restrictions. As of June 30, 1998,
the Association met the QTL test. Recent legislation has expanded the extent to
which education loans, credit card loans and small business loans may be
considered as "qualified thrift investments."

     Limitation on Capital Distributions.  OTS regulations impose limitations
upon all capital distributions by a savings institution, such as cash dividends,
payments to repurchase or otherwise acquire its shares, payments to shareholders
of another institution in a cash-out merger and other distributions charged
against capital.  The rule establishes three tiers of institutions, which are
based primarily on an institution's capital level.  An institution that exceeds
all fully phased-in regulatory capital requirements before and after a proposed
capital distribution ("Tier 1 Bank") and has not been advised by the OTS that it
is in need of more than normal supervision, could, after prior notice to, but
without the approval of the OTS, make capital distributions during a calendar
year equal to the greater of: (i) 100% of its net earnings to date during the
calendar year plus the amount that would reduce by one-half its "surplus capital
ratio" (the excess capital over its fully phased-in capital requirements) at the
beginning of the calendar year; or (ii) 75% of its net earnings for the previous
four quarters.  Any additional capital distributions would require prior OTS
approval.  In the event the Association's capital fell below its capital
requirements or the OTS notified it that it was in need of more than normal
supervision, the Association's ability to make capital distributions could be
restricted.  In addition, the OTS could prohibit a proposed capital distribution
by any institution, which would otherwise be permitted by the regulation, if the
OTS determines that such distribution would constitute an unsafe or unsound
practice.

     The OTS has proposed amendments to its capital distribution regulations
which could conform OTS regulations to the existing requirements of other
banking agencies, as well as simplify the existing OTS regulations.  These
proposed rules would eliminate the requirement of notifying the OTS when cash
dividends of a certain amount will be paid for institutions that will remain at
least adequately capitalized.  However, applications for capital distributions
will be required for all distributions over a specified amount.  Notices will
still be required for distributions that would reduce the amount of or retire
common or preferred stock, or debt instruments included in the capital and for
all capital distributions by savings associations in a holding company
structure.

     Liquidity.  The Association is required to maintain an average daily
balance of specified liquid assets equal to a monthly average of not less than a
specified percentage (currently 4%) of its net withdrawable deposit accounts
plus short-term borrowings.  Monetary penalties may be imposed for failure to
meet these liquidity requirements.  The Association's average liquidity ratio
for the month ended June 30, 1998 was 9.40%, which exceeded the applicable
requirements.  The Association has never been subject to monetary penalties for
failure to meet its liquidity requirements.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations --Liquidity and
Capital Resources."

     Assessments.  Savings institutions are required by regulation to pay
assessments to the OTS to fund the agency's operations.  The general assessment,
paid on a semi-annual basis, is based upon the savings institution's total
assets, including consolidated subsidiaries, as reported in the Association's
latest quarterly Thrift Financial Report.  The assessments paid by the
Association for the year ended June 30, 1998 totaled $124,000.

     Branching.  OTS regulations permit federally-chartered savings associations
to branch nationwide under certain conditions.  Generally, federal savings
associations may establish interstate networks and geographically diversify
their loan portfolios and lines of business.  The OTS authority preempts any
state law purporting to regulate branching by federal savings associations.

     Transactions with Related Parties.  The Association's authority to engage
in transactions with related parties or "affiliates" (i.e., any company that
controls or is under common control with an institution, including the Company
and any non-savings institution subsidiaries that the Company may establish) is
limited by Sections 23A and 23B of the Federal Reserve Act ("FRA").  Section 23A
restricts the aggregate amount of covered transactions with any 

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<PAGE>
 
individual affiliate to 10% of the capital and surplus of the savings
institution and also limits the aggregate amount of transactions with all
affiliates to 20% of the savings institution's capital and surplus. Certain
transactions with affiliates are required to be secured by collateral in an
amount and of a type described in Section 23A and the purchase of low quality
assets from affiliates is generally prohibited. Section 23B generally requires
that certain transactions with affiliates, including loans and asset purchases,
must be on terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies. A savings association also is prohibited from extending credit to any
affiliate engaged in activities not permitted for a bank holding company and may
not purchase the securities of an affiliate (other than a subsidiary).

     Section 22(h) of the Federal Reserve Act restricts a savings association
with respect to loans to directors, executive officers, and principal
stockholders.  Under Section 22(h), loans to directors, executive officers and
stockholders who control, directly or indirectly, 10% or more of voting
securities of a savings association, and certain related interests of any of the
foregoing, may not exceed, together with all other outstanding loans to such
persons and affiliated entities, the savings association's total capital and
surplus.  Section 22(h) also prohibits loans above amounts prescribed by the
appropriate federal banking agency to directors, executive officers, and
shareholders who directly or indirectly control 10% or more of voting securities
of a stock savings association, and their respective related interests, unless
such loan is approved in advance by a majority of the board of directors of the
savings association.  Any "interested" director may not participate in the
voting.  The loan amount (which includes all other outstanding loans to such
person) as to which such prior board of director approval is required, is the
greater of $25,000 or 5% of capital and surplus or any loans over $500,000.
Further, pursuant to Section 22(h), loans to directors, executive officers and
principal shareholders must be made on terms substantially the same as offered
in comparable transactions to other persons except for extensions of credit made
pursuant to a benefit or compensation program that is widely available to the
institution's employees and does not give preference to insiders over other
employees.  Section 22(g) of the Federal Reserve Act places additional
limitations on loans to executive officers.

     Enforcement.  Under the FDI Act, the OTS has primary enforcement
responsibility over savings institutions and has the authority to bring action
against all "institution-affiliated parties," including stockholders, and any
attorneys, appraisers and accountants who knowingly or recklessly participate in
wrongful action likely to have an adverse effect on an insured institution.
Formal enforcement action may range from the issuance of a capital directive or
cease and desist order to removal of officers or directors, receivership,
conservatorship or termination of deposit insurance.  Civil penalties cover a
wide range of violations and can amount to $25,000 per day, or $1 million per
day in especially egregious cases.  Under the FDI Act, the FDIC has the
authority to recommend to the Director of the OTS that enforcement action be
taken with respect to a particular savings institution.  If action is not taken
by the Director, the FDIC has authority to take such action under certain
circumstances.  Federal and state law also establishes criminal penalties for
certain violations.

     Standards for Safety and Soundness.  The FDI Act requires each federal
banking agency to prescribe for all insured depository institutions standards
relating to, among other things, internal controls, information systems and
audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, and compensation, fees and benefits and such other
operational and managerial standards as the agency deems appropriate.  The
federal banking agencies have adopted final regulations and Interagency
Guidelines Establishing Standards for Safety and Soundness ("Guidelines") to
implement these safety and soundness standards.  The Guidelines set forth the
safety and soundness standards that the federal banking agencies use to identify
and address problems at insured depository institutions before capital becomes
impaired.  The Guidelines address internal controls and information systems;
internal audit system; credit underwriting; loan documentation; interest rate
risk exposure; asset growth; asset quality; earnings; and compensation, fees and
benefits.  If the appropriate federal banking agency determines that an
institution fails to meet any standard prescribed by the Guidelines, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard, as required by the FDI Act.  The final
regulations establish deadlines for the submission and review of such safety and
soundness compliance plans.

     Capital Requirements.  The OTS capital regulations require savings
institutions to meet three capital standards: a 1.5% tangible capital standard,
a 3% leverage (core capital) ratio and an 8% risk based capital standard.  Core
capital is defined as common stockholder's equity (including retained earnings),
certain non-cumulative perpetual 

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<PAGE>
 
preferred stock and related surplus, minority interests in equity accounts of
consolidated subsidiaries less intangibles other than certain mortgage servicing
rights ("MSRs") and credit card relationships. The OTS regulations require that,
in meeting the leverage ratio, tangible and risk-based capital standards
institutions generally must deduct investments in and loans to subsidiaries
engaged in activities not permissible for a national bank. In addition, the OTS
prompt corrective action regulation provides that a savings institution that has
a leverage capital ratio of less than 4% (3% for institutions receiving the
highest CAMEL examination rating) will be deemed to be "undercapitalized" and
may be subject to certain restrictions. See "--Prompt Corrective Regulatory
Action." The OTS has proposed to amend its capital regulations so that the
leverage requirement is identical to the above prompt corrective standard to
avoid "undercapitalized" status.

     The risk-based capital standard for savings institutions requires the
maintenance of total capital (which is defined as core capital and supplementary
capital) to risk-weighted assets of 8%.  In determining the amount of risk-
weighted assets, all assets, including certain off-balance sheet assets, are
multiplied by a risk-weight of 0% to 100%, as assigned by the OTS capital
regulation based on the risks OTS believes are inherent in the type of asset.
The components of core capital are equivalent to those discussed earlier under
the 3% leverage standard.  The components of supplementary capital currently
include cumulative preferred stock, long-term perpetual preferred stock,
mandatory convertible securities, subordinated debt and intermediate preferred
stock and, within specified limits, the allowance for loan and lease losses.
Overall, the amount of supplementary capital included as part of total capital
cannot exceed 100% of core capital.

     The OTS has incorporated an interest rate risk component into its
regulatory capital rule.  The final interest rate risk rule also adjusts the
risk-weighting for certain mortgage derivative securities.  Under the rule,
savings associations with "above normal" interest rate risk exposure would be
subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements.  A savings association's interest rate risk
would be measured by the decline in the net portfolio value of its assets (i.e.,
the difference between incoming and outgoing discounted cash flows from assets,
liabilities and off-balance sheet contracts) that would result from a
hypothetical 200-basis point increase or decrease in market interest rates
divided by the estimated economic value of the association's assets, as
calculated in accordance with guidelines set forth by the OTS.  A savings
association whose measured interest rate risk exposure exceeds 2% must deduct an
interest rate component in calculating its total capital under the risk-based
capital rule.  The interest rate risk component is an amount equal to one-half
of the difference between the institution's measured interest rate risk and 2%,
multiplied by the estimated economic value of the association's assets.  That
dollar amount is deducted from an association's total capital in calculating
compliance with its risk-based capital requirement.  Under the rule, there is a
two quarter lag between the reporting date of an institution's financial data
and the effective date for the new capital requirement based on that data.  A
savings association with assets of less than $300 million and risk-based capital
ratios in excess of 12% is not subject to the interest rate risk component,
unless the OTS determines otherwise.  The rule also provides that the Director
of the OTS may waive or defer an association's interest rate risk component on a
case-by-case basis.  The OTS has postponed indefinitely the date that the
component will first be deducted from an institution's total capital.

     At June 30, 1998, the Association met each of its capital requirements, in
each case on a fully phased-in basis.  See "Regulatory Capital Compliance" for a
table which sets forth in terms of dollars and percentages the OTS tangible,
leverage and risk-based capital requirements, the Association's historical
amounts and percentages at June 30, 1998, and pro forma amounts and percentages
based upon the issuance of the shares within the Estimated Price Range and
assuming that a portion of the net proceeds are retained by the Company.

Prompt Corrective Regulatory Action

     Under the OTS prompt corrective action regulations, the OTS is required to
take certain supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution's degree of capitalization.
Generally, a savings institution that has a total risk-based capital of less
than 8.0% or a leverage ratio or a Tier 1 capital ratio that is less than 4.0%
is considered to be undercapitalized.  A savings institution that has a total
risk-based capital less than 6.0%, a Tier 1 risk-based capital ratio of less
than 3.0% or a leverage ratio that is less than 3.0% is considered to be
"significantly undercapitalized" and a savings institution that has a tangible
capital to assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." Subject to a narrow exception, the banking regulator is

                                      71
<PAGE>
 
required to appoint a receiver or conservator for an institution that is
critically undercapitalized.  The regulation also provides that a capital
restoration plan must be filed with the OTS within 45 days of the date an
association receives notice that it is "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized." Compliance with the plan
must be guaranteed by any parent holding company. In addition, numerous
mandatory supervisory actions may become immediately applicable to the
institution depending upon its category, including, but not limited to,
increased monitoring by regulators, restrictions on growth, and capital
distributions and limitations on expansion. The OTS could also take any one of a
number of discretionary supervisory actions, including the issuance of a capital
directive and the replacement of senior executive officers and directors.

Insurance of Deposit Accounts

     The FDIC has adopted a risk-based insurance assessment system.  The FDIC
assigns an institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period, consisting of (1) well capitalized, (2)
adequately capitalized or (3) undercapitalized, and one of three supervisory
subcategories within each capital group.  The supervisory subgroup to which an
institution is assigned is based on a supervisory evaluation provided to the
FDIC by the institution's primary federal regulator and information which the
FDIC determines to be relevant to the institution's financial condition and the
risk posed to the deposit insurance funds.  An institution's assessment rate
depends on the capital category and supervisory category to which it is
assigned.  Assessment rates for SAIF member institutions currently range from 0
basis points to 27 basis points.  The FDIC is authorized to raise the assessment
rates in certain circumstances.  The FDIC has exercised this authority several
times in the past and may raise insurance premiums in the future.  If such
action is taken by the FDIC, it could have an adverse effect on the earnings of
the Association.  The Association's assessment rate for the year ended June 30,
1998 was 0.006% of assessable deposits.

     Under the FDI Act, insurance of deposits may be terminated by the FDIC upon
a finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
OTS.  The management of the Association does not know of any practice, condition
or violation that might lead to termination of deposit insurance.

Community Reinvestment Act

     Federal Regulation.  Under the Community Reinvestment Act, as amended
("CRA"), as implemented by OTS regulations, a savings association has a
continuing and affirmative obligation consistent with its safe and sound
operation to help meet the credit needs of its entire community, including low
and moderate income neighborhoods.  The CRA does not establish specific lending
requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the CRA.
The CRA requires the OTS, in connection with its examination of a savings
institution, to assess the institution's record of meeting the credit needs of
its community and to take such record into account in its evaluation of certain
applications by such institution.  The FIRREA amended the CRA to require the OTS
to provide a written evaluation of an institution's CRA performance utilizing a
four-tiered descriptive rating system, which replaced the five-tiered numerical
rating system.  The Association's latest CRA rating received from the OTS was
"Outstanding."

Federal Home Loan Bank System

     The Association is a member of the FHLB System, which consists of 12
regional FHLBs.  The FHLB provides a central credit facility primarily for
member institutions.  The Association, as a member of the FHLB, is required to
acquire and hold shares of capital stock in the FHLB in an amount at least equal
to 1% of the aggregate principal amount of its unpaid residential mortgage loans
and similar obligations at the beginning of each year, or 1/20 of its advances
(borrowings) from the FHLB, whichever is greater.  The Association was in
compliance with this requirement with an investment in FHLB stock at June 30,
1998 of $4.4 million.  FHLB advances must be secured by specified types of
collateral and all long-term advances may only be obtained for the purpose of
providing funds for residential housing finance.  At June 30, 1998, the
Association had $44.8 million in FHLB advances.

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<PAGE>
 
     The FHLBs are required to provide funds for the resolution of insolvent
thrifts and to contribute funds for affordable housing programs.  These
requirements could reduce the amount of dividends that the FHLBs pay to their
members and could also result in the FHLBs imposing a higher rate of interest on
advances to their members.  For the years ended June 30, 1998, 1997 and 1996,
dividends from the FHLB to the Association amounted to approximately $352,000,
$330,000 and $261,000, respectively.  If dividends were reduced, the
Association's net interest income would likely also be reduced.  Further, there
can be no assurance that the impact of recent or future legislation on the FHLBs
will not also cause a decrease in the value of the FHLB stock held by the
Association.

Federal Reserve System

     The Federal Reserve Board regulations require savings institutions to
maintain non-interest-earning reserves against their transaction accounts.  The
Federal Reserve Board regulations generally require that reserves be maintained
against aggregate transaction accounts as follows: for accounts aggregating
$47.8 million or less (subject to adjustment by the Federal Reserve Board) the
reserve requirement is 3%; and for accounts greater than $47.8 million, the
reserve requirement is $1.4 million plus 10% (subject to adjustment by the
Federal Reserve Board between 8% and 14%) against that portion of total
transaction accounts in excess of $47.8 million.  The first $4.7 million of
otherwise reservable balances (subject to adjustment by the Federal Reserve
Board) are exempted from the reserve requirements.  The Association is in
compliance with the foregoing requirements.  Because required reserves must be
maintained in the form of either vault cash, a non-interest-bearing account at a
Federal Reserve Bank or a pass-through account as defined by the Federal Reserve
Board, the effect of this reserve requirement is to reduce the Association's
interest-earning assets.  FHLB System members are also authorized to borrow from
the Federal Reserve "discount window," but Federal Reserve Board regulations
require institutions to exhaust all FHLB sources before borrowing from a Federal
Reserve Bank.

Holding Company Regulation

     The Company, if utilized, will be a non-diversified unitary savings and
loan holding company within the meaning of the HOLA.  As such, the Company will
be required to register with the OTS and will be subject to OTS regulations,
examinations, supervision and reporting requirements.  In addition, the OTS has
enforcement authority over the Company and its non-savings institution
subsidiaries.  Among other things, this authority permits the OTS to restrict or
prohibit activities that are determined to be a serious risk to the subsidiary
savings institution.  The Association must notify the OTS 30 days before
declaring any dividend to the Company.

     As a unitary savings and loan holding company, the Company generally will
not be restricted under existing laws as to the types of business activities in
which it may engage, provided that the Association continues to be a QTL.  See
"-- Federal Savings Institution Regulation -- QTL Test" for a discussion of the
QTL requirements.  Upon any non-supervisory acquisition by the Company of
another savings association, the Company would become a multiple savings and
loan holding company (if the acquired institution is held as a separate
subsidiary) and would be subject to extensive limitations on the types of
business activities in which it could engage.  The HOLA limits the activities of
a multiple savings and loan holding company and its non-insured institution
subsidiaries primarily to activities permissible for bank holding companies
under Section 4(c)(8) of the Bank Holding Company Act, as amended (the "BHC
Act"), subject to the prior approval of the OTS, and to other activities
authorized by OTS regulation.  Previously proposed legislation would have
treated all savings and loan holding companies as bank holding companies and
limit the activities of such companies to those permissible for bank holding
companies.

     The HOLA prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from acquiring more than 5% of
the voting stock of another savings institution, or holding company thereof,
without prior written approval of the OTS; from acquiring or retaining, with
certain exceptions, more than 5% of a non-subsidiary holding company or savings
association.  The HOLA also prohibits a savings and loan holding company from
acquiring more than 5% of a company engaged in activities other than those
authorized for savings and loan holding companies by the HOLA; or acquiring or
retaining control of a depository institution that is not insured by the FDIC.
In evaluating applications by holding companies to acquire savings institutions,
the OTS must consider the financial and managerial resources and future
prospects of the company and institution involved, the effect of the acquisition
on the risk to the insurance funds, the convenience and needs of the community
and competitive factors.

                                      73
<PAGE>
 
     The OTS is prohibited from approving any acquisition that would result in a
multiple savings and loan holding company controlling savings institutions in
more than one state, except: (i) the approval of interstate supervisory
acquisitions by savings and loan holding companies, and (ii) the acquisition of
a savings institution in another state if the laws of the state of the target
savings institution specifically permit such acquisitions.  The states vary in
the extent to which they permit interstate savings and loan holding company
acquisitions.

Federal Securities Laws

     The Company has filed with the SEC a registration statement under the
Securities Act for the registration of the Common Stock to be issued pursuant to
the Conversion.  Upon completion of the Conversion, the Company's Common Stock
will be registered with the SEC under the Exchange Act.  The Company will then
be subject to the information, proxy solicitation, insider trading restrictions
and other requirements under the Exchange Act.

     The registration under the Securities Act of shares of the Common Stock to
be issued in the Conversion does not cover the resale of such shares.  Shares of
the Common Stock purchased by persons who are not affiliates of the Company may
be resold without registration.  Shares purchased by an affiliate of the Company
will be subject to the resale restrictions of Rule 144 under the Securities Act.
If the Company meets the current public information requirements of Rule 144
under the Securities Act, each affiliate of the Company who complies with the
other conditions of Rule 144 (including those that require the affiliate's sale
to be aggregated with those of certain other persons) would be able to sell in
the public market, without registration, a number of shares not to exceed, in
any three-month period, the greater of (i) 1% of the outstanding shares of the
Company or (ii) the average weekly volume of trading in such shares during the
preceding four calendar weeks.  Provision may be made in the future by the
Company to permit affiliates to have their shares registered for sale under the
Securities Act under certain circumstances.

                                      74
<PAGE>
 
                           MANAGEMENT OF THE COMPANY

Directors of the Company

     The Board of Directors of the Company is divided into three classes, each
of which contains one-third of the Board.  The directors shall be elected by the
stockholders of the Company for staggered three year terms, or until their
successors are elected and qualified.  One class of directors, consisting of
Messrs.  Paul Watson, William Watson and Steven Lewis, has a term of office
expiring at the first annual meeting of stockholders, a second class, consisting
of Messrs.  Thomas Humphries, Robert McGeough and Robert Grace, has a term
expiring at the second annual meeting of stockholders and a third class,
consisting of Messrs.  George Gentithes and E. Jeffrey Rossi, has a term of
office expiring at the third annual meeting of stockholders.  The biographical
information of each Director is set forth under "Management of the Association -
Biographical Information."  It is currently intended that Directors of the
Company will receive no additional fees for their services as Directors of the
Company.

Executive Officers of the Company

     The following individuals are executive officers of the Company and hold
the offices set forth below opposite their names.  The biographical information
for each executive officer is set forth under "Management of the Association -
Biographical Information."

 
 Name                             Position(s) Held With the Company   
 ----                             ---------------------------------   
 Paul A. Watson                   Chairman of the Board of Directors  
 Steven R. Lewis                  President and Chief Executive Officer
 Richard K. Smith                 Vice President - Treasurer          
 Mary Ann Roberts                 Corporate Secretary                  


     The executive officers of the Company are elected annually and hold office
until their respective successors have been elected and qualified or until
death, resignation, retirement or removal by the Board of Directors.

     Since the formation of the Company, none of the executive officers,
Directors or other personnel has received remuneration from the Company.
Information concerning the principal occupations, employment and other
information concerning the directors and officers of the Company during the past
five years is set forth under "Management of the Association - Biographical
Information."

                                      75
<PAGE>
 
                         MANAGEMENT OF THE ASSOCIATION

Directors of the Association

     The Directors of the Company are also Directors of the Association.  Upon
consummation of the Conversion, the current Directors of the Association will
become Directors of the stock chartered Association.  The following table sets
forth certain information regarding the Board of Directors of the Association.


                                     Position(s) Held         Director   Term  
        Name          Age(1)       With the Association        Since    Expires 
        ----          ------       --------------------        -----    -------
Paul A. Watson          66     Chairman of the Board of         1983      2001
                               Directors                                
Robert P. Grace         59     Director                         1996      2001
George J. Gentithes     65     Director                         1989      2000
Thomas M. Humphries     53     Director                         1990      1999
Steven R. Lewis         40     Director, President and          1998      2001
                               Chief Executive Officer                  
Robert S. McGeough      67     Director                         1973      1999
E. Jeffrey Rossi        45     Director                         1994      2000
William W. Watson       71     Director                         1993      2001

-------------------
(1)  As of June 30, 1998.


Executive Officers of the Association who are not Directors

     The following table sets forth certain information regarding the executive
officers of the Association who are not also directors.


                                             Position(s) Held         
         Name          Age(1)              With the Association       
         ----          ------              --------------------       
David J. Jenkins         60          Vice President-Lending Operations
R. Patrick Wilkinson     50          Vice President-Retail Division   
Richard K. Smith         40          Vice President-Treasurer         
Brian Hoopes             40          Vice President - Bank Systems    
Mary Ann Roberts         57          Secretary                         

---------------------
(1)  As of June 30, 1998.



     The executive officers of the Association are elected annually and will
hold office in the converted Association until the annual meeting of the Board
of Directors of the Association held immediately after the first annual meeting
of stockholders of the Association subsequent to Conversion, and until their
successors are elected and qualified or until death, resignation, retirement or
removal by the Board of Directors.  Officers are re-elected by the Board of
Directors annually.

Biographical Information

Directors of the Association

     Paul A. Watson is Chairman of the Board of Directors of the Association.
Mr. Watson was elected to the Board of Directors of the Association in 1983 and
has been Chairman of the Board since 1997.  Prior to his retirement on December
31, 1996, Mr. Watson served as President and Chief Executive Officer of the
Association since 1983.  Mr. Watson is the brother of Mr. William Watson, a
director of the Association.

                                      76
<PAGE>
 
     Robert P. Grace has served as a Director of the Association since 1996.
Mr. Grace is Vice President and Chief Financial Officer of Salem Label Co.,
Salem, Ohio.  Prior to assuming that position in May 1995, Mr. Grace was a
principal in the accounting firm of  Packer, Thomas & Co., since 1993, and was a
partner in the accounting firm Ernst & Young from 1977 to 1993.  Mr. Grace is a
certified public accountant.

     George J. Gentithes has served as a Director of the Association since 1989.
Mr. Gentithes was owner and Chief Executive Officer of the Rapid Poulson
Textile Service from 1976 until 1989, when he became a consultant for Clean
Textile Service until 1994.  He is currently a consultant for T.F. Industries,
located in Warren, Ohio.

     Thomas M. Humphries has served on the Association's Board of Directors
since 1990.  Mr. Humphries is currently President of the Youngstown-Warren
Regional Chamber of Commerce .  Prior to taking that position in 1998, Mr.
Humphries was a General Manager with Sprint Corp., a telecommunications
corporation located in Warren, Ohio.

     Steven R. Lewis, a certified public accountant, is President and Chief
Executive Officer of the Association.  Mr. Lewis has been employed by the
Association since 1983.  He served as Vice President and Treasurer of the
Association from 1985 until his promotion to Executive Vice President in 1995.
He was elected President and Chief Executive Officer in 1997, and became a
Director of the Association in January 1998.  Mr. Lewis has a B.S. degree in
Accounting from the University of Akron, and has an M.B.A. from Cleveland State
University.

     Robert S. McGeough has served as a Director of the Association since 1973.
Mr. McGeough was a partner with the law firm of Hoppe, Frey, Hewitt & Milligan
from 1970 until 1997, when he became of counsel to the firm Harrington, Hoppe &
Mitchell, located in Warren, Ohio.  Harrington, Hoppe & Mitchell serves as the
Association's legal counsel.

     E. Jeffrey Rossi joined the Association's Board of Directors in 1994.  Mr.
Rossi is principal of E.J. Rossi & Company, located in Youngstown and Warren,
Ohio, where he is a life and health insurance broker.  Mr. Rossi holds B.A. and
J.D. degrees from The Catholic University of America.  He is the immediate past
Chairman of the Board of HM Health Services.

     William W. Watson has served as a Director of the Association since 1993.
Prior to his retirement in 1991, Mr. Watson served as President of Trumbull
Savings and Loan Association.  Mr. Watson is the brother of Mr. Paul Watson, a
director of the Association.

Executive Officers of the Association Who are Not Directors

     David J. Jenkins has been employed by the Association since 1969.  From
1969 until 1982, Mr. Jenkins held various positions with the Association.  In
1982, he was named Vice President-Secretary.  He currently is responsible for
overseeing all lending functions of the Association.

     R. Patrick Wilkinson has been with the Association since 1973.  He served
in various positions until he was named Vice President of the Retail Division in
1987.  His responsibilities are primarily to plan, develop and implement
policies and procedures in support of the Association's retail function,
including branch operations and general services.

     Richard K. Smith joined the Association in 1990 as Assistant Vice
President--Financial.  In January 1995, he was named Vice President--Treasurer.
His primary areas of responsibility are overseeing financial and regulatory
reporting, investment policy, interest rate risk policy and internal controls.
Mr. Smith has Bachelor of Science degrees in Accounting and Industrial
Management from the University of Akron.

     Brian E. Hoopes joined the Association in August 1998 as Vice President-
Banking Systems.  He was previously employed with Michelin Tire Corporation for
the past 18 years in positions responsible for electronic data processing and
financial operations.  His most recent position there was Project Manager for
the installation of a new financial software package in North America.

                                      77
<PAGE>
 
     Mary Ann Roberts has been with the Association since 1975.  In 1981 she
accepted the position of Executive Administrative Assistant.  In August 1998 she
was named the Corporate Secretary of the Association.

Meetings and Committees of the Boards of Directors of the Association and the
Company

     The Association's Board of Directors meets weekly and may have additional
special meetings as may be called in the manner specified in the Bylaws.  During
the year ended June 30, 1998, the Board held fifty-two meetings.  For the year
ended June 30, 1998, no Director attended fewer than 75% in the aggregate of the
total number of meetings of the Board or Committees on which such Director
served.

     The Board of Directors of the Association has established the following
committees:

     The Executive Committee consists of Messrs. Paul Watson, McGeough,
Gentithes and Lewis.  This committee acts upon such items that demand immediate
attention between meetings of the Board of Directors.  The committee meets on an
as-needed basis and met one time in fiscal 1998.

     The Audit Committee consists of Messrs. Grace, Gentithes, Humphries and
Rossi.  The committee meets quarterly with the Internal Auditor to review
material findings and general status, as well as to review proposed regulatory
changes with regard to their impact on the Association.

     Additionally, the Board has established the following committees composed
of directors and/or management: the Loan Committee, the Asset Classification
Committee, the Human Resources Committee, the Long-Range Planning Committee, the
Proxy Committee, the Pension and 401(k) Committee, the Investment Committee, the
Technology Committee, the Asset Liability Committee, the CRA Committee, the
Environmental Risk Committee, the Commercial Loan Committee and the Second
Review Committee.

     The Board of Directors of the Company has established the following
committees: the Audit Committee, consisting of Messrs.  Grace, Gentithes,
Humphries and Rossi; and the Compensation Committee consisting of Messrs.
McGeough, Rossi, Gentithes and Humphries.

Compensation of Directors

     All outside Directors of the Association receive an annual retainer of
$6,000.  In addition, each outside director receives a fee of $300 ($350 for the
Chairman of the Board) for each regular and special Board meeting which they
attend.  All outside Directors of the Association receive a fee of $90 ($150 in
the case of the Audit Committee and the Asset Classification Committee) for each
committee meeting attended.

Directors Emeritus

     Pursuant to the Association's bylaws, no person seventy-five years of age
shall be eligible for election, reelection, appointment or reappointment to the
Board of Directors, and no director shall serve as such beyond the annual
meeting of the Association immediately following the director becoming seventy-
two years of age.  Any Director who retires because of such age limitation is
eligible to be elected as advisor or emeritus director.  Directors emeritus have
no vote and receive fees as determined by resolution of the Directors of the
Association.  There is currently one director emeritus who receives an annual
retainer of $6,600.  Additionally, the Board has retained a former director as a
consultant who receives $300 for each Board meeting attended.

                                      78
<PAGE>
 
Executive Compensation

     Summary Compensation Table.  The following table sets forth the cash
compensation paid by the Association as well as certain other compensation paid
or accrued for services rendered in all capacities during the fiscal year ended
June 30, 1998, to the Chief Executive Officer.  No other executive officers of
the Association received salary and bonus in excess of $100,000.

<TABLE>
<CAPTION>

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

                                                                      Annual Compensation(1)        
                                                         --------------------------------------------------
                                                                                                          
                                                                                             Other         
                                                                                             Annual        
Name and Principal                                                                        Compensation     
Positions                                         Year       Salary($)      Bonus($)         ($)(2) 
-----------------------------------------------------------------------------------------------------------
<S>                                               <C>        <C>            <C>           <C> 
Steven R. Lewis                                   1998       $120,162       $12,480            --     
       President and Chief Executive Officer 

<CAPTION> 
-------------------------------------------------------------------------------------------------------------------------
                                                            Long-Term Compensation
                                              ------------------------------------------------------
                                                              Awards                      Payouts
                                              ------------------------------------------------------
                                                
                                                                      Securities       
                                                  Restricted          Underlying           LTIP           All Other
Name and Principal                               Stock Awards        Options/SARs         Payouts       Compensation
Positions                                            ($)                 (#)                ($)            ($)(3)
-------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                 <C>                  <C>           <C> 
Steven R. Lewis                                       --                  --                 --            $2,603
       President and Chief Executive Officer 
</TABLE>

-------------------------------
(1)    Under Annual Compensation, the column titled "Salary" includes amounts
       deferred by the Chief Executive Officer under the Association's 401(k)
       Plan.
(2)    For 1998, there were no (a) perquisites over the lesser of $50,000 or 10%
       of the individual's total salary and bonus for the year; (b) payments of
       above-market preferential earnings on deferred compensation; (c) payments
       of earnings with respect to long-term incentive plans prior to settlement
       or maturation; (d) tax payment reimbursements; or (e) preferential
       discounts on stock.  For 1998, the Association had no restricted stock or
       stock related plans in existence.
(3)    Other compensation includes the Association's matching contribution under
       the Association's 401(k) Plan.

                                      79
<PAGE>
 
Employment Agreements

     Upon the Conversion, the Association and the Company intend to enter into
employment agreements with Mr. Lewis (the "Executive") (collectively, the
"Employment Agreements").  The Employment Agreements are subject to the review
and approval of the OTS and may be amended as a result of such OTS review.
Review of compensation arrangements by the OTS does not indicate, and should not
be construed to indicate, that the OTS has passed on the merits of such
arrangements.  The Employment Agreements are intended to ensure that the
Association and the Company will be able to maintain a stable and competent
management base after the Conversion.  The continued success of the Association
and the Company depends to a significant degree on the skills and competence of
Mr. Lewis.

     The Employment Agreements provide for a three-year term.  The Association
Employment Agreement provides that, commencing on the first anniversary date and
continuing on each anniversary date thereafter, the Board of Directors may
extend the agreement for an additional year so that the remaining term shall be
three years, unless written notice of non-renewal is given by the Board of
Directors after conducting a performance evaluation of the Executive.  The terms
of the Company Employment Agreement shall be extended on a daily basis, unless
written notice of non-renewal is given by the Board of Directors.  The
Employment Agreements provide that the Executive's base salary will be reviewed
annually.  The base salary which will be effective for such Employment
Agreements for Mr. Lewis will be $150,000.  In addition to the base salary, the
Employment Agreements provide for, among other things, participation in stock
benefits plans and other fringe benefits applicable to executive personnel.  The
agreements provide for termination by the Association or the Company for cause,
as defined in the Employment Agreements, at any time.  In the event the
Association or the Company chooses to terminate the Executive's employment for
reasons other than for cause, or in the event of the Executive's resignation
from the Association and the Company upon:  (i) failure to re-elect the
Executive to his current offices; (ii) a material change in the Executive's
functions, duties or responsibilities; (iii) a relocation of the Executive's
principal place of employment by more than 25 miles; (iv) a material reduction
in the benefits and perquisites being provided to the Executive into the
Employment Agreement, unless consented to by the Executive; (v) liquidation or
dissolution of the Association or the Company; or (vi) a breach of the agreement
by the Association or the Company, the Executive or, in the event of death, his
beneficiary would be entitled to receive an amount equal to the remaining base
salary payments due to the Executive for the remaining term of the Employment
Agreement and the contributions that would have been made on the Executive's
behalf to any employee benefit plans of the Association and the Company during
the remaining term of the agreement.  The Association and the Company would also
continue and pay for the Executive's life, health, and dental coverage for the
remaining term of the Agreement.  Upon any termination of the Executive, the
Executive is subject to a one year non-competition agreement.

     Under the Employment Agreements, if involuntary termination or under
certain circumstances, voluntary termination follows a change in control of the
Association or the Company, the Executive or, in the event of the Executive's
death, his beneficiary, would be entitled to a severance payment equal to the
greater of:  (i) the payments due for the remaining terms of the agreement; or
(ii) three times the average of the five preceding taxable years' annual
compensation.  The Association and the Company would also continue the
Executive's life, health and dental coverage for thirty-six months.
Notwithstanding that both the Association and Company Employment Agreements
provide for a severance payment in the event of a change in control, the
Executive would only be entitled to receive a severance payment under one
agreement.

     Payments to the Executive under the Association's Employment Agreement will
be guaranteed by the Company in the event that payments or benefits are not paid
by the Association.  Payment under the Company's Employment Agreement would be
made by the Company.  All reasonable costs and legal fees paid or incurred by
the Executive pursuant to any dispute or question of interpretation relating to
the Employment Agreements shall be paid by the Association or Company,
respectively, if the Executive is successful on the merits pursuant to a legal
judgment, arbitration or settlement.  The Employment Agreements also provide
that the Association and Company shall indemnify the Executive to the fullest
extent allowable under Federal and Delaware law, respectively.  In the event of
a change in control of the Association or the Company, the total amount of
payments due under the Agreements, based solely on the base salary to be paid to
Mr. Lewis effective upon consummation of the Conversion excluding any benefits
under any employee benefit plan which may be payable, would be approximately
$450,000.

                                      80
<PAGE>
 
Change in Control Agreements

     Upon Conversion, the Association and the Company intend to enter into two-
year Change in Control Agreements (the "CIC Agreements") with certain officers
of the Association, none of whom will be covered by employment contracts.
Commencing on the first anniversary date and continuing on each anniversary
thereafter, the Association CIC Agreements may be renewed by the Board of
Directors of the Association for an additional year.  The Company CIC Agreements
shall be extended on a daily basis unless written notice of non-renewal is given
by the Board of Directors.  The CIC Agreements will provide that in the event
involuntary termination or, in certain circumstances, voluntary termination
follows a change in control of the Company or the Association, the officer would
be entitled to receive a severance payment equal to two times the officer's
average annual compensation for the five most recent taxable years preceding
termination.  The Company and the Association would also continue and pay for
the officer's life and health coverage for 24 months following termination.  In
the event of a change in control of the Company or the Association, the total
payments that would be due under the CIC Agreements, based solely on the current
annual compensation paid to the officers covered by the CIC Agreements and
excluding any benefits under any employee benefit plan which may be payable,
would be approximately $___________.

Employee Severance Compensation Plan

     The Association's Board of Directors intends to, upon Conversion, establish
the First Federal Savings and Loan Association of Warren Employee Severance
Compensation Plan ("Severance Plan") which will provide eligible employees with
severance pay benefits in the event of a change in control of the Association or
the Company following Conversion.  Management personnel with Employment
Agreements or CIC Agreements are not eligible to participate in the Severance
Plan.  Generally, employees are eligible to participate in the Severance Plan if
they have completed at least one year of service with the Association.  The
Severance Plan vests in each participant a contractual right to the benefits
such participant is entitled to thereunder.  Under the Severance Plan, in the
event of a change in control of the Association or the Company, eligible
employees who are terminated from or terminate their employment within one year
(for reasons specified under the Severance Plan), will be entitled to receive a
severance payment.  If the participant, whose employment has terminated, has
completed at least one year of service, the participant will be entitled to a
cash severance payment equal to one-twelfth of annual compensation for each year
of service up to a maximum of 100% of annual compensation.  Such payments may
tend to discourage takeover attempts by increasing costs to be incurred by the
Association in the event of a takeover.  However, it is management's belief that
substantially all of the Association's employees would be retained in their
current positions in the event of a change in control, and that any amount
payable under the Severance Plan would be considerably less than the total
amount that could possibly be paid under the Severance Plan.

Insurance Plans

     All full-time employees of the Association, upon completion of the
applicable introductory period, are covered as a group for comprehensive
hospitalization, including major medial and long-term disability insurance.
Life insurance is also provided to employees and directors.

Benefit Plans

     Retirement Plan.  The Association sponsors a defined benefit pension plan
known as the First Federal Savings and Loan Association of Warren Defined
Benefit Pension Plan ("Retirement Plan").  The Retirement Plan is intended to
satisfy the tax qualification requirements of Section 401(a) of the Code.

     Employees are eligible to participate in the Retirement Plan on the April 1
or October 1 coincident with or otherwise next following the later of an
employee's 21/st/ birthday and the one year anniversary of the employee's date
of employment, regardless of the number of hours of service credited.  The
Retirement Plan defines "Employee" as any individual employed by the Association
or its affiliates or any leased employee who is deemed to be an employee under
Section 414(n) of the Code but excludes any person who is an independent
contractor.

     The Retirement Plan provides for a normal retirement  benefit to
participants upon retirement at or after the later of (i) attainment of age 65
or (ii) the fifth anniversary of initial participation in the plan. The annual
normal

                                      81
<PAGE>
 
retirement benefit for a participant under the Retirement Plan equals 45% of a
participant's "Average Monthly Compensation" (as defined in the plan) plus 16%
of the participant's "Average Monthly Compensation" in excess of one-twelfth
"Covered Compensation" (as defined in the plan).  However, if projected years of
service to normal retirement age are less than twenty-five, the percentage of
Average Monthly Compensation and the excess percentage will be reduced by one-
twenty-fifth for each year of service less than twenty-five.

     A participant may also become eligible to receive an early retirement
benefit upon the (i) attainment of age 60; and (ii) completion of 15 years of
service.  Early retirement benefits are generally calculated in the same manner
as a participant's normal retirement benefits but may be actuarially reduced if
paid prior to the participant's "Normal Retirement Date" (as defined by the
plan).  Participants generally become vested in their benefits under the
Retirement Plan upon completing at least five years of Service.

     The plan generally pays benefits in the form of a straight life annuity
with respect to unmarried participants and in the form of a joint and 50%
survivor annuity (with the spouse as designated beneficiary) for married
participants.  Other forms of benefit payments, including a lump sum, are
available under the Retirement Plan.

     The following table sets forth the estimated annual benefits payable under
the Retirement Plan upon a participant's retirement at age 65 under the most
advantageous plan provisions available at various levels of compensation and
years of service.  Covered compensation under the Retirement Plan basically
includes the base salary for participants, and does not consider any cash bonus
amounts.  The benefits listed in the table below for the Retirement Plan are not
subject to a deduction for social security benefits or any other offset amount.


    Final                        Years of Service               
   Average      --------------------------------------------------------
 Compensation        15       20       25       30       35       40 
--------------  --------------------------------------------------------
 $ 20,000         $ 5,400  $ 7,200  $ 9,000  $ 9,000  $ 9,000  $ 9,000
   30,000           8,100   10,800   13,500   13,500   13,500   13,500
   50,000          13,500   18,000   22,500   22,500   22,500   22,500
   75,000          21,102   28,137   35,171   35,171   35,171   35,171
  100,000          30,252   40,337   50,421   50,421   50,421   50,421
  150,000          48,552   64,737   80,921   80,921   80,921   80,921
  200,000          52,212   69,617   87,021   87,021   87,021   87,021
  250,000          52,212   69,617   87,021   87,021   87,021   87,021
  300,000          52,212   69,617   87,021   87,021   87,021   87,021
  and over(1)   

-----------
(1) Under current law, the final average compensation for computing benefits
    under the Pension Plan cannot exceed $160,000 (indexed for inflation).


     The approximate years of service, as of June 30, 1998, for the named
executive officer is as follows:


      Named Executive Officer          Years of Service
      -----------------------          ----------------
 
      Steven R. Lewis                          14


      401(k) Plan.  The Association also sponsors the First Federal Savings
and Loan Association of Warren 401(k) Savings Plan ("401(k) Plan"), a tax-
qualified profit sharing and salary reduction plan under Sections 401(a) and
401(k) of the Code.  Generally, employees other than employees who are
collective bargaining unit employees and employees

                                      82
<PAGE>
 
who are non-resident aliens become eligible to participate in the 401(k) Plan
upon the attainment of age 21 and the completion of one year of service.  Under
the 401(k) Plan, participants may make salary reduction contributions equal to
2% to 12% of their compensation or the legally permissible limit (currently
$9,500).  The Association matches of the compensation deferred by a participant
with respect to amounts deferred up to 4% of annual compensation.

     Participants are always 100% vested in their salary reduction
contributions. Participants become 100% vested in Association matching
contributions after the completion of five years of service with the
Association. A participant who terminates employment due to death, disability,
or retirement immediately becomes fully vested in the Association's matching
contributions credited to his or her account regardless of the participant's
years of service. A participant's vested portion of his or her 401(k) Plan
account is distributable from the 401(k) Plan upon the termination of the
participant's employment, death, disability or retirement. In addition, a
participant may be eligible for hardship withdrawals and loans under the 401(k)
Plan. Any distribution made to a participant prior to the participant's
attainment of age 59 1/2 is subject to a 10% excise tax in addition to federal
income taxes. The Board of Directors may at any time discontinue the
Association's contributions to employee accounts. For the years ended June 30,
1998, 1997 and 1996, the Association's matching contributions to the 401(k) Plan
were $56,000, $52,000 and $48,000, respectively.

     The 401(k) Plan currently permits participants to invest their 401(k) plan
account balances in several types of investment funds. In connection with the
Conversion, the Association intends amend the 401(k) Plan to permit plan
participants to invest their account balances in Company Common Stock through an
employer stock fund (the "Employer Stock Fund.") The Employer Stock Fund will be
invested primarily in shares of Common Stock. Participants may use their
subscription rights to purchase stock in the Conversion but may not purchase
more than $250,000 in aggregate value of the Common Stock in the Conversion
(subject to the maximum overall purchase liability). A participant's ability to
divert all or some of his vested account to purchase Common Stock in the
Offering will be dependent upon such individual being an Eligible Account
Holder, Supplemental Eligible Account Holder or Other Member. The trustee may
follow the voting directions of 401(k) Plan participants investing in the
Employer Stock Fund; provided that the trustee determines such voting is
consistent with its fiduciary duties.

     ESOP. In connection with the Conversion, the Association also intends to
implement an employee stock ownership plan ("ESOP"). An ESOP is a tax-qualified
retirement plan designed to invest primarily in employer securities. The
Association will make contributions to the ESOP on behalf of all ESOP
participants. The ESOP will provide eligible employees with the opportunity to
receive a Association funded retirement benefit based on the value of the Common
Stock. The Association anticipates that the eligibility requirements for the
ESOP will be similar to those of the 401(k) Plan.

     The ESOP intends to purchase 8.0% of the Common Stock issued in connection
with the Conversion, including shares issued to the Foundation. As part of the
Conversion and in order to fund the ESOP's purchase of the Common Stock to be
issued in the Conversion, the ESOP intends to borrow funds from the Company
equal to 100% of the aggregate purchase price of the Common Stock to be
purchased by the ESOP. Alternatively, the Company and Association may choose to
fund the ESOP's purchase of stock through a loan from a third party financial
institution. The Common Stock purchased by the ESOP with the loan proceeds will
serve as collateral for the loan, as described below. The term of the ESOP loan
will be 15 years and the trustee will repay the loan principally from the
Company's or the Association's contributions to the ESOP. The Association may
use matching contributions made with respect to ESOP participants' 401(k) salary
reduction contributions and other discretionary contributions to meet the ESOP
loan obligations. Additionally, any dividends that may be paid on unallocated
stock held by the ESOP will also be used to repay the ESOP loan. Subject to
receipt of any necessary regulatory approvals or opinions, the Association may
make additional contributions to the ESOP for repayment of the loan or to
reimburse the Company for contributions made by it. The interest rate for the
loan is expected to be at or near the prime rate.

     Shares of Common Stock purchased by the ESOP with the loan proceeds will
initially be pledged as collateral for the loan, and will be held in a suspense
account until released for allocation among participants as the loan is repaid.
The trustee will release the pledged shares annually from the suspense account
in an amount proportional to the repayment of the ESOP loan for each plan year.
The released shares will then be allocated to the accounts of ESOP participants
as follows: First, for each eligible ESOP participant, a portion of the shares
released for the plan year will be allocated to a special "matching" account
under the ESOP equal in value to the amount of matching contribution,

                                      83
<PAGE>
 
if any, and/or if applicable, that such participant would be entitled to under
the terms of the 401(k) Plan for the plan year.  Second, the remaining shares
which have been released for the plan year will be allocated to each eligible
participant's general ESOP account based on the ratio of each such participant's
base compensation to the total base compensation of all eligible ESOP
participants.  Participants will vest in their ESOP account at a rate of 20%
annually commencing after the completion of two years of service, with 100%
vesting upon the completion of 6 years of service.   Participants will also
become fully vested in their accounts if their service terminates due to death,
retirement, disability, or upon the occurrence of a change in control.  The ESOP
may reallocate forfeitures among remaining participants, in the same proportion
as contributions.  Benefits under the ESOP will become payable upon death,
retirement, early retirement, or separation from service.  The annual
contributions to the ESOP are not fixed, so benefits payable under the ESOP
cannot be estimated.

     In connection with the establishment of the ESOP, the Board of Directors
will appoint a Committee of the Board of Directors and officers of the
Association to administer the ESOP (the "ESOP Committee"). The Association
anticipates that this Committee will appoint an unrelated trustee for the ESOP
and the 401(k) Plan Employer Stock Fund prior to the Conversion. The ESOP
Committee may instruct the trustee regarding investment of funds contributed to
the ESOP and the 401(k) Plan Employee Stock Fund. The ESOP trustee, subject to
its fiduciary duties, must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees. Subject to its
fiduciary duties under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the trustee will vote unallocated shares and allocated shares
for which participants provide no instructions in a manner calculated to most
accurately reflect the instructions it has received from participants regarding
the allocated stock for which it has received instructions.

     Stock Option Plan. Following the Conversion, the Board of Directors of the
Company intends to adopt a stock-based benefit plan which would provide for the
granting of options to purchase Common Stock to certain individuals. Currently,
the Company anticipates granting stock options under a single stock-based
incentive plan ("Incentive Option Plan") covering full-time employees and
outside directors of the Company and its affiliates. However, it is possible
that the Company may establish a separate option plan solely for outside
directors. At a meeting of stockholders of the Company following the Conversion,
which under applicable regulations may not be held earlier than six months after
the completion of the Conversion, the Board of Directors intends to present the
Incentive Option Plan to stockholders for approval. The Company anticipates
reserving an amount equal to 10% of the shares of Common Stock issued in the
Conversion, including shares issued to the Foundation (or 1,288,000 shares based
upon the issuance of 12,880,000 shares), for issuance under the Incentive Option
Plan.

     The Company intends to design the stock option benefits provided under the
Incentive Option Plan to attract and retain qualified personnel in key
positions, provide officers and key employees with a proprietary interest in the
Company as an incentive to contribute to the success of the Company and reward
key employees for outstanding performance. The Company may condition the
granting or vesting of stock options on the achievement of individual or 
Company-wide performance goals, including the achievement by the Company or the
Association of specified levels of net income, asset growth, return on equity or
other specific financial performance goals. The Company anticipates that the
Incentive Option Plan will provide for the grant of: (i) options for employees
to purchase the Company's Common Stock intended to qualify as incentive stock
options under Section 422 of the Code ("Incentive Stock Options"); (ii) options
for all participants that do not qualify as incentive stock options ("Non-
Statutory Stock Options"); and (iii) Limited Rights (discussed below) which
participants may exercise only upon a change in control of the Association or
the Company. Unless sooner terminated, the Incentive Option Plan will be in
effect for a period of ten years from the earlier of adoption by the Board of
Directors or approval by the Company's stockholders. If such plan is adopted
within one year after Conversion, OTS regulations provide that no individual
officer or employee of the Association may receive more than 25% of the stock
options available under the Incentive Option Plan (or any separate plan for
officers and employees) and non-employee directors may not receive more than 5%
individually, or 30% in the aggregate, of the stock options available under the
Incentive Option Plan (or any separate plan for directors). The Company intends
to grant options with Limited Rights under the Incentive Option Plan at an
exercise price equal to the fair market value of the underlying Common Stock on
the date of grant. Subject to any applicable regulations, upon exercise of
"Limited Rights" in the event of a change in control, the employee will be
entitled to receive a lump sum cash payment equal to the difference between the
exercise price of the related option and the fair market value of the shares of
common stock subject to the option on the date of exercise of the right in lieu
of purchasing the stock underlying the option. The Company anticipates that all
options granted contemporaneously with

                                      84
<PAGE>
 
stockholder approval of the Incentive Option Plan will qualify as Incentive
Stock Options to the extent permitted under Section 422 of the Code.

     A committee of the Board of Directors will administer the Incentive Option
Plan and will determine which officers and employees may receive options and
Limited Rights, whether such options will qualify as Incentive Stock Options,
the number of shares subject to each option, the exercise price of each option,
the manner of exercise of the options and the time when such options become
exercisable.

     If the Company adopts an option plan in the form described above, an
employee will not realize taxable income upon grant or exercise of any Incentive
Stock Option, provided that the employee does not dispose of the shares received
through the exercise of such option for at least one year after the date the
employee receives the stock in connection with the option exercise and two years
after the date of grant of the option (a "disqualifying disposition"). The
Company may not take a compensation expense deduction with respect to the grant
or exercise of Incentive Stock Options, unless the employee disposes of the
shares in a disqualifying disposition. In the case of a Non-Statutory Stock
Option and in the case of a disqualifying disposition of an Incentive Stock
Option, an employee will be deemed to receive ordinary income upon exercise of
the stock option in an amount equal to the amount by which the fair market value
of the Common Stock on the date of exercise exceeds the exercise price of the
option. The amount of taxable income realized by an optionee upon the exercise
of a Non-Statutory Stock Option or due to a disqualifying disposition of shares
acquired through the exercise of an Incentive Stock Option are a deductible
expense for tax purposes by the Company. Upon the exercise of a Limited Right,
the option holder realizes taxable income equal to the amount paid to him or her
upon exercise of the right and the Company receives a deduction equal to that
same amount.
     
     Stock options under an option plan adopted by the Company would become
vested and exercisable in the manner specified by the committee responsible for
administering the plan, subject to applicable regulations. If the Incentive
Option Plan (or any separate plans for employees and directors) is adopted
within one year after the Conversion, awards would become vested and exercisable
subject to applicable OTS regulations, which such regulations require that any
awards begin vesting not earlier than one year from the date of shareholder
approval of the plan and, thereafter, vest at a rate of no more than 20% per
year and may not be accelerated except in case of death or disability. The
Company anticipates options granted in connection with the Incentive Option Plan
will remain exercisable for at least three months following the date on which
the employee ceases to perform services for the Association or the Company,
except that in the event of death or disability, in which cases options
accelerate and become fully vested and remain exercisable for up to one year
thereafter, or such longer period as determined by the Company. However, any
Incentive Stock Options exercised more than three months following the date the
employee ceases to perform services as an employee, other than termination due
to death or disability, would be treated for tax purposes as a Non-Statutory
Stock Option. The Company also anticipates that in the event of retirement, if
the optionee continues to perform services as a Director, Director Emeritus or
consultant on behalf of the Association, the Company or an affiliate, unvested
options would continue to vest in accordance with their original vesting
schedule until the optionee ceases to serve as a Director, Director Emeritus or
consultant. If the Incentive Option Plan is adopted in the form described above,
the Company, if requested by the optionee, could elect, in exchange for vested
options, to pay the optionee, or beneficiary in the event of death, the amount
by which the fair market value of the Common Stock exceeds the exercise price of
the options on the date of the employee's termination of employment.

     All options granted to outside directors under an option plan must, by law,
be Non-Statutory Stock Options and would vest and become exercisable in a manner
specified by the committee, subject to applicable regulations, and would expire
upon the earlier of ten years following the date of grant or one year following
the date the optionee ceases to be a Director, Director Emeritus, Advisory
Director or consultant. In the event of the death or disability of a
participant, all previously granted options would immediately vest and become
fully exercisable.

     Subject to any applicable regulations, the Incentive Option Plan (or any
separate plan for employees and directors) described above may be amended
subsequent to the expiration of the one-year period to provide for accelerated
vesting of previously granted options in the event of a change in control of the
Company or the Association. A change in control would be defined in the plan
document and would generally occur when a person or group of persons acting in
concert acquires beneficial ownership of 20% or more of any class of equity
security of the Company or the Association or in the event of a tender or
exchange offer, merger or other form of business combination, sale of all or
substantially all of the assets of the Company or the Association or contested
election of directors which 

                                      85
<PAGE>
 
resulted in the replacement of a majority of the Board of Directors by persons
not nominated by the directors in office prior to the contested election.

     Stock Program. Following the Conversion, the Company intends to establish
the Stock Program which would provide for the grant of stock awards to officers,
employees and non-employee directors of the Association and Company as a method
of providing officers, employees and non-employee directors with a proprietary
interest in the Company in a manner designed to encourage such persons to remain
with the Association. The benefits under the Stock Program may be provided for
under either a separate plan for officers and employees and a separate plan for
outside directors or under the Incentive Option Plan. The Company intends to
present the Stock Program for stockholder approval at a meeting of stockholders,
which pursuant to applicable regulations, the Company may hold no earlier than
six months after the completion of the Conversion.

     The Association or Company expects to contribute funds to the Stock Program
to enable such plan to acquire, in the aggregate, an amount equal to 4% of the
shares of Common Stock issued in the Conversion, including shares issued to the
Foundation (or 515,200 shares based upon the issuance of 12,880,000 shares). The
Company will acquire these shares through open market purchases, if permitted,
or from authorized but unissued shares. Although no specific award
determinations have been made, the Company anticipates that it will provide
stock awards to the directors and employees of the Company or Association or
their affiliates to the extent permitted by applicable regulations. If such plan
is adopted within one year after Conversion, OTS regulations provide that no
individual officer or employee of the Association may receive more than 25% of
the stock awards available under the Stock Program (or any separate plan for
officers and employees) and non-employee directors may not receive more than 5%
individually, or 30% in the aggregate, of the stock awards available under the
Stock Program (or any separate plan for directors). Shares of Common Stock
granted pursuant to the Stock Program will be awarded at no cost to the
recipients.

     A committee of the Board of Directors will administer the Stock Program.
Stock awards will not be transferable or assignable. The Board intends to
appoint an independent fiduciary to serve as trustee of a trust established
pursuant to the Stock Program. The Company may make allocations and grants to
officers and employees under the Stock Program in the form of non performance-
based grants and/or performance-based grants. The Company may make the granting
or vesting of stock awards under the Stock Program conditioned upon the
achievement of individual or Company-wide performance goals, including the
Company's or Association's achievement of specified levels of net income, return
on assets, return on equity or other specified financial performance goals and
will be subject to applicable regulations. If the Stock Program (or any separate
plans for employees and directors) is adopted within one year after the
Conversion, awards would become vested subject to applicable OTS regulations,
which such regulations require that any awards begin vesting not earlier than
one year from the date of shareholder approval of the plan and, thereafter, vest
at a rate of no more than 20% per year and may not be accelerated except in case
or death or disability.

     In the event of death, stock awards will become 100% vested. In the event
of disability, stock awards would be 100% vested upon termination of employment
of an officer or employee, or upon termination of service as a director. In the
event of retirement, if the participant continues to perform services as a
Director, Director Emeritus or consultant on behalf of the Association, the
Company or an affiliate or, in the case of a retiring Director, Director
Emeritus or as a consulting director, unvested stock awards will continue to
vest in accordance with their original vesting schedule until the recipient
ceases to perform such services at which time any unvested stock awards would
lapse.

     Subject to any applicable regulations, the Stock Program described above
may be amended subsequent to the expiration of the one-year period to provide
for accelerated vesting of shares granted under the Stock Program in the event
of a change in control of the Association or Company. A change in control, which
will be defined in the plan document, generally occurs when a person or group of
persons acting in concert acquires beneficial ownership of 20% or more of a
class of equity securities of the Company or the Association or in the event of
a tender or exchange offer, merger or other form of business combination, sale
of all or substantially all of the assets of the Company or the Association or
contested election of directors which results in the replacement of a majority
of the Board of Directors by persons not nominated by the directors in office
prior to the contested election. 

     When shares become vested in accordance with the Stock Program described
above, the participants will

                                      86
<PAGE>
 
recognize taxable income equal to the fair market value of the Common Stock at
that time. The Company may take a deduction equal to that amount for the year in
which it becomes taxable to the individual. When shares become vested and are
actually distributed in accordance with the Stock Program, the participants also
receive amounts equal to any accrued dividends with respect thereto. Prior to
vesting, recipients of grants may direct the voting of the shares awarded to
them. Shares not subject to grants and shares allocated subject to the
achievement of performance goals will be voted by the trustee of the Stock
Program in accordance to the directions provided by individuals with respect to
shares subject to grants. Vested shares will be distributed to recipients as
soon as practicable following the day on which they are vested.

     In the event that additional authorized but unissued shares are acquired by
the Stock Program after the Conversion, the interests of existing shareholders
would be diluted. See "Pro Forma Data."

Transactions With Certain Related Persons

     Federal regulations require that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with the general public and must not involve more than
the normal risk of repayment or present other unfavorable features. In addition,
loans made to a director or executive officer in excess of the greater of
$25,000 or 5% of the Association's capital and surplus (up to a maximum of
$500,000) must be approved in advance by a majority of the disinterested members
of the Board of Directors.

     The Association offers directors, officers and full-time employees of the
Association who satisfy certain criteria and the general underwriting standards
of the Association, mortgage loans with interest rates which may be up to 1%
below the rates offered to the Association's other customers, the Employee Loan
Rate ("ELR"). The program also offers a 3/4% interest rate discount on motor
vehicle loans (other than motorcycles). Loan application fees are waived for all
ELR loans. The ELR normally ceases upon termination of employment. Upon
termination of the ELR, the interest rate reverts to the contract rate in effect
at the time that the loan was originated. All other terms and conditions
contained in the original mortgage and note continue to remain in effect. With
the exception of ELR loans, the Association currently makes loans to its
executive officers, directors and employees on the same terms and conditions
offered to the general public. Loans made by the Association to its directors
and executive officers are made in the ordinary course of business, on
substantially the same terms , including collateral, as those prevailing at the
time for comparable transactions with other persons and do not involve more than
the normal risk of collectability or present other unfavorable features. As of
June 30, 1998, eight of the Association's executive officers or directors had
loans with outstanding balances totaling $862,000 in the aggregate. All such
loans were made by the Association in the ordinary course of business, with no
favorable terms (except for ELR loans) and such loans do not involve more than
the normal risk of collectability or present unfavorable features.

     The Company intends that all transactions between the Company and its
executive officers, directors, holders of 10% or more of the shares of any class
of its Common Stock and affiliates thereof, will contain terms no less favorable
to the Company than could have been obtained by it in arms-length negotiations
with unaffiliated persons and will be approved by a majority of independent
outside directors of the Company not having any interest in the transaction.

                                      87
<PAGE>
 
Subscriptions of Executive Officers and Directors

     The following table sets forth the number of shares of Common Stock that
the executive officers and directors, and their associates, propose to purchase,
assuming shares of Common Stock are issued at the minimum and maximum of the
Estimated Price Range (including shares issued to the Foundation) and that
sufficient shares will be available to satisfy their subscriptions. The table
also sets forth the total expected beneficial ownership of Common Stock as to
all directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                          At the Minimum              At the Maximum         
                                                         of the Estimated         of the Estimated Price      
                                                          Price Range(1)                 Range(1)             
                                                    --------------------------  --------------------------
                                                                                                As a              
                                                                As a Percent                   Percent            
                                                     Number       of Shares       Number      of Shares           
                 Name                     Amount    of Shares     Issued(2)      of Shares    Issued(2)          
--------------------------------------  ----------  ---------  ---------------  ----------  --------------
<S>                                     <C>         <C>        <C>              <C>         <C>                 
Paul A. Watson........................  $  700,000     70,000       0.74%          70,000        0.54%            

Robert P. Grace.......................     250,000     25,000       0.26           25,000        0.19            

George J. Gentithes...................     750,000     75,000       0.79           75,000        0.58            

Thomas M. Humphries...................     500,000     50,000       0.53           50,000        0.39            

Steven R. Lewis.......................     400,000     40,000       0.42           40,000        0.31            

Robert S. McGeough....................     250,000     25,000       0.26           25,000        0.19            

E. Jeffrey Rossi......................     400,000     40,000       0.42           40,000        0.31            

William W. Watson.....................     500,000     50,000       0.53           50,000        0.39                
 
All directors and executive officers
  as a group (11 persons).............  $4,350,000    435,000       4.57%         435,000        3.38%    
                                        ==========    =======       ====          =======        ====
 
</TABLE>
----------------------
(1) Includes proposed subscriptions, if any, by associates.  Does not include
    orders by the ESOP.  Intended purchases by the ESOP are expected to be 8%
    of the shares issued in the Conversion, including shares issued to the
    Foundation.  Also does not include shares to be contributed to the
    Foundation equal to 8% of the Common Stock sold, Common Stock which may
    be awarded under the Stock Program to be adopted equal to 4% of the
    Common Stock issued in the Conversion, including shares issued to the
    Foundation, and Common Stock which may be purchased pursuant to options
    which may be granted under the Stock Option Plan equal to 10% of the
    number of shares of Common Stock issued in the Conversion, including
    shares issued to the Foundation.
(2) Includes shares issued to the Foundation.

                                      88
<PAGE>
 
                                 THE CONVERSION
                                        
     THE BOARD OF DIRECTORS OF THE ASSOCIATION AND THE OTS HAVE  APPROVED THE
PLAN OF CONVERSION, SUBJECT TO APPROVAL BY THE MEMBERS OF THE ASSOCIATION
ENTITLED TO VOTE ON THE MATTER AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS.
SUCH OTS APPROVAL, HOWEVER, DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT
OF THE PLAN BY SUCH AGENCY.  THE OTS NEITHER APPROVED NOR DISAPPROVED THE
ESTABLISHMENT OF THE FOUNDATION.

General

     The Association's Board of Directors, on June 15, 1998, unanimously
adopted, subject to approval by the OTS, the Plan pursuant to which the
Association will be converted from a federally-chartered mutual savings
association to a federally-chartered capital stock savings association.  It is
currently intended that all of the outstanding capital stock of the Association
will be held by the Company, which is incorporated under Delaware law.  The Plan
was approved by the OTS, subject to, among other things, approval of the Plan by
the Association's members.  A special meeting of members has been called for
this purpose to be held on __________, 1998.

     The Company has applied for and expects to receive the approval from the
OTS to become a savings and loan holding company and to acquire all of the
Common Stock of the Association to be issued in the Conversion.  The Company
plans to purchase the shares of issued and outstanding capital stock of the
Association in exchange for 50% of the net proceeds and retain the remaining net
proceeds.  The Conversion will be effected only upon completion of the sale of
all of the shares of Common Stock of the Company or the Association, if the
holding company form of organization is not utilized, to be issued pursuant to
the Plan.

     The Plan provides that the Board of Directors of the Association may, at
any time prior to the issuance of the Common Stock and for any reason, decide
not to use a holding company form.  Such reasons may include possible delays
resulting from overlapping regulatory processing or policies which could
adversely affect the Association's or the Company's ability to consummate the
Conversion and transact its business as contemplated herein and in accordance
with the Association's operating policies.  In the event such a decision is
made, the Association will withdraw the Company's registration statement from
the SEC and take steps necessary to complete the Conversion without the Company,
including filing any necessary documents with the OTS.  In such event, and
provided there is no regulatory action, directive or other consideration upon
which basis the Association determines not to complete the Conversion, if
permitted by the OTS, the Association will issue and sell the Common Stock of
the Association and subscribers will be notified of the elimination of a holding
company and resolicited (i.e., be permitted to affirm their orders, in which
case they will need to affirmatively reconfirm their subscriptions prior to the
expiration of the resolicitation offering or their funds will be promptly
refunded with interest at the Association's passbook rate of interest; or be
permitted to modify or rescind their subscriptions), and notified of the time
period within which the subscriber must affirmatively notify the Association of
his intention to affirm, modify or rescind his subscription.  The following
description of the Plan assumes that a holding company form of organization will
be used in the Conversion.  In the event that a holding company form of
organization is not used, all other pertinent terms of the Plan as described
below will apply to the conversion of the Association from the mutual to stock
form of organization and the sale of the Association's common stock.

     The Plan provides generally that (i) the Association will convert from a
mutual savings association to a capital stock savings association and (ii) the
Company will offer shares of Common Stock for sale in the Subscription Offering
to the Association's Eligible Account Holders, the ESOP, Supplemental Eligible
Account Holders, and Other Members.  Subsequent to the Subscription Offering,
any remaining shares will be offered in a Community Offering with preference
given to natural persons residing in the Association's Local Community.  It is
anticipated that all shares not subscribed for in the Subscription and Community
Offerings will be offered for sale by the Company to the general public in a
Syndicated Community Offering.  The Association has the right to accept or
reject, in whole or in part, any orders to purchase shares of the Common Stock
received in the Community Offering or in the Syndicated Community Offering.  See
"-- Community Offering" and "-- Syndicated Community Offering."

     The aggregate price of the shares of Common Stock to be sold in the
Conversion within the Estimated Price 

                                      89
<PAGE>
 
Range, currently estimated to be between $88.4 million and $119.6 million, will
be determined based upon an independent appraisal, prepared by Keller of the
estimated pro forma market value of the Common Stock of the Company. All shares
of Common Stock to be issued and sold in the Conversion will be sold at the same
price. The independent appraisal will be affirmed or, if necessary, updated at
the completion of the Subscription and Community Offerings, if all shares are
subscribed for, or at the completion of the Syndicated Community Offering. The
appraisal has been performed by Keller, a consulting firm experienced in the
valuation and appraisal of savings institutions. See "-- Stock Pricing" for
additional information as to the determination of the estimated pro forma market
value of the Common Stock.

     The following is a brief summary of the material aspects of the Conversion.
The summary is qualified in its entirety by reference to the provisions of the
Plan.  A copy of the Plan is available for inspection at each branch of the
Association and at the Central Region and Washington, D.C. offices of the OTS.

Establishment of the Charitable Foundation

     General.  In furtherance of the Association's long-standing commitment to
its local community, the Association's Plan of Conversion provides for the
establishment of a charitable foundation in connection with the Association's
Conversion.  The Plan provides that the Association and the Company will
establish the Foundation, which will be incorporated under Delaware law as a
non-stock corporation, and will fund the Foundation with Common Stock of the
Company, as further described below.  The Company and the Association believe
that the funding of the Foundation with Common Stock of the Company is a means
of establishing a common bond between the Association and the communities in
which the Association operates and thereby enables such communities to share in
the potential growth and success of the Company and the Association over the
long term.  By further enhancing the Association's visibility and reputation in
the communities in which it operates, the Association believes that the
Foundation will enhance the long-term value of the Association's community
banking franchise.

     The Foundation would be dedicated to the promotion of charitable purposes
within the communities in which the Association operates, including, but not
limited to, providing grants or donations to support housing assistance, not-
for-profit medical facilities, community groups and other types of organizations
or projects.  Establishment of the Foundation is subject to the approval of a
majority of the total outstanding votes of the Association's members eligible to
be cast at the Special Meeting.  The Foundation will be considered as a separate
matter from approval of the Plan of Conversion.  If the Association's members
approve the Plan of Conversion, but not the Foundation, the Association intends
to complete the Conversion without the establishment of the Foundation.  Failure
to approve the establishment of the Foundation may materially affect the pro
forma market value of the Common Stock.  In such an event, the Association may
establish a new Estimated Price Range and commence a resolicitation of
subscribers.  In the event of a resolicitation, unless an affirmative response
is received within a specified period of time, all funds will be promptly
returned to investors, as described elsewhere herein.  See "-- Stock Pricing."

     Purpose of the Foundation.  The purpose of the Foundation is to provide
funding to support charitable purposes within the communities in which the
Association operates.  The Association has long emphasized community lending and
community development activities and currently has an "outstanding" Community
Reinvestment Act ("CRA") rating.  The Foundation is being formed as a complement
to the Association's existing community activities, not as a replacement for
such activities.  Indeed, the Association intends to continue to emphasize
community lending and community development activities following the Conversion.
However, such activities are not the Association's sole corporate purpose.  The
Foundation, conversely, will be completely dedicated to community activities and
the promotion of charitable causes, and may be able to support such activities
in ways that are not presently available to the Association.  Since the
Association already engages in community development activities, the Association
believes that the Foundation will enable the Company and the Association to
assist their local community in areas beyond community development and lending.
In this regard, the Board of Directors believes the establishment of a
charitable foundation is consistent with the Association's commitment to
community service.  The Boards of Directors of the Association and Company also
believe that the funding of the Foundation with Common Stock of the Company is a
means of enabling the communities in which the Association operates to share in
the potential growth and success of the Company long after completion of the
Conversion.  The Foundation accomplishes that goal by providing for continued
ties between the Foundation and Association, thereby forming a partnership with
the Association's community.  The establishment of the Foundation would also
enable the Company and the Association to develop a 

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unified charitable donation strategy and would centralize the responsibility for
administration and allocation of corporate charitable funds.

     Structure of the Foundation.  The Foundation will be incorporated under
Delaware law as a non-stock corporation.  It is currently anticipated that the
Foundation's board of directors will be comprised of three members, all of whom
will be individuals elected from existing directors of the Association.  The
directors of the Association and Company that are expected to serve on the Board
of Directors of the Foundation consist of Messrs.  Paul Watson, Robert McGeough
and Steven Lewis, who intend to purchase 70,000, 25,000 and 40,000 shares of
Common Stock in the Conversion, respectively, or 0.5%, 0.2% and 0.3%,
respectively, or 1.0% in the aggregate of the total number of shares to be
issued in the Conversion, including shares issued to the Foundation, based upon
the maximum of the Estimated Price Range.  On an on-going basis, a Nominating
Committee of the board of directors of the Foundation will nominate individuals
eligible for election to the board of directors of the Foundation.  The members
of the Foundation, who are comprised of its board members, will elect the
directors at the annual meeting of the Foundation from those nominated by the
Nominating Committee.  Only persons serving as directors of the Foundation
qualify as members of the Foundation with voting authority.  Directors will be
divided into three classes with each class appointed for three-year terms.  The
certificate of incorporation of the Foundation will provide that the Foundation
is organized exclusively for charitable purposes as set forth in Section
501(c)(3) of the Code.  The Foundation's certificate of incorporation further
will provide that no part of the net earnings of the Foundation will inure to
the benefit of, or be distributable to, its directors, officers or members.  A
person who is a director, officer or employee of the Association, or has the
power to direct its management or policies, or otherwise owes a fiduciary duty
to the Association, and who will also serve as a director or employee of the
Foundation would be subject to the requirements of OTS conflicts of interest
regulations.

     The authority for the affairs of the Foundation will be vested in the board
of directors of the Foundation.  The directors of the Foundation will be
responsible for establishing the policies of the Foundation with respect to
grants or donations by the Foundation, consistent with the stated purposes for
which the Foundation is established.  Although no formal policy governing
Foundation grants exists at this time, the Foundation's board of directors will
adopt such a policy upon establishment of the Foundation.  The directors will
also be responsible for directing the assets of the Foundation.  Pursuant to the
terms of the contribution as mandated by the OTS, all shares of Common Stock
held by the Foundation must be voted in the same ratio as all other shares of
the Company's Common Stock on all proposals considered by stockholders of the
Company; provided, however, that the OTS will waive this voting restriction
under certain circumstances if compliance with the restriction would: (i) cause
a violation of the law of the State of Delaware and the OTS determines that
federal law would not preempt the application of the laws of the State of
Delaware to the Foundation; (ii) cause the Foundation to lose its tax-exempt
status or otherwise have a material and adverse tax consequence on the
Foundation; or (iii) cause the Foundation to be subject to an excise tax under
Section 4941 of the Code.  In order for the OTS to waive such voting
restriction, the Company's or the Foundation's legal counsel must render an
opinion satisfactory to OTS that compliance with the voting restriction would
have the effect described in clauses (i), (ii) or (iii) above.  Under those
circumstances, the OTS will grant a waiver of the voting restriction upon
submission of such legal opinion(s) by the Company or the Foundation.  In the
event that the OTS waived the voting restriction, the directors would direct the
voting of the Common Stock held by the Foundation.  However, a condition to the
OTS approval of the Conversion provides that in the event such voting
restriction is waived or becomes unenforceable, the Director of the OTS, or his
designees, at that time may impose conditions on the composition of the board of
directors of the Foundation or such other conditions or restrictions relating to
the control of the Common Stock held by the Foundation, any of which could limit
the ability of the board of directors of the Foundation to control the voting of
the Common Stock held by the Foundation.  Further, there will be no agreements
or understandings with directors of the Foundation regarding the exercise of
control, directly or indirectly, over the management or policies of the Company
or the Association, including agreements related to voting, acquisition or
disposition of the Company's stock.  As directors of a nonprofit corporation,
directors of the Foundation will at all times be bound by their fiduciary duty
to advance the Foundation's charitable goals, to protect the assets of the
Foundation and to act in a manner consistent with the charitable purpose for
which the Foundation is established.

     The Company will provide office space and administrative support services
to the Foundation.  Initially, the Foundation is expected to have no employees.
The board of directors of the Foundation will appoint such officers as may be
necessary to manage the operations of the Foundation.  It is anticipated that
initially such officers will be selected from the board of directors of the
Foundation.  Any transaction between the Association and the Foundation 

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will comply with the affiliate transaction restrictions set forth in Sections
23A and 23B of the Federal Reserve Act, as amended.

     The Company and the Association determined to fund the Foundation with
Common Stock rather than cash because it desired to form a bond with its
community in a manner that would allow the community to share in the potential
growth and success of the Company and the Association over the long term. The
funding of the Foundation with stock also provides the Foundation with a
potentially larger endowment than if the Company contributed cash to the
Foundation since, as a shareholder, the Foundation will share in the potential
growth and success of the Company. As such, the contribution of stock to the
Foundation has the potential to provide a self-sustaining funding mechanism
which reduces the amount of cash that the Company, if it were not making the
stock contribution, would have to contribute to the Foundation in future years
in order to maintain a level amount of charitable grants and donations.

     The Foundation would receive working capital from any dividends that may be
paid on the Common Stock in the future, and subject to applicable federal and
state laws, loans collateralized by the Common Stock or from the proceeds of the
sale of any of the Common Stock in the open market from time to time as may be
permitted to provide the Foundation with additional liquidity.  As a private
foundation under Section 501(c)(3) of the Code, the Foundation will be required
to distribute annually in grants or donations, a minimum of 5% of the average
fair market value of its net investment assets.  One of the conditions imposed
on the gift of Common Stock by the Company is that the amount of Common Stock
that may be sold by the Foundation in any one year shall not exceed 5% of the
average market value of the assets held by the Foundation, except where the
board of directors of the Foundation, determines that the failure to sell an
amount of common stock greater than such amount would result in a long-term
reduction of the value of the Foundation's assets or would otherwise jeopardize
the Foundation's capacity to carry out its charitable purposes.  While there may
be a greater risk associated with a one-stock portfolio in comparison to a
diversified portfolio, the Company believes any such risk is mitigated by the
ability of the Foundation's directors to sell more than 5% of its stock in such
circumstances.  Upon completion of the Conversion and the contribution of shares
to the Foundation immediately following the Conversion, the Company would have
9,520,000, 11,200,000 and 12,880,000 shares issued and outstanding at the
minimum, midpoint and maximum of the Estimated Price Range.  BECAUSE THE COMPANY
WILL HAVE AN INCREASED NUMBER OF SHARES OUTSTANDING, THE VOTING AND OWNERSHIP
INTERESTS OF SHAREHOLDERS IN THE COMPANY'S COMMON STOCK WOULD BE DILUTED BY
7.1%, AS COMPARED TO THEIR INTERESTS IN THE COMPANY IF THE FOUNDATION WAS NOT
ESTABLISHED.  For additional discussion of the dilutive effect, see "Comparison
of Valuation and Pro Forma Information With No Foundation" and "Pro Forma Data."

     Comparison of Valuation and Other Factors Assuming the Foundation Is Not
Established as Part of the Conversion.  The Company proposes to capitalize the
Foundation with Common Stock in an amount equal to 7.7% of the total amount of
Common Stock sold in connection with the Conversion.  At the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Price Range, the contribution
to the Foundation would equal 680,000, 800,000, 920,000 and 1,058,000 shares,
respectively, which would have a market value of $6.8 million, $8.0 million,
$9.2 million and $10.6 million, respectively, based on the Purchase Price of
$10.00 per share.  Such contribution, once made, will not be recoverable by the
Company or the Association.  As a result of the establishment of the Foundation,
the Estimated Price Range, as estimated by Keller, has decreased and the amount
of stock available for sale in the Offerings has also correspondingly decreased.
The amount of the decrease is 1,530,000, 1,800,000, 2,070,000 and  2,380,500
shares, or $15.3 million, $18.0 million, $20.7 million and $23.8 million at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated Price
Range, respectively.  See "Pro Forma Data" and "Comparison of Valuation and Pro
Forma Data Information with No Foundation."

     As a result of the establishment of the Foundation, the Company will
recognize an expense of the full amount of the contribution, which is expected
to be offset in part by a corresponding tax benefit, during the quarter in which
the contribution is made, which is expected to be the second quarter of fiscal
1999.  Such expense will reduce earnings and have a material impact on the
Company's earnings for the fiscal year in which it is made.  While management
cannot predict earnings for fiscal 1999, it expects that the establishment and
funding of the Foundation will have an adverse impact on the Company's earnings
for the year in which it is made.  Assuming a contribution of $9.2 million in
Common Stock in fiscal 1999, based on the maximum of the Estimated Price Range
and assuming a tax rate of 34%, the Company estimates a net tax effected expense
of $6.1 million.  If the Foundation had been established at June 30, 1998, the
Association would have recorded a net loss of $2.0 million, rather than
recording net income of $4.1 million 

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for the year ended June 30, 1998, based on an assumed tax rate of 34%. Due to
the contribution to the Foundation, the Association expects in the future to
reduce the amount of its current charitable contributions within its community.
The Association does not anticipate making future charitable contributions to
the Foundation during the first five years following the initial contribution to
the Foundation.

     Tax Considerations. The Company and the Association have been advised by
Crowe, Chizek and Company LLP that the Foundation will qualify as a 501(c)(3)
exempt organization under the Code, and will be classified as a private
foundation rather than a public charity. A private foundation typically receives
its support from one person or one corporation whereas a public charity receives
its support from the public. The Foundation will submit a request to the IRS to
be recognized as an exempt organization after approval of the Foundation by the
Association's members at the Special Meeting being held to consider the
Conversion. As long as the Foundation files its application for tax-exempt
status within 15 months from the date of its organization, and provided the IRS
approves the application, the effective date of the Foundation's status as a
Section 501(c)(3) organization will be the date of its organization. Crowe,
Chizek and Company LLP, however, has not rendered any advice on the condition of
the gift which requires that all shares of Common Stock of the Company held by
the Foundation must be voted in the same ratio as all other shares of the
Company's Common Stock, on all proposals considered by stockholders of the
Company. In the event that the Company or the Foundation receives an opinion of
their tax counsel satisfactory to the OTS that compliance with the voting
restriction would cause the Foundation to lose its tax-exempt status, otherwise
have a material adverse tax consequence on the Foundation or subject the
Foundation to an excise tax under Section 4941 of the Code, the OTS will waive
such condition upon submission of such opinion(s) by the Company or the
Foundation. See "-- Regulatory Conditions Imposed on the Foundation."

     A legal opinion of the OTS which addresses the establishment of charitable
foundations by savings associations opines that as a general rule funds
contributed to a charitable foundation should not exceed the deductible
limitations set forth in the Code, and if a saving association's contributions
exceed the deductible limit, such action must be justified by the Board of
Directors.  In addition, under Delaware law, the Company is authorized by
statute to make charitable contributions and case law has recognized the
benefits of such contributions to a Delaware corporation.  In this regard,
Delaware case law provides that a charitable gift must merely be within
reasonable limits as to amount and purpose to be valid.  Under the Code, the
Company may deduct up to 10% of its taxable income in any one year and any
contributions made by the Company in excess of the deductible amount will be
deductible for federal tax purposes over each of the five succeeding taxable
years.  The Company and the Association believe that the Conversion presents a
unique opportunity to establish and fund a charitable foundation given the
substantial amount of additional capital being raised in the Conversion.  In
making such a determination, the Company and the Association considered the
dilutive impact of the Foundation on the amount of Common Stock available to be
offered for sale in the Conversion.  See "Comparison of Valuation and Pro Forma
Information with No Foundation."  Based on such consideration, the Company and
Association believe that the contribution to the Foundation in excess of the 10%
annual limitation is justified given the Association's capital position and its
earnings, the substantial additional capital being raised in the Conversion and
the potential benefits of the Foundation to the Association's community.  In
this regard, assuming the sale of the Common Stock at the midpoint of the
Estimated Price Range, the Company would have pro forma consolidated capital of
$150.5 million, or 21.5% of pro forma consolidated assets and the Association's
pro forma tangible, core and risk-based capital ratios would be 14.8%, 14.8% and
33.3%, respectively.  See "Regulatory Capital Compliance," "Capitalization," and
"Comparison of Valuation and Pro Forma Information with No Foundation."  Thus,
the amount of the contribution will not adversely impact the financial condition
of the Company and the Association and the Company and the Association therefore
believe that the amount of the charitable contribution is reasonable given the
Company and the Association's pro forma capital positions.  As such, the Company
and the Association believe that the contribution does not raise safety and
soundness concerns.

     The Company and the Association have received an opinion of Crowe, Chizek
and Company LLP that the Company's contribution of its own stock to the
Foundation should not constitute an act of self-dealing, and that the Company
should be entitled to a deduction in the amount of the fair market value of the
stock at the time of the contribution less the nominal par value that the
Foundation is required to pay to the Company for such stock, subject to a
limitation based on 10% of the Company's annual taxable income.  The Company,
however, would be able to carry forward any unused portion of the deduction for
five years following the year in which the contribution is made for federal tax
purposes.  Thus, while the Company expects, based on the midpoint of the
Estimated Price Range, to be able to utilize for federal income tax purposes a
charitable contribution deduction of approximately $1.3 million in 

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<PAGE>
 
fiscal year 1999, the Company is permitted under the Code to carryover the
excess of the total contribution over such 1999 deduction over a five-year
period for federal income tax purposes. Assuming the close of the Offerings at
the midpoint of the Estimated Price Range, the Company estimates that all of the
federal tax deduction should be deductible over the six-year period. However, no
assurances can be made that the Company will have sufficient pre-tax income over
the five year period following the year in which the contribution was made to
fully utilize the carryover related to the excess contribution. Neither the
Company nor the Association expects to make any further contributions to the
Foundation within the first five years following the initial contribution. After
that time, the Company and the Association may consider future contributions to
the Foundation. Any such decisions would be based on an assessment of, among
other factors, the financial condition of the Company and the Association at
that time, the interests of shareholders and depositors of the Company and the
Association, and the financial condition and operations of the Foundation.

     Although the Company and the Association have received an opinion of Crowe,
Chizek and Company LLP that the Company is entitled to a deduction for the
charitable contribution, there can be no assurances that the IRS will recognize
the Foundation as a Section 501(c)(3) exempt organization or that the deduction
will be permitted.  In such event, the Company's contribution to the Foundation
would be expensed without tax benefit, resulting in a reduction in earnings in
the year in which the IRS makes such a determination.  In cases of willful,
flagrant or repeated acts or failures to act which result in violations of the
IRS rules governing private foundations, a private foundation's status as a
private foundation may be involuntarily terminated by the IRS.  In such event,
the managers of a private foundation could be liable for excise taxes based on
such violations and the private foundation could be liable for a termination tax
under the Code.  The Foundation's certificate of incorporation provides that it
shall have a perpetual existence.  In the event, however, the Foundation were
subsequently dissolved as a result of a loss of its tax exempt status, the
Foundation would be required under the Code and its certificate of incorporation
to distribute any assets remaining in the Foundation at that time for one or
more exempt purposes within the meaning of Section 501(c)(3) of the Code, or to
distribute such assets to the federal government, or to a state or local
government, for a public purpose.

     As a private foundation, earnings and gains, if any, from the sale of
Common Stock or other assets are exempt from federal and state corporate
taxation.  However, investment income, such as interest, dividends and capital
gains, will be subject to a federal excise tax of 2.0%.  The Foundation will be
required to make an annual filing with the IRS within four and one-half months
after the close of the Foundation's fiscal year to maintain its tax-exempt
status.  The Foundation will be required to publish a notice that the annual
information return will be available for public inspection for a period of 180
days after the date of such public notice.  The information return for a private
foundation must include, among other things, an itemized list of all grants made
or approved, showing the amount of each grant, the recipient, any relationship
between a grant recipient and the Foundation's managers and a concise statement
of the purpose of each grant.

     Regulatory Conditions Imposed on the Foundation.  Establishment of the
Foundation is subject to the following conditions imposed by the OTS: (i) the
Foundation will be subject to examination by the OTS, at the Foundation's own
expense; (ii) the Foundation must comply with supervisory directives imposed by
the OTS; (iii) the Foundation will provide annual reports to the OTS describing
grants made and grant recipients; (iv) the Foundation will operate in accordance
with written policies adopted by the board of directors, including a conflict of
interest policy; (v) the Foundation will not engage in self-dealing and will
comply with all laws necessary to maintain its tax-exempt status; (vi) any
purchases of Common Stock by the Foundation following that Conversion will be
subject to OTS regulations on stock repurchases; and (vii) any shares of Common
Stock of the Company held by the Foundation must be voted in the same ratio as
all other shares of the Company's Common Stock on all proposals considered by
stockholders of the Company; provided, however, that the OTS will waive this
voting restriction under certain circumstances if compliance with the voting
restriction would: (a) cause a violation of the law of the State of Delaware and
the OTS determines the federal law does not preempt the application of the laws
of the State of Delaware to the Foundation; (b) cause the Foundation to lose its
tax-exempt status or otherwise have a material and adverse tax consequence on
the Foundation; or (c) cause the Foundation to be subject to an excise tax under
Section 4941 of the Code.  In order for the OTS to waive such voting
restriction, the Company's or the Foundation's legal counsel must render an
opinion satisfactory to OTS that compliance with the voting restriction would
have the effect described in clauses (a), (b) or (c) above.  Under those
circumstances, the OTS will grant a waiver of the voting restriction upon
submission of such opinion(s) by the Company or the Foundation.  There can be no
assurances that either a legal or 

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<PAGE>
 
tax opinion addressing these issues will be rendered, or if rendered, that the
OTS will grant an unconditional waiver of the voting restriction. In this
regard, a condition to the OTS approval of the Conversion provides that in the
event such voting restriction is waived or becomes unenforceable, the Director
of the OTS, or his designees, at that time may impose conditions on the
composition of the board of directors of the Foundation or such other conditions
or restrictions relating to the control of the Common Stock held by the
Foundation, any of which could limit the ability of the board of directors of
the Foundation to control the voting of Common Stock held by the Foundation. In
no event will the voting restriction survive the sale of shares of the Common
Stock held by the Foundation.

     In addition, establishment of the Foundation is subject to the approval of
a majority of the total outstanding votes of the Association's members eligible
to be cast at the Special Meeting. The Foundation will be considered as a
separate matter from approval of the Plan of Conversion. If the Association's
members approve the Plan of Conversion, but not the Foundation, the Association
intends to complete the Conversion without the establishment of the Foundation.
Failure to approve the Foundation may materially increase the pro forma market
value of the Common Stock being offered for sale in the Offering since the
Valuation Range, as set forth herein, takes into account the dilutive impact of
the issuance of shares to the Foundation. See "Comparison of Valuation and Pro
Forma Information With No Foundation."

Purposes of Conversion

     The Association, as a federally-chartered mutual savings and loan
association, does not have shareholders and has no authority to issue capital
stock.  By converting to the capital stock form of organization, the Association
will be structured in the form used by commercial banks, other business entities
and a growing number of savings institutions.  The Conversion will enhance the
Association's ability to access capital markets, expand its current operations,
acquire other financial institutions or branch offices, provide affordable home
financing opportunities to the communities it serves or diversify into other
financial services to the extent allowable by applicable law and regulation.
The Conversion would also position the Association for a conversion to a
commercial bank charter if the Board of the Association chooses to do so in the
future.

     The holding company form of organization, if used, would provide additional
flexibility to diversify the Association's business activities through existing
or newly formed subsidiaries, or through acquisitions of or mergers with both
mutual and stock institutions, as well as other companies.  Although there are
no current arrangements, understandings or agreements regarding any such
opportunities, the Company will be in a position after the Conversion, subject
to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise.

     The potential impact of the Conversion upon the Association's capital base
is significant.  The Conversion will significantly increase the Association's
capital position to a level whereby the Association will be better positioned to
take advantage of business opportunities and engage in activities which, prior
to Conversion, would have been more difficult for the Association to engage in
and still continue to meet its status as a "well capitalized" institution.  At
June 30, 1998, the Association had total equity, determined in accordance with
GAAP, of $59.4 million, or 9.7% of total assets, which approximated the
Association's regulatory tangible capital at that date of 9.5% of assets.  An
institution with a ratio of tangible capital to total assets of greater than or
equal to 5.0% is considered to be "well-capitalized" pursuant to OTS
regulations.  Assuming that the Company uses 50% of the net proceeds at the
maximum of the Estimated Price Range to purchase the stock of the Association,
the Association's GAAP capital will increase to $102.6 million or a ratio of
GAAP capital to adjusted assets, on a pro forma basis, of 15.7% after the
Conversion.  In the event that the holding company form of organization is not
utilized and all of the net Conversion proceeds, at the midpoint of the
Estimated Price Range, are retained by the Association, the Association's ratios
of tangible and core capital to adjusted assets, on a pro forma basis, will both
increase to 21.2% after Conversion.  The investment of the net proceeds from the
sale of the Common Stock is expected to provide the Association with additional
income to increase further its capital position.  The additional capital may
also assist the Association in offering new programs and expanded services to
its customers.  See "Use of Proceeds."

     After completion of the Conversion, the unissued common and preferred stock
authorized by the Company's Certificate of Incorporation will permit the
Company, subject to market conditions and any required regulatory approval of an
offering, to raise additional equity capital through further sales of
securities, and to issue securities in 

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<PAGE>
 
connection with possible acquisitions. At the present time, the Company has no
plans with respect to additional offerings of securities, other than the
possible issuance of additional shares upon exercise of Stock Options under the
Stock-Based Incentive Plan or the possible issuance of authorized but unissued
shares to the Stock-Based Incentive Plan for Stock Awards. Following the
Conversion, the Company will also be able to use stock-related incentive plans
to attract and retain executive and other personnel for itself and its
subsidiaries. See "Management of the Association -- Executive Compensation."

Effects of Conversion

     General. Each depositor in a mutual savings institution has both a deposit
account in the institution and a pro rata ownership interest in the net worth of
the institution based upon the balance in his or her account, which interest may
only be realized in the event of a liquidation of the institution or in the
event the institution declares a capital distribution to depositors, subject to
applicable regulations of the OTS. However, this ownership interest is tied to
the depositor's account and has no tangible market value separate from such
deposit account. Any depositor who opens a deposit account obtains a pro rata
ownership interest in the net worth of the institution without any additional
payment beyond the amount of the deposit. A depositor who reduces or closes his
account receives a portion or all of the balance in the account but nothing for
his ownership interest in the net worth of the institution, which is lost to the
extent that the balance in the account is reduced.

     Consequently, mutual savings institution depositors normally have no way to
realize the value of their ownership interest, which has realizable value only
in the unlikely event that the mutual savings institution is liquidated or in
the event the institution declares a capital distribution to depositors, subject
to applicable regulations of the OTS.  In such event, the depositors of record
at that time, as owners, would share pro rata in any residual surplus and
reserves after other claims, including claims of depositors to the amounts of
their deposits, are paid.

     When a mutual savings institution converts to stock form, permanent
nonwithdrawable capital stock is created to represent the ownership of the
institution's net worth.  The common stock is separate and apart from deposit
accounts and cannot be and is not insured by the FDIC or any other governmental
agency.  Certificates are issued to evidence ownership of the capital stock.
The stock certificates are transferable and, therefore, the stock may be sold or
traded if a purchaser is available with no effect on any account the seller may
hold in the institution.

     Continuity.  While the Conversion is being accomplished, the normal
business of the Association of accepting deposits and making loans will continue
without interruption.  The Association will continue to be subject to regulation
by the OTS and the FDIC.  After the Conversion, the Association will continue to
provide services for depositors and borrowers under current policies by its
present management and staff.  The Directors serving the Association at the time
of Conversion will serve initially as Directors of the Association after the
Conversion.  The Directors of the Company will consist initially of individuals
currently serving on the Board of Directors of the Association.  All officers of
the Association at the time of Conversion will retain their positions
immediately after Conversion.

     Effect on Deposit Accounts.  Under the Plan, each depositor in the
Association at the time of Conversion will automatically continue as a depositor
after the Conversion, and each such deposit account will remain the same with
respect to deposit balance, interest rate and other terms.  Each such account
will be insured by the FDIC to the same extent as before the Conversion (i.e.,
up to $100,000 per depositor).  Depositors will continue to hold their existing
certificates, passbooks and other evidences of their accounts.

     Effect on Loans.  No loan outstanding from the Association will be affected
by the Conversion, and the amount, interest rate, maturity and security for each
loan will remain as they were contractually fixed prior to the Conversion.

     Effect on Voting Rights of Members.  At present, all depositors and certain
borrowers of the Association are members of, and have voting rights in, the
Association as to all matters requiring membership action.  Upon Conversion,
depositors and borrowers will cease to be members and will no longer be entitled
to vote at meetings of the Association.  Upon Conversion, all voting rights in
the Association will be vested in the Company as the sole stockholder of the
Association.  Exclusive voting rights with respect to the Company will be vested
in the holders of Common Stock.  Depositors and borrowers of the Association
will not have voting rights after the Conversion except 

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to the extent that they become stockholders of the Company through the purchase
of Common Stock.

     Tax Effects.  The Association has received an opinion from Patton Boggs LLP
with regard to federal income taxation and an opinion from Crowe, Chizek and
Company LLP with regard to Ohio income taxation to the effect that the
Conversion will not be a taxable transaction to the Association, its Eligible
Account Holders, or its Supplemental Eligible Account Holders or the Company,
except as discussed below.  See "-- Tax Aspects."

     Effect on Liquidation Rights.  If a mutual savings institution were to
liquidate, all claims of creditors (including those of depositors, to the extent
of deposit balances) would be paid first. Thereafter, if there were any assets
remaining, depositors would be entitled to such remaining assets, pro rata,
based upon the deposit balances in their deposit accounts immediately prior to
liquidation. In the unlikely event that the Association were to liquidate after
Conversion, all claims of creditors (including those of depositors, to the
extent of their deposit balances) would also be paid first, followed by
distribution of the "liquidation account" to certain depositors (see "--
Liquidation Rights"), with any assets remaining thereafter distributed to the
Company as the holder of the Association's capital stock. Pursuant to the rules
and regulations of the OTS, a post-Conversion merger, consolidation, sale of
bulk assets or similar combination or transaction with another insured savings
institution would not be considered a liquidation and, in such a transaction,
the liquidation account would be assumed by the surviving institution.

Stock Pricing

     The Plan of Conversion requires that the aggregate purchase price of the
Common Stock must be based on the appraised pro forma market value of the Common
Stock, as determined on the basis of an independent valuation.  The Association
and the Company have retained Keller to make such valuation.  For its services
in making such appraisal, Keller will receive a fee of $26,000, including out-
of-pocket expenses.  The Association and the Company have agreed to indemnify
Keller and its employees and affiliates against certain losses (including any
losses in connection with claims under the federal securities laws) arising out
of its services as appraiser, except where Keller's liability results from its
negligence, willful misconduct or bad faith.

     An appraisal has been made by Keller in reliance upon the information
contained in this Prospectus, including the Consolidated Financial Statements.
Keller also considered the following factors, among others: the present and
projected operating results and financial condition of the Company and the
Association and the economic and demographic conditions in the Association's
existing marketing area; certain historical, financial and other information
relating to the Association; a comparative evaluation of the operating and
financial statistics of the Association with those of other similarly situated
publicly-traded savings banks and savings institutions located in the
Association's market area and the Midwest and the Midatlantic areas of the
United States; the aggregate size of the offering of the Common Stock; the
impact of Conversion on the Association's net worth and earnings potential; the
proposed dividend policy of the Company and the Association; and the trading
market for securities of comparable institutions and general conditions in the
market for such securities.

     On the basis of the foregoing, Keller has advised the Company and the
Association that, in its opinion, dated August 14, 1998, the estimated pro forma
market value of the Common Stock, being offered for sale ranged from a minimum
of $88.4 million to a maximum of $119.6 million with a midpoint of $104.0
million.  Based upon the Valuation Range and the Purchase Price of $10.00 per
share for the Common Stock established by the Board of Directors, the Board of
Directors has established the Estimated Price Range of $88.4 million to $119.6
million, with a midpoint of $104.0 million, and the Company expects to sell
between 8,840,000 and 11,960,000 shares of Common Stock.  The Board of Directors
of the Company and the Association have reviewed the appraisal of Keller and in
determining the reasonableness and adequacy of such appraisal consistent with
OTS regulations and policies, have reviewed the methodology and reasonableness
of the assumptions utilized by Keller in the preparation of such appraisal.  The
Estimated Price Range may be amended with the approval of the OTS (if required),
if necessitated by subsequent developments in the financial condition of the
Company or the Association or market conditions generally.  The $10.00 per share
price for the Common Stock was based on the consideration of a number of
factors, including the potential after market liquidity of the stock, Nasdaq
listing requirements and other marketing conditions.

     SUCH APPRAISAL, HOWEVER, IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS A
RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING COMMON STOCK IN
THE OFFERINGS.  KELLER DID NOT INDEPENDENTLY VERIFY THE 

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CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION PROVIDED BY THE
ASSOCIATION, NOR DID KELLER VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE
ASSOCIATION. THE APPRAISAL CONSIDERS THE ASSOCIATION AS A GOING CONCERN AND
SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE OF THE
ASSOCIATION. MOREOVER, BECAUSE SUCH APPRAISAL IS NECESSARILY BASED UPON
ESTIMATES AND PROJECTIONS OF A NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO
CHANGE FROM TIME TO TIME, NO ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING
COMMON STOCK IN THE CONVERSION WILL THEREAFTER BE ABLE TO SELL COMMON STOCK AT
PRICES AT OR ABOVE THE PURCHASE PRICE OR IN THE RANGE OF THE FOREGOING VALUATION
OF THE PRO FORMA MARKET VALUE THEREOF. SEE "RISK FACTORS -- ABSENCE OF MARKET
FOR COMMON STOCK."

     Following commencement of the Subscription Offering, the maximum of the
Estimated Price Range may be increased up to 15% and the number of shares of
Common Stock to be sold in the Conversion may be increased to 13,754,000 shares
due to regulatory considerations, changes in the market and general financial
and economic conditions, without the resolicitation of subscribers. See "--
Limitations on Common Stock Purchases" as to the method of distribution and
allocation of additional shares that may be issued in the event of an increase
in the Estimated Price Range to fill unfilled orders in the Subscription
Offering.

     If the pro forma market value of the Common Stock is either more than 15%
above the maximum of the Estimated Price Range or less than the minimum of the
Estimated Price Range, the Association and the Company, after consulting with
the OTS, may terminate the Plan and return all funds promptly with interest at
the Association's passbook rate of interest on payments made by check,
Association draft or money order, extend or hold a new Subscription Offering
and/or Community Offering, establish a new Estimated Price Range, commence a
resolicitation of subscribers or take such other actions as permitted by the OTS
in order to complete the Conversion.  In the event that a resolicitation is
commenced, unless an affirmative response is received within a reasonable period
of time, all funds will be promptly returned to investors as described above.  A
resolicitation, if any, following the conclusion of the Subscription Offering
would not exceed 45 days unless further extended by the OTS for periods of up to
90 days not to extend beyond _______, 2000.

     If all shares of Common Stock are not sold through the Subscription
Offering or Community Offering, then the Association and the Company expect to
offer the remaining shares in a Syndicated Community Offering which would occur
as soon as practicable following the close of the Subscription Offering but may
commence during the Subscription Offering subject to prior rights of
subscribers.  All shares of Common Stock will be sold at the same price per
share in the Syndicated Community Offering as in the Subscription Offering and
Community Offering.  See "--Syndicated Community Offering."

     No sale of shares of Common Stock may be consummated unless, prior to such
consummation, Keller confirms to the Association, the Company and the OTS that,
to the best of its knowledge, nothing of a material nature has occurred which,
taking into account all relevant factors, would cause Keller to conclude that
the aggregate value of the Common Stock at the Purchase Price is incompatible
with its estimate of the pro forma market value of the Common Stock of the
Company.  Any change which would result in an aggregate purchase price which is
below or more than 15% above the Estimated Price Range would be subject to OTS
approval.  If such confirmation is not received, the Association may extend the
Conversion, extend, reopen or commence a new Subscription Offering, Community
Offering or Syndicated Community Offering, establish a new Estimated Price Range
and commence a resolicitation of all subscribers with the approval of the OTS or
take such other actions as permitted by the OTS in order to complete the
Conversion, or terminate the Plan and cancel the Subscription and Community
Offerings and/or the Syndicated Community Offering.  In the event market or
financial conditions change so as to cause the aggregate purchase price of the
shares to be below the minimum of the Estimated Price Range or more than 15%
above the maximum of such range, and the Company and the Association determine
to continue the Conversion, subscribers will be resolicited (i.e., be permitted
to continue their orders, in which case they will need to affirmatively
reconfirm their subscriptions prior to the expiration of the resolicitation
offering or their subscription funds will be promptly refunded with interest at
the Association's passbook rate of interest, or be permitted to decrease or
cancel their subscriptions).  Any change in the Estimated Price Range must be
approved by the OTS.  A resolicitation, if any, following the conclusion of the
Subscription Offering would not exceed 45 days unless further extended by the
OTS for periods up to 90 days not to extend beyond _______, 2000.  If such
resolicitation is not effected, the Association will return all funds promptly
with interest at the Association's passbook rate of interest on payments made by
check, bank draft or money order.

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<PAGE>
 
     Copies of the appraisal report of Keller, including any amendments thereto,
and the detailed memorandum of the appraiser setting forth the method and
assumptions for such appraisal are available for inspection at the main office
of the Association and the other locations specified under "Additional
Information."

Number of Shares to Be Issued

     Depending upon market or financial conditions following the commencement of
the Subscription Offering, the total number of shares to be issued in the
Conversion may be increased or decreased without a resolicitation of
subscribers, provided that the product of the total number of shares times the
price per share is not below the minimum of the Estimated Price Range or more
than 15% above the maximum of the Estimated Price Range. Based on a fixed
purchase price of $10.00 per share and Keller's estimate of the pro forma market
value of the Common Stock to be sold ranging from a minimum of $88.4 million to
a maximum, as increased by 15%, of $137.5 million, the number of shares of
Common Stock expected to be sold in the Conversion is between a minimum of
8,840,000 shares and a maximum, as adjusted by 15%, of 13,754,000 shares. The
actual number of shares sold between this range will depend on a number of
factors and shall be determined by the Association and Company, subject to OTS
approval, if necessary.

     In the event market or financial conditions change so as to cause the
aggregate purchase price of the shares to be below the minimum of the Estimated
Price Range or more than 15% above the maximum of the Estimated Price Range, if
the Plan is not terminated by the Company and the Association after consultation
with the OTS, purchasers will be resolicited (i.e., permitted to continue their
orders, in which case they will need to affirmatively reconfirm their
subscriptions prior to the expiration of the resolicitation offering or their
subscription funds will be promptly refunded, or be permitted to modify or
rescind their subscriptions).  Any change in the Estimated Price Range must be
approved by the OTS.  If the number of shares issued in the Conversion is
increased due to an increase of up to 15% in the Estimated Price Range to
reflect changes in market or financial condition, persons who subscribed for the
maximum number of shares will not be given the opportunity to subscribe for an
adjusted maximum number of shares, except for the ESOP which will be able to
subscribe for such adjusted amount.  See "-- Limitations on Common Stock
Purchases."

     In the event the members of the Association approve the establishment of
the Foundation, the number of shares to be issued and outstanding following the
Conversion will be increased by a number of shares equal to 7.7% of the Common
Stock sold in the Conversion.  Assuming the sale of shares in the Offerings at
the maximum of the Estimated Price Range, the Company will issue 920,000 shares
of its Common Stock from authorized but unissued shares to the Foundation
immediately following the completion of the Conversion.  In that event, the
Company will have total shares of Common Stock outstanding of 12,880,000 shares.
Of that amount, the Foundation will own 7.1%. Funding the Foundation with
authorized but unissued shares will have the effect of diluting the ownership
and voting interests of persons purchasing shares in the Conversion by 7.1%
since a greater number of shares will be outstanding upon completion of the
Conversion than would be if the Foundation were not established.  See "Pro Forma
Data."

     An increase in the number of shares to be issued in the Conversion as a
result of an increase in the estimated pro forma market value would decrease
both a subscriber's ownership interest and the Company's pro forma net earnings
and stockholders' equity on a per share basis while increasing pro forma net
earnings and stockholders' equity on an aggregate basis.  A decrease in the
number of shares to be issued in the Conversion would increase both a
subscriber's ownership interest and the Company's pro forma net earnings and
stockholders' equity on a per share basis while decreasing pro forma net
earnings and stockholder's equity on an aggregate basis.  For a presentation of
the effects of such changes, see "Pro Forma Data."

Subscription Offering and Subscription Rights

     In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock have been granted under the Plan of Conversion to the
following persons in the following order of descending priority: (1) holders of
deposit accounts (as defined by the Plan and described herein) with a balance of
$50 or more as of March 31, 1997 ("Eligible Account Holders"); (2) the ESOP; (3)
holders of deposit accounts with a balance of $50 or more as of ________, 1998
("Supplemental Eligible Account Holders"); and (4) members of the Association,
consisting of depositors of the Association as of _________, 1998, the Voting
Record Date, and borrowers with loans outstanding 

                                      99
<PAGE>
 
as of ________, other than Eligible Account Holders and Supplemental Eligible
Account Holders ("Other Members"). All subscriptions received will be subject to
the availability of Common Stock after satisfaction of all subscriptions of all
persons having prior rights in the Subscription Offering and to the maximum and
minimum purchase limitations set forth in the Plan of Conversion and as
described below under "--Limitations on Common Stock Purchases."

     Deposit accounts which will provide subscription rights to holders thereof
consist of any "savings account," as defined by the Plan of Conversion
consistent with OTS regulations.  Pursuant to the Plan and OTS regulations,
certain deposits do not qualify as "savings accounts," including but not limited
to noninterest-bearing demand accounts, (primarily noninterest-bearing checking
accounts) and mortgage escrow deposits, maintained at the Association.

     Priority 1: Eligible Account Holders.  Each Eligible Account Holder will
receive, without payment therefor, first priority, nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of (1)
the amount permitted to be purchased in the Community Offering, currently
$250,000 of Common Stock; (2) one-tenth of one percent (.10%) of the total
offering of shares of Common Stock; or (3) fifteen times the product (rounded
down to the next whole number) obtained by multiplying the total number of
shares of Common Stock to be issued by a fraction of which the numerator is the
amount of the Eligible Account Holder's Qualifying Deposit (defined by the Plan
as any deposit account in the Association with a balance of $50 or more as of
March 31, 1997) and the denominator is the total amount of Qualifying Deposits
of all Eligible Account Holders, in each case on the Eligibility Record Date,
subject to the overall purchase limitation and exclusive of an increase in the
shares issued pursuant to an increase in the Estimated Price Range of up to 15%.
See "-- Limitations on Common Stock Purchases."

     In the event that Eligible Account Holders exercise subscription rights for
a number of shares of Conversion Stock in excess of the total number of such
shares eligible for subscription, the shares of Conversion Stock shall be
allocated among the subscribing Eligible Account Holders so as to permit each
subscribing Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of Conversion
Stock equal to the lesser of 100 shares or the number of shares subscribed for
by the Eligible Account Holder.  Any shares remaining after that allocation will
be allocated among the subscribing Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Eligible Account Holder whose subscription remains unsatisfied bears to
the total amount of the Qualifying Deposits of all Eligible Account Holders
whose subscriptions remain unsatisfied.  If the amount so allocated exceeds the
amount subscribed for by any one or more Eligible Account Holders, the excess
shall be reallocated (one or more times as necessary) among those Eligible
Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated or all subscriptions
satisfied.

     To ensure proper allocation of stock, each Eligible Account Holder must
list on his subscription order form all accounts in which he has an ownership
interest.  Failure to list an account could result in less shares being
allocated than if all accounts had been disclosed.  The subscription rights of
Eligible Account Holders who are also Directors or Officers of the Association
or their associates will be subordinated to the subscription rights of other
Eligible Account Holders to the extent attributable to increased deposits in the
12 months preceding March 31, 1997.

     Priority 2: Employee Stock Ownership Plan.  To the extent that there are
sufficient shares remaining after satisfaction of the subscriptions by Eligible
Account Holders, the ESOP will receive, without payment therefor, second
priority, nontransferable subscription rights to purchase, in the aggregate, up
to 10% of Common Stock issued in the Conversion, including shares issued to the
Foundation, and any increase in the number of shares of Common Stock to be
issued in the Conversion after the date hereof as a result of an increase of up
to 15% in the maximum of the Estimated Price Range.  The ESOP intends to
purchase 8% of the shares to be issued in the Conversion, including shares
issued to the Foundation, or 761,600 shares and 1,030,400 shares, based on the
minimum and maximum of the Estimated Price Range, respectively.  Subscriptions
by the ESOP will not be aggregated with shares of Common Stock purchased
directly by or which are otherwise attributable to any other participants in the
Subscription Offering, including subscriptions of any of the Association's
directors, officers, employees or associates thereof.  See "Management of the
Association -- Other Benefit Plans -- Employee Stock Ownership Plan."

     Priority 3: Supplemental Eligible Account Holders.  Each Supplemental
Eligible Account Holder will receive, without payment therefor, third priority,
nontransferable subscription rights to subscribe for in the Subscription
Offering up to the greater of the amount permitted to be purchased in the
Community Offering, currently $250,000 

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<PAGE>
 
of Common Stock, one-tenth of one percent (.10%) of the total offering of shares
of Common Stock or fifteen times the product (rounded down to the next whole
number) obtained by multiplying the total number of shares of Common Stock to be
issued by a fraction of which the numerator is the amount of the Supplemental
Eligible Account Holder's Qualifying Deposit and the denominator is the total
amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in
each case on the Supplemental Eligibility Record Date, subject to the overall
purchase limitation and exclusive of an increase in the shares issued pursuant
to an increase in the Estimated Price Range of up to 15%. See "-- Limitations on
Common Stock Purchases."

     In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of shares of Conversion Stock in excess of the
total number of such shares eligible for subscription, the shares of Conversion
Stock shall be allocated among the subscribing Supplemental Eligible Account
Holders so as to permit each subscribing Supplemental Eligible Account Holder,
to the extent possible, to purchase a number of shares sufficient to make his or
her total allocation of Conversion Stock equal to the lesser of 100 shares or
the number of shares subscribed for by the Supplemental Eligible Account Holder.
Any shares remaining after that allocation will be allocated among the
subscribing Supplemental Eligible Account Holders whose subscriptions remain
unsatisfied in the proportion that the amount of the Qualifying Deposit of each
Supplemental Eligible Account Holder whose subscription remains unsatisfied
bears to the total amount of the Qualifying Deposits of all Supplemental
Eligible Account Holders whose subscriptions remain unsatisfied. If the amount
so allocated exceeds the amount subscribed for by any one or more Supplemental
Eligible Account Holders, the excess shall be reallocated (one or more times as
necessary) among those Supplemental Eligible Account Holders whose subscriptions
are still not fully satisfied on the same principle until all available shares
have been allocated or all subscriptions satisfied.

     To ensure proper allocation of stock, each Supplemental Eligible Account
Holder must list on his subscription order form all accounts in which he has an
ownership interest.  Failure to list an account could result in less shares
being allocated than if all accounts had been disclosed.  The subscription
rights received by Eligible Account Holders will be applied in partial
satisfaction to the subscription rights to be received as a Supplemental
Eligible Account Holder.

     Priority 4: Other Members.  To the extent that there are sufficient shares
remaining after satisfaction of subscriptions by the Eligible Account Holders,
the ESOP and the Supplemental Eligible Account Holders, each Other Member will
receive, without payment therefor, fourth priority nontransferable subscription
rights to subscribe for Common Stock in the Subscription Offering up to the
greater of the amount permitted to be purchased in the Community Offering,
currently $250,000 of Common Stock, or one-tenth of one percent (.10%) of the
total offering of shares of Common Stock, subject to the overall purchase
limitation and exclusive of an increase in shares issued pursuant to an increase
in the Estimated Price Range of up to 15%.

     In the event that Other Members subscribe for a number of shares of
Conversion Stock which, when added to the shares of Conversion Stock subscribed
for by the Eligible Account Holders, the Employee Plans and the Supplemental
Eligible Account Holders is in excess of the total number of shares of
Conversion Stock being issued, the subscriptions of such Other Members will be
allocated among the subscribing Other Members so as to permit each subscribing
Other Member, to the extent possible, to purchase a number of shares sufficient
to make his or her total allocation of Conversion Stock equal to the lesser of
100 shares or the number of shares subscribed for by the Other Member.  Any
shares remaining after that allocation will be allocated among the subscribing
Other Members whose subscriptions remain unsatisfied pro rata in the same
proportion that the number of votes of a subscribing Other Member on the Voting
Record Date bears to the total votes on the Voting Record Date of all
subscribing Other Members whose subscriptions remain unsatisfied.  If the amount
so allocated exceeds the amount subscribed for by any one or more remaining
Other Members, the excess shall be reallocated (one or more times as necessary)
among those remaining Other Members whose subscriptions are still not fully
satisfied on the same principle until all available shares have been allocated
or all subscriptions satisfied.

     Expiration Date for the Subscription Offering.  The Subscription Offering
will expire on ________, 1998, unless extended for up to 45 days by the
Association or such additional periods with the approval of the OTS.
Subscription rights which have not been exercised prior to the Expiration Date
will become void.

     The Association will not execute orders until all shares of Common Stock
have been subscribed for or 

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<PAGE>
 
otherwise sold. If all shares have not been subscribed for or sold within 45
days after the Expiration Date, unless such period is extended with the consent
of the OTS, all funds delivered to the Association pursuant to the Subscription
Offering will be returned promptly to the subscribers with interest and all
withdrawal authorizations will be canceled. If an extension beyond the 45 day
period following the Expiration Date is granted, the Association will notify
subscribers of the extension of time and of any rights of subscribers to modify
or rescind their subscriptions and have their funds returned promptly with
interest, and of the time period within which subscribers must affirmatively
notify the Association of their intention to confirm, modify, or rescind their
subscription. If an affirmative response to any resolicitation is not received
by the Company from a subscriber, such order will be rescinded and all
subscription funds will be promptly returned with interest. Such extensions may
not go beyond _______, 2000.

Community Offering

     To the extent that shares remain available for purchase after satisfaction
of all subscriptions of the Eligible Account Holders, the ESOP, the Supplemental
Eligible Account Holders and Other Members, the Association has determined to
offer shares pursuant to the Plan to certain members of the general public in a
Community Offering. In the event a Community Offering is held, a preference will
be given to natural persons residing in Trumbull and Mahoning counties, subject
to the right of the Company to accept or reject any such orders, in whole or in
part, in their sole discretion. Persons purchasing stock in the Community
Offering, together with associates of and persons acting in concert with such
persons, may purchase up to $250,000 of Common Stock subject to the maximum
purchase limitation and exclusive of shares issued pursuant to an increase in
the Estimated Price Range by up to 15%. See "--Limitations on Common Stock
Purchases." This amount may be increased to up to a maximum of 5% or decreased
to less than $250,000 at the sole discretion of the Company and the Association.
THE OPPORTUNITY TO SUBSCRIBE FOR SHARES OF COMMON STOCK IN THE COMMUNITY
OFFERING CATEGORY IS SUBJECT TO THE RIGHT OF THE ASSOCIATION AND THE COMPANY, IN
THEIR SOLE DISCRETION, TO ACCEPT OR REJECT ANY SUCH ORDERS IN WHOLE OR IN PART
EITHER AT THE TIME OF RECEIPT OF AN ORDER OR AS SOON AS PRACTICABLE FOLLOWING
THE EXPIRATION DATE.

     Subject to the foregoing, if the amount of stock remaining is insufficient
to fill the orders of subscribers after completion of the Subscription Offering,
such stock will be allocated first to each subscriber whose order is accepted by
the Association, in an amount equal to the lesser of 100 shares or the number of
shares subscribed for by each such subscriber, if possible.  Thereafter,
unallocated shares will be allocated among the subscribers whose order remains
unsatisfied on a 100 shares per order basis until all such orders have been
filled or the remaining shares have been allocated.

Syndicated Community Offering

     As a final step in the Conversion, the Plan provides that, if feasible, all
shares of Common Stock not purchased in the Subscription and Community
Offerings, if any, will be offered for sale to the general public in a
Syndicated Community Offering through a syndicate of registered broker-dealers
to be formed and managed by Webb acting as agent of the Company to assist the
Company and the Association in the sale of the Common Stock.  The Company and
the Association have the right to reject orders in whole or in part in their
sole discretion in the Syndicated Community Offering.  Neither Webb nor any
registered broker-dealer shall have any obligation to take or purchase any
shares of the Common Stock in the Syndicated Community Offering, however, Webb
has agreed to use its best efforts in the sale of shares in the Syndicated
Community Offering.

     The price at which Common Stock is sold in the Syndicated Community
Offering will be determined as described above under "-- Stock Pricing."
Subject to overall purchase limitations, no person, together with any associate
or group of persons acting in concert, will be permitted to subscribe in the
Syndicated Community Offering for more than $250,000 of the Common Stock,
exclusive of an increase in shares issued pursuant to an increase in the
Estimated Price Range of up to 15%; provided, however, that shares of Common
Stock purchased in the Community Offering by any persons, together with
associates of or persons acting in concert with such persons, will be aggregated
with purchases in the Syndicated Community Offering and be subject to an overall
maximum purchase limitation of 1.0% of the shares offered, exclusive of an
increase in shares issued pursuant to an increase in the Estimated Price Range
by up to 15%.

     Payments made in the form of a check, bank draft, money order or in cash
will earn interest at the 

                                      102
<PAGE>
 
Association's passbook rate of interest from the date such payment is actually
received by the Association until completion or termination of the Conversion.

     In addition to the foregoing, if a syndicate of broker-dealers ("selected
dealers") is formed to assist in the Syndicated Community Offering, a purchaser
may pay for his shares with funds held by or deposited with a selected dealer.
If an order form is executed and forwarded to the selected dealer or if the
selected dealer is authorized to execute the order form on behalf of a
purchaser, the selected dealer is required to forward the order form and funds
to the Association for deposit in a segregated account on or before noon of the
business day following receipt of the order form or execution of the order form
by the selected dealer.  Alternatively, selected dealers may solicit indications
of interest from their customers to place orders for shares.  Such selected
dealers shall subsequently contact their customers who indicated an interest and
seek their confirmation as to their intent to purchase.  Those indicating an
intent to purchase shall execute order forms and forward them to their selected
dealer or authorize the selected dealer to execute such forms.  The selected
dealer will acknowledge receipt of the order to its customer in writing on the
following business day and will debit such customer's account on the third
business day after the customer has confirmed his intent to purchase (the "debit
date") and on or before noon of the next business day following the debit date
will send order forms and funds to the Association for deposit in a segregated
account.  Although purchasers' funds are not required to be in their accounts
with selected dealers until the debit date in the event that such alternative
procedure is employed once a confirmation of an intent to purchase has been
received by the selected dealer, the purchaser has no right to rescind his
order.

     Certificates representing shares of Common Stock purchased, together with
any refund due, will be mailed to purchasers at the address specified in the
order form, as soon as practicable following consummation of the sale of the
Common Stock.  Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.

     The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Company with
the approval of the OTS.  Such extensions may not be beyond _________, 2000.
See "-- Stock Pricing" above for a discussion of rights of subscribers, if any,
in the event an extension is granted.

Persons in Nonqualified States or Foreign Countries

     The Company and the Association will make reasonable efforts to comply with
the securities laws of all states in the United States in which persons entitled
to subscribe for stock pursuant to the Plan reside.  However, the Plan provides
that the Association and the Company are not required to offer stock in the
Subscription Offering to any person who resides in a foreign country or resides
in a state of the United States with respect to which both of the following
apply: (i) a small number of persons otherwise eligible to subscribe for shares
of Common Stock reside in such state; and (ii) the Company or the Association
determines that compliance with the securities laws of such state would be
impracticable for reasons of cost or otherwise, including but not limited to a
request that the Company and the Association or their officers, directors or
trustees register as a broker, dealer, salesman or selling agent, under the
securities laws of such state, or a request to register or otherwise qualify the
subscription rights or Common Stock for sale or submit any filing with respect
thereto in such state.  Where the number of persons eligible to subscribe for
shares in one state is small, the Association and the Company will base their
decision as to whether or not to offer the Common Stock in such state on a
number of factors, including the size of accounts held by account holders in the
state, the cost of registering or qualifying the shares or the need to register
the Company, its officers, directors or employees as brokers, dealers or
salesmen.

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<PAGE>
 
Marketing and Underwriting Arrangements

     The Association and the Company have engaged Webb as a consultant and
financial advisor in connection with the offering of the Common Stock, and Webb
has agreed to use its best efforts to solicit subscriptions and purchase orders
for shares of Common Stock in the Offerings.  Based upon negotiations between
the Association and the Company concerning fee structure, Webb will receive a
management fee of $25,000 and a fee equal to 1.25% of the aggregate Purchase
Price of the shares sold in the Subscription and Community Offerings, up to the
maximum of the Estimated Price Range, excluding shares purchased by directors,
officers, employees and any immediate family member thereof, and any employee
benefit plan of the Company or Association, including the ESOP for which Webb
will not receive a fee.  If Common Stock remains available after the
satisfaction of all subscriptions in the Subscription Offering, Webb may enter
into an agreement with other NASD member firms ("Selected Brokers") to assist in
the sale of Common Stock in the Community Offering.  If Selected Brokers are
used, Webb will receive commission of no more than 5.5% of the aggregate
purchase price of the Common Stock sold in the Community Offering by the
Selected Brokers, and Webb will pay to the Selected Brokers a portion of the
5.5% commission pursuant to selected dealer agreements.  Fees to Webb and to any
other broker-dealer may be deemed to be underwriting fees, and Webb and such
broker-dealers may be deemed to be underwriters.  The Company and the
Association have agreed to indemnify Webb for reasonable costs and expenses in
connection with certain claims or liabilities, including certain liabilities
under the Securities Act.  Webb has received advances towards its fees.  Total
marketing fees to Webb are expected to be $875,000 and $1.2 million at the
minimum and the maximum of the Estimated Price Range, respectively.  See "Pro
Forma Data" for the assumptions used to arrive at these estimates.  The
Association will also reimburse Webb for its out-of-pocket expenses, provided
such expenses (excluding counsel's fees) do not exceed $15,000.

     Crowe, Chizek & Company, LLP will perform conversion agent services and
records management services for the Association in the Conversion and will
receive a fee for these services of $30,000, including out-of-pocket expenses.

     Directors and executive officers of the Company and Association may
participate in the solicitation of offers to purchase Common Stock.  Questions
of prospective purchasers will be directed to executive officers or registered
representatives.  Other employees of the Association may participate in the
Offering in ministerial capacities or providing clerical work in effecting a
sales transaction.  Such other employees have been instructed not to solicit
offers to purchase Common Stock or provide advice regarding the purchase of
Common Stock.  The Company will rely on Rule 3a4-1 under the Exchange Act, and
sales of Common Stock will be conducted within the requirements of Rule 3a4-1,
so as to permit officers, directors and employees to participate in the sale of
Common Stock.  No officer, director or employee of the Company or the
Association will be compensated in connection with his participation by the
payment of commissions or other remuneration based either directly or indirectly
on the transactions in the Common Stock.

Procedure for Purchasing Shares

     To ensure that each purchaser receives a prospectus at least 48 hours
before the Expiration Date in accordance with Rule 15c2-8 of the Exchange Act,
no prospectus will be mailed any later than five days prior to such date or hand
delivered any later than two days prior to such date.  Execution of the stock
order form and certification form will confirm receipt or delivery in accordance
with Rule 15c2-8.  Stock order and certification forms will only be distributed
with a prospectus.

     To purchase shares in the Offerings, an executed stock order form and
certification form with the required payment for each share subscribed for, or
with appropriate authorization for withdrawal from the Association's deposit
account (which may be given by completing the appropriate blanks in the stock
order form), must be physically received by the Association at any of its
offices by Noon, Eastern time, on the Expiration Date.  Stock order forms which
are not received by such time or are executed defectively or are received
without full payment (or appropriate withdrawal instructions) are not required
to be accepted.  In addition, the Association and Company are not obligated to
accept orders submitted on photocopied or facsimiled stock order forms and will
not accept stock order forms unaccompanied by an executed certification form.
Notwithstanding the foregoing, the Company shall have the right, in its sole
discretion, to permit institutional investors to submit irrevocable orders
together with a legally binding commitment for payment and to thereafter pay for
the shares of Common Stock for which they subscribe in the 

                                      104
<PAGE>
 
Community Offering at any time prior to 48 hours before the completion of the
Conversion. The Company and the Association have the right to waive or permit
the correction of incomplete or improperly executed forms, but do not represent
that they will do so. Once received, an executed stock order form may not be
modified, amended or rescinded without the consent of the Association unless the
Conversion has not been completed within 45 days after the end of the
Subscription Offering, unless such period has been extended.

     IMPORTANT:  TO ENSURE THAT YOUR SUBSCRIPTION RIGHTS ARE PROPERLY
IDENTIFIED, YOU MUST LIST ALL QUALIFYING DEPOSIT ACCOUNTS AND LOANS, AS OF THE
RESPECTIVE QUALIFYING DATES ON THE STOCK ORDER FORM.  PERSONS WHO DO NOT LIST
ALL QUALIFYING DEPOSIT ACCOUNTS AND LOANS MAY BE SUBJECT TO REDUCTION OR
REJECTION OF THEIR SUBSCRIPTION.
 
     In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priorities, depositors as of the Eligibility Record Date (March 31,
1997) and/or the Supplemental Eligibility Record Date (_______, 1998) and/or the
Voting Record Date (________, 1998) must list all accounts on the stock order
form giving all names in each account and the account number.

     Payment for subscriptions may be made (i) in cash if delivered in person at
any branch office of the Association, (ii) by check, bank draft or money order,
or (iii) by authorization of withdrawal from deposit accounts maintained with
the Association.  No wire transfers will be accepted.  Interest will be paid on
payments made by cash, check, bank draft or money order at the Association's
passbook rate of interest from the date payment is received until the completion
or termination of the Conversion.  Orders for Common Stock submitted by
subscribers in the Subscription Offering which aggregate $50,000 or more must be
paid by official or certified check or by withdrawal authorization from a
deposit account of the Association.  If payment is made by authorization of
withdrawal from deposit accounts, the funds authorized to be withdrawn from a
deposit account will continue to accrue interest at the contractual rates until
completion or termination of the Conversion, but a hold will be placed on such
funds, thereby making them unavailable to the depositor until completion or
termination of the Conversion.

     If a subscriber authorizes the Association to withdraw the amount of the
purchase price from his deposit account, the Association will do so as of the
effective date of the Conversion.  The Association will waive any applicable
penalties for early withdrawal from certificate accounts.  If the remaining
balance in a certificate account is reduced below the applicable minimum balance
requirement at the time that the funds actually are transferred under the
authorization, the certificate will be canceled at the time of the withdrawal,
without penalty, and the remaining balance will earn interest at the
Association's passbook rate.

     If the ESOP subscribes for shares during the Subscription Offering, the
ESOP will not be required to pay for the shares subscribed for at the time it
subscribes, but rather, may pay for such shares of Common Stock subscribed for
at the Purchase Price upon consummation of the Subscription Offering, if all
shares are sold, or upon consummation of the Community Offering or Syndicated
Community Offering if shares remain to be sold in such offerings; provided, that
there is in force from the time of its subscription until such time, a loan
commitment from an unrelated financial institution or the Company to lend to the
ESOP, at such time, the aggregate Purchase Price of the shares for which it
subscribed.

     Owners of self-directed Individual Retirement Accounts ("IRAs") and
Qualified Plans may use the assets of such IRAs and Qualified Plans to purchase
shares of Common Stock in the Subscription Offering and/or Community Offering,
provided that such IRAs are not maintained at the Association.  Persons with
self-directed IRAs and Qualified Plans maintained at the Association must have
their accounts transferred to an unaffiliated institution or broker to purchase
shares of Common Stock in the Subscription Offering and/or Community Offering.
In addition, the provisions of ERISA and IRS regulations require that officers,
directors and ten percent shareholders who use self-directed IRA funds and
Qualified Plans to purchase shares of Common Stock in the Subscription Offering
and/or Community Offering, make such purchases for the exclusive benefit of the
IRAs and Qualified Plans.

     Certificates representing shares of Common Stock purchased will be mailed
to purchasers at the address specified in properly completed stock order forms,
as soon as practicable following consummation of the sale of all shares of
Common Stock.  Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.

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<PAGE>
 
Restrictions on Transfer of Subscription Rights and Shares

     Prior to the completion of the Conversion, the OTS conversion regulations
prohibit any person with subscription rights, including the Eligible Account
Holders, the ESOP, the Supplemental Eligible Account Holders and Other Members
of the Association, from transferring or entering into any agreement or
understanding to transfer the legal or beneficial ownership of the subscription
rights issued under the Plan or the shares of Common Stock to be issued upon
their exercise.  Such rights may be exercised only by the person to whom they
are granted and only for his account.  Each person exercising such subscription
rights will be required to certify that he is purchasing shares solely for his
own account and that he has no agreement or understanding regarding the sale or
transfer of such shares.  The regulations also prohibit any person from offering
or making an announcement of an offer or intent to make an offer to purchase
such subscription rights or shares of Common Stock prior to the completion of
the Conversion.

     THE ASSOCIATION AND THE COMPANY WILL PURSUE ANY AND ALL LEGAL AND EQUITABLE
REMEDIES (INCLUDING FORFEITURE) IN THE EVENT THEY BECOME AWARE OF THE TRANSFER
OF SUBSCRIPTION RIGHTS AND WILL NOT HONOR ORDERS KNOWN BY THEM TO INVOLVE THE
TRANSFER OF SUCH RIGHTS.

Limitations on Common Stock Purchases

     The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased during the Conversion:

     (1)  No less than 25 shares;

     (2)  Each Eligible Account Holder may subscribe for and purchase in the
          Subscription Offering up to the greater of: 1) the amount permitted to
          be purchased in the Community Offering, currently $250,000 of Common
          Stock; 2) one-tenth of one percent (.10%) of the total offering of
          shares of Common Stock; or 3) fifteen times the product (rounded down
          to the next whole number) obtained by multiplying the total number of
          shares of Common Stock to be issued by a fraction of which the
          numerator is the amount of the Qualifying Deposit of the Eligible
          Account Holder and the denominator is the total amount of Qualifying
          Deposits of all Eligible Account Holders, in each case on the
          Eligibility Record Date subject to the overall maximum purchase
          limitation in (8) below and exclusive of an increase in the total
          number of shares issued due to an increase in the Estimated Price
          Range of up to 15%;

     (3)  The ESOP is permitted to purchase in the aggregate up to 10% of the
          shares of Common Stock issued in the Conversion, including shares
          issued to the Foundation, including shares issued in the event of an
          increase in the Estimated Price Range of 15%, and intends to purchase
          8% of the shares of Common Stock issued in the Conversion, including
          shares issued to the Foundation;

     (4)  Each Supplemental Eligible Account Holder may subscribe for and
          purchase in the Subscription Offering up to the greater of: 1) the
          amount permitted to be purchased in the Community Offering, currently
          $250,000 of Common Stock; 2) one-tenth of one percent (.10%) of the
          total offering of shares of Common Stock; or 3) fifteen times the
          product (rounded down to the next whole number) obtained by
          multiplying the total number of shares of Common Stock to be issued by
          a fraction of which the numerator is the amount of the Qualifying
          Deposit of the Supplemental Eligible Account Holder and the
          denominator is the total amount of Qualifying Deposits of all
          Supplemental Eligible Account Holders, in such case on the
          Supplemental Eligibility Record Date subject to the overall maximum
          purchase limitation in (8) below and exclusive of an increase in the
          total number of shares issued due to an increase in the Estimated
          Price Range of up to 15%;

     (5)  Each Other Member may subscribe for and purchase in the Subscription
          Offering up to the greater of: 1) the amount permitted to be purchased
          in the Community Offering, currently $250,000 of Common Stock; or 2)
          one-tenth of one percent (.10%) of the total offering of shares of
          Common Stock, in each case subject to the overall maximum purchase
          limitation in (8) below and exclusive of an increase in the total
          number of shares issued due to an increase in the Estimated Price
          Range 

                                      106
<PAGE>
 
          of up to 15%;

     (6)  Persons purchasing shares of Common Stock in the Community Offering,
          together with associates of and groups of persons acting in concert
          with such persons, may purchase in the Community Offering up to
          $250,000 of Common Stock, subject to the overall maximum purchase
          limitation in (8) below and exclusive of an increase in the total
          number of shares issued due to an increase in the Estimated Price
          Range of up to 15%;

     (7)  Persons purchasing shares of Common Stock in the Syndicated Community
          Offering, together with associates of and persons acting in concert
          with such persons, may purchase in the Syndicated Offering up to
          $250,000 of Common Stock, subject to the overall maximum purchase
          limitation in (8) below and exclusive of an increase in the total
          number of shares issued due to an increase in the Estimated Price
          Range of up to 15% and, provided further that shares of Common Stock
          purchased in the Community Offering by any persons, together with
          associates of or persons acting in concert with such persons, will be
          aggregated with purchases in the Syndicated Community Offering in
          applying the $250,000 purchase limitation;

     (8)  Except for the ESOP, the overall maximum number of shares of Common
          Stock subscribed for or purchased in all categories of the Conversion
          by any person, together with associates of or persons acting in
          concert with such persons, shall not exceed 1.0% of the shares of
          Common Stock offered in the Conversion and exclusive of an increase in
          the total number of shares issued due to an increase in the Estimated
          Price Range of up to 15%; and

     (9)  No more than 25% of the total number of shares offered for sale in the
          Conversion may be purchased by directors and officers of the
          Association and their associates in the aggregate, excluding purchases
          by the ESOP.

     Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members of
the Association, both the individual amount permitted to be subscribed for and
the overall maximum purchase limitation may be increased to up to a maximum of
5% at the sole discretion of the Company and the Association.  If such amount is
increased, subscribers for the maximum amount will be, and certain other large
subscribers in the sole discretion of the Association may be, given the
opportunity to increase their subscriptions up to the then applicable limit.  In
addition, the Boards of Directors of the Company and the Association may, in
their sole discretion, increase the maximum purchase limitation referred to
above up to 9.99%, provided that orders for shares exceeding 5% of the shares
being offering in the Subscription and Community Offerings shall not exceed, in
the aggregate, 10% of the shares being offered in the Subscription and Community
Offerings.  Requests to purchase additional shares of Common Stock under this
provision will be determined by the Boards of Directors and, if approved,
allocated on a pro rata basis giving priority in accordance with the priority
rights set forth herein.

     The overall maximum purchase limitation may not be reduced to less than 1%
but the individual amount permitted to be subscribed for may be reduced by the
Association to less than $250,000 subject to paragraphs (2), (4) and (5) above
without the further approval of members or resolicitation of subscribers.  An
individual Eligible Account Holder, Supplemental Eligible Account Holder or
Other Member may not purchase individually in the Subscription Offering the
overall maximum purchase limit of 1.0% of the shares offered, but may make such
purchase, together with associates of and persons acting in concert with such
person, by also purchasing in other available categories of the Conversion,
subject to availability of shares and the overall maximum purchase limit for
purchases in the Conversion.

     In the event of an increase in the total number of shares offered in the
Conversion due to an increase in the Estimated Price Range of up to 15% (the
"Adjusted Maximum"), the additional shares will be allocated in the following
order or priority in accordance with the Plan: (i) to fill the ESOP's
subscription of 8% of the amount of Common Stock issued in the Conversion,
including shares issued to the Foundation, at the Adjusted Maximum number of
shares; (ii) in the event that there is an oversubscription by Eligible Account
Holders, to fill unsatisfied subscriptions of Eligible Account Holders,
exclusive of the Adjusted Maximum; (iii) in the event that there is an
oversubscription by Supplemental Eligible Account Holders, to fill unsatisfied
subscriptions of Supplemental Eligible Account Holders, exclusive of the
Adjusted Maximum; (iv) in the event that there is an oversubscription by Other
Members, to fill 

                                      107
<PAGE>
 
unsatisfied subscriptions of Other Members exclusive of the Adjusted Maximum;
and (v) to fill unsatisfied subscriptions in the Community Offering to the
extent possible, exclusive of the Adjusted Maximum, with preference to
institutional investors.

     The term "associate" of a person is defined to mean: (i) any corporation,
partnership (other than the Association or a majority-owned subsidiary of the
Association) of which such person is an officer, partner or 10% stockholder;
(ii) any trust or other estate in which such person has a substantial beneficial
interest or serves as a trustee or in a similar fiduciary capacity; provided,
however, such term shall not include any employee stock benefit plan of the
Association in which such person has a substantial beneficial interest or serves
as a trustee or in a similar fiduciary capacity; and (iii) any relative or
spouse of such person, or any relative of such spouse, who either has the same
home as such person or who is a director or officer of the Association.
Directors are not treated as associates of each other solely because of their
Board membership.  For a further discussion of limitations on purchases of a
converting institution's stock at the time of Conversion and subsequent to
Conversion, see "Management of the Association -- Subscriptions by Executive
Officers and Directors," "-- Certain Restrictions on Purchase or Transfer of
Shares After Conversion" and "Restrictions on Acquisition of the Company and the
Association."

Liquidation Rights

     In the unlikely event of a complete liquidation of the Association in its
present mutual form, each depositor would receive his pro rata share of any
assets of the Association remaining after payment of claims of all creditors
(including the claims of all depositors to the withdrawal value of their
accounts).  Each depositor's pro rata share of such remaining assets would be in
the same proportion as the value of his deposit account was to the total value
of all deposit accounts in the Association at the time of liquidation.  After
the Conversion, each depositor, in the event of a complete liquidation, would
have a claim as a creditor of the same general priority as the claims of all
other general creditors of the Association.  However, except as described below,
his claim would be solely in the amount of the balance in his deposit account
plus accrued interest.  He would not have an interest in the value or assets of
the Association above that amount.

     The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the surplus and reserves of the Association as of the date of its latest balance
sheet contained in the final Prospectus used in connection with the Conversion.
Each Eligible Account Holder and Supplemental Eligible Account Holder, if he
were to continue to maintain his deposit account at the Association, would be
entitled, on a complete liquidation of the Association after the Conversion, to
an interest in the liquidation account prior to any payment to the stockholders
of the Association.  Each Eligible Account Holder and Supplemental Eligible
Account Holder would have an initial interest in such liquidation account for
each deposit account, including regular accounts, transaction accounts such as
NOW accounts, money market deposit accounts, and certificates of deposit, with a
balance of $50 or more held in the Association on March 31, 1997 and ________,
1998, respectively.  Each Eligible Account Holder and Supplemental Eligible
Account Holder will have a pro rata interest in the total liquidation account
based on the proportion that the balance of his Qualifying Deposits on the
Eligibility Record Date or Supplemental Eligibility Record Date, respectively,
bore to the total amount of all Qualifying Deposits of all Eligible Account
Holders and Supplemental Eligible Account Holders in the Association.  For
deposit accounts in existence at both dates separate subaccounts shall be
determined on the basis of the Qualifying Deposits in such deposit accounts on
such respective record dates.

     If, however, on any annual closing date subsequent to the Eligibility
Record Date or Supplemental Eligibility Record Date, the amount of the
Qualifying Deposit of an Eligible Account Holder or Supplemental Eligible
Account Holder is less than the amount of the Qualifying Deposit of such
Eligible Account Holder or Supplemental Eligible Account Holder as of the
Eligibility Record Date or Supplemental Eligibility Record Date, respectively,
or less than the amount of the Qualifying Deposits as of the previous annual
closing date, then the interest in the liquidation account relating to such
Qualifying Deposit would be reduced from time to time by the proportion of any
such reduction, and such interest will cease to exist if such Qualifying Deposit
accounts are closed.  In addition, no interest in the liquidation account would
ever be increased despite any subsequent increase in the related Qualifying
Deposit.  Any assets remaining after the above liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders are satisfied would be
distributed to the Company as the sole stockholder of the Association.

                                      108
<PAGE>
 
Tax Aspects

     Consummation of the Conversion is expressly conditioned upon the receipt by
the Association of either a favorable ruling from the IRS or an opinion with
respect to federal income taxation, and an opinion with respect to Ohio income
taxation, to the effect that the Conversion will not be a taxable transaction to
the Company, the Association, Eligible Account Holders, or Supplemental Eligible
Account Holders except as noted below.

     No private ruling will be received from the IRS with respect to the
proposed Conversion.  Instead, the Association has received an opinion of its
counsel, Patton Boggs LLP, to the effect that for federal income tax purposes,
among other matters: (i) the Association's change in form from mutual to stock
ownership will constitute a reorganization under section 368(a)(1)(F) of the
Code and neither the Association nor the Company will recognize any gain or loss
as a result of the Conversion; (ii) no gain or loss will be recognized to the
Association or the Company upon the purchase of the Association's capital stock
by the Company or to the Company upon the purchase of its Common Stock in the
Conversion; (iii) no gain or loss will be recognized by Eligible Account Holders
or Supplemental Eligible Account Holders upon the issuance to them of Deposit
Accounts in the Association in its stock form plus their interests in the
liquidation account in exchange for their deposit accounts in the Association;
(iv) the tax basis of the depositors' accounts in the Association immediately
after the Conversion will be the same as the basis of their deposit accounts
immediately prior to the Conversion; (v) the tax basis of each Eligible Account
Holder's and Supplemental Eligible Account Holder's interest in the liquidation
account will be zero; (vi) no gain or loss will be recognized by Eligible
Account Holders or Supplemental Eligible Account Holders upon the distribution
to them of nontransferable subscription rights to purchase shares of the Common
Stock, provided that the amount to be paid for the Common Stock is equal to the
fair market value of such stock; and (vii) the tax basis to the stockholders of
the Common Stock of the Company purchased in the Conversion will be the amount
paid therefor and the holding period for the shares of Common Stock purchased by
such persons will begin on the date on which their subscription rights are
exercised.  Crowe, Chizek and Company LLP has opined that the Conversion will
not be a taxable transaction to the Company, the Association, Eligible Account
Holders or Supplemental Eligible Account Holders for Ohio income tax purposes.
Certain portions of both the federal and the state income tax opinions are based
upon the assumption that the subscription rights issued in connection with the
Conversion will have no value.

     Unlike private rulings, an opinion of counsel or an opinion of an
independent accountant is not binding on the IRS and the IRS could disagree with
conclusions reached therein.  In the event of such disagreement, there can be no
assurance that the IRS would not prevail in a judicial or administrative
proceeding.

     Keller has issued an opinion stating that, pursuant to its valuation,
Keller is of the opinion that the subscription rights do not have any value,
based on the fact that such rights are acquired by the recipients without cost,
are nontransferable and of short duration, and afford the recipients the right
only to purchase the Common Stock at a price equal to its estimated fair market
value, which will be the same price as the Purchase Price for the shares of
Common Stock sold in the Community Offering.  Such valuation is not binding on
the IRS.  If the subscription rights granted to Eligible Account Holders or
Supplemental Eligible Account Holders are deemed to have an ascertainable value,
receipt of such rights could be taxable to those Eligible Account Holders or
Supplemental Eligible Account Holders who receive and/or exercise the
subscription rights in an amount equal to such value and the Association could
recognize gain on such distribution.  Eligible Account Holders and Supplemental
Eligible Account Holders are encouraged to consult with their own tax advisor as
to the tax consequences in the event that such subscription rights are deemed to
have an ascertainable value.

Interpretation and Amendment of the Plan of Conversion

     To the extent permitted by law, all interpretations of the Plan by the
Board of Directors of the Association will be final.  The Plan provides that the
Association's Board of Directors shall have the discretion to interpret and
apply the provisions of the Plan to particular circumstances and that such
interpretation or application shall be final.  This includes any and all
interpretations, applications and determinations made by the Board of Directors
on the basis of such information and assistance as was then reasonably available
for such purpose.

     The Plan provides that, if deemed necessary or desirable by the Board of
Directors, the Plan may be substantively amended at any time prior to
solicitation of proxies from members to vote on the Plan by a two-thirds 

                                      109
<PAGE>
 
vote of the Association's Board of Directors. After submission of the proxy
materials to the members, the Plan may be amended by a two-thirds vote of the
Association's Board of Directors at any time prior to the Special Meeting with
the concurrence of the OTS. The Plan may be amended at any time after the
approval of members with the approval of the OTS and no further approval of the
members will be necessary unless otherwise required by the OTS. By adoption of
the Plan, the Association's members will be deemed to have authorized amendment
of the Plan under the circumstances described above.

     The establishment of the Foundation will be considered as a separate matter
from approval of the Plan of Conversion.  If the Association's members approve
the Plan of Conversion, but not the creation of the Foundation, the Association
intends to complete the Conversion without the Foundation.  Failure to approve
the establishment of the Foundation may materially increase the pro forma market
value of the Common Stock since the Valuation Range, as set forth herein, takes
into account the dilutive impact of the issuance of shares to the Foundation.
In such an event, the Association may establish a new Estimated Price Range and
commence a resolicitation of subscribers.  In the event of a resolicitation,
unless an affirmative response is received within a specified period of time,
all funds will be promptly returned to investors, as described elsewhere herein.
See "-- Stock Pricing."

Certain Restrictions on Purchase or Transfer of Shares after Conversion

     All shares of Common Stock purchased in connection with the Conversion by a
director or an officer of the Association will be subject to a restriction that
the shares not be sold for a period of one year following the Conversion, except
in the event of the death of such director or officer.  Each certificate for
restricted shares will bear a legend giving notice of this restriction on
transfer, and instructions will be issued to the effect that any transfer within
such time period of any certificate or record ownership of such shares other
than as provided above is a violation of the restriction.  Any shares of Common
Stock issued at a later date as a stock dividend, stock split, or otherwise,
with respect to such restricted stock will be subject to the same restrictions.
The directors and officers of the Association will also be subject to the
insider trading rules promulgated pursuant to the Exchange Act and any other
applicable requirements of the federal securities laws.

     Purchases of outstanding shares of Common Stock of the Company by
directors, officers (or any person who was an officer or director of the
Association after adoption of the Plan of Conversion) and their associates
during the three-year period following Conversion may be made only through a
broker or dealer registered with the SEC, except with the prior written approval
of the OTS.  This restriction does not apply, however, to negotiated
transactions involving more than 1.0% of the Company's outstanding Common Stock
or to the purchase of stock pursuant to any stock option plan to be established
after the Conversion.

     Unless approved by the OTS, the Company, pursuant to OTS regulations, will
be prohibited from repurchasing any shares of the Common Stock for three years
after the Conversion except: (i) for an offer to all stockholders on a pro rata
basis; or (ii) for the repurchase of qualifying shares of a director.
Notwithstanding the foregoing, beginning one year following completion of the
Conversion the Company may repurchase its Common Stock so long as: (i) the
repurchases within the following two years are part of an open-market program
not involving greater than 5% of its outstanding capital stock during a twelve-
month period; (ii) the repurchases do not cause the Company to become
undercapitalized; and (iii) the Company provides to the Regional Director of the
OTS no later than 10 days prior to the commencement of a repurchase program
written notice containing a full description of the program to be undertaken and
such program is not disapproved by the Regional Director.  In addition, under
current OTS policies, repurchases may be allowed in the first year following
Conversion and in amounts greater than 5% in the second and third years
following Conversion, provided there are valid and compelling business reasons
for such repurchases and the OTS approves such repurchases.


         RESTRICTIONS ON ACQUISITION OF THE COMPANY AND THE ASSOCIATION
                                        
General

     The Association's Plan of Conversion provides for the Conversion of the
Association from the mutual to the stock form of organization and, in connection
therewith, a new Federal Stock Charter and Bylaws to be adopted by 

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members of the Association. The Plan also provides for the concurrent formation
of a holding company, which form of organization may or may not be utilized at
the option of the Board of Directors of the Association. See "The Conversion --
General." In the event that the holding company form of organization is
utilized, as described below, certain provisions in the Company's Certificate of
Incorporation and Bylaws and in its management remuneration entered into in
connection with the Conversion, together with provisions of Delaware corporate
law, may have anti-takeover effects. In the event that the holding company form
of organization is not utilized, the Association's Stock Charter and Bylaws and
management remuneration entered into in connection with the Conversion may have
anti-takeover effects as described below. In addition, regulatory restrictions
may make it difficult for persons or companies to acquire control of either the
Company or the Association.

Restrictions in the Company's Certificate of Incorporation and Bylaws

     A number of provisions of the Company's Certificate of Incorporation and
Bylaws deal with matters of corporate governance and certain rights of
stockholders.  The following discussion is a general summary of the material
provisions of the Company's Certificate of Incorporation and Bylaws and certain
other statutory and regulatory provisions relating to stock ownership and
transfers, the Board of Directors and business combinations, which might be
deemed to have a potential "anti-takeover" effect.  These provisions may have
the effect of discouraging a future takeover attempt which is not approved by
the Board of Directors but which individual Company stockholders may deem to be
in their best interests or in which shareholders may receive a substantial
premium for their shares over then current market prices.  As a result,
stockholders who might desire to participate in such a transaction may not have
an opportunity to do so.  Such provisions will also render the removal of the
current Board of Directors or management of the Company more difficult.  The
following description of certain of the provisions of the Certificate of
Incorporation and Bylaws of the Company is necessarily general and reference
should be made in each case to such Certificate of Incorporation and Bylaws,
which are incorporated herein by reference.  See "Additional Information" as to
how to obtain a copy of these documents.

     Limitation on Voting Rights.  The Certificate of Incorporation of the
Company provides that in no event shall any record owner of any outstanding
Common Stock which is beneficially owned, directly or indirectly, by a person
who beneficially owns in excess of 10% of the then outstanding shares of Common
Stock (the "Limit") be entitled or permitted to any vote in respect of the
shares beneficially owned by such person in excess of the Limit.  Beneficial
ownership is determined pursuant to Rule 13d-3 of the General Rules and
Regulations promulgated pursuant to the Exchange Act, and includes shares
beneficially owned by such person or any of his affiliates (as defined in the
Certificate of Incorporation), shares which such person or his affiliates have
the right to acquire upon the exercise of conversion rights or options and
shares as to which such person and his affiliates have or share investment or
voting power, but shall not include shares beneficially owned by the ESOP or
directors, officers and employees of the Association or Company or shares that
are subject to a revocable proxy and that are not otherwise beneficially owned,
or deemed by the Company to be beneficially owned, by such person and his
affiliates.  The Certificate of Incorporation of the Company further provides
that this provision limiting voting rights may only be amended upon the vote of
80% of the outstanding shares of voting stock (after giving effect to the
limitation on voting rights).

     Board of Directors.  The Board of Directors of the Company is divided into
three classes, each of which shall contain approximately one-third of the whole
number of members of the Board.  Each class shall serve a staggered term, with
approximately one-third of the total number of directors being elected each
year.  The Company's Certificate of Incorporation and Bylaws provide that the
size of the Board shall be determined by a majority of the directors, but in the
absence of such determination shall be eight.  The Certificate of Incorporation
and the Bylaws provide that any vacancy occurring in the Board, including a
vacancy created by an increase in the number of directors or resulting from
death, resignation, retirement, disqualification, removal from office or other
cause, shall be filled for the remainder of the unexpired term exclusively by a
majority vote of the directors then in office.  The classified Board is intended
to provide for continuity of the Board of Directors and to make it more
difficult and time consuming for a stockholder group to fully use its voting
power to gain control of the Board of Directors without the consent of the
incumbent Board of Directors of the Company.  The Certificate of Incorporation
of the Company provides that a director may be removed from the Board of
Directors prior to the expiration of his term only for cause, upon the vote of
80% of the outstanding shares of voting stock.

     In the absence of these provisions, the vote of the holders of a majority
of the shares could remove the entire 

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Board, with or without cause, and replace it with persons of such holders'
choice.

     Cumulative Voting, Special Meetings And Action by Written Consent.  The
Certificate of Incorporation does not provide for cumulative voting for any
purpose.  Moreover, special meetings of stockholders of the Company may be
called only by the Board of Directors of the Company.  The Certificate of
Incorporation also provides that any action required or permitted to be taken by
the stockholders of the Company may be taken only at an annual or special
meeting and prohibits stockholder action by written consent in lieu of a
meeting.

     Authorized Shares.  The Certificate of Incorporation authorizes the
issuance of 33,000,000 shares of Common Stock and 3,000,000 shares of Preferred
Stock.  The shares of Common Stock and Preferred Stock were authorized in an
amount greater than that to be issued in the Conversion to provide the Company's
Board of Directors with as much flexibility as possible to effect, among other
transactions, financings, acquisitions, stock dividends, stock splits and
employee Stock Options.  However, these additional authorized shares may also be
used by the Board of Directors consistent with its fiduciary duty to deter
future attempts to gain control of the Company.  The Board of Directors also has
sole authority to determine the terms of any one or more series of Preferred
Stock, including voting rights, conversion rates, and liquidation preferences.
As a result of the ability to fix voting rights for a series of Preferred Stock,
the Board has the power, to the extent consistent with its fiduciary duty, to
issue a series of Preferred Stock to persons friendly to management in order to
attempt to block a post-tender offer merger or other transaction by which a
third party seeks control, and thereby assist management to retain its position.
The Company's Board of Directors currently has no plans for the issuance of
additional shares, other than the issuance of additional shares pursuant to the
terms of the Stock Program and upon exercise of Stock Options to be issued
pursuant to the terms of the Stock Option Plan or Master Stock-Based Benefit
Plan, all of which are to be established and presented to stockholders at the
first annual meeting after the Conversion.

     Stockholder Vote Required to Approve Business Combinations With Interested
Stockholders.   The Certificate of Incorporation requires the approval of the
holders of at least 80% of the Company's outstanding shares of voting stock to
approve certain "Business Combinations," as defined therein, and related
transactions.  Under Delaware law, absent this provision, Business Combinations,
including mergers, consolidations and sales of all or substantially all of the
assets of a corporation must, subject to certain exceptions, be approved by the
vote of the holders of only a majority of the outstanding shares of Common Stock
of the Company and any other affected class of stock.  Under the Certificate of
Incorporation, at least 80% approval of shareholders is required in connection
with any transaction involving an Interested Stockholder (as defined below)
except (i) in cases where the proposed transaction has been approved in advance
by a majority of those members of the Company's Board of Directors who are
unaffiliated with the Interested Stockholder and were directors prior to the
time when the Interested Stockholder became an Interested Stockholder or (ii) if
the proposed transaction meets certain conditions set forth therein which are
designed to afford the shareholders a fair price in consideration for their
shares in which case, if a stockholder vote is required, approval of only a
majority of the outstanding shares of voting stock would be sufficient.  The
term "Interested Stockholder" is defined to include any individual, corporation,
partnership or other entity (other than the Company or its subsidiaries) which
owns beneficially or controls, directly or indirectly, 10% or more of the voting
power of the outstanding shares of voting stock of the Company.  This provision
of the Certificate of Incorporation applies to any "Business Combination," which
is defined to include (i) any merger or consolidation of the Company or any of
its subsidiaries with or into any Interested Stockholder or Affiliate (as
defined in the Certificate of Incorporation) of an Interested Stockholder; (ii)
any sale, lease, exchange, mortgage, pledge, transfer, or other disposition to
or with any Interested Stockholder or Affiliate of 25% or more of the assets of
the Company or combined assets of the Company and its subsidiary; (iii) the
issuance or transfer to any Interested Stockholder or its Affiliate by the
Company (or any subsidiary) of any securities the value of which equals or
exceeds 25% of the fair market value of the Common Stock of the Company in
exchange for any assets, cash or securities; (iv) the adoption of any plan for
the liquidation or dissolution of the Company proposed by or on behalf of any
Interested Stockholder or Affiliate thereof; and (v) any reclassification of
securities, recapitalization, merger or consolidation of the Company which has
the effect of increasing the proportionate share of Common Stock or any class of
equity or convertible securities of the Company owned directly or indirectly by
an Interested Stockholder or Affiliate thereof.  The directors and executive
officers of the Association are purchasing in the aggregate approximately 3.4%
of the shares of the Common Stock to be issued in the Conversion, including
shares to be issued to the Foundation, at the maximum of the Estimated Price
Range.  In addition, the ESOP intends to purchase 8% of the Common Stock issued
in connection with the Conversion, including shares issued to the Foundation.
Additionally, if at a meeting of stockholders following the Conversion
stockholder 

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approval of the proposed Stock-Based Incentive Plan is received, the Company
expects to acquire 4% of the Common Stock issued in connection with the
Conversion, including shares issued to the Foundation, on behalf of the Stock-
Based Incentive Plan and expects to issue options to purchase up to 10% of the
Common Stock issued in connection with the Conversion, including shares issued
to the Foundation, under the Stock-Based Incentive Plan to directors and
executive officers. As a result, at the maximum of the Estimated Price Range,
assuming the Stock-Based Incentive Plan is approved by Stockholders, directors,
executive officers and employees have the potential to control the voting of
approximately 23.1% of the Company's Common Stock, if the shares held by the
ESOP are aggregated with the shares purchased in the Conversion by management
and acquired for award under the Stock-Based Incentive Plan, thereby enabling
them to prevent the approval of the transactions requiring the approval of at
least 80% of the Company's outstanding shares of voting stock described
hereinabove.

     Evaluation of Offers.  The Certificate of Incorporation of the Company
further provides that the Board of Directors of the Company, when evaluating any
offer of another "Person" (as defined therein) to (i) make a tender or exchange
offer for any equity security of the Company, (ii) merge or consolidate the
Company with another corporation or entity, or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the Company,
may, in connection with the exercise of its judgment in determining what is in
the best interest of the Company, the Association and the stockholders of the
Company, give due consideration to all relevant factors, including, without
limitation, the social and economic effects of acceptance of such offer on the
Company's customers and the Association's present and future account holders,
borrowers and employees; on the communities in which the Company and the
Association operate or are located; and on the ability of the Company to fulfill
its corporate objectives as a savings and loan holding company and on the
ability of the Association to fulfill the objectives of a federally-chartered
stock savings bank under applicable statutes and regulations.  By having these
standards in the Certificate of Incorporation of the Company, the Board of
Directors may be in a stronger position to oppose such a transaction if the
Board concludes that the transaction would not be in the best interest of the
Company, even if the price offered is significantly greater than the then market
price of any equity security of the Company.

     Amendment of Certificate of Incorporation and Bylaws.  Amendments to the
Company's Certificate of Incorporation must be approved by a majority vote of
its Board of Directors and also by a majority of the outstanding shares of its
voting stock; provided, however, that an affirmative vote of at least 80% of the
outstanding voting stock entitled to vote (after giving effect to the provision
limiting voting rights) is required to amend or repeal certain provisions of the
Certificate of Incorporation, including the provision limiting voting rights,
the provisions relating to approval of certain business combinations, calling
special meetings, the number and classification of directors, director and
officer indemnification by the Company and amendment of the Company's Bylaws and
Certificate of Incorporation.  The Company's Bylaws may be amended by its Board
of Directors, or by a vote of 80% of the total votes eligible to be voted at a
duly constituted meeting of stockholders.

     Certain Bylaw Provisions.  The Bylaws of the Company also require a
stockholder who intends to nominate a candidate for election to the Board of
Directors, or to raise new business at a stockholder meeting to give at least 90
days advance notice to the Secretary of the Company.  The notice provision
requires a stockholder who desires to raise new business to provide certain
information to the Company concerning the nature of the new business, the
stockholder and the stockholder's interest in the business matter.  Similarly, a
stockholder wishing to nominate any person for election as a director must
provide the Company with certain information concerning the nominee and the
proposing stockholder.

Anti-takeover Effects of the Company's Certificate of Incorporation and Bylaws
and Management Remuneration Adopted in Conversion

     The provisions described above are intended to reduce the Company's
vulnerability to takeover attempts and certain other transactions which have not
been negotiated with and approved by members of its Board of Directors.  The
provisions of the Employment Agreements, CIC Agreements, Employee Severance
Compensation Plan, Stock Program, Stock Option Plan or Master Stock-Based
Benefit Plan to be established may also discourage takeover attempts by
increasing the costs to be incurred by the Association and the Company in the
event of a takeover.  See "Management of the Association -- Employment
Agreements."

     The Company's Board of Directors believes that the provisions of the
Certificate of Incorporation, Bylaws 

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and management remuneration plans to be established are in the best interest of
the Company and its stockholders. An unsolicited non-negotiated proposal can
seriously disrupt the business and management of a corporation and cause it
great expense. Accordingly, the Board of Directors believes it is in the best
interests of the Company and its stockholders to encourage potential acquirors
to negotiate directly with management and that these provisions will encourage
such negotiations and discourage non-negotiated takeover attempts. It is also
the Board of Directors' view that these provisions should not discourage persons
from proposing a merger or other transaction at a price that reflects the true
value of the Company and that otherwise is in the best interest of all
stockholders.

Delaware Corporate Law

     The state of Delaware has a statute designed to provide Delaware
corporations with additional protection against hostile takeovers.  The takeover
statute, which is codified in Section 203 of the Delaware General Corporate Law
("Section 203"), is intended to discourage certain takeover practices by
impeding the ability of a hostile acquiror to engage in certain transactions
with the target company.

     In general, Section 203 provides that a "Person" (as defined therein) who
owns 15% or more of the outstanding voting stock of a Delaware corporation (an
"Interested Stockholder") may not consummate a merger or other business
combination transaction with such corporation at any time during the three-year
period following the date such Person became an Interested Stockholder.  The
term "business combination" is defined broadly to cover a wide range of
corporate transactions including mergers, sales of assets, issuances of stock,
transactions with subsidiaries and the receipt of disproportionate financial
benefits.

     The statute exempts the following transactions from the requirements of
Section 203: (i) any business combination if, prior to the date a person became
an Interested Stockholder, the Board of Directors approved either the business
combination or the transaction which resulted in the stockholder becoming an
Interested Stockholder; (ii) any business combination involving a person who
acquired at least 85% of the outstanding voting stock in the transaction in
which he became an Interested Stockholder, with the number of shares outstanding
calculated without regard to those shares owned by the corporation's directors
who are also officers and by certain employee stock plans; (iii) any business
combination with an Interested Stockholder that is approved by the Board of
Directors and by a two-thirds vote of the outstanding voting stock not owned by
the Interested Stockholder; and (iv) certain business combinations that are
proposed after the corporation had received other acquisition proposals and
which are approved or not opposed by a majority of certain continuing members of
the Board of Directors.  A corporation may exempt itself from the requirements
of the statute by adopting an amendment to its Certificate of Incorporation or
Bylaws electing not to be governed by Section 203.  At the present time, the
Board of Directors does not intend to propose any such amendment.

Restrictions in the Association's New Charter and Bylaws

     Although the Board of Directors of the Association is not aware of any
effort that might be made to obtain control of the Association after the
Conversion, the Board of Directors believes that it is appropriate to adopt
certain provisions permitted by federal regulations to protect the interests of
the converted Association and its stockholders from any hostile takeover.  Such
provisions may, indirectly, inhibit a change in control of the Company, as the
Association's sole stockholder.  See "Risk Factors -- Certain Anti-Takeover
Provisions."

     The Association's Federal Stock Charter will contain a provision whereby
the acquisition of or offer to acquire beneficial ownership of more than 10% of
the issued and outstanding shares of any class of equity securities of the
Association by any person (i.e., any individual, corporation, group acting in
concert, trust, partnership, joint stock company or similar organization),
either directly or through an affiliate thereof, will be prohibited for a period
of five years following the date of completion of the Conversion.  Any stock in
excess of 10% acquired in violation of the Federal Stock Charter provision will
not be counted as outstanding for voting purposes.  This limitation shall not
apply to any transaction in which the Association forms a holding company
without a change in the respective beneficial ownership interests of its
stockholders other than pursuant to the exercise of any dissenter or appraisal
rights.  In the event that holders of revocable proxies for more than 10% of the
shares of the Common Stock of the Company seek, among other things, to elect
one-third or more of the Company's Board of Directors, to cause the Company's
stockholders to approve the acquisition or corporate reorganization of the
Company or to exert a continuing influence 

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on a material aspect of the business operations of the Company, which actions
could indirectly result in a change in control of the Association, the Board of
Directors of the Association will be able to assert this provision of the
Association's Federal Stock Charter against such holders. Although the Board of
Directors of the Association is not currently able to determine when and if it
would assert this provision of the Association's Federal Stock Charter, the
Board of Directors, in exercising its fiduciary duty, may assert this provision
if it were deemed to be in the best interests of the Association, the Company
and its stockholders. It is unclear, however, whether this provision, if
asserted, would be successful against such persons in a proxy contest which
could result in a change in control of the Association indirectly through a
change in control of the Company. Finally, for five years, stockholders will not
be permitted to call a special meeting of stockholders relating to a change of
control of the Association or a charter amendment or to cumulate their votes in
the election of directors. Furthermore, the staggered terms of the Board of
Directors could have an anti-takeover effect by making it more difficult for a
majority of shares to force an immediate change in the Board of Directors since
only one-third of the Board is elected each year. The purpose of these
provisions is to assure stability and continuity of management of the
Association in the years immediately following the Conversion.

     Although the Association has no arrangements, understandings or plans at
the present time, except as described in "Description of Capital Stock of the
Company -- Preferred Stock," for the issuance or use of the shares of
undesignated Preferred Stock proposed to be authorized, the Board of Directors
believes that the availability of such shares will provide the Association with
increased flexibility in structuring possible future financings and acquisitions
and in meeting other corporate needs which may arise.  In the event of a
proposed merger, tender offer or other attempt to gain control of the
Association of which management does not approve, it might be possible for the
Board of Directors to authorize the issuance of one or more series of Preferred
Stock with rights and preferences which could impede the completion of such a
transaction.  An effect of the possible issuance of such Preferred Stock,
therefore, may be to deter a future takeover attempt.  The Board of Directors
does not intend to issue any Preferred Stock except on terms which the Board
deems to be in the best interest of the Association and its then existing
stockholders.

Regulatory Restrictions

     The Plan of Conversion prohibits any person, prior to the completion of the
Conversion, from transferring, or from entering into any agreement or
understanding to transfer, to the account of another, legal or beneficial
ownership of the subscription rights issued under the Plan or the Common Stock
to be issued upon their exercise.  The Plan also prohibits any person, prior to
the completion of the Conversion, from offering, or making an announcement of an
offer or intent to make an offer, to purchase such subscription rights or Common
Stock.

     For three years following the Conversion, OTS regulations prohibit any
person from acquiring or making an offer to acquire more than 10% of the stock
of any converted savings institution, except for: (i) offers that, if
consummated, would not result in the acquisition by such person during the
preceding 12-month period of more than 1% of such stock; (ii) offers for up to
25% in the aggregate by the ESOP or other tax qualified plans of the Association
or the Company; or (iii) offers which are not opposed by the Board of Directors
of the Association and which receive the prior approval of the OTS.  Such
prohibition is also applicable to the acquisition of the stock of the Company.
Such acquisition may be disapproved by the OTS if it is found, among other
things, that the proposed acquisition (a) would frustrate the purposes of the
provisions of the regulations regarding conversions; (b) would be manipulative
or deceptive; (c) would subvert the fairness of the conversion; (d) would be
likely to result in injury to the savings institution; (e) would not be
consistent with economical home financing; (f) would otherwise violate law or
regulation; or (g) would not contribute to the prudent deployment of the savings
institution's conversion proceeds.  In the event that any person, directly or
indirectly, violates this regulation, the securities beneficially owned by such
person in excess of 10% shall not be counted as shares entitled to vote and
shall not be voted by any person or counted as voting shares in connection with
any matters submitted to a vote of stockholders.  The definition of beneficial
ownership for this regulation extends to persons holding revocable or
irrevocable proxies for the Company's stock under circumstances that give rise
to a conclusive or rebuttable determination of control under the OTS
regulations.

     In addition, any proposal to acquire 10% of any class of equity security of
the Company generally would be subject to approval by the OTS under the Change
in Bank Control Act. The OTS requires all persons seeking control of a savings
institution and, therefore, indirectly its holding company, to obtain regulatory
approval prior to offering to obtain control. Federal law generally provides
that no "person," acting directly or indirectly or through or

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in concert with one or more other persons, may acquire directly or indirectly
"control," as that term is defined in OTS regulations, of a federally-insured
savings institution without giving at least 60 days' written notice to the OTS
and providing the OTS an opportunity to disapprove the proposed acquisition.
Such acquisitions of control may be disapproved if it is determined, among other
things, that (i) the acquisition would substantially lessen competition; (ii)
the financial condition of the acquiring person might jeopardize the financial
stability of the savings institution or prejudice the interests of its
depositors; or (iii) the competency, experience or integrity of the acquiring
person or the proposed management personnel indicates that it would not be in
the interest of the depositors or the public to permit the acquisition of
control by such person. Such change in control restrictions on the acquisition
of holding company stock are not limited to three years after conversion but
will apply for as long as the regulations are in effect. Persons holding
revocable or irrevocable proxies may be deemed to be beneficial owners of such
securities under OTS regulations and therefore prohibited from voting all or the
portion of such proxies in excess of the 10% aggregate beneficial ownership
limit. Such regulatory restrictions may prevent or inhibit proxy contests for
control of the Company or the Association which have not received prior
regulatory approval.

                  DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
                                        
General

     The Company is authorized to issue 33,000,000 shares of Common Stock having
a par value of $0.01 per share and 3,000,000 shares of preferred stock having a
par value of $0.01 per share (the "Preferred Stock").  Based on the sale of
Common Stock in connection with the Conversion and issuance of authorized but
unissued Common Stock to the Foundation in an amount equal to 7.7% of the Common
Stock sold in the Conversion, the Company currently expects to issue up to
12,880,000 shares of Common Stock (or 14,812,000 in the event of an increase of
15% in the Estimated Price Range) and no shares of Preferred Stock in the
Conversion.  Except as discussed above in "Restriction on Acquisition of the
Company and the Association," each share of the Company's Common Stock will have
the same relative rights as, and will be identical in all respects with, each
other share of Common Stock.  Upon payment of the Purchase Price for the Common
Stock, in accordance with the Plan, all such stock will be duly authorized,
fully paid and non-assessable.

     THE COMMON STOCK OF THE COMPANY WILL REPRESENT NON-WITHDRAWABLE CAPITAL,
WILL NOT BE AN ACCOUNT OF AN INSURABLE TYPE, AND WILL NOT BE INSURED BY THE
FDIC.

Common Stock

     Dividends.  The Company can pay dividends out of statutory surplus or from
certain net profits if, as and when declared by its Board of Directors.  The
payment of dividends by the Company is subject to limitations which are imposed
by law and applicable regulation.  See "Dividend Policy" and "Regulation."  The
holders of Common Stock of the Company will be entitled to receive and share
equally in such dividends as may be declared by the Board of Directors of the
Company out of funds legally available therefor.  If the Company issues
Preferred Stock, the holders thereof may have a priority over the holders of the
Common Stock with respect to dividends.

     Voting Rights.  Upon Conversion, the holders of Common Stock of the Company
will possess exclusive voting rights in the Company.  They will elect the
Company's Board of Directors and act on such other matters as are required to be
presented to them under Delaware law or the Company's Certificate of
Incorporation or as are otherwise presented to them by the Board of Directors.
Except as discussed in "Restrictions on Acquisition of the Company and the
Association," each holder of Common Stock will be entitled to one vote per share
and will not have any right to cumulate votes in the election of directors.  If
the Company issues Preferred Stock, holders of the Preferred Stock may also
possess voting rights.  Certain matters require an 80% shareholder vote.  See
"Restrictions on Acquisition of the Company and the Association."

     As a federal mutual savings and loan association, corporate powers and
control of the Association are vested in its Board of Directors, who elect the
officers of the Association and who fill any vacancies on the Board of Directors
as it exists upon Conversion.  Subsequent to Conversion, voting rights will be
vested exclusively in the owners of the shares of capital stock of the
Association, which will be the Company, and voted at the direction of the
Company's Board of Directors.  Consequently, the holders of the Common Stock
will not have direct control of the Association.

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     Liquidation.  In the event of any liquidation, dissolution or winding up of
the Association, the Company, as holder of the Association's capital stock,
would be entitled to receive, after payment or provision for payment of all
debts and liabilities of the Association (including all deposit accounts and
accrued interest thereon) and after distribution of the balance in the special
liquidation account to Eligible Account Holders and Supplemental Eligible
Account Holders (see "The Conversion -- Liquidation Rights"), all assets of the
Association available for distribution.  In the event of liquidation,
dissolution or winding up of the Company, the holders of its Common Stock would
be entitled to receive, after payment or provision for payment of all its debts
and liabilities, all of the assets of the Company available for distribution.
If Preferred Stock is issued, the holders thereof may have a priority over the
holders of the Common Stock in the event of liquidation or dissolution.

     Preemptive Rights.  Holders of the Common Stock of the Company will not be
entitled to preemptive rights with respect to any shares which may be issued.
The Common Stock is not subject to redemption.

Preferred Stock

     None of the shares of the Company's authorized Preferred Stock will be
issued in the Conversion.  Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine.  The
Board of Directors can, without stockholder approval, issue preferred stock with
voting, dividend, liquidation and conversion rights which could dilute the
voting strength of the holders of the Common Stock and may assist management in
impeding an unfriendly takeover or attempted change in control.

                DESCRIPTION OF CAPITAL STOCK OF THE ASSOCIATION
                                        
General

     The Federal Stock Charter of the Association, to be effective upon the
Conversion, authorizes the issuance of capital stock consisting of 33,000,000
shares of common stock, par value $1.00 per share, and 3,000,000 shares of
preferred stock, par value $1.00 per share, which preferred stock may be issued
in series and classes having such rights, preferences, privileges and
restrictions as the Board of Directors may determine.  Each share of Common
Stock of the Association will have the same relative rights as, and will be
identical in all respects with, each other share of common stock.  After the
Conversion, the Board of Directors will be authorized to approve the issuance of
Common Stock up to the amount authorized by the Federal Stock Charter without
the approval of the Association's stockholders.  Assuming that the holding
company form of organization is utilized, all of the issued and outstanding
common stock of the Association will be held by the Company as the Association's
sole stockholder.  THE CAPITAL STOCK OF THE ASSOCIATION WILL REPRESENT NON-
WITHDRAWABLE CAPITAL, WILL NOT BE AN ACCOUNT OF AN INSURABLE TYPE, AND WILL NOT
BE INSURED BY THE FDIC.

Common Stock

     Dividends.  The holders of the Association's common stock will be entitled
to receive and to share equally in such dividends as may be declared by the
Board of Directors of the Association out of funds legally available therefor.
See "Dividend Policy" for certain restrictions on the payment of dividends and
"Federal and State Taxation --Federal Taxation" for a discussion of the
consequences of the payment of cash dividends from income appropriated to bad
debt reserves.

     Voting Rights.  Immediately after the Conversion, the holders of the
Association's common stock will possess exclusive voting rights in the
Association.  Each holder of shares of common stock will be entitled to one vote
for each share held, subject to the right of shareholders to cumulate their
votes for the election of directors.  During the five-year period after the
effective date of the Conversion, cumulation of votes will not be permitted.
See "Restrictions on Acquisition of the Company and the Association -- Anti-
Takeover Effects of the Company's Certificate of Incorporation and Bylaws and
Management Remuneration Adopted in Conversion."

                                      117
<PAGE>
 
     Liquidation.  In the event of any liquidation, dissolution, or winding up
of the Association, the holders of common stock will be entitled to receive,
after payment of all debts and liabilities of the Association (including all
deposit accounts and accrued interest thereon), and distribution of the balance
in the special liquidation account to Eligible Account Holders and Supplemental
Eligible Account Holders, all assets of the Association available for
distribution in cash or in kind.  If preferred stock is issued subsequent to the
Conversion, the holders thereof may also have priority over the holders of
common stock in the event of liquidation or dissolution.

     Preemptive Rights; Redemption.  Holders of the common stock of the
Association will not be entitled to preemptive rights with respect to any shares
of the Association which may be issued.  The common stock will not be subject to
redemption.  Upon receipt by the Association of the full specified purchase
price therefor, the common stock will be fully paid and non-assessable.

                          TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for the Common Stock is [Transfer Agent].

                             CHANGE IN ACCOUNTANTS

     Prior to the year ended June 30, 1998 the Association's financial
statements were audited by Packer, Thomas & Co.  As a result of the
Association's decision to convert from a mutual savings and loan association to
a stock savings and loan association, the Association decided on June 29, 1998
to replace Packer, Thomas & Co.  and to engage Crowe, Chizek and Company LLP as
the independent auditors of the Association.  The decision to change auditors
was recommended by the Audit Committee and was approved by the Board of
Directors.  Accordingly, the statement of financial condition as of June 30,
1997 and related statements of income, retained earnings and cash flows for the
years ended June 30, 1997 and 1996, and included in this Prospectus, were
audited by Packer, Thomas & Co.

     For the year ended June 30, 1997 and up to the date of replacement of
Packer, Thomas & Co., there were no disagreements with Packer, Thomas & Co. on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure which, if not resolved to the satisfaction of
Packer, Thomas & Co., would have caused it to make reference to the subject
matter of the disagreement in connection with its report.  The independent
auditors' report on the financial statements for the year ended June 30, 1997
did not contain an adverse opinion or a disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principles.

                                    EXPERTS

     The consolidated financial statements of the Association as of June 30,
1998, and for the year ended June 30, 1998, have been included herein in
reliance upon the report of Crowe, Chizek & Company, LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing.

     The financial statements of the Association as of June 30, 1997 and for the
years ended June 30, 1997 and 1996, have been included herein in reliance upon
the report of Packer, Thomas & Co., independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.

     Keller and Company, Inc. has consented to the publication herein of the
summary of its report to the Association and Company setting forth its opinion
as to the estimated pro forma market value of the Common Stock upon Conversion
and its opinion with respect to subscription rights.

                             LEGAL AND TAX OPINIONS

     The legality of the Common Stock and the federal income tax consequences of
the Conversion will be passed upon for the Association and Company by Patton
Boggs LLP, Washington, D.C., special counsel to the Association and Company.
The federal income tax consequences of First Federal of Warren Community
Foundation will be passed upon for the Association and the Company by Crowe,
Chizek and Company LLP, independent certified public 

                                      118
<PAGE>
 
accountants who have served as the Association's and the Company's independent
tax advisors. Patton Boggs LLP will rely as to certain matters of Delaware law
on the opinion of Potter Anderson & Corroon LLP. Ohio state income tax
consequences will be passed upon by Crowe, Chizek and Company LLP. Certain legal
matters will be passed upon for Webb by Elias, Matz, Tiernan & Herrick L.L.P.,
Washington, DC.


                             ADDITIONAL INFORMATION

     The Company has filed with the SEC a registration statement under the
Securities Act with respect to the Common Stock offered hereby.  As permitted by
the rules and regulations of the SEC, this Prospectus does not contain all the
information set forth in the registration statement.  Such information,
including the Conversion Valuation Appraisal Report, which is an exhibit to the
Registration Statement, can be examined without charge at the public reference
facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of such material can be obtained from the SEC at prescribed rates.
In addition, the SEC maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC, including the Company.  The
Conversion Valuation Appraisal Report may also be inspected by members of the
Association at the offices of the Association during normal business hours.
This Prospectus contains a description of the material terms and features of all
material contracts, reports or exhibits to the registration statement required
to be described; however, the statements contained in this Prospectus as to the
contents of any contract or other document filed as an exhibit to the
registration statement are, of necessity, brief descriptions thereof and are not
necessarily complete; each such statement is qualified by reference to such
contract or document.

     The Association has filed an application for conversion with the OTS.
Pursuant to the rules and regulations of the OTS, this Prospectus omits certain
information contained in that application.  The application may be examined at
the principal office of the OTS, 1700 G Street, Washington, DC, 20552 and at the
office of the Regional Director of the OTS located at 200 West Madison Street,
Suite 1300, Chicago, Illinois, 60606.

     The Company has filed with the Office of Thrift Supervision an Application
to Form a Holding Company.  This Prospectus omits certain information contained
in such Application.  Such Application may be inspected at the offices of the
OTS, 1700 G Street, N.W., Washington, D.C.  20552.

     In connection with the Conversion, the Company will register its Common
Stock with the SEC under Section 12(g) of the Exchange Act, and, upon such
registration, the Company and the holders of its stock will become subject to
the proxy solicitation rules, reporting requirements and restrictions on stock
purchases and sales by directors, officers and greater than 10% stockholders,
the annual and periodic reporting and certain other requirements of the Exchange
Act.  Under the Plan, the Company has undertaken that it will not terminate such
registration for a period of at least three years following the Conversion.  In
the event that the Association amends the Plan to eliminate the concurrent
formation of the Company as part of the Conversion, the Association will
register its stock with the Federal Deposit Insurance Corporation under Section
12(g) of the Exchange Act and, upon such registration, the Association and the
holders of its stock will become subject to the same obligations and
restrictions.

     A copy of the Plan of Conversion, Certificate of Incorporation and the
Bylaws of the Company and the Charter and Bylaws of the Association are
available without charge from the Association.  The Association's principal
office is located at 185 East Market Street, Warren, Ohio and its telephone
number is (330) 373-1221.


                                      119
<PAGE>
 
              FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         INDEX TO FINANCIAL STATEMENTS


                                                                        Page
                                                                   -------------
 
Independent Auditors' Report for the Year Ended June 30, 1998......      F-1
 
Independent Auditors' Report for the Years Ended June 30, 1997 and       
 1996..............................................................      F-2
 
Statements of Financial Condition as of June 30, 1998 and 1997.....      F-3
 
Statements of Income for the Years Ended June 30, 1998, 1997 and         
 1996..............................................................      F-4
 
Statements of Retained Earnings for the Years Ended June 30, 1998,       
 1997 and 1996.....................................................      F-5
 
Statements of Cash Flows for the Years Ended June 30, 1998,          
1997 and 1996......................................................  F-6 to F-7
 
Notes to Financial Statements......................................  F-8 to F-26


     All schedules are omitted because they are not required or applicable, or
the required information is shown in the financial statements or notes thereto.

     The financial statements of First Place Financial Corp. have been omitted
because First Place Financial Corp. has not yet issued any stock, has no assets
and no liabilities, and has not conducted any business other than of an
organizational nature.
<PAGE>
 
                   [LETTERHEAD OF CROWE CHIZEK APPEARS HERE]

                        REPORT OF INDEPENDENT AUDITORS



Board of Directors
First Federal Savings and Loan Association
 of Warren
Warren, OH


We have audited the accompanying statements of financial condition of First
Federal Savings and Loan Association of Warren as of June 30, 1998, and the
related statements of income, retained earnings and cash flows for the year then
ended.  These financial statements are the responsibility of the Association's
management.  Our responsibility is to express an opinion on these financial
statements based on our audit.  The 1997 and 1996 financial statements were
audited by other auditors whose report dated September 9, 1997, expressed an
unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion, the 1998 financial statements referred to above present fairly,
in all material respects, the financial position of First Federal Savings and
Loan Association of Warren as of June 30, 1998, and the results of its
operations and cash flows for the year then ended, in conformity with generally
accepted accounting principles.


                                    /s/ Crowe, Chizek and Company LLP

                                    Crowe, Chizek and Company LLP

Cleveland, Ohio
July 22, 1998


                                      F-1

<PAGE>
REPORT OF INDEPENDENT AUDITORS


THE BOARD OF DIRECTORS
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN

We have audited the accompanying statements of financial condition of First
Federal Savings and Loan Association of Warren as of June 30, 1997 and 1996 and
the related statements of income, retained earnings and cash flows, for the
years then ended. These financial statements are the responsibility of the
Association's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. 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 financial position of First Federal Savings and Loan
Association of Warren as of June 30, 1997 and 1996, and the results of its
operations and cash flows for the years then ended, in conformity with generally
accepted accounting principles.

Warren, Ohio                                   /s/ Packer, Thomas & Co.
September 9, 1997                               Packer, Thomas & Co.

 












<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                       STATEMENTS OF FINANCIAL CONDITION
                            June 30, 1998 and 1997

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
 
                                                                    1998           1997
                                                                -------------  -------------
<S>                                                             <C>            <C>
ASSETS
  Cash and cash equivalents                                     $  6,668,406   $  6,757,030
  Federal funds sold                                               1,565,167        209,892
  Securities available for sale                                  211,184,978    202,676,569
  Securities held to maturity, fair value of
    $28,518,985 in 1998 and $44,798,465 in 1997                   28,294,848     44,874,887
  Loans receivable, net                                          353,012,434    285,211,625
  Premises and equipment, net                                      5,898,813      6,446,380
  Accrued interest receivable                                      1,835,336      1,888,998
  Other assets                                                       938,261        804,191
                                                                ------------   ------------
 
      Total assets                                              $609,398,243   $548,869,572
                                                                ============   ============
 
LIABILITIES
  Deposits                                                      $435,461,723   $412,933,944
  Repurchase agreements                                           60,430,000     16,000,000
  Federal Home Loan Bank advances                                 44,820,060     58,397,984
  Advances by borrowers for taxes and insurance                    1,983,256      1,700,988
  Accrued interest payable                                         1,089,645        704,278
  Federal income taxes payable                                     1,702,008      1,115,234
  Other liabilities                                                4,554,191      4,270,326
                                                                ------------   ------------
     Total liabilities                                           550,040,883    495,122,754
                                                                ------------   ------------
 
 
RETAINED EARNINGS
  Retained earnings, substantially restricted                     57,762,916     53,690,574
  Unrealized gain on available for sale securities, net            1,594,444         56,244
                                                                ------------   ------------
     Total retained earnings                                      59,357,360     53,746,818
                                                                ------------   ------------
 
      Total liabilities and retained earnings                   $609,398,243   $548,869,572
                                                                ============   ============
</TABLE> 

--------------------------------------------------------------------------------
                See accompanying notes to financial statements.

                                                                             F-3
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                             STATEMENTS OF INCOME
                   Years ended June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
 
<TABLE> 
<CAPTION> 
 
                                                      1998          1997           1996
                                                   -----------  ------------   ------------
<S>                                                <C>          <C>            <C> 
INTEREST INCOME
   Loans                                           $25,735,667  $ 21,871,589   $ 20,135,093
   Securities
     Taxable                                         3,098,434     3,542,299      3,145,380
     Tax-exempt                                         66,072       193,879         31,517
   Mortgage-backed and related securities           13,581,433    12,805,242     13,124,197
                                                   -----------  ------------   ------------
     Total interest income                          42,481,606    38,413,009     36,436,187
                                                   -----------  ------------   ------------
 
INTEREST EXPENSE
   Deposits                                         19,859,626    18,495,360     17,881,388
   FHLB advances                                     3,056,698     3,953,237      3,976,414
   Repurchase agreements                             2,595,728       480,356
                                                   -----------  ------------   ------------
     Total interest expense                         25,512,052    22,928,953     21,857,802
                                                   -----------  ------------   ------------
 
NET INTEREST INCOME                                 16,969,554    15,484,056     14,578,385
 
Provision for loan losses                            1,778,591       590,395        238,239
                                                   -----------  ------------   ------------
 
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES                                    15,190,963    14,893,661     14,340,146
                                                   -----------  ------------   ------------
 
NONINTEREST INCOME
   Service charges                                   1,084,911       929,166        803,099
   Security gains (losses), net                        135,138      (934,150)       (26,451)
   Other                                               531,723       449,007        443,426
                                                   -----------  ------------   ------------
     Total noninterest income                        1,751,772       444,023      1,220,074
                                                   -----------  ------------   ------------
 
NONINTEREST EXPENSE
   Salaries and benefits                             5,470,758     4,863,349      4,698,715
   Occupancy and equipment                           1,577,820     1,431,500      1,295,575
   Federal deposit insurance premiums                  258,236     2,970,655        867,188
   Franchise taxes                                     776,228       713,658        648,608
   Other                                             2,289,423     1,919,304      1,638,425
                                                   -----------  ------------   ------------
     Total noninterest expense                      10,372,465    11,898,466      9,148,511
                                                   -----------  ------------   ------------
 
INCOME BEFORE INCOME TAX                             6,570,270     3,439,218      6,411,709
 
Provision for income tax                             2,497,928     1,215,175      2,262,419
                                                   -----------  ------------   ------------
 
NET INCOME                                         $ 4,072,342  $  2,224,043   $  4,149,290
                                                   ===========  ============   ============
</TABLE>

--------------------------------------------------------------------------------
                See accompanying notes to financial statements.

                                                                             F-4
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                        STATEMENTS OF RETAINED EARNINGS
                   Years ended June 30, 1998, 1997 and 1996

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

<TABLE>
<CAPTION>
 
 
                                                  Unrealized
                                                Gains (Losses)
                                                on Securities
                                    Retained    Available for
                                    Earnings      Sale, Net      Total
                                   -----------  -----------    -----------
<S>                                <C>          <C>           <C>
 
Balance at July 1, 1995            $47,317,241  $(1,107,951)   $46,209,290
 
Change in fair value of
  securities available for sale                  (1,535,916)    (1,535,916)
 
Net income                           4,149,290                   4,149,290
                                   -----------  -----------    -----------
 
 
Balance at June 30, 1996            51,466,531   (2,643,867)    48,822,664
 
Change in fair value of
  securities available for sale                   2,700,111      2,700,111
 
Net income                           2,224,043                   2,224,043
                                   -----------  -----------    -----------
 
 
Balance at June 30, 1997            53,690,574       56,244     53,746,818
 
Change in fair value of
  securities available for sale                   1,538,200      1,538,200
 
Net income                           4,072,342                   4,072,342
                                   -----------  -----------    -----------
 
Balance at June 30, 1998           $57,762,916  $ 1,594,444    $59,357,360
                                   ===========  ===========    ===========
</TABLE> 

--------------------------------------------------------------------------------
                See accompanying notes to financial statements.

                                                                             F-5
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                           STATEMENTS OF CASH FLOWS
                   Years ended June 30, 1998, 1997 and 1996

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

<TABLE>
<CAPTION>
 
 
                                                       1998           1997           1996
                                                   -------------  -------------  -------------
<S>                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                       $  4,072,342   $  2,224,043   $  4,149,290
  Adjustments to reconcile net income to net
   cash from operating activities
     Depreciation                                       737,726        570,125        514,596
     Provision for loan losses                        1,778,591        590,395        238,239
     Net amortization                                   282,363        127,892        298,834
     Investment security (gains) losses                (135,138)       934,150         26,451
     Loss on disposal of fixed assets                                  158,878
     FHLB dividend                                     (351,800)      (330,022)      (262,378)
     Change in
       Interest receivable                               53,662        (15,920)        44,704
       Interest payable                                 385,367       (185,616)      (446,752)
       Other assets                                    (134,070)       (23,960)       (78,098)
       Other liabilities                                498,574        572,638        986,473
       Deferred loan fees                                 3,611       (180,949)       179,410
       Deferred taxes                                  (420,339)        15,175        209,680
                                                   ------------   ------------   ------------
          Net cash from operating activities          6,770,889      4,456,829      5,860,449
                                                   ------------   ------------   ------------
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Investment and mortgage-backed securities
   available for sale
     Proceeds from sales                             37,052,332     43,293,998     20,683,939
     Proceeds from maturities, calls
      and principal paydowns                         41,984,709      9,480,126      2,782,904
     Purchases                                      (85,697,887)   (50,050,159)   (74,984,501)
  Investment and mortgage-backed securities
   held to maturity
     Proceeds from maturities, calls
      and principal paydowns                         16,437,655      7,225,191     25,571,016
     Purchases                                                      (4,000,000)
  Net decrease (increase) in Federal Funds sold      (1,355,275)     2,360,909     (1,128,407)
  Purchases of Federal Home Loan Bank Stock                           (330,000)    (1,084,200)
  Sale of Federal Home Loan Bank Stock                  830,000
  Net increase in loans                             (69,583,011)   (30,678,497)   (15,351,087)
  Premises and equipment expenditures, net             (190,159)    (2,063,256)      (460,180)
                                                   ------------   ------------   ------------
     Net cash from investing activities             (60,521,636)   (24,761,688)   (43,970,516)
                                                   ------------   ------------   ------------
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                             F-6
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                     STATEMENTS OF CASH FLOWS (Continued)
                   Years ended June 30, 1998, 1997 and 1996

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

<TABLE>
<CAPTION>
 
 
                                                1998           1997           1996
                                            -------------  -------------  -------------
<S>                                         <C>            <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Net change in deposits                      22,527,779     21,199,868     15,151,770
  Net change in advances by borrowers
      for taxes and insurance                    282,268        (16,448)      (230,556)
  Net change in repurchase agreements         44,430,000     16,000,000
  Proceeds from FHLB borrowings               57,075,000     59,550,000     82,078,100
  Repayment of FHLB borrowings               (70,652,924)   (77,229,912)   (58,435,754)
                                            ------------   ------------   ------------
     Net cash from financing activities       53,662,123     19,503,508     38,563,560
                                            ------------   ------------   ------------
 
Net change in cash and cash equivalents          (88,624)      (801,351)       453,493
 
Cash and cash equivalents at beginning
  of year                                      6,757,030      7,558,381      7,104,888
                                            ------------   ------------   ------------
 
CASH AND CASH EQUIVALENTS AT END OF YEAR    $  6,668,406   $  6,757,030   $  7,558,381
                                            ============   ============   ============
 
Supplemental disclosures of cash flow
  information
  Cash paid during the year for
     Interest                               $ 25,126,685   $ 23,215,732   $ 22,182,972
     Income taxes                              2,745,000      1,200,000      1,895,000
</TABLE>

--------------------------------------------------------------------------------
                See accompanying notes to financial statements.

                                                                             F-7
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization:  First Federal Savings and Loan Association of Warren is a
------------                                                            
federally chartered mutual thrift association operating in Trumbull and Mahoning
Counties, Ohio.  The Association is engaged in the business of banking with
operations conducted through its main office in Warren, Ohio and eleven branch
locations and two loan production offices.  The Association originates and holds
residential, consumer and commercial loans and also offers a variety of deposit
products to customers.  The majority of the Association's income is derived from
one- to four-family residential real estate loans and mortgage-backed
securities.

Use of Estimates in Preparation of Financial Statements:  In preparing financial
-------------------------------------------------------                         
statements, management must make estimates and assumptions.  These estimates and
assumptions affect the amounts reported for assets, liabilities, revenues and
expenses as well as affecting the disclosures provided.  Future results could
differ from current estimates.  Areas involving the use of management's
estimates and assumptions primarily include the allowance for loan losses, the
realization of deferred tax assets, fair value of certain securities and the
determination and carrying value of impaired loans.

Cash Reserves:  At June 30, 1998, the Association was required to have $100,000
-------------                                                                  
on deposit with a correspondent bank.  This deposit does not earn interest.

Investment Securities:  Securities are classified into held-to-maturity and
---------------------                                                      
available-for-sale categories.  Held-to-maturity securities are those that the
Association has the positive intent and ability to hold to maturity, and are
reported at amortized cost.  Available-for-sale securities are those that the
Association may decide to sell if needed for liquidity, asset-liability
management, or other reasons.  Available-for-sale securities are reported at
fair value, with unrealized gains or losses included as a separate component of
equity, net of tax.

Realized gains or losses on sales are determined based on the amortized cost of
the specific security sold.  Amortization of premiums and accretion of discounts
are computed under a system materially consistent with the level yield method
and are recognized as adjustments to interest income.  Prepayment activity on
mortgage-backed securities is affected primarily by changes in interest rates.
Yields on mortgage-backed securities are adjusted as prepayments occur through
changes to premium amortization or discount accretion.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                             F-8
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans:  Interest income on loans is accrued over the term of the loans based
-----                                                                       
upon the principal outstanding.  The accrual of interest on loans is suspended
when a loan  is 90 days or more past due or when, in management's opinion, the
collection of all or a portion of the loan principal has become doubtful.  When
a loan is placed on nonaccrual status, accrued and unpaid interest at risk is
charged against income.  Under Statement of Financial Accounting Standards
("SFAS") No. 114, as amended by SFAS No. 118, the carrying value of impaired
loans is periodically adjusted to reflect cash payments, revised estimates of
future cash flows and increases in the present value of expected cash flows due
to the passage of time.  Cash payments representing interest income are reported
as such and other cash payments are reported as reductions in carrying value.
Increases or decreases in carrying value due to changes in estimates of future
payments or the passage of time are reported as reductions or increases in bad
debt expense.

Loan fees, net of direct loan origination costs, are deferred and recognized
over the life of the loan as a yield adjustment.

Allowance for Loan Losses:  Because some loans may not be repaid in full, an
-------------------------                                                   
allowance for loan losses is maintained.  Increases to the allowance are
recorded by a provision for loan losses charged to expense.  Estimating the risk
of the loss and the amount of loss on any loan is necessarily subjective.
Accordingly, the allowance is maintained by management at a level considered
adequate to cover losses that are currently anticipated based on past loss
experience, general economic conditions, information about specific borrower
situations including their financial position and collateral values, and other
factors and estimates which are subject to change over time.  While management
may periodically allocate portions of the allowance for specific problem-loan
situations, the whole allowance is available for any loan charge-offs that
occur.  A loan is charged-off against the allowance by management when deemed
uncollectible, although collection efforts continue and future recoveries may
occur.

Effective July 1, 1995, the Association adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan."  SFAS No. 114 requires that the carrying
values of impaired loans be determined by calculating the present value of
estimated future cash flows, discounted using the loan's effective interest
yield.  A loan is impaired when it is probable that a creditor will be unable to
collect all amounts due according to the contractual terms of the loan
agreement.  SFAS No. 118 was issued in October 1994 and amends SFAS No. 114 to
allow a creditor to use existing methods to recognize income on impaired loans.
SFAS No. 114 and SFAS No. 118 did not materially affect the Association's
financial condition or results of operations.

Smaller-balance homogeneous loans are evaluated for impairment in total.  Such
loans include residential first mortgage loans secured by one- to four-family
residences, residential construction loans and automobile, home equity and
second mortgages.  Commercial loans and mortgage loans secured by other
properties are evaluated individually for impairment.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                             F-9

<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

When analysis of borrower operating results and financial condition indicates
that underlying cash flows of the borrower's business are not adequate to meet
its debt service requirements, the loan is evaluated for impairment. Often this
is associated with a delay or shortfall in payments of 30 days or more. Loans
are generally moved to nonaccrual status when 90 days or more past due or when
collection of principal or interest is in doubt. These loans are often also
considered impaired. Impaired loans, or portions thereof, are charged off when
deemed uncollectible. The nature of disclosures for impaired loans is considered
generally comparable to prior nonaccrual and renegotiated loans and non-
performing and past-due asset disclosures.

Real Estate Owned:  Real estate owned, other than that which is used in the
-----------------                                                          
normal course of business, is recorded at fair value less estimated costs to
sell.  For real estate acquired through foreclosure, any initial loss is
recorded as a charge to the allowance for loan losses before being transferred
to real estate owned.  Any subsequent reduction in fair value is recognized in a
valuation allowance by charges to income.

Premises and Equipment:  Office properties and equipment are stated at cost less
----------------------                                                          
accumulated depreciation.  Depreciation is computed based on both the straight-
line method and the accelerated method over the estimated useful lives of the
respective properties and equipment.  Maintenance and repairs are expensed and
major improvements are capitalized.

Income Taxes:  The Association records income tax expense based on the amount of
------------                                                                    
tax due on its tax return plus deferred taxes computed based on the expected
future tax consequences of temporary differences between the carrying amounts
and tax bases of assets and liabilities, using enacted tax rates.  The provision
for income taxes is based on the effective tax rate expected to be applicable
for the entire year.

Concentrations of Credit Risk:  The Association grants residential, consumer and
-----------------------------                                                   
commercial loans to customers located primarily in Trumbull and surrounding
counties in Ohio.  Real estate mortgage loans make up approximately 82% of the
Association's loan portfolio and the remaining 18% is made up of consumer and
commercial loans.  The Association, in the normal course of business, makes
commitments to make loans that are not reflected in the financial statements.

Statement of Cash Flows:  For purposes of this statement, cash and cash
-----------------------                                                
equivalents are defined to include the Association's cash on hand and due from
banks.  The Association reports net cash flows for customer loan transactions,
deposit transactions, repurchase agreements transactions and federal funds sold.

Reclassifications:  Certain items in the 1997 and 1996 financial statements have
------------------                                                              
been reclassified to conform with the 1998 presentation.  Such reclassifications
had no effect on the net results of operations.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-10
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 2 - INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair values
of investment securities at June 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
 
                                                            1998
                                                           Gross       Gross      Estimated
                                            Amortized    Unrealized  Unrealized      Fair
                                               Cost        Gains       Losses       Value
                                           ------------  ----------  ----------  ------------
<S>                                        <C>           <C>         <C>         <C>
 
Available for sale
   Investment securities
     U.S. Government agencies              $ 15,733,962  $   63,519    $    567  $ 15,796,914
     Federal Home Loan Bank stock             4,414,500                             4,414,500
     Obligations of states and
      political subdivisions                    826,127      27,226                   853,353
                                           ------------  ----------    --------  ------------
       Total                                 20,974,589      90,745         567    21,064,767
                                           ------------  ----------    --------  ------------
   Mortgage-backed securities and
    collateralized mortgage obligations
     FHLMC                                   99,493,537   1,470,722      66,163   100,898,096
     FNMA                                    49,958,930   1,095,359     536,341    50,517,948
     GNMA                                    37,354,752     375,622      16,455    37,713,919
     Other                                      987,346       2,902                   990,248
                                           ------------  ----------    --------  ------------       
       Total                                187,794,565   2,944,605     618,959   190,120,211
                                           ------------  ----------    --------  ------------
 
                                           $208,769,154  $3,035,350    $619,526  $211,184,978
                                           ============  ==========    ========  ============
 
 
HELD TO MATURITY
   Investment securities
     U.S. Treasury securities              $  6,004,462  $   12,938    $  3,640  $  6,013,760
     U.S. Government agencies                 4,147,358      33,268                 4,180,626
     Obligations of states and
      political subdivisions                    364,203      32,108                   396,311
                                           ------------  ----------    --------  ------------
       Total                                 10,516,023      78,314       3,640    10,590,697
                                           ------------  ----------    --------  ------------
   Mortgage-backed securities and
    collateralized mortgage obligations
     FNMA                                    16,266,909     210,027     110,026    16,366,910
     GNMA                                     1,511,916      49,462                 1,561,378
                                           ------------  ----------    --------  ------------
       Total                                 17,778,825     259,489     110,026    17,928,288
                                           ------------  ----------    --------  ------------
 
                                           $ 28,294,848  $  337,803    $113,666  $ 28,518,985
                                           ============  ==========    ========  ============
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-11
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 2 - INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
 
                                                                1997
                                        -------------------------------------------------------        
                                                           Gross       Gross      Estimated
                                            Amortized    Unrealized  Unrealized      Fair
                                               Cost        Gains       Losses       Value
                                           ------------  ----------  ----------  ------------
<S>                                        <C>           <C>         <C>         <C>
 
Available for sale
   Investment securities
     U.S. Government agencies              $ 34,011,694  $   73,846  $  407,560  $ 33,677,980
     Federal Home Loan Bank stock             4,892,700                             4,892,700
     Obligations of states and
      political subdivisions                    825,316      12,649                   837,965
     Equity securities                        3,216,426                 236,184     2,980,242
                                           ------------  ----------  ----------  ------------
       Total                                 42,946,136      86,495     643,744    42,388,887
                                           ------------  ----------  ----------  ------------
   Mortgage-backed securities and
    collateralized mortgage obligations
     FHLMC                                   60,892,819     553,578     555,331    60,891,066
     FNMA                                    57,604,132   1,055,564     771,678    57,888,018
     GNMA                                    39,493,035     340,681      11,197    39,822,519
     Other                                    1,655,228      30,851                 1,686,079
                                           ------------  ----------  ----------  ------------
       Total                                159,645,214   1,980,674   1,338,206   160,287,682
                                           ------------  ----------  ----------  ------------
 
                                           $202,591,350  $2,067,169  $1,981,950  $202,676,569
                                           ============  ==========  ==========  ============
 
 
HELD TO MATURITY
   Investment securities
     U.S. Treasury securities              $ 14,004,878  $      599  $   54,837  $ 13,950,640
     U.S. Government agencies                 4,238,818       2,081       5,273     4,235,626
     Obligations of states and
      political subdivisions                    405,088      34,249                   439,337
                                           ------------  ----------  ----------  ------------
       Total                                 18,648,784      36,929      60,110    18,625,603
                                           ------------  ----------  ----------  ------------
   Mortgage-backed securities and
    collateralized mortgage obligations
     FNMA                                    24,283,597      73,909     177,438    24,180,068
     GNMA                                     1,942,506      50,288                 1,992,794
                                           ------------  ----------  ----------  ------------
       Total                                 26,226,103     124,197     177,438    26,172,862
                                           ------------  ----------  ----------  ------------
 
                                           $ 44,874,887  $  161,126  $  237,548  $ 44,798,465
                                           ============  ==========  ==========  ============
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-12
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 2 - INVESTMENT SECURITIES (Continued)

The amortized cost and estimated fair value of debt securities at June 30, 1998,
by contractual maturity, are shown below.  Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
 
                                                 Amortized     Estimated
                                                    Cost       Fair Value
                                                ------------  ------------
<S>                                             <C>           <C>
   AVAILABLE FOR SALE
      Due in one year or less                   $  9,552,400  $  9,575,038
      Due after one year through five years        7,007,689     7,075,229
                                                ------------  ------------
                                                  16,560,089    16,650,267
 
      Mortgage-backed securities and
         collateralized mortgage obligations     187,794,565   190,120,211
 

      Federal Home Loan Bank stock                 4,414,500     4,414,500
                                                ------------  ------------

                                                $208,769,154  $211,184,978
                                                ============  ============
 
 
HELD TO MATURITY
      Due in one year or less                   $  6,044,517  $  6,054,319
      Due after one year through five years        4,308,691     4,352,783
      Due after five years through ten years         162,815       183,595
                                                ------------  ------------
                                                  10,516,023    10,590,697
      Mortgage-backed securities and
         collateralized mortgage obligations      17,778,825    17,928,288
                                                ------------  ------------
 
                                                $ 28,294,848  $ 28,518,985
                                                ============  ============
 
</TABLE>

Proceeds from the sale of debt securities for the years ended June 30, 1998 and
1997 were $34,009,566 and $43,293,998.  Gross gains of $472,837  and $ 76,317
and gross losses of $164,038 and $1,010,467 were realized on sales of securities
in 1998 and 1997.  Proceeds from the sale of equity securities for the year
ended June 30, 1998 were $3,042,766, resulting in gross loss of $173,661.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-13
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 2 - INVESTMENT SECURITIES (Continued)

Investment and mortgage-backed securities with a carrying value of $103,493,000
and $27,517,152 as of June 30, 1998 and 1997 were pledged to secure public
deposits, repurchase agreements and for other purposes as required or permitted
by law.


NOTE 3 - LOANS

Loans as presented on the balance sheet are comprised of the following
classifications at June 30:
<TABLE>
<CAPTION>
                                               1998          1997
                                           ------------  ------------
<S>                                        <C>           <C>
Real estate mortgage loans
     One- to four- family                  $267,949,898  $215,548,836
     Multifamily                              4,481,617     2,292,969
     Commercial                               8,626,770     6,787,635
     Construction                             6,301,000     5,376,444
     Home equity                              9,189,216     9,822,022
                                           ------------  ------------
                                            296,548,501   239,827,906
                                           ------------  ------------
 
Consumer loans
     Automobile                              52,846,731    43,172,395
     Other                                   11,242,663     6,521,390
                                           ------------  ------------
                                             64,089,394    49,693,785
                                           ------------  ------------
 
Commercial loans                              2,586,649     2,067,758
 
   Less:
     Loans in process                         5,865,902     3,339,387
     Net deferred loan origination fees       1,319,278     1,315,667
     Allowance for loan losses                3,026,930     1,722,770
                                           ------------  ------------
                                             10,212,110     6,377,824
                                           ------------  ------------
 
                                           $353,012,434  $285,211,625
                                           ============  ============
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-14
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 3 - LOANS (Continued)

A summary of the activity in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
 
                                           1998         1997         1996
                                        -----------  -----------  -----------
<S>                                     <C>          <C>          <C>
 
      Balance at beginning of period    $1,722,770   $1,258,829   $1,186,076
      Provision for loan losses          1,778,591      590,395      238,239
      Charge-offs                         (515,000)    (138,000)    (236,000)
      Recoveries                            40,569       11,546       70,514
                                        ----------   ----------   ----------
 
      Balance at end of period          $3,026,930   $1,722,770   $1,258,829
                                        ==========   ==========   ==========
</TABLE>

Nonaccrual loans totaled $2,143,000, $1,830,000 at June 30, 1998 and 1997.
Interest not recognized on nonaccrual loans totaled approximately $94,400,
$172,000 and $109,000 for the years then ended June 30, 1998, 1997 and 1996.
There were no impaired loans at June 30, 1998 and 1997 or during the fiscal
years ended June 30, 1998, 1997 and 1996.


NOTE 4 - RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Association has granted loans to
executive officers, directors, and their related business interests.  A summary
of related party loan activity is as follows for the year ended June 30, 1998:

<TABLE>
<CAPTION>
 
 
<S>                                     <C>
      Balance at beginning of period    $695,688
      New loans                          343,145
      Repayments                         (59,995)
                                        --------
 
      Balance at end of period          $978,838
                                        ========
 
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-15
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment consists of the following:
<TABLE>
<CAPTION>
                                        1998          1997
                                    ------------  ------------
<S>                                 <C>           <C>
      Land and improvements         $ 1,076,403   $ 1,076,403
      Buildings and improvements      4,522,645     4,499,798
      Leasehold improvements            959,540       948,618
      Furniture and equipment         6,466,648     6,257,427
      Construction in process           137,376       190,207
                                    -----------   -----------
          Total cost                 13,162,612    12,972,453
      Accumulated depreciation       (7,263,799)   (6,526,073)
                                    -----------   -----------
 
                                    $ 5,898,813   $ 6,446,380
                                    ===========   ===========
</TABLE>

At June 30, 1998, the Association is obligated for rental commitments under non-
cancelable operating leases on real estate and equipment as follows:

<TABLE>
<CAPTION>
 
<S>                     <C>
          1999          $  344,576
          2000             262,076
          2001             214,753
          2002             210,451
          2003             186,451
          Thereafter     1,274,243
                        ----------
                        $2,492,550
                        ==========
</TABLE>

NOTE 6 - ACCRUED INTEREST RECEIVABLE

Accrued interest receivable at June 30, is summarized as follows:

<TABLE>
<CAPTION>
                                      1998        1997
                                   ----------  ----------
<S>                                <C>         <C>
      Investment securities        $  461,348  $  647,200
      Mortgage backed
         and related securities     1,061,572     956,187
      Loans receivable                312,416     285,611
                                   ----------  ----------
                                   $1,835,336  $1,888,998
                                   ==========  ==========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-16
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 7 - DEPOSITS

Deposits consist of the following:

<TABLE>
<CAPTION>
 
                                           1998            1997
                                       ------------     -----------
<S>                                    <C>              <C>
 
      Noninterest-bearing demand       $  5,216,944    $  4,066,290
      Savings                            67,401,498      71,191,247
      NOW                                34,140,895      32,699,421
      Money Market                       68,733,365      57,801,995
      Certificates of deposit           259,969,021     247,174,991
                                       ------------    ------------
 
                                       $435,461,723    $412,933,944
                                       ============    ============
</TABLE>

The aggregate amount of certificates of deposit with a minimum denomination of
$100,000 is $53,224,874 and $42,399,697 at June 30, 1998 and 1997.

At June 30, 1998, scheduled maturities of certificates of deposit are as
follows:

<TABLE>
<CAPTION>
 
<S>                         <C>
              1999          $167,818,397
              2000            51,160,680
              2001            17,703,267
              2002             6,715,124
              2003             1,633,548
              Thereafter      14,938,005
                            ------------
 
                            $259,969,021
                            ============
 
</TABLE>

NOTE 8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase are secured by mortgage-backed
securities with a carrying value and fair value of approximately $62,608,000 at
June 30, 1998 and $16,836,000 at June 30, 1997.

Securities sold under agreements to repurchase are financing arrangements that
mature within three years. Information concerning securities sold under
agreements to repurchase is summarized as follows:

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-17
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Continued)

<TABLE>
<CAPTION>
 
                                                   1998          1997
                                               ------------  ------------
<S>                                            <C>           <C>
 
  Average daily balance during the year        $45,044,000   $ 8,470,000
  Average interest rate during the year               5.76%         5.67%
  Maximum month-end balance during the year    $60,430,000   $16,000,000
</TABLE>

NOTE 9 - ADVANCES FROM FEDERAL HOME LOAN BANK

The association had the following outstanding Federal Home Loan Bank ("FHLB")
advances at June 30, 1998 and 1997:

<TABLE>
<CAPTION>
 
                                           1998
                            ----------------------------------
                                          Rate at
                              Amount     June 30,    Maturity
                            -----------  ---------  ----------
<S>                         <C>          <C>        <C>
LIBOR indexed advance       $20,000,000      5.54%  06/30/2000
LIBOR indexed advance         6,000,000      5.59   12/01/2000
Mortgage matched advance      1,668,719      5.20   05/01/2003
Mortgage matched advance      1,147,881      5.30   07/01/2003
Mortgage matched advance      1,178,121      5.20   09/01/2003
Mortgage matched advance      3,258,081      6.30   02/01/2007
Mortgage matched advance      4,013,449      6.05   12/01/2010
Mortgage matched advance      7,553,809      6.05   12/01/2010
                            -----------
 
                            $44,820,060
                            ===========
 
                                           1997
                            ----------------------------------
Cash management advance     $   675,000      5.75%   9/23/1997
Cash management advance         175,000      5.75    9/25/1997
Cash management advance         650,000      5.75    9/26/1997
LIBOR indexed advance        20,000,000      5.54    6/30/2000
LIBOR indexed advance         6,000,000      5.59    12/1/2000
Mortgage matched advance      1,959,068      5.20     5/1/2003
Mortgage matched advance      1,339,586      5.30     7/1/2003
Mortgage matched advance      1,368,367      5.20     9/1/2003
Mortgage matched advance      3,964,467      6.30     2/1/2007
Mortgage matched advance      4,444,364      6.05    12/1/2010
Mortgage matched advance      8,364,844      6.05    12/1/2010
Mortgage matched advance      9,457,288      6.20    12/1/2010
                            -----------
 
                            $58,397,984
                            ===========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-18
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 9 - ADVANCES FROM FEDERAL HOME LOAN BANK (Continued)

At June 30, 1998, scheduled principal payments on FHLB advances are as follows:

<TABLE>
<CAPTION>
        Year ended June 30,
        -------------------
<S>                         <C>
 
              1999                  $ 2,185,521
              2000                   22,188,640
              2001                    8,197,754
              2002                    2,212,920
              2003                    2,202,090
              Thereafter              7,833,135
                                    -----------
 
                                    $44,820,060
                                    ===========
</TABLE>

All advances are collateralized by the Association's FHLB stock and residential
mortgage loans totaling $67,230,000 and $87,597,000 at June 30, 1998 and 1997.
Based on the Association investment in FHLB stock, the maximum dollar amount of
FHLB advance borrowings available at June 30, 1998 was $88,290,000.

NOTE 10 - INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                       1998         1997        1996
                                    -----------  ----------  ----------
<S>                                 <C>          <C>         <C>
 
    Current provision               $2,918,267   $1,200,000  $2,052,739
    Deferred provision (benefit)      (420,339)      15,175     209,680
                                    ----------   ----------  ----------
 
                                    $2,497,928   $1,215,175  $2,262,419
                                    ==========   ==========  ==========
</TABLE>

The differences between the financial statement provision and amounts computed
by applying the statutory federal income tax rate of 34% to income before taxes
are as follows:

<TABLE>
<CAPTION>
                                       1998        1997        1996
                                    ----------  ----------  ----------
<S>                                 <C>         <C>         <C>
    Income tax computed at the
     statutory federal rate         $2,301,892  $1,169,334  $2,179,981
 
    Add (subtract) tax effect of
      miscellaneous items              196,036      45,841      82,438
                                    ----------  ----------  ----------
 
                                    $2,497,928  $1,215,175  $2,262,419
                                    ==========  ==========  ==========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-19
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 10 - INCOME TAXES (Continued)

The tax effects of principal temporary differences and the resulting deferred
tax assets and liabilities that comprise the net deferred tax balance are as
follows at June 30:

<TABLE>
<CAPTION>
 
                                                             1998          1997
                                                         -------------  -----------
<S>                                                      <C>            <C>
  Items giving rise to deferred tax assets:
     Deferred loan fees and costs                        $    525,309   $  472,088
     Nonaccrual loan interest                                  32,097       58,441
     Write down of marketable equity security                       -       51,680
     Accrued retirement                                       137,037      160,542
     Deferred compensation                                     68,104       26,319
     Other                                                     27,848       24,967
 
  Items giving rise to deferred tax liabilities:
     FHLB stock dividend                                     (605,653)    (596,775)
     Franchise taxes                                         (139,174)    (124,272)
     Depreciation                                            (467,544)    (467,544)
     Bad debt                                                 (26,298)    (469,712)
     Unrealized gain on securities available for sale        (821,379)     (28,974)
     Other                                                    (26,214)     (30,561)
                                                         ------------   ----------
        Net deferred liability                            ($1,295,867)   ($923,801)
                                                         ============   ==========
</TABLE>

The Association has sufficient taxes paid in prior years and available for
recovery to warrant recording the full deferred tax asset without a valuation
allowance.

Retained earnings at June 30, 1998, include approximately $11,600,000 for which
no provision for federal income taxes has been made.  This amount represents the
tax bad debt reserve at June 30, 1988, which is the end of the Association's
base year for purposes of calculating the bad debt deduction for tax purposes.
If this portion of retained earnings is used in the future for any purpose other
than to absorb bad debts, the amount used will be added to future taxable
income.  The unrecorded deferred tax liability on the above amount at June 30,
1998 was approximately $3,900,000.

Tax expense (benefit)  attributable to securities gains (losses) approximated
$46,000, ($318,000) and ($9,000) for the years ended June 30, 1998, 1997 and
1996.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-20
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 11 - EMPLOYEE BENEFIT PLANS

The Association sponsors a defined benefit pension plan that covers
substantially all employees.  The plan calls for benefits to be paid to eligible
employees at retirement based primarily upon years of service with the
Association and compensation rates near retirement.  Contributions to the plan
reflect benefits attributed to employees' services to date, as well as services
expected to be earned in the future.  Plan assets consist primarily of
certificates of deposits with the Association and insurance contracts.

The following sets forth the funded status of the plan as of March 31, 1998 and
1997 and the amounts recognized in the accompanying Statements of Financial
Condition at June 30, 1998 and 1997.

<TABLE>
<CAPTION>
 
                                                                                             1998          1997
                                                                                         ------------  ------------
<S>                                                                                      <C>           <C>
  Present values using actuarial assumptions:
     Accumulated benefit obligation, based on current
     compensation:
       Vested                                                                            $ 2,044,689   $ 2,369,415
       Non vested                                                                             80,459        49,936
                                                                                         -----------   -----------
          Total                                                                          $ 2,125,148   $ 2,419,351
                                                                                         ===========   ===========
 
 
  Projected benefit obligation, using compensation
       increase assumptions                                                              $ 3,943,041   $ 3,744,281
  Plan assets at fair value                                                                1,415,664     2,032,070
                                                                                         -----------   -----------
  Projected benefit obligation in excess of plan assets                                   (2,527,377)   (1,712,211)
  Unrecognized obligation from accounting transition                                         158,537       105,120
  Unrecognized net gain in assumptions or plan assets                                      1,619,661       904,860
                                                                                         -----------   -----------
     Recorded pension liability                                                          $   749,179   $   702,231
                                                                                         ===========   ===========
</TABLE> 
 
Pension expense and related year-end assumptions consist of the following:

<TABLE> 
<CAPTION> 
 
                                                                                  1998          1997          1996
                                                                              --------   -----------   -----------
<S>                                                                           <C>        <C>           <C> 
  Service cost--benefits earned                                               $225,414   $   230,080   $   186,752
  Interest cost on benefit obligation                                          224,829       232,512       202,334
  Actual return on plan assets                                                 (34,891)     (133,399)     (119,357)
  Net amortization and deferral                                                (41,800)       21,779         2,042
                                                                              --------   -----------   -----------
     Pension expense                                                          $373,552   $   350,972   $   271,771
                                                                              ========   ===========   ===========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-21
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 11 - EMPLOYEE BENEFIT PLANS (Continued)

<TABLE>
<CAPTION>
 
<S>                                           <C>    <C>    <C>
  Weighted average discount rate              6.93%  6.93%  6.60%
  Rate of increase in future compensation     5.00%  5.00%  5.00%
  Expected long-term return on plan assets    7.00%  7.00%  7.00%
</TABLE>

The Association also sponsors a salary reduction profit sharing plan under
section 401(k) of the Internal Revenue Code.  The plan covers substantially all
full-time employees.  Contributions to the plan are based on the salary
reduction of the participants and a matching contribution at the discretion of
the Association.  The expense related to this plan was $54,000, $58,000 and
$48,000 for the years ended June 30, 1998, 1997 and 1996.


NOTE 12 - COMMITMENTS AND FINANCIAL INSTRUMENTS WITH
 OFF-BALANCE-SHEET RISK

The Association is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to make loans.  The
Association's exposure to credit loss in case of nonperformance by the other
party to the financial instrument for commitments to make loans is represented
by the contractual amount of those instruments.  The Association follows the
same credit policy to make such commitments as is followed for those loans
recorded in the financial statements.

As of June 30, 1998, variable rate commitments to make loans or fund outstanding
lines of credit amounted to approximately $1.9 million and fixed-rate
commitments amounted to $22.0 million.  The interest rates on variable-rate
commitments ranged from 6.625% to 7.375% and interest rates on fixed-rate
commitments ranged from 6.625% to 8.5% at June 30, 1998.  As of June 30, 1997,
commitments to extend credit totaled approximately $13.9 million.  Since loan
commitments may expire without being used, the amounts do not necessarily
represent future cash commitments.

NOTE 13 - SAVINGS ASSOCIATION INSURANCE FUND RECAPITALIZATION

Included in federal deposit insurance premium expense in the Statement of Income
for the year ended June 30, 1997 is $2,461,000 for a special assessment
resulting from legislation passed and enacted into law on September 30, 1996 to
recapitalize the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation.  Thrifts such as the Association paid a one-time
assessment in November, 1996 of $0.657 for each 100 in deposits as of March 31,
1995.  Because of the recapitalization, the Association began paying lower
deposit insurance premiums in January, 1997.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-22
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
                                        
NOTE 14 - REGULATORY CAPITAL

The Association is subject to regulatory capital requirements administered by
federal banking agencies.  Capital adequacy guidelines and prompt corrective
action regulations involve quantitative measures of assets, liabilities, and
certain off-balance-sheet items calculated under regulatory accounting
practices.  Capital amounts and classifications are also subject to qualitative
judgments by regulators about components, risk weightings, and other factors,
and the regulators can lower classifications in certain cases.  Failure to meet
various capital requirements can initiate regulatory action that could have a
direct material effect on the financial statements.

The prompt corrective action regulations provide five classifications, including
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition.  If adequately capitalized,
regulatory approval is required to accept brokered deposits.  If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required.  The minimum
requirements are:

<TABLE>
<CAPTION>
 
                             Capital to risk-
                             weighted assets     
                            -----------------    Tier 1 capital
                             Total    Tier 1   to average assets
                            -------  --------  ------------------
<S>                         <C>      <C>       <C>
 
  Well capitalized              10%        6%         5%
  Adequately capitalized         8%        4%         4%
  Undercapitalized               6%        3%         3%
 
</TABLE>

At June 30, 1998, management believes the Association complies with all
regulatory capital requirements.  Based on the computed regulatory capital
ratios, the Association is considered well capitalized under the Federal Deposit
Insurance Act.  No conditions or events have occurred after June 30, 1998 that
management believes have changed the Associations category.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-23
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
                                        
NOTE 14 - REGULATORY CAPITAL (Continued)

At year end, actual capital levels (in millions) and minimum required levels
were:

<TABLE>
<CAPTION>
 
                                                                                      Minimum Required
                                                                                         To Be Well
                                                                  Minimum Required    Capitalized Under
                                                                    For Capital       Prompt Corrective
                                                    Actual       Adequacy Purposes    Action Regulations
                                               ----------------  ------------------  --------------------
                                               Amount    Ratio    Amount     Ratio     Amount      Ratio
                                               -------  -------  ---------  -------  -----------  -------
<S>                                            <C>      <C>      <C>        <C>      <C>          <C>
1998
----

Total capital (to risk weighted assets)        $60,418    21.8%    $22,134     8.0%     $27,667     10.0%
 
Tier 1 capital (to risk weighted assets)       $57,763    20.9%    $11,067     4.0%     $16,600      6.0%
 
Tier 1 capital (to adjusted total assets)      $57,763     9.5%    $24,279     4.0%     $30,349      5.0%
 
Tangible capital (to adjusted total assets)    $57,763     9.5%    $ 9,105     1.5%       N/A
 
 
1997
----
 
Total capital (to risk weighted assets)        $54,967    23.8%    $18,434     8.0%     $23,043     10.0%
 
Tier 1 capital (to risk weighted assets)       $53,659    23.3%    $ 9,217     4.0%     $13,826      6.0%
 
Tier 1 capital (to adjusted total assets)      $53,659     9.8%    $21,905     4.0%     $27,381      5.0%
 
Tangible capital (to adjusted total assets)    $53,659     9.8%    $ 8,214     1.5%        N/A
</TABLE>

NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The following table shows the estimated fair value and the related carrying
value of the Associations financial instruments at June 30, 1998 and 1997:

<TABLE>
<CAPTION>
 
                                         1998                        1997
                               --------------------------  --------------------------
                                 Carrying     Estimated      Carrying     Estimated
                                  Value       Fair Value      Value       Fair Value
                               ------------  ------------  ------------  ------------
<S>                            <C>           <C>           <C>           <C>
ASSETS
Cash and cash equivalents      $  6,668,000  $  6,668,000  $  6,757,000  $  6,757,000
Federal Funds sold                1,565,000     1,565,000       210,000       210,000
Securities available
  for sale                      211,185,000   211,185,000   202,677,000   202,677,000
Securities held to
  maturity                       28,295,000    28,519,000    44,875,000    44,798,000
Loans receivable, net           353,012,000   368,109,000   285,212,000   283,734,000
Accrued interest receivable       1,835,000     1,835,000     1,889,000     1,889,000
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-24
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
                                        
NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

<TABLE>
<CAPTION>
 
LIABILITIES
<S>                            <C>            <C>            <C>            <C>
Demand and savings deposits    (175,493,000)  (175,493,000)  (165,725,000)  (165,725,000)
Time deposits                  (259,969,000)  (260,580,000)  (247,175,000)  (246,722,000)
Repurchase agreements           (60,430,000)   (60,888,000)   (16,000,000)   (16,000,000)
FHLB advances                   (44,820,000)   (44,774,000)   (58,398,000)   (58,288,000)
Advances by borrowers
  for taxes and insurance        (1,983,000)    (1,983,000)    (1,701,000)    (1,701,000)
Accrued interest payable         (1,090,000)    (1,090,000)      (704,000)      (704,000)
</TABLE>

For purposes of the above disclosures of estimated fair value, the following
assumptions were used.  The estimated fair value for cash and cash equivalents
and federal funds sold is considered to approximate cost.  The estimated fair
value of investment and mortgage-backed securities is based on quoted market
values for the individual securities or for equivalent securities.  Carrying
value is considered to approximate fair value for loans that contractually
reprice at intervals of six months or less, for short-term borrowings, for
deposit liabilities subject to immediate withdrawal and accrued interest.  The
fair values of fixed rate loans, loans that reprice less frequently than each
six months, time deposits and Federal Home Loan Bank borrowings have been
approximated by a discount rate value technique utilizing estimated market
interest rates as of June 30, 1998 and 1997.  The fair values of unrecorded
commitments at June 30, 1998 and 1997 are not material.

While these estimates of fair value are based on management's judgment of the
most appropriate factors, there is no assurance that were the Association to
have disposed of such items at June 30, 1998 and 1997, the estimated fair values
would necessarily have been achieved at these dates, since market values may
differ depending on various circumstances.  The estimated fair values at June
30, 1998 and 1997 should not necessarily be considered to apply at subsequent
dates.

Other assets and liabilities of the Association may have value but are not
included in the above disclosures, such as property and equipment.  In addition,
nonfinancial instruments typically not recognized in these financial statements
nevertheless may have value, but are not included in the above disclosures.
These include, among other items, the estimated earnings power of core deposit
accounts, the earnings potential of loan servicing rights, the value of a
trained work force, customer goodwill, and similar items.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-25
<PAGE>
 
             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
                                        
NOTE 16 - ADOPTION OF PLAN OF CONVERSION

On June 15, 1998, the Board of Directors of the Association, subject to
regulatory approval and approval by the members of the Association, unanimously
adopted a Plan of Conversion from a federally chartered mutual savings and loan
association to a federally chartered stock savings and loan association with the
concurrent formation of a holding company.  The Holding Company will acquire 100
percent of the Association's common stock.  The conversion is expected to be
accomplished through amendment of the Association's charter and the sale of the
Holding Company's common stock in an amount equal to the pro forma market value
of the Association after giving effect to the conversion.  A subscription
offering of the shares of the Holding Company's common stock will be offered to
the Association's depositors, then to an employee stock benefit plan and then to
other members.  Any shares of the Holding Company's common stock not sold in the
subscription offering may be offered for sale to the general public.

At the time of the conversion, the Association will establish a liquidation
account in the amount equal to its regulatory capital as of the latest
practicable date before the conversion at which such regulatory capital can be
determined.  The liquidation account will be maintained for the benefit of
eligible depositors who continue to maintain their accounts at the Association
after the conversion.  The liquidation account will be reduced annually to the
extent that eligible depositors have reduced their qualifying deposits.
Subsequent increases will not restore an eligible account holder's interest in
the liquidation account.  In the event of a complete liquidation, each eligible
depositor will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted qualifying balances
for accounts then held.  The Association may not pay dividends that would reduce
stockholders' equity below the required liquidation account balance.

Under Office of Thrift Supervision (OTS) regulations, limitations have been
imposed on all "capital distributions" by savings institutions, including cash
dividends.  The regulation establishes a three-tiered system of restrictions,
with the greatest flexibility afforded to thrifts that are both well capitalized
and given favorable qualitative examination ratings by the OTS.

Conversion costs will be deferred and deducted from the proceeds of the shares
sold in the conversion.  If the conversion is not completed, all costs will be
charged to expense.  At June 30, 1998, no costs have been deferred or expensed.

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

                                                                            F-26
<PAGE>
 
================================================================================
      No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offering made hereby, and, if given or made,
such other information or representation must not be relied upon as having been
authorized by First Place Financial Corp., First Federal Savings and Loan
Association of Warren or Charles Webb & Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby to any person in any jurisdiction in which such offer
or solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. Neither the delivery of
this Prospectus nor any sale hereunder shall under any circumstances create any
implication that there has been no change in the affairs of First Place
Financial Corp. or First Federal Savings and Loan Association of Warren since
any of the dates as of which information is furnished herein or since the date
hereof.
 
                           -------------------------
 
                               TABLE OF CONTENTS
                                                                        Page
                                                                        ----
Summary..................................................................... 
Selected Consolidated Financial and Other Data of the Association...........
Risk Factors................................................................ 
First Place Financial Corp.................................................. 
First Federal Savings and Loan Association of Warren........................
 
Regulatory Capital Compliance...............................................
Use of Proceeds............................................................. 
Dividend Policy............................................................. 
Market for the Common Stock Capitalization..................................
Pro Forma Data.............................................................. 
Comparison of Valuation and Pro Forma Information with No Foundation........
Consolidated Statements of Income...........................................
Management's Discussion and Analysis of Financial Condition and 
 Results of Operations......................................................
Business of the Company..................................................... 
Business of the Association ................................................
Federal and State Taxation..................................................
Regulation.................................................................. 
Management of the Company................................................... 
Management of the Association...............................................  
The Conversion..............................................................  
Restrictions on Acquisition of the Company and the Association..............
Description of Capital Stock of the Company.................................  
Description of Capital Stock of the Association.............................  
Transfer Agent and Registrar................................................  
Change in Accountants....................................................... 
Experts..................................................................... 
Legal and Tax Opinions...................................................... 
Additional Information......................................................  
Index to Financial Statements...............................................  

                           -------------------------
 
     Until ____, 1998 or 25 days after commencement of the Syndicated Community
Offering, if any, whichever is later, all dealers effecting transactions in the
registered securities, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
 
================================================================================


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



                               11,960,000 Shares
                                                                        
                                                                        
                                                                        
                                    [LOGO]
                                                                        
                                                                        
                                                                        
                                                                        
                          FIRST PLACE FINANCIAL CORP.
                                                                        
                         (Proposed Holding Company for
             First Federal Savings and Loan Association of Warren)
                                                                        
                                                                  
      
                                                                        
                                 COMMON STOCK
                          (par value $0.01 per share)
                                                                        
                                                                        
                                                                        
                                  ----------
                                                                        
                                  PROSPECTUS

                                  ----------
                                                                        
                                                                        
                                                                        
                                            

                            
                            Charles Webb & Company
                  A Division of Keefe, Bruyette & Woods, Inc.
                                                                        
                                                                        
                                                                        
                                                                        
                              _________ __, 1998



================================================================================
<PAGE>
 
                                    PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.(1)

<TABLE>
<CAPTION>
 
 
<S>                                                <C>
OTS filing fee...................................  $   14,400
SEC filing fee(1)................................      43,696
NASD filing fee(1)...............................      14,254
Nasdaq listing fee(1)............................      90,505
Printing, postage and mailing....................     250,000
Legal fees and expenses..........................     450,000
Accounting fees and expenses.....................     100,000
Appraiser's fees and expenses (including
  business plan).................................      33,000
Marketing fees and selling commissions (1).......   1,200,000
Underwriter's expenses (including underwriter's
   counsel fees)(1)..............................      15,000
Proxy solicitation and record management
  fees and  expenses.............................      30,000
Transfer agent fees and expenses.................      10,000
Certificate printing.............................      10,000
Telephone, temporary help and other
  equipment......................................      10,000
Miscellaneous....................................       4,145
                                                   ----------
 
TOTAL............................................  $2,275,000
                                                   ==========
</TABLE>
____________________
(1)  Actual expenses based upon the registration of 14,812,000 shares at $10.00
     per share.  All other expenses are estimated.


Item 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

In accordance with the General Corporation Law of the State of Delaware (being
Chapter 1 of Title 8 of the Delaware Code), Articles 10 and 11 of the
Registrant's Certificate of Incorporation provide as follows:

TENTH:

A.  Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent, or in any other capacity while serving as a Director,
Officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith; provided, however, that, except as
provided in Section C hereof with respect to proceedings to enforce rights to
<PAGE>
 
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding against the Corporation (or part thereof) initiated
by such indemnitee only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation.

B.  The right to indemnification conferred in Section A of this Article TENTH
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a Director or Officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, services to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise.  The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article TENTH shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.

C.  If a claim under Section A or B of this Article TENTH is not paid in full by
the Corporation within sixty days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim.  If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expenses of prosecuting or defending such suit.  In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) in any suit by the Corporation to recover an
advancement of expenses the Corporation shall be entitled to recover such
expenses upon a final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit.  In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses under this Article TENTH or otherwise shall be on the
Corporation.

D.  The rights to indemnification and to the advancement of expenses conferred
in this Article TENTH shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, the Corporation's Certificate
of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested
Directors or otherwise.

E.  The Corporation may maintain insurance, at its expense, to protect itself
and any Director, Officer, employee or agent of the Corporation or subsidiary or
Affiliate or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.

F.  The Corporation may, to the extent authorized from time to time by the Board
of Directors, grant rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
<PAGE>
 
ELEVENTH:
---------

A Director of this Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability:  (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the Director derived an improper personal
benefit.  If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
Directors, then the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of the
Corporation shall not adversely affect any right or protection of a Director of
the Corporation existing at the time of such repeal or modification.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

Not applicable.
<PAGE>
 
Item 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:

(a) List of Exhibits (Filed herewith unless otherwise noted)

1.1    Engagement Letter between First Federal Savings and Loan Association of
       Warren and Charles Webb & Company
1.2    Draft Form of Agency Agreement*
2.1    Plan of Conversion (including the Federal Stock Charter and Bylaws of
       First Federal Savings and Loan Association of Warren)
3.1    Certificate of Incorporation of First Place Financial Corp.
3.2    Bylaws of First Place Financial Corp.
3.3    Federal Stock Charter and Bylaws of First Federal Savings and Loan
       Association of Warren (See Exhibit 2.1 hereto)
4.0    Draft Stock Certificate of First Place Financial Corp.
5.0    Draft Opinion of Patton Boggs LLP re: legality
5.1    Draft Opinion of Potter Anderson & Corroon LLP re: legality
8.0    Draft Opinion of Patton Boggs LLP re:  Federal Tax Matters
8.1    Opinion of Crowe, Chizek and Company LLP re: State Tax Matters
10.1   First Federal Savings and Loan Association of Warren Employee Stock
       Ownership Plan
10.2   Draft ESOP Loan Commitment Letter and ESOP Loan Documents*
10.3   Form of Employment Agreement between First Federal Savings and Loan
       Association of Warren and Steven R. Lewis
10.4   Form of Employment Agreement between First Place Financial Corp. and
       Steven R. Lewis
10.5   Form of Change in Control Agreements between First Federal Savings and
       Loan Association of Warren and certain executive officers
10.6   Form of Change in Control Agreements between First Place Financial Corp.
       and certain executive officers
10.7   Form of First Federal Savings and Loan Association of Warren Employee
       Severance Compensation Plan
16.1   Letter of Packer, Thomas & Co.  re: change in accountants
23.1   Consent of Crowe, Chizek and Company LLP
23.2   Consent of Packer, Thomas & Co.
23.3   Consent of Patton Boggs LLP
23.4   Consent of Potter Anderson & Corroon LLP
23.5   Consent and Subscription Rights Opinion of Keller & Company, Inc.
24.1   Powers of Attorney
27.0   Financial Data Schedule
99.1   Appraisal Report of Keller & Company, Inc. (P)
99.2   Draft Gift Instrument to First Federal of Warren Community Foundation
--------------------------------------------------------------------------------
*To be filed by amendment
(P) Filed pursuant to Rule 202 of Regulation S-T.
<PAGE>
 
(b)  Financial Statement Schedules

All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X.

Item 17.  UNDERTAKINGS.

     The undersigned Registrant hereby undertakes:

     (1)  To file, during any period in which offers or sales are being made, a
          post-effective amendment to this Registration Statement:

          (i) To include any Prospectus required by Section 10(a)(3) of the
          Securities Act of 1933;

          (ii) To reflect in the Prospectus any facts or events arising after
          the effective date of the Registration Statement (or the most recent
          post-effective amendment thereof) which, individually or in the
          aggregate, represent a fundamental change in the information set forth
          in the Registration Statement.  Notwithstanding the foregoing, any
          increase or decrease in volume of securities offered (if the total
          dollar value of securities offered would not exceed that which was
          registered) and any deviation from the low or high end of the
          estimated maximum offering range may be reflected in the form of
          prospectus filed with the Commission pursuant to Rule 424(b) if, in
          the aggregate, the changes in volume and price represent no more than
          a 20 percent change in the maximum aggregate offering price set forth
          in the "Calculation of Registration Fee" table in the effective
          registration statement;

          (iii)  To include any material information with respect to the plan of
          distribution not previously disclosed in the Registration Statement or
          any material change to such information in the Registration Statement;

     (2)  That, for the purpose of determining any liability under the
          Securities Act of 1933, each such post-effective amendment shall be
          deemed to be a new Registration Statement relating to the securities
          offered therein, and the offering of such securities at that time
          shall be deemed to be the initial bona fide offering thereof.

     (3)  To remove from registration by means of a post-effective amendment any
          of the securities being registered which remain unsold at the
          termination of the Offering.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.  In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
 
CONFORMED
                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Warren, State of Ohio, on
September 9, 1998.

FIRST PLACE FINANCIAL CORP.

By:    /s/ Steven R. Lewis
      --------------------------------------
     Steven R. Lewis
     President and Chief Executive Officer
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

   Name                                             Date
   ----                                             ----
                                            
 /s/ Paul A. Watson                                 September 9, 1998
--------------------------------------------           
Paul A. Watson                              
Chairman of the Board                       
                                            
                                            
 /s/ Steven R. Lewis                                September 9, 1998
--------------------------------------------           
Steven R. Lewis                             
President, Chief Executive Officer and      
Director (principal executive officer)      
                                            
                                            
 /s/ Richard K. Smith                               September 9, 1998
--------------------------------------------           
Richard K. Smith                            
Vice President-Treasurer                    
(principal accounting and financial officer)
                                            
                                            
 /s/ Robert P. Grace                                September 9, 1998
--------------------------------------------           
Robert P. Grace                             
Director                                    
                                            
                                            
 /s/ George J. Gentithes                            September 9, 1998
--------------------------------------------           
George J. Gentithes                         
Director                                    
                                            
                                            
 /s/ Thomas M. Humphries                            September 9, 1998
--------------------------------------------            
Thomas M. Humphries                         
Director                                    
                                            
                                            
 /s/ Robert S. McGeough                             September 9, 1998
--------------------------------------------           
Robert S. McGeough                          
Director                                    
                                            
                                            
<PAGE>
 
 /s/ E. Jeffrey Rossi                               September 9, 1998
--------------------------------------------                       
E. Jeffrey Rossi
Director


/s/ William W. Watson                               September 9, 1998
--------------------------------------------                                
William W. Watson
Director
<PAGE>
 
       As filed with the Securities and Exchange Commission on September 9, 1998

                                                       Registration No. 33-_____
_______________________________________________________________________________

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

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



                                    EXHIBITS

                                     TO THE

                                    FORM S-1

                             REGISTRATION STATEMENT

                                     Under

                           THE SECURITIES ACT OF 1933

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

                          FIRST PLACE FINANCIAL CORP.
  (Exact name of registrant as specified in its certificate of incorporation)


_______________________________________________________________________________
<PAGE>
 
                               TABLE OF CONTENTS

List of Exhibits (Filed herewith unless otherwise noted)

1.1    Engagement Letter between First Federal Savings and Loan Association of
       Warren and Charles Webb & Company
1.2    Draft Form of Agency Agreement*
2.1    Plan of Conversion (including the Federal Stock Charter and Bylaws of
       First Federal Savings and Loan Association of Warren)
3.1    Certificate of Incorporation of First Place Financial Corp.
3.2    Bylaws of First Place Financial Corp.
3.3    Federal Stock Charter and Bylaws of First Federal Savings and Loan
       Association of Warren (See Exhibit 2.1 hereto)
4.0    Draft Stock Certificate of First Place Financial Corp.
5.0    Draft Opinion of Patton Boggs LLP re: legality
5.1    Draft Opinion of Potter Anderson & Corroon LLP re: legality
8.0    Draft Opinion of Patton Boggs LLP re:  Federal Tax Matters
8.1    Opinion of Crowe, Chizek and Company LLP re: State Tax Matters
10.1   First Federal Savings and Loan Association of Warren Employee Stock
       Ownership Plan
10.2   Draft ESOP Loan Commitment Letter and ESOP Loan Documents*
10.3   Form of Employment Agreement between First Federal Savings and Loan
       Association of Warren and Steven R.  Lewis
10.4   Form of Employment Agreement between First Place Financial Corp. and
       Steven R. Lewis
10.5   Form of Change in Control Agreements between First Federal Savings and
       Loan Association of Warren and certain executive officers
10.6   Form of Change in Control Agreements between First Place Financial Corp.
       and certain executive officers
10.7   Form of First Federal Savings and Loan Association of Warren Employee
       Severance Compensation Plan
16.1   Letter of Packer, Thomas & Co.  re:  change in accountants
23.1   Consent of Crowe, Chizek and Company LLP
23.2   Consent of Packer, Thomas & Co.
23.3   Consent of Patton Boggs LLP
23.4   Consent of Potter Anderson & Corroon LLP
23.5   Consent and Subscription Rights Opinion of Keller & Company, Inc.
24.1   Powers of Attorney
27.0   Financial Data Schedule
99.1   Appraisal Report of Keller & Company, Inc. (P)
99.2   Draft Gift Instrument to First Federal of Warren Community Foundation
--------------------------------------------------------------------------------
*To be filed by amendment
(P) Filed pursuant to Rule 202 of Regulation S-T.
[{"type": "S-1", "sequence": "1", "description": "FORM S-1", "secsgml_size_bytes": 715555}]
{"company-data": {"conformed-name": "FIRST PLACE FINANCIAL CORP /DE/", "cik": "0001068912", "assigned-sic": "", "state-of-incorporation": "DE", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-63099", "film-number": "98706222"}, "business-address": {"street1": "185 EAST MARKET ST", "city": "WARREN", "state": "OH", "zip": "44482", "phone": "3303731221"}, "mail-address": {"street1": "185 EAST MARKET ST", "city": "WARREN", "state": "OH", "zip": "44482"}}
As filed with the Securities and Exchange Commission on September 9, 1998
                                                     Registration No. 333-
                                                                           -----

================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                    FORM S-1

                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933
                          FIRST PLACE FINANCIAL CORP.
                   FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
                         OF WARREN 401(K) SAVINGS PLAN
  (exact name of registrant as specified in its certificate of incorporation)
DELAWARE                                   6035                       BEING APPLIED FOR
(state or other jurisdiction of    (Primary Standard            (IRS Employer Identification No.)
 incorporation or organization)    Classification Code Number)
185 EAST MARKET STREET
                              WARREN, OHIO  44482
                                 (330) 373-1221
              (Address, including zip code, and telephone number,
       including area code, of registrant's principal executive offices)

                                STEVEN R. LEWIS
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
              FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                             185 EAST MARKET STREET
                               WARREN, OHIO 44482
                                 (330) 373-1221
           (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                                   Copies to:
                        JOSEPH G. PASSAIC, JR., ESQUIRE
                           GEOFFREY W. RYAN, ESQUIRE
                                PATTON BOGGS LLP
                              2550 M STREET, N.W.
                             WASHINGTON, D.C. 20037
                                 (202) 457-6000

     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:  As soon as
practicable after this Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / X /
                               ---- 

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  /   /
                                                         ---- 

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.   /   /
            ---- 

     If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.   /   /
            ---- 

 
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.    /   /
                                   ----
Title of each Class of           Amount to       Purchase Price        Aggregate       Registration
 Securities to be Registered      be Registered       Per Share            Offering            Fee
                                                                           Price(2)
-------------------------------------------------------------------------------------------------------
        Common Stock               14,812,000 (1)
        $.01 par Value                 Shares           $10.00           $148,120,000        $43,696
=======================================================================================================
Participation                             
Interests                               --                --                $908,275           (3)
=======================================================================================================
(1)  Includes shares of Common Stock to be issued to the First Federal of Warren
     Community Foundation, a private foundation.
(2)  Estimated solely for the purpose of calculating the registration fee.
(3)  The securities of First Place Financial Corp. to be purchased by First
     Federal Savings and Loan Association of Warren 401(k) Plan are included in
     the amount shown for Common Stock. Accordingly, no separate fee is required
     for the participation interests. In accordance with Rule 457(h) of the
     Securities Act, as amended, the aggregate offering amount has been
     calculated on the basis of the number of shares of Common Stock that may be
     purchased with the current assets of such Plan.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
[To be used in connection with the Syndicated Community Offering only]

SYNDICATED PROSPECTUS SUPPLEMENT

                          FIRST PLACE FINANCIAL CORP.
              (PROPOSED HOLDING COMPANY FOR FIRST FEDERAL SAVINGS
                        AND LOAN ASSOCIATION OF WARREN)

                       __________ SHARES OF COMMON STOCK

     First Place Financial Corp. (the "Company"), a Delaware corporation, is
offering for sale in a syndicated community offering (the "Syndicated Community
Offering") __________ shares, at a per share price of $10.00, of its common
stock, par value $.01 per share (the "Common Stock"), to be issued in connection
with the conversion of First Federal Savings and Loan Association of Warren,
Ohio (the "Association") from a federally-chartered mutual savings and loan
association to a federally-chartered stock savings and loan association and the
issuance of all of the Association's capital stock to the Company pursuant to
the Association's Plan of Conversion (the "Plan").  The remaining __________
shares of the Common Stock have been subscribed for in subscription and
community offerings (the "Subscription and Community Offerings") by the Bank's
holders of deposit accounts with a balance of $50 or more as of March 31, 1997,
by the First Federal Savings and Loan Association of Warren Employee Stock
Ownership Plan, a tax-qualified employee benefit plan, and related trust (the
"ESOP"), by holders of deposit accounts with a balance of $50 or more as of
___________, 1998, by certain other members of the Association, consisting of
holders of deposit accounts of the Association as of ____________________, 1998
(the "Voting Record Date") and borrowers with loans outstanding as of _______,
1998, which continue to be outstanding as of the Voting Record Date and then by
certain members of the general public.  See "The Conversion -General."
Contained herein is the Prospectus in the form used in the Subscription and
Community Offerings.  The purchase price for all shares purchased in the
Syndicated Community Offering will be the same as the price paid by subscribers
in the Subscription and Community Offerings (the "Purchase Price").  The
Purchase Price of $10.00 per share is the amount to be paid for each share at
the time a purchase order is submitted.  See the cover page of the Prospectus
and the table below for information as to the method by which the range within
which the number of shares offered may vary and the method of subscribing for
shares of the Common Stock.

     Funds submitted to the Association with purchase orders will earn interest
at the Association's passbook rate of interest from the date of receipt until
completion or termination of the Conversion.  The Syndicated Community Offering
will expire no later than _______________, 1998, unless extended by the
Association and the Company with the approval of the Office of Thrift
Supervision (the "OTS").  Such extensions may not go beyond _______________,
2000.  If an extension of time has been granted, all subscribers will be
notified of such extension, and of their rights to confirm their subscriptions,
or to modify or rescind their subscriptions and have their funds returned
promptly with interest, and of the time period within which the subscriber must
notify the Association of his intention to confirm, modify or rescind his
subscription.  If an affirmative response to any resolicitation is not received
by the Association and the Company from subscribers, such orders will be
rescinded and all funds will be returned promptly with interest.  The minimum
number of shares which may be purchased is 25 shares.  Except for the ESOP,
which may purchase up to 10% of the total number of shares of Common Stock
issued in the Conversion, including shares issued to the First Federal of Warren
Community Foundation (the "Foundation"), no person, together with associates of
and persons acting in concert with such person, may purchase more than the total
number of shares offered in the Community Offering and the Syndicated Community
Offering that could be purchased for $250,000 at the Purchase Price and no
person, together with associates of and persons acting in concert with such
person, may purchase more than 1.0% of the total number of shares issued in the
Conversion.  See "The Conversion - Subscription Offering and Subscription
Rights," and " - Limitations on Conversion Stock Purchases."  The Company
reserves the right, in its absolute discretion, to accept or reject, in whole or
in part, any or all subscriptions in the Syndicated Community Offering.

     The Company and the Association have engaged Charles Webb & Company
("Webb"), a Division of Keefe, Bruyette & Woods, Inc., as financial advisors to
assist them in the sale of the Common Stock in the Syndicated Community
Offering.  It is anticipated that Webb will use the services of other registered
broker-dealers ("Selected Dealers") and that fees to Webb and such Selected
Dealers will be ____% of the aggregate Purchase Price of the shares sold in the
Syndicated Community Offering.  Neither Webb nor any Selected Dealer shall have
any obligation to take or purchase any shares of Common Stock in the Syndicated
Community Offering.

     The Company has applied to have its Common Stock quoted on the Nasdaq
National Market under the symbol "FPFC."  Prior to this offering, there has not
been a public market for the Common Stock, and there can be no assurance that an
active and liquid trading market for the Common Stock will develop.  The absence
or discontinuance of a market may have an adverse impact on both the price and
liquidity of the stock.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE OFFICE OF THRIFT SUPERVISION, OR ANY OTHER FEDERAL
AGENCY OR ANY STATE SECURITIES COMMISSION, NOR HAS SUCH COMMISSION, OFFICE,
DEPARTMENT OR OTHER AGENCY OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY, NOR ARE THEY INSURED OR GUARANTEED BY THE ASSOCIATION OR THE
COMPANY.

                                       2
Estimated                      Estimated Net Pro-
                                                  Underwriting    Estimated Net    ceeds of Subscrip-
                                                   Commissions     Proceeds of      tion, Community
                                   Syndicated       and Other      Syndicated        and Syndicated
                                   Community        Fees and        Community          Community
                                 Offering Price    Expenses(1)      Offering        Offerings(2)(3)
=====================================================================================================
Minimum Per Share                $10.00          $                $              $
----------------------------------------------------------------------------------------------------- 
Midpoint Per Share               $10.00          $                $              $
-----------------------------------------------------------------------------------------------------  
Maximum Per Share                $10.00          $                $              $
-----------------------------------------------------------------------------------------------------  
Total Minimum(5)                 $               $                $              $
-----------------------------------------------------------------------------------------------------  
Total Midpoint                   $               $                $              $
-----------------------------------------------------------------------------------------------------  
Total Maximum(5)                 $               $                $              $
----------------------------------------------------------------------------------------------------- 
Total Maximum, As Adjusted(6)    $               $                $              $
=====================================================================================================
______________________________
(1) Consists of a pro rata allocation of estimated expenses of the Association
    and the Company in connection with the Conversion (other than estimated fees
    to be paid to Webb for services in connection with the Subscription and
    Community Offerings) and estimated compensation of Webb and Selected Dealers
    in connection with the sale of the remaining shares in the Syndicated
    Community Offering which fees are estimated to be $__________ million and
    $__________ million at the minimum and the maximum of the estimated price
    range and may be deemed to be underwriting fees.  The information under "Pro
    Forma Data" in the Prospectus was based on the assumptions stated therein,
    which may differ from the estimates used for this table.  See "The
    Conversion - Marketing and Underwriting Arrangements" for a more detailed
    discussion of fee arrangements.
(2) The Company applied to retain up to 50% of the net proceeds.  The balance of
    the net proceeds will be transferred to the Association in exchange for all
    of the outstanding common stock of the Association.
(3) The net proceeds of the Subscription and Community Offerings (based upon the
    sale of the __________ shares subscribed for at a price of $10.00 per share
    and after allocation of a pro rata portion of the estimated expenses
    relating to the Conversion) are estimated to be $__________.
(4) Based on an estimated price range of $__________ to $__________ at $10.00
    per share (the "Estimated Price Range).  The Total Minimum reflects the sale
    of __________ shares at a per share price of $10.00, leaving a total of
    __________ shares to be sold in the Syndicated Community Offering.
(5) Gives effect to an increase in the number of shares which could occur due to
    an increase in the Estimated Price Range of up to 15% to reflect changes in
    market and financial conditions following commencement of the offerings.
    See "The Conversion - Stock Pricing."  For a discussion of the distribution
    and allocation of the additional shares, see "The Conversion - Subscription
    Offerings and Subscription Rights," and " -Limitations on Conversion Stock
    Purchases."

                            CHARLES WEBB & COMPANY

                       _________________________________

      The date of this Prospectus Supplement is _______________, 199___.

                                       3
PROSPECTUS
                          FIRST PLACE FINANCIAL CORP.
  (Proposed Holding Company for First Federal Savings and Loan Association of
                                    Warren)
                       11,960,000 Shares of Common Stock

     First Place Financial Corp. (the "Company" or "First Place"), a Delaware
corporation, is offering up to 11,960,000 shares of its common stock, par value
$.01 per share (the "Common Stock"), in connection with the conversion of First
Federal Savings and Loan Association of Warren (the "Association" or "First
Federal") from a federally-chartered mutual savings and loan association to a
federally-chartered stock savings and loan association and the issuance of the
Association's capital stock to the Company pursuant to the Association's plan of
conversion (the "Plan" or "Plan of Conversion").  The simultaneous conversion of
the Association to stock form, the issuance of the Association's stock to the
Company and the offer and sale of the Common Stock by the Company are herein
referred to as the "Conversion."  In certain circumstances, the Company may
increase the amount of Common Stock offered hereby up to 13,754,000 shares.  See
Footnote 4 to the table below.

                                                   (continued on following page)
                            
                             ---------------------

     FOR ADDITIONAL INFORMATION ON HOW TO SUBSCRIBE FOR COMMON STOCK, PLEASE
CALL THE CONVERSION CENTER AT (330) ___-____.

     FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY EACH
PROSPECTIVE INVESTOR, SEE "RISK FACTORS" ON PAGES ___ THROUGH ___.

     THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT SUPERVISION ("OTS") OR ANY OTHER
FEDERAL AGENCY OR ANY STATE SECURITIES COMMISSION, OR ANY OTHER AGENCY, NOR HAS
SUCH COMMISSION, OFFICE OR OTHER AGENCY OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

     THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS  ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE BANK INSURANCE FUND ("BIF") OR
THE SAVINGS ASSOCIATION INSURANCE FUND ("SAIF") OF THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC") OR ANY OTHER GOVERNMENT AGENCY AND ARE NOT GUARANTEED BY
THE COMPANY OR ASSOCIATION.  THE COMMON STOCK IS SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL INVESTED.
----------------------------------------------------------------------------------------------------------------------------- 
                                                                Estimated Underwriting 
                                                              Commissions and Other Fees                            
                               Subscription Price(1)               and Expenses(2)               Estimated Net Proceeds(3)
-----------------------------------------------------------------------------------------------------------------------------
Minimum Per Share                     $10.00                             $0.22                               $9.78
-----------------------------------------------------------------------------------------------------------------------------     
Midpoint Per Share                    $10.00                             $0.20                               $9.80
-----------------------------------------------------------------------------------------------------------------------------     
Maximum Per Share                     $10.00                             $0.19                               $9.81
-----------------------------------------------------------------------------------------------------------------------------     
Total Minimum(1)                 $88,400,000                        $1,975,000                         $86,425,000
-----------------------------------------------------------------------------------------------------------------------------     
Total Midpoint(1)               $104,000,000                        $2,100,000                        $101,900,000
-----------------------------------------------------------------------------------------------------------------------------     
Total Maximum(1)                $119,600,000                        $2,275,000                        $117,325,000
----------------------------------------------------------------------------------------------------------------------------- 
Total Maximum, as adjusted(4)   $137,540,000                        $2,275,000                        $135,265,000
-----------------------------------------------------------------------------------------------------------------------------
(1)      Determined in accordance with an independent appraisal prepared by
         Keller & Company, Inc. ("Keller") dated August 14, 1998, which states
         that the aggregate estimated pro forma market value of the Common Stock
         being issued in the Conversion ranged from $95.2 million to $128.8
         million with a midpoint of $112.0 million taking into account the
         contribution to the First Federal of Warren Community Foundation of an
         amount of Common Stock equal to 7.7% of the Common Stock sold in the
         Conversion (the "Valuation Range").  The independent appraisal of
         Keller is based upon estimates and projections that are subject to
         change and the valuation must not be construed as a recommendation as
         to the advisability of purchasing the Common Stock nor an assurance
         that a purchaser of Common Stock will thereafter be able to sell the
         Common Stock at prices within the Valuation Range.  Based on the
         Valuation Range, the Board of Directors of the Company and the Board of
         Directors of the Association established an estimated price range of
         the Common Stock being offered for sale in the Conversion within the
         Valuation Range of $88.4 million to $119.6 million (the "Estimated
         Price Range") or between 8,840,000 and 11,960,000 shares of Common
         Stock issued at the $10.00 per share price (the "Purchase Price") to be
         paid for each share of Common Stock subscribed for or purchased in the
         Offering.  See "The Conversion - Stock Pricing."
(2)      Consists of the estimated costs to the Association and the Company
         arising from the Conversion, including estimated fixed expenses of
         approximately $1.1 million, and marketing fees to be paid to Charles
         Webb & Company ("Webb"), a Division of Keefe, Bruyette & Woods, Inc.
         ("KBW"), estimated to be between $875,000  and $1.2 million at the
         minimum and maximum of the Estimated Price Range, respectively.  See
         "The Conversion - Marketing and Underwriting Arrangements."  The actual
         fees and expenses may vary from the estimates.  See "Pro Forma Data"
         for the assumptions used to arrive at these estimates.
(3)      Actual net proceeds may vary substantially from estimated amounts
         depending upon the number of shares sold in the Offerings and other
         factors.  Includes the purchase of shares of Common Stock by the First
         Federal Savings and Loan Association of Warren Employee Stock Ownership
         Plan and related trust (the "ESOP") which is intended to be funded by a
         loan to the ESOP from the Company or from a third party, which will be
         deducted from the Company's stockholders' equity.  See "Use of
         Proceeds" and "Pro Forma Data."
(4)      As adjusted to reflect the sale of up to an additional 15% of the
         Common Stock which may be offered at the Purchase Price, without
         resolicitation of subscribers or any right of cancellation, due to
         regulatory considerations, changes in market conditions or general
         financial and economic conditions.  See "Pro Forma Data" and "The
         Conversion - Stock Pricing."  For a discussion of the distribution and
         allocation of the additional shares, if any, see "The Conversion -
         Subscription Offering and Subscription Rights," "- Community Offering"
         and  "- Limitations on Common Stock Purchases."

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

                             Charles Webb & Company
                  a Division of Keefe, Bruyette & Woods, Inc.
                       
                            -----------------------

                The date of this Prospectus is _________, 1998.
(continued from previous page)

     NON-TRANSFERABLE RIGHTS TO SUBSCRIBE FOR THE COMMON STOCK IN A SUBSCRIPTION
OFFERING (THE "SUBSCRIPTION OFFERING") HAVE BEEN GRANTED IN THE FOLLOWING ORDER
OF PRIORITY TO: (1) THE ASSOCIATION'S ELIGIBLE ACCOUNT HOLDERS (DEFINED AS
HOLDERS OF DEPOSIT ACCOUNTS TOTALLING $50 OR MORE AS OF MARCH 31, 1997) (2) THE
COMPANY'S AND ASSOCIATION'S TAX-QUALIFIED EMPLOYEE BENEFIT PLANS (COLLECTIVELY,
THE "EMPLOYEE PLANS"), INCLUDING THE ESOP WHICH INTENDS TO SUBSCRIBE FOR UP TO
8% OF THE COMMON STOCK ISSUED IN CONNECTION WITH THE CONVERSION (INCLUDING
SHARES ISSUED TO THE FIRST FEDERAL OF WARREN COMMUNITY FOUNDATION (THE
"FOUNDATION")); (3) THE ASSOCIATION'S SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS
(DEFINED AS HOLDERS OF DEPOSIT ACCOUNTS TOTALLING $50 OR MORE AS OF ________,
1998); AND (4) OTHER MEMBERS OF THE ASSOCIATION (DEFINED AS DEPOSITORS OF THE
ASSOCIATION AS OF __________, 1998, THE VOTING RECORD DATE (THE "VOTING RECORD
DATE") FOR THE SPECIAL MEETING (AS DEFINED HEREIN), AND BORROWERS WITH LOANS
OUTSTANDING AS OF __________, OTHER THAN THOSE MEMBERS WHO OTHERWISE QUALIFY AS
ELIGIBLE ACCOUNT HOLDERS AND SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS).
SUBSCRIPTION RIGHTS ARE NON-TRANSFERABLE.  PERSONS FOUND TO BE TRANSFERRING
SUBSCRIPTION RIGHTS WILL BE SUBJECT TO FORFEITURE OF SUCH RIGHTS AND POSSIBLE
FURTHER SANCTIONS AND PENALTIES IMPOSED BY THE OTS.  Concurrently, and subject
to the prior rights of holders of subscription rights, the Company is offering
the shares of Common Stock not subscribed for in the Subscription Offering for
sale in a community offering to certain members of the general public (the
"Community Offering") with a preference given to natural persons residing in
Trumbull and Mahoning Counties, Ohio (the Association's "Local Community") (such
natural persons herein referred to as "Preferred Subscribers").  Shares not
subscribed for in the Subscription and Community Offerings will be offered to
certain members of the general public in a syndicated community offering (the
"Syndicated Community Offering") (the Subscription Offering, Community Offering
and the Syndicated Community Offering are referred to collectively as the
"Offerings").  For a description of limitations on the amount of Common Stock
that can be purchased in the Offerings, see "Summary of the Conversion and the
Offerings - Purchase Limitations" and "The Conversion - Subscription Offering
and Subscription Rights," "-Community Offering" and "- Limitation on Common
Stock Purchases."

     The Plan provides that the Association and the Company will create the
Foundation, which will be incorporated under Delaware law as a non-stock
corporation, and fund the Foundation with shares of Common Stock contributed by
the Company from authorized but unissued shares, in an amount equal to 7.7% of
the number of shares of Common Stock sold in the Conversion.  For a discussion
of the Foundation and its effects on the Conversion, including if the members do
not approve the establishment of the Foundation, see "Risk Factors -
Establishment of the Charitable Foundation," "Pro Forma Data," and "The
Conversion - Establishment of Charitable Foundation."

     The Association has engaged Webb to consult with and advise the Company and
the Association in the Offerings and Webb has agreed to use its best efforts to
assist the Company with the solicitation of subscriptions and purchase orders
for shares of Common Stock in the Offerings.  Webb is not obligated to take or
purchase any shares of Common Stock in the Offerings.  The Association and the
Company will pay a fee to Webb which will be based on the aggregate Purchase
Price of the Common Stock sold in the Offerings.  The Company and the
Association have agreed to indemnify Webb against certain liabilities arising
under the Securities Act of 1933, as amended (the "Securities Act").  See "The
Conversion - Marketing and Underwriting Arrangements."

     THE SUBSCRIPTION AND COMMUNITY OFFERINGS WILL TERMINATE AT 12:00 NOON,
EASTERN TIME, ON __________, 1998 (THE "EXPIRATION DATE") UNLESS EXTENDED BY THE
ASSOCIATION AND THE COMPANY, WITH THE APPROVAL OF THE OTS, IF NECESSARY.  Orders
submitted are irrevocable until the completion of the Conversion; provided, that
if the Conversion is not completed within 45 days after the close of the
Subscription and Community Offerings, unless such period has been extended with
the consent of the OTS, if necessary, all subscribers will have their funds
returned promptly with interest, and all withdrawal authorizations will be
cancelled.  Such extensions may not go beyond _________, 2000.  See "The
Conversion - Procedure for Purchasing Shares in Subscription and Community
Offerings."  The Company and the Association reserve the right, in their
absolute discretion, to accept or reject, in whole or in part, any and all
subscriptions in the Community Offering and the Syndicated Community Offering,
either at the time of receipt of an order or as soon as practicable following
the termination of the Offerings.

     The Company has applied to have its Common Stock quoted on the Nasdaq
National Market ("Nasdaq")  under the symbol "FPFC" upon completion of the
Conversion.  Prior to this offering there has not been a public market for the
Common Stock, and there can be no assurance that an active and liquid trading
market for the Common Stock will develop, or that the Common Stock will trade at
or above the Purchase Price.  To the extent an active and liquid trading market
does not develop, the liquidity and market value of the Common Stock may be
adversely affected.  See "Risk Factors - Absence of Market for Common Stock" and
"Market for the Common Stock."

                                       2
Explanatory Note:  This Prospectus contains certain forward looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company and the Association.
Prospective investors are cautioned that such forward looking statements are not
guarantees of future performance and are subject to various factors which could
cause actual results to differ materially from these estimates.  These factors
include changes in general, economic and market conditions, and the development
of an interest rate environment that adversely affects the interest rate spread
or other income anticipated from the Company's and the Association's operations
and investments.  See "Risk Factors" for a discussion of other factors that
might cause actual results to differ from such estimates.

                                       3
[MAP GOES HERE]
SUMMARY OF THE CONVERSION AND THE OFFERINGS
 
     The following summary of the Conversion and the Offerings is qualified in
its entirety by the more detailed information appearing elsewhere in this
Prospectus.
 
Risk Factors...........  A purchase of the Common Stock involves a substantial
                         degree of risk. Eligible Account Holders, Supplemental
                         Eligible Account Holders, Other Members and other
                         prospective investors should carefully consider the
                         matters set forth under "Risk Factors." THE SHARES OF
                         COMMON STOCK OFFERED HEREBY ARE NOT INSURED OR
                         GUARANTEED BY THE FDIC, BIF OR SAIF OR ANY OTHER
                         GOVERNMENT AGENCY AND ARE NOT GUARANTEED BY THE COMPANY
                         OR ASSOCIATION.

First Place Financial   
 Corp..................  The Company is a Delaware corporation organized at the
                         direction of the Association to become a savings and
                         loan holding company and own all of the Association's
                         capital stock to be issued upon its conversion from
                         mutual form to stock form. To date, the Company has not
                         engaged in any business. Its executive office is
                         located at 185 East Market Street, Warren, Ohio 44482
                         and its telephone number is (330) 373-1221.

First Federal Savings  
 and Loan Association    
 of Warren.............  The Association is a federally-chartered mutual savings
                         association. At June 30, 1998, the Association had
                         total assets of $609.4 million, total deposits of
                         $435.5 million and retained earnings of $59.4 million.
                         The Association is located at 185 East Market Street,
                         Warren, Ohio 44482 and its telephone number is (330)
                         373-1221.

                         The Association is a community-oriented savings
                         institution whose principal business consists of
                         accepting retail deposits from the general public in
                         its primary market area and investing those deposits,
                         together with funds generated from operations and
                         borrowings, primarily in one- to four-family
                         residential mortgage loans, automobile and home equity
                         loans and, to a much lesser extent, multi-family and
                         commercial real estate loans, construction loans,
                         commercial loans and passbook savings loans. The
                         Association also invests in government issued and
                         sponsored mortgage-backed securities, securities issued
                         by the U.S. Government and agencies thereof, and other
                         investments permitted by applicable laws and
                         regulations. See "Business of the Association."

The Conversion and
 Reasons for        
 Conversion............  The Board of Directors of the Association has adopted a
                         Plan of Conversion pursuant to which the Association
                         intends to convert to a federally-chartered stock
                         savings association and issue all of its stock to the
                         Company. The Company is offering shares of its Common
                         Stock in the Offerings in connection with the
                         Association's Conversion. Management believes the
                         Conversion offers a number of advantages, including:
                         (i) providing a larger capital base on which to
                         operate; (ii) providing enhanced future access to
                         capital markets; (iii) providing enhanced ability to
                         diversify into other financial services related
                         activities; and (iv) providing enhanced ability to
                         increase its presence in the communities it serves
                         through the acquisition or establishment of branch
                         offices or the acquisition of other financial
                         institutions. The Conversion and the Offerings are
                         subject to approval by the OTS, and approval of members
                         of the Association eligible to vote at a special
                         meeting to be held on __________, 1998 (the "Special
                         Meeting"). The OTS issued an approval letter on
                         _______, 1998. See "The Conversion--General."

                                       5
First Federal of        
 Warren Community        The Association's Plan of Conversion provides for the
 Foundation............  establishment of a charitable foundation in connection
                         with the Conversion. The Foundation, which will be
                         incorporated under Delaware law as a non-stock
                         corporation, will be funded concurrent with the sale of
                         Common Stock of the Company with a contribution by the
                         Company equal to 7.7% of the Common Stock sold in the
                         Conversion. The authority for the affairs of the
                         Foundation will be vested in the Board of Directors of
                         the Foundation, all of whom are existing Directors of
                         the Company and the Association. See "The Conversion -
                         Establishment of the Charitable Foundation."
                          
 
Terms of the             The shares of Common Stock to be sold in connection
 Offering..............  with the Conversion are being offered at a fixed price
                         of $10.00 per share in the Subscription Offering
                         pursuant to subscription rights in the following order
                         of priority to: (i) Eligible Account Holders; (ii) the
                         ESOP; (iii) Supplemental Eligible Account Holders; and
                         (iv) Other Members. Concurrently, and subject to the
                         prior rights of holders of subscription rights, any
                         shares of Common Stock not subscribed for in the
                         Subscription Offering are being offered in the
                         Community Offering at $10.00 per share to certain
                         members of the general public with a preference given
                         to Preferred Subscribers. Subscription rights will
                         expire if not exercised by Noon, Eastern time, on
                         __________, 1998, unless extended by the Association
                         and the Company, with the approval of the OTS, if
                         necessary. See "The Conversion - Subscription Offering
                         and Subscription Rights" and " - Community Offering."
                          
                       
Procedure for Ordering 
 Shares and Prospectus   Forms to order Common Stock offered in the Subscription
 Delivery..............  Offering and the Community Offering will only be
                         distributed with or preceded by a Prospectus.  Any 
                         person receiving a stock order and certification form
                         who desires to subscribe for shares must do so prior to
                         the Expiration Date by delivering to the Association a
                         properly executed stock order form and certification
                         form together with full payment. ONCE TENDERED,
                         SUBSCRIPTION ORDERS CANNOT BE REVOKED OR MODIFIED
                         WITHOUT THE CONSENT OF THE ASSOCIATION. To ensure that
                         each purchaser receives a prospectus at least 48 hours
                         prior to the Expiration Date in accordance with Rule
                         15c2-8 of the Securities Exchange Act of 1934, as
                         amended (the "Exchange Act"), no prospectus will be
                         mailed any later than five days prior to the Expiration
                         Date or hand delivered any later than two days prior to
                         such date. The Company and the Association are not
                         obligated to accept subscriptions not submitted on an
                         original stock order form. See "The Conversion -
                         Procedure for Purchasing Shares in Subscription and
                         Community Offerings."

                         IMPORTANT: TO ENSURE THAT YOUR SUBSCRIPTION RIGHTS ARE
                         PROPERLY IDENTIFIED, YOU MUST LIST ALL QUALIFYING
                         DEPOSIT ACCOUNTS AND LOANS, AS OF THE RESPECTIVE
                         QUALIFYING DATES ON THE STOCK ORDER FORM. PERSONS WHO
                         DO NOT LIST ALL QUALIFYING DEPOSIT ACCOUNTS AND LOANS
                         MAY BE SUBJECT TO REDUCTION OR REJECTION OF THEIR
                         SUBSCRIPTION.
                          

Form of Payment for      Payment for subscriptions may be made:  (i) in cash 
 Shares................  (if delivered in person); (ii) by check, bank draft 
                         or money order; or (iii) by authorization of withdrawal
                         from deposit accounts maintained at the Association.
                         Orders for Common Stock submitted by subscribers in the
                         Subscription Offering which aggregate $50,000 or more
                         must be paid by official bank or certified check or by
                         withdrawal authorization from a deposit account at the
                         Association. No wire transfers will be accepted. See
                         "Conversion - Procedure for Purchasing Shares in
                         Subscription and Community Offerings."

                                       6
Nontransferability of                           
 Subscription Rights...  The subscription rights of Eligible Account Holders,
                         Supplemental Eligible Account Holders, Other Members
                         and the Employee Plans, including the ESOP, are
                         nontransferable. THE ASSOCIATION AND THE COMPANY WILL
                         PURSUE ANY AND ALL LEGAL AND EQUITABLE REMEDIES
                         (INCLUDING FORFEITURE) IN THE EVENT THEY BECOME AWARE
                         OF THE TRANSFER OF SUBSCRIPTION RIGHTS AND WILL NOT
                         HONOR ORDERS KNOWN BY THEM TO INVOLVE THE TRANSFER OF
                         SUCH RIGHTS. Certificates representing shares of Common
                         Stock purchased in the Subscription Offering must be
                         registered in the name of the Eligible Account Holder,
                         Supplemental Eligible Account Holder or Other Member,
                         as the case may be. Joint stock registration will be
                         allowed only if the qualifying deposit account is so
                         registered. See "The Conversion -Restrictions on
                         Transfer of Subscription Rights and Shares."
 

Purchase Limitations...  No Eligible Account Holder, Supplemental Eligible
                         Account Holder or Other Member may purchase in the
                         Subscription Offering more than $250,000 of Common
                         Stock. No person, together with associates and persons
                         acting in concert with such person, may purchase in the
                         Community Offering and the Syndicated Community
                         Offering more than $250,000 of Common Stock. No person,
                         together with associates and persons acting in concert
                         with such person, may purchase in the aggregate more
                         than 1% of the Common Stock offered. However, the ESOP
                         may purchase up to 10% of the Common Stock issued,
                         including shares issued to the Foundation. Pursuant to
                         the Plan of Conversion, it is the intent of the ESOP to
                         purchase 8% of the Common Stock issued, including
                         shares issued to the Foundation. The minimum purchase
                         is 25 shares of Common Stock. At any time during the
                         Conversion and without approval of the Association's
                         depositors or a resolicitation of subscribers, the
                         Association and the Company may, in their sole
                         discretion, decrease the maximum purchase limitation
                         below $250,000 of Common Stock; however, such amount
                         may not be reduced to less than 0.10% of the Common
                         Stock offered. Additionally, at any time during the
                         Conversion, the Association and the Company may, in
                         their sole discretion, increase the maximum purchase
                         limitation in the Subscription and Community Offerings
                         to an amount in excess of $250,000 up to a maximum of
                         5% of the shares to be issued in the Conversion.
                         Similarly, the 1% overall maximum purchase limitation
                         may be increased up to 5% of the total shares of Common
                         Stock offered in the Conversion.
                          
                        
Securities Offered and  
 Purchase Price........  The Company is offering between 8,840,000 and
                         11,960,000 shares of Common Stock at a Purchase Price
                         of $10.00 per share. The maximum of the Estimated Price
                         Range may be increased by up to 15% and the maximum
                         number of shares of Common Stock to be offered may be
                         increased up to 13,754,000 shares due to regulatory
                         considerations and changes in market or general
                         financial or economic conditions. See "The Conversion -
                         Stock Pricing" and "- Number of Shares to be Issued."

Appraisal..............  The Purchase Price per share has been fixed at $10.00.
                         The total number of shares to be issued in the
                         Conversion is based upon an independent appraisal
                         prepared by Keller, dated as of August 14, 1998, which
                         states that the estimated pro forma market value of the
                         Common Stock ranged from $95.2 million to $128.8
                         million, taking into account shares to be issued to the
                         Foundation. The final aggregate value will be
                         determined at the time of closing of the Offerings and
                         is subject to change due to changing market conditions
                         and other factors. See "The Conversion - Stock
                         Pricing."
                                                       

Use of Proceeds........  The Company will use 50% of the net proceeds of the
                         Offerings to purchase all of the outstanding common
                         stock of the Association to be issued in the
                         Conversion. A 

                                       7
portion of net proceeds retained by the Company will be
                         used for general business activity, including a loan of
                         funds by the Company directly to the ESOP to enable the
                         ESOP to purchase up to 8% of the stock issued in
                         connection with the Conversion, including shares issued
                         to the Foundation. The Company intends to initially
                         invest the remaining net proceeds primarily in 
                         mortgage-backed and mortgage-related securities and
                         investment grade debt and equity securities. The
                         Association intends to utilize net proceeds from the
                         sale of its stock to the Company for general business
                         purposes, including investment in loans and securities,
                         as well as the possible expansion of its facilities and
                         operations through marketing, business development, or
                         the acquisition or establishment of branch offices,
                         although the Company and the Association have no
                         current arrangements, understanding or agreements
                         regarding any such transactions. The Association may
                         also use a portion of the net proceeds to renovate or
                         rebuild its main office building. The renovation or
                         reconstruction of the Association's main office is
                         currently estimated to cost up to $15.0 million. See
                         "Use of Proceeds."

Dividend Policy........  Upon Conversion, the Board of Directors of the Company
                         will have the authority to declare dividends on the
                         Common Stock, subject to statutory and regulatory
                         requirements. In the future, the Board of Directors of
                         the Company may consider a policy of paying cash
                         dividends on the Common Stock. However, no decision has
                         been made with respect to such dividends, if any. See
                         "Dividend Policy."
 
                        
Benefits of the         
 Conversion to                                   
 Management............  Among the benefits to the Association and the Company
                         anticipated from the Conversion is the ability to
                         attract and retain personnel through the use of stock
                         options and other stock related benefit programs.
                         Subsequent to the Conversion, the Company intends to
                         adopt a Stock Program (as defined herein) and Stock
                         Option Plan (as defined herein) for the benefit of
                         directors, officers and employees. If such benefit
                         plans are adopted within one year after the Conversion,
                         such plans will be subject to stockholders' approval at
                         a meeting of stockholders which may not be held earlier
                         than six months after the Conversion. The Company
                         intends to adopt a stock benefit plan which would
                         provide for the granting of Common Stock to officers,
                         directors and employees of the Association and Company
                         in an amount equal to 4% of the Common Stock issued in
                         the Conversion, including shares issued to the
                         Foundation (the "Stock Program"). The Company also
                         intends to adopt a stock option plan which would
                         provide the Company with the ability to grant options
                         to officers, directors and employees of the Association
                         and Company to purchase Common Stock equal to 10% of
                         the number of shares of Common Stock issued in the
                         Conversion, including shares issued to the Foundation
                         (the "Stock Option Plan"). Additionally, certain
                         officers of the Company and the Association will be
                         provided with employment agreements or change in
                         control agreements which provide such officers with
                         employment rights and/or payments upon their
                         termination of service following a change in control.
                         For a further description of the Stock Program and
                         Stock Option Plan, see "Risk Factors-Stock Based
                         Benefits to Management, Employment Contracts and Change
                         in Control Payments" and "Management of the 
                         Association - Benefit Plans." See "Management of the 
                         Association - Subscriptions of Executive Officers and
                         Directors," "Restrictions on Acquisition of the Company
                         and the Association -Restrictions in the Company's
                         Certificate of Incorporation and Bylaws," and "The
                         Conversion -Establishment of the Charitable
                         Foundation."
                        
                        
Expiration Date for the 
 Subscription and    
 Community Offerings...  The Expiration Date for the Subscription and Community
                         Offerings is 12:00 Noon, Eastern time on
                         _______________, 1998 unless extended by the
                         Association and the Company. See "The Conversion -
                         Subscription Offering and Subscription Rights."
 
                                      8
Market for Stock.......  As a mutual institution, the Association has never
                         issued capital stock and, consequently, there is no
                         existing market for the Common Stock. The Company has
                         applied to have its Common Stock quoted on the Nasdaq
                         under the symbol "FPFC" subject to the completion of
                         the Conversion and compliance with certain conditions,
                         including the presence of at least three registered and
                         active market makers. KBW has advised the Company that
                         it intends to make a market in the Common Stock
                         following completion of the Conversion, but it is under
                         no obligation to do so. See "Market for the Common
                         Stock."
                          
No Board                 
 Recommendations.......  The Association's Board of Directors and the Company's
                         Board of Directors are not making any recommendations
                         to depositors or other potential investors regarding
                         whether such persons should purchase the Common Stock.
                         An investment in the Common Stock must be made pursuant
                         to each investor's evaluation of his or her best
                         interests.

Conversion Center......  If you have any questions regarding Conversion, please
                         call the Conversion Center at (330) _____.
 
 
Voting Control of
 Officers                 
 and Directors.........  Directors and executive officers of the Association and
                         the Company expect to purchase approximately 4.6% or
                         3.4% of shares of Common Stock outstanding, based upon
                         the minimum and the maximum of the Estimated Price
                         Range, including shares issued to the Foundation
                         respectively. Additionally, assuming the implementation
                         of the ESOP, Stock Program and Stock Option Plan,
                         directors, executive officers and employees have the
                         potential to control the voting of approximately 24.2%
                         or 23.1% of the Common Stock at the minimum and the
                         maximum of the Estimated Price Range, respectively,
                         including shares issued to the Foundation, on a fully
                         diluted basis. See "The Conversion -Establishment of
                         the Charitable Foundation," "Management of the
                         Association -Subscriptions of Executive Officers and
                         Directors," and "Restrictions on Acquisition of the
                         Company and the Association -Restrictions in the
                         Company's Certificate of Incorporation and Bylaws."

Risk Factors...........  For a discussion of certain factors to be considered by
                         prospective investors, see "Risk Factors."

                                       9
SELECTED FINANCIAL AND OTHER DATA OF THE ASSOCIATION

     Set forth below are selected financial and other data of the Association.
These financial data are derived in part from, and should be read in conjunction
with, the Financial Statements of the Association and Notes thereto presented
elsewhere in this Prospectus.
At June 30,                     
                                             -------------------------------------------------------
                                                 1998       1997       1996       1995       1994   
                                             -------------------------------------------------------
(In thousands)                    
      Selected Financial Data:                                                         
      Total assets...........................   $609,398   $548,870   $523,131   $481,192   $480,317
      Loans receivable, net..................    353,012    285,212    254,435    239,457    217,574
      Securities available for sale(1).......    211,185    202,677    202,176    148,273    158,243
      Securities held to maturity(1).........     28,295     44,875     47,918     74,006     81,707
      Deposits...............................    435,462    412,934    391,715    376,541    382,710
      Federal Home Loan Bank advances........     44,820     58,398     76,078     52,436     47,265
      Repurchase agreements..................     60,430     16,000          -          -      5,062
      Total retained earnings................     59,357     53,747     48,823     46,209     40,107
For the Years Ended June 30,
                                                                     --------------------------------------------------
                                                                         1998      1997      1996      1995      1994
                                                                     --------------------------------------------------
(In thousands)
Selected Operating Data:
Total interest income................................................   $42,482   $38,413   $36,436   $34,362   $32,208
Total interest expense...............................................    25,512    22,929    21,858    20,150    18,558
                                                                        -------   -------   -------   -------   -------
   Net interest income...............................................    16,970    15,484    14,578    14,212    13,650
Provision for loan losses............................................     1,779       590       238       313       360
                                                                        -------   -------   -------   -------   -------
   Net interest income after provision for loan losses...............    15,191    14,894    14,340    13,899    13,290
Total noninterest income.............................................     1,751       444     1,220       565     1,240
Total noninterest expense............................................    10,372    11,898     9,149     8,396     8,039
                                                                        -------   -------   -------   -------   -------
   Income before income tax..........................................     6,570     3,440     6,411     6,068     6,491
Provision for income tax.............................................     2,498     1,216     2,262     2,039     2,249
                                                                        -------   -------   -------   -------   -------
    Net income.......................................................   $ 4,072   $ 2,224   $ 4,149   $ 4,029   $ 4,242
                                                                        =======   =======   =======   =======   =======
(Continued on following page)

                                      10
For the Years Ended June 30,
                                  ---------------------------------------------------
                                      1998      1997      1996      1995      1994
                                  ---------------------------------------------------
(Dollars in thousands)
Selected Financial Ratios and
 Other Data(2):
Performance Ratios:
 Return on average assets.........     0.70%     0.42%     0.82%     0.84%     0.87%
 Return on average retained                                                         
  earnings........................     7.16      4.26      8.34      8.75     10.39 
 Average retained earnings to                                                       
  average assets..................     9.71      9.81      9.83      9.57      8.41 
 Retained earnings to total                                                         
  assets at end of period.........     9.48      9.78      9.84      9.82      9.01 
 Net interest rate spread(3)......     2.55      2.52      2.48      2.49      2.39
 Net interest margin(4)...........     3.00      2.97      2.94      2.88      2.70
 Average interest-earning            
  assets to average interest-    
  bearing liabilities.............   110.46    109.90    109.94    109.08    108.07 
 Total noninterest expense to          
  average assets..................     1.77      2.23      1.81      1.75      1.66 
 Efficiency ratio(5)..............    55.40     74.70     57.91     56.82     53.99
 Net interest income to           
  operating expenses..............   163.60    130.13    159.35    169.27    169.79 
Regulatory Capital Ratios(6):    
 Tangible capital.................     9.52%     9.80%     9.79%     9.81%     8.05%
 Core capital.....................     9.52      9.80      9.79      9.81      8.05
 Total risk-based capital.........    21.84     23.85     25.64     24.87     22.50
Asset Quality Data and Ratios: : 
 Total nonperforming loans(7).....   $2,143    $2,480    $1,126    $  992    $  731
 Real estate owned, net...........        -         -         -         -       140
 Total nonperforming assets(8).)..    2,143     2,480     1,126       992       871
 Allowance for loan losses........    3,027     1,723     1,259     1,186     1,034
 Nonperforming loans as a              
  percent of total loans(7)(9)....     0.60%     0.86%     0.44%     0.41%     0.33% 
 Nonperforming assets as a                                                          
  percent of total assets(8)......     0.35      0.45      0.22      0.21      0.18 
 Allowance for loan losses                                                        
  as a percent of loans(9)........     0.85      0.60      0.49      0.49      0.47 
 Allowance for loan losses                                                        
  as a percent of nonperforming 
  loans(7)........................   141.25     69.48    111.81    119.56    141.45
-------------------
(1)  The Association adopted Statement of Financial Accounting Standards
     ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
     Securities," ("SFAS No. 115"), as of June 30, 1994.
(2)  Asset Quality Ratios and Regulatory Capital Ratios are end of period
     ratios. With the exception of end of period ratios, all ratios are based on
     average daily balances during the indicated periods and are annualized
     where appropriate.
(3)  The net interest rate spread represents the difference between the weighted
     average yield on average interest-earning assets and the weighted average
     cost of average interest-bearing liabilities.
(4)  The net interest margin represents net interest income as a percent of
     average interest-earning assets.
(5)  The efficiency ratio represents the ratio of noninterest expense divided by
     the sum of net interest income and noninterest income.
(6)  For definitions and further information relating to the Association's
     regulatory capital requirements, see "Regulation and Supervision -
     Regulations - Capital Requirements." See "Regulatory Capital Compliance"
     for the Association's pro forma capital levels as a result of the
     Offerings.
(7)  Nonperforming loans consist of all non-accrual loans and all other loans 90
     days or more past due. It is the Association's policy to generally cease
     accruing interest on all loans 90 days or more past due when, in
     management's opinion, the collection of all or a portion of the loan
     principal has become doubtful. See "Business of the Association -
     Delinquent Loans, Classified Assets and Real Estate Owned."
(8)  Nonperforming assets consist of nonperforming loans and real estate owned,
     net ("REO").
(9)  Loans represent loans receivable, net, excluding the allowance for loan
     losses.

                                      11
RISK FACTORS

     The following special considerations, in addition to those discussed
elsewhere in this Prospectus, should be considered by investors in deciding
whether to purchase the Common Stock offered hereby.

Sensitivity to Increases in Interest Rates

     The Association's profitability, like that of most financial institutions,
is dependent to a large extent upon its net interest income, which is the
difference between its interest income on interest-earning assets, such as loans
and securities, and its interest expense on interest-bearing liabilities, such
as its deposits and borrowed funds.  Accordingly, the Association's results of
operations and financial condition are largely dependent on movements in market
interest rates and its ability to manage its assets and liabilities in response
to such movements.

     At June 30, 1998, the Association had $185.5 million of long-term, fixed-
rate mortgage loans, or 51% of the Association's total loan portfolio, all of
which the Association maintains in its portfolio.  At that date, $111 million,
or 30.5% of the Association's total loan portfolio consisted of adjustable-rate
mortgage ("ARM") loans.  As of June 30, 1998, $60.6 million, or 25.3% of the
Association's securities had adjustable rates and its securities portfolio had a
weighted average life of 6.4 years.  The Association's certificates of deposit
with maturities of less than one year totaled $167.8 million, and certificates
of deposit over $100,000 ("jumbo certificates of deposit") totaled $53.2
million.  Such jumbo certificates of deposit tend to be less stable sources of
funding as compared to money market, savings, retail checking/negotiable order
of withdrawal ("NOW") accounts and commercial checking accounts (collectively,
"core deposits"), and at June 30, 1998, represented 10.3% of the Association's
interest-bearing liabilities.

     Management monitors the Association's interest rate sensitivity through the
use of an internally generated  Net Portfolio Value Model which generates
estimates of the change in the Association's net portfolio value ("NPV") over a
range of interest rate scenarios.  NPV is the present value of expected cash
flows from assets, liabilities and off-balance sheet contracts.  The NPV ratio,
under any interest rate scenario, is defined as the NPV in that scenario divided
by the market value of assets in the same scenario.  As of June 30, 1998, the
Association's NPV was $72.2 million, or 11.7% of the market value of assets.  A
200 basis point increase in interest rates would result in a decrease in the
Association's NPV to $53.4 million, representing a 26.0% reduction in the value
of the Association's discounted cash flows.  Conversely, a 200 basis point
decrease in interest rates would result in a decrease in the Association's NPV
to $66.6 million, representing only a 7.7% decrease in the value of the
Association's discounted cash flows.  Consequently, an increase in interest
rates will have a significantly greater impact on the Association's NPV than a
corresponding decrease in interest rates.

     Significant increases in the level of market interest rates also may
adversely affect the fair value of the Association's securities and other
interest-earning assets.  At June 30, 1998, $178.9 million, or 74.7%, of the
Association's securities had fixed interest rates.  Generally, the value of
fixed-rate instruments fluctuates inversely with changes in interest rates.  As
a result, increases in interest rates could result in decreases in the market
value of interest-earning assets which could adversely affect the Association's
results of operations if sold or, in the case of interest-earning assets
classified as available-for-sale, the Association's retained earnings if
retained.  Increases in market interest rates also can affect the type (fixed-
rate or adjustable-rate) and amount of loans originated by the Association and
the average life of loans and securities, which can adversely impact the yields
earned on the Association's loan and securities portfolio.  In periods of
decreasing interest rates, the average life of loans held by the Association may
be shortened to the extent increased prepayment activity occurs during such
periods which, in turn, may result in the Association investing funds from such
prepayments in lower yielding assets.  See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Management of Interest Rate
Risk."

Risks Associated with Economic Conditions in the Association's Primary Market
Area

     The Association's primary market area consists of Trumbull and Mahoning
Counties in Northeastern Ohio.  Nine of the Association's offices are located in
Trumbull County, including the Association's main office in the City of Warren
and two offices are in Mahoning County.  With regard to several important
economic factors, statistics for the Association's primary market area in recent
years have trailed both the State of Ohio and the United States.

                                      12
In 1997, the per capita annual income of $14,953 for the Association's
primary market area was lower than the $17,244 and $18,100 per capita annual
income for Ohio and the United States, respectively.  The median annual
household income for the Association's primary market area was $31,060 in 1996,
compared to $36,165 for the State of Ohio and $36,961 for the United States.
The unemployment rates for the Association's market area and the City of Warren
have exceeded both the Ohio and national rates in the recent past.  For 1998,
through May, the unemployment rate in the Association's primary market area
averaged 5.0%, compared to 4.2% for Ohio and 3.9% for the United States.  The
City of Warren experienced a significantly higher unemployment rate of 9.3% in
January 1998.

     There have been published reports that General Motors ("GM") is considering
closing its Lordstown, Ohio, plant, which employs approximately 6,400 people in
the Warren/Youngstown area.  While GM has not commented on such reports, and the
possibility of such a closure cannot be determined, if the plant were to be shut
down, the resulting unemployment would have a major adverse impact on the
economy in the region, and therefore on the Association's results of operations.
Additionally, a number of businesses in the Warren/Youngstown area are dependent
on the Lordstown plant and/or its employees and the impact of a plant closing
would have a ripple effect on other businesses in the area, which in turn would
exacerbate the adverse impact of the closing on the Association.  The reports
estimate that a closure would be effective in 2003.  The reports state that
decision on the future of the Lordstown plant could be made as early as November
of 1998.  The Association is unable to estimate the extent of the impact that
such a closure would have on its results of operations.

     A decline in the local economy could result in an increase in the level of
defaults by borrowers in the repayment of existing loans and could suppress
demand for new loans.  Similarly, a decline in the local economy could result in
a decline in core deposits as customers would have fewer discretionary funds for
savings.  If these conditions occurred, they could adversely affect the
Association's net income.  Moreover, the absence of a robust local economy could
limit the Association's potential for growth in its primary market area.

Lending and Deposit Concentrations

     At June 30, 1998, the majority of the Association's total real estate loans
were secured by properties in Trumbull and Mahoning Counties, located in
northeastern Ohio.  A concentration of loans secured by properties in any single
area presents the risk that any adverse change in the local economic or
employment conditions may result in increased loan delinquencies and loan
losses.  The Association attempts to address this risk by relying upon
conservative underwriting practices when considering loans and frequently
reviewing general economic information relating to northeastern Ohio.  See
"Business of the Association--Lending Activities."

Increased Lending Risks Associated with Automobile Loans

     In recent years, the Association has increased its emphasis on automobile
loans.  At June 30, 1998, the Association's consumer loan portfolio totaled
$64.1 million, or 17.6% of the Association's total loans, and consisted
primarily of new and used automobile loans.  At that date, automobile loans
totaled $52.8 million, or 14.5% of total loans and 82.5% of consumer loans.
Loans secured by rapidly depreciable assets such as automobiles entail greater
risks than one- to four-family residential mortgage loans.  In such cases,
repossessed collateral for a defaulted loan may not provide an adequate source
of repayment of the outstanding loan balance, since there is a greater
likelihood of damage, loss or depreciation of the underlying collateral.
Further, collections on these loans are dependent on the borrower's continuing
financial stability and, therefore, are more likely to be adversely affected by
job loss, divorce, illness or personal bankruptcy.  Finally, the application of
various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount which can be recovered on such loans in
the event of a default.  See "Business of the Association--Lending Activities--
Consumer Lending."

Potential Low Return on Equity Following the Conversion

     At June 30, 1998, the Association's ratio of average retained earnings to
average assets was 9.71%.  The Company's equity position will be significantly
increased as a result of the Conversion.  On a pro forma basis as of June 30,
1998, assuming the sale of Common Stock at the midpoint of the Estimated Price
Range, the Company's ratio of equity to assets would exceed 21.5%.  The
Company's ability to deploy this new capital through investments in interest-

                                      13
bearing assets, such as loans and securities, which bear rates of return
comparable to its current investments, will be significantly affected by
industry competition for such investments. The Company currently anticipates
that it will take time to prudently deploy such capital. In addition, the
issuance of authorized but unissued shares of Common Stock to the Foundation
will adversely impact the Company's earnings per share on a going-forward basis.
As a result, the Company's return on equity initially is expected to be below
its historical return on equity and may be below peer group institutions after
the Conversion.

Year 2000 Compliance

     As the year 2000 approaches, a critical business issue has emerged
regarding how existing application software programs and operating systems can
accommodate this date value.  In brief, many existing application software
products in the marketplace were designed to only accommodate a two digit date
position which represents the year  (e.g., '95 is stored on the system and
represents the year 1995).  The Association has been identifying potential
problems associated with the year 2000 issue and is in the process of
implementing a plan designed to ensure that all software used in connection with
the Association's business will manage and manipulate data involving the
transition with dates from 1999 to 2000 without functional or data abnormality
and without inaccurate results related to such data.  In addition, the
Association recognizes that its ability to be "Year 2000" compliant, to some
extent, is dependent upon the cooperation of its vendors.  The Association is
requiring its computer systems and software vendors to represent that the
products provided are or will be Year 2000 compliant and has planned a program
of testing for compliance.  There can be no assurances that such plan or the
performance by the Association's vendors will be effective to remedy all
potential problems.  To the extent the Association's systems are not fully Year
2000 compliant, there can be no assurance that potential systems interruptions
or the cost necessary to update software would not have a material adverse
effect on the Company's business, financial condition, results of operations and
business prospects.  Further, any Year 2000 failures on the part of the
Association's customers could result in additional expense or loss to the
Association.  The Association's plan also contemplates working with its
customers to address any potential Year 2000 problems.

Highly Competitive Industry and Geographic Area

     The Association faces significant competition in its primary market area
both in attracting deposits and in originating loans.  All of the Association's
offices are located in Trumbull and Mahoning Counties in northeastern Ohio.  The
Association's share of deposits in Trumbull and Mahoning Counties amounts to
approximately 7.3%.  The Association faces direct competition from a significant
number of financial institutions operating in its market area, many with a
state-wide or regional presence, and, in some cases, a national presence.  This
competition arises from commercial banks, savings banks, mortgage banking
companies, credit unions and other providers of financial services, many of
which are significantly larger than the Association and, therefore, have greater
financial and marketing resources than those of the Association.  As the
Trumbull and Mahoning Counties area continues to develop, the continued
profitability of the Association will depend, in part, upon its ability to
compete successfully in its primary market area.  See "Business of the
Association - Primary Market Area."

Provisions Which May Discourage Takeover Attempt

     Provisions in the Company's and the Association's Governing Instruments.
Certain provisions of the Company's Certificate of Incorporation and Bylaws,
particularly a provision limiting voting rights, and the Association's Stock
Charter and Bylaws, as well as certain federal regulations, assist the Company
in maintaining its status as an independent publicly owned corporation.  These
provisions provide for, among other things, supermajority voting on certain
matters, staggered boards of directors, noncumulative voting for directors,
limits on the calling of special meetings of shareholders, limits on the ability
to vote Common Stock in excess of 10% of outstanding shares, and certain uniform
price provisions for certain business combinations.  The Association's Stock
Charter also prohibits, for five years, the acquisition or offer to acquire,
directly or indirectly, the beneficial ownership of more than 10% of the
Association's equity securities.  Any person, or group acting in concert,
violating this restriction may not vote the Association's securities in excess
of 10%.  These provisions in the Association's and the Company's governing
instruments may discourage potential proxy contests and other potential takeover
attempts, particularly those which have not been negotiated with the Boards of
Directors, and thus, generally may serve to perpetuate current management.  For
a more detailed discussion of these provisions, see "Restrictions on Acquisition
of the Company and the Association."

                                      14
Voting Control of Officers and Directors.  Directors and executive officers
of the Association and the Company expect to purchase approximately 4.6% or 3.4%
of the shares of Common Stock to be issued in the Conversion, including shares
issued to the Foundation, based upon the minimum and the maximum of the
Estimated Price Range, respectively, and exclusive of shares that may be
attributable to directors and officers through the Stock Program, the Stock
Option Plan and the ESOP, which plans may give directors, executive officers and
employees the potential to control the voting of an additional 20.0% of the
Company's Common Stock on a fully diluted basis at the maximum of the Estimated
Price Range.  In addition, the Foundation will be funded with a contribution by
the Company equal to 7.7% of the Common Stock sold in the Conversion, which if a
waiver of the voting restriction imposed on such Common Stock is obtained from
the OTS, may be voted as determined by the Directors of the Foundation who also
will be Directors of the Company or the Association.  Management's potential
voting control could, together with additional stockholder support, defeat
stockholder proposals requiring 80% approval of stockholders.  As a result, this
potential voting control may preclude takeover attempts that certain
stockholders deem to be in their best interest and may tend to perpetuate
existing management.  See "Restrictions on Acquisition of the Company and the
Association - Restrictions in the Company's Certificate of Incorporation and
Bylaws" and "The Conversion - Establishment of the Charitable Foundation."

Absence of Market For Common Stock

     The Company, as a newly organized company, has never issued capital stock,
and consequently, there is no established market for its Common Stock at this
time.  The Company has applied to have its Common Stock quoted on the Nasdaq
under the symbol "FPFC" upon completion of the Conversion.  A public trading
market having the desirable characteristics of depth, liquidity and orderliness
depends upon the existence of willing buyers and sellers at any given time, the
presence of which is dependent upon the individual decisions of buyers and
sellers over which the Company has no control.  Accordingly, there can be no
assurance that an active and liquid trading market for the Common Stock will
develop or that, if developed, will continue, nor is there any assurance that
purchasers of the Common Stock will be able to sell their shares at or above the
Purchase Price.  The absence or discontinuance of a market for the Common Stock
would have an adverse impact on both the price and liquidity of the Common
Stock.  See "Market for Common Stock."

Possible Dilutive Effect of Stock Program and Stock Options

     Following the Conversion, the Stock Program will acquire an amount of
shares equal to 4% of the shares of Common Stock issued in the Conversion,
including shares issued to the Foundation, either through open market purchases
or the issuance of authorized but unissued shares of Common Stock from the
Company.  If the Stock Program is funded by the issuance of authorized but
unissued shares, the voting interests of existing shareholders will be diluted
by approximately 3.8%.  Also following the Conversion, the Company intends to
implement the Stock Option Plan which will provide directors and selected
employees of the Company and the Association with Stock Options to purchase
authorized but unissued shares in an amount equal to 10% of the Common Stock
issued in the Conversion, including shares issued to the Foundation.  If all of
the Stock Options intended to be granted were to be exercised using authorized
but unissued Common Stock and if the Stock Program were funded with authorized
but unissued shares, the voting interests of existing stockholders would be
diluted by approximately 12.3%.

Possible Adverse Income Tax Consequences of the Distribution of Subscription
Rights

     The Association has received an opinion of Keller that subscription rights
granted to Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members have no value.  However, this opinion is not binding on the IRS.
If the subscription rights granted to Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are deemed to have an ascertainable
value, such recipients could be taxed upon receipt of such subscription rights.
Additionally, the Association could recognize a gain for tax purposes on such
distribution.  Whether subscription rights are considered to have ascertainable
value is an inherently factual determination.  See "The Conversion - Effects of
Conversion" and "- Tax Aspects."

                                      15
Possible Increase in Estimated Price Range and Number of Shares Issued

     The number of shares to be sold in the Conversion may be increased as a
result of an increase in the Estimated Price Range of up to 15% to reflect
changes in market and financial conditions following the commencement of the
Subscription and Community Offerings. In the event that the Estimated Price
Range is so increased, it is expected that the Company will sell up to
13,754,000 shares of Common Stock at the Purchase Price for an aggregate
purchase price of up to $137.5 million. An increase in the number of shares
issued will decrease a subscriber's pro forma net earnings per share and
stockholders' equity per share and will increase the Company's pro forma
consolidated stockholders' equity and net earnings. Such an increase will also
increase the Purchase Price as a percentage of pro forma stockholders' equity
per share and net earnings per share.

No Fairness Opinion

     The Association has engaged Webb as a financial and marketing advisor, and
Webb has agreed to assist the Association and the Company in its solicitation of
subscriptions and purchase orders for Common Stock in the Offerings.  Webb has
not prepared any report or opinion constituting recommendations or advice to the
Association.  In addition, Webb has expressed no opinion as to the prices at
which Common Stock to be issued in the Offerings may trade.  Furthermore, Webb
has not verified the accuracy or completeness of the information contained in
the Prospectus or the Proxy Statement.  See "The Conversion - Marketing and
Underwriting Arrangements."

Potential Delays of Consummation of the Conversion

     Orders submitted in the Subscription Offering, Community Offering and/or
Syndicated Community Offering are irrevocable.  The Company and the Association
expect to complete the Conversion within the time periods indicated in this
Prospectus.  Nevertheless, it is possible that several factors, including, but
not limited to, a delay in receiving regulatory approval of the final updated
appraisal prepared by Keller, a delay in processing orders in the event the
Offerings are oversubscribed or a delay caused by a regulatory or legal
challenge to the establishment and funding of the Foundation or other actions
taken in connection with the Conversion could significantly delay the completion
of the Conversion.  Subscribers will have no access to subscription funds and/or
shares of Common Stock until the Conversion is completed or terminated.  In the
event the Conversion is terminated, subscribers will be refunded their
subscription funds, together with interest at a rate equal to the Association's
interest rate paid on passbook accounts, or will have their withdrawal
authorization terminated.  See "The Conversion."

Effects of the Establishment of the Charitable Foundation

     Pursuant to the Plan, the Company intends to voluntarily establish a
charitable foundation in connection with the Conversion.  The Foundation will be
incorporated under Delaware law as a non-stock corporation and will be funded
with shares of Common Stock contributed by the Company.  Establishment of the
Foundation is subject to the approval of the Association's members at the
Special Meeting.  If approved by members, the establishment of the Foundation
and the contribution of Common Stock to the Foundation will be dilutive to the
interests of stockholders and will have an adverse impact on the reported
earnings of the Company in fiscal 1999, the year in which the Foundation will be
funded.

     Dilution of Stockholders' Interests.  The Company proposes to fund the
Foundation with Common Stock of the Company in an amount equal to 7.7% of the
Common Stock to be sold in the Conversion.  At the minimum, midpoint and maximum
of the Estimated Price Range, the contribution to the Foundation would equal
680,000,  800,000 and 920,000 shares, with a value of $6.8 million, $8.0 million
and $9.2 million, respectively, based on the Purchase Price of $10.00 per share.
Assuming the sale of Common Stock at the maximum of the Estimated Price Range,
upon completion of the Conversion and establishment of the Foundation, the
Company will have 12,880,000 shares issued and outstanding of which the
Foundation will own 920,000 shares, or 7.1%.  AS A RESULT, PERSONS PURCHASING
SHARES OF COMMON STOCK IN THE CONVERSION WILL HAVE THEIR OWNERSHIP AND VOTING
INTERESTS IN THE COMPANY DILUTED BY 7.1%, AS COMPARED TO COMPLETING THE
CONVERSION WITHOUT THE FOUNDATION.  SEE "PRO FORMA DATA."

     Adverse Impact on Earnings.  Assuming receipt of approval of the
Association's members, the contribution of Common Stock to the Foundation will
have an adverse impact on the Company's earnings in the year in which the

                                      16
contribution is made. The Company will recognize the full expense in the amount
of the contribution of Common Stock to the Foundation in the quarter in which it
occurs, which is expected to be the second quarter of fiscal 1999. The amount of
the contribution will range from $6.8 million to $9.2 million, based on the
minimum and maximum of the Estimated Price Range. The contribution expense will
be partially offset by the tax benefit related to the expense. The Company and
the Association have been advised by their independent tax advisors that the
contribution to the Foundation will be tax deductible, subject to an annual
limitation based on 10% of the Company's annual taxable income. Assuming a
contribution of $9.2 million in Common Stock (based on the maximum of the
Estimated Price Range), the Company estimates a net tax effected expense of $6.1
million (based upon a 34% tax rate). If the Foundation had been established at
June 30, 1998, the Association would have reported a net loss of $2.0 million,
rather than reporting net income of $4.1 million for the year ended June 30,
1998. Management cannot predict earnings for fiscal 1999, but expects that the
establishment and funding of the Foundation will have an adverse impact on the
Company's earnings for the quarter in which the Foundation is funded. Due to the
contribution to the Foundation, the Association expects in the future to reduce
the amount of its current charitable contributions within its community. The
Company and the Association do not currently anticipate making additional
contributions to the Foundation within the first five years following the
initial contribution.

     Tax Considerations.  The Company and the Association have been advised by
Crowe, Chizek and Company LLP that an organization created for the above
purposes would qualify as a Section 501(c)(3) exempt organization under the
Internal Revenue Code of 1986, as amended (the "Code"), and would be classified
as a private foundation.  The Foundation will submit a request to the Internal
Revenue Service ("IRS") to be recognized as an exempt organization.  The Company
and the Association have received an opinion of Crowe, Chizek and Company LLP
that the Foundation would qualify as a Section 501(c)(3) exempt organization
under the Code, except that such opinion does not consider the impact of the
regulatory condition agreed to by the Foundation that Common Stock issued to the
Foundation be voted in the same ratio as all shares of the Company's Common
Stock voted on all proposals considered by stockholders of the Company.  See
"The Conversion - Establishment of the Charitable Foundation."  Consistent with
this condition, in the event that the Company or the Foundation receives an
opinion of their legal counsel that compliance with the voting restriction would
have the effect of causing the Foundation to lose its tax-exempt status, or
otherwise have a material and adverse tax consequence on the Foundation or
subject the Foundation to an excise tax under Section 4941 of the Code, the OTS
will waive such voting restriction upon submission of a legal opinion by the
Company or the Foundation that is satisfactory to the OTS.  The independent tax
advisors' opinion further provides that the Company's contribution of its own
stock to the Foundation will not constitute an act of self-dealing, and that the
Company will be entitled to a deduction in the amount of the fair market value
of the stock at the time of the contribution less the nominal par value that the
Foundation is required to pay to the Company for such stock, subject to an
annual limitation based on 10% of the Company's annual taxable income.  The
Company, however, would be able to carry forward any unused portion of the
deduction for five years following the contribution subject to the 10% annual
limitation.  Thus, while the Company would have received a charitable
contribution deduction of approximately $700,000 in fiscal 1998 (based upon the
sale of stock at the maximum of the Estimated Price Range and a contribution of
$9.2 million of Common Stock and the Association's pre-tax income for fiscal
1998), the Company is permitted under the Code to carryover the excess
contribution in the five following years.  Assuming the sale of Common Stock at
the midpoint of the Estimated Price Range, the Company estimates that
substantially all of the deduction should be deductible over the six-year
period.  Although the Company and the Association have received an opinion of
Crowe, Chizek and Company LLP that the Company will be entitled to the deduction
for the charitable contribution, there can be no assurances that the IRS will
recognize the Foundation as a Section 501(c)(3) exempt organization or that the
deduction will be permitted.  In such event, the Company's tax benefit related
to the Foundation would have to be fully expensed, resulting in a further
reduction in earnings in the year in which the IRS makes such a determination.

     Comparison of Valuation and Other Factors Assuming the Foundation is Not
Established as Part of the Conversion.  The establishment of the Foundation was
taken into account by Keller in determining the estimated pro forma market value
of the Common Stock of the Company.  The aggregate price of the shares of Common
Stock being offered in the Subscription and Community Offerings is based upon
the independent appraisal conducted by Keller of the estimated pro forma market
value of the Common Stock of the Company. The pro forma aggregate price of the
Common Stock being offered for sale in the Conversion is currently estimated to
be between $88.4 million and $119.6 million, with a midpoint of $104.0 million.
Based on the appraisal, the pro forma market capitalization of the Association
at the midpoint of the Estimated Price Range, including shares issued to the
Foundation, is $112.0 million.  

                                      17
The pro forma price to book ratio and the pro forma price to earnings ratio, at
and for the year ended June 30, 1998, are 74.40% and 16.95x, respectively, at
the midpoint of the Estimated Price Range. In the event that the Conversion did
not include the Foundation, Keller has estimated that the estimated pro forma
market capitalization of the Association would be approximately $122.0 million
at the midpoint based on a pro forma price to book ratio and the pro forma price
to earnings ratio that are approximately the same as the independent appraisal
at 74.26% and 16.95x, respectively. If the Foundation was not part of the
Conversion, the pro forma market value of the shares being offered is estimated
to be between $103.7 million and $140.3 million. See "Comparison of Valuation
and Pro Forma Information with No Foundation." This estimate by Keller was
prepared at the request of the OTS and is solely for purposes of providing
depositors and subscribers with information with which to make an informed
decision on the Conversion. There is no assurance that if the Foundation was not
approved the appraisal prepared at that time would conclude that the pro forma
market value of the Company would be the same as the amount estimated herein.
Any appraisal prepared at that time would be based on the facts and
circumstances existing at that time, including, among other things, market and
economic conditions.

     The Association believes that the establishment of the Foundation is in the
best interests of the Association, its depositors, its prospective stockholders
and the communities in which it operates.  The Foundation is integrally tied to
the Association's business of operating a community banking institution and the
Association believes that the Foundation will have a positive impact on the
Association's long-term franchise value.  The amount of Common Stock being
offered in the Conversion at the midpoint of the Estimated Price Range is
approximately $18.0 million less than the estimated amount of Common Stock that
would be offered in the Conversion without the Foundation based on the estimate
provided by Keller.  Accordingly, certain depositors of the Association who
subscribe to purchase Common Stock in the Subscription Offering may receive
fewer shares depending on the appraisal valuation at that time, the number of
shares sold based on that appraisal, the size of a depositor's stock order, the
amount of his or her qualifying deposits in the Association and the overall
level of subscriptions.  The decrease in the amount of Common Stock being
offered as a result of the contribution of Common Stock to the Foundation will
not have a significant effect on the Company or the Association's capital
position.  The Association's regulatory capital is significantly in excess of
its regulatory capital requirements and will further exceed such requirements
following the Conversion.  The Association's tangible, core and risk-based
capital ratios at June 30, 1998 were 9.5%, 9.5% and 21.8%, respectively.
Assuming the sale of shares at the midpoint of the Estimated Price Range, the
Association's pro forma tangible, core and risk-based capital ratios at June 30,
1998 would be 14.8%, 14.8% and 33.3%, respectively.  On a consolidated basis,
the Company's pro forma stockholders' equity would be $150.5 million, or
approximately 21.6% of pro forma consolidated assets, assuming the sale of
shares at the midpoint of the Estimated Price Range.  Pro forma stockholders'
equity per share and pro forma net earnings per share would be $13.44 and $0.59,
respectively.  If the Foundation was not being established in the Conversion,
based on the Keller estimate, the Company's pro forma stockholders' equity would
be approximately $169.2 million, or approximately 23.5% of pro forma
consolidated assets at the midpoint of the estimate, and pro forma stockholder's
equity per share and pro forma net earnings per share would be substantially
similar with the Foundation as without the establishment of the Foundation.
See "Comparison of Valuation and Pro Forma Information with No Foundation."

     Potential Anti-Takeover Effect.  If approved by members, upon completion of
the Conversion, the Foundation will own 7.1% of the total shares of the
Company's Common Stock outstanding.  Such shares will be owned solely by the
Foundation; however pursuant to the terms of the contribution as mandated by the
OTS, the shares of Common Stock held by the Foundation must be voted in the same
ratio as all other shares of the Company's Common Stock on all proposals
considered by the stockholders of the Company.  See "The Conversion--
Establishment of the Charitable Foundation--Regulatory Conditions Imposed on the
Foundation."  The Company and the Foundation will take the necessary steps to
provide such requirement in the Foundation's corporate governance documents.  As
such, the Company does not believe the Foundation will have an anti-takeover
effect on the Company.  In the event that the OTS were to waive this voting
restriction, the Foundation's board of directors would exercise sole voting
power over such shares and would no longer be subject to the restriction.
However, the OTS could impose additional conditions at that time on the
composition of the board of directors of the Foundation or which otherwise
relate to control of the Common Stock held by the Foundation.  See "The
Conversion--Establishment of the Foundation--Regulatory Conditions Imposed on
the Foundation."  If a waiver of the voting restriction were granted by the OTS
and no further conditions were imposed on the Foundation at that time,
management of the Company and the Association may benefit to the extent that the
Board of Directors of the Foundation determines to vote the shares of Common
Stock held by the Foundation in 

                                      18
favor of proposals supported by the Company and the Association. Furthermore, in
such an event, when the Foundation's shares are combined with shares purchased
directly by officers and directors of the Company, shares held by the Stock
Program trust, and shares held by the ESOP trust, the aggregate of such shares
could exceed 20% of the Company's outstanding Common Stock, which could enable
management to defeat stockholder proposals requiring 80% approval. Consequently,
in the event the voting restriction was waived, the potential voting control
might preclude takeover attempts that certain stockholders deem to be in their
best interest, and might tend to perpetuate management. However, since the ESOP
shares are allocated to all eligible employees of the Association, and any
unallocated shares will be voted by an independent trustee, and because the
Stock Program must first be approved by stockholders no sooner than six months
following completion of the Conversion, and awards under such proposed plans may
be granted to employees other than executive officers and Directors, management
of the Company does not expect to have voting control of all shares covered by
the ESOP and other stock-based benefit plans. See " -Certain Anti-Takeover
Provisions - Voting Control of Officers and Directors."

     Further, there will be no agreements or understandings, written or tacit,
with respect to the exercise of either direct or indirect control over the
management or policies of the Company by the Foundation which may discourage
takeover attempts, including agreements related to voting, acquisition or
disposition of the Company's Common Stock.  Finally, as the Foundation sells its
shares of Common Stock over time, its ownership interest and voting power in the
Company is expected to decrease.

     Potential Challenges.  The establishment and funding of a charitable
foundation as part of a conversion of a mutual savings institution to stock form
is innovative and has been done in a limited number of instances.  As such, the
Foundation may be subject to potential challenges notwithstanding that the Board
of Directors of the Company and the Board of Directors of the Association have
carefully considered the various factors involved in the establishment of the
Foundation in reaching their determination to establish the Foundation as part
of the Conversion.  See "The Conversion - Establishment of the Charitable
Foundation - Purpose of the Foundation."  In conjunction with its approval of
the Conversion, the Association determined to submit the Foundation for a vote
of members so that members have a right to vote on whether the Foundation should
be established as part of the Conversion.  If certain parties were to institute
an action seeking to require the Association to eliminate establishment of the
Foundation in connection with the Conversion, no assurances can be made that the
resolution of such challenges would not result in a delay in the consummation of
the Conversion or that any objecting persons would not be ultimately successful
in obtaining such removal or other equitable relief or monetary damages against
the Company or the Association.  Additionally, if the Company and the
Association are forced to eliminate the Foundation, the Company may be required
to resolicit subscribers in the Offerings.

     Approval of Members.  Establishment of the Foundation is subject to the
approval of a majority of the total outstanding votes of the Association's
members eligible to be cast the Special Meeting.  The Foundation will be
considered as a separate matter from approval of the Plan of Conversion.  If the
Association's members approve the Plan of Conversion, but not the establishment
of the Foundation, the Association intends to complete the Conversion without
the establishment of the Foundation.  Failure to approve the Foundation may
materially increase the pro forma market value of the Common Stock being offered
for sale in the Offerings since the Valuation Range, as set forth herein, takes
into account the dilutive impact of the issuance of shares to the Foundation.
If the pro forma market value of the Common Stock without the Foundation is
either greater than $137.5 million or less than $88.4 million, the Association
will establish a new Estimated Price Range and commence a resolicitation of
subscribers (i.e., subscribers will be permitted to continue their orders, in
which case they will need to affirmatively reconfirm their subscriptions prior
to the expiration of the resolicitation offering or their subscriptions funds
will be promptly refunded with interest at the Association's passbook rate of
interest, or be permitted to increase, decrease, or cancel their subscriptions).
Any change in the Estimated Price Range must be approved by the OTS.  See "The
Conversion--Stock Pricing."  A resolicitation, if any, following the conclusion
of the Subscription and Community Offerings would not exceed 45 days unless
further extended by the OTS for periods of up to 90 days not to extend beyond
__________, 2000.

                                      19
Stock-Based Benefits to Management, Employment Contracts and Change in Control
Payments

     Stock Program.  The Company intends to adopt the Stock Program which would
provide stock grants of Common Stock to non-employee directors and selected
officers and employees of the Company and Association and intends to seek
stockholder approval of such plans at a meeting of stockholders following the
Conversion, which may be held no earlier than six months after completion of the
Conversion.  The Company expects to acquire Common Stock on behalf of the Stock
Program in an amount equal to 4% of the Common Stock issued in connection with
the Conversion, including shares issued to the Foundation, or 380,800 shares and
515,200 shares at the minimum and maximum of the Estimated Price Range,
respectively.  These shares will be acquired either through open market
purchases or from authorized but unissued Common Stock.  See "- Possible
Dilutive Effect of Stock Program and Stock Options." Although no specific award
determinations have been made, the Company anticipates that it will provide
awards under the Stock Program to the directors and selected officers and
employees of the Company and Association to the extent permitted by applicable
regulations. See "Management of the Association - Benefit Plans - Stock
Program." These shares granted under the Stock Program will be awarded at no
cost to the recipients. The implementation of such Stock Program may result in
increased compensation expenses to the Company and may have a dilutive effect on
existing stockholders. See "Management of the Association - Benefit Plans -Stock
Program" and "- Possible Dilutive Effect of Stock Program and Stock Options."

     Stock Option Plan.  The Company also intends to adopt stock-based benefit
plans which would provide options to purchase Common Stock ("Stock Options") to
officers, employees and non-employee directors of the Company and Association
(the "Stock Option Plan") and intends to seek stockholder approval of such plans
at a meeting of stockholders following the Conversion, which may be held no
earlier than six months after completion of the Conversion.  Although no
specific determinations have been made, the Company expects that non-employee
directors and selected officers and employees of the Company and Association
will be granted options to purchase Common Stock in an amount equal to 10% of
the Common Stock issued in connection with the Conversion, including shares
issued to the Foundation, or 952,000 shares and 1,288,000 shares at the minimum
and maximum of the Estimated Price Range, respectively.  It is currently
intended that the exercise price of the Stock Options will be equal to the fair
market value of the underlying Common Stock on the date of grant.  Recipients of
Stock Options will not be required to pay for the shares until the date of
exercise.  The implementation of such Stock Option Plan may have a dilutive
effect upon existing stockholders of the Company to the extent option exercises
are satisfied with authorized but unissued shares.  See "- Possible Dilutive
Effect of Stock Program and Stock Options" and "Management of the Association -
Benefit Plans - Stock Option Plan."

     Change In Control Provisions.  The Company and the Association intend to
enter into employment or change in control agreements with certain officers of
the Association and Company which will provide for benefits and cash payments in
the event of their involuntary or, in certain circumstances, voluntary
termination following a change in control of the Company or Association.  These
provisions may have the effect of increasing the cost of acquiring the Company
or Association, thereby discouraging future attempts to take over the Company or
the Association.  Additionally, the Association intends to adopt an employee
severance compensation plan, which similarly provides a cash payment and
benefits to eligible employees upon such employees' termination following a
change in control of the Company or Association, which, in addition to any
payments which may be made under the Stock Program and Stock Option Plan, also
may have the effect of increasing the cost of acquiring the Company or
Association.  Based on current salaries, cash payments to be paid in the event
of a change in control pursuant to the terms of the employment agreements, and
change in control agreements would be approximately $___ million.  However, the
actual amount to be paid in the event of a change in control of the Association
or the Company cannot be estimated at this time because the actual amount is
based on the average salary of the employee and other factors existing at the
time of the change in control.  See "Restrictions on Acquisition of the Company
and the Association - Restrictions in the Company's Certificate of Incorporation
and Bylaws," "Management of the Association - Employment Agreements," "- Change
in Control Agreements," "- Employee Severance Compensation Plan," "- Benefit
Plans - Stock Option Plan" and "- Benefit Plans - Stock Program."

                                      20
FIRST PLACE FINANCIAL CORP.

     First Place Financial Corp. is a Delaware corporation recently organized at
the direction of the Board of Directors of the Association for the purpose of
acquiring all of the capital stock of the Association to be issued in the
Conversion.  The Company expects to receive approval from the Office of Thrift
Supervision ("OTS") to become a savings and loan holding company and, upon
completion of the Conversion, will be subject to regulation by the OTS.  See
"The Conversion - General" and "Regulation - Holding Company Regulation."  Upon
consummation of the Conversion, the Company will have no significant assets
other than all of the shares of the Association's capital stock acquired in the
Conversion and an amount equal to 50% of the net proceeds of the Conversion,
including the loan to the ESOP, and will have no significant liabilities.  The
Company intends to use a portion of the net proceeds it retains to loan to the
ESOP funds to enable the ESOP to purchase up to 8% of the stock issued in
connection with the Conversion, including shares issued to the Foundation.  The
Company and the Association may, however, alternatively choose to fund the ESOP
through a loan to the ESOP trust by a third-party financial institution.  The
management of the Holding Company is set forth under "Management of the
Company."  Initially, the Company will neither own nor lease any property, but
will instead use the premises, equipment and furniture of the Association.  At
the present time, the Company does not intend to employ any persons other than
certain officers who are currently officers of the Association but will utilize
the support staff of the Association from time to time.  Additional employees
will be hired as appropriate to the extent the Company expands its business in
the future.

     Management believes that the holding company structure will provide the
Company additional flexibility to diversify its business activities through
existing or newly formed subsidiaries (which subsidiaries could be financial
institutions), or through acquisitions of or mergers with other financial
institutions and financial services related companies.  Although there are no
current arrangements, understandings or agreements regarding any such
opportunities, the Company will be in a position after the Conversion, subject
to regulatory limitations and the Company's financial position, to take
advantage of any such acquisition and expansion opportunities that may arise.
The initial activities of the Company are anticipated to be funded by the
proceeds to be retained by the Company, income thereon and through dividends
from the Association.

     The Company's executive office is located at the administrative offices of
the Association, 185 East Market Street, Warren, Ohio 44482.  Its telephone
number is (330) 373-1221.

              FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN

     The Association was originally organized in 1922 as an Ohio-chartered
savings and loan association, and converted to a federally-chartered savings and
loan association in 1936.  The Association's deposit accounts are insured to the
maximum allowable amount by the SAIF as administered by the FDIC.  Including the
Association's principal office, which is located in Warren, Ohio, the
Association serves its customers from 11 full-service banking facilities and 2
loan service centers located in Warren, Ohio and its surrounding areas.  At June
30, 1998, the Association had total assets of $609.4 million, total deposits of
$435.5 million, retained earnings of $59.4 million and had a tangible capital
ratio of 9.52%, a core capital ratio of 9.52% and a total risk-based capital
ratio of 21.84%.  See "Regulation--Federal Savings Institution Regulation--
Capital Requirements."

     The Association is a community-oriented savings institution whose principal
business consists of accepting retail deposits from the general public in its
primary market area, consisting of those areas surrounding its full-service
branch offices, and investing those deposits, together with funds generated from
operations and borrowings, primarily in one- to four-family residential mortgage
loans, automobile and home equity loans and, to a much lesser extent, multi-
family and commercial real estate loans, construction loans, commercial loans
and passbook savings loans.  The Association also invests in government issued
and sponsored mortgage-backed securities, securities issued by the U.S.
Government and agencies thereof, and other investments permitted by applicable
laws and regulations.  The Association's primary market area for lending
consists of Trumbull and Mahoning Counties.  See "Business of the Association."

                                      21
At June 30, 1998, the Association's gross loan portfolio totaled $363.4
million, or 59.6% of total assets, of which $268.0 million were one- to four-
family residential mortgage loans, $4.5 million were multi-family real estate
loans, $8.8 million were commercial real estate loans, $6.3 million were
construction loans, $9.2 were home equity loans and $64.1 million were consumer
loans, consisting primarily of automobile loans.  The Association originates
one- to four-family mortgage loans generally secured by properties located in
the Association's primary market area.  See "Business of the Association."

     The Association's investment activities primarily consist of investments in
mortgage-backed securities and U.S. Government obligations.  At June 30, 1998,
the Association's securities portfolio totaled $239.5 million, or 39.3% of total
assets, of which $211.2 million was categorized as available-for-sale.  At June
30, 1998, the Association's mortgage-backed securities portfolio totaled $207.9
million, or 34.1% of total assets, of which $190.1 million was classified as
available-for-sale and consisted almost entirely of mortgage-backed securities,
guaranteed or issued by Governmental-sponsored and federal agencies such as the
Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation ("FHLMC") and Government National Mortgage Association ("GNMA"). The
Association's investment securities generally consist of United States
Government or federal agency obligations.  See "Business of the Association -
Investment Activities."

     At June 30, 1998, the Association's deposit accounts totaled $435.5 million
or 79.2% of total liabilities, of which $175.5 million, or 40.3%, were comprised
of passbook saving accounts, retail checking/NOW accounts, money market accounts
and commercial checking accounts.  In addition to core deposits, the Association
had $260.0 million of certificate accounts, or 59.7% of total deposits, of which
$167.8 million  were certificates of deposit with maturities of one year or less
and $53.2 million were certificates of deposit with balances of $100,000 or more
("jumbo deposits").

     The Association's executive office is located at 185 East Market Street,
Warren, Ohio 44482.  Its telephone number is (330) 373-1221.

                                      22
REGULATORY CAPITAL COMPLIANCE

     At June 30, 1998, the Association exceeded each of its regulatory capital
requirements. Set forth below is a summary of the Association's compliance with
the OTS capital standards as of June 30, 1998, on an historical and pro forma
basis assuming that the indicated number of shares were sold as of such date and
receipt by the Association of 50% of the net proceeds. For purposes of the table
below, the amount expected to be borrowed by the ESOP and the cost of its shares
expected to be acquired by the Stock Program are deducted from pro forma
regulatory capital.
Pro Forma at June 30, 1998 Based Upon the Sale at $10.00 Per Share
                                                            ------------------------------------------------------------------
                                                                8,840,000 Shares            10,400,000 Shares  
                                                                (Minimum of the             (Midpoint of the   
                                     Historical at                 Estimated                    Estimated       
                                     June 30, 1998                Price Range)                 Price Range)     
                                -------------------------   -------------------------    -------------------------
                                                Percent                     Percent                      Percent   
                                                  of                          of                           of     
                                  Amount       Assets(2)      Amount       Assets(2)       Amount       Assets(2)  
                                -----------   -----------   -----------   -----------    -----------   -----------
                                                              (Dollars in thousands)
GAAP Capital(3)..............     $59,357         9.7%        $91,146        14.2%          $96,867        15.0%   
                                  =======        ====         =======        ====           =======        ====    
Tangible Capital:                                                                                                 
   Capital Level(4)..........     $57,763         9.5%        $89,552        14.0%          $95,273        14.8%   
   Requirement(5)............       9,117         1.5           9,594         1.5             9,680         1.5    
                                  -------        ----         -------        ----           -------        ----    
   Excess....................     $48,646         8.0%        $79,958        12.5%          $85,593        13.3%   
                                  =======        ====         =======        ====           =======        ====    
Core Capital:                                                                                                     
   Capital Level(4)..........     $57,763         9.5%        $89,552        14.0%          $95,273        14.8%   
   Requirement(5)............      18,234         3.0          19,188         3.0            19,359         3.0    
                                  -------        ----         -------        ----           -------        ----    
   Excess....................     $39,529         6.5%        $70,364        11.0%          $75,914        11.8%   
                                  =======        ====         =======        ====           =======        ====    
Risk-Based Capital:                                                                                               
   Capital Level(4)(6).......     $60,418(7)     21.8%        $92,207        31.7%          $97,928        33.3%   
   Requirement...............      22,134         8.0          23,288         8.0            23,496         8.0    
                                  -------        ----         -------        ----           -------        ----    
   Excess....................     $38,284        13.8%        $68,919        23.7%          $74,432        25.3%   
                                  =======        ====         =======        ====           =======        ====
Pro Forma at June 30, 1998 Based Upon the Sale at $10.00 Per Share
                                ------------------------------------------------------------------
                                                               13,754,000 Shares
                                   11,960,000 Shares          (15% Above Maximum
                                     (Maximum of the                of the
                                        Estimated                 Estimated
                                       Price Range)             Price Range)(1)
                                -------------------------   -------------------------    
                                                Percent                     Percent
                                                  of                          of
                                   Amount      Assets(2)      Amount       Assets(2)
                                -----------   -----------   -----------   -----------    
                                                (Dollars in thousands)
GAAP Capital(3)..............    $102,564        15.7%       $109,215        16.6%
                                 ========        ====        ========        ====
Tangible Capital:                 
   Capital Level(4)..........    $100,970        15.5%       $107,621        16.4%
   Requirement(5)............       9,765         1.5           9,865         1.5
                                 --------        ----        --------        ----
   Excess....................    $ 91,205        14.0%       $ 97,756        14.9%
                                 ========        ====        ========        ====
Core Capital:                                                          
   Capital Level(4)..........    $100,970        15.5%       $107,621        16.4%
   Requirement(5)............      19,530         3.0          19,730         3.0
                                 --------        ----        --------        ----
   Excess....................    $ 81,440        12.5%       $ 87,891        13.4%
                                 ========        ====        ========        ====
Risk-Based Capital:                                                    
   Capital Level(4)(6).......    $103,625        35.0%       $110,276        36.8%
   Requirement...............      23,703         8.0          23,945         8.0
                                 --------        ----        --------        ----
   Excess....................    $ 79,922        27.0%       $ 86,331        28.8%
                                 ========        ====        ========        ====
---------------------
(1) As adjusted to give effect to an increase in the number of shares which
    could occur due to an increase in the Estimated Price Range of up to 15% as
    a result of regulatory considerations as changes in market or general
    financial or economic conditions following the commencement of the
    Subscription and Community Offerings.
(2) Tangible capital levels are shown as a percentage of total adjusted assets
    of $609.4 million. Core capital levels are shown as a percentage of total
    adjusted assets of $609.4 million. Risk-based capital levels are calculated
    on the basis of a percentage of risk-weighted assets of $276.7 million.
(3) GAAP defined as Generally Accepted Accounting Principles.
(4) Pro forma capital levels assume receipt by the Association of 50% of the net
    proceeds from the shares of Common Stock sold at the minimum, midpoint and
    maximum of the Estimated Price Range. These levels also assume funding by
    the Association of the Stock Program equal to 4% of the Common Stock issued
    and repayment of the Company's loan to the ESOP to enable the ESOP to
    purchase 8% of the Common Stock issued valued at the minimum, midpoint and
    maximum of the Estimated Price Range. See "Management of the Association -
    Benefit Plans" for a discussion of the Stock Program and ESOP.
(5) The current OTS core capital requirement for savings associations is 3% of
    total adjusted assets. The OTS has proposed core capital requirements which
    would require a core capital ratio of 3% of total adjusted assets for
    thrifts that receive the highest supervisory rating for safety and soundness
    and that are not experiencing or anticipating significant growth, and a 4%
    to 5% core capital ratio requirement for all other thrifts. See 
    "Regulation - Regulations - Capital Requirements." The Company will not be
    subject to regulatory capital requirements.
(6) Assumes net proceeds are invested in assets that carry a risk-weighting of
    45.4%, the average risk weighting of the Association's assets as of June 30,
    1998.
(7) Historical risk-based capital is comprised of tangible capital of $57.8
    million plus the Association's general valuation allowance of $2.7 million
    at June 30, 1998.

                                      23
USE OF PROCEEDS

     Although the actual net proceeds from the sale of the Common Stock cannot
be determined until the Conversion is completed, it is presently anticipated
that the net proceeds from the sale of the Common Stock will be between $75.0
million and $101.9 million (or $117.5 million if the Estimated Price Range is
increased by 15%).  See "Pro Forma Data" and "The Conversion - Stock Pricing" as
to the assumptions used to arrive at such amounts.  The Company will be unable
to utilize any of the net proceeds of the Offerings until the consummation of
the Conversion.

     The Company will purchase all of the outstanding capital stock of the
Association to be issued upon Conversion in exchange for 50% of the net proceeds
of the Offerings, with the remaining net proceeds to be retained by the Company.
Based on net proceeds of $75.0 million to $101.9 million, the Company expects to
utilize between $37.5 million and $50.9 million of net proceeds to purchase the
common stock of the Association.  Such portion of net proceeds received by the
Association from the Company will be added to the Association's general funds
which the Association currently intends to utilize for general corporate
purposes, including investment in loans and securities, as well as the possible
expansion of its facilities and operations through marketing, business
development, or the acquisition or establishment of branch offices, although the
Company and the Association have no current arrangements, understandings or
agreements regarding any such transactions.  The Association may also use a
portion of the net proceeds to renovate or rebuild its main office building.
The renovation or reconstruction of the Association's main office building is
currently estimated to cost up to $15.0 million.  To the extent that the stock-
based benefit programs which the Company or the Association intend to adopt
subsequent to the Conversion are not funded with authorized but unissued common
stock of the Company, the Company or Association may use net proceeds from the
Conversion to fund the purchase of stock to be awarded under such stock benefit
programs.  The Association has not yet determined the approximate amount of net
proceeds to be used for any of the purposes mentioned above.  See "Risk Factors
- Stock-Based Benefits to Management, Employment Contracts and Change in Control
Payments" and "Management of the Association - Benefit Plans - Stock Option
Plan" and " - Stock Program."

     The Company intends to use a portion of the net proceeds it retains (i.e.,
50% of the net proceeds, which based on net proceeds of $75.0 million to $101.9
million will be between $37.5 million and $50.9 million) to make a loan directly
to the ESOP to enable the ESOP to purchase in the Conversion 8% of the Common
Stock issued in connection with the Conversion, including shares issued to the
Foundation.  Based upon the sale of 8,840,000 shares or 11,960,000 shares at the
minimum and maximum of the Estimated Price Range, and the issuance of shares to
the Foundation, the amount of the loan to the ESOP would be $7.6 million or
$10.3 million, respectively (or $11.8 million if the Estimated Price Range is
increased by 15%), with a term of 15 years at the prevailing prime rate of
interest.  The Company and Association may alternatively choose to fund the
ESOP's stock purchases through a loan by a third party financial institution.
See "Management of the Association - Benefit Plans - ESOP."  The remaining net
proceeds retained by the Company will initially be invested in mortgage-backed
and investment securities.

     The net proceeds retained by the Company may also be used to support the
future expansion of operations through branch acquisitions, the establishment of
branch offices and the acquisition of savings associations and commercial banks
or their assets, including those located within the Association's market area or
diversification into other banking related businesses.  The Company and the
Association have no current arrangements, understandings or agreements regarding
any such transactions.  The Company, upon the Conversion, will be a unitary
savings and loan holding company, which under existing laws would not be
restricted as to the types of business activities in which it may engage.  See
"Regulation - Holding Company Regulation" for a description of certain
regulations applicable to the Company.

     Upon completion of the Conversion, the Board of Directors of the Company
will have the authority to adopt stock repurchase plans, subject to statutory
and regulatory requirements.  Unless approved by the OTS, the Company, pursuant
to OTS regulations, will be prohibited from repurchasing any shares of Common
Stock for three years except (i) for an offer to all stockholders on a pro rata
basis, or (ii) for the repurchase of qualifying shares of a director.
Notwithstanding the foregoing and except as provided below, beginning one year
following completion of the Conversion, the OTS regulations permit the Company
to repurchase its Common Stock so long as: (i) the repurchases within the
following two years are part of an open-market program not involving greater
than 5% of its outstanding capital stock during a 12-month period; (ii) the
repurchases do not cause the Association to become "undercapitalized" 

                                      24
within the meaning of the OTS prompt corrective action regulation; and (iii) the
Company provides to the Regional Director of the OTS no later than 10 days prior
to the commencement of a repurchase program written notice containing a full
description of the program to be undertaken and such program is not disapproved
by the Regional Director. See "Regulation--Prompt Corrective Regulatory Action."
In addition, under current OTS policies, repurchases may be allowed in the first
year following Conversion and in amounts greater than 5% in the second and third
years following Conversion provided there are valid and compelling business
reasons for such repurchases and the OTS does not object to such repurchases.

     Based upon facts and circumstances following the Conversion and subject to
applicable regulatory requirements, the Board of Directors may determine to
repurchase stock in the future.  Such facts and circumstances may include but
not be limited to:  (i) market and economic factors such as the price at which
the stock is trading in the market, the volume of trading, the attractiveness of
other investment alternatives in terms of the rate of return and risk involved
in the investment, the ability to increase the book value and/or earnings per
share of the remaining outstanding shares, and the opportunity to improve the
Company's return on equity; (ii) the avoidance of dilution to stockholders by
not having to issue additional shares to cover the exercise of stock options or
to fund employee stock benefit plans; and (iii) any other circumstances in which
repurchases would be in the best interests of the Company and its shareholders.
In the event the Company determines to repurchase stock, such repurchases may be
made at market prices which may be in excess of the Purchase Price in the
Conversion and in excess of the per share book value.  To the extent that the
Company repurchases stock at market prices in excess of the per share book
value, such repurchases may have a dilutive effect upon the interests of
existing stockholders.  Any stock repurchases will be subject to the
determination of the Board of Directors that both the Company and the
Association will be capitalized in excess of all applicable regulatory
requirements after any such repurchases and that such capital will be adequate,
taking into account, among other things, the level of non-performing and other
risk assets, the Company's and the Association's current and projected results
of operations and asset/liability structure, the economic environment, tax and
other considerations.  See "The Conversion - Certain Restrictions on Purchase or
Transfer of Shares after Conversion."

                                DIVIDEND POLICY

     Upon Conversion, the Board of Directors of the Company will have the
authority to declare dividends on the Common Stock, subject to statutory and
regulatory requirements.  In the future, the Board of Directors intends to
consider a policy of paying cash or stock dividends on the Common Stock.
However, no decision has been made with respect to the payment of dividends.
Declarations of dividends by the Board of Directors, if any, will depend upon a
number of factors, including the amount of net proceeds retained by the Company
in the Conversion, investment opportunities available to the Company or the
Association, capital requirements, regulatory limitations, the Company's and the
Association's financial condition and results of operations, tax considerations
and general economic conditions.  No assurances can be given, however, that any
dividends will be paid or, if commenced, will continue to be paid.  Special cash
dividends, stock dividends or returns of capital may be paid in addition to, or
in lieu of, regular cash dividends (however, the Company and the Association
have committed to the OTS that they will take no action to further the payment
of any return of capital during the one-year period following consummation of
the Conversion).

     The Association will not be permitted to pay dividends to the Company on
its capital stock if its stockholders' equity would be reduced below the amount
required for the liquidation account.  See "The Conversion--Liquidation Rights."
For information concerning federal regulations which apply to the Association in
determining the amount of proceeds which may be retained by the Company and
regarding a savings institution's ability to make capital distributions,
including payment of dividends to its holding company, see "Federal and State
Taxation--Distributions" and "Regulation--Federal Savings Institution
Regulation--Limitations on Capital Distributions."

     Unlike the Association, the Company is not subject to OTS regulatory
restrictions on the payment of dividends to its stockholders, although the
source of such dividends will be, in part, dependent upon dividends from the
Association in addition to the net proceeds retained by the Company and earnings
thereon.  The Company is subject, however, to the requirements of Delaware law,
which generally limit dividends to an amount equal to the excess of the net
assets of the Company (the amount by which total assets exceed total
liabilities) over its statutory capital (generally defined as the aggregate par
value of the outstanding shares of the Company's capital stock having a par
value plus the amount of the consideration paid for shares of the Company's
capital stock without par value) or, if there is no such excess, to its net
profits for the current and/or immediately preceding fiscal year.

                                      25
MARKET FOR THE COMMON STOCK

     The Company and the Association have never issued capital stock, and
consequently, there is no established market for the Common Stock at this time.
The Company has applied to have its Common Stock quoted on the Nasdaq National
Market under the symbol "FPFC".  Making a market involves maintaining bid and
ask quotations and being able, as principal, to effect transactions in
reasonable quantities at these quoted prices, subject to various securities laws
and other regulatory requirements.  Additionally, the development of a liquid
public market depends on the existence of willing buyers and sellers, the
presence of which is not within the control of the Company, the Association or
any market maker.  Accordingly, the number of active buyers and sellers of the
Common Stock at any particular time may be limited.  Under such circumstances,
investors in the Common Stock could have difficulty disposing of their shares
and should not view the Common Stock as a short-term investment.  Accordingly,
there can be no assurance that an active and liquid trading market for the
Common Stock will develop or that, if developed, it will continue, nor is there
any assurance that persons purchasing shares of Common Stock will be able to
sell them at or above the Purchase Price.  In order to be quoted on the Nasdaq
National Market, among other criteria, there must be at least three market
makers for the Common Stock, the Company must satisfy certain minimum
capitalization requirements, and there must be at least 400 round lot
shareholders.  KBW has indicated its intention to act as a market maker in the
Common Stock following the consummation of the Conversion, depending on trading
volume and subject to compliance with applicable laws and regulatory
requirements.  Furthermore, Webb has agreed to use its best efforts to assist
the Company in obtaining at least two additional market makers for the Common
Stock.  There can be no assurance there will be two additional market makers for
the Common Stock.  There can be no assurance that purchasers will be able to
sell their shares at or above the Purchase Price.

                                      26
CAPITALIZATION

     The following table presents the unaudited historical capitalization of the
Association at June 30, 1998, and the pro forma consolidated capitalization of
the Company after giving effect to the Conversion, including the issuance of
shares to the Foundation, based upon the sale of the number of shares indicated
in the table and the other assumptions set forth under "Pro Forma Data."
Company Pro Forma Based Upon Sale at $10.00 Per Share
                                                                      --------------------------------------------------------------

                                                                                                                      13,754,000
                                                                          8,840,000      10,400,00    11,960,000        Shares
                                                                           Shares         Shares        Shares        (15% above
                                                                         (Minimum of   (Midpoint of   (Maximum of     Maximum of
                                                            Association   Estimated     Estimated      Estimated      Estimated
                                                             Historical  Price Range   price Range)   Price Range)  Price Range)(1)
                                                            -----------  -----------   ------------   ------------  ---------------
                                                                                         (In thousands)
Borrowings:
     Deposits (2).......................................      $435,462     $435,462       $435,462      $435,462        $435,462
     Repurchase agreements..............................        60,430       60,430         60,430        60,430          60,430
     FHLB Advances......................................        44,820       44,820         44,820        44,820          44,820
                                                              --------     --------       --------      --------        --------
     Total deposits and borrowed funds..................      $540,712     $540,712       $540,712      $540,712        $540,712
                                                              ========     ========       ========      ========        ========
  Stockholders' equity:
     Preferred Stock, $.01 par value,                          
        3,000,000 shares authorized;                           
        none to be issued...............................      $      -     $      -       $      -      $      -        $      - 
     Common Stock, $.01 par value,                                                                                               
        33,000,000 shares authorized;                                                                                            
        shares to be issued as reflected(3).............              -           95            112           129             148
     Additional paid-in capital(3)......................              -       86,330        101,788       117,196         135,117
     Retained earnings(4)...............................         57,763       57,763         57,763        57,763          57,763
     Net unrealized gain (loss) on                                                                                               
        securities available-for-sale, net of taxes.....          1,594        1,594          1,594         1,594           1,594
     Shares issued to Foundation........................              -        6,800          8,000         9,200          10,580
  Less:                                                                                                                          
     Foundation contribution expense, net (5)...........              -        4,488          5,280         6,072           6,983
     Common Stock acquired by the                                                                                                
       ESOP(6)..........................................              -        7,616          8,960        10,304          11,850
     Common Stock acquired by the                                                                                                
       Stock Program(7).................................              -        3,808          4,480         5,152           5,925
                                                               --------     --------       --------      --------        --------
  Total stockholders' equity............................       $ 59,357     $136,670       $150,537      $164,354        $180,444
                                                               ========     ========       ========      ========        ========
-----------------------
(1)  As adjusted to give effect to an increase in the number of shares which
     could occur due to an increase in the Estimated Price Range of up to 15% as
     a result of regulatory considerations or changes in market or general
     financial and economic conditions following the commencement of the
     Subscription and Community Offerings.
(2)  Does not reflect withdrawals from deposit accounts for the purchase of
     Common Stock in the Conversion.  Such withdrawals would reduce pro forma
     deposits by the amount of such withdrawals.
(3)  Reflects the issuance of shares sold in the Offerings and the issuance of
     additional shares of Common Stock to the Foundation in an amount of
     680,000, 800,000, 920,000 and 1,058,000 shares at the minimum, midpoint,
     maximum and maximum, as adjusted, of the Estimated Price Range, at a
     value of $10.00 per share.  No effect has been given to the issuance of
     additional shares of Common Stock pursuant to the Company's Stock Option
     Plan intended to be adopted by the Company and presented for approval of
     stockholders at a meeting of stockholders following the Conversion.  The
     Stock Option Plan would provide the grant of stock options to purchase an
     amount of Common Stock equal to 10% of the shares of Common Stock issued
     in the Conversion, including shares issued to the Foundation.  See
     "Management of the Association - Benefit Plans - Stock Option Plan."
(4)  The retained earnings of the Association will be substantially restricted
     after the Conversion.  See "The Conversion - Liquidation Rights."
(5)  Represents the tax effect of the contribution of Common Stock to the
     Foundation based on a 34% tax rate.  The realization of the deferred tax
     benefit is limited annually to 10% of the Company's annual taxable
     income, subject to the ability of the Company to carry forward any unused
     portion of the deduction for five years following the year in which the
     contribution is made.
(6)  Assumes that 8% of the shares issued in connection with the Conversion,
     including shares issued to the Foundation, will be purchased by the ESOP
     and the funds used to acquire the ESOP shares will be borrowed from the
     Company.  The Common Stock acquired by the ESOP is reflected as a
     reduction of stockholders' equity.  See "Management of the Association -
     Benefit Plans - ESOP" and "- Benefit Plans -Stock Program."
(7)  Assumes that, subsequent to the Conversion, an amount equal to 4% of the
     shares of Common Stock sold in the Conversion, including shares issued to
     the Foundation, is purchased by the Stock Program through open market
     purchases.  The Common Stock purchased by the Stock Program is reflected
     as a reduction of stockholder's equity.  See "Risk Factors - Possible
     Dilutive Effect of Stock Program and Stock Options," Footnote 2 to the
     tables under "Pro Forma Data" and "Management of the Association -
     Benefit Plans - Stock Program."

                                      27
PRO FORMA DATA

        The actual net proceeds from the sale of the Common Stock cannot be
determined until the Conversion is completed.  However, net proceeds are
currently estimated to be between $75.0 million and $101.9 million based upon
the following assumptions:  (i) $5.0 million will be sold to executive officers,
Directors and employees of the Association and Company, the ESOP will purchase
8% of the Common Stock issued in connection with the Conversion, including
shares issued to the Foundation, and the remaining shares will be sold in the
Subscription and Community Offerings; (ii) Webb will receive a fee equal to
1.25% of the aggregate Purchase Price of the shares sold in the Subscription
Offering and Community Offering, up to the maximum of the estimated price range,
except that no fee will be paid with respect to shares purchased by the Employee
Plans, including the ESOP, officers, employees, Directors of the Association and
Company and members of their immediate families; (iii) the Company will issue to
the Foundation an amount of Common Stock of equal to 7.7% of the Common Stock
sold in the Conversion from authorized but unissued shares; and (iv) Conversion
expenses, excluding the marketing fees paid to Webb, will be approximately $1.1
million.  Actual Conversion expenses may vary from those estimated.

        Pro forma consolidated net income of the Company for the year ended June
30, 1998 has been calculated as if the Common Stock had been sold at the
beginning of the fiscal year and the net proceeds had been invested at 5.23%,
which is the arithmetic average of the weighted average yield earned by the
Association on its interest-earning assets and the weighted average rate paid on
its deposits during such period (as required by OTS regulations).  The tables do
not reflect the effect of withdrawals from deposit accounts for the purchase of
Common Stock.  The pro forma after-tax yield for the Company and the Association
is assumed to be 3.45% for the year ended June 30, 1998 (based on an assumed tax
rate of 34%).  Historical and pro forma per share amounts have been calculated
by dividing historical and pro forma amounts by the indicated number of shares
of Common Stock, as adjusted to give effect to the purchase of shares by the
ESOP and the effect of the issuance of shares to the Foundation.  No effect has
been given in the pro forma stockholders' equity calculations for the assumed
earnings on the net proceeds.  As discussed under "Use of Proceeds," the Company
will retain 50% of the net Conversion proceeds.

        The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations.  Pro forma consolidated stockholders' equity represents
the difference between the stated amount of assets and liabilities of the
Company.  The pro forma stockholders' equity is not intended to represent the
fair market value of the Common Stock and may be greater than amounts that would
be available for distribution to stockholders in the event of liquidation.

        The following table summarizes historical data of the Association and
pro forma data of the Company at or the year ended June 30, 1998, based on the
assumptions set forth above and in the table and should not be used as a basis
for projections of market value of the Common Stock following the Conversion.
The table below gives effect to the Stock Program, which are expected to be
adopted by the Company following the Conversion and presented to stockholders
for approval at a meeting of stockholders.  See Footnote 2 to the table and
"Management of the Association - Benefit Plans - Stock Program."  No effect has
been given in the table to the possible issuance of additional shares reserved
for future issuance pursuant to the Stock Option Plan to be adopted by the Board
of Directors of the Company and presented to stockholders for approval at a
meeting of stockholders, nor does book value as presented give any effect to the
liquidation account to be established for the benefit of Eligible Account
Holders or Supplemental Eligible Account Holders or, in the event of liquidation
of the Association, to the tax effect of the bad debt reserve and other factors.
See Footnote 3 to the tables below, "The Conversion - Liquidation Rights" and
"Management of the Association - Benefit Plans - Stock Option Plan."  THE
FOLLOWING TABLES GIVE EFFECT TO THE ISSUANCE OF AUTHORIZED BUT UNISSUED SHARES
OF THE COMPANY'S COMMON STOCK TO THE FOUNDATION CONCURRENTLY WITH THE COMPLETION
OF THE CONVERSION.  THE VALUATION RANGE, AS SET FORTH HEREIN AND IN THE TABLES
BELOW, TAKES INTO ACCOUNT THE DILUTIVE IMPACT OF THE ISSUANCE OF SHARES TO THE
FOUNDATION.

                                      28
At or For the Year Ended June 30, 1998                       
                                                 -------------------------------------------------------------------------------   
                                                    8,840,000          10,400,000                                  13,754,000      
                                                   Shares Sold       Shares Sold at          11,960,000          Shares Sold at   
                                                   at $10.00 Per       $10.00 Per          Shares Sold at       $10.00 Per Share  
                                                      Share              Share            $10.00 Per Share        (15% above      
                                                    (Minimum           (Midpoint            (Maximum of            Maximum of       
                                                   of Estimated       of Estimated        Estimated Price        Estimated Price   
                                                   Price Range)       Price Range)             Range)               Range)(7)      
                                                 ---------------    ---------------       -----------------    -----------------  
                                                                   (In Thousands, Except Per Share Amounts)
Gross proceeds.............................       $  88,400         $   104,000              $   119,600         $   137,540
Plus:  Shares issued to the Foundation               
        (equal to 7.7% of stock issued in
        Conversion)........................           6,800               8,000                    9,200              10,580
                                                  ---------         -----------              -----------         ----------- 
Pro forma market capitalization............       $  95,200         $   112,000              $   128,800         $   148,120
                                                  =========         ===========              ===========         ===========
Gross proceeds.............................       $  88,400         $   104,000              $   119,600         $   137,540
Less:  Offering expenses and                                                                                                
          commissions......................          (1,975)             (2,100)                  (2,275)             (2,275)
                                                  ---------         -----------              -----------         ----------- 
Estimated net proceeds.....................          86,425             101,900                  117,325             135,265
Less:  Common Stock purchased
          by ESOP..........................          (7,616)             (8,960)                 (10,304)            (11,850)
       Common Stock purchased by
         Stock Program.....................          (3,808)             (4,480)                  (5,152)             (5,925)
                                                  ---------         -----------              -----------         ----------- 

    Estimated net proceeds, as adjusted....       $  75,001         $    88,460              $   101,869         $   117,490
                                                  =========         ===========              ===========         ===========
Net income(1):     
    Historical.............................       $   4,072         $     4,072              $     4,072         $     4,072
    Pro forma income on net proceeds,
       as adjusted.........................           2,589               3,053                    3,516               4,056
Less:  Pro forma ESOP adjustment(2)........            (335)               (394)                    (453)               (521)
       Pro forma Stock Program
        adjustment(3)......................            (503)               (591)                    (680)               (782)
                                                  ---------         -----------              -----------         ----------- 
         Pro forma net income..............       $   5,823         $     6,140              $     6,455         $     6,825
                                                  =========         ===========              ===========         ===========
Per share net income(1):
    Historical.............................       $    0.47         $      0.40              $      0.34         $      0.30
    Pro forma income on net proceeds,
       as adjusted.........................            0.29                0.29                     0.29                0.30
Less:  Pro forma ESOP adjustment(2)........           (0.04)              (0.04)                   (0.04)              (0.04)
       Pro forma Stock Program
        adjustment(3)......................           (0.06)              (0.06)                   (0.06)              (0.06)
                                                  ---------         -----------              -----------         ----------- 
         Pro forma net income per share....       $    0.66         $      0.59              $      0.54         $      0.50
                                                  =========         ===========              ===========         ===========
Stockholders' equity(4): 
   Historical..............................       $  59,357         $    59,357              $    59,357         $    59,357
   Estimated net proceeds..................          86,425             101,900                  117,325             135,265
   Plus:  Shares issued to Foundation......           6,800               8,000                    9,200              10,580
   Less:   After tax cost of Foundation....          (4,488)             (5,280)                  (6,072)             (6,983)
   Less:   Common Stock acquired 
            by ESOP(2).....................          (7,616)             (8,960)                 (10,304)            (11,850)
   Less:   Common Stock acquired
            by Stock Program(3)............          (3,808)             (4,480)                  (5,152)             (5,925)
                                                  ---------         -----------              -----------         ----------- 
       Pro forma stockholders'                 
        equity(3)(5)(6)....................       $ 136,670         $   150,537              $   164,354         $   180,444 
                                                  =========         ===========              ===========         ===========
 Stockholders' equity per share(4)(7):            
    Historical.............................       $    6.24         $      5.30              $      4.61         $      4.01
    Estimated net proceeds.................            9.08                9.10                     9.11                9.13
    Plus:  Shares issued to Foundation.....            0.71                0.71                     0.71                0.71
    Less:  After tax cost of Foundation....           (0.47)              (0.47)                   (0.47)              (0.47)
    Less:  Common Stock acquired                                                                          
             by ESOP(2)....................           (0.80)              (0.80)                   (0.80)              (0.80)
           Common Stock acquired by                                                                         
             Stock Program(3)..............           (0.40)              (0.40)                   (0.40)              (0.40)
                                                  ---------         -----------              -----------         ----------- 
       Pro forma stockholders' equity              
           per share(3)(5)(6)..............       $   14.36         $     13.44              $     12.76         $     12.18
                                                  =========         ===========              ===========         ===========
Offering price as a percentage of                                                                       
    pro forma stockholders' equity                                                                       
    per share..............................           69.66%              74.40%                   78.37%              82.09%
Offering price to pro forma net                                                                          
    earnings per share(8)..................           15.15x              16.95x                   18.52x              20.00x
(See footnotes on next page)

                                      29
---------------------
(1)    Does not give effect to the non-recurring expense that will be recognized
       in fiscal 1999 as a result of the establishment of the Foundation.  The
       Company will recognize an after-tax expense for the amount of the
       contribution to the Foundation which is expected to be $4.5 million, $5.3
       million, $6.1 million and $7.0 million at the minimum, midpoint, maximum
       and maximum as adjusted, of the Estimated Price Range, respectively.
       Assuming the contribution to the Foundation was expensed during the year
       ended June 30, 1998, pro forma net loss per share would be $0.05, $0.12,
       $0.17 and $0.21, at the minimum, midpoint, maximum and maximum, as
       adjusted, respectively.  Per share net income data is based on 8,809,173,
       10,363,733, 11,918,293 and 13,706,037 shares outstanding which represents
       shares sold in the Conversion, shares contributed to the Foundation and
       shares to be allocated or distributed under the ESOP and Stock Program
       for the period presented.
(2)    It is assumed that 8% of the shares of Common Stock issued in connection
       with the Conversion, including shares issued to the Foundation, will be
       purchased by the ESOP. For purposes of this table, the funds used to
       acquire such shares are assumed to have been borrowed by the ESOP from
       the Company. The amount to be borrowed is reflected as a reduction of
       stockholders' equity. The Association intends to make annual
       contributions to the ESOP in an amount at least equal to the principal
       and interest requirement of the debt. The Association's total annual
       payment of the ESOP debt is based upon fifteen equal annual installments
       of principal. The pro forma net earnings assumes: (i) that the
       Association's contribution to the ESOP is equivalent to the debt service
       requirement for the year ended June 30, 1998, and was made at the end of
       the period; (ii) that 50,773, 59,733, 68,693 and 78,997 shares at the
       minimum, midpoint, maximum and 15% above the maximum of the range,
       respectively, were committed to be released during the year ended June
       30, 1998 at an average fair value of $10.00 per share in accordance with
       SOP 93-6; and (iii) only the ESOP shares committed to be released were
       considered outstanding for purposes of the net earnings per share
       calculations. See "Management of the Association - Benefit Plans -ESOP."
(3)    Gives effect to the Stock Program expected to be adopted by the Company
       following the Conversion and presented for approval at a meeting of
       stockholders. If the Stock Program are approved by stockholders, the
       Stock Program intend to acquire an amount of Common Stock equal to 4% of
       the shares of Common Stock issued in connection with the Conversion,
       including shares issued to the Foundation, or 380,800, 448,000, 515,200
       and 592,480 shares of Common Stock at the minimum, midpoint, maximum and
       15% above the maximum of the Estimated Price Range, respectively, either
       through open market purchases, if permissible, or from authorized but
       unissued shares of Common Stock or treasury stock of the Company, if any.
       Funds used by the Stock Program to purchase the shares will be
       contributed to the Stock Program by the Association. In calculating the
       pro forma effect of the Stock Program, it is assumed that the shares were
       acquired by the Stock Program at the beginning of the period presented in
       open market purchases at the Purchase Price and that 20% of the amount
       contributed was an amortized expense during such period. The issuance of
       authorized but unissued shares of the Company's Common Stock to the Stock
       Program instead of open market purchases would dilute the voting
       interests of existing stockholders by approximately 3.8% and pro forma
       net earnings per share would be $0.65, $0.58, $0.53 and $0.49 at the
       minimum, midpoint, maximum and 15% above the maximum of the range,
       respectively and pro forma stockholders' equity per share would be
       $14.19, $13.31, $12.65 and $12.10 at the minimum, midpoint, maximum and
       15% above the maximum of the range, respectively. There can be no
       assurance that stockholder approval of the Stock Program will be
       obtained, or that the actual purchase price of the shares granted under
       the Stock Program will be equal to the Purchase Price. See "Management of
       the Association - Benefit Plans - Stock Program."
(4)    No effect has been given to the issuance of additional shares of Common
       Stock pursuant to the Stock Option Plan expected to be adopted by the
       Company following the Conversion. The Company expects to present the
       Stock Option Plan for approval at a meeting of stockholders. If the Stock
       Option Plan are approved by stockholders, an amount equal to 10% of the
       Common Stock issued in connection with the Conversion, including shares
       issued to the Foundation, or 952,000, 1,120,000, 1,288,000 and 1,481,200
       shares at the minimum, midpoint, maximum and 15% above the maximum of the
       Estimated Price Range, respectively, will be reserved for future issuance
       upon the exercise of options to be granted under the Stock Option Plan.
       The issuance of Common Stock pursuant to the exercise of options under
       the Stock Option Plan will result in the dilution of existing
       stockholders' interests. Assuming all options were exercised at the end
       of the period at an exercise price of $10.00 per share, the pro forma net
       earnings per share would be $0.63, $0.57, $0.52 and $0.48, respectively,
       and the pro forma stockholders' equity per share would be $13.96, $13.13,
       $12.51 and $11.98, respectively. See "Management of the Association -
       Benefit Plans - Stock Option Plan."
(5)    The retained earnings of the Association will continue to be
       substantially restricted after the Conversion. See "Dividend Policy,"
       "The Conversion - Liquidation Rights."
(6)    Stockholders' equity per share data is based upon 9,520,000, 11,200,000,
       12,880,000 and 14,812,000 shares outstanding representing shares sold in
       the conversion, shares contributed to the Foundation and shares purchased
       by the ESOP and Stock Program.
(7)    As adjusted to give effect to an increase in the number of shares which
       could occur due to an increase in the Estimated Price Range of up to 15%
       as a result of regulatory considerations or changes in market or general
       financial and economic conditions following the commencement of the
       Subscription and Community Offerings.

                                      30
COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH NO FOUNDATION

     In the event that the Foundation was not being established as part of the
Conversion, Keller has estimated that the pro forma aggregate market
capitalization of the Company would be approximately $122.0 million, at the
midpoint, which is approximately $10.0 million greater than the pro forma
aggregate market capitalization of the Company if the Foundation is approved by
members of the Association, and would result in approximately an $18.0 million
increase, or 17.31%, in the amount of Common Stock offered for sale in the
Conversion. The pro forma price to book ratio and pro forma price to earnings
ratio would be approximately the same under both the current appraisal and the
estimate of the value of the Company without the Foundation. Further, assuming
the midpoint of the Estimated Price Range, pro forma stockholders' equity per
share and pro forma earnings per share would be substantially the same with the
Foundation as without the Foundation. In this regard, pro forma stockholders'
equity and pro forma net income per share would be $13.47 and $0.59,
respectively, at the midpoint of the estimate, assuming no Foundation, and
$13.44 and $0.59, respectively, with the Foundation. The pro forma price to book
ratio and the pro forma price to earnings ratio are 74.26% and 16.95x,
respectively, at the midpoint of the estimate, assuming no Foundation and are
74.40% and 16.95x, respectively, with the Foundation. This estimate by Keller
was prepared at the request of the OTS and is solely for the purposes of
providing members with sufficient information with which to make an informed
decision on the Foundation. There is no assurance that in the event the
Foundation is not approved by members of the Association that the appraisal
prepared at that time would conclude that the pro forma market value of the
Company would be the same as that estimated herein. Any appraisal prepared at
that time would be based on the facts and circumstances existing at that time,
including, among other things, market and economic conditions.

     For comparative purposes only, set forth below are certain pricing ratios
and financial data and ratios, at the minimum, midpoint, maximum and maximum, as
adjusted, of the Estimated Price Range, assuming the Conversion was completed at
June 30, 1998.
At the Maximum,
                                  At the Minimum           At the Midpoint            At the Maximum             as Adjusted
                           --------------------------  ------------------------  ------------------------  -----------------------
                                With          No          With          No          With          No          With          No
                             Foundation   Foundation   Foundation   Foundation   Foundation   Foundation   Foundation   Foundation
                           -------------  -----------  -----------  -----------  -----------  -----------  -----------  ----------
                                                       (Dollars in thousands except per share information)
Estimated offering amount..    $ 88,400     $103,700     $104,000     $122,000     $119,600     $140,300     $137,540     $161,345
Pro forma market                 
 capitalization............      95,200      103,700      112,000      122,000      128,800      140,300      148,120      161,345
Total assets...............     686,711      702,574      700,578      719,211      714,395      735,848      730,485      754,981
Total liabilities..........     550,041      550,041      550,041      550,041      550,041      550,041      550,041      550,041
Pro forma stockholders'         
 equity....................     136,670      152,534      150,537      169,171      164,354      185,808      180,444      204,940
Pro forma consolidated net        
 earnings..................       5,823        6,233        6,140        6,620        6,455        7,008        6,825        7,455
Pro forma stockholders'           
 equity per share..........       14.36        14.31        13.44        13.47        12.76        12.84        12.18        12.30
Pro forma consolidated net         
 earnings per share........        0.66         0.66         0.59         0.59         0.54         0.54         0.50         0.50
Pro Forma Pricing Ratios:
 Offering price as a              
  percentage of pro
    forma stockholders'
     equity per share......       69.66%       69.89%       74.40%       74.26%       78.37%       77.86%       82.09%       81.29%
 Offering price to pro      
  forma net earnings per 
  share....................       15.15x       15.15x       16.95x       16.95x       18.52x       18.52x       20.00x       20.00x
 Pro Forma Market                 
  Capitalization to assets.       13.86%       14.76%       15.99%       16.96%       18.03%       19.07%       20.28%       21.37%
Pro Forma Financial Ratios:
 Return on assets..........        0.85%        0.89%        0.88%        0.92%        0.90%        0.95%        0.93%        0.99%
 Return on stockholders'           
  equity...................        4.26         4.09         4.08         3.91         3.93         3.77         3.78         3.64
 Stockholders' equity to          
  assets...................       19.90        21.71        21.49        23.52        23.01        25.25        24.70        27.15
31
MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

    The Association's results of operations are dependent primarily on net
interest income, which is the difference ("spread") between the interest income
earned on its loans, mortgage-backed securities, and investment portfolio and
its cost of funds, consisting of interest paid on its deposits and borrowed
funds.  The interest rate spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit
flows.  The Association's net income is also affected by, among other things,
loan fee income, provisions for loan losses, service charges, operating expenses
and franchise and income taxes.  The Association's revenues are derived
primarily from interest on mortgage loans, consumer loans, mortgage-backed
securities and investments, as well as income from service charges and loan
originations.  The Association's operating expenses principally consist of
employee compensation and benefits, occupancy and other general and
administrative expenses.  The Association's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory authorities.

    The Association has been, and intends to continue to be, a community-
oriented financial institution offering a variety of financial services to meet
the needs of the communities it serves.  The Association attracts deposits from
the general public and uses such deposits, together with borrowings and other
funds, to originate one- to four-family residential mortgage loans and short-
term consumer loans.  To a lesser extent, the Association also originates
residential construction loans in its market area and a limited amount of
commercial business loans and loans secured by multi-family and non-residential
real estate.  The Association's deposits are insured up to the maximum allowable
amount by the SAIF as administered by the FDIC.  The Association also invests in
mortgage-backed securities, most of which are insured or guaranteed by federal
agencies, as well as securities issued by the U.S. government or agencies
thereof.

    The Association is not aware of any market or institutional trends, events
or uncertainties that are expected to have a material effect on liquidity,
capital resources or operations, except as discussed below.  The Association is
also not aware of any current recommendations by its regulators which would have
a material effect if implemented, except as discussed below.

Management Strategy

    The Association operates as a consumer-oriented savings association,
offering traditional savings deposit and loan products to its local community.
Management's primary goal has been to improve profitability and its capital
position, so that the Association can have greater flexibility in providing the
products and services desired by the customers in the communities it serves.  To
accomplish this, the Association has employed an operating strategy which has:
(1) emphasized the increased origination of one- to four-family residential
mortgage loans secured by properties located in its primary market area; (2)
emphasized the increased origination of consumer loans, consisting primarily of
home equity and automobile loans, in an effort to diversify the loan portfolio;
(3) sought to maintain asset quality and manage credit risk by limiting its
investment in commercial real estate and multi-family lending; (4) invested
funds not utilized for lending in investment securities primarily consisting of
U.S. Government Agency and mortgage-backed  securities; and (5) focused on
increasing its loan and deposit market share and the retention of existing
deposit accounts by offering competitive rates on its deposit and loan products
and expanding the number of deposit and loan products and services offered.  In
addition, while the Association has not done so in the past, it may in the
future sell long-term, fixed-rate mortgage loans in an effort to better manage
interest rate risk and add flexibility to balance sheet management policy.

    Management periodically engages in arbitrage strategies as a means of
augmenting the earnings of the Association by leveraging  the balance sheet
while helping to insulate against interest rate risk.  The leveraging is done in
such a manner to ensure that the cash flows of both the assets and the
liabilities are closely matched.  The assets used in the arbitrage strategies
are mortgage-backed securities issued or guaranteed by FNMA, FHLMC or GNMA,
while funding is obtained through FHLB advances or through reverse repurchase
agreements.  Historically, the Association has looked to achieve spreads of
between 100 to 120 basis points with its arbitrage positions.

                                      32
Average Balances, Interest Rates and Yields.  The following table presents
for the periods indicated the total dollar amount of interest income from
average interest-earning assets and the resultant yields, as well as the
interest expense on average interest-bearing liabilities, expressed in both
dollars and rates.
For the Years Ended June 30,
                                      --------------------------------------------------------------------------------------------
                                                     1998                           1997                           1996
                                      --------------------------------------------------------------------------------------------
                                                              Average                        Average                       Average
                                         Average               Yield/    Average              Yield/   Average              Yield/
                                         Balance    Interest    Cost     Balance   Interest    Cost    Balance   Interest    Cost
                                      --------------------------------------------------------------------------------------------
                                                                     (Dollars in thousands)
Assets:
 Interest-earning assets:
   Interest-bearing deposits in other     
    financial institutions............    $  4,107   $   306     7.45%  $ 10,452    $   623     5.96%  $  3,110   $   191     6.14% 

   Taxable securities(1)..............      40,264     2,441     6.04     47,337      2,751     5.71     45,785     2,691     5.80
   Nontaxable securities(1)(2)........       1,234        66     8.29        437         32    11.09        457        32    10.61
   Mortgage-backed securities(1)......     200,866    13,581     6.84    188,362     12,805     6.76    193,599    13,124     6.73
   Loans receivable - net.............     315,726    25,736     8.15    267,928     21,872     8.16    247,699    20,135     8.13
   FHLB stock.........................       4,869       352     7.23      4,683        330     7.05      3,749       263     7.02
                                          --------   -------            --------    -------            --------   -------
     Total interest-earning assets....     567,066    42,482     7.52    519,199     38,413     7.37    494,399    36,436     7.34
 Noninterest-earning assets:
   Cash and amounts due from                
    depository institutions...........       9,780                         9,366                          4,953 
   Premises and equipment, net........       6,183                         5,589                          4,958
   Other noninterest-earning assets...       2,304                        (1,727)                         2,023
                                          --------                      --------                       --------
      Total assets....................    $585,333                      $532,427                       $506,333
                                          ========                      ========                       ========
 Interest-bearing liabilities:
   NOW and money market accounts......    $ 95,871     3,300     3.44   $ 84,388      2,701     3.20   $ 70,183     1,942     2.77
   Savings accounts...................      68,945     1,661     2.41     72,132      1,782     2.47     77,953     2,013     2.58
   Time deposits......................     251,130    14,898     5.93    238,859     14,013     5.87    232,955    13,927     5.98
   Repurchase agreements..............      45,044     2,596     5.76      8,470        480     5.67          -         -        -
   FHLB advances......................      52,396     3,057     5.83     68,596      3,953     5.76     68,615     3,976     5.79
                                          --------   -------            --------    -------            --------   -------
      Total interest-bearing               
       liabilities....................     513,386    25,512     4.97    472,445     22,929     4.85    449,706    21,858     4.86 
    Noninterest-bearing liabilities...      13,739                         9,368                          7,944
                                          --------                      --------                       --------
   Total liabilities..................     527,125                       481,813                        457,650
   Retained earnings..................      58,208                        50,614                         48,683
                                          --------                      --------                       --------
      Total liabilities and retained      
       earnings.......................    $585,333                      $532,427                       $506,333 
                                          ========                      ========                       ======== 
Net interest income/interest rate                  
 spread...............................               $16,970     2.55%              $15,484     2.52%             $14,578     2.48%
                                                     =======   ======               =======   ======              =======   ======  

Net interest margin (net interest
 income as a percent of average                               
 interest-earning assets).............                           3.00%                          2.97%                         2.94%
                                                               ======                         ======                        ======
 
Average interest-earning assets to                             110.46%                        109.90%                       109.94%
 interest-bearing liabilities.........                         ======                         ======                        ======
--------
(1) Includes unamortized discounts and premiums. Average balance is computed
    using the carrying value of securities. The average yield has been computed
    using the historical amortized cost average balance for available for sale
    securities.

(2) Average yields are stated on a fully taxable equivalent basis.

                                                                              
                                      33
Rate/Volume Analysis of Net Interest Income.  The following table presents
the dollar amount of changes in interest income and interest expense for major
components of interest-earning assets and interest-bearing liabilities. It
distinguishes between the increase or decrease related to changes in balances
and/or changes in interest rates. For each category of interest-earning assets
and interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (i.e., changes in volume multiplied by old
rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume).
For purposes of this table, changes attributable to both rate and volume, which
cannot be segregated, have been allocated proportionately to the change due to
volume and the change due to rate.
Year Ended                        Year Ended
                                                                         June 30, 1998                     June 30, 1997
                                                                          Compared to                       Compared to
                                                                          Year Ended                        Year Ended
                                                                         June 30, 1997                     June 30, 1996
                                                                -------------------------------  --------------------------------
                                                                  Increase (Decrease)            Increase (Decrease)
                                                                         Due to                         Due to
                                                                ----------------------           --------------------
                                                                    Volume      Rate      Net      Volume      Rate       Net
                                                                ------------ --------- --------  ---------- --------- -----------
                                                                                          (In thousands)
Interest-earning assets:
  Interest-bearing deposits in other financial institutions..       $ (445)     $128    $ (317)   $  438     $  (6)    $  432
  Taxable securities.........................................         (460)      150      (310)      102       (42)        60
  Nontaxable securities......................................           67       (33)       34        (2)        2          -
  Mortgage-backed securities.................................          637       139       776      (385)       66       (319)
  Loans receivable - net.....................................        3,896       (32)    3,864     1,651        86      1,737
  FHLB stock.................................................           13         9        22        66         1         67
                                                                    ------      ----    ------    ------     -----     ------
    Total interest-earning assets............................        3,708       361     4,069     1,870       107      1,977
                                                                    ------      ----    ------    ------     -----     ------
Interest-bearing liabilities:                                                                                        
  NOW and money market accounts..............................          385       214       599       428       331        759
  Savings accounts...........................................          (77)      (44)     (121)     (146)      (85)      (231)
  Time deposits..............................................          727       158       885       349      (262)        87
  Repurchase agreements......................................        2,108         8     2,116       480         -        480
  FHLB advances..............................................         (945)       49      (896)       (1)      (22)       (23)
                                                                    ------      ----    ------    ------     -----     ------
    Total interest-bearing liabilities.......................        2,210       373     2,583     1,111       (39)     1,072
                                                                    ------      ----    ------    ------     -----     ------
  Net change in net interest income..........................       $1,498      $(12)   $1,486    $  759     $ 146     $  905
                                                                    ======      ====    ======    ======     =====     ======
Asset and Liability Management and Market Risk

     General.  The principal market risk affecting the Association is interest-
rate risk.  The Association does not maintain a trading account for any class of
financial instrument, and the Association is not affected by foreign currency
exchange rate risk or commodity price risk.  Because the Association does not
hold any equity securities other than stock in the FHLB of Cincinnati, the
Association is not subject to equity price risk.

     The Association, like other financial institutions, is subject to interest
rate risk to the extent that its interest-earnings assets reprise differently
than its interest-bearing liabilities.  As part of its efforts to monitor and
manage the interest-rate risk of the Association, the Board of Directors has
adopted an interest-rate risk policy which charges the Board with reviewing
quarterly reports related to interest-rate risk and to set exposure limits for
the Association as a guide to senior management in setting and implementing day
to day operating strategies.

     Quantitative Aspects of Market Risk.  As part of its efforts to monitor and
manage interest rate risk, the Association uses the "net portfolio value"
("NPV") methodology adopted by the OTS as part of its capital regulations.  See
"Regulation - Federal Savings Institution Regulation - Capital Requirements."
In essence, NPV is the difference between the present value of expected cash
flows from assets and the present value of expected cash flows from

                                      34
liabilities.  The Association uses a net portfolio value simulation model
prepared in-house as the primary method of managing interest-rate risk.  The
model utilizes the actual cash flows and repricing characteristics of its assets
and liabilities and incorporates market-based assumptions regarding the impact
of changing interest rates on future volumes and prepayment rates.  For purposes
of valuing core deposit products, valuations derived by the OTS for the
Association each quarter are utilized.

     Presented below, as of June 30, 1998, is an analysis of the Association's
interest rate risk as measured by changes in NPV for instantaneous and sustained
parallel shifts of 100 basis point increments in market interest rates.  The
percentage changes fall within the policy limits set forth by the Board of
Directors of the Association.

                  
                                                         NPV as % of Portfolio
   Change in                 Net Portfolio Value             Value of Assets
 Interest Rates    ----------------------------------- ------------------------
 In Basis Points                               %
  (Rate Shock)       Amount    $ Change      Change      NPV Ratio     Change 
------------------ ---------- ----------- ------------ ------------- ----------
                                        (Dollars in thousands)
 
     400            $32,658    ($39,530)    -54.76%        5.99%      -571 bp
     300             43,056     (29,132)    -40.36         7.65       -405
     200             53,449     (18,739)    -25.96         9.19       -251
     100             63,770      (8,418)    -11.66        10.63       -107
       0             72,188          --         --        11.70         --
    (100)            71,122      (1,066)     -1.48        11.40        -30
    (200)            66,614      (5,574)     -7.72        10.64       -106
    (300)            65,500      (6,688)     -9.26        10.37       -133
    (400)            64,447      (7,741)    -10.72        10.13       -157

     As illustrated in the table, the Association's NPV is more sensitive to
increases in interest rates than to decreases.  This sensitivity arises because
as interest rates rise borrowers become less likely to prepay fixed-rate loans
than when rates are falling.  Since a majority of the Association's assets have
longer terms and its liabilities have shorter terms, an increase in market
interest rates results in the cash flow characteristics of the Association's
liabilities changing more rapidly than the cash flow characteristics of its
assets resulting in a decrease in NPV from the base.

     In evaluating the Association's exposure to interest rate risk, certain
shortcomings inherent in the method of analysis presented in the foregoing table
must be considered.  For example, although certain assets and liabilities may
have similar maturities or period to repricing, they may react in varying
degrees to changes in market interest rates.  In addition, the interest rates on
certain types of assets and liabilities may fluctuate in advance of changes in
market interest rates, while interest rates on other types may lag behind
changes in market rates.  Furthermore, in the event of a change in interest
rates, prepayments on loans and mortgage-backed securities and early withdrawals
of certificates of deposit would likely deviate significantly from those assumed
in calculating the table.  Therefore, the actual effect of changing interest
rates may differ from that presented in the foregoing table.

     The Board of Directors and management of the Association believe that
certain factors afford the Association the ability to operate successfully
despite its exposure to interest rate risk.  The Association manages its
interest rate risk by maintaining capital and liquidity well in excess of
regulatory requirement.  For the year ended June 30, 1998, the Association's
tangible capital was 9.5% of total assets and its liquidity ratio was 9.35%.

                                      35
Financial Condition at June 30, 1998 and 1997

     Total assets of the Association were $609.4 million at June 30, 1998,
compared to $548.9 million at June 30, 1997, representing an increase of $60.5
million, or 11.0%.  The growth was primarily attributable to increases in loans,
which was partially offset by decreases in investment and mortgage-backed
securities.  The increase was funded from an increase in deposits and repurchase
agreements.  The changes in the balance sheets and the factors that caused the
changes are discussed below.

     Investment and Mortgage-Backed Securities.  Total investment and mortgage-
backed securities decreased $8.1 million, or 3.3%, from $247.6 million at June
30, 1997 to $239.5 million at June 30, 1998.  The decrease was the result of the
Association investing funds obtained through sales and maturities of investment
securities to partially fund loan growth.

     At June 30, 1998 the Association's mortgage-backed securities portfolio was
comprised primarily of agency-issued securities.  The net unrealized gain on
these securities totaled $2.5 million at June 30, 1998.  Of the $207.9 million
mortgage-backed securities, $190.1 million, or 91.4%, are classified as
available for sale, however, the Association does not anticipate the need to
sell these securities in the near future.  Management's strategy emphasizes
investment in securities guaranteed by the U.S. Government and its agencies in
order to minimize credit risk.  The investment strategy also includes purchasing
an established level of variable rate mortgage-backed securities with monthly
and annually adjusting interest rates in order to minimize interest rate risk.
These securities provide the Association a continued cash flow stream through
principal paydowns and help reduce the Association's exposure to interest rate
risk.  Investment securities totaled $31.6 million at June 30, 1998 and included
U.S. government and government agency securities as well as a small portfolio of
municipal securities.

     At June 30, 1997, the Association's mortgage-backed and investment
securities were comprised of $202.7 million in available-for-sale securities and
$44.9 million in held-for-maturity securities.

     Loans.  Loans increased from $285.2 million at June 30, 1997 to $353.0
million at June 30, 1998.  Average loans comprised 55.7% of interest-earning
assets in 1998 compared to 51.6% in 1997.  Real estate loans increased $56.7
million, or 23.7%, from $239.8 million at June 30, 1997 to $296.6 million at
June 30, 1998.  The increase in one-to four-family loans represented $52.4
million, or 92.4%, of the increase in real estate loans as the Association
continued to increase its core lending product.  At June 30, 1998, one-to four-
family loans of $268.0 million represented 73.8% of gross loans.

     Consumer loans increased $14.4 million, or 29.0%, from $49.7 million at
June 30, 1997 to $64.1 million at June 30, 1998.  The increases were primarily
due to management's increased emphasis on originating consumer loans, which
resulted in a $9.7 million increase in automobile loans and a $4.7 million
increase in other loans.

     Deposits and Borrowings.  The Association's deposits are obtained primarily
from individuals and businesses in its primary market area.  Total deposits
increased $22.6 million, or 5.5%, from $412.9 million at June 30, 1997 to $435.5
million at June 30, 1998.  The growth was primarily in certificates of deposits,
which increased $12.8 million, or 5.2% during the period and money market
accounts which increased $10.9 million, or 18.9%.  Repurchase agreements
increased $44.4 million, or 277.7%, from $16.0 million at June 30, 1997 to $60.4
million at June 30, 1998, due to the Association's arbitrage positions taken
during the year.

Comparison of Results of Operations for the Years Ended June 30, 1998 and 1997

     General.  Net income for the year ended June 30, 1998 increased by $1.9
million or 83.1% from $2.2 million for the year ended June 30, 1997 to $4.1
million for the year ended June 30, 1998.   The increase was primarily due to a
decrease in noninterest expense, due to the one-time special assessment to
recapitalize the SAIF, which was recorded in fiscal 1997, as well as the
increase in net interest income and noninterest income, including an increase in
gains on sales of securities.  The increase in net income was partially offset
by increases in the provision for loan losses and federal income tax expense.

                                      36
Net Interest Income.  Net interest income is the largest component of the
Association's net income, and consists of the difference between interest income
generated on interest-earnings assets and interest expense incurred on interest-
bearing liabilities.  Net interest income is primarily affected by the volume,
interest rates and composition of interest-earning assets and interest-bearing
liabilities.

     Net interest income increased approximately $1.5 million, or 9.6%, from
$15.5 million in 1997 to $17.0 million in fiscal 1998.  The primary component of
this change was a $3.9 million, or 17.7%, increase in interest income on loans.
The increase in interest income on loans consisted of a $3.9 million increase
due to increased average volume in the loan portfolio and a $32,000 decrease due
to decreasing average interest rates.  The increase in interest income of $4.1
million was partially offset by a $2.6 million, or 11.3%, increase in interest
expense, primarily due to the $2.1 million increase in repurchase agreements.

     Average loans outstanding during fiscal 1998 increased $47.8 million, or
17.8%, compared to fiscal 1997, while average mortgage-backed securities
increased $12.5 million, or 6.6%, compared to the prior year.  In fiscal 1998,
the Association experienced increases in yield on assets and cost of liabilities
of 15 and 12 basis points, resulting in the $4.1 million increase in interest
income and $2.6 million increase in interest expense.  Net interest margin
increased 3 basis points from 2.97% in 1997 to 3.00% in 1998.  The Association's
average interest rate spread increased 3 basis points from 2.52% in 1997 to
2.55% in 1998.

     The tables appearing elsewhere in this discussion provide a more detailed
analysis of the changes in average balances, yields/rates and net interest
income identifying that portion of change in average volume versus that portion
due to change in average rates.  See "-Average Balances, Interest Rates and
Yields," "-Rate/Volume Analysis of Net Interest Income" and "-Weighted Average
Yields."

     Provision for Loan Losses.  The provision for loan losses is based on
management's regular review of the loan portfolio, which considers factors such
as past experience, prevailing general economic conditions and considerations
applicable to specific loans, such as the ability of the borrower to repay the
loan and the estimated value of the underlying collateral, as well as changes in
the size and growth of the loan portfolio

     The provision for loan losses increased $1.2 million from $590,000 for 1997
to $1.8 million for 1998.  At June 30, 1998, the allowance for loan losses
represented .85% of loans, net of unearned and deferred income, compared to .60%
at June 30, 1997.  The increased provision and resulting increased allowance for
loan losses was due to several factors including an increase in the level of
consumer loan charge-offs, the approximately 25% growth in total loans, the
continued trend of increased non-performing loans over the Association's
historical levels as well as local economic conditions including significant
recent layoffs at GM's Lordstown plant caused by a strike at two of GM's other
facilities.  Management believes the allowance for loan losses is adequate to
absorb potential losses; however, future additions to the allowance may be
necessary based on changes in economic conditions.  In addition, the OTS, as an
integral part of its examination process, periodically reviews the Association's
allowance for loan losses.  Such agency may require the Association to make
additional provisions for loan losses based on judgements different from those
of management.

     Noninterest Income.  The Association experienced a $1.3 million, or 294.5%,
increase in noninterest income during 1998.  The increase was primarily due to
sales of securities which generated net gains of $135,000 in 1998, resulting in
an increase of $1.1 million over the loss on sale of securities of $934,000
recognized in fiscal 1997.  The increase was due to management's decision to
restructure a portion of its investment portfolio which accrued in 1997.  In 
addition, service charges provided an increase in noninterest income of
$156,000, or 16.8% from $929,000 in fiscal 1997 to $1.1 million in fiscal 1998,
due to the increase in the average balance of deposit accounts.

     Noninterest Expense.  Noninterest expense decreased $1.5 million, or 12.8%,
primarily due to the special assessment to recapitalize the SAIF recorded in
fiscal 1997. Salaries and benefits increased $607,000, or 12.5%, for 1998,
compared to 1997 due primarily to the staffing requirements for opening two new
offices. The Association expects that salaries and benefits may increase after
the Conversion, primarily as a result of the adoption of various employee
benefit plans contemplated in connection with the Conversion. See "Management of
the Association - Benefit Plans." In addition, noninterest expense may increase
in future periods as a result of the possible renovation or reconstruction of
the Association's main office, the cost of which is currently estimated to be up
to $11.6 million.

                                      37
Income Taxes.  The provision for income taxes totaled $2.5 million in
fiscal 1998 compared to $1.2 million in fiscal 1997, due to the increase in
income before income taxes.  The effective tax rate was 38.0% for fiscal 1998 as
compared to 35.3% for fiscal 1997.

Comparison of Results of Operations for the Years Ended June 30, 1997 and 1996

     General.  Net income for the year ended June 30, 1997 decreased by $1.9
million or 46.4% from $4.1 million for the year ended June 30, 1996 to $2.2
million for the year ended June 30, 1997.   The decrease was primarily due to
the increase in noninterest expense, due to the special assessment to
recapitalize the SAIF recorded in 1997, and the provision for loan losses and
the decrease in noninterest income, which was partially offset by increases in
net interest income and a decrease in federal income tax expense.

     Net Interest Income.  Net interest income increased approximately $906,000,
or 6.2%, from $14.6 million in 1996 to $15.5 million in 1997.  In fiscal 1997,
the Association experienced an increased yield on assets of three basis points
and a decreased cost of funds of one basis point.  Interest income increased by
$2.0 million, primarily due to increased interest earning assets and to a lesser
extent due to the increase in weighted average yields.  Interest expense
increased $1.1 million due to increases in average interest bearing liabilities
which was slightly offset by the modest one basis point decrease in the weighted
average cost of funds.

     The primary component of the increase in interest income was a $1.7
million, or 8.6%, increase in interest income on loans.  Average loans
outstanding during fiscal 1997 increased $20.2 million, or 8.2% compared to
fiscal 1996, while average investment and mortgage-backed securities decreased
$2.8 million, or 1.1%, compared to the prior year.  The increase in interest
income on loans consisted of a $1.7 million increase due to increased average
volume in the loan portfolio and an $86,000 increase due to rising average
interest rates in the loan portfolio.  The increase in interest income was also
due to a $559,000 increase in interest income on securities which was partially
offset by a $319,000 decrease in interest income on mortgage-backed securities.
The increase in interest income on securities and decrease in interest income on
mortgage-backed securities were substantially due to the changes in the average
balance of the respective portfolios.

     The increase in interest income was partially offset by a $1.1 million, or
5.0%, increase in interest expense, primarily on NOW and money market accounts
and FHLB advances.  Interest expense on NOW and money market accounts increased
both due to a $14.9 million increase in the average balance of NOW and money
market accounts and a 43 basis point increase in the weighted average rate paid
on NOW and money market accounts from 2.77% in 1996 to 3.20% in 1997, as part of
management's strategy to increase core deposit accounts  In addition, interest
expense on repurchase agreements increased $480,000 as the Association utilized
retail repurchase agreements as a source of funding in 1997.  During 1997, the
Association experienced a $5.9 million increase in the balance of average
certificates, while reducing the weighted average rate paid on those deposits by
11 basis points, resulting in a modest overall increase of $86,000 in interest
expense on certificates.

     The tables appearing elsewhere in this report provide a more detailed
analysis of the changes in average balances, yields/rates and net interest
income identifying that portion of change in average volume versus that portion
due to change in average rates.  See "Average Balances, Interest Rates and
Yields," "Rate/Volume Analysis of Net Interest Income" and "Weighted Average
Yields."

     Provision for Loan Losses.  The provision for loan losses increased from
$238,000 in 1996 to $590,000 in 1997.  The increase was based on management's
evaluation of the loan portfolio and real estate market conditions.  In
particular, management considered delinquencies, current market conditions and
the size and mix of the loan portfolio.  At June 30, 1997, the allowance for
loan losses represented .60% of loans, net of unearned and deferred income,
compared to .49% at June 30, 1996.

     During fiscal year 1997, the Association adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment
of a Loan," and SFAS No. 118 which require the carrying value of an impaired
loan be determined by calculating the present value of estimated future cash
flows discounted using the loan's effective interest yield. The adoption of
these pronouncements did not have a significant impact on the Association's

                                      38
financial statements.

     Noninterest Income.  The Association experienced a $776,000, or 63.6%,
decrease in noninterest income during 1997.  The decrease was primarily due to
increases in losses on the sale of securities as the Association continued its
strategy to use the sale of securities as a source of funding to support loan
growth and to increase the yield on earnings assets by shifting assets from
lower yielding securities to higher yielding loans.  The decrease in noninterest
income was slightly offset by a $126,000 increase in service charges, from
$803,000 for fiscal 1996 to $929,000 for fiscal 1997, an increase of 15.7%.  The
increase was due to the increase in the average balance of deposit accounts.

     Noninterest Expense.  Noninterest expense increased $2.8 million, or 30.1%,
primarily due to the assessment to recapitalize the SAIF recorded in 1997.  The
SAIF assessment represented 65.7 basis points of deposits held as of March 31,
1995, and amounted to $2.5 million, which was paid in October 1996.  Occupancy
and equipment expense increased by $136,000, or 10.4%, in fiscal 1997, due to
the conversion to a new computer system in October 1996.

     Income Taxes.  The provision for income taxes totaled $1.2 million in
fiscal 1997 compared to $2.3 million in fiscal 1996.  The decrease was primarily
the result of a decrease in pretax income.

Liquidity and Capital Resources

     Liquidity.  The Association's liquidity, primarily represented by cash and
cash equivalents, is a result of its operating, investing and financing
activities.  These activities are summarized below for the years ended June 30,
1998 and 1997.

                                                         Year Ended June 30,
                                                        ---------------------
                                                           1998       1997
                                                        ----------  ---------
                                                           (in thousands)
 
Net income............................................   $  4,072   $  2,224
Adjustments to reconcile net income to net cash from
  operating activities................................      2,699      2,233
                                                         --------   --------
Net cash from operating activities....................      6,771      4,457
Net cash used in investing activities.................    (60,522)   (24,762)
Net cash from financing activities....................     53,662     19,504
                                                         --------   --------
Net change in cash and cash equivalents...............        (89)      (801)
Cash and cash equivalents at beginning of period......      6,757      7,558
                                                         --------   --------
Cash and cash equivalents at end of period............   $  6,668   $  6,757

     The Association's sources of funds include customer deposits, other
borrowings including FHLB advances and repurchase agreements, loan and mortgage-
backed securities repayments and other funds provided by operations.  The
Association also has the ability to borrow additional funds from the FHLB of
Cincinnati.  The Association maintains investments in liquid assets based upon
management's assessment of (i) the Association's need for funds, (ii) expected
deposit flows, (iii) the yields available on short-term liquid assets, and (iv)
the objectives of the Association's asset/liability management program.  The OTS
requires savings associations to maintain minimum levels of liquid assets.  OTS
regulations currently require the Association to maintain an average daily
balance of liquid assets equal to at least 4.0% of the sum of its average daily
balance of net withdrawable deposit accounts and borrowings payable in one year
or less.  At June 30, 1998, the Association's regulatory liquidity ratio was
9.4% compared to 13.0% at June 30, 1997.  At June 30, 1998 and 1997, the
Association had commitments to originate loans or fund outstanding lines of
credit totaling $23.9 million and $13.9 million, respectively.  The Association
considers its liquidity sufficient to meet its outstanding short- and long-term
needs.  The Association expects to be able to fund or refinance, on a timely
basis, its material commitments and long-term liabilities.

     Capital Resources.  Federally insured savings institutions, such as the
Association, are required to meet a 1.5% tangible capital requirement, a 4.0%
leverage ratio (core capital to risk weighted assets) requirement, a 4.0%
leverage ratio (core capital to adjusted total assets) requirement and an 8.0%
risk-based capital requirement.  At June 30, 1998, 

                                      39
the Association exceeded these requirements with tangible capital ratio of 9.5%,
a core capital to risk weighted assets ratio of 20.9%, a core capital to
adjusted total assets of 9.5% and a risk-based capital ratio of 21.8%. See
"Regulatory Capital Compliance" for the Association's pro forma capital levels
as a result of the Offerings.

Year 2000

     The Association's operations, like those of most financial institutions,
depend almost entirely on computer systems.  The Association is addressing the
potential problems associated with the possibility that the computers which
control or operate the Association's operating systems, facilities and
infrastructure may not be programmed to read four-digit date codes and, upon
arrival of the year 2000, may recognize the two-digit code of "00" as the year
1900, causing systems to fail to function or to generate erroneous data.  The
Association is working with the companies that supply or service its computer-
operated or dependent systems to identify and remedy any year-2000 related
problems.

     It is anticipated that all reprogramming efforts will be complete by
December 31, 1998, allowing adequate time for testing.  The Association has not
identified any material expenses which are reasonably likely to be incurred in
connection with year-2000 issues and the Association does not expect to incur
significant expense to implement corrective measures.  No assurance can be
given, however, that significant expense will not be incurred in future periods.
In the event that the Association is ultimately required to purchase replacement
computer systems, programs and equipment, or that substantial expense must be
incurred to make the Association's current systems, programs and equipment year-
2000 compliant, the Association's net income and financial condition could be
adversely affected.  While the Association is working to ensure that its
computer-dependent operations are year-2000 compliant, no assurance can be given
that some year-2000 problems will not occur.

     In addition to possible expense related to its own systems, the Association
could incur losses if year-2000 issues adversely affect the Association's
depositors or borrowers.  Such problems could include delayed loan payments due
to year-2000 problems affecting any of the Association's significant borrowers
or impairing the payroll systems of large employers in the Association's market
area.  Because the Association is not dependent on a small number of large
commercial customers, the Association does not expect any significant or
prolonged year-2000 related difficulties due to year-2000 problems on the part
of its customers that will affect net earnings or cash flows.

Recent Accounting Developments

     Recent pronouncements by the Financial Accounting Standards Board ("FASB")
will have an impact on financial statements issued in subsequent periods.  Set
forth below are summaries of such pronouncements.

     SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," was issued in 1996.  It revises the
accounting for transfers of financial assets, such as loans and securities, and
for distinguishing between sales and secured borrowings.  SFAS No. 125 was
originally effective for some transactions occurring after December 31, 1996,
and was effective for others in 1998.  SFAS No. 127, "Deferral of the Effective
Date of Certain Provisions of FASB Statement No. 125," which was issued in
December 1996, defers for one year the effective date of provisions relating to
securities lending, repurchase agreements and other similar transactions.  The
impact of partial adoption in 1997 was not material to the 1997 financial
statements and the impact of the complete adoption in 1998 was not material to
the 1998 financial statements.

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income."  This Statement establishes standards for reporting and display of
comprehensive income and its components (revenue, expenses, gains and losses) in
a full set of general-purpose financial statements.  This Statement requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.  Income tax
effects must also be shown.  This Statement is effective for fiscal years
beginning after December 15, 1997.

                                      40
In June 1997, the FASB issued SFAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information."  SFAS No. 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders.  It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
This statement is effective for financial statements for periods beginning after
December 15, 1997.

     In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities."  SFAS No. 133 addresses the accounting for
derivative instruments and certain derivative instruments embedded in other
contracts, and hedging activities.  The statement standardizes the accounting
for derivative instruments by requiring that an entity recognize those items as
assets or liabilities in the statement of financial position and measure them at
fair value.  This statement is effective for all fiscal years beginning after
June 15, 1999, although the Company may elect to adopt the statement earlier.

     These statements are not expected to have a material effect on the
Association's consolidated financial position or results of operation.

Impact on Inflation and Changing Prices

     The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and results of operations
primarily in terms of historical dollars without considering changes in the
relative purchasing power of money over time due to inflation.  Unlike most
industrial companies, virtually all of the assets and liabilities of the
Association are monetary in nature.  Therefore, interest rates have a more
significant impact on a financial institution's performance than the effects of
general levels of inflation.  Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services.  The
liquidity, maturity structure and quality of the Association's assets and
liabilities are critical to the maintenance of acceptable performance levels.

                            BUSINESS OF THE COMPANY

General

     The Company was organized in August 1998 at the direction of the Board of
Directors of the Association for the purpose of becoming a holding company to
own all of the outstanding capital stock of the Association.  Upon consummation
of the Conversion, it is anticipated that the Association will become a wholly-
owned subsidiary of the Company.  Upon the consummation of the Conversion, the
Company will be a savings and loan holding company regulated by the OTS.  See
"Regulation - Holding Company Regulation."

     The Company is currently not an operating company.  Following the
Conversion, in addition to directing, planning and coordinating the business
activities of the Association, the Company will initially invest net proceeds it
retains primarily in mortgage-backed and mortgage-related securities and other
investment-grade marketable securities.  In addition, the Company intends to
fund the loan to the ESOP to enable the ESOP to subscribe for 8% of the Common
Stock issued in connection with the Conversion, including shares issued to the
Foundation; however, a third-party lender may be utilized to lend funds to the
ESOP.  See "Use of Proceeds."  In the future, the Company may acquire or
organize operating subsidiaries, including other financial institutions and
financial services companies.  There are presently no agreements, understandings
or plans for an expansion of the Company's operations.  Initially, the Company
will neither own nor lease any property from any third party, but will instead
use the premises, equipment and furniture of the Association.  At the present
time, the Company does not intend to employ any persons other than certain
officers of the Association, who will not be separately provided cash
compensation by the Company.  The Company may utilize the support staff of the
Association from time to time, if needed.  Additional employees will be hired as
appropriate to the extent the Company expands its business in the future.

                                      41
BUSINESS OF THE ASSOCIATION
General

     The Association is a community-oriented savings institution which was
originally organized in 1922 as an Ohio-chartered savings and loan association,
and which converted to a federally-chartered savings and loan association in
1936.  The Association's principal business consists of the acceptance of retail
deposits from the general public in its primary market area, consisting of those
areas surrounding its full-service branch offices, and investing those deposits,
together with funds generated from operations and borrowings, primarily in one-
to four-family residential mortgage loans, automobile and home equity loans and,
to a much lesser extent, multi-family and commercial real estate loans,
construction loans, commercial loans, and passbook savings loans.  The
Association originates all of its loans for investment.  Management may consider
in the future selling long-term, fixed-rate mortgage loans in an effort to
better manage interest rate risk and add flexibility to balance sheet management
policy.  The Association also invests in government issued and sponsored
mortgage-backed securities, securities issued by the U.S. Government and
agencies thereof, and other investments permitted by applicable laws and
regulations.  See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Management Strategy."  The Association's revenues
are derived principally from the interest on its mortgage and consumer loans and
mortgage-backed and investment securities.  The Association's primary sources of
funds are retail savings deposits and, to a lesser extent, advances from the
FHLB-Cincinnati and reverse repurchase agreements.

Primary Market Area

     Headquartered in Trumbull County, Ohio, the Association has been, and
intends to continue to be, a community-oriented financial institution offering a
variety of financial services to meet the needs of the communities it serves.
The Association currently operates 11 full-service banking facilities and two
loan origination centers in Trumbull and Mahoning Counties of Ohio.  See "--
Properties."  The Association's primary lending and deposit gathering area is
concentrated around the areas where its full-service banking facilities are
located which the Association generally considers to be its primary market area.

     Warren is located in northeastern Ohio, in proximity to Youngstown, Ohio
and approximately half way between the cities of Cleveland, Ohio and Pittsburgh,
Pennsylvania.  The Association's primary market area is characterized by a
higher current unemployment rate than in both Ohio and the United States.  For
1998, through May, the primary market area continues to have a decreased yet
still higher unemployment rate of 5.0%, as compared to Ohio at 4.2% and the
United States at 3.9%.  In Warren, the unemployment rate was 9.3% in January
1998.  Overall, the primary market area's population decreased by 1.5% from 1990
to 1997, while Ohio's population increased by 3.4% and the United States'
population increased by 7.7% for the same period.  Median household income in
the primary market area has increased by 19.6% from 1990 to 1997, while it has
increased by 26.0% and 30.8% in Ohio and the United States, respectively, over
the same period.  According to the Youngstown/Warren Regional Chamber of
Commerce, major employers in the Youngstown/Warren metropolitan area include
Delphi Packard Electric Systems, General Motors and HM Health Systems.  See
"Risk Factors--Risks Associated with Economic Conditions in the Association's
Primary Market Area."

Competition

     The Association faces significant competition both in making loans and in
attracting deposits.  The State of Ohio has a high density of financial
institutions, many of which are branches of significantly larger institutions
which have greater financial resources than the Association, all of which are
competitors of the Association to varying degrees.  The Association's
competition for loans comes principally from savings banks, savings and loan
associations, commercial banks, mortgage banking companies, credit unions,
insurance companies and other financial service companies.  Its most direct
competition for deposits has historically come from savings and loan
associations, savings banks, commercial banks and credit unions.  The
Association faces additional competition for deposits from non-depository
competitors such as the mutual fund industry, securities and brokerage firms and
insurance companies.  Competition may also increase as a result of the lifting
of restrictions on the interstate operations of financial institutions.  There
are approximately seventeen different financial institutions with operations in
Trumbull and Mahoning counties.

                                      42
Lending Activities

     Loan Portfolio Composition.  The types of loans that the Association may
originate are subject to federal and state laws and regulations.  Interest rates
charged by the Association on loans are affected principally by the demand for
such loans, the supply of money available for lending purposes and the rates
offered by its competitors.  These factors are, in turn, affected by general and
economic conditions, monetary policies of the federal government, including the
Board of Governors of the Federal Reserve System ("FRB"), legislative tax
policies and governmental budgetary matters.

     The Association's loan portfolio primarily consists of first mortgage loans
secured by one- to four-family residences most of which are located in its
primary market area.  At June 30, 1998, the Association's total loans receivable
were $363.2 million, of which $268.0 million were one- to four-family
residential mortgage loans, or 73.7% of total loans receivable.  At such date,
the remainder of the loan portfolio consisted of $4.5 million of multi-family
loans, or 1.2% of total loans receivable; $8.6 million of commercial real estate
loans, or 2.4% of total loans receivable; $6.3 million of construction loans, or
1.7% of total loans receivable; $9.2  million of home equity loans, or 2.5% of
total loans receivable; $2.6 million of commercial loans, or 0.7% of total loans
receivable; and $64.1 million of consumer  loans, or 17.6% of total loans
receivable, consisting of $52.9 million of automobile loans and $11.2 million of
other consumer loans.  The Association has not sold loans in recent years and
had no loans held for sale at each of the five years ended June 30, 1998.  At
June 30, 1998, 37.4% of the Association's real estate mortgage loans had
adjustable interest rates, most of which were indexed to the one year Constant
Maturity Treasury ("CMT") Index.  

                                      43
The following table sets forth the composition of the Association's loan
portfolio in dollar amounts and in percentages of the respective portfolios at
the dates indicated.
At June 30,
                                ---------------------------------------------------------------------------------------------------
                                       1998                 1997                1996                1995                1994
                                -------------------   -----------------   -----------------   -----------------   -----------------
                                           Percent             Percent             Percent             Percent             Percent
                                 Amount    of Total   Amount   of Total   Amount   of Total   Amount   of Total   Amount   of Total
                                --------  ---------   ------  ---------   -------  --------   -------  --------   -------  --------
                                                                        (Dollars in thousands)
Real estate mortgage loans:
  One- to four-family........   $267,950     73.77%  $215,549    73.92%  $202,697    78.14%  $185,270    76.15%  $185,039    83.32%
  Multi-family...............      4,482      1.23      2,293     0.79      1,397     0.54      1,515     0.62      1,719     0.77
  Commercial real estate.....      8,626      2.37      6,789     2.33      7,159     2.76      8,516     3.50      7,063     3.18
  Construction...............      6,301      1.73      5,376     1.84      2,515     0.97      1,859     0.76      2,363     1.06
  Home equity................      9,189      2.53      9,822     3.37      6,531     2.52      4,309     1.77      1,545     0.70
                                --------    ------   --------   ------   -------- --------   --------   ------   --------   ------
    Total real estate            296,548     81.64    239,829    82.25    220,299    84.93    201,469    82.80    197,729    89.03
     mortgage loans..........
Consumer loans:             
  Automobiles................     52,847     14.55     43,172    14.80     31,234    12.04     32,212    13.24     14,679     6.61
  Other(1)...................     11,243      3.10      6,521     2.24      6,675     2.57      8,262     3.40      7,863     3.54
                                --------    ------   --------   ------   -------- --------   --------   ------   --------   ------
    Total consumer loans.....     64,090     17.65     49,693    17.04     37,909    14.61     40,474    16.64     22,542    10.15
Commercial loans.............      2,586      0.71      2,068     0.71      1,188     0.46      1,358     0.56      1,813     0.82
                                --------    ------   --------   ------   -------- --------   --------   ------   --------   ------
Total loans receivable.......    363,224    100.00%   291,590   100.00%   259,396  100.00%    243,301   100.00%   222,084   100.00%
                                            ======              ======             ======               ======              ======
                            
Less:                       
  Net deferred loan                1,319                1,316               1,517               1,228               1,776
   origination fees..........
  Loans in process...........      5,866                3,339               1,837               1,221               1,693
  Allowance for loan losses..      3,027                1,723               1,259               1,186               1,034
                                --------             --------            --------            --------            --------
Loans receivable, net........   $353,012             $285,212            $254,783            $239,666            $217,581
                                ========             ========            ========            ========            ========
----------
(1) Other consumer loans consist of home equity lines of credit and secured and
    unsecured personal loans.

                                      44
Loan Originations.   The Association's mortgage lending activities are
conducted primarily by its loan personnel operating at its executive and 10
other full-service branch offices and its two loan origination centers.  All
loans originated by the Association are underwritten by the Association pursuant
to the Association's policies and procedures.  The Association originates both
adjustable-rate and fixed-rate mortgage loans, commercial loans and consumer
loans.  The Association's ability to originate fixed- or adjustable-rate loans
is dependent upon the relative customer demand for such loans, which is affected
by the current and expected future level of interest rates.  It is the general
policy of the Association to retain all loans originated in its portfolio.

     During the years ended June 30, 1998, 1997 and 1996, the Association
originated $105.2 million, $49.9 million and $54.6 million of one- to four-
family and home equity loans, respectively, and $33.5 million, $31.6 million and
$18.7 million of consumer loans, respectively.  During the three years ended
June 30, 1998, the Association neither sold nor purchased any loans, and no
loans were held for sale at June 30, 1998.

                                      45
The following tables set forth the Association's loan originations and
principal repayments for the periods indicated.  All loans originated by the
Association are held for investment.  The Association neither purchased nor sold
any loans during these periods.
For the Years Ended June 30,
                                              ------------------------------
                                                  1998      1997      1996
                                              ------------------------------
                                                       (In thousands)
Total loans receivable(1):
 Balance outstanding at beginning of period...  $288,251  $257,559  $242,080
 Loans originated(2):
  Real estate mortgage loans:
     One-to four-family and home equity.......   105,184    49,913    54,644
     Multi-family and commercial real estate..     4,515     5,494       316
     Construction.............................     7,882     6,415     3,127
  Consumer loans(3)...........................    33,457    31,610    18,683
  Commercial loans............................        62        92        87
                                                --------  --------  --------
     Total loans originated...................   151,100    93,524    76,857
  Less:
   Principal repayments.......................    79,466    61,330    60,762
   Change in loans in process.................     2,527     1,502       616
                                                --------  --------  --------
Total loans receivable at end of period.......  $357,358  $288,251  $257,559
                                                ========  ========  ========
____________________
(1)  Total loans receivable does not include unearned discounts, deferred loan
     fees and the allowance for loan losses.
(2)  Amounts for each period include loans in process at period end.
(3)  Consists primarily of originations of automobile loans.

                                      46
Loan Maturity and Repricing.  The following table shows the contractual
maturity of the Association's loan portfolio at June 30, 1998.  The table does
not include prepayments or scheduled principal amortization.  Prepayments and
scheduled principal amortization on mortgage loans totaled $79.3 million, $61.3
million, and $60.8 million for the years ended June 30, 1998, 1997 and 1996,
respectively.  All loans originated by the Association are held for investment.
                                                
                                                
                                                  At June 30, 1998
                                  ----------------------------------------------
                                                
                                      Real                              Total
                                     Estate                             Loans
                                    Mortgage   Consumer   Commercial  Receivable
                                  ----------------------------------------------
                                                   (In thousands)
Amounts due:
 Within one year..................   $ 10,971    $ 1,114    $1,662      $ 13,747
                                     --------    -------    ------      --------
 After one year:                                                    
   More than one year to three          2,879     11,859        63        14,801
    years.........................                                  
   More than three years to five        8,682     34,390        64        43,136
    years.........................                                  
   More than five years to 10          27,670      7,380       328        35,378
    years.........................                                  
   More than 10 years to 20 years.     95,294      9,137       470       104,901
   More than 20 years.............    151,052        209         -       151,261
                                     --------    -------    ------      --------
                                                                    
Total due after June 30, 1999.....    296,548     64,089     2,587       349,477
                                                                        --------
     Total amount due.............                                       363,224
                                                                        --------
 
Less:
   Net deferred loan origination                                           1,319
    fees..........................
     Loans in process.............                                         5,866
     Allowance for loan losses....                                         3,027
                                                                        --------
Loans receivable, net.............                                      $353,012
                                                                        ========

                                      47
The following table sets forth at June 30, 1998, the dollar amount of total
loans receivable contractually due after June 30, 1999, and whether such loans
have fixed interest rates or adjustable interest rates.

                                              Due After June 30, 1999
                                   --------------------------------------------
                                     Fixed          Adjustable         Total
                                   ----------      ------------      ----------
                                                  (In thousands)
                                                               
Real estate mortgage loans........  $180,267          $105,310        $285,577
Consumer loans....................    53,737             9,238          62,975
Commercial loans..................       105               821             926
                                    --------          --------        --------
      Total loans.................  $234,109          $115,369        $349,478
                                    ========          ========        ========

     One- to Four-Family Lending.  The Association currently offers both fixed-
rate and adjustable-rate mortgage ("ARM") loans with maturities up to 30 years
secured by one- to four-family residences substantially all of which are located
in the Association's primary market area. One- to four-family mortgage loan
originations are generally obtained from the Association's in-house loan
representatives, from existing or past customers, through advertising, and
through referrals from local builders, real estate brokers and attorneys.  At
June 30, 1998, the Association's one- to four-family mortgage loans totaled
$268.0 million, or 73.8%, of total loans.  Of the one- to four-family mortgage
loans outstanding at that date, 63.2% were fixed-rate mortgage loans and 36.8%
were ARM loans.

     The Association currently offers fixed-rate one-to four-family mortgage
loans with terms of up to 30 years.  These loans have generally been priced
competitively with current market rates for such loans.  The Association
currently offers a number of ARM loans with terms of up to 30 years and interest
rates which adjust every year from the outset of the loan or which adjust
annually after a three, five or seven  year initial fixed period.  The interest
rates for the Association's ARM loans are indexed to the one year U.S. Treasury
Index.  The Association's ARM loans generally provide for periodic (not more
than 2%) and overall (not more than 6%) caps on the increase or decrease in the
interest rate at any adjustment date and over the life of the loan.

     The origination of adjustable-rate one-to four-family mortgage loans, as
opposed to fixed-rate one-to four-family mortgage loans, helps reduce the
Association's exposure to increases in interest rates.  However, adjustable-rate
loans generally pose credit risks not inherent in fixed-rate loans, primarily
because as interest rates rise, the underlying payments of the borrower rise,
thereby increasing the potential for default.  Periodic and lifetime caps on
interest rate increases help to reduce the risks associated with adjustable-rate
loans but also limit the interest rate sensitivity of such loans.

     The Association currently originates all one- to four-family mortgage loans
for its own portfolio.  Management may consider in the future selling long-term,
fixed-rate one-to four-family mortgage loans in an effort to better manage
interest-rate risk.  Generally, the Association originates one- to four-family
residential mortgage loans in amounts up to 97% of the appraised value or
selling price of the property, whichever is lower, securing the loan.  Private
mortgage insurance ("PMI") may be required for such loans with a loan-to-value
("LTV") ratio of greater than 85%.  One-to four-family mortgage loans originated
by the Association generally include due-on-sale clauses which provide the
Association with the contractual right to deem the loan immediately due and
payable in the event the borrower transfers ownership of the property without
the Association's consent.  Due-on-sale clauses are an important means of
adjusting the yields on the Association's fixed-rate one- to four-family
mortgage loan portfolio.  The Association requires fire, casualty, and, in
required cases, flood insurance on all properties securing real estate loans
made by the Association.

     Home Equity Lending.  The Association originates home equity loans secured
by one- to four-family residences.  These loans are generally originated as
fixed-rate loans with terms of up to 15 years.  Home equity loans are primarily
made on owner-occupied, one- to four-family residences and primarily to the
Association's first mortgage 

                                      48
customers. These loans are generally subject to a 90% loan-to-value limitation,
including any other outstanding mortgages or liens. Generally, the Association's
minimum equity loan is $5,000 and the maximum equity loan, if the loan-to-value
ratio exceeds 90%, is $40,000. As of June 30, 1998, the Association had $9.2
million in fixed-rate home equity loans outstanding and no adjustable-rate home
equity loans outstanding.

     Multi-family and Commercial Real Estate Lending.  The Association
originates multi-family and commercial real estate loans on a limited basis.
Such loans are generally secured by five or more unit apartment buildings and
properties used for business purposes such as small office buildings or retail
facilities located in the Association's primary market area.  The Association's
multi-family and commercial real estate underwriting policies provide that such
real estate loans may be made in amounts up to 75% of the appraised value of the
property or sales price, when applicable, whichever is lower.  The Association's
multi-family and commercial real estate loans may be made with terms up to 15
years and are offered with interest rates that adjust periodically.  In reaching
its decision on whether to make a multi-family or commercial real estate loan,
the Association considers the net operating income of the property, the
borrower's expertise, credit history and profitability and the value of the
underlying property.  Generally, all multi-family and commercial real estate
loans made to corporations, partnerships and other business entities require
personal guarantees by the principals.  On an exception basis, the Association
may not require a personal guarantee on such loans depending on the
creditworthiness of the borrower and the amount of the downpayment and other
mitigating circumstances.  The Association's multi-family real estate loan
portfolio at June 30, 1998 was $4.5 million, or 1.2% of total loans and the
Association's commercial real estate loan portfolio at such date was $8.6
million, or 2.4% of total loans.  The largest multi-family or commercial real
estate loan in the Association's portfolio (excluding loan participation
interests) at June 30, 1998 was a performing $900,000 commercial real estate
loan secured by real estate, accounts receivable and other corporate assets.

     Loans secured by multi-family and commercial real estate properties
generally involve larger principal amounts and a greater degree of risk than
one- to four-family residential mortgage loans. Because payments on loans
secured by multi-family and commercial real estate properties are often
dependent on successful operation or management of the properties, repayment of
such loans may be subject to adverse conditions in the real estate market or the
economy.  The Association seeks to minimize these risks through its underwriting
standards.

     Construction Lending.  The Association originates construction loans for
the development of residential property primarily located in the Association's
primary market area.  Construction loans are offered primarily to individuals
for the construction of their residence and, to a lesser extent, to experienced
local developers operating in the Association's primary market area.  The
majority of the Association's construction loans are originated primarily to
finance the construction of one- to four-family, owner-occupied residential real
estate and, to a lesser extent, multi-family  real estate properties located in
the Association's primary market area.  Construction loans are generally offered
with terms up to 30 years, if the loan converts to a permanent mortgage loan,
and may be made in amounts up to 85% of the appraised value of the property, as
improved.  Construction loan proceeds are disbursed periodically in increments
as construction progresses and as inspections by the Association's lending
officers warrant.

     At June 30, 1998, the Association's largest construction loan was a
performing loan with a $1.0 million carrying balance secured by land and
condominium units for single-family residences located in Howland Township.  At
June 30, 1998, the Association had $6.3 million of construction loans which
amounted to 1.7% of the Association's total loans.

     Speculative construction financing is generally considered to involve a
higher degree of credit risk than long-term financing on improved, owner-
occupied real estate.  Risk of loss on a construction loan is dependent largely
upon the accuracy of the initial estimate of the property's value at completion
of construction or development compared to the estimated cost (including
interest) of construction and other assumptions, including the estimated time to
sell residential properties.  If the estimate of value proves to be inaccurate,
the Association may be confronted with a project, when completed, having a value
which is insufficient to assure full repayment.

     Commercial Lending.  The Association also originates on a very limited
basis commercial loans in the forms of term loans and lines of credit to small-
and medium-sized businesses operating in the Association's primary market area.
Since commercial loans are made on such an infrequent basis, the Association
handles each such loan request on 

                                      49
an individual basis. At June 30, 1998, the Association had $2.6 million of
commercial loans, which amounted to 0.7% of the Association's total loans.

     Unlike mortgage loans, which generally are made on the basis of the
borrower's ability to make repayment from his or her employment or other income,
and which are secured by real property whose value tends to be more easily
ascertainable, commercial loans are of higher risk and typically are made on the
basis of the borrower's ability to make repayment from the cash flow of the
borrower's business.  As a result, the availability of funds for the repayment
of commercial loans may be substantially dependent on the success of the
business itself.  Further, any collateral securing such loans may depreciate
over time, may be difficult to appraise and may fluctuate in value based on the
success of the business.

     Consumer Lending.  Consumer loans at June 30, 1998 amounted to $64.1
million, or 17.6% of the Association's total loans, and consisted primarily of
new and used automobile loans, and to a lesser extent, secured and unsecured
personal loans.  Such loans are generally originated in the Association's
primary market area and generally are secured by real estate, deposit accounts,
personal property and automobiles.  Secured personal loans are generally secured
by personal assets.  Unsecured personal loans generally may not exceed $10,000
and must be approved by an executive officer of the Association.  In recent
years, the Association has increased its emphasis on the origination of new and
used automobile loans.  Such loans are only available to Ohio and Pennsylvania
residents.  Approximately half of the Association's automobile loans are made on
used vehicles; the Association will generally not make a loan on a vehicle
manufactured before 1991.  The average automobile loan is for $13,000.  The
Association originates automobile loans through an automobile dealer network,
primarily composed of new car dealers located in the Association's primary
market area.  At June 30, 1998, the Association had sixty dealers participating
in the dealer network.  The dealer takes the application and forwards it to the
Association for underwriting.  The Association will loan up to 100% of the
manufacturer's suggested retail price on new automobiles and 100% of the average
retail value of used cars.  The typical loan term is sixty-six months.  At June
30, 1998, personal loans (both secured and unsecured) totalled $2.0 million, or
0.6% of the Association's total loans and 3.1% of consumer loans; and automobile
loans totalled $52.8 million, or 14.5% of total loans and 82.5% of consumer
loans.

     The Association also offers a variable rate home equity line of credit
which extends a credit line based on the applicant's income and equity in the
home.  Generally, the credit line, when combined with the balance of the prior
mortgage liens, may not exceed 90% of the appraised value of the property at the
time of the loan commitment.  Home equity lines of credit are secured by a
mortgage on the underlying real estate.  The Association holds the first
mortgage on a substantial majority of the properties securing such lines of
credit.  The Association presently charges no origination fees for these loans.
A borrower is required to make monthly payments of principal and interest.
Generally, the interest rate charged is the prime rate of interest (as published
in The Wall Street Journal) plus up to 0.49%.  The interest rate adjusts when
the prime rate adjusts. At June 30, 1998, the Association had outstanding home
equity lines of credit of $9.2 million, against total available credit lines of
$21.6 million.

     Loans secured by rapidly depreciable assets such as automobiles or that are
unsecured entail greater risks than one- to four-family residential mortgage
loans.  In such cases, repossessed collateral for a defaulted loan may not
provide an adequate source of repayment of the outstanding loan balance, since
there is a greater likelihood of damage, loss or depreciation of the underlying
collateral.  Further, collections on these loans are dependent on the borrower's
continuing financial stability and, therefore, are more likely to be adversely
affected by job loss, divorce, illness or personal bankruptcy.  Finally, the
application of various federal and state laws, including federal and state
bankruptcy and insolvency laws, may limit the amount which can be recovered on
such loans in the event of a default.

     Loan Approval Procedures and Authority.  The Board of Directors of the
Association establishes the lending policies and loan approval limits of the
Association.  The Board of Directors has established the Loan Committee (the
"Committee") of the Board which considers and approves all loans within its
designated authority as established by the Board.  In addition, the Board of
Directors has authorized certain officers of the Association (the "designated
officers") to consider and approve all loans within their designated authority
as established by the Board.

     The Board of Directors has authorized the following persons and groups of
persons to approve loans up to the amounts indicated: one- to four-family
mortgage loans up to $200,000 may be approved by any of the designated 

                                      50
officers; one- to four-family mortgage loans in excess of $200,000 and up to
$300,000 may be approved by two of the designated officers; one- to four-family
mortgage loans in excess of $300,000 must be approved by the Board of Directors.
Home equity loans and lines of credit up to $200,000 may be approved by any of
the designated officers. Home equity loans and lines of credit over $200,000
must be approved by the Board of Directors. Multi-family and commercial real
estate loans less than $100,000 may be approved by the Lending Division; any
multi-family and commercial real estate loan greater than $100,000 must be
approved by the Board of Directors. Construction loans are subject to the
approval limits applicable to the type of property being constructed. Consumer
loans may be approved by certain officers up to $50,000, and the President must
approve loans in excess of $50,000 to $100,000. Consumer loans over $100,000
must approved by the Board of Directors. Commercial loans up to $50,000 may be
approved by any member of the Commercial Loan Committee; commercial loans up to
$100,000 must be approved by two members of that committee; commercial loans up
to $250,000 must be approved by the Commercial Loan Committee and one member of
the Board of Directors of the Association, and commercial loans in excess of
$250,000 must be approved by the Board of Directors.

     With respect to all loans originated by the Association, upon receipt of a
completed loan application from a prospective borrower, a credit report is
ordered and certain other information is verified by an independent credit
agency.  If necessary, additional financial information may be required.  An
appraisal of real estate intended to secure a proposed loan generally is
required to be performed by the Association's "in-house" appraisers or outside
appraisers approved by the Association.  The Board annually approves independent
appraisers used by the Association.  The Association's policy is to obtain
hazard insurance on all mortgage loans and flood insurance when necessary and
the Association may require borrowers to make payments to a mortgage escrow
account for the payment of property taxes and insurance premiums.

Delinquent Loans, Classified Assets and Real Estate Owned

     Delinquencies, Classified Assets and Real Estate Owned.  Reports listing
all delinquent accounts are generated and reviewed by management on a monthly
basis and the Board of Directors performs a monthly review of all loans or
lending relationships delinquent 30 days or more.  The procedures taken by the
Association with respect to delinquencies vary depending on the nature of the
loan, period and cause of delinquency and whether the borrower is habitually
delinquent.  When a borrower fails to make a required payment on a loan, the
Association takes a number of steps to have the borrower cure the delinquency
and restore the loan to current status.  The Association generally sends the
borrower a written notice of non-payment after the loan is first past due.  The
Association's guidelines provide that telephone, written correspondence and/or
face-to-face contact will be attempted to ascertain the reasons for delinquency
and the prospects of repayment once a loan becomes 60 days past due.  When
contact is made with the borrower at any time prior to foreclosure, the
Association will attempt to obtain full payment, offer to work out a repayment
schedule with the borrower to avoid foreclosure or, in some instances, accept a
deed in lieu of foreclosure.  In the event payment is not then received or the
loan not otherwise satisfied, additional letters and telephone calls generally
are made.  Once the loan becomes 90 days past due, the Association notifies the
borrower in writing that if the loan is not brought current within two weeks,
the Association will commence foreclosure proceedings against any real property
that secured the loan.  If a foreclosure action is instituted and the loan is
not brought current, paid in full, or refinanced before the foreclosure sale,
the property securing the loan generally is sold at foreclosure and, if
purchased by the Association, becomes real estate owned.

     Federal regulations and the Association's internal policies require that
the Association utilize an internal asset classification system as a means of
reporting problem and potential problem assets.  The Association currently
classifies problem and potential problem assets as "Substandard," "Doubtful" or
"Loss" assets.  An asset is considered Substandard if it is inadequately
protected by the current net worth and paying capacity of the obligor or of the
collateral pledged, if any.  Substandard assets include those characterized by
the distinct possibility that the Association will sustain some loss if the
deficiencies are not corrected.  Assets classified as Doubtful have all of the
weaknesses inherent in those classified Substandard with the added
characteristic that the weaknesses present make collection or liquidation in
full, on the basis of currently existing facts, conditions and values, highly
questionable and improbable.  Assets classified as Loss are those considered
uncollectible and of such little value that their continuance as assets, without
the establishment of a specific loss reserve, is not warranted.  Assets which do
not currently expose the Association  to a sufficient degree of risk to warrant
classification in one of the aforementioned categories but possess weaknesses
are 

                                      51
required to be designated "Special Mention."

     When the Association classifies one or more assets, or portions thereof, as
Substandard or Doubtful, it is required to establish an allowance for possible
loan losses in an amount deemed prudent by management unless the loss of
principal appears to be remote. When the Association classifies one or more
assets, or portions thereof, as Loss, it is required either to establish a
specific allowance for losses equal to 100% of the amount of the assets so
classified or to charge off such amount.

     The Association's determination as to the classification of its assets and
the amount of its valuation allowances is subject to review by the OTS which can
order the establishment of additional general or specific loss allowances.  The
OTS, in conjunction with the other federal banking agencies, recently adopted an
interagency policy statement on the allowance for loan and lease losses.  The
policy statement provides guidance for financial institutions on both the
responsibilities of management for the assessment and establishment of adequate
allowances and guidance for banking agency examiners to use in determining the
adequacy of general valuation guidelines.  Generally, the policy statement
recommends that institutions have effective systems and controls to identify,
monitor and address asset quality problems; that management has analyzed all
significant factors that affect the collectibility of the portfolio in a
reasonable manner; and that management has established acceptable allowance
evaluation processes that meet the objectives set forth in the policy statement.
While the Association believes that it has established an adequate allowance for
possible loan losses, there can be no assurance that regulators, in reviewing
the Association's loan portfolio, will not request the Association to materially
increase at that time its allowance for possible loan losses, thereby negatively
affecting the Association's financial condition and earnings at that time.
Although management believes that adequate specific and general loan loss
allowances have been established, future provisions are dependent upon future
events such as loan growth and portfolio diversification and, as such, further
additions to the level of specific and general loan loss allowances may become
necessary.

     The Association reviews and classifies its assets on a quarterly basis and
the Board of Directors reviews the results of the reports on a quarterly basis.
The Association classifies its assets in accordance with the management
guidelines described above.  At June 30, 1998, the Association had $1.6 million,
or 0.27%, of assets designated as Substandard, consisting of primarily mortgage
loans secured by single-family owner-occupied residences.  Assets classified as
Doubtful totaled $231,000, consisting of automobile loans, and assets classified
as Loss totaled $100,000 at June 30, 1998.  At June 30, 1998, the Association
had $933,000, or 0.15%, of assets designated as Special Mention, consisting
primarily of automobile loans.  At June 30, 1998, these classified assets
totaled $2.8 million, representing 0.77% of loans receivable.

                                      52
The following tables set forth delinquencies in the Association's loan
portfolio past due 30 days or more:
At June 30, 1998                                    At June 30, 1997
                               --------------------------------------------------   -----------------------------------------------
                                      30-89 Days             90 Days or More              30-89 Days            90 Days or More  
                               ----------------------  --------------------------   ------------------------  ---------------------
                                           Principal                 Principal                    Principal               Principal
                                 Number     Balance     Number        Balance         Number       Balance      Number     Balance
                                of Loans    of Loans   of Loans      of Loans        of Loans      of Loans    of Loans    of Loans
                               ---------   ---------   --------   ---------------   ----------   ----------   ----------  ---------
                                                                      (Dollars in thousands)
Real estate mortgage loans...      39        $1,298       59          $1,673               51      $1,380             82    $1,767  
Consumer loans...............     138         1,287       58             470              108       1,053             87       713  
Commercial loans.............       -             -        -               -                -           -              -         -  
                                  ---        ------      ---          ------         --------      ------       --------    ------  
  Total delinquent loans(1)..     177        $2,585      117          $2,143              159      $2,433            169    $2,480  
                                             ======                   ======                       ======                   ======  
Delinquent loans to total                                                                                                           
 loans(1)....................                 0.73%                    0.60%                        0.85%                    0.86%
                                                                                                   ======                   ======
At June 30,  1996                 
                                --------------------------------------------------
                                      30-89 Days            90 Days or More   
                                ---------------------   -------------------------- 
                                            Principal                 Principal     
                                  Number     Balance      Number        Balance      
                                 of Loans   of Loans     of Loans       of Loans     
                                ---------   ---------   ---------   --------------
                                              (Dollars in thousands)
Real estate mortgage loans...      (2)       $  939        (2)          $  825        
Consumer loans...............      (2)          588        (2)             200        
Commercial loans.............      (2)          140        (2)             101        
                                             ------                     ------        
  Total delinquent loans(1)..                $1,667                     $1,126        
                                             ======                     ======        
Delinquent loans to total                                                             
 loans(1)....................                 0.66%                      0.44%        
                                             ======                     ======
____________________
(1) Total loans represent gross loans receivable less deferred loan fees and
    loans in process.
(2) Information not available.

                                      53
Nonperforming Assets.  The following table sets forth information regarding
nonperforming loans and REO.  At June 30, 1998, the Association had no troubled-
debt restructured loans within the meaning of SFAS 15, and no REO properties.
It is the general policy of the Association to cease accruing interest on loans
90 days or more past due when, in management's opinion, the collection of all or
a portion of the loan principal has become doubtful and to fully reserve for all
previously accrued interest.  For the years ended June 30, 1998, 1997, 1996,
1995 and 1994 the amount of additional interest income that would have been
recognized on non-accrual loans if such loans had continued to perform in
accordance with their contractual terms was $94,000, $172,000, $109,000, $88,000
and $59,000, respectively.
At June 30,
                                     -------------------------------------------
                                        1998     1997      1996     1995    1994
                                     -------------------------------------------
(In thousands)
Nonperforming loans:
 Real estate mortgage loans..........  $1,673   $1,767    $  825   $ 665   $ 516
 Consumer loans......................     470      713       200     256      64
 Commercial loans....................       -        -       101      71     151
                                       ------   ------    ------   -----   -----
  Total nonperforming loans..........   2,143    2,480     1,126     992     731
                                       ------   ------    ------   -----   -----
  Real estate owned, net.............       -        -         -       -     140
                                       ------   ------    ------   -----   -----
Total nonperforming assets...........  $2,143   $2,480    $1,126   $ 992   $ 871
                                       ======   ======    ======   =====   =====
Nonperforming loans as a percent of      0.60%    0.86%     0.44%   0.41%   0.33%
 total loans (1).....................
Nonperforming assets as a percent of     0.35     0.45      0.22    0.21    0.18
 total assets(2).....................
__________
(1) Loans represent loans receivable, net, excluding the allowance for
    loan losses.
(2) Nonperforming assets consist of nonperforming loans and REO.

     Nonperforming loans totaled $2.1 million as of June 30, 1998, and included
59 mortgage loans with an aggregate balance of $1.7 million and $470,000 in
consumer loans.

Allowance for Loan Losses

     The allowance for loan losses is maintained through provisions for loan
losses based on management's on-going evaluation of the risks inherent in its
loan portfolio in consideration of the trends in its loan portfolio, the
national and regional economies and the real estate market in the Association's
primary lending area. The allowance for loan losses is maintained at an amount
management considers adequate to cover estimated losses in its loan portfolio
which are deemed probable and estimable based on information currently known to
management. The Association's loan loss allowance determinations also
incorporate factors and analyses which consider the potential principal loss
associated with the loan, costs of acquiring the property securing the loan
through foreclosure or deed in lieu thereof, the periods of time involved with
the acquisition and sale of such property, and costs and expenses associated
with maintaining and holding the property until sale and the costs associated
with the Association's inability to utilize funds for other income producing
activities during the estimated holding period of the property.

     As of June 30, 1998, the Association's allowance for loan losses was $3.0
million, or 0.9% of total loans and 141.3% of nonperforming loans as compared to
$1.7 million, or 0.6%, of total loans and 69.5% of nonperforming loans as of
June 30, 1997.  The increased allowance for loan losses was due to several
factors including an increase in the level of consumer loan charge-offs, the
approximately 25% growth in total loans, the continued trend of increased non-
performing loans over the Association's historical levels as well as local
economic conditions including significant recent layoffs at GM's Lordstown plant
caused by a strike at two of GM's other facilities.  The Association had total
nonperforming loans of $2.1 million at June 30, 1998, and nonperforming loans to
total loans of 0.6%.  The Association will continue to monitor and modify its
allowance for loan losses as conditions dictate.  Management believes that,
based on information currently available, the Association's allowance for loan
losses is sufficient to cover losses inherent in 

                                      54
its loan portfolio at this time. Based upon the Association's recent increased
emphasis in consumer lending, the Association expects to increase its allowance
for loan losses over future periods depending upon the then current conditions.
However, no assurances can be given that the Association's level of allowance
for loan losses will be sufficient to cover future loan losses incurred by the
Association or that future adjustments to the allowance for loan losses will not
be necessary if economic and other conditions differ substantially from the
economic and other conditions used by management to determine the current level
of the allowance for loan losses. In addition, the OTS, as an integral part of
its examination process, periodically reviews the Association's allowance for
loan losses. Such agency may require the Association to make additional
provisions for estimated loan losses based upon judgments different from those
of management.

     The following table sets forth activity in the Association's allowance for
loan losses for the periods set forth in the table.
At or For the Years Ended June 30,        
                                        ----------------------------------------------  
                                          1998     1997      1996      1995      1994   
                                        --------  -------  --------  --------  -------  
                                                        (In thousands)
Balance at beginning of period......    $ 1,723   $1,259   $ 1,186   $ 1,034   $ 1,087  
Provision for loan losses...........      1,779      590       238       313       360  
Charge-offs:                                                                            
  Real estate mortgage loans:                                                           
   One-to four-family...............         32        -         -         -        50  
   Commercial real estate...........          -        -         -         -       325  
  Consumer..........................        484      138       236       205        75  
  Commercial........................          -        -         -         -        11  
                                        -------   ------   -------   -------   -------  
    Total charge-offs...............        516      138       236       205       461  
Recoveries:                                                                             
  Real estate mortgage loans:                                                           
   One-to four-family...............          3        3         -        12         -  
  Consumer..........................         38        9        71        32        10  
  Commercial........................          -        -         -         -        38  
                                        -------   ------   -------   -------   -------  
    Total recoveries................         41       12        71        44        48  
                                        -------   ------   -------   -------   -------  
Balance at end of period............    $ 3,027   $1,723   $ 1,259   $ 1,186   $ 1,034  
                                        =======   ======   =======   =======   =======  
Allowance for loan losses as a                                                          
 percent of loans(1)................       0.85%    0.60%     0.49%     0.49%     0.47% 
Allowance for loan losses as a                                                          
 percent of nonperforming loans(2)..     141.25%   69.48%   111.81%   119.56%   141.45%
______________
(1) Loans receivable, net, excluding the allowance for loan losses.
(2) Nonperforming loans consist of all nonaccrual loans and all other
    loans 90 days or more past due.

                                      55
The following tables set forth the Association's percent of allowance for
loan losses to total allowance and the percent of loans to total loans in each
of the categories listed at the dates indicated.
At June 30,
                              -----------------------------------------------------------------------------------------------
                                            1998                           1997                            1996              
                              -----------------------------------------------------------------------------------------------
                                                      Percent                        Percent                         Percent 
                                                     of Loans                       of Loans                        of Loans 
                                         Percent of   in Each           Percent of   in Each            Percent of   in Each  
                                         Allowance   Category           Allowance   Category            Allowance   Category 
                                         to Total     to Total           to Total    to Total             to Total   to Total 
                                Amount   Allowance     Loans   Amount   Allowance     Loans     Amount  Allowance     Loans  
                               -------- ----------- --------- -------- ----------- ---------- --------- ---------- ---------- 
                                                                       (Dollars in thousands)
Real estate mortgage loans..    $1,458      48.17%     81.64%  $  911      52.87%     82.25%  $  836      66.40%     84.86%  
Consumer loans..............       901      29.77      17.65      432      25.07      17.04      275      21.84      14.62   
Commercial loans............         9       0.30       0.71        7       0.41       0.71       11       0.87       0.52   
Unallocated.................       659      21.76          -      373      21.65          -      137      10.89          -   
                                ------     ------     ------   ------     ------     ------   ------     ------     ------   
                                                                                                                             
Total allowance for loan        $3,027     100.00%    100.00%  $1,723     100.00%    100.00%  $1,259     100.00%    100.00%  
 losses.....................    ======     ======     ======   ======     ======     ======   ======     ======     ======
At June 30,                  
                               --------------------------------------------------------------
                                           1995                           1994
                               --------------------------------------------------------------
                                                      Percent                        Percent  
                                                     of Loans                       of Loans  
                                         Percent of   in Each           Percent of   in Each  
                                         Allowance   Category           Allowance   Category  
                                         to Total     to Total           to Total    to Total  
                                Amount   Allowance     Loans   Amount   Allowance     Loans   
                               -------- ----------- --------- -------- ----------- ----------
Real estate mortgage loans..    $  779      65.68%     82.74%  $  839      81.14%     88.62%
Consumer loans..............       286      24.11      16.63      145      14.02      10.49
Commercial loans............        12       1.01       0.63        6       0.58       0.89
Unallocated.................       109       9.20          -       44                     -
                                ------     ------     ------   ------       4.26     ------
                                                                          ------           
Total allowance for loan        $1,186     100.00%    100.00%  $1,034     100.00%    100.00%
 losses.....................    ======     ======     ======   ======     ======     ======
56
Real Estate Owned.  At June 30, 1998, the Association had no REO in its
portfolio.  When the Association does acquire property through foreclosure or
deed in lieu of foreclosure, it is initially recorded at fair value of the
related assets at the date of foreclosure, less costs to sell.  Any initial loss
is recorded as a charge to the allowance for loan losses before being
transferred to REO.  Thereafter, if there is a further deterioration in value,
the Association provides for a specific valuation allowance and charges
operations for the diminution in value.

Investment Activities

     The Board of Directors of the Association sets the investment policy and
procedures of the Association.  This policy generally provides that investment
decisions will be made based on the safety of the investment, liquidity
requirements of the Association and, to a lesser extent,  potential return on
the investments.  In pursuing these objectives, the Association considers the
ability of an investment to provide earnings consistent with factors of quality,
maturity, marketability and risk diversification.  While the Board of Directors
has final authority and responsibility for the securities investment portfolio,
the Association has established an Investment Committee comprised of the Chief
Executive Officer, the Chief Financial Officer and at least one member of the
Board of Directors to supervise the Association's investment activities.  A
chief investment officer is appointed annually to oversee daily investment
activities.  The Association's Investment Committee meets quarterly and
evaluates all investment activities for safety and soundness, adherence to the
Association's investment policy, and assurance that authority levels are
maintained.

     The Association currently does not participate in hedging programs,
interest rate swaps, or other activities involving the use of off-balance sheet
derivative financial instruments.  Similarly, the Association does not invest in
mortgage-related securities which are deemed to be "high risk," or purchase
bonds which are not rated investment grade.

     Mortgage-Backed Securities.  The Association currently purchases mortgage-
backed securities in order to:  (i) generate positive interest rate spreads with
minimal administrative expense; and (ii) lower its credit risk as a result of
the guarantees provided by FHLMC, FNMA, and GNMA.  The Association invests in
mortgage-backed securities issued or guaranteed by FNMA, FHLMC and GNMA.  At
June 30, 1998, mortgage-backed securities totaled $207.9 million, or 34.1%, of
total assets, of which $190.1 million was classified as available-for-sale.  At
June 30, 1998, 29.1% of the mortgage-backed securities were backed by
adjustable-rate loans and 70.9% were backed by fixed-rate loans.  The mortgage-
backed  securities portfolio had coupon rates ranging from 4.7% to 10.25% and
had a weighted average yield of 6.75% at June 30, 1998.  The estimated fair
value of the Association's mortgage-backed securities at June 30, 1998, was
$208.0 million, which is $2.5 million more than the amortized cost of $205.6
million.

     Mortgage-backed securities are created by the pooling of mortgages and
issuance of a security with an interest rate which is less than the interest
rate on the underlying mortgage.  Mortgage-backed securities typically represent
a participation interest in a pool of single-family or multi-family mortgages,
although the Association focuses its investments on mortgage-backed securities
backed by single-family mortgages.  The issuers of such securities (generally
U.S. Government agencies and government sponsored enterprises, including FNMA,
FHLMC and GNMA) pool and resell the participation interests in the form of
securities to investors such as the Association and guarantee the payment of
principal and interest to investors.  Mortgage-backed securities generally yield
less than the loans that underlie such securities because of the cost of payment
guarantees and credit enhancements.  In addition, mortgage-backed securities are
usually more liquid than individual mortgage loans and may be used to
collateralize certain liabilities and obligations of the Association.
Investments in mortgage-backed securities involve a risk that actual prepayments
will be greater than estimated prepayments over the life of the security, which
may require adjustments to the amortization of any premium or accretion of any
discount relating to such instruments thereby reducing the net yield on such
securities.  There is also reinvestment risk associated with the cash flows from
such securities or in the event such securities are redeemed by the issuer.  In
addition, the market value of such securities may be adversely affected by
changes in interest rates.  The Association estimates prepayments for its
mortgage-backed securities at purchase to ensure that prepayment assumptions are
reasonable considering the underlying collateral for the mortgage-backed
securities at issue and current mortgage interest rates and to determine the
yield and estimated maturity of its mortgage-backed security portfolio excluding
FHLB stock.  Of the Association's $207.9 million mortgage-backed securities
portfolio at June 30, 1998, $715,000 with a weighted average yield of 6.23% had
contractual maturities within five years and $207.2 million with a weighted
average yield of 6.75% had contractual maturities over five years.  However, the
actual maturity of a mortgage-backed security may be less than its stated
maturity due to prepayments of the underlying mortgages.  

                                      57
Prepayments that are faster than anticipated may shorten the life of the
security and may result in a loss of any premiums paid and thereby reduce the
net yield on such securities. Although prepayments of underlying mortgages
depend on many factors, the difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates generally is the
most significant determinant of the rate of prepayments. During periods of
declining mortgage interest rates, refinancing generally increases and
accelerates the prepayment of the underlying mortgages and the related security.
Under such circumstances, the Association may be subject to reinvestment risk
because, to the extent that the Association's mortgage-backed securities prepay
faster than anticipated, the Association may not be able to reinvest the
proceeds of such repayments and prepayments at a comparable rate.

     Investment Securities.  At June 30, 1998, the Association's investment
securities portfolio totaled $31.6 million, of which $21.1 million were
classified as available-for-sale.  Such portfolio primarily consists of short-
to medium-term (maturities of one to five years) U.S. Treasury and agency
securities.

     The following table sets forth the composition of the Association's
investment and mortgage-backed securities portfolios in dollar amounts and in
percentages at the dates indicated:
At June 30,
                                                        --------------------------------------------------------------------------
                                                                  1998                    1997                    1996
                                                        ----------------------- ------------------------- ------------------------
                                                                    Percent of                Percent of              Percent of   
                                                           Amount      Total      Amount         Total      Amount       Total     
                                                        ---------- ------------ ----------- ------------- --------- -------------- 
                                                                                   (Dollars in thousands)
Available for sale:                                                                                                                
   U.S. Government agencies.............................  $ 15,797        6.60%  $ 33,678          13.60%  $ 25,012        10.00%  
   Obligations of states and political subdivisions.....       853        0.36        838           0.34          -                
   FHLB stock...........................................     4,415        1.84      4,893           1.98      4,563         1.82   
   Marketable equity securities.........................         -           -      2,980           1.20      2,920         1.17   
                                                          --------      ------   --------         ------   --------       ------   
       Total investment securities......................    21,065        8.80     42,389          17.12     32,495        12.99   
                                                          --------               --------                  --------                
Mortgage-backed securities:                                                                                                        
   GNMA.................................................    37,714       15.75     39,823          16.09     31,075        12.43   
   FNMA.................................................    50,518       21.09     57,888          23.38     63,959        25.57   
   FHLMC................................................   100,898       42.13     60,891          24.60     72,092        28.83   
   Other mortgage-backed securities.....................       990        0.41      1,686           0.68      2,555         1.02   
                                                          --------      ------   --------         ------   --------       ------   
              Total mortgage-backed securities..........   190,120       79.38    160,288          64.75    169,681        67.85   
                                                          --------      ------   --------         ------   --------       ------   
Total securities available for sale.....................   211,185       88.18    202,677          81.87    202,176        80.84   
                                                          --------               --------                  --------                
Held to maturity:                                                                                                                  
   U.S.Treasury securities..............................     6,005        2.52     14,005           5.66     11,984         4.79   
   U.S. Government agencies.............................     4,147        1.73      4,239           1.71      6,000         2.40   
   Obligations of states and political subdivisions.....       364        0.15        405           0.16        446         0.18   
                                                          --------      ------   --------         ------   --------       ------   
       Total investment securities......................    10,516        4.40     18,649           7.53     18,430         7.37   
                                                          --------               --------                  --------                
 Mortgage backed securities:                                                                                                     
       GNMA.............................................     1,512        0.63      1,943           0.78      2,386         0.95   
       FNMA.............................................    16,267        6.79     24,283           9.82     27,102        10.84   
                                                          --------      ------   --------         ------   --------       ------   
          Total mortgaged-backed securities.............    17,779        7.42     26,226          10.60     29,488        11.79   
                                                          --------      ------   --------         ------   --------       ------   
Total securities held to maturity.......................    28,295       11.82     44,875          18.13     47,918        19.16   
                                                          --------      ------   --------         ------   --------       ------   
Total securities........................................  $239,480      100.00%  $247,552         100.00%  $250,094       100.00%  
                                                          ========      ======   ========         ======   ========       ======
58
The following table sets forth at the dates indicated certain information
regarding the amortized cost and market values of the Association's investment
and mortgage-backed securities.
At June 30,
                                                             -------------------------------------------------------------
                                                                    1998                 1997                 1996
                                                             -------------------  -------------------  -------------------

                                                             Amortized   Market   Amortized   Market   Amortized   Market
                                                               Cost      Value      Cost      Value      Cost      Value
                                                             ---------  --------  ---------  --------  ---------  --------
                                                                                    (In thousands)
Available for sale:
   U.S. Government agencies................................   $ 15,734  $ 15,797   $ 34,012  $ 33,678   $ 25,938  $ 25,012
   Obligations of states and political subdivisions........        826       853        825       838         --        --
   FHLB stock..............................................      4,415     4,415      4,893     4,893      4,563     4,563
   Marketable equity securities............................         --        --      3,216     2,980      3,216     2,920
                                                              --------  --------   --------  --------   --------  --------
       Total investment securities.........................     20,975    21,065     42,946    42,389     33,717    32,495
                                                              --------  --------   --------  --------   --------  --------
Mortgage-backed securities:
   GNMA....................................................     37,355    37,714     39,493    39,823     31,507    31,075
   FNMA....................................................     49,959    50,518     57,604    57,888     65,065    63,959
   FHLMC...................................................     99,494   100,898     60,893    60,891     73,428    72,092
   Other mortgage-backed securities........................        987       990      1,655     1,686      2,465     2,555
                                                              --------  --------   --------  --------   --------  --------
              Total mortgage-backed securities.............    187,795   190,120    159,645   160,288    172,465   169,681
                                                              --------  --------   --------  --------   --------  --------
Total securities available for sale........................   $208,770  $211,185   $202,591  $202,677   $206,182  $202,176
                                                              ========  ========   ========  ========   ========  ========
Held to maturity:
   U.S.Treasury securities.................................   $  6,005  $  6,014   $ 14,005  $ 13,951   $ 11,984  $ 12,061
   U.S. Government agencies................................      4,147     4,181      4,239     4,236      6,000     5,932
   Obligations of states and political subdivisions........        364       396        405       439        446       472
                                                              --------  --------   --------  --------   --------  --------
       Total investment securities.........................     10,516    10,591     18,649    18,626     18,430    18,465
                                                              --------  --------   --------  --------   --------  --------
   Mortgage backed securities:
       GNMA................................................      1,512     1,561      1,943     1,993      2,386     2,324
       FNMA................................................     16,267    16,367     24,283    24,180     27,102    26,597
                                                              --------  --------   --------  --------   --------  --------
       Total mortgaged-backed securities...................     17,779    17,928     26,226    26,173     29,488    28,921
                                                              --------  --------   --------  --------   --------  --------
Total securities held to maturity..........................   $ 28,295  $ 28,519   $ 44,875  $ 44,799   $ 47,918  $ 47,386
                                                              ========  ========   ========  ========   ========  ========
59
The table below sets forth certain information regarding the carrying
value, weighted average yields and contractual maturities of the Association's
securities portfolio, excluding FHLB stock.
At June 30, 1998                
                                                 ---------------------------------------------------------------------------------
                                                                                  More than One               More than Five    
                                                     One Year or Less           Year to Five Years          Years to Ten Years   
                                                 -------------------------   -------------------------   -------------------------
                                                                Weighted                    Weighted                    Weighted   
                                                  Carrying       Average      Carrying       Average      Carrying       Average   
                                                    Value         Yield         Value         Yield         Value         Yield    
                                                 -----------   -----------   -----------   -----------   -----------   -----------
                                                                               (Dollars in thousands)
Available for sale:                                                                                
                                                                                                   
U.S. Government agencies.......................    $ 9,575        6.36%        $ 6,222         5.96%        $     -            -%  
Obligations of state and political subdivisions          -           -             429         6.85             424         7.05   
                                                                                                          
Mortgage-backed securities:                                                                                   
      GNMA.....................................          -           -               -            -               -            -   
      FNMA.....................................          -           -               -            -           2,972         6.84   
      FHLMC....................................          -           -               -            -          17,647         6.68   
      Other mortgage-backed securities.........          -           -               -            -               -            -   
                                                   -------                     -------                      -------                
        Total securities available for sale....    $ 9,575        6.36         $ 6,651         6.02         $21,043         6.71   
                                                   =======                     =======                      =======                
                                                                                                              
Held to maturity:                                                                                             
U.S. Treasury securities.......................    $ 6,005        5.73     $         -            -         $     -            -   
U.S. Government agencies.......................          -           -           4,147         6.17               -            -   
Obligations of state and political subdivisions         40        6.80             161         6.80             163         6.80   
Mortgage-backed securities:                                                                                   
  GNMA.........................................          -           -               -                        1,462         7.88   
  FNMA.........................................          -           -             710         6.23           4,174         6.78   
                                                   -------                     -------                      -------                
      Total securities held to maturity........    $ 6,045        5.74         $ 5,018         6.20         $ 5,799         7.06  
                                                   =======                     =======                      =======                
Total securities...............................    $15,620        6.12         $11,669         6.10         $26,842         6.79   
                                                   =======                     =======                      =======
At June 30, 1998                
                                                 -----------------------------------------------------
                                                    More than Ten Years              Total
                                                 -------------------------   -------------------------   
                                                                Weighted                    Weighted
                                                  Carrying       Average      Carrying       Average
                                                    Value         Yield         Value         Yield
                                                 -----------   -----------   -----------   -----------   
                                                                 (Dollars in thousands)
Available for sale:           
                              
U.S. Government agencies.......................    $      -            -%     $ 15,797          6.20%
Obligations of state and political subdivisions           -            -           853          6.95
   
Mortgage-backed securities:   
      GNMA.....................................      37,714         7.09        37,714          7.09
      FNMA.....................................      47,546         6.32        50,518          6.35
      FHLMC....................................      83,251         6.79       100,898          6.77
      Other mortgage-backed securities.........         990        10.04           990         10.04
                                                   --------                   --------
        Total securities available for sale....    $169,501         6.74      $206,770          6.70
                                                   ========                   ========
                              
Held to maturity:             
U.S. Treasury securities.......................    $      -            -      $  6,005          5.73
U.S. Government agencies.......................           -            -         4,147          6.17
Obligations of state and political subdivisions           -            -           364          6.80
   
Mortgage-backed securities:   
  GNMA.........................................          50         7.22         1,512          7.86
  FNMA.........................................      11,383         6.77        16,267          6.75
                                                   --------                   --------      
      Total securities held to maturity........    $ 11,433         6.77      $ 28,295          6.51
                                                   ========                   ========      
Total securities...............................    $180,934         6.74      $235,065          6.68
                                                   ========                   ========
60
Sources of Funds

     General.  Deposits, loan repayments, cash flows generated from operations
and FHLB advances are the primary sources of the Association's funds for use in
lending, investing and for other general purposes.

     Deposits.  The Association offers a variety of deposit accounts with a
range of interest rates and terms. The Association's deposit accounts consist of
savings, retail checking/NOW accounts, business checking accounts, money market
accounts, club accounts and certificate of deposit accounts. The Association
offers certificate of deposit accounts with balances in excess of $100,000 at
preferential rates (jumbo certificates) and also offers Individual Retirement
Accounts ("IRAs") and other qualified plan accounts.

     At June 30, 1998, the Association's deposits totaled $435.5 million, or
81.3%, of interest-bearing liabilities. For the year ended June 30, 1998, the
average balance of core deposits totaled $169.3 million, or 40.3% of total
average deposits. At June 30, 1998, the Association had a total of $260.0
million in certificates of deposit, of which $167.8 million had maturities of
one year or less reflecting the shift in deposit accounts from savings accounts
to shorter-term certificate accounts that has occurred in recent years. Although
the Association has a significant portion of its deposits in core deposits,
management monitors activity on the Association's core deposits and, based on
historical experience and the Association's current pricing strategy, believes
it will continue to retain a large portion of such accounts. The Association is
not limited with respect to the rates it may offer on deposit products.

     The flow of deposits is influenced significantly by general economic
conditions, changes in money market rates, prevailing interest rates and
competition. The Association's deposits are obtained predominantly from the
areas in which its branch offices are located. The Association relies primarily
on customer service and long-standing relationships with customers to attract
and retain these deposits; however, market interest rates and rates offered by
competing financial institutions affect the Association's ability to attract and
retain deposits. The Association uses traditional means of advertising its
deposit products, including radio and print media and generally does not solicit
deposits from outside its primary market area. While certificate accounts in
excess of $100,000 are accepted by the Association, and may be subject to
preferential rates, the Association does not actively solicit such deposits as
such deposits are more difficult to retain than core deposits. The Association's
policies do not permit the use of brokered deposits.

                                      61
The following table presents the deposit activity of the Association for
the periods indicated.

                                                        For the Years Ended
                                                             June 30,
                                                   -----------------------------
                                                     1998      1997      1996
                                                   --------  --------  ---------
                                                         (In thousands)
       Beginning balance......................     $412,934  $391,715  $376,541

       Net deposits (withdrawals).............        2,579     2,538    (3,154)

       Interest credited on deposit accounts..       19,949    18,681    18,328
                                                   --------  --------  --------

       Total increase in deposit accounts.....       22,528    21,219    15,174
                                                   --------  --------  --------

       Ending balance.........................     $435,462  $412,934  $391,715
                                                   ========  ========  ========

     At June 30, 1998, the Association had outstanding $53.2 million in
certificate of deposit accounts in amounts of $100,000 or more, maturing as
follows:

                                                                  Weighted
             Maturity Period                   Amount           Average Rate
     -------------------------------------   ----------     --------------------
                                                  (Dollars in thousands)

     Three months or less.................     $ 5,374             6.24%

     Over three through six months........      10,585             6.17

     Over six through 12 months...........      17,735             5.91

     Over 12 months.......................      19,531             5.64
                                               -------       

     Total................................     $53,225             5.89

                                      62
The following table sets forth the distribution of the Association's
deposit accounts at June 30, 1998 and the distribution of the average deposit
accounts for the periods indicated and the weighted average interest rates on
each category of deposits presented.
At June 30, 1998           For the Year Ended June 30, 1998 
                                      ---------------------------------  ---------------------------------- 
                                                   Percent    Weighted               Percent      Weighted  
                                                  of Total     Average    Average    of Total      Average  
                                       Balance    Deposits      Rate      Balance    Deposits       Rate    
                                      ---------  ----------  ----------  ---------  ----------  -----------
(Dollars in thousands)    
Noninterest bearing demand....         $  5,217      1.20%        --%    $  4,560      1.08%        --% 
NOW and money market..........          102,875     23.62       3.51       95,871     22.80       3.44  
Savings.......................           67,401     15.48       2.24       68,945     16.40       2.41  
Certificates of deposit.......          259,969     59.70       5.88      251,130     59.72       5.93  
                                       --------    ------                --------    ------             
    Total deposits............         $435,462    100.00%      4.69     $420,506    100.00%      4.72  
                                       ========    ======                ========    ======
For the Year Ended June 30, 1997   For the Year Ended June 30, 1996
                                      ---------------------------------  ----------------------------------
                                                   Percent   Weighted                 Percent    Weighted
                                       Average    of Total    Average     Average    of Total     Average
                                       Balance    Deposits      Rate      Balance    Deposits       Rate
                                      ---------  ----------  ----------  ---------  ----------  -----------
(Dollars in thousands) 
Noninterest bearing demand....         $  3,681      0.92%        --%   $  3,033        0.79%        --%
NOW and money market..........           84,388     21.15       3.20      70,183       18.27       2.77
Savings.......................           72,132     18.08       2.47      77,953       20.29       2.58
Certificates of deposit.......          238,859     59.86       5.87     232,955       60.65       5.98
                                       --------    ------               --------      ------       
    Total deposits............         $399,060    100.00%      4.64    $384,124      100.00%      4.66
                                       ========    ======               ========      ======
The following table presents, by various rate categories, the amount of
certificate of deposit accounts outstanding at the dates indicated.
Period to Maturity from June 30, 1998
                                                ---------------------------------------------------------------------------------
                                                                                                                 Over    Total at
                                                  Less than    One to      Two to      Three to      Four to     Five     June 30,
                                                   One Year   Two Years  Three Years  Four Years    Five Years   Years      1998   
                                                ---------------------------------------------------------------------------------
(Dollars in thousands)
Certificate accounts:          
    0 to 4.00%.........................              $1,241     $1,503          $71         $19         $ -       $ -       $2,834
    4.01 to 5.00%......................              15,072        969          681       2,006          41        414      19,183
    5.01 to 6.00%......................             109,434     29,629       13,664       3,022       1,017      4,110     160,876
    6.01 to 7.00%......................              25,359     18,244        3,268       1,646         569     10,415      59,501
    7.01 to 8.00%......................               3,160        759           20           -           -          -       3,939
    8.01 to 9.00%......................               3,036         56            -          22           6          -       3,120
    Over 9.01%.........................              10,516          -            -           -           -          -      10,516
                                                   --------    -------      -------      ------      ------    -------    --------
        Total at June 30, 1998.........            $167,818    $51,160      $17,704      $6,715      $1,633    $14,939    $259,969
                                                   ========    =======      =======      ======      ======    =======    ========
63
Borrowings.  The Association's policy has been to utilize borrowings as an
alternative and/or less costly source of funds.  The Association obtains
advances from the FHLB-Cincinnati, which are collateralized by the capital stock
of the FHLB-Cincinnati held by the Association, and certain mortgage loans of
the Association.  The Association also borrows funds through reverse repurchase
agreements with the FHLB-Cincinnati and primary broker/dealers.  Advances from
the FHLB-Cincinnati are made pursuant to several different credit programs, each
of which has its own interest rate and maturity.  The maximum amount that the
FHLB-Cincinnati will advance to member institutions, including the Association,
for purposes of other than meeting withdrawals, fluctuates from time to time in
accordance with the policies of the FHLB-Cincinnati and the OTS.  The maximum
amount of FHLB-Cincinnati advances permitted to a member institution generally
is reduced by borrowings from any other source.  At June 30, 1998, the
Association's FHLB-Cincinnati advances totaled $44.8 million, representing 8.1%
of total liabilities.

     During the year ended June 30, 1998, the Association continued to borrow
funds from primary broker/dealers.  The borrowings are collateralized by
designated mortgage-backed securities and investment securities.  The total of
these borrowings at June 30, 1998, was $60.4 million, representing 11.0% of
total liabilities.  The Association has the right to freely substitute
collateral as long as the margin is at least 95% of all outstanding borrowings,
including accrued interest.  The Association has used these repurchase
agreements in arbitrage strategies, using the funds to purchase a mix of fixed
and adjustable rate mortgage-backed securities, to generate a spread of
approximately 100 to 120 basis points, as well as to help reduce the
Association's interest rate risk.  See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Management Strategy."

     The Association also has an available overnight line-of-credit with the
FHLB-Cincinnati for a maximum of $20.0 million.  There was no fee for the line-
of-credit for the year ended June 30, 1998.  The Association may continue to
increase borrowings in the future to fund asset growth.  To the extent it does
so, the Association may experience an increase in its cost of funds.

     The following table sets forth certain information regarding the
Association's borrowed funds at or for the periods ended on the dates indicated:

                                                  At or For the Years Ended
                                                           June 30,
                                              ---------------------------------
                                                  1998       1997        1996
                                              ---------------------------------
                                                    (Dollars in thousands)
FHLB advances:
     Average balance outstanding..............   $52,396    $68,596     $68,615
     Maximum amount outstanding at any           
      month-end during the period.............    65,705     87,001      88,054
     Balance outstanding at end of period.....    44,820     58,398      76,078
     Weighted average interest rate during          5.83%      5.76%       5.79%
      the period..............................   
     Weighted average interest rate at end of       5.71%      5.84%       5.70%
      period..................................   
Repurchase agreements:                           
     Average balance outstanding..............   $45,044    $ 8,470     $     -
     Maximum amount outstanding at any           
      month-end during the period.............    60,430     16,000           -
     Balance outstanding at end of period.....    60,430     16,000           -
     Weighted average interest rate during          
      the period..............................      5.76%      5.67%          -%
     Weighted average interest rate at end of       
      period..................................      5.69%      5.60%          -%
Total borrowings:                                
     Average balance outstanding..............   $97,440    $77,066     $68,615
     Maximum amount outstanding at any
      month-end during the period.............   109,089     87,001      88,054
     Balance outstanding at end of period.....   105,250     74,398      76,078
     Weighted average interest rate during          
      the period..............................      5.80%      5.75%       5.79%
     Weighted average interest rate at end of       
      period..................................      5.70%      5.79%       5.70%

                                      64
Properties

     The Association conducts its business through an executive and 10 other
full-service branch offices.  The Association currently is considering plans to
renovate or rebuild its main office, which includes its administrative offices.
The Board of Directors is currently considering options presented to it by an
outside consultant, which range from renovation of the existing facility to
razing the existing facility and building a new office at that location.  The
cost of renovation or rebuilding is currently estimated to be up to $15.0
million, exclusive of land acquisition costs.
 

                                         Original              Net Book Value
                                           Year                of Property or
                                 Leased   Leased    Date of       Leasehold
                                   or       or       Lease     Improvements at
           Location              Owned   Acquired  Expiration   June 30, 1998
------------------------------  ------- ---------- ---------- ------------------
Executive/Main/Branch Office:

185 East Market St.              Owned     1940        N/A         $353,581
Warren, OH 44482                                               
    
Branch Offices:                                                    

201 Elm Road NE                  Leased    1970       2002            8,128
Warren, OH 44483                                                   

8226 East Market Street          Leased    1973       2004           35,051
Warren, OH 44484                                                   

4460 Mahoning Ave NW             Owned     1976        N/A          376,401
Warren, OH 44483                                                   

325 S. High Street               Owned     1979        N/A          167,281
Cortland, OH 44410                                                 

7290 Sharon Warren Rd.           Owned     1981        N/A          144,813
Brookfield, OH 44403                                               

Village Center Plaza,            Leased    1986       2006          237,358
Unit 530                                                           
6002 Warren-Youngstown Rd.                                         
Niles, OH 44446                                                    

8228 East Market St.             Leased    1994       2003          154,682
Warren, OH 44484                                                   
(Loan Center)                                                      

2104 Niles Cortland Rd, SE       Leased    1995       2000          202,796
Warren, OH 44484                                                   
(Inside Super Kmart)                                               

2790 Mahoning Ave NW             Leased    1995       1999            3,009
Warren, OH 44483                                                   

486 Boardman Canfield Rd.        Leased    1996       2001          118,082
Youngstown, OH 44512                                               

5220 Mahoning Avenue, Suite A    Leased    1997       2002           99,647
Youngstown, OH 44515                                               

45 Manor Drive, Suite 400        Leased    1998       2003           57,579
Canfield, OH 44406
(Loan Center)

     The Association also owns an office building located at 159 E. Market
Street in Warren, Ohio, which is partially occupied by four commercial business
tenants.  The Association presently receives aggregate annual rental income of
approximately $101,000 from its tenants.  The largest tenant has a lease which
expires in December 1999, with a 3 year option to renew.  The other leases
expire in the years 2000 and 2001.

                                      65
Legal Proceedings

     The Association is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business.  Such
routine legal proceedings, in the aggregate, are believed by management to be
immaterial to the financial condition and results of operations of the
Association.

Personnel

     As of June 30, 1998, the Association had 150 full-time employees and 25
part-time employees.  The employees are not represented by a collective
bargaining unit and the Association considers its relationship with its
employees to be good.  See "Management of the Association - Benefit Plans" for a
description of certain compensation and benefit programs offered to the
Association's employees.

                           FEDERAL AND STATE TAXATION
                                        
Federal Taxation

     General.  The Company and the Association will report their income on a
June 30 fiscal year basis using the accrual method of accounting and will be
subject to federal income taxation in the same manner as other corporations with
some exceptions, including particularly the Association's reserve for bad debts
discussed below.  The following discussion of tax matters is intended only as a
summary and does not purport to be a comprehensive description of the tax rules
applicable to the Association or the Company.  The Association has been audited
by the IRS for the 1992 and 1993 tax years.

     Bad Debt Reserve.  Historically, savings institutions such as the
Association which met certain definitional tests primarily related to their
assets and the nature of their business ("qualifying thrifts") were permitted to
establish a reserve for bad debts and to make annual additions thereto, which
are deducted in arriving at their taxable income.  The Association's deductions
with respect to "qualifying real property loans," which are generally loans
secured by certain interest in real property, were computed using an amount
based on the Association's actual loss experience, or a percentage equal to 8%
of the Association's taxable income, computed with certain modifications and
reduced by the amount of any permitted addition to the non-qualifying reserve.
Due to the Association's loss experience, the Association generally recognized a
bad debt deduction equal to 8% of taxable income.

     In August 1996, the provisions repealing the above thrift bad debt rules
were passed by Congress as part of "The Small Business Job Protection Act of
1996." The new rules eliminate the 8% of taxable income method for deducting
additions to the tax bad debt reserves for all thrifts for tax years beginning
after December 31, 1995.  These rules also require that all thrift institutions
recapture all or a portion of their bad debt reserves added since the base year
(last taxable year beginning before January 1, 1988).  The Association has
previously recorded a deferred tax liability equal to the bad debt recapture and
as such, the new rules will have no effect on net income or federal income tax
expense.  For taxable years beginning after December 31, 1995, the Association's
bad debt deduction will be equal to net charge-offs.  The new rules allow an
institution to suspend the bad debt reserve recapture for the 1996 and 1997 tax
years if the institution's lending activity for those years is equal to or
greater than the institution's average mortgage lending activity for the six
taxable years preceding 1996.  For this purpose, only home purchase and home
improvement loans are included and the institution can elect to have the tax
years with the highest and lowest lending activity removed from the average
calculation.  If an institution is permitted to postpone the reserve recapture,
it must begin its six year recapture no later than the 1998 tax year.  The
unrecaptured base year reserves will not be subject to recapture as long as the
institution continues to carry on the business of banking.  In addition, the
balance of the pre-1988 bad debt reserves continue to be subject to a provision
of present law referred to below that require recapture in the case of certain
excess distributions to shareholders.

     Distributions.  To the extent that the Association makes "non-dividend
distributions" to the Company that are considered as made (i) from the reserve
for losses on qualifying real property loans, to the extent the reserve for such
losses exceeds the amount that would have been allowed under the experience
method, or (ii) from the supplemental reserve for losses on loans ("Excess
Distributions"), then an amount based on the amount distributed will be included

                                      66
in the Association's taxable income. Non-dividend distributions include
distributions in excess of the Association's current and accumulated earnings
and profits, distributions in redemption of stock, and distributions in partial
or complete liquidation. However, dividends paid out of the Association's
current or accumulated earnings and profits, as calculated for federal income
tax purposes, will not be considered to result in a distribution from the
Association's bad debt reserve. Thus, any dividends to the Company that would
reduce amounts appropriated to the Association's bad debt reserve and deducted
for federal income tax purposes would create a tax liability for the
Association. The amount of additional taxable income created from an Excess
Distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution. Thus, if, after the
Conversion, the Association makes a "non-dividend distribution," then
approximately one and one-half times the amount so used would be includable in
gross income for federal income tax purposes, assuming a 34% corporate income
tax rate (exclusive of state and local taxes). See "Regulation" and "Dividend
Policy" for limits on the payment of dividends of the Association. The
Association does not intend to pay dividends that would result in a recapture of
any portion of its bad debt reserve.

     Corporate Alternative Minimum Tax.  The Code imposes a tax on alternative
minimum taxable income ("AMTI") at a rate of 20%.  The excess of the bad debt
reserve deduction claimed by the Association over the deduction that would have
been allowable under the experience method is treated as a preference item for
purposes of computing the AMTI.  Only 90% of AMTI can be offset by net operating
loss carryovers of which the Association currently has none.  AMTI is increased
by an amount equal to 75% of the amount by which the Association's adjusted
current earnings exceeds its AMTI (determined without regard to this preference
and prior to reduction for net operating losses).

     Dividends Received Deduction and Other Matters.  The Company may exclude
from its income 100% of dividends received from the Association as a member of
the same affiliated group of corporations.  The corporate dividends received
deduction is generally 70% in the case of dividends received from unaffiliated
corporations with which the Company and the Association will not file a
consolidated tax return, except that if the Company or the Association own more
than 20% of the stock of a corporation distributing a dividend then 80% of any
dividends received may be deducted.

Ohio Taxation

     The Company is subject to the Ohio corporation franchise tax, which, as
applied to the Company, is a tax measured by both net earnings and net worth.
The rate of tax is the greater of (i) 5.1% on the first $50,000 of computed Ohio
taxable income and 8.9% of computed Ohio taxable income in excess of $50,000 and
(ii) 0.582% times taxable net worth.  Under these alternative measures of
computing tax liability, the states to which a taxpayer's adjusted total net
income and adjusted total net worth are apportioned or allocated are determined
by complex formulas.  The minimum tax is $50 per year.

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

     Ohio corporation franchise tax law is scheduled to change markedly as a
consequence of legislative reforms enacted July 1, 1997.  Tax liability,
however, continues to be measured by both net income and net worth.  In general,
tax liability will be the greater of (i) 5.1% on the first $50,000 of computed
Ohio taxable income and 8.5% of computed Ohio taxable income in excess of
$50,000 or (ii) 0.40% of taxable net worth.  Under these alternative measures of
computing tax liability, the states to which total net income and total net
worth will be apportioned or allocated will continue to be determined by complex
formulas, but the formulas change.  The minimum tax will still be $50 per year
and maximum tax liability as measured by net worth will be limited to $150,000
per year.  The special litter taxes remain in effect.  Various other changes in
the tax law may affect the Company.

     The Association is a "financial institution" for State of Ohio tax
purposes. As such, it is subject to the Ohio

                                      67
corporation franchise tax on "financial institutions," which is imposed annually
at a rate of 1.5% of the Association's apportioned book net worth, determined in
accordance with GAAP, less any statutory deduction. This rate of tax is
scheduled to decrease in each of the years 1999 and 2000. As a "financial
institution," the Association is not subject to any tax based upon net income or
net profits imposed by the State of Ohio.

Delaware Taxation

     As a Delaware holding company not earning income in Delaware, the Company
is exempted from Delaware corporate income tax but is required to file an annual
report with and pay an annual franchise tax to the State of Delaware.

                                   REGULATION
                                        
General

     The Association is subject to extensive regulation, examination and
supervision by the OTS, as its chartering agency, and the FDIC, as the deposit
insurer.  The Association is a member of the FHLB System.  The Association's
deposit accounts are insured up to applicable limits by the SAIF managed by the
FDIC.  The Association must file reports with the OTS and the FDIC concerning
its activities and financial condition in addition to obtaining regulatory
approvals prior to entering into certain transactions such as mergers with, or
acquisitions of, other financial institutions.  There are periodic examinations
by the OTS and the FDIC to test the Association's compliance with various
regulatory requirements.  This regulation and supervision establishes a
comprehensive framework of activities in which an institution can engage and is
intended primarily for the protection of the insurance fund and depositors.  The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes.  Any
change in such policies, whether by the OTS, the FDIC or the Congress, could
have a material adverse impact on the Company, the Association and their
operations.  Assuming that the holding company form of organization is utilized,
the Company, as a savings and loan holding company, will also be required to
file certain reports with, and otherwise comply with the rules and regulations
of the OTS and of the SEC under the federal securities laws.

     Certain of the regulatory requirements applicable to the Association and to
the Company are referred to below or elsewhere herein.  The description of
statutory provisions and regulations applicable to savings associations set
forth in this Prospectus do not purport to be complete descriptions of such
statutes and regulations and their effects on the Association and the Company
and is qualified in its entirety by reference to such statutes and regulations.

Federal Savings Institution Regulation

     Business Activities.  The activities of federal savings institutions are
governed by the Home Owners' Loan Act, as amended (the "HOLA") and, in certain
respects, the Federal Deposit Insurance Act ("FDI Act") and the regulations
issued by the agencies to implement these statutes.  These laws and regulations
delineate the nature and extent of the activities in which federal associations
may engage.  In particular, many types of lending authority for federal
associations, e.g., commercial, non-residential real property loans and consumer
loans, are limited to a specified percentage of the institution's capital or
assets.

     Loans-to-One Borrower.  Under the HOLA, savings institutions are generally
subject to the national bank limit on loans-to-one borrower.  Generally, this
limit is 15% of the Association's unimpaired capital and surplus, plus an
additional 10% of unimpaired capital and surplus, if such loan is secured by
readily-marketable collateral, which is defined to include certain financial
instruments and bullion.  At June 30, 1998, the Association's largest aggregate
amount of loans-to-one borrower consisted of a $3.4 million real estate loan
for a community development project.

     Qualified Thrift Lender Test.  The HOLA requires savings institutions to
meet a qualified thrift lender ("QTL") test.  Under the QTL test, a savings
association is required to qualify as a "domestic building and loan 

                                      68
association" as that term is defined in the Code or maintain at least 65% of its
"portfolio assets" (total assets less: (i) specified liquid assets up to 20% of
total assets; (ii) intangibles, including goodwill; and (iii) the value of
property used to conduct business) in certain "qualified thrift investments"
(primarily residential mortgages and related investments, including certain
mortgage-backed and related securities) in at least 9 months out of each 12-
month period. A savings association that fails the QTL test must either convert
to a bank charter or operate under certain restrictions. As of June 30, 1998,
the Association met the QTL test. Recent legislation has expanded the extent to
which education loans, credit card loans and small business loans may be
considered as "qualified thrift investments."

     Limitation on Capital Distributions.  OTS regulations impose limitations
upon all capital distributions by a savings institution, such as cash dividends,
payments to repurchase or otherwise acquire its shares, payments to shareholders
of another institution in a cash-out merger and other distributions charged
against capital.  The rule establishes three tiers of institutions, which are
based primarily on an institution's capital level.  An institution that exceeds
all fully phased-in regulatory capital requirements before and after a proposed
capital distribution ("Tier 1 Bank") and has not been advised by the OTS that it
is in need of more than normal supervision, could, after prior notice to, but
without the approval of the OTS, make capital distributions during a calendar
year equal to the greater of: (i) 100% of its net earnings to date during the
calendar year plus the amount that would reduce by one-half its "surplus capital
ratio" (the excess capital over its fully phased-in capital requirements) at the
beginning of the calendar year; or (ii) 75% of its net earnings for the previous
four quarters.  Any additional capital distributions would require prior OTS
approval.  In the event the Association's capital fell below its capital
requirements or the OTS notified it that it was in need of more than normal
supervision, the Association's ability to make capital distributions could be
restricted.  In addition, the OTS could prohibit a proposed capital distribution
by any institution, which would otherwise be permitted by the regulation, if the
OTS determines that such distribution would constitute an unsafe or unsound
practice.

     The OTS has proposed amendments to its capital distribution regulations
which could conform OTS regulations to the existing requirements of other
banking agencies, as well as simplify the existing OTS regulations.  These
proposed rules would eliminate the requirement of notifying the OTS when cash
dividends of a certain amount will be paid for institutions that will remain at
least adequately capitalized.  However, applications for capital distributions
will be required for all distributions over a specified amount.  Notices will
still be required for distributions that would reduce the amount of or retire
common or preferred stock, or debt instruments included in the capital and for
all capital distributions by savings associations in a holding company
structure.

     Liquidity.  The Association is required to maintain an average daily
balance of specified liquid assets equal to a monthly average of not less than a
specified percentage (currently 4%) of its net withdrawable deposit accounts
plus short-term borrowings.  Monetary penalties may be imposed for failure to
meet these liquidity requirements.  The Association's average liquidity ratio
for the month ended June 30, 1998 was 9.40%, which exceeded the applicable
requirements.  The Association has never been subject to monetary penalties for
failure to meet its liquidity requirements.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations --Liquidity and
Capital Resources."

     Assessments.  Savings institutions are required by regulation to pay
assessments to the OTS to fund the agency's operations.  The general assessment,
paid on a semi-annual basis, is based upon the savings institution's total
assets, including consolidated subsidiaries, as reported in the Association's
latest quarterly Thrift Financial Report.  The assessments paid by the
Association for the year ended June 30, 1998 totaled $124,000.

     Branching.  OTS regulations permit federally-chartered savings associations
to branch nationwide under certain conditions.  Generally, federal savings
associations may establish interstate networks and geographically diversify
their loan portfolios and lines of business.  The OTS authority preempts any
state law purporting to regulate branching by federal savings associations.

     Transactions with Related Parties.  The Association's authority to engage
in transactions with related parties or "affiliates" (i.e., any company that
controls or is under common control with an institution, including the Company
and any non-savings institution subsidiaries that the Company may establish) is
limited by Sections 23A and 23B of the Federal Reserve Act ("FRA").  Section 23A
restricts the aggregate amount of covered transactions with any 

                                      69
individual affiliate to 10% of the capital and surplus of the savings
institution and also limits the aggregate amount of transactions with all
affiliates to 20% of the savings institution's capital and surplus. Certain
transactions with affiliates are required to be secured by collateral in an
amount and of a type described in Section 23A and the purchase of low quality
assets from affiliates is generally prohibited. Section 23B generally requires
that certain transactions with affiliates, including loans and asset purchases,
must be on terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies. A savings association also is prohibited from extending credit to any
affiliate engaged in activities not permitted for a bank holding company and may
not purchase the securities of an affiliate (other than a subsidiary).

     Section 22(h) of the Federal Reserve Act restricts a savings association
with respect to loans to directors, executive officers, and principal
stockholders.  Under Section 22(h), loans to directors, executive officers and
stockholders who control, directly or indirectly, 10% or more of voting
securities of a savings association, and certain related interests of any of the
foregoing, may not exceed, together with all other outstanding loans to such
persons and affiliated entities, the savings association's total capital and
surplus.  Section 22(h) also prohibits loans above amounts prescribed by the
appropriate federal banking agency to directors, executive officers, and
shareholders who directly or indirectly control 10% or more of voting securities
of a stock savings association, and their respective related interests, unless
such loan is approved in advance by a majority of the board of directors of the
savings association.  Any "interested" director may not participate in the
voting.  The loan amount (which includes all other outstanding loans to such
person) as to which such prior board of director approval is required, is the
greater of $25,000 or 5% of capital and surplus or any loans over $500,000.
Further, pursuant to Section 22(h), loans to directors, executive officers and
principal shareholders must be made on terms substantially the same as offered
in comparable transactions to other persons except for extensions of credit made
pursuant to a benefit or compensation program that is widely available to the
institution's employees and does not give preference to insiders over other
employees.  Section 22(g) of the Federal Reserve Act places additional
limitations on loans to executive officers.

     Enforcement.  Under the FDI Act, the OTS has primary enforcement
responsibility over savings institutions and has the authority to bring action
against all "institution-affiliated parties," including stockholders, and any
attorneys, appraisers and accountants who knowingly or recklessly participate in
wrongful action likely to have an adverse effect on an insured institution.
Formal enforcement action may range from the issuance of a capital directive or
cease and desist order to removal of officers or directors, receivership,
conservatorship or termination of deposit insurance.  Civil penalties cover a
wide range of violations and can amount to $25,000 per day, or $1 million per
day in especially egregious cases.  Under the FDI Act, the FDIC has the
authority to recommend to the Director of the OTS that enforcement action be
taken with respect to a particular savings institution.  If action is not taken
by the Director, the FDIC has authority to take such action under certain
circumstances.  Federal and state law also establishes criminal penalties for
certain violations.

     Standards for Safety and Soundness.  The FDI Act requires each federal
banking agency to prescribe for all insured depository institutions standards
relating to, among other things, internal controls, information systems and
audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, and compensation, fees and benefits and such other
operational and managerial standards as the agency deems appropriate.  The
federal banking agencies have adopted final regulations and Interagency
Guidelines Establishing Standards for Safety and Soundness ("Guidelines") to
implement these safety and soundness standards.  The Guidelines set forth the
safety and soundness standards that the federal banking agencies use to identify
and address problems at insured depository institutions before capital becomes
impaired.  The Guidelines address internal controls and information systems;
internal audit system; credit underwriting; loan documentation; interest rate
risk exposure; asset growth; asset quality; earnings; and compensation, fees and
benefits.  If the appropriate federal banking agency determines that an
institution fails to meet any standard prescribed by the Guidelines, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard, as required by the FDI Act.  The final
regulations establish deadlines for the submission and review of such safety and
soundness compliance plans.

     Capital Requirements.  The OTS capital regulations require savings
institutions to meet three capital standards: a 1.5% tangible capital standard,
a 3% leverage (core capital) ratio and an 8% risk based capital standard.  Core
capital is defined as common stockholder's equity (including retained earnings),
certain non-cumulative perpetual 

                                      70
preferred stock and related surplus, minority interests in equity accounts of
consolidated subsidiaries less intangibles other than certain mortgage servicing
rights ("MSRs") and credit card relationships. The OTS regulations require that,
in meeting the leverage ratio, tangible and risk-based capital standards
institutions generally must deduct investments in and loans to subsidiaries
engaged in activities not permissible for a national bank. In addition, the OTS
prompt corrective action regulation provides that a savings institution that has
a leverage capital ratio of less than 4% (3% for institutions receiving the
highest CAMEL examination rating) will be deemed to be "undercapitalized" and
may be subject to certain restrictions. See "--Prompt Corrective Regulatory
Action." The OTS has proposed to amend its capital regulations so that the
leverage requirement is identical to the above prompt corrective standard to
avoid "undercapitalized" status.

     The risk-based capital standard for savings institutions requires the
maintenance of total capital (which is defined as core capital and supplementary
capital) to risk-weighted assets of 8%.  In determining the amount of risk-
weighted assets, all assets, including certain off-balance sheet assets, are
multiplied by a risk-weight of 0% to 100%, as assigned by the OTS capital
regulation based on the risks OTS believes are inherent in the type of asset.
The components of core capital are equivalent to those discussed earlier under
the 3% leverage standard.  The components of supplementary capital currently
include cumulative preferred stock, long-term perpetual preferred stock,
mandatory convertible securities, subordinated debt and intermediate preferred
stock and, within specified limits, the allowance for loan and lease losses.
Overall, the amount of supplementary capital included as part of total capital
cannot exceed 100% of core capital.

     The OTS has incorporated an interest rate risk component into its
regulatory capital rule.  The final interest rate risk rule also adjusts the
risk-weighting for certain mortgage derivative securities.  Under the rule,
savings associations with "above normal" interest rate risk exposure would be
subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements.  A savings association's interest rate risk
would be measured by the decline in the net portfolio value of its assets (i.e.,
the difference between incoming and outgoing discounted cash flows from assets,
liabilities and off-balance sheet contracts) that would result from a
hypothetical 200-basis point increase or decrease in market interest rates
divided by the estimated economic value of the association's assets, as
calculated in accordance with guidelines set forth by the OTS.  A savings
association whose measured interest rate risk exposure exceeds 2% must deduct an
interest rate component in calculating its total capital under the risk-based
capital rule.  The interest rate risk component is an amount equal to one-half
of the difference between the institution's measured interest rate risk and 2%,
multiplied by the estimated economic value of the association's assets.  That
dollar amount is deducted from an association's total capital in calculating
compliance with its risk-based capital requirement.  Under the rule, there is a
two quarter lag between the reporting date of an institution's financial data
and the effective date for the new capital requirement based on that data.  A
savings association with assets of less than $300 million and risk-based capital
ratios in excess of 12% is not subject to the interest rate risk component,
unless the OTS determines otherwise.  The rule also provides that the Director
of the OTS may waive or defer an association's interest rate risk component on a
case-by-case basis.  The OTS has postponed indefinitely the date that the
component will first be deducted from an institution's total capital.

     At June 30, 1998, the Association met each of its capital requirements, in
each case on a fully phased-in basis.  See "Regulatory Capital Compliance" for a
table which sets forth in terms of dollars and percentages the OTS tangible,
leverage and risk-based capital requirements, the Association's historical
amounts and percentages at June 30, 1998, and pro forma amounts and percentages
based upon the issuance of the shares within the Estimated Price Range and
assuming that a portion of the net proceeds are retained by the Company.

Prompt Corrective Regulatory Action

     Under the OTS prompt corrective action regulations, the OTS is required to
take certain supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution's degree of capitalization.
Generally, a savings institution that has a total risk-based capital of less
than 8.0% or a leverage ratio or a Tier 1 capital ratio that is less than 4.0%
is considered to be undercapitalized.  A savings institution that has a total
risk-based capital less than 6.0%, a Tier 1 risk-based capital ratio of less
than 3.0% or a leverage ratio that is less than 3.0% is considered to be
"significantly undercapitalized" and a savings institution that has a tangible
capital to assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." Subject to a narrow exception, the banking regulator is

                                      71
required to appoint a receiver or conservator for an institution that is
critically undercapitalized.  The regulation also provides that a capital
restoration plan must be filed with the OTS within 45 days of the date an
association receives notice that it is "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized." Compliance with the plan
must be guaranteed by any parent holding company. In addition, numerous
mandatory supervisory actions may become immediately applicable to the
institution depending upon its category, including, but not limited to,
increased monitoring by regulators, restrictions on growth, and capital
distributions and limitations on expansion. The OTS could also take any one of a
number of discretionary supervisory actions, including the issuance of a capital
directive and the replacement of senior executive officers and directors.

Insurance of Deposit Accounts

     The FDIC has adopted a risk-based insurance assessment system.  The FDIC
assigns an institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period, consisting of (1) well capitalized, (2)
adequately capitalized or (3) undercapitalized, and one of three supervisory
subcategories within each capital group.  The supervisory subgroup to which an
institution is assigned is based on a supervisory evaluation provided to the
FDIC by the institution's primary federal regulator and information which the
FDIC determines to be relevant to the institution's financial condition and the
risk posed to the deposit insurance funds.  An institution's assessment rate
depends on the capital category and supervisory category to which it is
assigned.  Assessment rates for SAIF member institutions currently range from 0
basis points to 27 basis points.  The FDIC is authorized to raise the assessment
rates in certain circumstances.  The FDIC has exercised this authority several
times in the past and may raise insurance premiums in the future.  If such
action is taken by the FDIC, it could have an adverse effect on the earnings of
the Association.  The Association's assessment rate for the year ended June 30,
1998 was 0.006% of assessable deposits.

     Under the FDI Act, insurance of deposits may be terminated by the FDIC upon
a finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
OTS.  The management of the Association does not know of any practice, condition
or violation that might lead to termination of deposit insurance.

Community Reinvestment Act

     Federal Regulation.  Under the Community Reinvestment Act, as amended
("CRA"), as implemented by OTS regulations, a savings association has a
continuing and affirmative obligation consistent with its safe and sound
operation to help meet the credit needs of its entire community, including low
and moderate income neighborhoods.  The CRA does not establish specific lending
requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the CRA.
The CRA requires the OTS, in connection with its examination of a savings
institution, to assess the institution's record of meeting the credit needs of
its community and to take such record into account in its evaluation of certain
applications by such institution.  The FIRREA amended the CRA to require the OTS
to provide a written evaluation of an institution's CRA performance utilizing a
four-tiered descriptive rating system, which replaced the five-tiered numerical
rating system.  The Association's latest CRA rating received from the OTS was
"Outstanding."

Federal Home Loan Bank System

     The Association is a member of the FHLB System, which consists of 12
regional FHLBs.  The FHLB provides a central credit facility primarily for
member institutions.  The Association, as a member of the FHLB, is required to
acquire and hold shares of capital stock in the FHLB in an amount at least equal
to 1% of the aggregate principal amount of its unpaid residential mortgage loans
and similar obligations at the beginning of each year, or 1/20 of its advances
(borrowings) from the FHLB, whichever is greater.  The Association was in
compliance with this requirement with an investment in FHLB stock at June 30,
1998 of $4.4 million.  FHLB advances must be secured by specified types of
collateral and all long-term advances may only be obtained for the purpose of
providing funds for residential housing finance.  At June 30, 1998, the
Association had $44.8 million in FHLB advances.

                                      72
The FHLBs are required to provide funds for the resolution of insolvent
thrifts and to contribute funds for affordable housing programs.  These
requirements could reduce the amount of dividends that the FHLBs pay to their
members and could also result in the FHLBs imposing a higher rate of interest on
advances to their members.  For the years ended June 30, 1998, 1997 and 1996,
dividends from the FHLB to the Association amounted to approximately $352,000,
$330,000 and $261,000, respectively.  If dividends were reduced, the
Association's net interest income would likely also be reduced.  Further, there
can be no assurance that the impact of recent or future legislation on the FHLBs
will not also cause a decrease in the value of the FHLB stock held by the
Association.

Federal Reserve System

     The Federal Reserve Board regulations require savings institutions to
maintain non-interest-earning reserves against their transaction accounts.  The
Federal Reserve Board regulations generally require that reserves be maintained
against aggregate transaction accounts as follows: for accounts aggregating
$47.8 million or less (subject to adjustment by the Federal Reserve Board) the
reserve requirement is 3%; and for accounts greater than $47.8 million, the
reserve requirement is $1.4 million plus 10% (subject to adjustment by the
Federal Reserve Board between 8% and 14%) against that portion of total
transaction accounts in excess of $47.8 million.  The first $4.7 million of
otherwise reservable balances (subject to adjustment by the Federal Reserve
Board) are exempted from the reserve requirements.  The Association is in
compliance with the foregoing requirements.  Because required reserves must be
maintained in the form of either vault cash, a non-interest-bearing account at a
Federal Reserve Bank or a pass-through account as defined by the Federal Reserve
Board, the effect of this reserve requirement is to reduce the Association's
interest-earning assets.  FHLB System members are also authorized to borrow from
the Federal Reserve "discount window," but Federal Reserve Board regulations
require institutions to exhaust all FHLB sources before borrowing from a Federal
Reserve Bank.

Holding Company Regulation

     The Company, if utilized, will be a non-diversified unitary savings and
loan holding company within the meaning of the HOLA.  As such, the Company will
be required to register with the OTS and will be subject to OTS regulations,
examinations, supervision and reporting requirements.  In addition, the OTS has
enforcement authority over the Company and its non-savings institution
subsidiaries.  Among other things, this authority permits the OTS to restrict or
prohibit activities that are determined to be a serious risk to the subsidiary
savings institution.  The Association must notify the OTS 30 days before
declaring any dividend to the Company.

     As a unitary savings and loan holding company, the Company generally will
not be restricted under existing laws as to the types of business activities in
which it may engage, provided that the Association continues to be a QTL.  See
"-- Federal Savings Institution Regulation -- QTL Test" for a discussion of the
QTL requirements.  Upon any non-supervisory acquisition by the Company of
another savings association, the Company would become a multiple savings and
loan holding company (if the acquired institution is held as a separate
subsidiary) and would be subject to extensive limitations on the types of
business activities in which it could engage.  The HOLA limits the activities of
a multiple savings and loan holding company and its non-insured institution
subsidiaries primarily to activities permissible for bank holding companies
under Section 4(c)(8) of the Bank Holding Company Act, as amended (the "BHC
Act"), subject to the prior approval of the OTS, and to other activities
authorized by OTS regulation.  Previously proposed legislation would have
treated all savings and loan holding companies as bank holding companies and
limit the activities of such companies to those permissible for bank holding
companies.

     The HOLA prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from acquiring more than 5% of
the voting stock of another savings institution, or holding company thereof,
without prior written approval of the OTS; from acquiring or retaining, with
certain exceptions, more than 5% of a non-subsidiary holding company or savings
association.  The HOLA also prohibits a savings and loan holding company from
acquiring more than 5% of a company engaged in activities other than those
authorized for savings and loan holding companies by the HOLA; or acquiring or
retaining control of a depository institution that is not insured by the FDIC.
In evaluating applications by holding companies to acquire savings institutions,
the OTS must consider the financial and managerial resources and future
prospects of the company and institution involved, the effect of the acquisition
on the risk to the insurance funds, the convenience and needs of the community
and competitive factors.

                                      73
The OTS is prohibited from approving any acquisition that would result in a
multiple savings and loan holding company controlling savings institutions in
more than one state, except: (i) the approval of interstate supervisory
acquisitions by savings and loan holding companies, and (ii) the acquisition of
a savings institution in another state if the laws of the state of the target
savings institution specifically permit such acquisitions.  The states vary in
the extent to which they permit interstate savings and loan holding company
acquisitions.

Federal Securities Laws

     The Company has filed with the SEC a registration statement under the
Securities Act for the registration of the Common Stock to be issued pursuant to
the Conversion.  Upon completion of the Conversion, the Company's Common Stock
will be registered with the SEC under the Exchange Act.  The Company will then
be subject to the information, proxy solicitation, insider trading restrictions
and other requirements under the Exchange Act.

     The registration under the Securities Act of shares of the Common Stock to
be issued in the Conversion does not cover the resale of such shares.  Shares of
the Common Stock purchased by persons who are not affiliates of the Company may
be resold without registration.  Shares purchased by an affiliate of the Company
will be subject to the resale restrictions of Rule 144 under the Securities Act.
If the Company meets the current public information requirements of Rule 144
under the Securities Act, each affiliate of the Company who complies with the
other conditions of Rule 144 (including those that require the affiliate's sale
to be aggregated with those of certain other persons) would be able to sell in
the public market, without registration, a number of shares not to exceed, in
any three-month period, the greater of (i) 1% of the outstanding shares of the
Company or (ii) the average weekly volume of trading in such shares during the
preceding four calendar weeks.  Provision may be made in the future by the
Company to permit affiliates to have their shares registered for sale under the
Securities Act under certain circumstances.

                                      74
MANAGEMENT OF THE COMPANY

Directors of the Company

     The Board of Directors of the Company is divided into three classes, each
of which contains one-third of the Board.  The directors shall be elected by the
stockholders of the Company for staggered three year terms, or until their
successors are elected and qualified.  One class of directors, consisting of
Messrs.  Paul Watson, William Watson and Steven Lewis, has a term of office
expiring at the first annual meeting of stockholders, a second class, consisting
of Messrs.  Thomas Humphries, Robert McGeough and Robert Grace, has a term
expiring at the second annual meeting of stockholders and a third class,
consisting of Messrs.  George Gentithes and E. Jeffrey Rossi, has a term of
office expiring at the third annual meeting of stockholders.  The biographical
information of each Director is set forth under "Management of the Association -
Biographical Information."  It is currently intended that Directors of the
Company will receive no additional fees for their services as Directors of the
Company.

Executive Officers of the Company

     The following individuals are executive officers of the Company and hold
the offices set forth below opposite their names.  The biographical information
for each executive officer is set forth under "Management of the Association -
Biographical Information."

 
 Name                             Position(s) Held With the Company   
 ----                             ---------------------------------   
 Paul A. Watson                   Chairman of the Board of Directors  
 Steven R. Lewis                  President and Chief Executive Officer
 Richard K. Smith                 Vice President - Treasurer          
 Mary Ann Roberts                 Corporate Secretary                  

     The executive officers of the Company are elected annually and hold office
until their respective successors have been elected and qualified or until
death, resignation, retirement or removal by the Board of Directors.

     Since the formation of the Company, none of the executive officers,
Directors or other personnel has received remuneration from the Company.
Information concerning the principal occupations, employment and other
information concerning the directors and officers of the Company during the past
five years is set forth under "Management of the Association - Biographical
Information."

                                      75
MANAGEMENT OF THE ASSOCIATION

Directors of the Association

     The Directors of the Company are also Directors of the Association.  Upon
consummation of the Conversion, the current Directors of the Association will
become Directors of the stock chartered Association.  The following table sets
forth certain information regarding the Board of Directors of the Association.

                                     Position(s) Held         Director   Term  
        Name          Age(1)       With the Association        Since    Expires 
        ----          ------       --------------------        -----    -------
Paul A. Watson          66     Chairman of the Board of         1983      2001
                               Directors                                
Robert P. Grace         59     Director                         1996      2001
George J. Gentithes     65     Director                         1989      2000
Thomas M. Humphries     53     Director                         1990      1999
Steven R. Lewis         40     Director, President and          1998      2001
                               Chief Executive Officer                  
Robert S. McGeough      67     Director                         1973      1999
E. Jeffrey Rossi        45     Director                         1994      2000
William W. Watson       71     Director                         1993      2001

-------------------
(1)  As of June 30, 1998.

Executive Officers of the Association who are not Directors

     The following table sets forth certain information regarding the executive
officers of the Association who are not also directors.

                                             Position(s) Held         
         Name          Age(1)              With the Association       
         ----          ------              --------------------       
David J. Jenkins         60          Vice President-Lending Operations
R. Patrick Wilkinson     50          Vice President-Retail Division   
Richard K. Smith         40          Vice President-Treasurer         
Brian Hoopes             40          Vice President - Bank Systems    
Mary Ann Roberts         57          Secretary                         

---------------------
(1)  As of June 30, 1998.

     The executive officers of the Association are elected annually and will
hold office in the converted Association until the annual meeting of the Board
of Directors of the Association held immediately after the first annual meeting
of stockholders of the Association subsequent to Conversion, and until their
successors are elected and qualified or until death, resignation, retirement or
removal by the Board of Directors.  Officers are re-elected by the Board of
Directors annually.

Biographical Information

Directors of the Association

     Paul A. Watson is Chairman of the Board of Directors of the Association.
Mr. Watson was elected to the Board of Directors of the Association in 1983 and
has been Chairman of the Board since 1997.  Prior to his retirement on December
31, 1996, Mr. Watson served as President and Chief Executive Officer of the
Association since 1983.  Mr. Watson is the brother of Mr. William Watson, a
director of the Association.

                                      76
Robert P. Grace has served as a Director of the Association since 1996.
Mr. Grace is Vice President and Chief Financial Officer of Salem Label Co.,
Salem, Ohio.  Prior to assuming that position in May 1995, Mr. Grace was a
principal in the accounting firm of  Packer, Thomas & Co., since 1993, and was a
partner in the accounting firm Ernst & Young from 1977 to 1993.  Mr. Grace is a
certified public accountant.

     George J. Gentithes has served as a Director of the Association since 1989.
Mr. Gentithes was owner and Chief Executive Officer of the Rapid Poulson
Textile Service from 1976 until 1989, when he became a consultant for Clean
Textile Service until 1994.  He is currently a consultant for T.F. Industries,
located in Warren, Ohio.

     Thomas M. Humphries has served on the Association's Board of Directors
since 1990.  Mr. Humphries is currently President of the Youngstown-Warren
Regional Chamber of Commerce .  Prior to taking that position in 1998, Mr.
Humphries was a General Manager with Sprint Corp., a telecommunications
corporation located in Warren, Ohio.

     Steven R. Lewis, a certified public accountant, is President and Chief
Executive Officer of the Association.  Mr. Lewis has been employed by the
Association since 1983.  He served as Vice President and Treasurer of the
Association from 1985 until his promotion to Executive Vice President in 1995.
He was elected President and Chief Executive Officer in 1997, and became a
Director of the Association in January 1998.  Mr. Lewis has a B.S. degree in
Accounting from the University of Akron, and has an M.B.A. from Cleveland State
University.

     Robert S. McGeough has served as a Director of the Association since 1973.
Mr. McGeough was a partner with the law firm of Hoppe, Frey, Hewitt & Milligan
from 1970 until 1997, when he became of counsel to the firm Harrington, Hoppe &
Mitchell, located in Warren, Ohio.  Harrington, Hoppe & Mitchell serves as the
Association's legal counsel.

     E. Jeffrey Rossi joined the Association's Board of Directors in 1994.  Mr.
Rossi is principal of E.J. Rossi & Company, located in Youngstown and Warren,
Ohio, where he is a life and health insurance broker.  Mr. Rossi holds B.A. and
J.D. degrees from The Catholic University of America.  He is the immediate past
Chairman of the Board of HM Health Services.

     William W. Watson has served as a Director of the Association since 1993.
Prior to his retirement in 1991, Mr. Watson served as President of Trumbull
Savings and Loan Association.  Mr. Watson is the brother of Mr. Paul Watson, a
director of the Association.

Executive Officers of the Association Who are Not Directors

     David J. Jenkins has been employed by the Association since 1969.  From
1969 until 1982, Mr. Jenkins held various positions with the Association.  In
1982, he was named Vice President-Secretary.  He currently is responsible for
overseeing all lending functions of the Association.

     R. Patrick Wilkinson has been with the Association since 1973.  He served
in various positions until he was named Vice President of the Retail Division in
1987.  His responsibilities are primarily to plan, develop and implement
policies and procedures in support of the Association's retail function,
including branch operations and general services.

     Richard K. Smith joined the Association in 1990 as Assistant Vice
President--Financial.  In January 1995, he was named Vice President--Treasurer.
His primary areas of responsibility are overseeing financial and regulatory
reporting, investment policy, interest rate risk policy and internal controls.
Mr. Smith has Bachelor of Science degrees in Accounting and Industrial
Management from the University of Akron.

     Brian E. Hoopes joined the Association in August 1998 as Vice President-
Banking Systems.  He was previously employed with Michelin Tire Corporation for
the past 18 years in positions responsible for electronic data processing and
financial operations.  His most recent position there was Project Manager for
the installation of a new financial software package in North America.

                                      77
Mary Ann Roberts has been with the Association since 1975.  In 1981 she
accepted the position of Executive Administrative Assistant.  In August 1998 she
was named the Corporate Secretary of the Association.

Meetings and Committees of the Boards of Directors of the Association and the
Company

     The Association's Board of Directors meets weekly and may have additional
special meetings as may be called in the manner specified in the Bylaws.  During
the year ended June 30, 1998, the Board held fifty-two meetings.  For the year
ended June 30, 1998, no Director attended fewer than 75% in the aggregate of the
total number of meetings of the Board or Committees on which such Director
served.

     The Board of Directors of the Association has established the following
committees:

     The Executive Committee consists of Messrs. Paul Watson, McGeough,
Gentithes and Lewis.  This committee acts upon such items that demand immediate
attention between meetings of the Board of Directors.  The committee meets on an
as-needed basis and met one time in fiscal 1998.

     The Audit Committee consists of Messrs. Grace, Gentithes, Humphries and
Rossi.  The committee meets quarterly with the Internal Auditor to review
material findings and general status, as well as to review proposed regulatory
changes with regard to their impact on the Association.

     Additionally, the Board has established the following committees composed
of directors and/or management: the Loan Committee, the Asset Classification
Committee, the Human Resources Committee, the Long-Range Planning Committee, the
Proxy Committee, the Pension and 401(k) Committee, the Investment Committee, the
Technology Committee, the Asset Liability Committee, the CRA Committee, the
Environmental Risk Committee, the Commercial Loan Committee and the Second
Review Committee.

     The Board of Directors of the Company has established the following
committees: the Audit Committee, consisting of Messrs.  Grace, Gentithes,
Humphries and Rossi; and the Compensation Committee consisting of Messrs.
McGeough, Rossi, Gentithes and Humphries.

Compensation of Directors

     All outside Directors of the Association receive an annual retainer of
$6,000.  In addition, each outside director receives a fee of $300 ($350 for the
Chairman of the Board) for each regular and special Board meeting which they
attend.  All outside Directors of the Association receive a fee of $90 ($150 in
the case of the Audit Committee and the Asset Classification Committee) for each
committee meeting attended.

Directors Emeritus

     Pursuant to the Association's bylaws, no person seventy-five years of age
shall be eligible for election, reelection, appointment or reappointment to the
Board of Directors, and no director shall serve as such beyond the annual
meeting of the Association immediately following the director becoming seventy-
two years of age.  Any Director who retires because of such age limitation is
eligible to be elected as advisor or emeritus director.  Directors emeritus have
no vote and receive fees as determined by resolution of the Directors of the
Association.  There is currently one director emeritus who receives an annual
retainer of $6,600.  Additionally, the Board has retained a former director as a
consultant who receives $300 for each Board meeting attended.

                                      78
Executive Compensation

     Summary Compensation Table.  The following table sets forth the cash
compensation paid by the Association as well as certain other compensation paid
or accrued for services rendered in all capacities during the fiscal year ended
June 30, 1998, to the Chief Executive Officer.  No other executive officers of
the Association received salary and bonus in excess of $100,000.
-----------------------------------------------------------------------------------------------------------

                                                                      Annual Compensation(1)        
                                                         --------------------------------------------------
                                                                                                          
                                                                                             Other         
                                                                                             Annual        
Name and Principal                                                                        Compensation     
Positions                                         Year       Salary($)      Bonus($)         ($)(2) 
-----------------------------------------------------------------------------------------------------------
Steven R. Lewis                                   1998       $120,162       $12,480            --     
       President and Chief Executive Officer
-------------------------------------------------------------------------------------------------------------------------
                                                            Long-Term Compensation
                                              ------------------------------------------------------
                                                              Awards                      Payouts
                                              ------------------------------------------------------
                                                
                                                                      Securities       
                                                  Restricted          Underlying           LTIP           All Other
Name and Principal                               Stock Awards        Options/SARs         Payouts       Compensation
Positions                                            ($)                 (#)                ($)            ($)(3)
-------------------------------------------------------------------------------------------------------------------------
Steven R. Lewis                                       --                  --                 --            $2,603
       President and Chief Executive Officer
-------------------------------
(1)    Under Annual Compensation, the column titled "Salary" includes amounts
       deferred by the Chief Executive Officer under the Association's 401(k)
       Plan.
(2)    For 1998, there were no (a) perquisites over the lesser of $50,000 or 10%
       of the individual's total salary and bonus for the year; (b) payments of
       above-market preferential earnings on deferred compensation; (c) payments
       of earnings with respect to long-term incentive plans prior to settlement
       or maturation; (d) tax payment reimbursements; or (e) preferential
       discounts on stock.  For 1998, the Association had no restricted stock or
       stock related plans in existence.
(3)    Other compensation includes the Association's matching contribution under
       the Association's 401(k) Plan.

                                      79
Employment Agreements

     Upon the Conversion, the Association and the Company intend to enter into
employment agreements with Mr. Lewis (the "Executive") (collectively, the
"Employment Agreements").  The Employment Agreements are subject to the review
and approval of the OTS and may be amended as a result of such OTS review.
Review of compensation arrangements by the OTS does not indicate, and should not
be construed to indicate, that the OTS has passed on the merits of such
arrangements.  The Employment Agreements are intended to ensure that the
Association and the Company will be able to maintain a stable and competent
management base after the Conversion.  The continued success of the Association
and the Company depends to a significant degree on the skills and competence of
Mr. Lewis.

     The Employment Agreements provide for a three-year term.  The Association
Employment Agreement provides that, commencing on the first anniversary date and
continuing on each anniversary date thereafter, the Board of Directors may
extend the agreement for an additional year so that the remaining term shall be
three years, unless written notice of non-renewal is given by the Board of
Directors after conducting a performance evaluation of the Executive.  The terms
of the Company Employment Agreement shall be extended on a daily basis, unless
written notice of non-renewal is given by the Board of Directors.  The
Employment Agreements provide that the Executive's base salary will be reviewed
annually.  The base salary which will be effective for such Employment
Agreements for Mr. Lewis will be $150,000.  In addition to the base salary, the
Employment Agreements provide for, among other things, participation in stock
benefits plans and other fringe benefits applicable to executive personnel.  The
agreements provide for termination by the Association or the Company for cause,
as defined in the Employment Agreements, at any time.  In the event the
Association or the Company chooses to terminate the Executive's employment for
reasons other than for cause, or in the event of the Executive's resignation
from the Association and the Company upon:  (i) failure to re-elect the
Executive to his current offices; (ii) a material change in the Executive's
functions, duties or responsibilities; (iii) a relocation of the Executive's
principal place of employment by more than 25 miles; (iv) a material reduction
in the benefits and perquisites being provided to the Executive into the
Employment Agreement, unless consented to by the Executive; (v) liquidation or
dissolution of the Association or the Company; or (vi) a breach of the agreement
by the Association or the Company, the Executive or, in the event of death, his
beneficiary would be entitled to receive an amount equal to the remaining base
salary payments due to the Executive for the remaining term of the Employment
Agreement and the contributions that would have been made on the Executive's
behalf to any employee benefit plans of the Association and the Company during
the remaining term of the agreement.  The Association and the Company would also
continue and pay for the Executive's life, health, and dental coverage for the
remaining term of the Agreement.  Upon any termination of the Executive, the
Executive is subject to a one year non-competition agreement.

     Under the Employment Agreements, if involuntary termination or under
certain circumstances, voluntary termination follows a change in control of the
Association or the Company, the Executive or, in the event of the Executive's
death, his beneficiary, would be entitled to a severance payment equal to the
greater of:  (i) the payments due for the remaining terms of the agreement; or
(ii) three times the average of the five preceding taxable years' annual
compensation.  The Association and the Company would also continue the
Executive's life, health and dental coverage for thirty-six months.
Notwithstanding that both the Association and Company Employment Agreements
provide for a severance payment in the event of a change in control, the
Executive would only be entitled to receive a severance payment under one
agreement.

     Payments to the Executive under the Association's Employment Agreement will
be guaranteed by the Company in the event that payments or benefits are not paid
by the Association.  Payment under the Company's Employment Agreement would be
made by the Company.  All reasonable costs and legal fees paid or incurred by
the Executive pursuant to any dispute or question of interpretation relating to
the Employment Agreements shall be paid by the Association or Company,
respectively, if the Executive is successful on the merits pursuant to a legal
judgment, arbitration or settlement.  The Employment Agreements also provide
that the Association and Company shall indemnify the Executive to the fullest
extent allowable under Federal and Delaware law, respectively.  In the event of
a change in control of the Association or the Company, the total amount of
payments due under the Agreements, based solely on the base salary to be paid to
Mr. Lewis effective upon consummation of the Conversion excluding any benefits
under any employee benefit plan which may be payable, would be approximately
$450,000.

                                      80
Change in Control Agreements

     Upon Conversion, the Association and the Company intend to enter into two-
year Change in Control Agreements (the "CIC Agreements") with certain officers
of the Association, none of whom will be covered by employment contracts.
Commencing on the first anniversary date and continuing on each anniversary
thereafter, the Association CIC Agreements may be renewed by the Board of
Directors of the Association for an additional year.  The Company CIC Agreements
shall be extended on a daily basis unless written notice of non-renewal is given
by the Board of Directors.  The CIC Agreements will provide that in the event
involuntary termination or, in certain circumstances, voluntary termination
follows a change in control of the Company or the Association, the officer would
be entitled to receive a severance payment equal to two times the officer's
average annual compensation for the five most recent taxable years preceding
termination.  The Company and the Association would also continue and pay for
the officer's life and health coverage for 24 months following termination.  In
the event of a change in control of the Company or the Association, the total
payments that would be due under the CIC Agreements, based solely on the current
annual compensation paid to the officers covered by the CIC Agreements and
excluding any benefits under any employee benefit plan which may be payable,
would be approximately $___________.

Employee Severance Compensation Plan

     The Association's Board of Directors intends to, upon Conversion, establish
the First Federal Savings and Loan Association of Warren Employee Severance
Compensation Plan ("Severance Plan") which will provide eligible employees with
severance pay benefits in the event of a change in control of the Association or
the Company following Conversion.  Management personnel with Employment
Agreements or CIC Agreements are not eligible to participate in the Severance
Plan.  Generally, employees are eligible to participate in the Severance Plan if
they have completed at least one year of service with the Association.  The
Severance Plan vests in each participant a contractual right to the benefits
such participant is entitled to thereunder.  Under the Severance Plan, in the
event of a change in control of the Association or the Company, eligible
employees who are terminated from or terminate their employment within one year
(for reasons specified under the Severance Plan), will be entitled to receive a
severance payment.  If the participant, whose employment has terminated, has
completed at least one year of service, the participant will be entitled to a
cash severance payment equal to one-twelfth of annual compensation for each year
of service up to a maximum of 100% of annual compensation.  Such payments may
tend to discourage takeover attempts by increasing costs to be incurred by the
Association in the event of a takeover.  However, it is management's belief that
substantially all of the Association's employees would be retained in their
current positions in the event of a change in control, and that any amount
payable under the Severance Plan would be considerably less than the total
amount that could possibly be paid under the Severance Plan.

Insurance Plans

     All full-time employees of the Association, upon completion of the
applicable introductory period, are covered as a group for comprehensive
hospitalization, including major medial and long-term disability insurance.
Life insurance is also provided to employees and directors.

Benefit Plans

     Retirement Plan.  The Association sponsors a defined benefit pension plan
known as the First Federal Savings and Loan Association of Warren Defined
Benefit Pension Plan ("Retirement Plan").  The Retirement Plan is intended to
satisfy the tax qualification requirements of Section 401(a) of the Code.

     Employees are eligible to participate in the Retirement Plan on the April 1
or October 1 coincident with or otherwise next following the later of an
employee's 21/st/ birthday and the one year anniversary of the employee's date
of employment, regardless of the number of hours of service credited.  The
Retirement Plan defines "Employee" as any individual employed by the Association
or its affiliates or any leased employee who is deemed to be an employee under
Section 414(n) of the Code but excludes any person who is an independent
contractor.

     The Retirement Plan provides for a normal retirement  benefit to
participants upon retirement at or after the later of (i) attainment of age 65
or (ii) the fifth anniversary of initial participation in the plan. The annual
normal

                                      81
retirement benefit for a participant under the Retirement Plan equals 45% of a
participant's "Average Monthly Compensation" (as defined in the plan) plus 16%
of the participant's "Average Monthly Compensation" in excess of one-twelfth
"Covered Compensation" (as defined in the plan).  However, if projected years of
service to normal retirement age are less than twenty-five, the percentage of
Average Monthly Compensation and the excess percentage will be reduced by one-
twenty-fifth for each year of service less than twenty-five.

     A participant may also become eligible to receive an early retirement
benefit upon the (i) attainment of age 60; and (ii) completion of 15 years of
service.  Early retirement benefits are generally calculated in the same manner
as a participant's normal retirement benefits but may be actuarially reduced if
paid prior to the participant's "Normal Retirement Date" (as defined by the
plan).  Participants generally become vested in their benefits under the
Retirement Plan upon completing at least five years of Service.

     The plan generally pays benefits in the form of a straight life annuity
with respect to unmarried participants and in the form of a joint and 50%
survivor annuity (with the spouse as designated beneficiary) for married
participants.  Other forms of benefit payments, including a lump sum, are
available under the Retirement Plan.

     The following table sets forth the estimated annual benefits payable under
the Retirement Plan upon a participant's retirement at age 65 under the most
advantageous plan provisions available at various levels of compensation and
years of service.  Covered compensation under the Retirement Plan basically
includes the base salary for participants, and does not consider any cash bonus
amounts.  The benefits listed in the table below for the Retirement Plan are not
subject to a deduction for social security benefits or any other offset amount.

    Final                        Years of Service               
   Average      --------------------------------------------------------
 Compensation        15       20       25       30       35       40 
--------------  --------------------------------------------------------
 $ 20,000         $ 5,400  $ 7,200  $ 9,000  $ 9,000  $ 9,000  $ 9,000
   30,000           8,100   10,800   13,500   13,500   13,500   13,500
   50,000          13,500   18,000   22,500   22,500   22,500   22,500
   75,000          21,102   28,137   35,171   35,171   35,171   35,171
  100,000          30,252   40,337   50,421   50,421   50,421   50,421
  150,000          48,552   64,737   80,921   80,921   80,921   80,921
  200,000          52,212   69,617   87,021   87,021   87,021   87,021
  250,000          52,212   69,617   87,021   87,021   87,021   87,021
  300,000          52,212   69,617   87,021   87,021   87,021   87,021
  and over(1)   

-----------
(1) Under current law, the final average compensation for computing benefits
    under the Pension Plan cannot exceed $160,000 (indexed for inflation).

     The approximate years of service, as of June 30, 1998, for the named
executive officer is as follows:

      Named Executive Officer          Years of Service
      -----------------------          ----------------
 
      Steven R. Lewis                          14

      401(k) Plan.  The Association also sponsors the First Federal Savings
and Loan Association of Warren 401(k) Savings Plan ("401(k) Plan"), a tax-
qualified profit sharing and salary reduction plan under Sections 401(a) and
401(k) of the Code.  Generally, employees other than employees who are
collective bargaining unit employees and employees

                                      82
who are non-resident aliens become eligible to participate in the 401(k) Plan
upon the attainment of age 21 and the completion of one year of service.  Under
the 401(k) Plan, participants may make salary reduction contributions equal to
2% to 12% of their compensation or the legally permissible limit (currently
$9,500).  The Association matches of the compensation deferred by a participant
with respect to amounts deferred up to 4% of annual compensation.

     Participants are always 100% vested in their salary reduction
contributions. Participants become 100% vested in Association matching
contributions after the completion of five years of service with the
Association. A participant who terminates employment due to death, disability,
or retirement immediately becomes fully vested in the Association's matching
contributions credited to his or her account regardless of the participant's
years of service. A participant's vested portion of his or her 401(k) Plan
account is distributable from the 401(k) Plan upon the termination of the
participant's employment, death, disability or retirement. In addition, a
participant may be eligible for hardship withdrawals and loans under the 401(k)
Plan. Any distribution made to a participant prior to the participant's
attainment of age 59 1/2 is subject to a 10% excise tax in addition to federal
income taxes. The Board of Directors may at any time discontinue the
Association's contributions to employee accounts. For the years ended June 30,
1998, 1997 and 1996, the Association's matching contributions to the 401(k) Plan
were $56,000, $52,000 and $48,000, respectively.

     The 401(k) Plan currently permits participants to invest their 401(k) plan
account balances in several types of investment funds. In connection with the
Conversion, the Association intends amend the 401(k) Plan to permit plan
participants to invest their account balances in Company Common Stock through an
employer stock fund (the "Employer Stock Fund.") The Employer Stock Fund will be
invested primarily in shares of Common Stock. Participants may use their
subscription rights to purchase stock in the Conversion but may not purchase
more than $250,000 in aggregate value of the Common Stock in the Conversion
(subject to the maximum overall purchase liability). A participant's ability to
divert all or some of his vested account to purchase Common Stock in the
Offering will be dependent upon such individual being an Eligible Account
Holder, Supplemental Eligible Account Holder or Other Member. The trustee may
follow the voting directions of 401(k) Plan participants investing in the
Employer Stock Fund; provided that the trustee determines such voting is
consistent with its fiduciary duties.

     ESOP. In connection with the Conversion, the Association also intends to
implement an employee stock ownership plan ("ESOP"). An ESOP is a tax-qualified
retirement plan designed to invest primarily in employer securities. The
Association will make contributions to the ESOP on behalf of all ESOP
participants. The ESOP will provide eligible employees with the opportunity to
receive a Association funded retirement benefit based on the value of the Common
Stock. The Association anticipates that the eligibility requirements for the
ESOP will be similar to those of the 401(k) Plan.

     The ESOP intends to purchase 8.0% of the Common Stock issued in connection
with the Conversion, including shares issued to the Foundation. As part of the
Conversion and in order to fund the ESOP's purchase of the Common Stock to be
issued in the Conversion, the ESOP intends to borrow funds from the Company
equal to 100% of the aggregate purchase price of the Common Stock to be
purchased by the ESOP. Alternatively, the Company and Association may choose to
fund the ESOP's purchase of stock through a loan from a third party financial
institution. The Common Stock purchased by the ESOP with the loan proceeds will
serve as collateral for the loan, as described below. The term of the ESOP loan
will be 15 years and the trustee will repay the loan principally from the
Company's or the Association's contributions to the ESOP. The Association may
use matching contributions made with respect to ESOP participants' 401(k) salary
reduction contributions and other discretionary contributions to meet the ESOP
loan obligations. Additionally, any dividends that may be paid on unallocated
stock held by the ESOP will also be used to repay the ESOP loan. Subject to
receipt of any necessary regulatory approvals or opinions, the Association may
make additional contributions to the ESOP for repayment of the loan or to
reimburse the Company for contributions made by it. The interest rate for the
loan is expected to be at or near the prime rate.

     Shares of Common Stock purchased by the ESOP with the loan proceeds will
initially be pledged as collateral for the loan, and will be held in a suspense
account until released for allocation among participants as the loan is repaid.
The trustee will release the pledged shares annually from the suspense account
in an amount proportional to the repayment of the ESOP loan for each plan year.
The released shares will then be allocated to the accounts of ESOP participants
as follows: First, for each eligible ESOP participant, a portion of the shares
released for the plan year will be allocated to a special "matching" account
under the ESOP equal in value to the amount of matching contribution,

                                      83
if any, and/or if applicable, that such participant would be entitled to under
the terms of the 401(k) Plan for the plan year.  Second, the remaining shares
which have been released for the plan year will be allocated to each eligible
participant's general ESOP account based on the ratio of each such participant's
base compensation to the total base compensation of all eligible ESOP
participants.  Participants will vest in their ESOP account at a rate of 20%
annually commencing after the completion of two years of service, with 100%
vesting upon the completion of 6 years of service.   Participants will also
become fully vested in their accounts if their service terminates due to death,
retirement, disability, or upon the occurrence of a change in control.  The ESOP
may reallocate forfeitures among remaining participants, in the same proportion
as contributions.  Benefits under the ESOP will become payable upon death,
retirement, early retirement, or separation from service.  The annual
contributions to the ESOP are not fixed, so benefits payable under the ESOP
cannot be estimated.

     In connection with the establishment of the ESOP, the Board of Directors
will appoint a Committee of the Board of Directors and officers of the
Association to administer the ESOP (the "ESOP Committee"). The Association
anticipates that this Committee will appoint an unrelated trustee for the ESOP
and the 401(k) Plan Employer Stock Fund prior to the Conversion. The ESOP
Committee may instruct the trustee regarding investment of funds contributed to
the ESOP and the 401(k) Plan Employee Stock Fund. The ESOP trustee, subject to
its fiduciary duties, must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees. Subject to its
fiduciary duties under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the trustee will vote unallocated shares and allocated shares
for which participants provide no instructions in a manner calculated to most
accurately reflect the instructions it has received from participants regarding
the allocated stock for which it has received instructions.

     Stock Option Plan. Following the Conversion, the Board of Directors of the
Company intends to adopt a stock-based benefit plan which would provide for the
granting of options to purchase Common Stock to certain individuals. Currently,
the Company anticipates granting stock options under a single stock-based
incentive plan ("Incentive Option Plan") covering full-time employees and
outside directors of the Company and its affiliates. However, it is possible
that the Company may establish a separate option plan solely for outside
directors. At a meeting of stockholders of the Company following the Conversion,
which under applicable regulations may not be held earlier than six months after
the completion of the Conversion, the Board of Directors intends to present the
Incentive Option Plan to stockholders for approval. The Company anticipates
reserving an amount equal to 10% of the shares of Common Stock issued in the
Conversion, including shares issued to the Foundation (or 1,288,000 shares based
upon the issuance of 12,880,000 shares), for issuance under the Incentive Option
Plan.

     The Company intends to design the stock option benefits provided under the
Incentive Option Plan to attract and retain qualified personnel in key
positions, provide officers and key employees with a proprietary interest in the
Company as an incentive to contribute to the success of the Company and reward
key employees for outstanding performance. The Company may condition the
granting or vesting of stock options on the achievement of individual or 
Company-wide performance goals, including the achievement by the Company or the
Association of specified levels of net income, asset growth, return on equity or
other specific financial performance goals. The Company anticipates that the
Incentive Option Plan will provide for the grant of: (i) options for employees
to purchase the Company's Common Stock intended to qualify as incentive stock
options under Section 422 of the Code ("Incentive Stock Options"); (ii) options
for all participants that do not qualify as incentive stock options ("Non-
Statutory Stock Options"); and (iii) Limited Rights (discussed below) which
participants may exercise only upon a change in control of the Association or
the Company. Unless sooner terminated, the Incentive Option Plan will be in
effect for a period of ten years from the earlier of adoption by the Board of
Directors or approval by the Company's stockholders. If such plan is adopted
within one year after Conversion, OTS regulations provide that no individual
officer or employee of the Association may receive more than 25% of the stock
options available under the Incentive Option Plan (or any separate plan for
officers and employees) and non-employee directors may not receive more than 5%
individually, or 30% in the aggregate, of the stock options available under the
Incentive Option Plan (or any separate plan for directors). The Company intends
to grant options with Limited Rights under the Incentive Option Plan at an
exercise price equal to the fair market value of the underlying Common Stock on
the date of grant. Subject to any applicable regulations, upon exercise of
"Limited Rights" in the event of a change in control, the employee will be
entitled to receive a lump sum cash payment equal to the difference between the
exercise price of the related option and the fair market value of the shares of
common stock subject to the option on the date of exercise of the right in lieu
of purchasing the stock underlying the option. The Company anticipates that all
options granted contemporaneously with

                                      84
stockholder approval of the Incentive Option Plan will qualify as Incentive
Stock Options to the extent permitted under Section 422 of the Code.

     A committee of the Board of Directors will administer the Incentive Option
Plan and will determine which officers and employees may receive options and
Limited Rights, whether such options will qualify as Incentive Stock Options,
the number of shares subject to each option, the exercise price of each option,
the manner of exercise of the options and the time when such options become
exercisable.

     If the Company adopts an option plan in the form described above, an
employee will not realize taxable income upon grant or exercise of any Incentive
Stock Option, provided that the employee does not dispose of the shares received
through the exercise of such option for at least one year after the date the
employee receives the stock in connection with the option exercise and two years
after the date of grant of the option (a "disqualifying disposition"). The
Company may not take a compensation expense deduction with respect to the grant
or exercise of Incentive Stock Options, unless the employee disposes of the
shares in a disqualifying disposition. In the case of a Non-Statutory Stock
Option and in the case of a disqualifying disposition of an Incentive Stock
Option, an employee will be deemed to receive ordinary income upon exercise of
the stock option in an amount equal to the amount by which the fair market value
of the Common Stock on the date of exercise exceeds the exercise price of the
option. The amount of taxable income realized by an optionee upon the exercise
of a Non-Statutory Stock Option or due to a disqualifying disposition of shares
acquired through the exercise of an Incentive Stock Option are a deductible
expense for tax purposes by the Company. Upon the exercise of a Limited Right,
the option holder realizes taxable income equal to the amount paid to him or her
upon exercise of the right and the Company receives a deduction equal to that
same amount.
     
     Stock options under an option plan adopted by the Company would become
vested and exercisable in the manner specified by the committee responsible for
administering the plan, subject to applicable regulations. If the Incentive
Option Plan (or any separate plans for employees and directors) is adopted
within one year after the Conversion, awards would become vested and exercisable
subject to applicable OTS regulations, which such regulations require that any
awards begin vesting not earlier than one year from the date of shareholder
approval of the plan and, thereafter, vest at a rate of no more than 20% per
year and may not be accelerated except in case of death or disability. The
Company anticipates options granted in connection with the Incentive Option Plan
will remain exercisable for at least three months following the date on which
the employee ceases to perform services for the Association or the Company,
except that in the event of death or disability, in which cases options
accelerate and become fully vested and remain exercisable for up to one year
thereafter, or such longer period as determined by the Company. However, any
Incentive Stock Options exercised more than three months following the date the
employee ceases to perform services as an employee, other than termination due
to death or disability, would be treated for tax purposes as a Non-Statutory
Stock Option. The Company also anticipates that in the event of retirement, if
the optionee continues to perform services as a Director, Director Emeritus or
consultant on behalf of the Association, the Company or an affiliate, unvested
options would continue to vest in accordance with their original vesting
schedule until the optionee ceases to serve as a Director, Director Emeritus or
consultant. If the Incentive Option Plan is adopted in the form described above,
the Company, if requested by the optionee, could elect, in exchange for vested
options, to pay the optionee, or beneficiary in the event of death, the amount
by which the fair market value of the Common Stock exceeds the exercise price of
the options on the date of the employee's termination of employment.

     All options granted to outside directors under an option plan must, by law,
be Non-Statutory Stock Options and would vest and become exercisable in a manner
specified by the committee, subject to applicable regulations, and would expire
upon the earlier of ten years following the date of grant or one year following
the date the optionee ceases to be a Director, Director Emeritus, Advisory
Director or consultant. In the event of the death or disability of a
participant, all previously granted options would immediately vest and become
fully exercisable.

     Subject to any applicable regulations, the Incentive Option Plan (or any
separate plan for employees and directors) described above may be amended
subsequent to the expiration of the one-year period to provide for accelerated
vesting of previously granted options in the event of a change in control of the
Company or the Association. A change in control would be defined in the plan
document and would generally occur when a person or group of persons acting in
concert acquires beneficial ownership of 20% or more of any class of equity
security of the Company or the Association or in the event of a tender or
exchange offer, merger or other form of business combination, sale of all or
substantially all of the assets of the Company or the Association or contested
election of directors which 

                                      85
resulted in the replacement of a majority of the Board of Directors by persons
not nominated by the directors in office prior to the contested election.

     Stock Program. Following the Conversion, the Company intends to establish
the Stock Program which would provide for the grant of stock awards to officers,
employees and non-employee directors of the Association and Company as a method
of providing officers, employees and non-employee directors with a proprietary
interest in the Company in a manner designed to encourage such persons to remain
with the Association. The benefits under the Stock Program may be provided for
under either a separate plan for officers and employees and a separate plan for
outside directors or under the Incentive Option Plan. The Company intends to
present the Stock Program for stockholder approval at a meeting of stockholders,
which pursuant to applicable regulations, the Company may hold no earlier than
six months after the completion of the Conversion.

     The Association or Company expects to contribute funds to the Stock Program
to enable such plan to acquire, in the aggregate, an amount equal to 4% of the
shares of Common Stock issued in the Conversion, including shares issued to the
Foundation (or 515,200 shares based upon the issuance of 12,880,000 shares). The
Company will acquire these shares through open market purchases, if permitted,
or from authorized but unissued shares. Although no specific award
determinations have been made, the Company anticipates that it will provide
stock awards to the directors and employees of the Company or Association or
their affiliates to the extent permitted by applicable regulations. If such plan
is adopted within one year after Conversion, OTS regulations provide that no
individual officer or employee of the Association may receive more than 25% of
the stock awards available under the Stock Program (or any separate plan for
officers and employees) and non-employee directors may not receive more than 5%
individually, or 30% in the aggregate, of the stock awards available under the
Stock Program (or any separate plan for directors). Shares of Common Stock
granted pursuant to the Stock Program will be awarded at no cost to the
recipients.

     A committee of the Board of Directors will administer the Stock Program.
Stock awards will not be transferable or assignable. The Board intends to
appoint an independent fiduciary to serve as trustee of a trust established
pursuant to the Stock Program. The Company may make allocations and grants to
officers and employees under the Stock Program in the form of non performance-
based grants and/or performance-based grants. The Company may make the granting
or vesting of stock awards under the Stock Program conditioned upon the
achievement of individual or Company-wide performance goals, including the
Company's or Association's achievement of specified levels of net income, return
on assets, return on equity or other specified financial performance goals and
will be subject to applicable regulations. If the Stock Program (or any separate
plans for employees and directors) is adopted within one year after the
Conversion, awards would become vested subject to applicable OTS regulations,
which such regulations require that any awards begin vesting not earlier than
one year from the date of shareholder approval of the plan and, thereafter, vest
at a rate of no more than 20% per year and may not be accelerated except in case
or death or disability.

     In the event of death, stock awards will become 100% vested. In the event
of disability, stock awards would be 100% vested upon termination of employment
of an officer or employee, or upon termination of service as a director. In the
event of retirement, if the participant continues to perform services as a
Director, Director Emeritus or consultant on behalf of the Association, the
Company or an affiliate or, in the case of a retiring Director, Director
Emeritus or as a consulting director, unvested stock awards will continue to
vest in accordance with their original vesting schedule until the recipient
ceases to perform such services at which time any unvested stock awards would
lapse.

     Subject to any applicable regulations, the Stock Program described above
may be amended subsequent to the expiration of the one-year period to provide
for accelerated vesting of shares granted under the Stock Program in the event
of a change in control of the Association or Company. A change in control, which
will be defined in the plan document, generally occurs when a person or group of
persons acting in concert acquires beneficial ownership of 20% or more of a
class of equity securities of the Company or the Association or in the event of
a tender or exchange offer, merger or other form of business combination, sale
of all or substantially all of the assets of the Company or the Association or
contested election of directors which results in the replacement of a majority
of the Board of Directors by persons not nominated by the directors in office
prior to the contested election. 

     When shares become vested in accordance with the Stock Program described
above, the participants will

                                      86
recognize taxable income equal to the fair market value of the Common Stock at
that time. The Company may take a deduction equal to that amount for the year in
which it becomes taxable to the individual. When shares become vested and are
actually distributed in accordance with the Stock Program, the participants also
receive amounts equal to any accrued dividends with respect thereto. Prior to
vesting, recipients of grants may direct the voting of the shares awarded to
them. Shares not subject to grants and shares allocated subject to the
achievement of performance goals will be voted by the trustee of the Stock
Program in accordance to the directions provided by individuals with respect to
shares subject to grants. Vested shares will be distributed to recipients as
soon as practicable following the day on which they are vested.

     In the event that additional authorized but unissued shares are acquired by
the Stock Program after the Conversion, the interests of existing shareholders
would be diluted. See "Pro Forma Data."

Transactions With Certain Related Persons

     Federal regulations require that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with the general public and must not involve more than
the normal risk of repayment or present other unfavorable features. In addition,
loans made to a director or executive officer in excess of the greater of
$25,000 or 5% of the Association's capital and surplus (up to a maximum of
$500,000) must be approved in advance by a majority of the disinterested members
of the Board of Directors.

     The Association offers directors, officers and full-time employees of the
Association who satisfy certain criteria and the general underwriting standards
of the Association, mortgage loans with interest rates which may be up to 1%
below the rates offered to the Association's other customers, the Employee Loan
Rate ("ELR"). The program also offers a 3/4% interest rate discount on motor
vehicle loans (other than motorcycles). Loan application fees are waived for all
ELR loans. The ELR normally ceases upon termination of employment. Upon
termination of the ELR, the interest rate reverts to the contract rate in effect
at the time that the loan was originated. All other terms and conditions
contained in the original mortgage and note continue to remain in effect. With
the exception of ELR loans, the Association currently makes loans to its
executive officers, directors and employees on the same terms and conditions
offered to the general public. Loans made by the Association to its directors
and executive officers are made in the ordinary course of business, on
substantially the same terms , including collateral, as those prevailing at the
time for comparable transactions with other persons and do not involve more than
the normal risk of collectability or present other unfavorable features. As of
June 30, 1998, eight of the Association's executive officers or directors had
loans with outstanding balances totaling $862,000 in the aggregate. All such
loans were made by the Association in the ordinary course of business, with no
favorable terms (except for ELR loans) and such loans do not involve more than
the normal risk of collectability or present unfavorable features.

     The Company intends that all transactions between the Company and its
executive officers, directors, holders of 10% or more of the shares of any class
of its Common Stock and affiliates thereof, will contain terms no less favorable
to the Company than could have been obtained by it in arms-length negotiations
with unaffiliated persons and will be approved by a majority of independent
outside directors of the Company not having any interest in the transaction.

                                      87
Subscriptions of Executive Officers and Directors

     The following table sets forth the number of shares of Common Stock that
the executive officers and directors, and their associates, propose to purchase,
assuming shares of Common Stock are issued at the minimum and maximum of the
Estimated Price Range (including shares issued to the Foundation) and that
sufficient shares will be available to satisfy their subscriptions. The table
also sets forth the total expected beneficial ownership of Common Stock as to
all directors and executive officers as a group.
At the Minimum              At the Maximum         
                                                         of the Estimated         of the Estimated Price      
                                                          Price Range(1)                 Range(1)             
                                                    --------------------------  --------------------------
                                                                                                As a              
                                                                As a Percent                   Percent            
                                                     Number       of Shares       Number      of Shares           
                 Name                     Amount    of Shares     Issued(2)      of Shares    Issued(2)          
--------------------------------------  ----------  ---------  ---------------  ----------  --------------
Paul A. Watson........................  $  700,000     70,000       0.74%          70,000        0.54%            

Robert P. Grace.......................     250,000     25,000       0.26           25,000        0.19            

George J. Gentithes...................     750,000     75,000       0.79           75,000        0.58            

Thomas M. Humphries...................     500,000     50,000       0.53           50,000        0.39            

Steven R. Lewis.......................     400,000     40,000       0.42           40,000        0.31            

Robert S. McGeough....................     250,000     25,000       0.26           25,000        0.19            

E. Jeffrey Rossi......................     400,000     40,000       0.42           40,000        0.31            

William W. Watson.....................     500,000     50,000       0.53           50,000        0.39                
 
All directors and executive officers
  as a group (11 persons).............  $4,350,000    435,000       4.57%         435,000        3.38%    
                                        ==========    =======       ====          =======        ====
----------------------
(1) Includes proposed subscriptions, if any, by associates.  Does not include
    orders by the ESOP.  Intended purchases by the ESOP are expected to be 8%
    of the shares issued in the Conversion, including shares issued to the
    Foundation.  Also does not include shares to be contributed to the
    Foundation equal to 8% of the Common Stock sold, Common Stock which may
    be awarded under the Stock Program to be adopted equal to 4% of the
    Common Stock issued in the Conversion, including shares issued to the
    Foundation, and Common Stock which may be purchased pursuant to options
    which may be granted under the Stock Option Plan equal to 10% of the
    number of shares of Common Stock issued in the Conversion, including
    shares issued to the Foundation.
(2) Includes shares issued to the Foundation.

                                      88
THE CONVERSION
                                        
     THE BOARD OF DIRECTORS OF THE ASSOCIATION AND THE OTS HAVE  APPROVED THE
PLAN OF CONVERSION, SUBJECT TO APPROVAL BY THE MEMBERS OF THE ASSOCIATION
ENTITLED TO VOTE ON THE MATTER AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS.
SUCH OTS APPROVAL, HOWEVER, DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT
OF THE PLAN BY SUCH AGENCY.  THE OTS NEITHER APPROVED NOR DISAPPROVED THE
ESTABLISHMENT OF THE FOUNDATION.

General

     The Association's Board of Directors, on June 15, 1998, unanimously
adopted, subject to approval by the OTS, the Plan pursuant to which the
Association will be converted from a federally-chartered mutual savings
association to a federally-chartered capital stock savings association.  It is
currently intended that all of the outstanding capital stock of the Association
will be held by the Company, which is incorporated under Delaware law.  The Plan
was approved by the OTS, subject to, among other things, approval of the Plan by
the Association's members.  A special meeting of members has been called for
this purpose to be held on __________, 1998.

     The Company has applied for and expects to receive the approval from the
OTS to become a savings and loan holding company and to acquire all of the
Common Stock of the Association to be issued in the Conversion.  The Company
plans to purchase the shares of issued and outstanding capital stock of the
Association in exchange for 50% of the net proceeds and retain the remaining net
proceeds.  The Conversion will be effected only upon completion of the sale of
all of the shares of Common Stock of the Company or the Association, if the
holding company form of organization is not utilized, to be issued pursuant to
the Plan.

     The Plan provides that the Board of Directors of the Association may, at
any time prior to the issuance of the Common Stock and for any reason, decide
not to use a holding company form.  Such reasons may include possible delays
resulting from overlapping regulatory processing or policies which could
adversely affect the Association's or the Company's ability to consummate the
Conversion and transact its business as contemplated herein and in accordance
with the Association's operating policies.  In the event such a decision is
made, the Association will withdraw the Company's registration statement from
the SEC and take steps necessary to complete the Conversion without the Company,
including filing any necessary documents with the OTS.  In such event, and
provided there is no regulatory action, directive or other consideration upon
which basis the Association determines not to complete the Conversion, if
permitted by the OTS, the Association will issue and sell the Common Stock of
the Association and subscribers will be notified of the elimination of a holding
company and resolicited (i.e., be permitted to affirm their orders, in which
case they will need to affirmatively reconfirm their subscriptions prior to the
expiration of the resolicitation offering or their funds will be promptly
refunded with interest at the Association's passbook rate of interest; or be
permitted to modify or rescind their subscriptions), and notified of the time
period within which the subscriber must affirmatively notify the Association of
his intention to affirm, modify or rescind his subscription.  The following
description of the Plan assumes that a holding company form of organization will
be used in the Conversion.  In the event that a holding company form of
organization is not used, all other pertinent terms of the Plan as described
below will apply to the conversion of the Association from the mutual to stock
form of organization and the sale of the Association's common stock.

     The Plan provides generally that (i) the Association will convert from a
mutual savings association to a capital stock savings association and (ii) the
Company will offer shares of Common Stock for sale in the Subscription Offering
to the Association's Eligible Account Holders, the ESOP, Supplemental Eligible
Account Holders, and Other Members.  Subsequent to the Subscription Offering,
any remaining shares will be offered in a Community Offering with preference
given to natural persons residing in the Association's Local Community.  It is
anticipated that all shares not subscribed for in the Subscription and Community
Offerings will be offered for sale by the Company to the general public in a
Syndicated Community Offering.  The Association has the right to accept or
reject, in whole or in part, any orders to purchase shares of the Common Stock
received in the Community Offering or in the Syndicated Community Offering.  See
"-- Community Offering" and "-- Syndicated Community Offering."

     The aggregate price of the shares of Common Stock to be sold in the
Conversion within the Estimated Price 

                                      89
Range, currently estimated to be between $88.4 million and $119.6 million, will
be determined based upon an independent appraisal, prepared by Keller of the
estimated pro forma market value of the Common Stock of the Company. All shares
of Common Stock to be issued and sold in the Conversion will be sold at the same
price. The independent appraisal will be affirmed or, if necessary, updated at
the completion of the Subscription and Community Offerings, if all shares are
subscribed for, or at the completion of the Syndicated Community Offering. The
appraisal has been performed by Keller, a consulting firm experienced in the
valuation and appraisal of savings institutions. See "-- Stock Pricing" for
additional information as to the determination of the estimated pro forma market
value of the Common Stock.

     The following is a brief summary of the material aspects of the Conversion.
The summary is qualified in its entirety by reference to the provisions of the
Plan.  A copy of the Plan is available for inspection at each branch of the
Association and at the Central Region and Washington, D.C. offices of the OTS.

Establishment of the Charitable Foundation

     General.  In furtherance of the Association's long-standing commitment to
its local community, the Association's Plan of Conversion provides for the
establishment of a charitable foundation in connection with the Association's
Conversion.  The Plan provides that the Association and the Company will
establish the Foundation, which will be incorporated under Delaware law as a
non-stock corporation, and will fund the Foundation with Common Stock of the
Company, as further described below.  The Company and the Association believe
that the funding of the Foundation with Common Stock of the Company is a means
of establishing a common bond between the Association and the communities in
which the Association operates and thereby enables such communities to share in
the potential growth and success of the Company and the Association over the
long term.  By further enhancing the Association's visibility and reputation in
the communities in which it operates, the Association believes that the
Foundation will enhance the long-term value of the Association's community
banking franchise.

     The Foundation would be dedicated to the promotion of charitable purposes
within the communities in which the Association operates, including, but not
limited to, providing grants or donations to support housing assistance, not-
for-profit medical facilities, community groups and other types of organizations
or projects.  Establishment of the Foundation is subject to the approval of a
majority of the total outstanding votes of the Association's members eligible to
be cast at the Special Meeting.  The Foundation will be considered as a separate
matter from approval of the Plan of Conversion.  If the Association's members
approve the Plan of Conversion, but not the Foundation, the Association intends
to complete the Conversion without the establishment of the Foundation.  Failure
to approve the establishment of the Foundation may materially affect the pro
forma market value of the Common Stock.  In such an event, the Association may
establish a new Estimated Price Range and commence a resolicitation of
subscribers.  In the event of a resolicitation, unless an affirmative response
is received within a specified period of time, all funds will be promptly
returned to investors, as described elsewhere herein.  See "-- Stock Pricing."

     Purpose of the Foundation.  The purpose of the Foundation is to provide
funding to support charitable purposes within the communities in which the
Association operates.  The Association has long emphasized community lending and
community development activities and currently has an "outstanding" Community
Reinvestment Act ("CRA") rating.  The Foundation is being formed as a complement
to the Association's existing community activities, not as a replacement for
such activities.  Indeed, the Association intends to continue to emphasize
community lending and community development activities following the Conversion.
However, such activities are not the Association's sole corporate purpose.  The
Foundation, conversely, will be completely dedicated to community activities and
the promotion of charitable causes, and may be able to support such activities
in ways that are not presently available to the Association.  Since the
Association already engages in community development activities, the Association
believes that the Foundation will enable the Company and the Association to
assist their local community in areas beyond community development and lending.
In this regard, the Board of Directors believes the establishment of a
charitable foundation is consistent with the Association's commitment to
community service.  The Boards of Directors of the Association and Company also
believe that the funding of the Foundation with Common Stock of the Company is a
means of enabling the communities in which the Association operates to share in
the potential growth and success of the Company long after completion of the
Conversion.  The Foundation accomplishes that goal by providing for continued
ties between the Foundation and Association, thereby forming a partnership with
the Association's community.  The establishment of the Foundation would also
enable the Company and the Association to develop a 

                                      90
unified charitable donation strategy and would centralize the responsibility for
administration and allocation of corporate charitable funds.

     Structure of the Foundation.  The Foundation will be incorporated under
Delaware law as a non-stock corporation.  It is currently anticipated that the
Foundation's board of directors will be comprised of three members, all of whom
will be individuals elected from existing directors of the Association.  The
directors of the Association and Company that are expected to serve on the Board
of Directors of the Foundation consist of Messrs.  Paul Watson, Robert McGeough
and Steven Lewis, who intend to purchase 70,000, 25,000 and 40,000 shares of
Common Stock in the Conversion, respectively, or 0.5%, 0.2% and 0.3%,
respectively, or 1.0% in the aggregate of the total number of shares to be
issued in the Conversion, including shares issued to the Foundation, based upon
the maximum of the Estimated Price Range.  On an on-going basis, a Nominating
Committee of the board of directors of the Foundation will nominate individuals
eligible for election to the board of directors of the Foundation.  The members
of the Foundation, who are comprised of its board members, will elect the
directors at the annual meeting of the Foundation from those nominated by the
Nominating Committee.  Only persons serving as directors of the Foundation
qualify as members of the Foundation with voting authority.  Directors will be
divided into three classes with each class appointed for three-year terms.  The
certificate of incorporation of the Foundation will provide that the Foundation
is organized exclusively for charitable purposes as set forth in Section
501(c)(3) of the Code.  The Foundation's certificate of incorporation further
will provide that no part of the net earnings of the Foundation will inure to
the benefit of, or be distributable to, its directors, officers or members.  A
person who is a director, officer or employee of the Association, or has the
power to direct its management or policies, or otherwise owes a fiduciary duty
to the Association, and who will also serve as a director or employee of the
Foundation would be subject to the requirements of OTS conflicts of interest
regulations.

     The authority for the affairs of the Foundation will be vested in the board
of directors of the Foundation.  The directors of the Foundation will be
responsible for establishing the policies of the Foundation with respect to
grants or donations by the Foundation, consistent with the stated purposes for
which the Foundation is established.  Although no formal policy governing
Foundation grants exists at this time, the Foundation's board of directors will
adopt such a policy upon establishment of the Foundation.  The directors will
also be responsible for directing the assets of the Foundation.  Pursuant to the
terms of the contribution as mandated by the OTS, all shares of Common Stock
held by the Foundation must be voted in the same ratio as all other shares of
the Company's Common Stock on all proposals considered by stockholders of the
Company; provided, however, that the OTS will waive this voting restriction
under certain circumstances if compliance with the restriction would: (i) cause
a violation of the law of the State of Delaware and the OTS determines that
federal law would not preempt the application of the laws of the State of
Delaware to the Foundation; (ii) cause the Foundation to lose its tax-exempt
status or otherwise have a material and adverse tax consequence on the
Foundation; or (iii) cause the Foundation to be subject to an excise tax under
Section 4941 of the Code.  In order for the OTS to waive such voting
restriction, the Company's or the Foundation's legal counsel must render an
opinion satisfactory to OTS that compliance with the voting restriction would
have the effect described in clauses (i), (ii) or (iii) above.  Under those
circumstances, the OTS will grant a waiver of the voting restriction upon
submission of such legal opinion(s) by the Company or the Foundation.  In the
event that the OTS waived the voting restriction, the directors would direct the
voting of the Common Stock held by the Foundation.  However, a condition to the
OTS approval of the Conversion provides that in the event such voting
restriction is waived or becomes unenforceable, the Director of the OTS, or his
designees, at that time may impose conditions on the composition of the board of
directors of the Foundation or such other conditions or restrictions relating to
the control of the Common Stock held by the Foundation, any of which could limit
the ability of the board of directors of the Foundation to control the voting of
the Common Stock held by the Foundation.  Further, there will be no agreements
or understandings with directors of the Foundation regarding the exercise of
control, directly or indirectly, over the management or policies of the Company
or the Association, including agreements related to voting, acquisition or
disposition of the Company's stock.  As directors of a nonprofit corporation,
directors of the Foundation will at all times be bound by their fiduciary duty
to advance the Foundation's charitable goals, to protect the assets of the
Foundation and to act in a manner consistent with the charitable purpose for
which the Foundation is established.

     The Company will provide office space and administrative support services
to the Foundation.  Initially, the Foundation is expected to have no employees.
The board of directors of the Foundation will appoint such officers as may be
necessary to manage the operations of the Foundation.  It is anticipated that
initially such officers will be selected from the board of directors of the
Foundation.  Any transaction between the Association and the Foundation 

                                      91
will comply with the affiliate transaction restrictions set forth in Sections
23A and 23B of the Federal Reserve Act, as amended.

     The Company and the Association determined to fund the Foundation with
Common Stock rather than cash because it desired to form a bond with its
community in a manner that would allow the community to share in the potential
growth and success of the Company and the Association over the long term. The
funding of the Foundation with stock also provides the Foundation with a
potentially larger endowment than if the Company contributed cash to the
Foundation since, as a shareholder, the Foundation will share in the potential
growth and success of the Company. As such, the contribution of stock to the
Foundation has the potential to provide a self-sustaining funding mechanism
which reduces the amount of cash that the Company, if it were not making the
stock contribution, would have to contribute to the Foundation in future years
in order to maintain a level amount of charitable grants and donations.

     The Foundation would receive working capital from any dividends that may be
paid on the Common Stock in the future, and subject to applicable federal and
state laws, loans collateralized by the Common Stock or from the proceeds of the
sale of any of the Common Stock in the open market from time to time as may be
permitted to provide the Foundation with additional liquidity.  As a private
foundation under Section 501(c)(3) of the Code, the Foundation will be required
to distribute annually in grants or donations, a minimum of 5% of the average
fair market value of its net investment assets.  One of the conditions imposed
on the gift of Common Stock by the Company is that the amount of Common Stock
that may be sold by the Foundation in any one year shall not exceed 5% of the
average market value of the assets held by the Foundation, except where the
board of directors of the Foundation, determines that the failure to sell an
amount of common stock greater than such amount would result in a long-term
reduction of the value of the Foundation's assets or would otherwise jeopardize
the Foundation's capacity to carry out its charitable purposes.  While there may
be a greater risk associated with a one-stock portfolio in comparison to a
diversified portfolio, the Company believes any such risk is mitigated by the
ability of the Foundation's directors to sell more than 5% of its stock in such
circumstances.  Upon completion of the Conversion and the contribution of shares
to the Foundation immediately following the Conversion, the Company would have
9,520,000, 11,200,000 and 12,880,000 shares issued and outstanding at the
minimum, midpoint and maximum of the Estimated Price Range.  BECAUSE THE COMPANY
WILL HAVE AN INCREASED NUMBER OF SHARES OUTSTANDING, THE VOTING AND OWNERSHIP
INTERESTS OF SHAREHOLDERS IN THE COMPANY'S COMMON STOCK WOULD BE DILUTED BY
7.1%, AS COMPARED TO THEIR INTERESTS IN THE COMPANY IF THE FOUNDATION WAS NOT
ESTABLISHED.  For additional discussion of the dilutive effect, see "Comparison
of Valuation and Pro Forma Information With No Foundation" and "Pro Forma Data."

     Comparison of Valuation and Other Factors Assuming the Foundation Is Not
Established as Part of the Conversion.  The Company proposes to capitalize the
Foundation with Common Stock in an amount equal to 7.7% of the total amount of
Common Stock sold in connection with the Conversion.  At the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Price Range, the contribution
to the Foundation would equal 680,000, 800,000, 920,000 and 1,058,000 shares,
respectively, which would have a market value of $6.8 million, $8.0 million,
$9.2 million and $10.6 million, respectively, based on the Purchase Price of
$10.00 per share.  Such contribution, once made, will not be recoverable by the
Company or the Association.  As a result of the establishment of the Foundation,
the Estimated Price Range, as estimated by Keller, has decreased and the amount
of stock available for sale in the Offerings has also correspondingly decreased.
The amount of the decrease is 1,530,000, 1,800,000, 2,070,000 and  2,380,500
shares, or $15.3 million, $18.0 million, $20.7 million and $23.8 million at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated Price
Range, respectively.  See "Pro Forma Data" and "Comparison of Valuation and Pro
Forma Data Information with No Foundation."

     As a result of the establishment of the Foundation, the Company will
recognize an expense of the full amount of the contribution, which is expected
to be offset in part by a corresponding tax benefit, during the quarter in which
the contribution is made, which is expected to be the second quarter of fiscal
1999.  Such expense will reduce earnings and have a material impact on the
Company's earnings for the fiscal year in which it is made.  While management
cannot predict earnings for fiscal 1999, it expects that the establishment and
funding of the Foundation will have an adverse impact on the Company's earnings
for the year in which it is made.  Assuming a contribution of $9.2 million in
Common Stock in fiscal 1999, based on the maximum of the Estimated Price Range
and assuming a tax rate of 34%, the Company estimates a net tax effected expense
of $6.1 million.  If the Foundation had been established at June 30, 1998, the
Association would have recorded a net loss of $2.0 million, rather than
recording net income of $4.1 million 

                                      92
for the year ended June 30, 1998, based on an assumed tax rate of 34%. Due to
the contribution to the Foundation, the Association expects in the future to
reduce the amount of its current charitable contributions within its community.
The Association does not anticipate making future charitable contributions to
the Foundation during the first five years following the initial contribution to
the Foundation.

     Tax Considerations. The Company and the Association have been advised by
Crowe, Chizek and Company LLP that the Foundation will qualify as a 501(c)(3)
exempt organization under the Code, and will be classified as a private
foundation rather than a public charity. A private foundation typically receives
its support from one person or one corporation whereas a public charity receives
its support from the public. The Foundation will submit a request to the IRS to
be recognized as an exempt organization after approval of the Foundation by the
Association's members at the Special Meeting being held to consider the
Conversion. As long as the Foundation files its application for tax-exempt
status within 15 months from the date of its organization, and provided the IRS
approves the application, the effective date of the Foundation's status as a
Section 501(c)(3) organization will be the date of its organization. Crowe,
Chizek and Company LLP, however, has not rendered any advice on the condition of
the gift which requires that all shares of Common Stock of the Company held by
the Foundation must be voted in the same ratio as all other shares of the
Company's Common Stock, on all proposals considered by stockholders of the
Company. In the event that the Company or the Foundation receives an opinion of
their tax counsel satisfactory to the OTS that compliance with the voting
restriction would cause the Foundation to lose its tax-exempt status, otherwise
have a material adverse tax consequence on the Foundation or subject the
Foundation to an excise tax under Section 4941 of the Code, the OTS will waive
such condition upon submission of such opinion(s) by the Company or the
Foundation. See "-- Regulatory Conditions Imposed on the Foundation."

     A legal opinion of the OTS which addresses the establishment of charitable
foundations by savings associations opines that as a general rule funds
contributed to a charitable foundation should not exceed the deductible
limitations set forth in the Code, and if a saving association's contributions
exceed the deductible limit, such action must be justified by the Board of
Directors.  In addition, under Delaware law, the Company is authorized by
statute to make charitable contributions and case law has recognized the
benefits of such contributions to a Delaware corporation.  In this regard,
Delaware case law provides that a charitable gift must merely be within
reasonable limits as to amount and purpose to be valid.  Under the Code, the
Company may deduct up to 10% of its taxable income in any one year and any
contributions made by the Company in excess of the deductible amount will be
deductible for federal tax purposes over each of the five succeeding taxable
years.  The Company and the Association believe that the Conversion presents a
unique opportunity to establish and fund a charitable foundation given the
substantial amount of additional capital being raised in the Conversion.  In
making such a determination, the Company and the Association considered the
dilutive impact of the Foundation on the amount of Common Stock available to be
offered for sale in the Conversion.  See "Comparison of Valuation and Pro Forma
Information with No Foundation."  Based on such consideration, the Company and
Association believe that the contribution to the Foundation in excess of the 10%
annual limitation is justified given the Association's capital position and its
earnings, the substantial additional capital being raised in the Conversion and
the potential benefits of the Foundation to the Association's community.  In
this regard, assuming the sale of the Common Stock at the midpoint of the
Estimated Price Range, the Company would have pro forma consolidated capital of
$150.5 million, or 21.5% of pro forma consolidated assets and the Association's
pro forma tangible, core and risk-based capital ratios would be 14.8%, 14.8% and
33.3%, respectively.  See "Regulatory Capital Compliance," "Capitalization," and
"Comparison of Valuation and Pro Forma Information with No Foundation."  Thus,
the amount of the contribution will not adversely impact the financial condition
of the Company and the Association and the Company and the Association therefore
believe that the amount of the charitable contribution is reasonable given the
Company and the Association's pro forma capital positions.  As such, the Company
and the Association believe that the contribution does not raise safety and
soundness concerns.

     The Company and the Association have received an opinion of Crowe, Chizek
and Company LLP that the Company's contribution of its own stock to the
Foundation should not constitute an act of self-dealing, and that the Company
should be entitled to a deduction in the amount of the fair market value of the
stock at the time of the contribution less the nominal par value that the
Foundation is required to pay to the Company for such stock, subject to a
limitation based on 10% of the Company's annual taxable income.  The Company,
however, would be able to carry forward any unused portion of the deduction for
five years following the year in which the contribution is made for federal tax
purposes.  Thus, while the Company expects, based on the midpoint of the
Estimated Price Range, to be able to utilize for federal income tax purposes a
charitable contribution deduction of approximately $1.3 million in 

                                      93
fiscal year 1999, the Company is permitted under the Code to carryover the
excess of the total contribution over such 1999 deduction over a five-year
period for federal income tax purposes. Assuming the close of the Offerings at
the midpoint of the Estimated Price Range, the Company estimates that all of the
federal tax deduction should be deductible over the six-year period. However, no
assurances can be made that the Company will have sufficient pre-tax income over
the five year period following the year in which the contribution was made to
fully utilize the carryover related to the excess contribution. Neither the
Company nor the Association expects to make any further contributions to the
Foundation within the first five years following the initial contribution. After
that time, the Company and the Association may consider future contributions to
the Foundation. Any such decisions would be based on an assessment of, among
other factors, the financial condition of the Company and the Association at
that time, the interests of shareholders and depositors of the Company and the
Association, and the financial condition and operations of the Foundation.

     Although the Company and the Association have received an opinion of Crowe,
Chizek and Company LLP that the Company is entitled to a deduction for the
charitable contribution, there can be no assurances that the IRS will recognize
the Foundation as a Section 501(c)(3) exempt organization or that the deduction
will be permitted.  In such event, the Company's contribution to the Foundation
would be expensed without tax benefit, resulting in a reduction in earnings in
the year in which the IRS makes such a determination.  In cases of willful,
flagrant or repeated acts or failures to act which result in violations of the
IRS rules governing private foundations, a private foundation's status as a
private foundation may be involuntarily terminated by the IRS.  In such event,
the managers of a private foundation could be liable for excise taxes based on
such violations and the private foundation could be liable for a termination tax
under the Code.  The Foundation's certificate of incorporation provides that it
shall have a perpetual existence.  In the event, however, the Foundation were
subsequently dissolved as a result of a loss of its tax exempt status, the
Foundation would be required under the Code and its certificate of incorporation
to distribute any assets remaining in the Foundation at that time for one or
more exempt purposes within the meaning of Section 501(c)(3) of the Code, or to
distribute such assets to the federal government, or to a state or local
government, for a public purpose.

     As a private foundation, earnings and gains, if any, from the sale of
Common Stock or other assets are exempt from federal and state corporate
taxation.  However, investment income, such as interest, dividends and capital
gains, will be subject to a federal excise tax of 2.0%.  The Foundation will be
required to make an annual filing with the IRS within four and one-half months
after the close of the Foundation's fiscal year to maintain its tax-exempt
status.  The Foundation will be required to publish a notice that the annual
information return will be available for public inspection for a period of 180
days after the date of such public notice.  The information return for a private
foundation must include, among other things, an itemized list of all grants made
or approved, showing the amount of each grant, the recipient, any relationship
between a grant recipient and the Foundation's managers and a concise statement
of the purpose of each grant.

     Regulatory Conditions Imposed on the Foundation.  Establishment of the
Foundation is subject to the following conditions imposed by the OTS: (i) the
Foundation will be subject to examination by the OTS, at the Foundation's own
expense; (ii) the Foundation must comply with supervisory directives imposed by
the OTS; (iii) the Foundation will provide annual reports to the OTS describing
grants made and grant recipients; (iv) the Foundation will operate in accordance
with written policies adopted by the board of directors, including a conflict of
interest policy; (v) the Foundation will not engage in self-dealing and will
comply with all laws necessary to maintain its tax-exempt status; (vi) any
purchases of Common Stock by the Foundation following that Conversion will be
subject to OTS regulations on stock repurchases; and (vii) any shares of Common
Stock of the Company held by the Foundation must be voted in the same ratio as
all other shares of the Company's Common Stock on all proposals considered by
stockholders of the Company; provided, however, that the OTS will waive this
voting restriction under certain circumstances if compliance with the voting
restriction would: (a) cause a violation of the law of the State of Delaware and
the OTS determines the federal law does not preempt the application of the laws
of the State of Delaware to the Foundation; (b) cause the Foundation to lose its
tax-exempt status or otherwise have a material and adverse tax consequence on
the Foundation; or (c) cause the Foundation to be subject to an excise tax under
Section 4941 of the Code.  In order for the OTS to waive such voting
restriction, the Company's or the Foundation's legal counsel must render an
opinion satisfactory to OTS that compliance with the voting restriction would
have the effect described in clauses (a), (b) or (c) above.  Under those
circumstances, the OTS will grant a waiver of the voting restriction upon
submission of such opinion(s) by the Company or the Foundation.  There can be no
assurances that either a legal or 

                                      94
tax opinion addressing these issues will be rendered, or if rendered, that the
OTS will grant an unconditional waiver of the voting restriction. In this
regard, a condition to the OTS approval of the Conversion provides that in the
event such voting restriction is waived or becomes unenforceable, the Director
of the OTS, or his designees, at that time may impose conditions on the
composition of the board of directors of the Foundation or such other conditions
or restrictions relating to the control of the Common Stock held by the
Foundation, any of which could limit the ability of the board of directors of
the Foundation to control the voting of Common Stock held by the Foundation. In
no event will the voting restriction survive the sale of shares of the Common
Stock held by the Foundation.

     In addition, establishment of the Foundation is subject to the approval of
a majority of the total outstanding votes of the Association's members eligible
to be cast at the Special Meeting. The Foundation will be considered as a
separate matter from approval of the Plan of Conversion. If the Association's
members approve the Plan of Conversion, but not the Foundation, the Association
intends to complete the Conversion without the establishment of the Foundation.
Failure to approve the Foundation may materially increase the pro forma market
value of the Common Stock being offered for sale in the Offering since the
Valuation Range, as set forth herein, takes into account the dilutive impact of
the issuance of shares to the Foundation. See "Comparison of Valuation and Pro
Forma Information With No Foundation."

Purposes of Conversion

     The Association, as a federally-chartered mutual savings and loan
association, does not have shareholders and has no authority to issue capital
stock.  By converting to the capital stock form of organization, the Association
will be structured in the form used by commercial banks, other business entities
and a growing number of savings institutions.  The Conversion will enhance the
Association's ability to access capital markets, expand its current operations,
acquire other financial institutions or branch offices, provide affordable home
financing opportunities to the communities it serves or diversify into other
financial services to the extent allowable by applicable law and regulation.
The Conversion would also position the Association for a conversion to a
commercial bank charter if the Board of the Association chooses to do so in the
future.

     The holding company form of organization, if used, would provide additional
flexibility to diversify the Association's business activities through existing
or newly formed subsidiaries, or through acquisitions of or mergers with both
mutual and stock institutions, as well as other companies.  Although there are
no current arrangements, understandings or agreements regarding any such
opportunities, the Company will be in a position after the Conversion, subject
to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise.

     The potential impact of the Conversion upon the Association's capital base
is significant.  The Conversion will significantly increase the Association's
capital position to a level whereby the Association will be better positioned to
take advantage of business opportunities and engage in activities which, prior
to Conversion, would have been more difficult for the Association to engage in
and still continue to meet its status as a "well capitalized" institution.  At
June 30, 1998, the Association had total equity, determined in accordance with
GAAP, of $59.4 million, or 9.7% of total assets, which approximated the
Association's regulatory tangible capital at that date of 9.5% of assets.  An
institution with a ratio of tangible capital to total assets of greater than or
equal to 5.0% is considered to be "well-capitalized" pursuant to OTS
regulations.  Assuming that the Company uses 50% of the net proceeds at the
maximum of the Estimated Price Range to purchase the stock of the Association,
the Association's GAAP capital will increase to $102.6 million or a ratio of
GAAP capital to adjusted assets, on a pro forma basis, of 15.7% after the
Conversion.  In the event that the holding company form of organization is not
utilized and all of the net Conversion proceeds, at the midpoint of the
Estimated Price Range, are retained by the Association, the Association's ratios
of tangible and core capital to adjusted assets, on a pro forma basis, will both
increase to 21.2% after Conversion.  The investment of the net proceeds from the
sale of the Common Stock is expected to provide the Association with additional
income to increase further its capital position.  The additional capital may
also assist the Association in offering new programs and expanded services to
its customers.  See "Use of Proceeds."

     After completion of the Conversion, the unissued common and preferred stock
authorized by the Company's Certificate of Incorporation will permit the
Company, subject to market conditions and any required regulatory approval of an
offering, to raise additional equity capital through further sales of
securities, and to issue securities in 

                                      95
connection with possible acquisitions. At the present time, the Company has no
plans with respect to additional offerings of securities, other than the
possible issuance of additional shares upon exercise of Stock Options under the
Stock-Based Incentive Plan or the possible issuance of authorized but unissued
shares to the Stock-Based Incentive Plan for Stock Awards. Following the
Conversion, the Company will also be able to use stock-related incentive plans
to attract and retain executive and other personnel for itself and its
subsidiaries. See "Management of the Association -- Executive Compensation."

Effects of Conversion

     General. Each depositor in a mutual savings institution has both a deposit
account in the institution and a pro rata ownership interest in the net worth of
the institution based upon the balance in his or her account, which interest may
only be realized in the event of a liquidation of the institution or in the
event the institution declares a capital distribution to depositors, subject to
applicable regulations of the OTS. However, this ownership interest is tied to
the depositor's account and has no tangible market value separate from such
deposit account. Any depositor who opens a deposit account obtains a pro rata
ownership interest in the net worth of the institution without any additional
payment beyond the amount of the deposit. A depositor who reduces or closes his
account receives a portion or all of the balance in the account but nothing for
his ownership interest in the net worth of the institution, which is lost to the
extent that the balance in the account is reduced.

     Consequently, mutual savings institution depositors normally have no way to
realize the value of their ownership interest, which has realizable value only
in the unlikely event that the mutual savings institution is liquidated or in
the event the institution declares a capital distribution to depositors, subject
to applicable regulations of the OTS.  In such event, the depositors of record
at that time, as owners, would share pro rata in any residual surplus and
reserves after other claims, including claims of depositors to the amounts of
their deposits, are paid.

     When a mutual savings institution converts to stock form, permanent
nonwithdrawable capital stock is created to represent the ownership of the
institution's net worth.  The common stock is separate and apart from deposit
accounts and cannot be and is not insured by the FDIC or any other governmental
agency.  Certificates are issued to evidence ownership of the capital stock.
The stock certificates are transferable and, therefore, the stock may be sold or
traded if a purchaser is available with no effect on any account the seller may
hold in the institution.

     Continuity.  While the Conversion is being accomplished, the normal
business of the Association of accepting deposits and making loans will continue
without interruption.  The Association will continue to be subject to regulation
by the OTS and the FDIC.  After the Conversion, the Association will continue to
provide services for depositors and borrowers under current policies by its
present management and staff.  The Directors serving the Association at the time
of Conversion will serve initially as Directors of the Association after the
Conversion.  The Directors of the Company will consist initially of individuals
currently serving on the Board of Directors of the Association.  All officers of
the Association at the time of Conversion will retain their positions
immediately after Conversion.

     Effect on Deposit Accounts.  Under the Plan, each depositor in the
Association at the time of Conversion will automatically continue as a depositor
after the Conversion, and each such deposit account will remain the same with
respect to deposit balance, interest rate and other terms.  Each such account
will be insured by the FDIC to the same extent as before the Conversion (i.e.,
up to $100,000 per depositor).  Depositors will continue to hold their existing
certificates, passbooks and other evidences of their accounts.

     Effect on Loans.  No loan outstanding from the Association will be affected
by the Conversion, and the amount, interest rate, maturity and security for each
loan will remain as they were contractually fixed prior to the Conversion.

     Effect on Voting Rights of Members.  At present, all depositors and certain
borrowers of the Association are members of, and have voting rights in, the
Association as to all matters requiring membership action.  Upon Conversion,
depositors and borrowers will cease to be members and will no longer be entitled
to vote at meetings of the Association.  Upon Conversion, all voting rights in
the Association will be vested in the Company as the sole stockholder of the
Association.  Exclusive voting rights with respect to the Company will be vested
in the holders of Common Stock.  Depositors and borrowers of the Association
will not have voting rights after the Conversion except 

                                      96
to the extent that they become stockholders of the Company through the purchase
of Common Stock.

     Tax Effects.  The Association has received an opinion from Patton Boggs LLP
with regard to federal income taxation and an opinion from Crowe, Chizek and
Company LLP with regard to Ohio income taxation to the effect that the
Conversion will not be a taxable transaction to the Association, its Eligible
Account Holders, or its Supplemental Eligible Account Holders or the Company,
except as discussed below.  See "-- Tax Aspects."

     Effect on Liquidation Rights.  If a mutual savings institution were to
liquidate, all claims of creditors (including those of depositors, to the extent
of deposit balances) would be paid first. Thereafter, if there were any assets
remaining, depositors would be entitled to such remaining assets, pro rata,
based upon the deposit balances in their deposit accounts immediately prior to
liquidation. In the unlikely event that the Association were to liquidate after
Conversion, all claims of creditors (including those of depositors, to the
extent of their deposit balances) would also be paid first, followed by
distribution of the "liquidation account" to certain depositors (see "--
Liquidation Rights"), with any assets remaining thereafter distributed to the
Company as the holder of the Association's capital stock. Pursuant to the rules
and regulations of the OTS, a post-Conversion merger, consolidation, sale of
bulk assets or similar combination or transaction with another insured savings
institution would not be considered a liquidation and, in such a transaction,
the liquidation account would be assumed by the surviving institution.

Stock Pricing

     The Plan of Conversion requires that the aggregate purchase price of the
Common Stock must be based on the appraised pro forma market value of the Common
Stock, as determined on the basis of an independent valuation.  The Association
and the Company have retained Keller to make such valuation.  For its services
in making such appraisal, Keller will receive a fee of $26,000, including out-
of-pocket expenses.  The Association and the Company have agreed to indemnify
Keller and its employees and affiliates against certain losses (including any
losses in connection with claims under the federal securities laws) arising out
of its services as appraiser, except where Keller's liability results from its
negligence, willful misconduct or bad faith.

     An appraisal has been made by Keller in reliance upon the information
contained in this Prospectus, including the Consolidated Financial Statements.
Keller also considered the following factors, among others: the present and
projected operating results and financial condition of the Company and the
Association and the economic and demographic conditions in the Association's
existing marketing area; certain historical, financial and other information
relating to the Association; a comparative evaluation of the operating and
financial statistics of the Association with those of other similarly situated
publicly-traded savings banks and savings institutions located in the
Association's market area and the Midwest and the Midatlantic areas of the
United States; the aggregate size of the offering of the Common Stock; the
impact of Conversion on the Association's net worth and earnings potential; the
proposed dividend policy of the Company and the Association; and the trading
market for securities of comparable institutions and general conditions in the
market for such securities.

     On the basis of the foregoing, Keller has advised the Company and the
Association that, in its opinion, dated August 14, 1998, the estimated pro forma
market value of the Common Stock, being offered for sale ranged from a minimum
of $88.4 million to a maximum of $119.6 million with a midpoint of $104.0
million.  Based upon the Valuation Range and the Purchase Price of $10.00 per
share for the Common Stock established by the Board of Directors, the Board of
Directors has established the Estimated Price Range of $88.4 million to $119.6
million, with a midpoint of $104.0 million, and the Company expects to sell
between 8,840,000 and 11,960,000 shares of Common Stock.  The Board of Directors
of the Company and the Association have reviewed the appraisal of Keller and in
determining the reasonableness and adequacy of such appraisal consistent with
OTS regulations and policies, have reviewed the methodology and reasonableness
of the assumptions utilized by Keller in the preparation of such appraisal.  The
Estimated Price Range may be amended with the approval of the OTS (if required),
if necessitated by subsequent developments in the financial condition of the
Company or the Association or market conditions generally.  The $10.00 per share
price for the Common Stock was based on the consideration of a number of
factors, including the potential after market liquidity of the stock, Nasdaq
listing requirements and other marketing conditions.

     SUCH APPRAISAL, HOWEVER, IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS A
RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING COMMON STOCK IN
THE OFFERINGS.  KELLER DID NOT INDEPENDENTLY VERIFY THE 

                                      97
CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION PROVIDED BY THE
ASSOCIATION, NOR DID KELLER VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE
ASSOCIATION. THE APPRAISAL CONSIDERS THE ASSOCIATION AS A GOING CONCERN AND
SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE OF THE
ASSOCIATION. MOREOVER, BECAUSE SUCH APPRAISAL IS NECESSARILY BASED UPON
ESTIMATES AND PROJECTIONS OF A NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO
CHANGE FROM TIME TO TIME, NO ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING
COMMON STOCK IN THE CONVERSION WILL THEREAFTER BE ABLE TO SELL COMMON STOCK AT
PRICES AT OR ABOVE THE PURCHASE PRICE OR IN THE RANGE OF THE FOREGOING VALUATION
OF THE PRO FORMA MARKET VALUE THEREOF. SEE "RISK FACTORS -- ABSENCE OF MARKET
FOR COMMON STOCK."

     Following commencement of the Subscription Offering, the maximum of the
Estimated Price Range may be increased up to 15% and the number of shares of
Common Stock to be sold in the Conversion may be increased to 13,754,000 shares
due to regulatory considerations, changes in the market and general financial
and economic conditions, without the resolicitation of subscribers. See "--
Limitations on Common Stock Purchases" as to the method of distribution and
allocation of additional shares that may be issued in the event of an increase
in the Estimated Price Range to fill unfilled orders in the Subscription
Offering.

     If the pro forma market value of the Common Stock is either more than 15%
above the maximum of the Estimated Price Range or less than the minimum of the
Estimated Price Range, the Association and the Company, after consulting with
the OTS, may terminate the Plan and return all funds promptly with interest at
the Association's passbook rate of interest on payments made by check,
Association draft or money order, extend or hold a new Subscription Offering
and/or Community Offering, establish a new Estimated Price Range, commence a
resolicitation of subscribers or take such other actions as permitted by the OTS
in order to complete the Conversion.  In the event that a resolicitation is
commenced, unless an affirmative response is received within a reasonable period
of time, all funds will be promptly returned to investors as described above.  A
resolicitation, if any, following the conclusion of the Subscription Offering
would not exceed 45 days unless further extended by the OTS for periods of up to
90 days not to extend beyond _______, 2000.

     If all shares of Common Stock are not sold through the Subscription
Offering or Community Offering, then the Association and the Company expect to
offer the remaining shares in a Syndicated Community Offering which would occur
as soon as practicable following the close of the Subscription Offering but may
commence during the Subscription Offering subject to prior rights of
subscribers.  All shares of Common Stock will be sold at the same price per
share in the Syndicated Community Offering as in the Subscription Offering and
Community Offering.  See "--Syndicated Community Offering."

     No sale of shares of Common Stock may be consummated unless, prior to such
consummation, Keller confirms to the Association, the Company and the OTS that,
to the best of its knowledge, nothing of a material nature has occurred which,
taking into account all relevant factors, would cause Keller to conclude that
the aggregate value of the Common Stock at the Purchase Price is incompatible
with its estimate of the pro forma market value of the Common Stock of the
Company.  Any change which would result in an aggregate purchase price which is
below or more than 15% above the Estimated Price Range would be subject to OTS
approval.  If such confirmation is not received, the Association may extend the
Conversion, extend, reopen or commence a new Subscription Offering, Community
Offering or Syndicated Community Offering, establish a new Estimated Price Range
and commence a resolicitation of all subscribers with the approval of the OTS or
take such other actions as permitted by the OTS in order to complete the
Conversion, or terminate the Plan and cancel the Subscription and Community
Offerings and/or the Syndicated Community Offering.  In the event market or
financial conditions change so as to cause the aggregate purchase price of the
shares to be below the minimum of the Estimated Price Range or more than 15%
above the maximum of such range, and the Company and the Association determine
to continue the Conversion, subscribers will be resolicited (i.e., be permitted
to continue their orders, in which case they will need to affirmatively
reconfirm their subscriptions prior to the expiration of the resolicitation
offering or their subscription funds will be promptly refunded with interest at
the Association's passbook rate of interest, or be permitted to decrease or
cancel their subscriptions).  Any change in the Estimated Price Range must be
approved by the OTS.  A resolicitation, if any, following the conclusion of the
Subscription Offering would not exceed 45 days unless further extended by the
OTS for periods up to 90 days not to extend beyond _______, 2000.  If such
resolicitation is not effected, the Association will return all funds promptly
with interest at the Association's passbook rate of interest on payments made by
check, bank draft or money order.

                                      98
Copies of the appraisal report of Keller, including any amendments thereto,
and the detailed memorandum of the appraiser setting forth the method and
assumptions for such appraisal are available for inspection at the main office
of the Association and the other locations specified under "Additional
Information."

Number of Shares to Be Issued

     Depending upon market or financial conditions following the commencement of
the Subscription Offering, the total number of shares to be issued in the
Conversion may be increased or decreased without a resolicitation of
subscribers, provided that the product of the total number of shares times the
price per share is not below the minimum of the Estimated Price Range or more
than 15% above the maximum of the Estimated Price Range. Based on a fixed
purchase price of $10.00 per share and Keller's estimate of the pro forma market
value of the Common Stock to be sold ranging from a minimum of $88.4 million to
a maximum, as increased by 15%, of $137.5 million, the number of shares of
Common Stock expected to be sold in the Conversion is between a minimum of
8,840,000 shares and a maximum, as adjusted by 15%, of 13,754,000 shares. The
actual number of shares sold between this range will depend on a number of
factors and shall be determined by the Association and Company, subject to OTS
approval, if necessary.

     In the event market or financial conditions change so as to cause the
aggregate purchase price of the shares to be below the minimum of the Estimated
Price Range or more than 15% above the maximum of the Estimated Price Range, if
the Plan is not terminated by the Company and the Association after consultation
with the OTS, purchasers will be resolicited (i.e., permitted to continue their
orders, in which case they will need to affirmatively reconfirm their
subscriptions prior to the expiration of the resolicitation offering or their
subscription funds will be promptly refunded, or be permitted to modify or
rescind their subscriptions).  Any change in the Estimated Price Range must be
approved by the OTS.  If the number of shares issued in the Conversion is
increased due to an increase of up to 15% in the Estimated Price Range to
reflect changes in market or financial condition, persons who subscribed for the
maximum number of shares will not be given the opportunity to subscribe for an
adjusted maximum number of shares, except for the ESOP which will be able to
subscribe for such adjusted amount.  See "-- Limitations on Common Stock
Purchases."

     In the event the members of the Association approve the establishment of
the Foundation, the number of shares to be issued and outstanding following the
Conversion will be increased by a number of shares equal to 7.7% of the Common
Stock sold in the Conversion.  Assuming the sale of shares in the Offerings at
the maximum of the Estimated Price Range, the Company will issue 920,000 shares
of its Common Stock from authorized but unissued shares to the Foundation
immediately following the completion of the Conversion.  In that event, the
Company will have total shares of Common Stock outstanding of 12,880,000 shares.
Of that amount, the Foundation will own 7.1%. Funding the Foundation with
authorized but unissued shares will have the effect of diluting the ownership
and voting interests of persons purchasing shares in the Conversion by 7.1%
since a greater number of shares will be outstanding upon completion of the
Conversion than would be if the Foundation were not established.  See "Pro Forma
Data."

     An increase in the number of shares to be issued in the Conversion as a
result of an increase in the estimated pro forma market value would decrease
both a subscriber's ownership interest and the Company's pro forma net earnings
and stockholders' equity on a per share basis while increasing pro forma net
earnings and stockholders' equity on an aggregate basis.  A decrease in the
number of shares to be issued in the Conversion would increase both a
subscriber's ownership interest and the Company's pro forma net earnings and
stockholders' equity on a per share basis while decreasing pro forma net
earnings and stockholder's equity on an aggregate basis.  For a presentation of
the effects of such changes, see "Pro Forma Data."

Subscription Offering and Subscription Rights

     In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock have been granted under the Plan of Conversion to the
following persons in the following order of descending priority: (1) holders of
deposit accounts (as defined by the Plan and described herein) with a balance of
$50 or more as of March 31, 1997 ("Eligible Account Holders"); (2) the ESOP; (3)
holders of deposit accounts with a balance of $50 or more as of ________, 1998
("Supplemental Eligible Account Holders"); and (4) members of the Association,
consisting of depositors of the Association as of _________, 1998, the Voting
Record Date, and borrowers with loans outstanding 

                                      99
as of ________, other than Eligible Account Holders and Supplemental Eligible
Account Holders ("Other Members"). All subscriptions received will be subject to
the availability of Common Stock after satisfaction of all subscriptions of all
persons having prior rights in the Subscription Offering and to the maximum and
minimum purchase limitations set forth in the Plan of Conversion and as
described below under "--Limitations on Common Stock Purchases."

     Deposit accounts which will provide subscription rights to holders thereof
consist of any "savings account," as defined by the Plan of Conversion
consistent with OTS regulations.  Pursuant to the Plan and OTS regulations,
certain deposits do not qualify as "savings accounts," including but not limited
to noninterest-bearing demand accounts, (primarily noninterest-bearing checking
accounts) and mortgage escrow deposits, maintained at the Association.

     Priority 1: Eligible Account Holders.  Each Eligible Account Holder will
receive, without payment therefor, first priority, nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of (1)
the amount permitted to be purchased in the Community Offering, currently
$250,000 of Common Stock; (2) one-tenth of one percent (.10%) of the total
offering of shares of Common Stock; or (3) fifteen times the product (rounded
down to the next whole number) obtained by multiplying the total number of
shares of Common Stock to be issued by a fraction of which the numerator is the
amount of the Eligible Account Holder's Qualifying Deposit (defined by the Plan
as any deposit account in the Association with a balance of $50 or more as of
March 31, 1997) and the denominator is the total amount of Qualifying Deposits
of all Eligible Account Holders, in each case on the Eligibility Record Date,
subject to the overall purchase limitation and exclusive of an increase in the
shares issued pursuant to an increase in the Estimated Price Range of up to 15%.
See "-- Limitations on Common Stock Purchases."

     In the event that Eligible Account Holders exercise subscription rights for
a number of shares of Conversion Stock in excess of the total number of such
shares eligible for subscription, the shares of Conversion Stock shall be
allocated among the subscribing Eligible Account Holders so as to permit each
subscribing Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of Conversion
Stock equal to the lesser of 100 shares or the number of shares subscribed for
by the Eligible Account Holder.  Any shares remaining after that allocation will
be allocated among the subscribing Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Eligible Account Holder whose subscription remains unsatisfied bears to
the total amount of the Qualifying Deposits of all Eligible Account Holders
whose subscriptions remain unsatisfied.  If the amount so allocated exceeds the
amount subscribed for by any one or more Eligible Account Holders, the excess
shall be reallocated (one or more times as necessary) among those Eligible
Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated or all subscriptions
satisfied.

     To ensure proper allocation of stock, each Eligible Account Holder must
list on his subscription order form all accounts in which he has an ownership
interest.  Failure to list an account could result in less shares being
allocated than if all accounts had been disclosed.  The subscription rights of
Eligible Account Holders who are also Directors or Officers of the Association
or their associates will be subordinated to the subscription rights of other
Eligible Account Holders to the extent attributable to increased deposits in the
12 months preceding March 31, 1997.

     Priority 2: Employee Stock Ownership Plan.  To the extent that there are
sufficient shares remaining after satisfaction of the subscriptions by Eligible
Account Holders, the ESOP will receive, without payment therefor, second
priority, nontransferable subscription rights to purchase, in the aggregate, up
to 10% of Common Stock issued in the Conversion, including shares issued to the
Foundation, and any increase in the number of shares of Common Stock to be
issued in the Conversion after the date hereof as a result of an increase of up
to 15% in the maximum of the Estimated Price Range.  The ESOP intends to
purchase 8% of the shares to be issued in the Conversion, including shares
issued to the Foundation, or 761,600 shares and 1,030,400 shares, based on the
minimum and maximum of the Estimated Price Range, respectively.  Subscriptions
by the ESOP will not be aggregated with shares of Common Stock purchased
directly by or which are otherwise attributable to any other participants in the
Subscription Offering, including subscriptions of any of the Association's
directors, officers, employees or associates thereof.  See "Management of the
Association -- Other Benefit Plans -- Employee Stock Ownership Plan."

     Priority 3: Supplemental Eligible Account Holders.  Each Supplemental
Eligible Account Holder will receive, without payment therefor, third priority,
nontransferable subscription rights to subscribe for in the Subscription
Offering up to the greater of the amount permitted to be purchased in the
Community Offering, currently $250,000 

                                      100
of Common Stock, one-tenth of one percent (.10%) of the total offering of shares
of Common Stock or fifteen times the product (rounded down to the next whole
number) obtained by multiplying the total number of shares of Common Stock to be
issued by a fraction of which the numerator is the amount of the Supplemental
Eligible Account Holder's Qualifying Deposit and the denominator is the total
amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in
each case on the Supplemental Eligibility Record Date, subject to the overall
purchase limitation and exclusive of an increase in the shares issued pursuant
to an increase in the Estimated Price Range of up to 15%. See "-- Limitations on
Common Stock Purchases."

     In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of shares of Conversion Stock in excess of the
total number of such shares eligible for subscription, the shares of Conversion
Stock shall be allocated among the subscribing Supplemental Eligible Account
Holders so as to permit each subscribing Supplemental Eligible Account Holder,
to the extent possible, to purchase a number of shares sufficient to make his or
her total allocation of Conversion Stock equal to the lesser of 100 shares or
the number of shares subscribed for by the Supplemental Eligible Account Holder.
Any shares remaining after that allocation will be allocated among the
subscribing Supplemental Eligible Account Holders whose subscriptions remain
unsatisfied in the proportion that the amount of the Qualifying Deposit of each
Supplemental Eligible Account Holder whose subscription remains unsatisfied
bears to the total amount of the Qualifying Deposits of all Supplemental
Eligible Account Holders whose subscriptions remain unsatisfied. If the amount
so allocated exceeds the amount subscribed for by any one or more Supplemental
Eligible Account Holders, the excess shall be reallocated (one or more times as
necessary) among those Supplemental Eligible Account Holders whose subscriptions
are still not fully satisfied on the same principle until all available shares
have been allocated or all subscriptions satisfied.

     To ensure proper allocation of stock, each Supplemental Eligible Account
Holder must list on his subscription order form all accounts in which he has an
ownership interest.  Failure to list an account could result in less shares
being allocated than if all accounts had been disclosed.  The subscription
rights received by Eligible Account Holders will be applied in partial
satisfaction to the subscription rights to be received as a Supplemental
Eligible Account Holder.

     Priority 4: Other Members.  To the extent that there are sufficient shares
remaining after satisfaction of subscriptions by the Eligible Account Holders,
the ESOP and the Supplemental Eligible Account Holders, each Other Member will
receive, without payment therefor, fourth priority nontransferable subscription
rights to subscribe for Common Stock in the Subscription Offering up to the
greater of the amount permitted to be purchased in the Community Offering,
currently $250,000 of Common Stock, or one-tenth of one percent (.10%) of the
total offering of shares of Common Stock, subject to the overall purchase
limitation and exclusive of an increase in shares issued pursuant to an increase
in the Estimated Price Range of up to 15%.

     In the event that Other Members subscribe for a number of shares of
Conversion Stock which, when added to the shares of Conversion Stock subscribed
for by the Eligible Account Holders, the Employee Plans and the Supplemental
Eligible Account Holders is in excess of the total number of shares of
Conversion Stock being issued, the subscriptions of such Other Members will be
allocated among the subscribing Other Members so as to permit each subscribing
Other Member, to the extent possible, to purchase a number of shares sufficient
to make his or her total allocation of Conversion Stock equal to the lesser of
100 shares or the number of shares subscribed for by the Other Member.  Any
shares remaining after that allocation will be allocated among the subscribing
Other Members whose subscriptions remain unsatisfied pro rata in the same
proportion that the number of votes of a subscribing Other Member on the Voting
Record Date bears to the total votes on the Voting Record Date of all
subscribing Other Members whose subscriptions remain unsatisfied.  If the amount
so allocated exceeds the amount subscribed for by any one or more remaining
Other Members, the excess shall be reallocated (one or more times as necessary)
among those remaining Other Members whose subscriptions are still not fully
satisfied on the same principle until all available shares have been allocated
or all subscriptions satisfied.

     Expiration Date for the Subscription Offering.  The Subscription Offering
will expire on ________, 1998, unless extended for up to 45 days by the
Association or such additional periods with the approval of the OTS.
Subscription rights which have not been exercised prior to the Expiration Date
will become void.

     The Association will not execute orders until all shares of Common Stock
have been subscribed for or 

                                      101
otherwise sold. If all shares have not been subscribed for or sold within 45
days after the Expiration Date, unless such period is extended with the consent
of the OTS, all funds delivered to the Association pursuant to the Subscription
Offering will be returned promptly to the subscribers with interest and all
withdrawal authorizations will be canceled. If an extension beyond the 45 day
period following the Expiration Date is granted, the Association will notify
subscribers of the extension of time and of any rights of subscribers to modify
or rescind their subscriptions and have their funds returned promptly with
interest, and of the time period within which subscribers must affirmatively
notify the Association of their intention to confirm, modify, or rescind their
subscription. If an affirmative response to any resolicitation is not received
by the Company from a subscriber, such order will be rescinded and all
subscription funds will be promptly returned with interest. Such extensions may
not go beyond _______, 2000.

Community Offering

     To the extent that shares remain available for purchase after satisfaction
of all subscriptions of the Eligible Account Holders, the ESOP, the Supplemental
Eligible Account Holders and Other Members, the Association has determined to
offer shares pursuant to the Plan to certain members of the general public in a
Community Offering. In the event a Community Offering is held, a preference will
be given to natural persons residing in Trumbull and Mahoning counties, subject
to the right of the Company to accept or reject any such orders, in whole or in
part, in their sole discretion. Persons purchasing stock in the Community
Offering, together with associates of and persons acting in concert with such
persons, may purchase up to $250,000 of Common Stock subject to the maximum
purchase limitation and exclusive of shares issued pursuant to an increase in
the Estimated Price Range by up to 15%. See "--Limitations on Common Stock
Purchases." This amount may be increased to up to a maximum of 5% or decreased
to less than $250,000 at the sole discretion of the Company and the Association.
THE OPPORTUNITY TO SUBSCRIBE FOR SHARES OF COMMON STOCK IN THE COMMUNITY
OFFERING CATEGORY IS SUBJECT TO THE RIGHT OF THE ASSOCIATION AND THE COMPANY, IN
THEIR SOLE DISCRETION, TO ACCEPT OR REJECT ANY SUCH ORDERS IN WHOLE OR IN PART
EITHER AT THE TIME OF RECEIPT OF AN ORDER OR AS SOON AS PRACTICABLE FOLLOWING
THE EXPIRATION DATE.

     Subject to the foregoing, if the amount of stock remaining is insufficient
to fill the orders of subscribers after completion of the Subscription Offering,
such stock will be allocated first to each subscriber whose order is accepted by
the Association, in an amount equal to the lesser of 100 shares or the number of
shares subscribed for by each such subscriber, if possible.  Thereafter,
unallocated shares will be allocated among the subscribers whose order remains
unsatisfied on a 100 shares per order basis until all such orders have been
filled or the remaining shares have been allocated.

Syndicated Community Offering

     As a final step in the Conversion, the Plan provides that, if feasible, all
shares of Common Stock not purchased in the Subscription and Community
Offerings, if any, will be offered for sale to the general public in a
Syndicated Community Offering through a syndicate of registered broker-dealers
to be formed and managed by Webb acting as agent of the Company to assist the
Company and the Association in the sale of the Common Stock.  The Company and
the Association have the right to reject orders in whole or in part in their
sole discretion in the Syndicated Community Offering.  Neither Webb nor any
registered broker-dealer shall have any obligation to take or purchase any
shares of the Common Stock in the Syndicated Community Offering, however, Webb
has agreed to use its best efforts in the sale of shares in the Syndicated
Community Offering.

     The price at which Common Stock is sold in the Syndicated Community
Offering will be determined as described above under "-- Stock Pricing."
Subject to overall purchase limitations, no person, together with any associate
or group of persons acting in concert, will be permitted to subscribe in the
Syndicated Community Offering for more than $250,000 of the Common Stock,
exclusive of an increase in shares issued pursuant to an increase in the
Estimated Price Range of up to 15%; provided, however, that shares of Common
Stock purchased in the Community Offering by any persons, together with
associates of or persons acting in concert with such persons, will be aggregated
with purchases in the Syndicated Community Offering and be subject to an overall
maximum purchase limitation of 1.0% of the shares offered, exclusive of an
increase in shares issued pursuant to an increase in the Estimated Price Range
by up to 15%.

     Payments made in the form of a check, bank draft, money order or in cash
will earn interest at the 

                                      102
Association's passbook rate of interest from the date such payment is actually
received by the Association until completion or termination of the Conversion.

     In addition to the foregoing, if a syndicate of broker-dealers ("selected
dealers") is formed to assist in the Syndicated Community Offering, a purchaser
may pay for his shares with funds held by or deposited with a selected dealer.
If an order form is executed and forwarded to the selected dealer or if the
selected dealer is authorized to execute the order form on behalf of a
purchaser, the selected dealer is required to forward the order form and funds
to the Association for deposit in a segregated account on or before noon of the
business day following receipt of the order form or execution of the order form
by the selected dealer.  Alternatively, selected dealers may solicit indications
of interest from their customers to place orders for shares.  Such selected
dealers shall subsequently contact their customers who indicated an interest and
seek their confirmation as to their intent to purchase.  Those indicating an
intent to purchase shall execute order forms and forward them to their selected
dealer or authorize the selected dealer to execute such forms.  The selected
dealer will acknowledge receipt of the order to its customer in writing on the
following business day and will debit such customer's account on the third
business day after the customer has confirmed his intent to purchase (the "debit
date") and on or before noon of the next business day following the debit date
will send order forms and funds to the Association for deposit in a segregated
account.  Although purchasers' funds are not required to be in their accounts
with selected dealers until the debit date in the event that such alternative
procedure is employed once a confirmation of an intent to purchase has been
received by the selected dealer, the purchaser has no right to rescind his
order.

     Certificates representing shares of Common Stock purchased, together with
any refund due, will be mailed to purchasers at the address specified in the
order form, as soon as practicable following consummation of the sale of the
Common Stock.  Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.

     The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Company with
the approval of the OTS.  Such extensions may not be beyond _________, 2000.
See "-- Stock Pricing" above for a discussion of rights of subscribers, if any,
in the event an extension is granted.

Persons in Nonqualified States or Foreign Countries

     The Company and the Association will make reasonable efforts to comply with
the securities laws of all states in the United States in which persons entitled
to subscribe for stock pursuant to the Plan reside.  However, the Plan provides
that the Association and the Company are not required to offer stock in the
Subscription Offering to any person who resides in a foreign country or resides
in a state of the United States with respect to which both of the following
apply: (i) a small number of persons otherwise eligible to subscribe for shares
of Common Stock reside in such state; and (ii) the Company or the Association
determines that compliance with the securities laws of such state would be
impracticable for reasons of cost or otherwise, including but not limited to a
request that the Company and the Association or their officers, directors or
trustees register as a broker, dealer, salesman or selling agent, under the
securities laws of such state, or a request to register or otherwise qualify the
subscription rights or Common Stock for sale or submit any filing with respect
thereto in such state.  Where the number of persons eligible to subscribe for
shares in one state is small, the Association and the Company will base their
decision as to whether or not to offer the Common Stock in such state on a
number of factors, including the size of accounts held by account holders in the
state, the cost of registering or qualifying the shares or the need to register
the Company, its officers, directors or employees as brokers, dealers or
salesmen.

                                      103
Marketing and Underwriting Arrangements

     The Association and the Company have engaged Webb as a consultant and
financial advisor in connection with the offering of the Common Stock, and Webb
has agreed to use its best efforts to solicit subscriptions and purchase orders
for shares of Common Stock in the Offerings.  Based upon negotiations between
the Association and the Company concerning fee structure, Webb will receive a
management fee of $25,000 and a fee equal to 1.25% of the aggregate Purchase
Price of the shares sold in the Subscription and Community Offerings, up to the
maximum of the Estimated Price Range, excluding shares purchased by directors,
officers, employees and any immediate family member thereof, and any employee
benefit plan of the Company or Association, including the ESOP for which Webb
will not receive a fee.  If Common Stock remains available after the
satisfaction of all subscriptions in the Subscription Offering, Webb may enter
into an agreement with other NASD member firms ("Selected Brokers") to assist in
the sale of Common Stock in the Community Offering.  If Selected Brokers are
used, Webb will receive commission of no more than 5.5% of the aggregate
purchase price of the Common Stock sold in the Community Offering by the
Selected Brokers, and Webb will pay to the Selected Brokers a portion of the
5.5% commission pursuant to selected dealer agreements.  Fees to Webb and to any
other broker-dealer may be deemed to be underwriting fees, and Webb and such
broker-dealers may be deemed to be underwriters.  The Company and the
Association have agreed to indemnify Webb for reasonable costs and expenses in
connection with certain claims or liabilities, including certain liabilities
under the Securities Act.  Webb has received advances towards its fees.  Total
marketing fees to Webb are expected to be $875,000 and $1.2 million at the
minimum and the maximum of the Estimated Price Range, respectively.  See "Pro
Forma Data" for the assumptions used to arrive at these estimates.  The
Association will also reimburse Webb for its out-of-pocket expenses, provided
such expenses (excluding counsel's fees) do not exceed $15,000.

     Crowe, Chizek & Company, LLP will perform conversion agent services and
records management services for the Association in the Conversion and will
receive a fee for these services of $30,000, including out-of-pocket expenses.

     Directors and executive officers of the Company and Association may
participate in the solicitation of offers to purchase Common Stock.  Questions
of prospective purchasers will be directed to executive officers or registered
representatives.  Other employees of the Association may participate in the
Offering in ministerial capacities or providing clerical work in effecting a
sales transaction.  Such other employees have been instructed not to solicit
offers to purchase Common Stock or provide advice regarding the purchase of
Common Stock.  The Company will rely on Rule 3a4-1 under the Exchange Act, and
sales of Common Stock will be conducted within the requirements of Rule 3a4-1,
so as to permit officers, directors and employees to participate in the sale of
Common Stock.  No officer, director or employee of the Company or the
Association will be compensated in connection with his participation by the
payment of commissions or other remuneration based either directly or indirectly
on the transactions in the Common Stock.

Procedure for Purchasing Shares

     To ensure that each purchaser receives a prospectus at least 48 hours
before the Expiration Date in accordance with Rule 15c2-8 of the Exchange Act,
no prospectus will be mailed any later than five days prior to such date or hand
delivered any later than two days prior to such date.  Execution of the stock
order form and certification form will confirm receipt or delivery in accordance
with Rule 15c2-8.  Stock order and certification forms will only be distributed
with a prospectus.

     To purchase shares in the Offerings, an executed stock order form and
certification form with the required payment for each share subscribed for, or
with appropriate authorization for withdrawal from the Association's deposit
account (which may be given by completing the appropriate blanks in the stock
order form), must be physically received by the Association at any of its
offices by Noon, Eastern time, on the Expiration Date.  Stock order forms which
are not received by such time or are executed defectively or are received
without full payment (or appropriate withdrawal instructions) are not required
to be accepted.  In addition, the Association and Company are not obligated to
accept orders submitted on photocopied or facsimiled stock order forms and will
not accept stock order forms unaccompanied by an executed certification form.
Notwithstanding the foregoing, the Company shall have the right, in its sole
discretion, to permit institutional investors to submit irrevocable orders
together with a legally binding commitment for payment and to thereafter pay for
the shares of Common Stock for which they subscribe in the 

                                      104
Community Offering at any time prior to 48 hours before the completion of the
Conversion. The Company and the Association have the right to waive or permit
the correction of incomplete or improperly executed forms, but do not represent
that they will do so. Once received, an executed stock order form may not be
modified, amended or rescinded without the consent of the Association unless the
Conversion has not been completed within 45 days after the end of the
Subscription Offering, unless such period has been extended.

     IMPORTANT:  TO ENSURE THAT YOUR SUBSCRIPTION RIGHTS ARE PROPERLY
IDENTIFIED, YOU MUST LIST ALL QUALIFYING DEPOSIT ACCOUNTS AND LOANS, AS OF THE
RESPECTIVE QUALIFYING DATES ON THE STOCK ORDER FORM.  PERSONS WHO DO NOT LIST
ALL QUALIFYING DEPOSIT ACCOUNTS AND LOANS MAY BE SUBJECT TO REDUCTION OR
REJECTION OF THEIR SUBSCRIPTION.
 
     In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priorities, depositors as of the Eligibility Record Date (March 31,
1997) and/or the Supplemental Eligibility Record Date (_______, 1998) and/or the
Voting Record Date (________, 1998) must list all accounts on the stock order
form giving all names in each account and the account number.

     Payment for subscriptions may be made (i) in cash if delivered in person at
any branch office of the Association, (ii) by check, bank draft or money order,
or (iii) by authorization of withdrawal from deposit accounts maintained with
the Association.  No wire transfers will be accepted.  Interest will be paid on
payments made by cash, check, bank draft or money order at the Association's
passbook rate of interest from the date payment is received until the completion
or termination of the Conversion.  Orders for Common Stock submitted by
subscribers in the Subscription Offering which aggregate $50,000 or more must be
paid by official or certified check or by withdrawal authorization from a
deposit account of the Association.  If payment is made by authorization of
withdrawal from deposit accounts, the funds authorized to be withdrawn from a
deposit account will continue to accrue interest at the contractual rates until
completion or termination of the Conversion, but a hold will be placed on such
funds, thereby making them unavailable to the depositor until completion or
termination of the Conversion.

     If a subscriber authorizes the Association to withdraw the amount of the
purchase price from his deposit account, the Association will do so as of the
effective date of the Conversion.  The Association will waive any applicable
penalties for early withdrawal from certificate accounts.  If the remaining
balance in a certificate account is reduced below the applicable minimum balance
requirement at the time that the funds actually are transferred under the
authorization, the certificate will be canceled at the time of the withdrawal,
without penalty, and the remaining balance will earn interest at the
Association's passbook rate.

     If the ESOP subscribes for shares during the Subscription Offering, the
ESOP will not be required to pay for the shares subscribed for at the time it
subscribes, but rather, may pay for such shares of Common Stock subscribed for
at the Purchase Price upon consummation of the Subscription Offering, if all
shares are sold, or upon consummation of the Community Offering or Syndicated
Community Offering if shares remain to be sold in such offerings; provided, that
there is in force from the time of its subscription until such time, a loan
commitment from an unrelated financial institution or the Company to lend to the
ESOP, at such time, the aggregate Purchase Price of the shares for which it
subscribed.

     Owners of self-directed Individual Retirement Accounts ("IRAs") and
Qualified Plans may use the assets of such IRAs and Qualified Plans to purchase
shares of Common Stock in the Subscription Offering and/or Community Offering,
provided that such IRAs are not maintained at the Association.  Persons with
self-directed IRAs and Qualified Plans maintained at the Association must have
their accounts transferred to an unaffiliated institution or broker to purchase
shares of Common Stock in the Subscription Offering and/or Community Offering.
In addition, the provisions of ERISA and IRS regulations require that officers,
directors and ten percent shareholders who use self-directed IRA funds and
Qualified Plans to purchase shares of Common Stock in the Subscription Offering
and/or Community Offering, make such purchases for the exclusive benefit of the
IRAs and Qualified Plans.

     Certificates representing shares of Common Stock purchased will be mailed
to purchasers at the address specified in properly completed stock order forms,
as soon as practicable following consummation of the sale of all shares of
Common Stock.  Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.

                                      105
Restrictions on Transfer of Subscription Rights and Shares

     Prior to the completion of the Conversion, the OTS conversion regulations
prohibit any person with subscription rights, including the Eligible Account
Holders, the ESOP, the Supplemental Eligible Account Holders and Other Members
of the Association, from transferring or entering into any agreement or
understanding to transfer the legal or beneficial ownership of the subscription
rights issued under the Plan or the shares of Common Stock to be issued upon
their exercise.  Such rights may be exercised only by the person to whom they
are granted and only for his account.  Each person exercising such subscription
rights will be required to certify that he is purchasing shares solely for his
own account and that he has no agreement or understanding regarding the sale or
transfer of such shares.  The regulations also prohibit any person from offering
or making an announcement of an offer or intent to make an offer to purchase
such subscription rights or shares of Common Stock prior to the completion of
the Conversion.

     THE ASSOCIATION AND THE COMPANY WILL PURSUE ANY AND ALL LEGAL AND EQUITABLE
REMEDIES (INCLUDING FORFEITURE) IN THE EVENT THEY BECOME AWARE OF THE TRANSFER
OF SUBSCRIPTION RIGHTS AND WILL NOT HONOR ORDERS KNOWN BY THEM TO INVOLVE THE
TRANSFER OF SUCH RIGHTS.

Limitations on Common Stock Purchases

     The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased during the Conversion:

     (1)  No less than 25 shares;

     (2)  Each Eligible Account Holder may subscribe for and purchase in the
          Subscription Offering up to the greater of: 1) the amount permitted to
          be purchased in the Community Offering, currently $250,000 of Common
          Stock; 2) one-tenth of one percent (.10%) of the total offering of
          shares of Common Stock; or 3) fifteen times the product (rounded down
          to the next whole number) obtained by multiplying the total number of
          shares of Common Stock to be issued by a fraction of which the
          numerator is the amount of the Qualifying Deposit of the Eligible
          Account Holder and the denominator is the total amount of Qualifying
          Deposits of all Eligible Account Holders, in each case on the
          Eligibility Record Date subject to the overall maximum purchase
          limitation in (8) below and exclusive of an increase in the total
          number of shares issued due to an increase in the Estimated Price
          Range of up to 15%;

     (3)  The ESOP is permitted to purchase in the aggregate up to 10% of the
          shares of Common Stock issued in the Conversion, including shares
          issued to the Foundation, including shares issued in the event of an
          increase in the Estimated Price Range of 15%, and intends to purchase
          8% of the shares of Common Stock issued in the Conversion, including
          shares issued to the Foundation;

     (4)  Each Supplemental Eligible Account Holder may subscribe for and
          purchase in the Subscription Offering up to the greater of: 1) the
          amount permitted to be purchased in the Community Offering, currently
          $250,000 of Common Stock; 2) one-tenth of one percent (.10%) of the
          total offering of shares of Common Stock; or 3) fifteen times the
          product (rounded down to the next whole number) obtained by
          multiplying the total number of shares of Common Stock to be issued by
          a fraction of which the numerator is the amount of the Qualifying
          Deposit of the Supplemental Eligible Account Holder and the
          denominator is the total amount of Qualifying Deposits of all
          Supplemental Eligible Account Holders, in such case on the
          Supplemental Eligibility Record Date subject to the overall maximum
          purchase limitation in (8) below and exclusive of an increase in the
          total number of shares issued due to an increase in the Estimated
          Price Range of up to 15%;

     (5)  Each Other Member may subscribe for and purchase in the Subscription
          Offering up to the greater of: 1) the amount permitted to be purchased
          in the Community Offering, currently $250,000 of Common Stock; or 2)
          one-tenth of one percent (.10%) of the total offering of shares of
          Common Stock, in each case subject to the overall maximum purchase
          limitation in (8) below and exclusive of an increase in the total
          number of shares issued due to an increase in the Estimated Price
          Range 

                                      106
of up to 15%;

     (6)  Persons purchasing shares of Common Stock in the Community Offering,
          together with associates of and groups of persons acting in concert
          with such persons, may purchase in the Community Offering up to
          $250,000 of Common Stock, subject to the overall maximum purchase
          limitation in (8) below and exclusive of an increase in the total
          number of shares issued due to an increase in the Estimated Price
          Range of up to 15%;

     (7)  Persons purchasing shares of Common Stock in the Syndicated Community
          Offering, together with associates of and persons acting in concert
          with such persons, may purchase in the Syndicated Offering up to
          $250,000 of Common Stock, subject to the overall maximum purchase
          limitation in (8) below and exclusive of an increase in the total
          number of shares issued due to an increase in the Estimated Price
          Range of up to 15% and, provided further that shares of Common Stock
          purchased in the Community Offering by any persons, together with
          associates of or persons acting in concert with such persons, will be
          aggregated with purchases in the Syndicated Community Offering in
          applying the $250,000 purchase limitation;

     (8)  Except for the ESOP, the overall maximum number of shares of Common
          Stock subscribed for or purchased in all categories of the Conversion
          by any person, together with associates of or persons acting in
          concert with such persons, shall not exceed 1.0% of the shares of
          Common Stock offered in the Conversion and exclusive of an increase in
          the total number of shares issued due to an increase in the Estimated
          Price Range of up to 15%; and

     (9)  No more than 25% of the total number of shares offered for sale in the
          Conversion may be purchased by directors and officers of the
          Association and their associates in the aggregate, excluding purchases
          by the ESOP.

     Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members of
the Association, both the individual amount permitted to be subscribed for and
the overall maximum purchase limitation may be increased to up to a maximum of
5% at the sole discretion of the Company and the Association.  If such amount is
increased, subscribers for the maximum amount will be, and certain other large
subscribers in the sole discretion of the Association may be, given the
opportunity to increase their subscriptions up to the then applicable limit.  In
addition, the Boards of Directors of the Company and the Association may, in
their sole discretion, increase the maximum purchase limitation referred to
above up to 9.99%, provided that orders for shares exceeding 5% of the shares
being offering in the Subscription and Community Offerings shall not exceed, in
the aggregate, 10% of the shares being offered in the Subscription and Community
Offerings.  Requests to purchase additional shares of Common Stock under this
provision will be determined by the Boards of Directors and, if approved,
allocated on a pro rata basis giving priority in accordance with the priority
rights set forth herein.

     The overall maximum purchase limitation may not be reduced to less than 1%
but the individual amount permitted to be subscribed for may be reduced by the
Association to less than $250,000 subject to paragraphs (2), (4) and (5) above
without the further approval of members or resolicitation of subscribers.  An
individual Eligible Account Holder, Supplemental Eligible Account Holder or
Other Member may not purchase individually in the Subscription Offering the
overall maximum purchase limit of 1.0% of the shares offered, but may make such
purchase, together with associates of and persons acting in concert with such
person, by also purchasing in other available categories of the Conversion,
subject to availability of shares and the overall maximum purchase limit for
purchases in the Conversion.

     In the event of an increase in the total number of shares offered in the
Conversion due to an increase in the Estimated Price Range of up to 15% (the
"Adjusted Maximum"), the additional shares will be allocated in the following
order or priority in accordance with the Plan: (i) to fill the ESOP's
subscription of 8% of the amount of Common Stock issued in the Conversion,
including shares issued to the Foundation, at the Adjusted Maximum number of
shares; (ii) in the event that there is an oversubscription by Eligible Account
Holders, to fill unsatisfied subscriptions of Eligible Account Holders,
exclusive of the Adjusted Maximum; (iii) in the event that there is an
oversubscription by Supplemental Eligible Account Holders, to fill unsatisfied
subscriptions of Supplemental Eligible Account Holders, exclusive of the
Adjusted Maximum; (iv) in the event that there is an oversubscription by Other
Members, to fill 

                                      107
unsatisfied subscriptions of Other Members exclusive of the Adjusted Maximum;
and (v) to fill unsatisfied subscriptions in the Community Offering to the
extent possible, exclusive of the Adjusted Maximum, with preference to
institutional investors.

     The term "associate" of a person is defined to mean: (i) any corporation,
partnership (other than the Association or a majority-owned subsidiary of the
Association) of which such person is an officer, partner or 10% stockholder;
(ii) any trust or other estate in which such person has a substantial beneficial
interest or serves as a trustee or in a similar fiduciary capacity; provided,
however, such term shall not include any employee stock benefit plan of the
Association in which such person has a substantial beneficial interest or serves
as a trustee or in a similar fiduciary capacity; and (iii) any relative or
spouse of such person, or any relative of such spouse, who either has the same
home as such person or who is a director or officer of the Association.
Directors are not treated as associates of each other solely because of their
Board membership.  For a further discussion of limitations on purchases of a
converting institution's stock at the time of Conversion and subsequent to
Conversion, see "Management of the Association -- Subscriptions by Executive
Officers and Directors," "-- Certain Restrictions on Purchase or Transfer of
Shares After Conversion" and "Restrictions on Acquisition of the Company and the
Association."

Liquidation Rights

     In the unlikely event of a complete liquidation of the Association in its
present mutual form, each depositor would receive his pro rata share of any
assets of the Association remaining after payment of claims of all creditors
(including the claims of all depositors to the withdrawal value of their
accounts).  Each depositor's pro rata share of such remaining assets would be in
the same proportion as the value of his deposit account was to the total value
of all deposit accounts in the Association at the time of liquidation.  After
the Conversion, each depositor, in the event of a complete liquidation, would
have a claim as a creditor of the same general priority as the claims of all
other general creditors of the Association.  However, except as described below,
his claim would be solely in the amount of the balance in his deposit account
plus accrued interest.  He would not have an interest in the value or assets of
the Association above that amount.

     The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the surplus and reserves of the Association as of the date of its latest balance
sheet contained in the final Prospectus used in connection with the Conversion.
Each Eligible Account Holder and Supplemental Eligible Account Holder, if he
were to continue to maintain his deposit account at the Association, would be
entitled, on a complete liquidation of the Association after the Conversion, to
an interest in the liquidation account prior to any payment to the stockholders
of the Association.  Each Eligible Account Holder and Supplemental Eligible
Account Holder would have an initial interest in such liquidation account for
each deposit account, including regular accounts, transaction accounts such as
NOW accounts, money market deposit accounts, and certificates of deposit, with a
balance of $50 or more held in the Association on March 31, 1997 and ________,
1998, respectively.  Each Eligible Account Holder and Supplemental Eligible
Account Holder will have a pro rata interest in the total liquidation account
based on the proportion that the balance of his Qualifying Deposits on the
Eligibility Record Date or Supplemental Eligibility Record Date, respectively,
bore to the total amount of all Qualifying Deposits of all Eligible Account
Holders and Supplemental Eligible Account Holders in the Association.  For
deposit accounts in existence at both dates separate subaccounts shall be
determined on the basis of the Qualifying Deposits in such deposit accounts on
such respective record dates.

     If, however, on any annual closing date subsequent to the Eligibility
Record Date or Supplemental Eligibility Record Date, the amount of the
Qualifying Deposit of an Eligible Account Holder or Supplemental Eligible
Account Holder is less than the amount of the Qualifying Deposit of such
Eligible Account Holder or Supplemental Eligible Account Holder as of the
Eligibility Record Date or Supplemental Eligibility Record Date, respectively,
or less than the amount of the Qualifying Deposits as of the previous annual
closing date, then the interest in the liquidation account relating to such
Qualifying Deposit would be reduced from time to time by the proportion of any
such reduction, and such interest will cease to exist if such Qualifying Deposit
accounts are closed.  In addition, no interest in the liquidation account would
ever be increased despite any subsequent increase in the related Qualifying
Deposit.  Any assets remaining after the above liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders are satisfied would be
distributed to the Company as the sole stockholder of the Association.

                                      108
Tax Aspects

     Consummation of the Conversion is expressly conditioned upon the receipt by
the Association of either a favorable ruling from the IRS or an opinion with
respect to federal income taxation, and an opinion with respect to Ohio income
taxation, to the effect that the Conversion will not be a taxable transaction to
the Company, the Association, Eligible Account Holders, or Supplemental Eligible
Account Holders except as noted below.

     No private ruling will be received from the IRS with respect to the
proposed Conversion.  Instead, the Association has received an opinion of its
counsel, Patton Boggs LLP, to the effect that for federal income tax purposes,
among other matters: (i) the Association's change in form from mutual to stock
ownership will constitute a reorganization under section 368(a)(1)(F) of the
Code and neither the Association nor the Company will recognize any gain or loss
as a result of the Conversion; (ii) no gain or loss will be recognized to the
Association or the Company upon the purchase of the Association's capital stock
by the Company or to the Company upon the purchase of its Common Stock in the
Conversion; (iii) no gain or loss will be recognized by Eligible Account Holders
or Supplemental Eligible Account Holders upon the issuance to them of Deposit
Accounts in the Association in its stock form plus their interests in the
liquidation account in exchange for their deposit accounts in the Association;
(iv) the tax basis of the depositors' accounts in the Association immediately
after the Conversion will be the same as the basis of their deposit accounts
immediately prior to the Conversion; (v) the tax basis of each Eligible Account
Holder's and Supplemental Eligible Account Holder's interest in the liquidation
account will be zero; (vi) no gain or loss will be recognized by Eligible
Account Holders or Supplemental Eligible Account Holders upon the distribution
to them of nontransferable subscription rights to purchase shares of the Common
Stock, provided that the amount to be paid for the Common Stock is equal to the
fair market value of such stock; and (vii) the tax basis to the stockholders of
the Common Stock of the Company purchased in the Conversion will be the amount
paid therefor and the holding period for the shares of Common Stock purchased by
such persons will begin on the date on which their subscription rights are
exercised.  Crowe, Chizek and Company LLP has opined that the Conversion will
not be a taxable transaction to the Company, the Association, Eligible Account
Holders or Supplemental Eligible Account Holders for Ohio income tax purposes.
Certain portions of both the federal and the state income tax opinions are based
upon the assumption that the subscription rights issued in connection with the
Conversion will have no value.

     Unlike private rulings, an opinion of counsel or an opinion of an
independent accountant is not binding on the IRS and the IRS could disagree with
conclusions reached therein.  In the event of such disagreement, there can be no
assurance that the IRS would not prevail in a judicial or administrative
proceeding.

     Keller has issued an opinion stating that, pursuant to its valuation,
Keller is of the opinion that the subscription rights do not have any value,
based on the fact that such rights are acquired by the recipients without cost,
are nontransferable and of short duration, and afford the recipients the right
only to purchase the Common Stock at a price equal to its estimated fair market
value, which will be the same price as the Purchase Price for the shares of
Common Stock sold in the Community Offering.  Such valuation is not binding on
the IRS.  If the subscription rights granted to Eligible Account Holders or
Supplemental Eligible Account Holders are deemed to have an ascertainable value,
receipt of such rights could be taxable to those Eligible Account Holders or
Supplemental Eligible Account Holders who receive and/or exercise the
subscription rights in an amount equal to such value and the Association could
recognize gain on such distribution.  Eligible Account Holders and Supplemental
Eligible Account Holders are encouraged to consult with their own tax advisor as
to the tax consequences in the event that such subscription rights are deemed to
have an ascertainable value.

Interpretation and Amendment of the Plan of Conversion

     To the extent permitted by law, all interpretations of the Plan by the
Board of Directors of the Association will be final.  The Plan provides that the
Association's Board of Directors shall have the discretion to interpret and
apply the provisions of the Plan to particular circumstances and that such
interpretation or application shall be final.  This includes any and all
interpretations, applications and determinations made by the Board of Directors
on the basis of such information and assistance as was then reasonably available
for such purpose.

     The Plan provides that, if deemed necessary or desirable by the Board of
Directors, the Plan may be substantively amended at any time prior to
solicitation of proxies from members to vote on the Plan by a two-thirds 

                                      109
vote of the Association's Board of Directors. After submission of the proxy
materials to the members, the Plan may be amended by a two-thirds vote of the
Association's Board of Directors at any time prior to the Special Meeting with
the concurrence of the OTS. The Plan may be amended at any time after the
approval of members with the approval of the OTS and no further approval of the
members will be necessary unless otherwise required by the OTS. By adoption of
the Plan, the Association's members will be deemed to have authorized amendment
of the Plan under the circumstances described above.

     The establishment of the Foundation will be considered as a separate matter
from approval of the Plan of Conversion.  If the Association's members approve
the Plan of Conversion, but not the creation of the Foundation, the Association
intends to complete the Conversion without the Foundation.  Failure to approve
the establishment of the Foundation may materially increase the pro forma market
value of the Common Stock since the Valuation Range, as set forth herein, takes
into account the dilutive impact of the issuance of shares to the Foundation.
In such an event, the Association may establish a new Estimated Price Range and
commence a resolicitation of subscribers.  In the event of a resolicitation,
unless an affirmative response is received within a specified period of time,
all funds will be promptly returned to investors, as described elsewhere herein.
See "-- Stock Pricing."

Certain Restrictions on Purchase or Transfer of Shares after Conversion

     All shares of Common Stock purchased in connection with the Conversion by a
director or an officer of the Association will be subject to a restriction that
the shares not be sold for a period of one year following the Conversion, except
in the event of the death of such director or officer.  Each certificate for
restricted shares will bear a legend giving notice of this restriction on
transfer, and instructions will be issued to the effect that any transfer within
such time period of any certificate or record ownership of such shares other
than as provided above is a violation of the restriction.  Any shares of Common
Stock issued at a later date as a stock dividend, stock split, or otherwise,
with respect to such restricted stock will be subject to the same restrictions.
The directors and officers of the Association will also be subject to the
insider trading rules promulgated pursuant to the Exchange Act and any other
applicable requirements of the federal securities laws.

     Purchases of outstanding shares of Common Stock of the Company by
directors, officers (or any person who was an officer or director of the
Association after adoption of the Plan of Conversion) and their associates
during the three-year period following Conversion may be made only through a
broker or dealer registered with the SEC, except with the prior written approval
of the OTS.  This restriction does not apply, however, to negotiated
transactions involving more than 1.0% of the Company's outstanding Common Stock
or to the purchase of stock pursuant to any stock option plan to be established
after the Conversion.

     Unless approved by the OTS, the Company, pursuant to OTS regulations, will
be prohibited from repurchasing any shares of the Common Stock for three years
after the Conversion except: (i) for an offer to all stockholders on a pro rata
basis; or (ii) for the repurchase of qualifying shares of a director.
Notwithstanding the foregoing, beginning one year following completion of the
Conversion the Company may repurchase its Common Stock so long as: (i) the
repurchases within the following two years are part of an open-market program
not involving greater than 5% of its outstanding capital stock during a twelve-
month period; (ii) the repurchases do not cause the Company to become
undercapitalized; and (iii) the Company provides to the Regional Director of the
OTS no later than 10 days prior to the commencement of a repurchase program
written notice containing a full description of the program to be undertaken and
such program is not disapproved by the Regional Director.  In addition, under
current OTS policies, repurchases may be allowed in the first year following
Conversion and in amounts greater than 5% in the second and third years
following Conversion, provided there are valid and compelling business reasons
for such repurchases and the OTS approves such repurchases.

         RESTRICTIONS ON ACQUISITION OF THE COMPANY AND THE ASSOCIATION
                                        
General

     The Association's Plan of Conversion provides for the Conversion of the
Association from the mutual to the stock form of organization and, in connection
therewith, a new Federal Stock Charter and Bylaws to be adopted by 

                                      110
members of the Association. The Plan also provides for the concurrent formation
of a holding company, which form of organization may or may not be utilized at
the option of the Board of Directors of the Association. See "The Conversion --
General." In the event that the holding company form of organization is
utilized, as described below, certain provisions in the Company's Certificate of
Incorporation and Bylaws and in its management remuneration entered into in
connection with the Conversion, together with provisions of Delaware corporate
law, may have anti-takeover effects. In the event that the holding company form
of organization is not utilized, the Association's Stock Charter and Bylaws and
management remuneration entered into in connection with the Conversion may have
anti-takeover effects as described below. In addition, regulatory restrictions
may make it difficult for persons or companies to acquire control of either the
Company or the Association.

Restrictions in the Company's Certificate of Incorporation and Bylaws

     A number of provisions of the Company's Certificate of Incorporation and
Bylaws deal with matters of corporate governance and certain rights of
stockholders.  The following discussion is a general summary of the material
provisions of the Company's Certificate of Incorporation and Bylaws and certain
other statutory and regulatory provisions relating to stock ownership and
transfers, the Board of Directors and business combinations, which might be
deemed to have a potential "anti-takeover" effect.  These provisions may have
the effect of discouraging a future takeover attempt which is not approved by
the Board of Directors but which individual Company stockholders may deem to be
in their best interests or in which shareholders may receive a substantial
premium for their shares over then current market prices.  As a result,
stockholders who might desire to participate in such a transaction may not have
an opportunity to do so.  Such provisions will also render the removal of the
current Board of Directors or management of the Company more difficult.  The
following description of certain of the provisions of the Certificate of
Incorporation and Bylaws of the Company is necessarily general and reference
should be made in each case to such Certificate of Incorporation and Bylaws,
which are incorporated herein by reference.  See "Additional Information" as to
how to obtain a copy of these documents.

     Limitation on Voting Rights.  The Certificate of Incorporation of the
Company provides that in no event shall any record owner of any outstanding
Common Stock which is beneficially owned, directly or indirectly, by a person
who beneficially owns in excess of 10% of the then outstanding shares of Common
Stock (the "Limit") be entitled or permitted to any vote in respect of the
shares beneficially owned by such person in excess of the Limit.  Beneficial
ownership is determined pursuant to Rule 13d-3 of the General Rules and
Regulations promulgated pursuant to the Exchange Act, and includes shares
beneficially owned by such person or any of his affiliates (as defined in the
Certificate of Incorporation), shares which such person or his affiliates have
the right to acquire upon the exercise of conversion rights or options and
shares as to which such person and his affiliates have or share investment or
voting power, but shall not include shares beneficially owned by the ESOP or
directors, officers and employees of the Association or Company or shares that
are subject to a revocable proxy and that are not otherwise beneficially owned,
or deemed by the Company to be beneficially owned, by such person and his
affiliates.  The Certificate of Incorporation of the Company further provides
that this provision limiting voting rights may only be amended upon the vote of
80% of the outstanding shares of voting stock (after giving effect to the
limitation on voting rights).

     Board of Directors.  The Board of Directors of the Company is divided into
three classes, each of which shall contain approximately one-third of the whole
number of members of the Board.  Each class shall serve a staggered term, with
approximately one-third of the total number of directors being elected each
year.  The Company's Certificate of Incorporation and Bylaws provide that the
size of the Board shall be determined by a majority of the directors, but in the
absence of such determination shall be eight.  The Certificate of Incorporation
and the Bylaws provide that any vacancy occurring in the Board, including a
vacancy created by an increase in the number of directors or resulting from
death, resignation, retirement, disqualification, removal from office or other
cause, shall be filled for the remainder of the unexpired term exclusively by a
majority vote of the directors then in office.  The classified Board is intended
to provide for continuity of the Board of Directors and to make it more
difficult and time consuming for a stockholder group to fully use its voting
power to gain control of the Board of Directors without the consent of the
incumbent Board of Directors of the Company.  The Certificate of Incorporation
of the Company provides that a director may be removed from the Board of
Directors prior to the expiration of his term only for cause, upon the vote of
80% of the outstanding shares of voting stock.

     In the absence of these provisions, the vote of the holders of a majority
of the shares could remove the entire 

                                      111
Board, with or without cause, and replace it with persons of such holders'
choice.

     Cumulative Voting, Special Meetings And Action by Written Consent.  The
Certificate of Incorporation does not provide for cumulative voting for any
purpose.  Moreover, special meetings of stockholders of the Company may be
called only by the Board of Directors of the Company.  The Certificate of
Incorporation also provides that any action required or permitted to be taken by
the stockholders of the Company may be taken only at an annual or special
meeting and prohibits stockholder action by written consent in lieu of a
meeting.

     Authorized Shares.  The Certificate of Incorporation authorizes the
issuance of 33,000,000 shares of Common Stock and 3,000,000 shares of Preferred
Stock.  The shares of Common Stock and Preferred Stock were authorized in an
amount greater than that to be issued in the Conversion to provide the Company's
Board of Directors with as much flexibility as possible to effect, among other
transactions, financings, acquisitions, stock dividends, stock splits and
employee Stock Options.  However, these additional authorized shares may also be
used by the Board of Directors consistent with its fiduciary duty to deter
future attempts to gain control of the Company.  The Board of Directors also has
sole authority to determine the terms of any one or more series of Preferred
Stock, including voting rights, conversion rates, and liquidation preferences.
As a result of the ability to fix voting rights for a series of Preferred Stock,
the Board has the power, to the extent consistent with its fiduciary duty, to
issue a series of Preferred Stock to persons friendly to management in order to
attempt to block a post-tender offer merger or other transaction by which a
third party seeks control, and thereby assist management to retain its position.
The Company's Board of Directors currently has no plans for the issuance of
additional shares, other than the issuance of additional shares pursuant to the
terms of the Stock Program and upon exercise of Stock Options to be issued
pursuant to the terms of the Stock Option Plan or Master Stock-Based Benefit
Plan, all of which are to be established and presented to stockholders at the
first annual meeting after the Conversion.

     Stockholder Vote Required to Approve Business Combinations With Interested
Stockholders.   The Certificate of Incorporation requires the approval of the
holders of at least 80% of the Company's outstanding shares of voting stock to
approve certain "Business Combinations," as defined therein, and related
transactions.  Under Delaware law, absent this provision, Business Combinations,
including mergers, consolidations and sales of all or substantially all of the
assets of a corporation must, subject to certain exceptions, be approved by the
vote of the holders of only a majority of the outstanding shares of Common Stock
of the Company and any other affected class of stock.  Under the Certificate of
Incorporation, at least 80% approval of shareholders is required in connection
with any transaction involving an Interested Stockholder (as defined below)
except (i) in cases where the proposed transaction has been approved in advance
by a majority of those members of the Company's Board of Directors who are
unaffiliated with the Interested Stockholder and were directors prior to the
time when the Interested Stockholder became an Interested Stockholder or (ii) if
the proposed transaction meets certain conditions set forth therein which are
designed to afford the shareholders a fair price in consideration for their
shares in which case, if a stockholder vote is required, approval of only a
majority of the outstanding shares of voting stock would be sufficient.  The
term "Interested Stockholder" is defined to include any individual, corporation,
partnership or other entity (other than the Company or its subsidiaries) which
owns beneficially or controls, directly or indirectly, 10% or more of the voting
power of the outstanding shares of voting stock of the Company.  This provision
of the Certificate of Incorporation applies to any "Business Combination," which
is defined to include (i) any merger or consolidation of the Company or any of
its subsidiaries with or into any Interested Stockholder or Affiliate (as
defined in the Certificate of Incorporation) of an Interested Stockholder; (ii)
any sale, lease, exchange, mortgage, pledge, transfer, or other disposition to
or with any Interested Stockholder or Affiliate of 25% or more of the assets of
the Company or combined assets of the Company and its subsidiary; (iii) the
issuance or transfer to any Interested Stockholder or its Affiliate by the
Company (or any subsidiary) of any securities the value of which equals or
exceeds 25% of the fair market value of the Common Stock of the Company in
exchange for any assets, cash or securities; (iv) the adoption of any plan for
the liquidation or dissolution of the Company proposed by or on behalf of any
Interested Stockholder or Affiliate thereof; and (v) any reclassification of
securities, recapitalization, merger or consolidation of the Company which has
the effect of increasing the proportionate share of Common Stock or any class of
equity or convertible securities of the Company owned directly or indirectly by
an Interested Stockholder or Affiliate thereof.  The directors and executive
officers of the Association are purchasing in the aggregate approximately 3.4%
of the shares of the Common Stock to be issued in the Conversion, including
shares to be issued to the Foundation, at the maximum of the Estimated Price
Range.  In addition, the ESOP intends to purchase 8% of the Common Stock issued
in connection with the Conversion, including shares issued to the Foundation.
Additionally, if at a meeting of stockholders following the Conversion
stockholder 

                                      112
approval of the proposed Stock-Based Incentive Plan is received, the Company
expects to acquire 4% of the Common Stock issued in connection with the
Conversion, including shares issued to the Foundation, on behalf of the Stock-
Based Incentive Plan and expects to issue options to purchase up to 10% of the
Common Stock issued in connection with the Conversion, including shares issued
to the Foundation, under the Stock-Based Incentive Plan to directors and
executive officers. As a result, at the maximum of the Estimated Price Range,
assuming the Stock-Based Incentive Plan is approved by Stockholders, directors,
executive officers and employees have the potential to control the voting of
approximately 23.1% of the Company's Common Stock, if the shares held by the
ESOP are aggregated with the shares purchased in the Conversion by management
and acquired for award under the Stock-Based Incentive Plan, thereby enabling
them to prevent the approval of the transactions requiring the approval of at
least 80% of the Company's outstanding shares of voting stock described
hereinabove.

     Evaluation of Offers.  The Certificate of Incorporation of the Company
further provides that the Board of Directors of the Company, when evaluating any
offer of another "Person" (as defined therein) to (i) make a tender or exchange
offer for any equity security of the Company, (ii) merge or consolidate the
Company with another corporation or entity, or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the Company,
may, in connection with the exercise of its judgment in determining what is in
the best interest of the Company, the Association and the stockholders of the
Company, give due consideration to all relevant factors, including, without
limitation, the social and economic effects of acceptance of such offer on the
Company's customers and the Association's present and future account holders,
borrowers and employees; on the communities in which the Company and the
Association operate or are located; and on the ability of the Company to fulfill
its corporate objectives as a savings and loan holding company and on the
ability of the Association to fulfill the objectives of a federally-chartered
stock savings bank under applicable statutes and regulations.  By having these
standards in the Certificate of Incorporation of the Company, the Board of
Directors may be in a stronger position to oppose such a transaction if the
Board concludes that the transaction would not be in the best interest of the
Company, even if the price offered is significantly greater than the then market
price of any equity security of the Company.

     Amendment of Certificate of Incorporation and Bylaws.  Amendments to the
Company's Certificate of Incorporation must be approved by a majority vote of
its Board of Directors and also by a majority of the outstanding shares of its
voting stock; provided, however, that an affirmative vote of at least 80% of the
outstanding voting stock entitled to vote (after giving effect to the provision
limiting voting rights) is required to amend or repeal certain provisions of the
Certificate of Incorporation, including the provision limiting voting rights,
the provisions relating to approval of certain business combinations, calling
special meetings, the number and classification of directors, director and
officer indemnification by the Company and amendment of the Company's Bylaws and
Certificate of Incorporation.  The Company's Bylaws may be amended by its Board
of Directors, or by a vote of 80% of the total votes eligible to be voted at a
duly constituted meeting of stockholders.

     Certain Bylaw Provisions.  The Bylaws of the Company also require a
stockholder who intends to nominate a candidate for election to the Board of
Directors, or to raise new business at a stockholder meeting to give at least 90
days advance notice to the Secretary of the Company.  The notice provision
requires a stockholder who desires to raise new business to provide certain
information to the Company concerning the nature of the new business, the
stockholder and the stockholder's interest in the business matter.  Similarly, a
stockholder wishing to nominate any person for election as a director must
provide the Company with certain information concerning the nominee and the
proposing stockholder.

Anti-takeover Effects of the Company's Certificate of Incorporation and Bylaws
and Management Remuneration Adopted in Conversion

     The provisions described above are intended to reduce the Company's
vulnerability to takeover attempts and certain other transactions which have not
been negotiated with and approved by members of its Board of Directors.  The
provisions of the Employment Agreements, CIC Agreements, Employee Severance
Compensation Plan, Stock Program, Stock Option Plan or Master Stock-Based
Benefit Plan to be established may also discourage takeover attempts by
increasing the costs to be incurred by the Association and the Company in the
event of a takeover.  See "Management of the Association -- Employment
Agreements."

     The Company's Board of Directors believes that the provisions of the
Certificate of Incorporation, Bylaws 

                                      113
and management remuneration plans to be established are in the best interest of
the Company and its stockholders. An unsolicited non-negotiated proposal can
seriously disrupt the business and management of a corporation and cause it
great expense. Accordingly, the Board of Directors believes it is in the best
interests of the Company and its stockholders to encourage potential acquirors
to negotiate directly with management and that these provisions will encourage
such negotiations and discourage non-negotiated takeover attempts. It is also
the Board of Directors' view that these provisions should not discourage persons
from proposing a merger or other transaction at a price that reflects the true
value of the Company and that otherwise is in the best interest of all
stockholders.

Delaware Corporate Law

     The state of Delaware has a statute designed to provide Delaware
corporations with additional protection against hostile takeovers.  The takeover
statute, which is codified in Section 203 of the Delaware General Corporate Law
("Section 203"), is intended to discourage certain takeover practices by
impeding the ability of a hostile acquiror to engage in certain transactions
with the target company.

     In general, Section 203 provides that a "Person" (as defined therein) who
owns 15% or more of the outstanding voting stock of a Delaware corporation (an
"Interested Stockholder") may not consummate a merger or other business
combination transaction with such corporation at any time during the three-year
period following the date such Person became an Interested Stockholder.  The
term "business combination" is defined broadly to cover a wide range of
corporate transactions including mergers, sales of assets, issuances of stock,
transactions with subsidiaries and the receipt of disproportionate financial
benefits.

     The statute exempts the following transactions from the requirements of
Section 203: (i) any business combination if, prior to the date a person became
an Interested Stockholder, the Board of Directors approved either the business
combination or the transaction which resulted in the stockholder becoming an
Interested Stockholder; (ii) any business combination involving a person who
acquired at least 85% of the outstanding voting stock in the transaction in
which he became an Interested Stockholder, with the number of shares outstanding
calculated without regard to those shares owned by the corporation's directors
who are also officers and by certain employee stock plans; (iii) any business
combination with an Interested Stockholder that is approved by the Board of
Directors and by a two-thirds vote of the outstanding voting stock not owned by
the Interested Stockholder; and (iv) certain business combinations that are
proposed after the corporation had received other acquisition proposals and
which are approved or not opposed by a majority of certain continuing members of
the Board of Directors.  A corporation may exempt itself from the requirements
of the statute by adopting an amendment to its Certificate of Incorporation or
Bylaws electing not to be governed by Section 203.  At the present time, the
Board of Directors does not intend to propose any such amendment.

Restrictions in the Association's New Charter and Bylaws

     Although the Board of Directors of the Association is not aware of any
effort that might be made to obtain control of the Association after the
Conversion, the Board of Directors believes that it is appropriate to adopt
certain provisions permitted by federal regulations to protect the interests of
the converted Association and its stockholders from any hostile takeover.  Such
provisions may, indirectly, inhibit a change in control of the Company, as the
Association's sole stockholder.  See "Risk Factors -- Certain Anti-Takeover
Provisions."

     The Association's Federal Stock Charter will contain a provision whereby
the acquisition of or offer to acquire beneficial ownership of more than 10% of
the issued and outstanding shares of any class of equity securities of the
Association by any person (i.e., any individual, corporation, group acting in
concert, trust, partnership, joint stock company or similar organization),
either directly or through an affiliate thereof, will be prohibited for a period
of five years following the date of completion of the Conversion.  Any stock in
excess of 10% acquired in violation of the Federal Stock Charter provision will
not be counted as outstanding for voting purposes.  This limitation shall not
apply to any transaction in which the Association forms a holding company
without a change in the respective beneficial ownership interests of its
stockholders other than pursuant to the exercise of any dissenter or appraisal
rights.  In the event that holders of revocable proxies for more than 10% of the
shares of the Common Stock of the Company seek, among other things, to elect
one-third or more of the Company's Board of Directors, to cause the Company's
stockholders to approve the acquisition or corporate reorganization of the
Company or to exert a continuing influence 

                                      114
on a material aspect of the business operations of the Company, which actions
could indirectly result in a change in control of the Association, the Board of
Directors of the Association will be able to assert this provision of the
Association's Federal Stock Charter against such holders. Although the Board of
Directors of the Association is not currently able to determine when and if it
would assert this provision of the Association's Federal Stock Charter, the
Board of Directors, in exercising its fiduciary duty, may assert this provision
if it were deemed to be in the best interests of the Association, the Company
and its stockholders. It is unclear, however, whether this provision, if
asserted, would be successful against such persons in a proxy contest which
could result in a change in control of the Association indirectly through a
change in control of the Company. Finally, for five years, stockholders will not
be permitted to call a special meeting of stockholders relating to a change of
control of the Association or a charter amendment or to cumulate their votes in
the election of directors. Furthermore, the staggered terms of the Board of
Directors could have an anti-takeover effect by making it more difficult for a
majority of shares to force an immediate change in the Board of Directors since
only one-third of the Board is elected each year. The purpose of these
provisions is to assure stability and continuity of management of the
Association in the years immediately following the Conversion.

     Although the Association has no arrangements, understandings or plans at
the present time, except as described in "Description of Capital Stock of the
Company -- Preferred Stock," for the issuance or use of the shares of
undesignated Preferred Stock proposed to be authorized, the Board of Directors
believes that the availability of such shares will provide the Association with
increased flexibility in structuring possible future financings and acquisitions
and in meeting other corporate needs which may arise.  In the event of a
proposed merger, tender offer or other attempt to gain control of the
Association of which management does not approve, it might be possible for the
Board of Directors to authorize the issuance of one or more series of Preferred
Stock with rights and preferences which could impede the completion of such a
transaction.  An effect of the possible issuance of such Preferred Stock,
therefore, may be to deter a future takeover attempt.  The Board of Directors
does not intend to issue any Preferred Stock except on terms which the Board
deems to be in the best interest of the Association and its then existing
stockholders.

Regulatory Restrictions

     The Plan of Conversion prohibits any person, prior to the completion of the
Conversion, from transferring, or from entering into any agreement or
understanding to transfer, to the account of another, legal or beneficial
ownership of the subscription rights issued under the Plan or the Common Stock
to be issued upon their exercise.  The Plan also prohibits any person, prior to
the completion of the Conversion, from offering, or making an announcement of an
offer or intent to make an offer, to purchase such subscription rights or Common
Stock.

     For three years following the Conversion, OTS regulations prohibit any
person from acquiring or making an offer to acquire more than 10% of the stock
of any converted savings institution, except for: (i) offers that, if
consummated, would not result in the acquisition by such person during the
preceding 12-month period of more than 1% of such stock; (ii) offers for up to
25% in the aggregate by the ESOP or other tax qualified plans of the Association
or the Company; or (iii) offers which are not opposed by the Board of Directors
of the Association and which receive the prior approval of the OTS.  Such
prohibition is also applicable to the acquisition of the stock of the Company.
Such acquisition may be disapproved by the OTS if it is found, among other
things, that the proposed acquisition (a) would frustrate the purposes of the
provisions of the regulations regarding conversions; (b) would be manipulative
or deceptive; (c) would subvert the fairness of the conversion; (d) would be
likely to result in injury to the savings institution; (e) would not be
consistent with economical home financing; (f) would otherwise violate law or
regulation; or (g) would not contribute to the prudent deployment of the savings
institution's conversion proceeds.  In the event that any person, directly or
indirectly, violates this regulation, the securities beneficially owned by such
person in excess of 10% shall not be counted as shares entitled to vote and
shall not be voted by any person or counted as voting shares in connection with
any matters submitted to a vote of stockholders.  The definition of beneficial
ownership for this regulation extends to persons holding revocable or
irrevocable proxies for the Company's stock under circumstances that give rise
to a conclusive or rebuttable determination of control under the OTS
regulations.

     In addition, any proposal to acquire 10% of any class of equity security of
the Company generally would be subject to approval by the OTS under the Change
in Bank Control Act. The OTS requires all persons seeking control of a savings
institution and, therefore, indirectly its holding company, to obtain regulatory
approval prior to offering to obtain control. Federal law generally provides
that no "person," acting directly or indirectly or through or

                                      115
in concert with one or more other persons, may acquire directly or indirectly
"control," as that term is defined in OTS regulations, of a federally-insured
savings institution without giving at least 60 days' written notice to the OTS
and providing the OTS an opportunity to disapprove the proposed acquisition.
Such acquisitions of control may be disapproved if it is determined, among other
things, that (i) the acquisition would substantially lessen competition; (ii)
the financial condition of the acquiring person might jeopardize the financial
stability of the savings institution or prejudice the interests of its
depositors; or (iii) the competency, experience or integrity of the acquiring
person or the proposed management personnel indicates that it would not be in
the interest of the depositors or the public to permit the acquisition of
control by such person. Such change in control restrictions on the acquisition
of holding company stock are not limited to three years after conversion but
will apply for as long as the regulations are in effect. Persons holding
revocable or irrevocable proxies may be deemed to be beneficial owners of such
securities under OTS regulations and therefore prohibited from voting all or the
portion of such proxies in excess of the 10% aggregate beneficial ownership
limit. Such regulatory restrictions may prevent or inhibit proxy contests for
control of the Company or the Association which have not received prior
regulatory approval.

                  DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
                                        
General

     The Company is authorized to issue 33,000,000 shares of Common Stock having
a par value of $0.01 per share and 3,000,000 shares of preferred stock having a
par value of $0.01 per share (the "Preferred Stock").  Based on the sale of
Common Stock in connection with the Conversion and issuance of authorized but
unissued Common Stock to the Foundation in an amount equal to 7.7% of the Common
Stock sold in the Conversion, the Company currently expects to issue up to
12,880,000 shares of Common Stock (or 14,812,000 in the event of an increase of
15% in the Estimated Price Range) and no shares of Preferred Stock in the
Conversion.  Except as discussed above in "Restriction on Acquisition of the
Company and the Association," each share of the Company's Common Stock will have
the same relative rights as, and will be identical in all respects with, each
other share of Common Stock.  Upon payment of the Purchase Price for the Common
Stock, in accordance with the Plan, all such stock will be duly authorized,
fully paid and non-assessable.

     THE COMMON STOCK OF THE COMPANY WILL REPRESENT NON-WITHDRAWABLE CAPITAL,
WILL NOT BE AN ACCOUNT OF AN INSURABLE TYPE, AND WILL NOT BE INSURED BY THE
FDIC.

Common Stock

     Dividends.  The Company can pay dividends out of statutory surplus or from
certain net profits if, as and when declared by its Board of Directors.  The
payment of dividends by the Company is subject to limitations which are imposed
by law and applicable regulation.  See "Dividend Policy" and "Regulation."  The
holders of Common Stock of the Company will be entitled to receive and share
equally in such dividends as may be declared by the Board of Directors of the
Company out of funds legally available therefor.  If the Company issues
Preferred Stock, the holders thereof may have a priority over the holders of the
Common Stock with respect to dividends.

     Voting Rights.  Upon Conversion, the holders of Common Stock of the Company
will possess exclusive voting rights in the Company.  They will elect the
Company's Board of Directors and act on such other matters as are required to be
presented to them under Delaware law or the Company's Certificate of
Incorporation or as are otherwise presented to them by the Board of Directors.
Except as discussed in "Restrictions on Acquisition of the Company and the
Association," each holder of Common Stock will be entitled to one vote per share
and will not have any right to cumulate votes in the election of directors.  If
the Company issues Preferred Stock, holders of the Preferred Stock may also
possess voting rights.  Certain matters require an 80% shareholder vote.  See
"Restrictions on Acquisition of the Company and the Association."

     As a federal mutual savings and loan association, corporate powers and
control of the Association are vested in its Board of Directors, who elect the
officers of the Association and who fill any vacancies on the Board of Directors
as it exists upon Conversion.  Subsequent to Conversion, voting rights will be
vested exclusively in the owners of the shares of capital stock of the
Association, which will be the Company, and voted at the direction of the
Company's Board of Directors.  Consequently, the holders of the Common Stock
will not have direct control of the Association.

                                      116
Liquidation.  In the event of any liquidation, dissolution or winding up of
the Association, the Company, as holder of the Association's capital stock,
would be entitled to receive, after payment or provision for payment of all
debts and liabilities of the Association (including all deposit accounts and
accrued interest thereon) and after distribution of the balance in the special
liquidation account to Eligible Account Holders and Supplemental Eligible
Account Holders (see "The Conversion -- Liquidation Rights"), all assets of the
Association available for distribution.  In the event of liquidation,
dissolution or winding up of the Company, the holders of its Common Stock would
be entitled to receive, after payment or provision for payment of all its debts
and liabilities, all of the assets of the Company available for distribution.
If Preferred Stock is issued, the holders thereof may have a priority over the
holders of the Common Stock in the event of liquidation or dissolution.

     Preemptive Rights.  Holders of the Common Stock of the Company will not be
entitled to preemptive rights with respect to any shares which may be issued.
The Common Stock is not subject to redemption.

Preferred Stock

     None of the shares of the Company's authorized Preferred Stock will be
issued in the Conversion.  Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine.  The
Board of Directors can, without stockholder approval, issue preferred stock with
voting, dividend, liquidation and conversion rights which could dilute the
voting strength of the holders of the Common Stock and may assist management in
impeding an unfriendly takeover or attempted change in control.

                DESCRIPTION OF CAPITAL STOCK OF THE ASSOCIATION
                                        
General

     The Federal Stock Charter of the Association, to be effective upon the
Conversion, authorizes the issuance of capital stock consisting of 33,000,000
shares of common stock, par value $1.00 per share, and 3,000,000 shares of
preferred stock, par value $1.00 per share, which preferred stock may be issued
in series and classes having such rights, preferences, privileges and
restrictions as the Board of Directors may determine.  Each share of Common
Stock of the Association will have the same relative rights as, and will be
identical in all respects with, each other share of common stock.  After the
Conversion, the Board of Directors will be authorized to approve the issuance of
Common Stock up to the amount authorized by the Federal Stock Charter without
the approval of the Association's stockholders.  Assuming that the holding
company form of organization is utilized, all of the issued and outstanding
common stock of the Association will be held by the Company as the Association's
sole stockholder.  THE CAPITAL STOCK OF THE ASSOCIATION WILL REPRESENT NON-
WITHDRAWABLE CAPITAL, WILL NOT BE AN ACCOUNT OF AN INSURABLE TYPE, AND WILL NOT
BE INSURED BY THE FDIC.

Common Stock

     Dividends.  The holders of the Association's common stock will be entitled
to receive and to share equally in such dividends as may be declared by the
Board of Directors of the Association out of funds legally available therefor.
See "Dividend Policy" for certain restrictions on the payment of dividends and
"Federal and State Taxation --Federal Taxation" for a discussion of the
consequences of the payment of cash dividends from income appropriated to bad
debt reserves.

     Voting Rights.  Immediately after the Conversion, the holders of the
Association's common stock will possess exclusive voting rights in the
Association.  Each holder of shares of common stock will be entitled to one vote
for each share held, subject to the right of shareholders to cumulate their
votes for the election of directors.  During the five-year period after the
effective date of the Conversion, cumulation of votes will not be permitted.
See "Restrictions on Acquisition of the Company and the Association -- Anti-
Takeover Effects of the Company's Certificate of Incorporation and Bylaws and
Management Remuneration Adopted in Conversion."

                                      117
Liquidation.  In the event of any liquidation, dissolution, or winding up
of the Association, the holders of common stock will be entitled to receive,
after payment of all debts and liabilities of the Association (including all
deposit accounts and accrued interest thereon), and distribution of the balance
in the special liquidation account to Eligible Account Holders and Supplemental
Eligible Account Holders, all assets of the Association available for
distribution in cash or in kind.  If preferred stock is issued subsequent to the
Conversion, the holders thereof may also have priority over the holders of
common stock in the event of liquidation or dissolution.

     Preemptive Rights; Redemption.  Holders of the common stock of the
Association will not be entitled to preemptive rights with respect to any shares
of the Association which may be issued.  The common stock will not be subject to
redemption.  Upon receipt by the Association of the full specified purchase
price therefor, the common stock will be fully paid and non-assessable.

                          TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for the Common Stock is [Transfer Agent].

                             CHANGE IN ACCOUNTANTS

     Prior to the year ended June 30, 1998 the Association's financial
statements were audited by Packer, Thomas & Co.  As a result of the
Association's decision to convert from a mutual savings and loan association to
a stock savings and loan association, the Association decided on June 29, 1998
to replace Packer, Thomas & Co.  and to engage Crowe, Chizek and Company LLP as
the independent auditors of the Association.  The decision to change auditors
was recommended by the Audit Committee and was approved by the Board of
Directors.  Accordingly, the statement of financial condition as of June 30,
1997 and related statements of income, retained earnings and cash flows for the
years ended June 30, 1997 and 1996, and included in this Prospectus, were
audited by Packer, Thomas & Co.

     For the year ended June 30, 1997 and up to the date of replacement of
Packer, Thomas & Co., there were no disagreements with Packer, Thomas & Co. on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure which, if not resolved to the satisfaction of
Packer, Thomas & Co., would have caused it to make reference to the subject
matter of the disagreement in connection with its report.  The independent
auditors' report on the financial statements for the year ended June 30, 1997
did not contain an adverse opinion or a disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principles.

                                    EXPERTS

     The consolidated financial statements of the Association as of June 30,
1998, and for the year ended June 30, 1998, have been included herein in
reliance upon the report of Crowe, Chizek & Company, LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing.

     The financial statements of the Association as of June 30, 1997 and for the
years ended June 30, 1997 and 1996, have been included herein in reliance upon
the report of Packer, Thomas & Co., independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.

     Keller and Company, Inc. has consented to the publication herein of the
summary of its report to the Association and Company setting forth its opinion
as to the estimated pro forma market value of the Common Stock upon Conversion
and its opinion with respect to subscription rights.

                             LEGAL AND TAX OPINIONS

     The legality of the Common Stock and the federal income tax consequences of
the Conversion will be passed upon for the Association and Company by Patton
Boggs LLP, Washington, D.C., special counsel to the Association and Company.
The federal income tax consequences of First Federal of Warren Community
Foundation will be passed upon for the Association and the Company by Crowe,
Chizek and Company LLP, independent certified public 

                                      118
accountants who have served as the Association's and the Company's independent
tax advisors. Patton Boggs LLP will rely as to certain matters of Delaware law
on the opinion of Potter Anderson & Corroon LLP. Ohio state income tax
consequences will be passed upon by Crowe, Chizek and Company LLP. Certain legal
matters will be passed upon for Webb by Elias, Matz, Tiernan & Herrick L.L.P.,
Washington, DC.

                             ADDITIONAL INFORMATION

     The Company has filed with the SEC a registration statement under the
Securities Act with respect to the Common Stock offered hereby.  As permitted by
the rules and regulations of the SEC, this Prospectus does not contain all the
information set forth in the registration statement.  Such information,
including the Conversion Valuation Appraisal Report, which is an exhibit to the
Registration Statement, can be examined without charge at the public reference
facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of such material can be obtained from the SEC at prescribed rates.
In addition, the SEC maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC, including the Company.  The
Conversion Valuation Appraisal Report may also be inspected by members of the
Association at the offices of the Association during normal business hours.
This Prospectus contains a description of the material terms and features of all
material contracts, reports or exhibits to the registration statement required
to be described; however, the statements contained in this Prospectus as to the
contents of any contract or other document filed as an exhibit to the
registration statement are, of necessity, brief descriptions thereof and are not
necessarily complete; each such statement is qualified by reference to such
contract or document.

     The Association has filed an application for conversion with the OTS.
Pursuant to the rules and regulations of the OTS, this Prospectus omits certain
information contained in that application.  The application may be examined at
the principal office of the OTS, 1700 G Street, Washington, DC, 20552 and at the
office of the Regional Director of the OTS located at 200 West Madison Street,
Suite 1300, Chicago, Illinois, 60606.

     The Company has filed with the Office of Thrift Supervision an Application
to Form a Holding Company.  This Prospectus omits certain information contained
in such Application.  Such Application may be inspected at the offices of the
OTS, 1700 G Street, N.W., Washington, D.C.  20552.

     In connection with the Conversion, the Company will register its Common
Stock with the SEC under Section 12(g) of the Exchange Act, and, upon such
registration, the Company and the holders of its stock will become subject to
the proxy solicitation rules, reporting requirements and restrictions on stock
purchases and sales by directors, officers and greater than 10% stockholders,
the annual and periodic reporting and certain other requirements of the Exchange
Act.  Under the Plan, the Company has undertaken that it will not terminate such
registration for a period of at least three years following the Conversion.  In
the event that the Association amends the Plan to eliminate the concurrent
formation of the Company as part of the Conversion, the Association will
register its stock with the Federal Deposit Insurance Corporation under Section
12(g) of the Exchange Act and, upon such registration, the Association and the
holders of its stock will become subject to the same obligations and
restrictions.

     A copy of the Plan of Conversion, Certificate of Incorporation and the
Bylaws of the Company and the Charter and Bylaws of the Association are
available without charge from the Association.  The Association's principal
office is located at 185 East Market Street, Warren, Ohio and its telephone
number is (330) 373-1221.

                                      119
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         INDEX TO FINANCIAL STATEMENTS

                                                                        Page
                                                                   -------------
 
Independent Auditors' Report for the Year Ended June 30, 1998......      F-1
 
Independent Auditors' Report for the Years Ended June 30, 1997 and       
 1996..............................................................      F-2
 
Statements of Financial Condition as of June 30, 1998 and 1997.....      F-3
 
Statements of Income for the Years Ended June 30, 1998, 1997 and         
 1996..............................................................      F-4
 
Statements of Retained Earnings for the Years Ended June 30, 1998,       
 1997 and 1996.....................................................      F-5
 
Statements of Cash Flows for the Years Ended June 30, 1998,          
1997 and 1996......................................................  F-6 to F-7
 
Notes to Financial Statements......................................  F-8 to F-26

     All schedules are omitted because they are not required or applicable, or
the required information is shown in the financial statements or notes thereto.

     The financial statements of First Place Financial Corp. have been omitted
because First Place Financial Corp. has not yet issued any stock, has no assets
and no liabilities, and has not conducted any business other than of an
organizational nature.
[LETTERHEAD OF CROWE CHIZEK APPEARS HERE]

                        REPORT OF INDEPENDENT AUDITORS

Board of Directors
First Federal Savings and Loan Association
 of Warren
Warren, OH

We have audited the accompanying statements of financial condition of First
Federal Savings and Loan Association of Warren as of June 30, 1998, and the
related statements of income, retained earnings and cash flows for the year then
ended.  These financial statements are the responsibility of the Association's
management.  Our responsibility is to express an opinion on these financial
statements based on our audit.  The 1997 and 1996 financial statements were
audited by other auditors whose report dated September 9, 1997, expressed an
unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion, the 1998 financial statements referred to above present fairly,
in all material respects, the financial position of First Federal Savings and
Loan Association of Warren as of June 30, 1998, and the results of its
operations and cash flows for the year then ended, in conformity with generally
accepted accounting principles.

                                    /s/ Crowe, Chizek and Company LLP

                                    Crowe, Chizek and Company LLP

Cleveland, Ohio
July 22, 1998

                                      F-1
REPORT OF INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN

We have audited the accompanying statements of financial condition of First
Federal Savings and Loan Association of Warren as of June 30, 1997 and 1996 and
the related statements of income, retained earnings and cash flows, for the
years then ended. These financial statements are the responsibility of the
Association's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. 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 financial position of First Federal Savings and Loan
Association of Warren as of June 30, 1997 and 1996, and the results of its
operations and cash flows for the years then ended, in conformity with generally
accepted accounting principles.

Warren, Ohio                                   /s/ Packer, Thomas & Co.
September 9, 1997                               Packer, Thomas & Co.
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                       STATEMENTS OF FINANCIAL CONDITION
                            June 30, 1998 and 1997

--------------------------------------------------------------------------------
1998           1997
                                                                -------------  -------------
ASSETS
  Cash and cash equivalents                                     $  6,668,406   $  6,757,030
  Federal funds sold                                               1,565,167        209,892
  Securities available for sale                                  211,184,978    202,676,569
  Securities held to maturity, fair value of
    $28,518,985 in 1998 and $44,798,465 in 1997                   28,294,848     44,874,887
  Loans receivable, net                                          353,012,434    285,211,625
  Premises and equipment, net                                      5,898,813      6,446,380
  Accrued interest receivable                                      1,835,336      1,888,998
  Other assets                                                       938,261        804,191
                                                                ------------   ------------
 
      Total assets                                              $609,398,243   $548,869,572
                                                                ============   ============
 
LIABILITIES
  Deposits                                                      $435,461,723   $412,933,944
  Repurchase agreements                                           60,430,000     16,000,000
  Federal Home Loan Bank advances                                 44,820,060     58,397,984
  Advances by borrowers for taxes and insurance                    1,983,256      1,700,988
  Accrued interest payable                                         1,089,645        704,278
  Federal income taxes payable                                     1,702,008      1,115,234
  Other liabilities                                                4,554,191      4,270,326
                                                                ------------   ------------
     Total liabilities                                           550,040,883    495,122,754
                                                                ------------   ------------
 
 
RETAINED EARNINGS
  Retained earnings, substantially restricted                     57,762,916     53,690,574
  Unrealized gain on available for sale securities, net            1,594,444         56,244
                                                                ------------   ------------
     Total retained earnings                                      59,357,360     53,746,818
                                                                ------------   ------------
 
      Total liabilities and retained earnings                   $609,398,243   $548,869,572
                                                                ============   ============
--------------------------------------------------------------------------------
                See accompanying notes to financial statements.

                                                                             F-3
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                             STATEMENTS OF INCOME
                   Years ended June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
1998          1997           1996
                                                   -----------  ------------   ------------
INTEREST INCOME
   Loans                                           $25,735,667  $ 21,871,589   $ 20,135,093
   Securities
     Taxable                                         3,098,434     3,542,299      3,145,380
     Tax-exempt                                         66,072       193,879         31,517
   Mortgage-backed and related securities           13,581,433    12,805,242     13,124,197
                                                   -----------  ------------   ------------
     Total interest income                          42,481,606    38,413,009     36,436,187
                                                   -----------  ------------   ------------
 
INTEREST EXPENSE
   Deposits                                         19,859,626    18,495,360     17,881,388
   FHLB advances                                     3,056,698     3,953,237      3,976,414
   Repurchase agreements                             2,595,728       480,356
                                                   -----------  ------------   ------------
     Total interest expense                         25,512,052    22,928,953     21,857,802
                                                   -----------  ------------   ------------
 
NET INTEREST INCOME                                 16,969,554    15,484,056     14,578,385
 
Provision for loan losses                            1,778,591       590,395        238,239
                                                   -----------  ------------   ------------
 
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES                                    15,190,963    14,893,661     14,340,146
                                                   -----------  ------------   ------------
 
NONINTEREST INCOME
   Service charges                                   1,084,911       929,166        803,099
   Security gains (losses), net                        135,138      (934,150)       (26,451)
   Other                                               531,723       449,007        443,426
                                                   -----------  ------------   ------------
     Total noninterest income                        1,751,772       444,023      1,220,074
                                                   -----------  ------------   ------------
 
NONINTEREST EXPENSE
   Salaries and benefits                             5,470,758     4,863,349      4,698,715
   Occupancy and equipment                           1,577,820     1,431,500      1,295,575
   Federal deposit insurance premiums                  258,236     2,970,655        867,188
   Franchise taxes                                     776,228       713,658        648,608
   Other                                             2,289,423     1,919,304      1,638,425
                                                   -----------  ------------   ------------
     Total noninterest expense                      10,372,465    11,898,466      9,148,511
                                                   -----------  ------------   ------------
 
INCOME BEFORE INCOME TAX                             6,570,270     3,439,218      6,411,709
 
Provision for income tax                             2,497,928     1,215,175      2,262,419
                                                   -----------  ------------   ------------
 
NET INCOME                                         $ 4,072,342  $  2,224,043   $  4,149,290
                                                   ===========  ============   ============
--------------------------------------------------------------------------------
                See accompanying notes to financial statements.

                                                                             F-4
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                        STATEMENTS OF RETAINED EARNINGS
                   Years ended June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
Unrealized
                                                Gains (Losses)
                                                on Securities
                                    Retained    Available for
                                    Earnings      Sale, Net      Total
                                   -----------  -----------    -----------
Balance at July 1, 1995            $47,317,241  $(1,107,951)   $46,209,290
 
Change in fair value of
  securities available for sale                  (1,535,916)    (1,535,916)
 
Net income                           4,149,290                   4,149,290
                                   -----------  -----------    -----------
 
 
Balance at June 30, 1996            51,466,531   (2,643,867)    48,822,664
 
Change in fair value of
  securities available for sale                   2,700,111      2,700,111
 
Net income                           2,224,043                   2,224,043
                                   -----------  -----------    -----------
 
 
Balance at June 30, 1997            53,690,574       56,244     53,746,818
 
Change in fair value of
  securities available for sale                   1,538,200      1,538,200
 
Net income                           4,072,342                   4,072,342
                                   -----------  -----------    -----------
 
Balance at June 30, 1998           $57,762,916  $ 1,594,444    $59,357,360
                                   ===========  ===========    ===========
--------------------------------------------------------------------------------
                See accompanying notes to financial statements.

                                                                             F-5
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                           STATEMENTS OF CASH FLOWS
                   Years ended June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
1998           1997           1996
                                                   -------------  -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                       $  4,072,342   $  2,224,043   $  4,149,290
  Adjustments to reconcile net income to net
   cash from operating activities
     Depreciation                                       737,726        570,125        514,596
     Provision for loan losses                        1,778,591        590,395        238,239
     Net amortization                                   282,363        127,892        298,834
     Investment security (gains) losses                (135,138)       934,150         26,451
     Loss on disposal of fixed assets                                  158,878
     FHLB dividend                                     (351,800)      (330,022)      (262,378)
     Change in
       Interest receivable                               53,662        (15,920)        44,704
       Interest payable                                 385,367       (185,616)      (446,752)
       Other assets                                    (134,070)       (23,960)       (78,098)
       Other liabilities                                498,574        572,638        986,473
       Deferred loan fees                                 3,611       (180,949)       179,410
       Deferred taxes                                  (420,339)        15,175        209,680
                                                   ------------   ------------   ------------
          Net cash from operating activities          6,770,889      4,456,829      5,860,449
                                                   ------------   ------------   ------------
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Investment and mortgage-backed securities
   available for sale
     Proceeds from sales                             37,052,332     43,293,998     20,683,939
     Proceeds from maturities, calls
      and principal paydowns                         41,984,709      9,480,126      2,782,904
     Purchases                                      (85,697,887)   (50,050,159)   (74,984,501)
  Investment and mortgage-backed securities
   held to maturity
     Proceeds from maturities, calls
      and principal paydowns                         16,437,655      7,225,191     25,571,016
     Purchases                                                      (4,000,000)
  Net decrease (increase) in Federal Funds sold      (1,355,275)     2,360,909     (1,128,407)
  Purchases of Federal Home Loan Bank Stock                           (330,000)    (1,084,200)
  Sale of Federal Home Loan Bank Stock                  830,000
  Net increase in loans                             (69,583,011)   (30,678,497)   (15,351,087)
  Premises and equipment expenditures, net             (190,159)    (2,063,256)      (460,180)
                                                   ------------   ------------   ------------
     Net cash from investing activities             (60,521,636)   (24,761,688)   (43,970,516)
                                                   ------------   ------------   ------------
--------------------------------------------------------------------------------
                                  (Continued)

                                                                             F-6
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                     STATEMENTS OF CASH FLOWS (Continued)
                   Years ended June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
1998           1997           1996
                                            -------------  -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net change in deposits                      22,527,779     21,199,868     15,151,770
  Net change in advances by borrowers
      for taxes and insurance                    282,268        (16,448)      (230,556)
  Net change in repurchase agreements         44,430,000     16,000,000
  Proceeds from FHLB borrowings               57,075,000     59,550,000     82,078,100
  Repayment of FHLB borrowings               (70,652,924)   (77,229,912)   (58,435,754)
                                            ------------   ------------   ------------
     Net cash from financing activities       53,662,123     19,503,508     38,563,560
                                            ------------   ------------   ------------
 
Net change in cash and cash equivalents          (88,624)      (801,351)       453,493
 
Cash and cash equivalents at beginning
  of year                                      6,757,030      7,558,381      7,104,888
                                            ------------   ------------   ------------
 
CASH AND CASH EQUIVALENTS AT END OF YEAR    $  6,668,406   $  6,757,030   $  7,558,381
                                            ============   ============   ============
 
Supplemental disclosures of cash flow
  information
  Cash paid during the year for
     Interest                               $ 25,126,685   $ 23,215,732   $ 22,182,972
     Income taxes                              2,745,000      1,200,000      1,895,000
--------------------------------------------------------------------------------
                See accompanying notes to financial statements.

                                                                             F-7
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization:  First Federal Savings and Loan Association of Warren is a
------------                                                            
federally chartered mutual thrift association operating in Trumbull and Mahoning
Counties, Ohio.  The Association is engaged in the business of banking with
operations conducted through its main office in Warren, Ohio and eleven branch
locations and two loan production offices.  The Association originates and holds
residential, consumer and commercial loans and also offers a variety of deposit
products to customers.  The majority of the Association's income is derived from
one- to four-family residential real estate loans and mortgage-backed
securities.

Use of Estimates in Preparation of Financial Statements:  In preparing financial
-------------------------------------------------------                         
statements, management must make estimates and assumptions.  These estimates and
assumptions affect the amounts reported for assets, liabilities, revenues and
expenses as well as affecting the disclosures provided.  Future results could
differ from current estimates.  Areas involving the use of management's
estimates and assumptions primarily include the allowance for loan losses, the
realization of deferred tax assets, fair value of certain securities and the
determination and carrying value of impaired loans.

Cash Reserves:  At June 30, 1998, the Association was required to have $100,000
-------------                                                                  
on deposit with a correspondent bank.  This deposit does not earn interest.

Investment Securities:  Securities are classified into held-to-maturity and
---------------------                                                      
available-for-sale categories.  Held-to-maturity securities are those that the
Association has the positive intent and ability to hold to maturity, and are
reported at amortized cost.  Available-for-sale securities are those that the
Association may decide to sell if needed for liquidity, asset-liability
management, or other reasons.  Available-for-sale securities are reported at
fair value, with unrealized gains or losses included as a separate component of
equity, net of tax.

Realized gains or losses on sales are determined based on the amortized cost of
the specific security sold.  Amortization of premiums and accretion of discounts
are computed under a system materially consistent with the level yield method
and are recognized as adjustments to interest income.  Prepayment activity on
mortgage-backed securities is affected primarily by changes in interest rates.
Yields on mortgage-backed securities are adjusted as prepayments occur through
changes to premium amortization or discount accretion.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                             F-8
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans:  Interest income on loans is accrued over the term of the loans based
-----                                                                       
upon the principal outstanding.  The accrual of interest on loans is suspended
when a loan  is 90 days or more past due or when, in management's opinion, the
collection of all or a portion of the loan principal has become doubtful.  When
a loan is placed on nonaccrual status, accrued and unpaid interest at risk is
charged against income.  Under Statement of Financial Accounting Standards
("SFAS") No. 114, as amended by SFAS No. 118, the carrying value of impaired
loans is periodically adjusted to reflect cash payments, revised estimates of
future cash flows and increases in the present value of expected cash flows due
to the passage of time.  Cash payments representing interest income are reported
as such and other cash payments are reported as reductions in carrying value.
Increases or decreases in carrying value due to changes in estimates of future
payments or the passage of time are reported as reductions or increases in bad
debt expense.

Loan fees, net of direct loan origination costs, are deferred and recognized
over the life of the loan as a yield adjustment.

Allowance for Loan Losses:  Because some loans may not be repaid in full, an
-------------------------                                                   
allowance for loan losses is maintained.  Increases to the allowance are
recorded by a provision for loan losses charged to expense.  Estimating the risk
of the loss and the amount of loss on any loan is necessarily subjective.
Accordingly, the allowance is maintained by management at a level considered
adequate to cover losses that are currently anticipated based on past loss
experience, general economic conditions, information about specific borrower
situations including their financial position and collateral values, and other
factors and estimates which are subject to change over time.  While management
may periodically allocate portions of the allowance for specific problem-loan
situations, the whole allowance is available for any loan charge-offs that
occur.  A loan is charged-off against the allowance by management when deemed
uncollectible, although collection efforts continue and future recoveries may
occur.

Effective July 1, 1995, the Association adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan."  SFAS No. 114 requires that the carrying
values of impaired loans be determined by calculating the present value of
estimated future cash flows, discounted using the loan's effective interest
yield.  A loan is impaired when it is probable that a creditor will be unable to
collect all amounts due according to the contractual terms of the loan
agreement.  SFAS No. 118 was issued in October 1994 and amends SFAS No. 114 to
allow a creditor to use existing methods to recognize income on impaired loans.
SFAS No. 114 and SFAS No. 118 did not materially affect the Association's
financial condition or results of operations.

Smaller-balance homogeneous loans are evaluated for impairment in total.  Such
loans include residential first mortgage loans secured by one- to four-family
residences, residential construction loans and automobile, home equity and
second mortgages.  Commercial loans and mortgage loans secured by other
properties are evaluated individually for impairment.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                             F-9
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

When analysis of borrower operating results and financial condition indicates
that underlying cash flows of the borrower's business are not adequate to meet
its debt service requirements, the loan is evaluated for impairment. Often this
is associated with a delay or shortfall in payments of 30 days or more. Loans
are generally moved to nonaccrual status when 90 days or more past due or when
collection of principal or interest is in doubt. These loans are often also
considered impaired. Impaired loans, or portions thereof, are charged off when
deemed uncollectible. The nature of disclosures for impaired loans is considered
generally comparable to prior nonaccrual and renegotiated loans and non-
performing and past-due asset disclosures.

Real Estate Owned:  Real estate owned, other than that which is used in the
-----------------                                                          
normal course of business, is recorded at fair value less estimated costs to
sell.  For real estate acquired through foreclosure, any initial loss is
recorded as a charge to the allowance for loan losses before being transferred
to real estate owned.  Any subsequent reduction in fair value is recognized in a
valuation allowance by charges to income.

Premises and Equipment:  Office properties and equipment are stated at cost less
----------------------                                                          
accumulated depreciation.  Depreciation is computed based on both the straight-
line method and the accelerated method over the estimated useful lives of the
respective properties and equipment.  Maintenance and repairs are expensed and
major improvements are capitalized.

Income Taxes:  The Association records income tax expense based on the amount of
------------                                                                    
tax due on its tax return plus deferred taxes computed based on the expected
future tax consequences of temporary differences between the carrying amounts
and tax bases of assets and liabilities, using enacted tax rates.  The provision
for income taxes is based on the effective tax rate expected to be applicable
for the entire year.

Concentrations of Credit Risk:  The Association grants residential, consumer and
-----------------------------                                                   
commercial loans to customers located primarily in Trumbull and surrounding
counties in Ohio.  Real estate mortgage loans make up approximately 82% of the
Association's loan portfolio and the remaining 18% is made up of consumer and
commercial loans.  The Association, in the normal course of business, makes
commitments to make loans that are not reflected in the financial statements.

Statement of Cash Flows:  For purposes of this statement, cash and cash
-----------------------                                                
equivalents are defined to include the Association's cash on hand and due from
banks.  The Association reports net cash flows for customer loan transactions,
deposit transactions, repurchase agreements transactions and federal funds sold.

Reclassifications:  Certain items in the 1997 and 1996 financial statements have
------------------                                                              
been reclassified to conform with the 1998 presentation.  Such reclassifications
had no effect on the net results of operations.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-10
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 2 - INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair values
of investment securities at June 30, 1998 and 1997 are as follows:
1998
                                                           Gross       Gross      Estimated
                                            Amortized    Unrealized  Unrealized      Fair
                                               Cost        Gains       Losses       Value
                                           ------------  ----------  ----------  ------------
Available for sale
   Investment securities
     U.S. Government agencies              $ 15,733,962  $   63,519    $    567  $ 15,796,914
     Federal Home Loan Bank stock             4,414,500                             4,414,500
     Obligations of states and
      political subdivisions                    826,127      27,226                   853,353
                                           ------------  ----------    --------  ------------
       Total                                 20,974,589      90,745         567    21,064,767
                                           ------------  ----------    --------  ------------
   Mortgage-backed securities and
    collateralized mortgage obligations
     FHLMC                                   99,493,537   1,470,722      66,163   100,898,096
     FNMA                                    49,958,930   1,095,359     536,341    50,517,948
     GNMA                                    37,354,752     375,622      16,455    37,713,919
     Other                                      987,346       2,902                   990,248
                                           ------------  ----------    --------  ------------       
       Total                                187,794,565   2,944,605     618,959   190,120,211
                                           ------------  ----------    --------  ------------
 
                                           $208,769,154  $3,035,350    $619,526  $211,184,978
                                           ============  ==========    ========  ============
 
 
HELD TO MATURITY
   Investment securities
     U.S. Treasury securities              $  6,004,462  $   12,938    $  3,640  $  6,013,760
     U.S. Government agencies                 4,147,358      33,268                 4,180,626
     Obligations of states and
      political subdivisions                    364,203      32,108                   396,311
                                           ------------  ----------    --------  ------------
       Total                                 10,516,023      78,314       3,640    10,590,697
                                           ------------  ----------    --------  ------------
   Mortgage-backed securities and
    collateralized mortgage obligations
     FNMA                                    16,266,909     210,027     110,026    16,366,910
     GNMA                                     1,511,916      49,462                 1,561,378
                                           ------------  ----------    --------  ------------
       Total                                 17,778,825     259,489     110,026    17,928,288
                                           ------------  ----------    --------  ------------
 
                                           $ 28,294,848  $  337,803    $113,666  $ 28,518,985
                                           ============  ==========    ========  ============
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-11
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 2 - INVESTMENT SECURITIES (Continued)
1997
                                        -------------------------------------------------------        
                                                           Gross       Gross      Estimated
                                            Amortized    Unrealized  Unrealized      Fair
                                               Cost        Gains       Losses       Value
                                           ------------  ----------  ----------  ------------
Available for sale
   Investment securities
     U.S. Government agencies              $ 34,011,694  $   73,846  $  407,560  $ 33,677,980
     Federal Home Loan Bank stock             4,892,700                             4,892,700
     Obligations of states and
      political subdivisions                    825,316      12,649                   837,965
     Equity securities                        3,216,426                 236,184     2,980,242
                                           ------------  ----------  ----------  ------------
       Total                                 42,946,136      86,495     643,744    42,388,887
                                           ------------  ----------  ----------  ------------
   Mortgage-backed securities and
    collateralized mortgage obligations
     FHLMC                                   60,892,819     553,578     555,331    60,891,066
     FNMA                                    57,604,132   1,055,564     771,678    57,888,018
     GNMA                                    39,493,035     340,681      11,197    39,822,519
     Other                                    1,655,228      30,851                 1,686,079
                                           ------------  ----------  ----------  ------------
       Total                                159,645,214   1,980,674   1,338,206   160,287,682
                                           ------------  ----------  ----------  ------------
 
                                           $202,591,350  $2,067,169  $1,981,950  $202,676,569
                                           ============  ==========  ==========  ============
 
 
HELD TO MATURITY
   Investment securities
     U.S. Treasury securities              $ 14,004,878  $      599  $   54,837  $ 13,950,640
     U.S. Government agencies                 4,238,818       2,081       5,273     4,235,626
     Obligations of states and
      political subdivisions                    405,088      34,249                   439,337
                                           ------------  ----------  ----------  ------------
       Total                                 18,648,784      36,929      60,110    18,625,603
                                           ------------  ----------  ----------  ------------
   Mortgage-backed securities and
    collateralized mortgage obligations
     FNMA                                    24,283,597      73,909     177,438    24,180,068
     GNMA                                     1,942,506      50,288                 1,992,794
                                           ------------  ----------  ----------  ------------
       Total                                 26,226,103     124,197     177,438    26,172,862
                                           ------------  ----------  ----------  ------------
 
                                           $ 44,874,887  $  161,126  $  237,548  $ 44,798,465
                                           ============  ==========  ==========  ============
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-12
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 2 - INVESTMENT SECURITIES (Continued)

The amortized cost and estimated fair value of debt securities at June 30, 1998,
by contractual maturity, are shown below.  Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Amortized     Estimated
                                                    Cost       Fair Value
                                                ------------  ------------
AVAILABLE FOR SALE
      Due in one year or less                   $  9,552,400  $  9,575,038
      Due after one year through five years        7,007,689     7,075,229
                                                ------------  ------------
                                                  16,560,089    16,650,267
 
      Mortgage-backed securities and
         collateralized mortgage obligations     187,794,565   190,120,211
 

      Federal Home Loan Bank stock                 4,414,500     4,414,500
                                                ------------  ------------

                                                $208,769,154  $211,184,978
                                                ============  ============
 
 
HELD TO MATURITY
      Due in one year or less                   $  6,044,517  $  6,054,319
      Due after one year through five years        4,308,691     4,352,783
      Due after five years through ten years         162,815       183,595
                                                ------------  ------------
                                                  10,516,023    10,590,697
      Mortgage-backed securities and
         collateralized mortgage obligations      17,778,825    17,928,288
                                                ------------  ------------
 
                                                $ 28,294,848  $ 28,518,985
                                                ============  ============
Proceeds from the sale of debt securities for the years ended June 30, 1998 and
1997 were $34,009,566 and $43,293,998.  Gross gains of $472,837  and $ 76,317
and gross losses of $164,038 and $1,010,467 were realized on sales of securities
in 1998 and 1997.  Proceeds from the sale of equity securities for the year
ended June 30, 1998 were $3,042,766, resulting in gross loss of $173,661.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-13
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 2 - INVESTMENT SECURITIES (Continued)

Investment and mortgage-backed securities with a carrying value of $103,493,000
and $27,517,152 as of June 30, 1998 and 1997 were pledged to secure public
deposits, repurchase agreements and for other purposes as required or permitted
by law.

NOTE 3 - LOANS

Loans as presented on the balance sheet are comprised of the following
classifications at June 30:
1998          1997
                                           ------------  ------------
Real estate mortgage loans
     One- to four- family                  $267,949,898  $215,548,836
     Multifamily                              4,481,617     2,292,969
     Commercial                               8,626,770     6,787,635
     Construction                             6,301,000     5,376,444
     Home equity                              9,189,216     9,822,022
                                           ------------  ------------
                                            296,548,501   239,827,906
                                           ------------  ------------
 
Consumer loans
     Automobile                              52,846,731    43,172,395
     Other                                   11,242,663     6,521,390
                                           ------------  ------------
                                             64,089,394    49,693,785
                                           ------------  ------------
 
Commercial loans                              2,586,649     2,067,758
 
   Less:
     Loans in process                         5,865,902     3,339,387
     Net deferred loan origination fees       1,319,278     1,315,667
     Allowance for loan losses                3,026,930     1,722,770
                                           ------------  ------------
                                             10,212,110     6,377,824
                                           ------------  ------------
 
                                           $353,012,434  $285,211,625
                                           ============  ============
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-14
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 3 - LOANS (Continued)

A summary of the activity in the allowance for loan losses is as follows:
1998         1997         1996
                                        -----------  -----------  -----------
Balance at beginning of period    $1,722,770   $1,258,829   $1,186,076
      Provision for loan losses          1,778,591      590,395      238,239
      Charge-offs                         (515,000)    (138,000)    (236,000)
      Recoveries                            40,569       11,546       70,514
                                        ----------   ----------   ----------
 
      Balance at end of period          $3,026,930   $1,722,770   $1,258,829
                                        ==========   ==========   ==========
Nonaccrual loans totaled $2,143,000, $1,830,000 at June 30, 1998 and 1997.
Interest not recognized on nonaccrual loans totaled approximately $94,400,
$172,000 and $109,000 for the years then ended June 30, 1998, 1997 and 1996.
There were no impaired loans at June 30, 1998 and 1997 or during the fiscal
years ended June 30, 1998, 1997 and 1996.

NOTE 4 - RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Association has granted loans to
executive officers, directors, and their related business interests.  A summary
of related party loan activity is as follows for the year ended June 30, 1998:
Balance at beginning of period    $695,688
      New loans                          343,145
      Repayments                         (59,995)
                                        --------
 
      Balance at end of period          $978,838
                                        ========
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-15
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment consists of the following:
1998          1997
                                    ------------  ------------
Land and improvements         $ 1,076,403   $ 1,076,403
      Buildings and improvements      4,522,645     4,499,798
      Leasehold improvements            959,540       948,618
      Furniture and equipment         6,466,648     6,257,427
      Construction in process           137,376       190,207
                                    -----------   -----------
          Total cost                 13,162,612    12,972,453
      Accumulated depreciation       (7,263,799)   (6,526,073)
                                    -----------   -----------
 
                                    $ 5,898,813   $ 6,446,380
                                    ===========   ===========
At June 30, 1998, the Association is obligated for rental commitments under non-
cancelable operating leases on real estate and equipment as follows:
1999          $  344,576
          2000             262,076
          2001             214,753
          2002             210,451
          2003             186,451
          Thereafter     1,274,243
                        ----------
                        $2,492,550
                        ==========
NOTE 6 - ACCRUED INTEREST RECEIVABLE

Accrued interest receivable at June 30, is summarized as follows:
1998        1997
                                   ----------  ----------
Investment securities        $  461,348  $  647,200
      Mortgage backed
         and related securities     1,061,572     956,187
      Loans receivable                312,416     285,611
                                   ----------  ----------
                                   $1,835,336  $1,888,998
                                   ==========  ==========
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-16
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 7 - DEPOSITS

Deposits consist of the following:
1998            1997
                                       ------------     -----------
Noninterest-bearing demand       $  5,216,944    $  4,066,290
      Savings                            67,401,498      71,191,247
      NOW                                34,140,895      32,699,421
      Money Market                       68,733,365      57,801,995
      Certificates of deposit           259,969,021     247,174,991
                                       ------------    ------------
 
                                       $435,461,723    $412,933,944
                                       ============    ============
The aggregate amount of certificates of deposit with a minimum denomination of
$100,000 is $53,224,874 and $42,399,697 at June 30, 1998 and 1997.

At June 30, 1998, scheduled maturities of certificates of deposit are as
follows:
1999          $167,818,397
              2000            51,160,680
              2001            17,703,267
              2002             6,715,124
              2003             1,633,548
              Thereafter      14,938,005
                            ------------
 
                            $259,969,021
                            ============
NOTE 8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase are secured by mortgage-backed
securities with a carrying value and fair value of approximately $62,608,000 at
June 30, 1998 and $16,836,000 at June 30, 1997.

Securities sold under agreements to repurchase are financing arrangements that
mature within three years. Information concerning securities sold under
agreements to repurchase is summarized as follows:

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-17
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Continued)
1998          1997
                                               ------------  ------------
Average daily balance during the year        $45,044,000   $ 8,470,000
  Average interest rate during the year               5.76%         5.67%
  Maximum month-end balance during the year    $60,430,000   $16,000,000
NOTE 9 - ADVANCES FROM FEDERAL HOME LOAN BANK

The association had the following outstanding Federal Home Loan Bank ("FHLB")
advances at June 30, 1998 and 1997:
1998
                            ----------------------------------
                                          Rate at
                              Amount     June 30,    Maturity
                            -----------  ---------  ----------
LIBOR indexed advance       $20,000,000      5.54%  06/30/2000
LIBOR indexed advance         6,000,000      5.59   12/01/2000
Mortgage matched advance      1,668,719      5.20   05/01/2003
Mortgage matched advance      1,147,881      5.30   07/01/2003
Mortgage matched advance      1,178,121      5.20   09/01/2003
Mortgage matched advance      3,258,081      6.30   02/01/2007
Mortgage matched advance      4,013,449      6.05   12/01/2010
Mortgage matched advance      7,553,809      6.05   12/01/2010
                            -----------
 
                            $44,820,060
                            ===========
 
                                           1997
                            ----------------------------------
Cash management advance     $   675,000      5.75%   9/23/1997
Cash management advance         175,000      5.75    9/25/1997
Cash management advance         650,000      5.75    9/26/1997
LIBOR indexed advance        20,000,000      5.54    6/30/2000
LIBOR indexed advance         6,000,000      5.59    12/1/2000
Mortgage matched advance      1,959,068      5.20     5/1/2003
Mortgage matched advance      1,339,586      5.30     7/1/2003
Mortgage matched advance      1,368,367      5.20     9/1/2003
Mortgage matched advance      3,964,467      6.30     2/1/2007
Mortgage matched advance      4,444,364      6.05    12/1/2010
Mortgage matched advance      8,364,844      6.05    12/1/2010
Mortgage matched advance      9,457,288      6.20    12/1/2010
                            -----------
 
                            $58,397,984
                            ===========
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-18
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN 
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 9 - ADVANCES FROM FEDERAL HOME LOAN BANK (Continued)

At June 30, 1998, scheduled principal payments on FHLB advances are as follows:
Year ended June 30,
        -------------------
1999                  $ 2,185,521
              2000                   22,188,640
              2001                    8,197,754
              2002                    2,212,920
              2003                    2,202,090
              Thereafter              7,833,135
                                    -----------
 
                                    $44,820,060
                                    ===========
All advances are collateralized by the Association's FHLB stock and residential
mortgage loans totaling $67,230,000 and $87,597,000 at June 30, 1998 and 1997.
Based on the Association investment in FHLB stock, the maximum dollar amount of
FHLB advance borrowings available at June 30, 1998 was $88,290,000.

NOTE 10 - INCOME TAXES

The provision for income taxes consists of the following:
1998         1997        1996
                                    -----------  ----------  ----------
Current provision               $2,918,267   $1,200,000  $2,052,739
    Deferred provision (benefit)      (420,339)      15,175     209,680
                                    ----------   ----------  ----------
 
                                    $2,497,928   $1,215,175  $2,262,419
                                    ==========   ==========  ==========
The differences between the financial statement provision and amounts computed
by applying the statutory federal income tax rate of 34% to income before taxes
are as follows:
1998        1997        1996
                                    ----------  ----------  ----------
Income tax computed at the
     statutory federal rate         $2,301,892  $1,169,334  $2,179,981
 
    Add (subtract) tax effect of
      miscellaneous items              196,036      45,841      82,438
                                    ----------  ----------  ----------
 
                                    $2,497,928  $1,215,175  $2,262,419
                                    ==========  ==========  ==========
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-19
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 10 - INCOME TAXES (Continued)

The tax effects of principal temporary differences and the resulting deferred
tax assets and liabilities that comprise the net deferred tax balance are as
follows at June 30:
1998          1997
                                                         -------------  -----------
Items giving rise to deferred tax assets:
     Deferred loan fees and costs                        $    525,309   $  472,088
     Nonaccrual loan interest                                  32,097       58,441
     Write down of marketable equity security                       -       51,680
     Accrued retirement                                       137,037      160,542
     Deferred compensation                                     68,104       26,319
     Other                                                     27,848       24,967
 
  Items giving rise to deferred tax liabilities:
     FHLB stock dividend                                     (605,653)    (596,775)
     Franchise taxes                                         (139,174)    (124,272)
     Depreciation                                            (467,544)    (467,544)
     Bad debt                                                 (26,298)    (469,712)
     Unrealized gain on securities available for sale        (821,379)     (28,974)
     Other                                                    (26,214)     (30,561)
                                                         ------------   ----------
        Net deferred liability                            ($1,295,867)   ($923,801)
                                                         ============   ==========
The Association has sufficient taxes paid in prior years and available for
recovery to warrant recording the full deferred tax asset without a valuation
allowance.

Retained earnings at June 30, 1998, include approximately $11,600,000 for which
no provision for federal income taxes has been made.  This amount represents the
tax bad debt reserve at June 30, 1988, which is the end of the Association's
base year for purposes of calculating the bad debt deduction for tax purposes.
If this portion of retained earnings is used in the future for any purpose other
than to absorb bad debts, the amount used will be added to future taxable
income.  The unrecorded deferred tax liability on the above amount at June 30,
1998 was approximately $3,900,000.

Tax expense (benefit)  attributable to securities gains (losses) approximated
$46,000, ($318,000) and ($9,000) for the years ended June 30, 1998, 1997 and
1996.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-20
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 11 - EMPLOYEE BENEFIT PLANS

The Association sponsors a defined benefit pension plan that covers
substantially all employees.  The plan calls for benefits to be paid to eligible
employees at retirement based primarily upon years of service with the
Association and compensation rates near retirement.  Contributions to the plan
reflect benefits attributed to employees' services to date, as well as services
expected to be earned in the future.  Plan assets consist primarily of
certificates of deposits with the Association and insurance contracts.

The following sets forth the funded status of the plan as of March 31, 1998 and
1997 and the amounts recognized in the accompanying Statements of Financial
Condition at June 30, 1998 and 1997.
1998          1997
                                                                                         ------------  ------------
Present values using actuarial assumptions:
     Accumulated benefit obligation, based on current
     compensation:
       Vested                                                                            $ 2,044,689   $ 2,369,415
       Non vested                                                                             80,459        49,936
                                                                                         -----------   -----------
          Total                                                                          $ 2,125,148   $ 2,419,351
                                                                                         ===========   ===========
 
 
  Projected benefit obligation, using compensation
       increase assumptions                                                              $ 3,943,041   $ 3,744,281
  Plan assets at fair value                                                                1,415,664     2,032,070
                                                                                         -----------   -----------
  Projected benefit obligation in excess of plan assets                                   (2,527,377)   (1,712,211)
  Unrecognized obligation from accounting transition                                         158,537       105,120
  Unrecognized net gain in assumptions or plan assets                                      1,619,661       904,860
                                                                                         -----------   -----------
     Recorded pension liability                                                          $   749,179   $   702,231
                                                                                         ===========   ===========
Pension expense and related year-end assumptions consist of the following:
1998          1997          1996
                                                                              --------   -----------   -----------
Service cost--benefits earned                                               $225,414   $   230,080   $   186,752
  Interest cost on benefit obligation                                          224,829       232,512       202,334
  Actual return on plan assets                                                 (34,891)     (133,399)     (119,357)
  Net amortization and deferral                                                (41,800)       21,779         2,042
                                                                              --------   -----------   -----------
     Pension expense                                                          $373,552   $   350,972   $   271,771
                                                                              ========   ===========   ===========
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-21
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

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

NOTE 11 - EMPLOYEE BENEFIT PLANS (Continued)
Weighted average discount rate              6.93%  6.93%  6.60%
  Rate of increase in future compensation     5.00%  5.00%  5.00%
  Expected long-term return on plan assets    7.00%  7.00%  7.00%
The Association also sponsors a salary reduction profit sharing plan under
section 401(k) of the Internal Revenue Code.  The plan covers substantially all
full-time employees.  Contributions to the plan are based on the salary
reduction of the participants and a matching contribution at the discretion of
the Association.  The expense related to this plan was $54,000, $58,000 and
$48,000 for the years ended June 30, 1998, 1997 and 1996.

NOTE 12 - COMMITMENTS AND FINANCIAL INSTRUMENTS WITH
 OFF-BALANCE-SHEET RISK

The Association is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to make loans.  The
Association's exposure to credit loss in case of nonperformance by the other
party to the financial instrument for commitments to make loans is represented
by the contractual amount of those instruments.  The Association follows the
same credit policy to make such commitments as is followed for those loans
recorded in the financial statements.

As of June 30, 1998, variable rate commitments to make loans or fund outstanding
lines of credit amounted to approximately $1.9 million and fixed-rate
commitments amounted to $22.0 million.  The interest rates on variable-rate
commitments ranged from 6.625% to 7.375% and interest rates on fixed-rate
commitments ranged from 6.625% to 8.5% at June 30, 1998.  As of June 30, 1997,
commitments to extend credit totaled approximately $13.9 million.  Since loan
commitments may expire without being used, the amounts do not necessarily
represent future cash commitments.

NOTE 13 - SAVINGS ASSOCIATION INSURANCE FUND RECAPITALIZATION

Included in federal deposit insurance premium expense in the Statement of Income
for the year ended June 30, 1997 is $2,461,000 for a special assessment
resulting from legislation passed and enacted into law on September 30, 1996 to
recapitalize the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation.  Thrifts such as the Association paid a one-time
assessment in November, 1996 of $0.657 for each 100 in deposits as of March 31,
1995.  Because of the recapitalization, the Association began paying lower
deposit insurance premiums in January, 1997.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-22
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
                                        
NOTE 14 - REGULATORY CAPITAL

The Association is subject to regulatory capital requirements administered by
federal banking agencies.  Capital adequacy guidelines and prompt corrective
action regulations involve quantitative measures of assets, liabilities, and
certain off-balance-sheet items calculated under regulatory accounting
practices.  Capital amounts and classifications are also subject to qualitative
judgments by regulators about components, risk weightings, and other factors,
and the regulators can lower classifications in certain cases.  Failure to meet
various capital requirements can initiate regulatory action that could have a
direct material effect on the financial statements.

The prompt corrective action regulations provide five classifications, including
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition.  If adequately capitalized,
regulatory approval is required to accept brokered deposits.  If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required.  The minimum
requirements are:
Capital to risk-
                             weighted assets     
                            -----------------    Tier 1 capital
                             Total    Tier 1   to average assets
                            -------  --------  ------------------
Well capitalized              10%        6%         5%
  Adequately capitalized         8%        4%         4%
  Undercapitalized               6%        3%         3%
At June 30, 1998, management believes the Association complies with all
regulatory capital requirements.  Based on the computed regulatory capital
ratios, the Association is considered well capitalized under the Federal Deposit
Insurance Act.  No conditions or events have occurred after June 30, 1998 that
management believes have changed the Associations category.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-23
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
                                        
NOTE 14 - REGULATORY CAPITAL (Continued)

At year end, actual capital levels (in millions) and minimum required levels
were:
Minimum Required
                                                                                         To Be Well
                                                                  Minimum Required    Capitalized Under
                                                                    For Capital       Prompt Corrective
                                                    Actual       Adequacy Purposes    Action Regulations
                                               ----------------  ------------------  --------------------
                                               Amount    Ratio    Amount     Ratio     Amount      Ratio
                                               -------  -------  ---------  -------  -----------  -------
1998
----

Total capital (to risk weighted assets)        $60,418    21.8%    $22,134     8.0%     $27,667     10.0%
 
Tier 1 capital (to risk weighted assets)       $57,763    20.9%    $11,067     4.0%     $16,600      6.0%
 
Tier 1 capital (to adjusted total assets)      $57,763     9.5%    $24,279     4.0%     $30,349      5.0%
 
Tangible capital (to adjusted total assets)    $57,763     9.5%    $ 9,105     1.5%       N/A
 
 
1997
----
 
Total capital (to risk weighted assets)        $54,967    23.8%    $18,434     8.0%     $23,043     10.0%
 
Tier 1 capital (to risk weighted assets)       $53,659    23.3%    $ 9,217     4.0%     $13,826      6.0%
 
Tier 1 capital (to adjusted total assets)      $53,659     9.8%    $21,905     4.0%     $27,381      5.0%
 
Tangible capital (to adjusted total assets)    $53,659     9.8%    $ 8,214     1.5%        N/A
NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The following table shows the estimated fair value and the related carrying
value of the Associations financial instruments at June 30, 1998 and 1997:
1998                        1997
                               --------------------------  --------------------------
                                 Carrying     Estimated      Carrying     Estimated
                                  Value       Fair Value      Value       Fair Value
                               ------------  ------------  ------------  ------------
ASSETS
Cash and cash equivalents      $  6,668,000  $  6,668,000  $  6,757,000  $  6,757,000
Federal Funds sold                1,565,000     1,565,000       210,000       210,000
Securities available
  for sale                      211,185,000   211,185,000   202,677,000   202,677,000
Securities held to
  maturity                       28,295,000    28,519,000    44,875,000    44,798,000
Loans receivable, net           353,012,000   368,109,000   285,212,000   283,734,000
Accrued interest receivable       1,835,000     1,835,000     1,889,000     1,889,000
--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-24
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
                                        
NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
LIABILITIES
Demand and savings deposits    (175,493,000)  (175,493,000)  (165,725,000)  (165,725,000)
Time deposits                  (259,969,000)  (260,580,000)  (247,175,000)  (246,722,000)
Repurchase agreements           (60,430,000)   (60,888,000)   (16,000,000)   (16,000,000)
FHLB advances                   (44,820,000)   (44,774,000)   (58,398,000)   (58,288,000)
Advances by borrowers
  for taxes and insurance        (1,983,000)    (1,983,000)    (1,701,000)    (1,701,000)
Accrued interest payable         (1,090,000)    (1,090,000)      (704,000)      (704,000)
For purposes of the above disclosures of estimated fair value, the following
assumptions were used.  The estimated fair value for cash and cash equivalents
and federal funds sold is considered to approximate cost.  The estimated fair
value of investment and mortgage-backed securities is based on quoted market
values for the individual securities or for equivalent securities.  Carrying
value is considered to approximate fair value for loans that contractually
reprice at intervals of six months or less, for short-term borrowings, for
deposit liabilities subject to immediate withdrawal and accrued interest.  The
fair values of fixed rate loans, loans that reprice less frequently than each
six months, time deposits and Federal Home Loan Bank borrowings have been
approximated by a discount rate value technique utilizing estimated market
interest rates as of June 30, 1998 and 1997.  The fair values of unrecorded
commitments at June 30, 1998 and 1997 are not material.

While these estimates of fair value are based on management's judgment of the
most appropriate factors, there is no assurance that were the Association to
have disposed of such items at June 30, 1998 and 1997, the estimated fair values
would necessarily have been achieved at these dates, since market values may
differ depending on various circumstances.  The estimated fair values at June
30, 1998 and 1997 should not necessarily be considered to apply at subsequent
dates.

Other assets and liabilities of the Association may have value but are not
included in the above disclosures, such as property and equipment.  In addition,
nonfinancial instruments typically not recognized in these financial statements
nevertheless may have value, but are not included in the above disclosures.
These include, among other items, the estimated earnings power of core deposit
accounts, the earnings potential of loan servicing rights, the value of a
trained work force, customer goodwill, and similar items.

--------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-25
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
                         NOTES TO FINANCIAL STATEMENTS
                         June 30, 1998, 1997 and 1996

--------------------------------------------------------------------------------
                                        
NOTE 16 - ADOPTION OF PLAN OF CONVERSION

On June 15, 1998, the Board of Directors of the Association, subject to
regulatory approval and approval by the members of the Association, unanimously
adopted a Plan of Conversion from a federally chartered mutual savings and loan
association to a federally chartered stock savings and loan association with the
concurrent formation of a holding company.  The Holding Company will acquire 100
percent of the Association's common stock.  The conversion is expected to be
accomplished through amendment of the Association's charter and the sale of the
Holding Company's common stock in an amount equal to the pro forma market value
of the Association after giving effect to the conversion.  A subscription
offering of the shares of the Holding Company's common stock will be offered to
the Association's depositors, then to an employee stock benefit plan and then to
other members.  Any shares of the Holding Company's common stock not sold in the
subscription offering may be offered for sale to the general public.

At the time of the conversion, the Association will establish a liquidation
account in the amount equal to its regulatory capital as of the latest
practicable date before the conversion at which such regulatory capital can be
determined.  The liquidation account will be maintained for the benefit of
eligible depositors who continue to maintain their accounts at the Association
after the conversion.  The liquidation account will be reduced annually to the
extent that eligible depositors have reduced their qualifying deposits.
Subsequent increases will not restore an eligible account holder's interest in
the liquidation account.  In the event of a complete liquidation, each eligible
depositor will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted qualifying balances
for accounts then held.  The Association may not pay dividends that would reduce
stockholders' equity below the required liquidation account balance.

Under Office of Thrift Supervision (OTS) regulations, limitations have been
imposed on all "capital distributions" by savings institutions, including cash
dividends.  The regulation establishes a three-tiered system of restrictions,
with the greatest flexibility afforded to thrifts that are both well capitalized
and given favorable qualitative examination ratings by the OTS.

Conversion costs will be deferred and deducted from the proceeds of the shares
sold in the conversion.  If the conversion is not completed, all costs will be
charged to expense.  At June 30, 1998, no costs have been deferred or expensed.

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

                                                                            F-26
================================================================================
      No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offering made hereby, and, if given or made,
such other information or representation must not be relied upon as having been
authorized by First Place Financial Corp., First Federal Savings and Loan
Association of Warren or Charles Webb & Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby to any person in any jurisdiction in which such offer
or solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. Neither the delivery of
this Prospectus nor any sale hereunder shall under any circumstances create any
implication that there has been no change in the affairs of First Place
Financial Corp. or First Federal Savings and Loan Association of Warren since
any of the dates as of which information is furnished herein or since the date
hereof.
 
                           -------------------------
 
                               TABLE OF CONTENTS
                                                                        Page
                                                                        ----
Summary..................................................................... 
Selected Consolidated Financial and Other Data of the Association...........
Risk Factors................................................................ 
First Place Financial Corp.................................................. 
First Federal Savings and Loan Association of Warren........................
 
Regulatory Capital Compliance...............................................
Use of Proceeds............................................................. 
Dividend Policy............................................................. 
Market for the Common Stock Capitalization..................................
Pro Forma Data.............................................................. 
Comparison of Valuation and Pro Forma Information with No Foundation........
Consolidated Statements of Income...........................................
Management's Discussion and Analysis of Financial Condition and 
 Results of Operations......................................................
Business of the Company..................................................... 
Business of the Association ................................................
Federal and State Taxation..................................................
Regulation.................................................................. 
Management of the Company................................................... 
Management of the Association...............................................  
The Conversion..............................................................  
Restrictions on Acquisition of the Company and the Association..............
Description of Capital Stock of the Company.................................  
Description of Capital Stock of the Association.............................  
Transfer Agent and Registrar................................................  
Change in Accountants....................................................... 
Experts..................................................................... 
Legal and Tax Opinions...................................................... 
Additional Information......................................................  
Index to Financial Statements...............................................  

                           -------------------------
 
     Until ____, 1998 or 25 days after commencement of the Syndicated Community
Offering, if any, whichever is later, all dealers effecting transactions in the
registered securities, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
 
================================================================================

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

                               11,960,000 Shares
                                                                        
                                                                        
                                                                        
                                    [LOGO]
                                                                        
                                                                        
                                                                        
                                                                        
                          FIRST PLACE FINANCIAL CORP.
                                                                        
                         (Proposed Holding Company for
             First Federal Savings and Loan Association of Warren)
                                                                        
                                                                  
      
                                                                        
                                 COMMON STOCK
                          (par value $0.01 per share)
                                                                        
                                                                        
                                                                        
                                  ----------
                                                                        
                                  PROSPECTUS

                                  ----------
                                                                        
                                                                        
                                                                        
                                            

                            
                            Charles Webb & Company
                  A Division of Keefe, Bruyette & Woods, Inc.
                                                                        
                                                                        
                                                                        
                                                                        
                              _________ __, 1998

================================================================================
PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.(1)
OTS filing fee...................................  $   14,400
SEC filing fee(1)................................      43,696
NASD filing fee(1)...............................      14,254
Nasdaq listing fee(1)............................      90,505
Printing, postage and mailing....................     250,000
Legal fees and expenses..........................     450,000
Accounting fees and expenses.....................     100,000
Appraiser's fees and expenses (including
  business plan).................................      33,000
Marketing fees and selling commissions (1).......   1,200,000
Underwriter's expenses (including underwriter's
   counsel fees)(1)..............................      15,000
Proxy solicitation and record management
  fees and  expenses.............................      30,000
Transfer agent fees and expenses.................      10,000
Certificate printing.............................      10,000
Telephone, temporary help and other
  equipment......................................      10,000
Miscellaneous....................................       4,145
                                                   ----------
 
TOTAL............................................  $2,275,000
                                                   ==========
____________________
(1)  Actual expenses based upon the registration of 14,812,000 shares at $10.00
     per share.  All other expenses are estimated.

Item 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

In accordance with the General Corporation Law of the State of Delaware (being
Chapter 1 of Title 8 of the Delaware Code), Articles 10 and 11 of the
Registrant's Certificate of Incorporation provide as follows:

TENTH:

A.  Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent, or in any other capacity while serving as a Director,
Officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith; provided, however, that, except as
provided in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding against the Corporation (or part thereof) initiated
by such indemnitee only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation.

B.  The right to indemnification conferred in Section A of this Article TENTH
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a Director or Officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, services to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise.  The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article TENTH shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.

C.  If a claim under Section A or B of this Article TENTH is not paid in full by
the Corporation within sixty days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim.  If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expenses of prosecuting or defending such suit.  In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) in any suit by the Corporation to recover an
advancement of expenses the Corporation shall be entitled to recover such
expenses upon a final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit.  In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses under this Article TENTH or otherwise shall be on the
Corporation.

D.  The rights to indemnification and to the advancement of expenses conferred
in this Article TENTH shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, the Corporation's Certificate
of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested
Directors or otherwise.

E.  The Corporation may maintain insurance, at its expense, to protect itself
and any Director, Officer, employee or agent of the Corporation or subsidiary or
Affiliate or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.

F.  The Corporation may, to the extent authorized from time to time by the Board
of Directors, grant rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ELEVENTH:
---------

A Director of this Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability:  (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the Director derived an improper personal
benefit.  If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
Directors, then the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of the
Corporation shall not adversely affect any right or protection of a Director of
the Corporation existing at the time of such repeal or modification.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

Not applicable.
Item 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:

(a) List of Exhibits (Filed herewith unless otherwise noted)

1.1    Engagement Letter between First Federal Savings and Loan Association of
       Warren and Charles Webb & Company
1.2    Draft Form of Agency Agreement*
2.1    Plan of Conversion (including the Federal Stock Charter and Bylaws of
       First Federal Savings and Loan Association of Warren)
3.1    Certificate of Incorporation of First Place Financial Corp.
3.2    Bylaws of First Place Financial Corp.
3.3    Federal Stock Charter and Bylaws of First Federal Savings and Loan
       Association of Warren (See Exhibit 2.1 hereto)
4.0    Draft Stock Certificate of First Place Financial Corp.
5.0    Draft Opinion of Patton Boggs LLP re: legality
5.1    Draft Opinion of Potter Anderson & Corroon LLP re: legality
8.0    Draft Opinion of Patton Boggs LLP re:  Federal Tax Matters
8.1    Opinion of Crowe, Chizek and Company LLP re: State Tax Matters
10.1   First Federal Savings and Loan Association of Warren Employee Stock
       Ownership Plan
10.2   Draft ESOP Loan Commitment Letter and ESOP Loan Documents*
10.3   Form of Employment Agreement between First Federal Savings and Loan
       Association of Warren and Steven R. Lewis
10.4   Form of Employment Agreement between First Place Financial Corp. and
       Steven R. Lewis
10.5   Form of Change in Control Agreements between First Federal Savings and
       Loan Association of Warren and certain executive officers
10.6   Form of Change in Control Agreements between First Place Financial Corp.
       and certain executive officers
10.7   Form of First Federal Savings and Loan Association of Warren Employee
       Severance Compensation Plan
16.1   Letter of Packer, Thomas & Co.  re: change in accountants
23.1   Consent of Crowe, Chizek and Company LLP
23.2   Consent of Packer, Thomas & Co.
23.3   Consent of Patton Boggs LLP
23.4   Consent of Potter Anderson & Corroon LLP
23.5   Consent and Subscription Rights Opinion of Keller & Company, Inc.
24.1   Powers of Attorney
27.0   Financial Data Schedule
99.1   Appraisal Report of Keller & Company, Inc. (P)
99.2   Draft Gift Instrument to First Federal of Warren Community Foundation
--------------------------------------------------------------------------------
*To be filed by amendment
(P) Filed pursuant to Rule 202 of Regulation S-T.
(b)  Financial Statement Schedules

All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X.

Item 17.  UNDERTAKINGS.

     The undersigned Registrant hereby undertakes:

     (1)  To file, during any period in which offers or sales are being made, a
          post-effective amendment to this Registration Statement:

          (i) To include any Prospectus required by Section 10(a)(3) of the
          Securities Act of 1933;

          (ii) To reflect in the Prospectus any facts or events arising after
          the effective date of the Registration Statement (or the most recent
          post-effective amendment thereof) which, individually or in the
          aggregate, represent a fundamental change in the information set forth
          in the Registration Statement.  Notwithstanding the foregoing, any
          increase or decrease in volume of securities offered (if the total
          dollar value of securities offered would not exceed that which was
          registered) and any deviation from the low or high end of the
          estimated maximum offering range may be reflected in the form of
          prospectus filed with the Commission pursuant to Rule 424(b) if, in
          the aggregate, the changes in volume and price represent no more than
          a 20 percent change in the maximum aggregate offering price set forth
          in the "Calculation of Registration Fee" table in the effective
          registration statement;

          (iii)  To include any material information with respect to the plan of
          distribution not previously disclosed in the Registration Statement or
          any material change to such information in the Registration Statement;

     (2)  That, for the purpose of determining any liability under the
          Securities Act of 1933, each such post-effective amendment shall be
          deemed to be a new Registration Statement relating to the securities
          offered therein, and the offering of such securities at that time
          shall be deemed to be the initial bona fide offering thereof.

     (3)  To remove from registration by means of a post-effective amendment any
          of the securities being registered which remain unsold at the
          termination of the Offering.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.  In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
CONFORMED
                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Warren, State of Ohio, on
September 9, 1998.

FIRST PLACE FINANCIAL CORP.

By:    /s/ Steven R. Lewis
      --------------------------------------
     Steven R. Lewis
     President and Chief Executive Officer
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

   Name                                             Date
   ----                                             ----
                                            
 /s/ Paul A. Watson                                 September 9, 1998
--------------------------------------------           
Paul A. Watson                              
Chairman of the Board                       
                                            
                                            
 /s/ Steven R. Lewis                                September 9, 1998
--------------------------------------------           
Steven R. Lewis                             
President, Chief Executive Officer and      
Director (principal executive officer)      
                                            
                                            
 /s/ Richard K. Smith                               September 9, 1998
--------------------------------------------           
Richard K. Smith                            
Vice President-Treasurer                    
(principal accounting and financial officer)
                                            
                                            
 /s/ Robert P. Grace                                September 9, 1998
--------------------------------------------           
Robert P. Grace                             
Director                                    
                                            
                                            
 /s/ George J. Gentithes                            September 9, 1998
--------------------------------------------           
George J. Gentithes                         
Director                                    
                                            
                                            
 /s/ Thomas M. Humphries                            September 9, 1998
--------------------------------------------            
Thomas M. Humphries                         
Director                                    
                                            
                                            
 /s/ Robert S. McGeough                             September 9, 1998
--------------------------------------------           
Robert S. McGeough                          
Director
/s/ E. Jeffrey Rossi                               September 9, 1998
--------------------------------------------                       
E. Jeffrey Rossi
Director

/s/ William W. Watson                               September 9, 1998
--------------------------------------------                                
William W. Watson
Director
As filed with the Securities and Exchange Commission on September 9, 1998

                                                       Registration No. 33-_____
_______________________________________________________________________________

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

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

                                    EXHIBITS

                                     TO THE

                                    FORM S-1

                             REGISTRATION STATEMENT

                                     Under

                           THE SECURITIES ACT OF 1933

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

                          FIRST PLACE FINANCIAL CORP.
  (Exact name of registrant as specified in its certificate of incorporation)

_______________________________________________________________________________
TABLE OF CONTENTS

List of Exhibits (Filed herewith unless otherwise noted)

1.1    Engagement Letter between First Federal Savings and Loan Association of
       Warren and Charles Webb & Company
1.2    Draft Form of Agency Agreement*
2.1    Plan of Conversion (including the Federal Stock Charter and Bylaws of
       First Federal Savings and Loan Association of Warren)
3.1    Certificate of Incorporation of First Place Financial Corp.
3.2    Bylaws of First Place Financial Corp.
3.3    Federal Stock Charter and Bylaws of First Federal Savings and Loan
       Association of Warren (See Exhibit 2.1 hereto)
4.0    Draft Stock Certificate of First Place Financial Corp.
5.0    Draft Opinion of Patton Boggs LLP re: legality
5.1    Draft Opinion of Potter Anderson & Corroon LLP re: legality
8.0    Draft Opinion of Patton Boggs LLP re:  Federal Tax Matters
8.1    Opinion of Crowe, Chizek and Company LLP re: State Tax Matters
10.1   First Federal Savings and Loan Association of Warren Employee Stock
       Ownership Plan
10.2   Draft ESOP Loan Commitment Letter and ESOP Loan Documents*
10.3   Form of Employment Agreement between First Federal Savings and Loan
       Association of Warren and Steven R.  Lewis
10.4   Form of Employment Agreement between First Place Financial Corp. and
       Steven R. Lewis
10.5   Form of Change in Control Agreements between First Federal Savings and
       Loan Association of Warren and certain executive officers
10.6   Form of Change in Control Agreements between First Place Financial Corp.
       and certain executive officers
10.7   Form of First Federal Savings and Loan Association of Warren Employee
       Severance Compensation Plan
16.1   Letter of Packer, Thomas & Co.  re:  change in accountants
23.1   Consent of Crowe, Chizek and Company LLP
23.2   Consent of Packer, Thomas & Co.
23.3   Consent of Patton Boggs LLP
23.4   Consent of Potter Anderson & Corroon LLP
23.5   Consent and Subscription Rights Opinion of Keller & Company, Inc.
24.1   Powers of Attorney
27.0   Financial Data Schedule
99.1   Appraisal Report of Keller & Company, Inc. (P)
99.2   Draft Gift Instrument to First Federal of Warren Community Foundation
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*To be filed by amendment
(P) Filed pursuant to Rule 202 of Regulation S-T.