METROPOLITAN FINANCIAL CORP /OH/, 424B4, 1996-10-29

METROPOLITAN FINANCIAL CORP /OH/
424B4, 1996-10-29
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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<PAGE> 1
File Pursuant To Rule 424(b)(4)
Registration No. 333-12381

PROSPECTUS
[LOGO]

700,000 SHARES
METROPOLITAN FINANCIAL CORP.
COMMON STOCK

Of the 700,000 shares of Common Stock, without par value (the "Common
Stock") offered hereby, 400,000 shares are being sold by Metropolitan Financial
Corp. ("Metropolitan" or the "Corporation"), and 300,000 shares are being sold
by the sole shareholder of the Corporation (the "Selling Shareholder"). See
"Selling Shareholder and Beneficial Ownership." The Corporation will not receive
any of the proceeds from the sale of Common Stock by the Selling Shareholder.
After the offering, the Selling Shareholder will own 80.1% of the Corporation's
Common Stock (77.2% if the Underwriter's over-allotment option is exercised in
full) and as such will be able to control those matters requiring shareholder
approval. See "Selling Shareholder and Beneficial Ownership." Prior to this
offering, there has been no public market for the Corporation's Common Stock.
See "Underwriting" for the factors considered in determining the initial public
offering price of the Common Stock.

The Corporation's Common Stock has been approved for listing, subject to
official notice of issuance, on the Nasdaq National Market under the symbol
"METF." There is no guarantee that an active public trading market for the
Common Stock will develop or be sustained.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN
INFORMATION THAT SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
SHARES OF COMMON STOCK OFFERED HEREBY.
------------------------
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS
ASSOCIATION INSURANCE FUND, THE BANK INSURANCE FUND OR ANY GOVERNMENT
AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PROCEEDS TO
UNDERWRITING PROCEEDS TO THE SELLING
PRICE TO PUBLIC DISCOUNT(1) THE CORPORATION(2) SHAREHOLDER
- --------------------------------------------------------------------------------------------------------------------
Per Share............................... $10.00 $.70 $9.30 $9.30
- --------------------------------------------------------------------------------------------------------------------
Total(3)............................ $7,000,000 $490,000 $3,720,000 $2,790,000
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
<FN>
(1) The Corporation and the Selling Shareholder have agreed to indemnify
McDonald & Company Securities, Inc. (the "Underwriter") against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting estimated expenses of $325,000 payable by the Corporation.

(3) The Selling Shareholder has granted the Underwriter a 30-day option to
purchase up to an additional 105,000 shares of Common Stock on the same
terms and conditions as set forth above to cover over-allotments. If such
option is exercised in full, the total Price to Public, Underwriting
Discount, and Proceeds to the Selling Shareholder will be $8,050,000,
$563,500, and $3,766,500 respectively. See "Underwriting."
</TABLE>

The shares of Common Stock are offered by the Underwriter subject to receipt
and acceptance of the shares by it. The Underwriter reserves the right to reject
any order in whole or in part. It is expected that delivery of the shares of
Common Stock will be made against payment therefor through the facilities of the
Depository Trust Company on or about November 1, 1996.
------------------------

MCDONALD & COMPANY
SECURITIES, INC.
The date of this Prospectus is October 29, 1996
<PAGE> 2

[METROPOLITAN SAVINGS BANK LOGO]

[MAP GRAPHIC]

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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<PAGE> 3

PROSPECTUS SUMMARY

This summary is qualified in its entirety by the more detailed information
and financial statements appearing elsewhere herein. Unless otherwise indicated,
information in this Prospectus assumes no exercise of the Underwriter's
over-allotment option and reflects a 3,125,635-for-one stock split which
occurred prior to the completion of the offering. Prospective investors should
carefully consider the information set forth under the heading "Risk Factors"
beginning on page 6.

THE CORPORATION

Metropolitan is the holding company for Metropolitan Savings Bank of
Cleveland (the "Bank"), an Ohio chartered stock savings association
headquartered in Mayfield Heights, Ohio. Metropolitan had total assets of $672.8
million at June 30, 1996. The Bank operates 14 full service retail offices
serving primarily the eastern suburbs of Cleveland, Ohio and is the sixth
largest savings association headquartered in Ohio. The Bank's deposits are
insured up to applicable limits by the Federal Deposit Insurance Corporation
("FDIC").

Metropolitan is wholly-owned by Robert M. Kaye, the Selling Shareholder. In
recent years, Metropolitan has pursued a strategy of maximizing long term
profitability by pursuing balance sheet growth designed to enhance the franchise
value of the Bank, its primary operating subsidiary. Metropolitan seeks to
maintain strong growth through (i) increasing total interest-earning assets by
continuing to focus on multifamily, commercial real estate and residential loan
origination while maintaining a high level of asset quality and "adequately
capitalized" status pursuant to FDIC guidelines, (ii) growing time and core
deposits at a rate that is consistent with the overall level of growth of
interest-earning assets, (iii) increasing non-interest income as a non-credit
based source of income that requires a lower commitment of capital than credit
based products, and (iv) increasing the capital of the Bank through retained
earnings.

As a result of this strategy, Metropolitan's assets have increased from
$249.6 million at December 31, 1991 to $672.8 million at June 30, 1996. Net
income for the Corporation has increased from $1.2 million for the year ended
December 31, 1991 to $3.5 million for the year ended December 31, 1995. The
Corporation's net income was $1.6 million for the six-month period ended June
30, 1996.

Metropolitan is primarily engaged in originating and purchasing multifamily
and commercial real estate loans in Ohio, Southeastern Michigan, Central and
Northern New Jersey, Northern Kentucky, and Western Pennsylvania and residential
real estate loans in Northeastern Ohio. Metropolitan has expanded its
multifamily lending beyond its primary retail banking market of Northeastern
Ohio into other areas of the Midwest and Northeastern United States to markets
that it believes are similar in nature to Northeastern Ohio in order to benefit
from management's expertise in multifamily lending. Management believes that a
certain degree of geographic diversity serves to enhance Metropolitan's asset
quality.

At June 30, 1996, Metropolitan's loan portfolio totalled $563.9 million, of
which $270.0 million, or 47.9%, was in multifamily loans. Management intends to
continue to focus on originating and purchasing variable rate multifamily, as
well as commercial real estate and residential mortgages in its primary lending
markets. Management believes that multifamily loans offer attractive
risk-adjusted yields and favorable asset/liability management characteristics.
Metropolitan believes that, despite growing competition for multifamily real
estate loans from other lenders, it will continue to benefit from management's
experience and relationships with various sources of multifamily lending
developed over the years.

At June 30, 1996, commercial real estate loans comprised 21.6% of
Metropolitan's total loan portfolio. Over the past three years, this portion of
Metropolitan's portfolio has increased mainly through purchases. A majority of
these loans were part of larger packages of loans that included multifamily
residential loans and exhibited the yield and term characteristics sought by
Metropolitan and met the underwriting criteria established by Metropolitan.
Metropolitan plans to continue to add commercial real estate loans to its
portfolio through these types of purchases and to a lesser extent, through
origination. Due to regulatory limitations, Metropolitan expects that although
the level of commercial real estate loans in its portfolio will continue to
increase, the percentage of its loan portfolio consisting of commercial real
estate loans will remain stable.

Metropolitan originates one- to four-family residential loans in its
primary market of Northeastern Ohio. Metropolitan originates fixed rate
residential loans primarily for sale in the secondary market and originates

3
<PAGE> 4

adjustable rate residential loans to hold in its portfolio. At June 30, 1996,
16.3% of Metropolitan's total loan portfolio was made up of residential real
estate loans secured by one- to four-family residences. When Metropolitan sells
its fixed rate residential loans into the secondary market, it retains the
servicing rights on the loans, thereby increasing the amount of non-interest
income to the Corporation.

In addition to retaining servicing rights on the residential loans that it
sells, Metropolitan increases its loan servicing portfolio through purchases of
servicing rights. At June 30, 1996, Metropolitan's overall servicing portfolio
was $1.5 billion. Of such amount, $1.1 billion represented loans serviced for
others. Loan servicing income, net, which was $632,000 in the six months ended
June 30, 1996, represents a significant source of fee income to Metropolitan.
Management believes that the market value of the servicing portfolio exceeds the
amount reflected on the balance sheet.

Maintaining a high level of asset quality is one of management's top
priorities. Net charge-offs have averaged 0.06% for the five years ended
December 31, 1995, and net charge-offs were only $13,000 in the six months ended
June 30, 1996. At June 30, 1996, nonperforming loans represented 1.03% of total
loans and nonperforming assets represented 0.90% of total assets.

Metropolitan plans to fund its asset growth primarily through growth in
time and core deposits. Deposits have grown at a compound annual rate of 21.1%
from December 31, 1991 to June 30, 1996, while assets have grown at the rate of
24.5%. As deposit growth has lagged asset growth, Federal Home Loan Bank
("FHLB") advances have been used by the Bank to fund asset growth. Metropolitan
targets growing communities with demographic and market characteristics which
can support new retail sales office locations and plans to open two de novo
offices per year. In addition to providing a source of core deposit funding,
these retail sales offices will enable the Corporation to continue to increase
residential, consumer and business lending in its primary Ohio markets.

In recent years, Metropolitan has put in place several initiatives designed
to make the Bank a full service bank. Metropolitan has created a trust
department, which manages investment assets for individuals and institutional
clients. In addition, the Bank has business lending and consumer loan
departments and personnel. Recently, the Bank instituted a credit card program.
These initiatives have been undertaken despite the short-term detrimental impact
on earnings as Metropolitan believes that such additional products and services
will enhance its competitive position and profitability in future years.
Although these activities constitute a relatively small part of Metropolitan's
business strategy at the present time, management expects these lines of
business to continue to grow and to become a more significant part of the
business of the Bank in the future.

The Corporation was incorporated in Ohio in 1972. Its corporate
headquarters is located at 6001 Landerhaven Drive, Mayfield Heights, Ohio 44124
and its telephone number is (216) 646-1111.

THE OFFERING

Common Stock offered by the
Corporation........................... 400,000

Common Stock offered by the Selling
Shareholder........................... 300,000(1)

Common Stock outstanding after the
offering.............................. 3,525,635

Use of proceeds....................... The Corporation anticipates that all
of the proceeds to the Corporation
will be contributed as paid-in
capital to the Bank. See "Use of
Proceeds."

Nasdaq National Market symbol......... METF
- ---------------

(1) 405,000 shares assuming full exercise of the Underwriter's over-allotment
option.

4
<PAGE> 5

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth certain summary consolidated financial and
other data of the Corporation at or for the dates indicated. The information
with respect to the six month periods ended June 30, 1996 and 1995 has been
derived from Metropolitan's unaudited financial statements. In the opinion of
management, all adjustments (which consist of normal recurring accruals)
necessary for a fair presentation have been included. This information should be
read in conjunction with the Consolidated Financial Statements and notes
thereto, and Management's Discussion and Analysis of Financial Condition and
Results of Operations included elsewhere herein. The results of operations for
the six month period ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the entire year.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets........................... $ 672,786 $ 555,274 $ 590,095 $479,384 $372,390 $300,500 $249,587
Loans receivable, net.................. 563,883 462,424 478,345 424,944 284,288 216,688 164,983
Loans held for sale.................... 10,686 16,739 1,504 84 10,391 5,082 11,839
Mortgage-backed securities............. 41,821 24,874 39,156 16,785 13,412 23,322 33,040
Securities............................. 12,136 12,333 22,806 7,641 10,168 19,740 20,040
Cost in excess of fair value of net
assets acquired...................... 3,079 3,298 3,188 3,409 3,631 3,853 4,098
Cost of loan servicing rights.......... 8,693 8,910 9,130 4,825 2,295 1,541 358
Deposits............................... 558,794 454,822 503,742 436,198 332,549 269,159 228,331
Borrowings............................. 77,074 64,674 46,874 15,504 15,745 11,820 5,910
Shareholder's equity................... 26,614 23,021 25,466 20,280 17,750 13,111 10,157
SELECTED OPERATIONS DATA:
Total interest income.................. $ 24,988 $ 20,368 $ 43,127 $ 31,389 $ 24,448 $ 22,100 $ 20,942
Total interest expense................. (15,449) (12,388) (26,816) (15,992) (11,215) (12,285) (14,851)
---------- ---------- ---------- -------- -------- -------- --------
Net interest income.................... 9,539 7,980 16,311 15,397 13,233 9,815 6,091
Provision for loan losses.............. (685) (479) (959) (766) (740) (367) (45)
---------- ---------- ---------- -------- -------- -------- --------
Net interest income after provision for
loan losses.......................... 8,854 7,501 15,352 14,631 12,493 9,448 6,046
Loan servicing income, net............. 632 391 1,068 642 601 490 226
Gain on sales of loans and
securities........................... 36 113 833 86 1,712 719 261
Other non-interest income.............. 1,378 1,458 2,631 1,123 1,067 578 465
Non-interest expense................... (8,363) (6,752) (14,187) (11,058) (8,274) (6,339) (5,032)
---------- ---------- ---------- -------- -------- -------- --------
Income before income taxes and
cumulative effect of change in
accounting methods................... 2,537 2,711 5,697 5,424 7,599 4,896 1,966
Income tax expense..................... (956) (1,032) (2,155) (1,987) (2,829) (1,773) (715)
Cumulative effect on prior years of
change in accounting method.......... -- -- -- -- (300) -- --
---------- ---------- ---------- -------- -------- -------- --------
Net income............................. $ 1,581 $ 1,679 $ 3,542 $ 3,437 $ 4,470 $ 3,123 $ 1,251
========== ========== ========== ======== ======== ======== ========
PER SHARE DATA:(1)
Net income............................. $ 0.51 $ 0.54 $ 1.13 $ 1.10 $ 1.43 $ 1.00 $ 0.40
Book value............................. 8.51 7.37 8.15 6.49 5.68 4.19 3.25
Tangible book value.................... 7.46 6.20 7.04 5.26 4.32 2.71 1.63
PERFORMANCE RATIOS:(2)
Return on average assets............... 0.50% 0.66% 0.65% 0.82% 1.34% 1.13% 0.54%
Return on average equity............... 12.17 15.59 16.19 17.83 29.30 27.01 13.32
Interest rate spread................... 2.89 2.97 2.92 3.65 4.05 3.86 2.82
Net interest margin(3)................. 3.19 3.27 3.18 3.87 4.26 3.88 2.82
Average interest-earning assets to
average interest-bearing
liabilities.......................... 105.22 105.11 105.13 105.53 105.62 100.33 100.04
Non-interest expense to average
assets............................... 2.63 2.64 2.61 2.64 2.49 2.30 2.17
Efficiency ratio(4).................... 71.24 66.80 68.28 62.95 49.42 52.51 67.51
ASSET QUALITY RATIOS:
Non-performing loans to total
loans(5)............................. 1.03 0.69 0.68 0.55 1.08 0.44 0.26
Non-performing assets to total
assets(5)............................ 0.90 0.60 0.60 0.51 1.08 0.40 0.24
Allowance for losses on loans to total
loans(5)............................. 0.59 0.57 0.57 0.45 0.43 0.32 0.28
Net charge-offs to average loans(2).... 0.00 0.02 0.02 0.03 0.09 0.07 0.10
CAPITAL RATIOS:(5)
Shareholder's equity to total assets... 3.96 4.15 4.32 4.23 4.77 4.36 4.07
Tier 1 capital to total assets......... 5.89 5.26 5.77 5.34 5.81 4.47 4.18
Tier 1 capital to risk-weighted
assets............................... 8.22 7.47 8.20 7.60 8.33 6.75 7.00
OTHER DATA:
Loans serviced for others.............. $1,135,615 $1,181,349 $1,182,216 $739,425 $504,677 $396,703 $208,899
Number of full service offices......... 14 11 13 11 9 8 10
Number of loan production offices...... 6 4 5 4 1 -- --
<FN>
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(1) Per share data has been calculated to reflect the 3,125,635-for-one stock
split which occurred prior to the completion of the offering.

(2) Ratios for interim periods are stated on an annualized basis.

(3) Represents the ratio of net interest income to average interest-earning
assets.

(4) Equals non-interest expense less amortization of intangible assets divided
by net interest income plus non-interest income (excluding gains or losses
on securities transactions).

(5) Ratios are calculated based on period end balances.
</TABLE>

5
<PAGE> 6

RISK FACTORS

Prospective investors should carefully consider the following factors,
together with the information set forth in this Prospectus, prior to purchasing
any shares of Common Stock offered hereby.

CONTROL BY ROBERT M. KAYE

The Corporation is currently wholly-owned by Robert M. Kaye of Rumson, New
Jersey. Mr. Kaye is also Chairman of the Corporation, Chairman of the Bank and
the Selling Shareholder. Following the offering, Mr. Kaye will continue to own
80.1% of the Corporation's outstanding Common Stock (77.2% if the Underwriter's
over-allotment option is exercised in full), will control the outcome of various
matters submitted to the shareholders for approval, will have the ability to
elect or remove all of the directors of the Corporation and will have ultimate
control of the Corporation and the Bank. See "Selling Shareholder and Beneficial
Ownership."

DIVIDEND POLICY

The Corporation has paid no cash dividends on its Common Stock since 1987.
Furthermore, the Corporation anticipates that future earnings will be retained
to finance the Corporation's operations and support the continued growth of the
Bank. Accordingly, the Corporation does not currently anticipate paying cash
dividends on its Common Stock in the foreseeable future. In addition, the terms
of the Corporation's 10% subordinated debt maturing December 31, 2001 and
outstanding in the amount of $4.9 million (the "1993 Subordinated Notes")
prohibit the Corporation from paying any cash dividend while the 1993
Subordinated Notes are outstanding. The Indenture dated as of December 1, 1995
between the Corporation and Boatmen's Trust Company (the "Indenture") covering
the 9 5/8% subordinated debt maturing January 1, 2005 and outstanding in the
amount of $14.0 million (the "1995 Subordinated Notes") and the restated loan
agreement between the Corporation and The Huntington National Bank, dated
October 16, 1996 (the "Huntington Loan Agreement") prohibit the Corporation from
paying a dividend or other distribution on its equity securities unless the
Corporation's ratio of tangible equity to total assets is in excess of 7.0%. For
these purposes, both the Indenture and the Huntington Loan Agreement define
tangible equity as Consolidated Net Worth less goodwill. See "Dividend Policy"
and "Description of Subordinated Notes."

REAL ESTATE LENDING

At June 30, 1996, approximately 90.7% of Metropolitan's loans were secured
by real estate. Therefore, Metropolitan's ability to conduct its mortgage
lending business and the value of Metropolitan's real estate collateral could be
adversely affected by adverse changes in the real estate markets in which
Metropolitan conducts its business. At June 30, 1996, approximately 61.7% of the
principal amount of Metropolitan's real estate loans was secured by properties
located in Ohio. A decline in real estate values in Ohio would increase the risk
that losses would be incurred should borrowers default on their loans.

At June 30, 1996, approximately 44.4% of the principal amount of
Metropolitan's loans was secured by multifamily properties. Multifamily
properties include residential apartment buildings of five or more units.
Metropolitan focuses on this segment of the market more than many other
financial institutions, and it believes that this emphasis gives Metropolitan
certain competitive advantages. Loans secured by multifamily properties,
however, are generally higher in principal amount and are considered to entail a
higher level of risk of loss than loans secured by one- to four-family
residences. Potential significant sources of losses are that the cash flows from
the properties securing the loans may become inadequate to service the loan
payments and that the value of the collateral may not be sufficient to repay the
loan. See "Business -- Loan Originations and Purchases -- Multifamily
Residential Lending."

At June 30, 1996, approximately 20.1% of the principal amount of
Metropolitan's loans was secured by commercial real estate. Commercial real
estate loans generally present a higher level of risk than loans secured by one-
to four-family residences due to the concentration of principal in a limited
number of loans and borrowers, the effects of general economic conditions on
commercial properties and the increased difficulty of evaluating and monitoring
these types of loans. In addition, the repayment of loans secured by commercial
real estate is typically dependent upon the successful operation of the related
business activities. See "Business -- Loan Originations and
Purchases -- Commercial Real Estate Lending."

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ALLOWANCE FOR LOSSES ON LOANS

Metropolitan's allowance for losses on loans is maintained at a level
considered adequate by management to cover losses that are currently anticipated
based on past loss experience, general economic conditions, information about
specific borrowing situations, including financial position and collateral
values and other factors and estimates that are subject to change over time. The
amount of future losses is susceptible to changes in economic, operating and
other conditions, including changes in interest rates, that may be beyond
Metropolitan's control, and such losses may exceed Metropolitan's current
allowance for losses on loans. At June 30, 1996, Metropolitan had total
non-performing loans of $5.8 million. At the same date, Metropolitan's allowance
for losses on loans was $3.4 million, or 0.59% of total loans and 59.0% of total
non-performing loans. There can be no assurance, however, that such allowance
will be adequate to cover actual losses. See "Business -- Loan Delinquencies and
Non-Performing Assets and -- Allocation of Allowance for Losses on Loans."

ASSET GROWTH STRATEGY

Metropolitan's primary strategy is to maximize long-term profitability by
pursuing balance sheet growth designed to enhance the franchise value of the
Bank. This growth strategy may present special risks. One potential risk is that
shareholders may incur dilution of book value and earnings per share in the
event that the Corporation makes an acquisition using Common Stock as the
consideration. In addition, in accordance with this growth strategy, the
Corporation's objective has been to maintain "adequately capitalized" status (as
opposed to "well capitalized" status) under Federal regulatory guidelines. In
the event that the Corporation's operating performance would be adversely
affected by losses on loans or other circumstances, the Bank's capital status
could be reclassified as "undercapitalized." An undercapitalized institution is
subject to "prompt corrective action" by its primary regulator and may be
required to comply with certain mandatory or discretionary supervisory actions.
Prompt corrective action includes increased restrictions on dividends and other
capital distributions by the Bank to its holding company and can require the
creation of a written capital restoration plan which must be submitted to and
approved by regulators. Institutions like the Bank which operate with capital at
or close to the required levels may be more likely to be reclassified to the
next lower capital category. See "Regulation and Supervision -- The
Bank -- Prompt Corrective Action and -- Restrictions on Dividends and Other
Capital Distributions."

LEVERAGE; CAPITAL DISTRIBUTION REGULATIONS

As a result of the Corporation's asset growth strategy and its use of
long-term debt to help fund its growth, the Corporation is highly leveraged and
its debt service requirements are substantial. As of June 30, 1996, the
Corporation had long term indebtedness (excluding FHLB advances) of $18.9
million and shareholder's equity of $26.6 million. The ability of the
Corporation to satisfy its obligations is dependent upon the Bank's ability to
generate profits and pay dividends to the Corporation as well as the
Corporation's ability to renew or refinance borrowings or to raise additional
equity capital. Each of these alternatives is dependent upon financial,
business, regulatory and other general factors affecting the Corporation. There
can be no assurance that any such alternatives would be accomplished on
satisfactory terms. See "Capitalization."

The Office of Thrift Supervision's ("OTS") capital distribution regulations
limit the Bank's ability to pay dividends to Metropolitan based on the Bank's
capital level and supervisory condition. Under the regulations, a savings
institution that meets the OTS capital requirements is generally permitted to
make capital distributions during a year up to the greater of (i) 100% of its
net income during that year, plus the amount that would reduce by one-half its
"surplus capital ratio" at the beginning of the calendar year (the excess
capital over its capital requirements), or (ii) 75% of its net income over the
most recent four-quarter period. In addition, an insured depository institution
is prohibited from declaring any dividend, making any other capital
distribution, or paying a management fee to its holding company if, following
the distribution or payment, the institution would be classified as
"undercapitalized" or lower. See "Regulation and Supervision -- The
Bank -- Prompt Corrective Action." As of June 30, 1996, the Bank met the OTS
capital requirements and under the above regulations, the Bank had approximately
$3.5 million available for the payment of dividends in the aggregate to
Metropolitan. There can be no assurance that the Bank will continue to meet its
capital requirements or that its net income and surplus capital in the future
will be sufficient to permit the payment of dividends by the

7
<PAGE> 8

Bank to Metropolitan. In the event that the capital of the Bank falls below its
capital requirements or the OTS notifies the Bank that it is in need of more
than normal supervision, the ability of the Bank to pay dividends could be
further restricted. See "Regulation and Supervision -- The Bank -- Restrictions
on Dividends and Other Capital Distributions" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- Capital."

FLUCTUATIONS IN QUARTERLY RESULTS

The Corporation has experienced and expects to continue to experience
fluctuations in quarterly results of operations. The Corporation's sources of
non-interest income such as loan option income may provide fluctuating amounts
of non-interest income from quarter to quarter. In these option transactions
Metropolitan purchases loans and sells nonrefundable options to a third party to
purchase these same loans at a specified price within a specified time period.
The third party is a loan broker and the loan option fee is negotiated based on
the principal amount of the loans involved. These option transactions provide
the loan broker a period of time to find a buyer who is willing to pay a higher
price for the loans. See "Business -- Loan Option Income."

Loan option income is dependent on the availability of suitable loans for
purchase as well as the willingness of the potential optionee to negotiate an
option fee with the Corporation. As a result, the Corporation believes that
period-to-period comparisons of its operating results should not necessarily be
relied upon to predict future performance. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

GOVERNMENT REGULATION

As a savings and loan holding company, Metropolitan is subject to
regulation, examination and supervision by the OTS. The Bank is subject to
regulation and examination by the OTS, the FDIC and by agencies of the State of
Ohio. Applicable laws and regulations relate to such matters as capital
standards, mergers, establishment of branch offices, subsidiary investments and
activities and general investment authority.

As a savings and loan association, the Bank is insured by the Savings
Association Insurance Fund ("SAIF"). State commercial banks and national banks
are insured by the Bank Insurance Fund ("BIF"). Although both the BIF and the
SAIF are administered by the FDIC, BIF and SAIF insurance premium assessment
rates have not remained comparable. Under the current assessment rate structure,
BIF members generally pay lower premiums than SAIF-insured institutions, placing
SAIF-insured institutions, including Metropolitan, at a competitive disadvantage
to institutions whose deposits are exclusively or primarily BIF-insured. The
disparity between BIF and SAIF assessment rates was created after BIF reached
its required reserve ratio during May 1995 resulting in a reduction of BIF
assessment rates. At the time assessment rates were determined for the period
beginning January 1, 1996 and effective through December 31, 1996, SAIF was not
predicted to reach its required reserve ratio until the year 2001. As a result,
the SAIF rates were not adjusted.

As a result of this disparity in insurance premium rates, on September 30,
1996, President Clinton signed into law an omnibus budget reconciliation bill
(the "Omnibus Bill") which includes provisions designed to recapitalize the SAIF
and to mitigate the BIF/SAIF premium disparity. The Omnibus Bill requires the
FDIC to impose a special assessment on SAIF-insured deposits held by
institutions as of March 31, 1995. The FDIC has announced that the special
assessment rate will be set at 65.7 basis points. Based upon insured deposits on
March 31, 1995 and an assessment rate of 0.657%, Metropolitan will pay an
assessment of $2.9 million on November 27, 1996 from the working capital of the
Bank. When the SAIF reaches its required reserve ratio following the one-time
assessment, the FDIC has indicated that it will reduce the annual assessment
rates for SAIF-insured institutions. See "Recent Developments."

In addition, the Omnibus Bill requires the merger of the BIF and SAIF into
a single insurance fund no later than January 1, 1999. In connection with the
merger of the funds, it is possible that SAIF-insured institutions will be
required to convert their charters into state bank charters or national bank
charters. If such proposal became law, the Corporation could be subject to
capital requirements. The Corporation is not currently subject to such
requirements. See "Regulation and Supervision -- The Bank -- Insurance of
Accounts and Regulation by the FDIC."

8
<PAGE> 9

EXPOSURE TO CHANGES IN INTEREST RATES

The consolidated net income of Metropolitan depends to a substantial extent
on its net interest income, which reflects the difference between the interest
income Metropolitan receives from loans, securities and other interest-earning
assets, and the interest expense it pays to obtain deposits and other
liabilities. During periods of rising interest rates, Metropolitan's net
interest income could be adversely affected, because in such an environment,
rates paid on deposits tend to rise more quickly than rates received on loans.
These rates are highly sensitive to many factors including competition, general
economic conditions and the policies of various governmental and regulatory
authorities. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Asset/Liability Management."

COMPETITION

Metropolitan faces strong competition, both in originating real estate and
other loans and in attracting deposits. Competition in originating loans comes
primarily from other savings institutions, commercial banks, mortgage companies,
credit unions, finance companies and insurance companies. Competition in
deposits comes primarily from other savings institutions, commercial banks,
credit unions, mutual funds and brokerage companies. Some of the Bank's
competitors have higher lending limits and substantially greater financial
resources than the Bank. See "Business -- Competition."

NO PRIOR PUBLIC MARKET; DETERMINATION OF OFFERING PRICE; DILUTION

Prior to the offering, there has been no public market for the shares of
the Corporation's Common Stock. Although the Corporation's Common Stock has been
approved for listing on the Nasdaq National Market, there can be no assurance
that an active market for the Common Stock will develop or be sustained after
the offering. The initial public offering price was determined through
negotiations among the Corporation, the Selling Shareholder and the Underwriter
and may not be indicative of the market price for the shares of Common Stock
after the offering. In addition, the stock market has from time-to-time
experienced extreme price and volume volatility. These fluctuations may be
unrelated to the operating performance of particular companies whose shares are
traded. Generally, market fluctuations may adversely affect the market price of
the Common Stock. A variety of events, including quarter to quarter variations
in operating results, news announcements, trading volume, general market trends
and other factors, could result in fluctuations in the price of the Common Stock
and there can be no assurance that the market price of the Common Stock will not
decline below the initial public offering price. Based on financial information
of the Corporation as of June 30, 1996, purchasers of the Common Stock offered
hereby will experience an immediate and substantial dilution of $2.42 in the net
tangible book value per share of their investment. In the event the Corporation
issues additional Common Stock in the future, purchasers of Common Stock in this
offering may experience further dilution in the net tangible book value per
share of the Common Stock. See "Underwriting" and "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the public
market following the offering, or the perception that such sales could occur,
could have an adverse effect on the price of the shares of Common Stock. The
shares of Common Stock offered hereby will be freely transferable by persons who
are not affiliates of the Corporation without restriction or further
registration under the Securities Act of 1933 (the "Securities Act"). Following
the completion of the offering, the Selling Shareholder will own 80.1% of the
Corporation's outstanding Common Stock (77.2% if the Underwriter's
over-allotment option is exercised in full). In addition, the Underwriter has
agreed to reserve a maximum of 120,000 shares of Common Stock offered by this
Prospectus for sale to officers, directors and employees of the Corporation. The
Selling Shareholder and the directors and executive officers of the Corporation
have agreed not to offer or sell any shares of Common Stock or securities
convertible into or exchangeable for Common Stock, for a period of 180 days from
the date of this Prospectus without the prior written consent of the
Underwriter. The Underwriter, in its sole discretion, and at any time without
prior notice, may release all or any portion of the Common Stock subject to the
lockup arrangement described herein. All shares of Common Stock held by such
affiliates of the Corporation, including the Selling Shareholder, are subject to
certain restrictions on resale under the Securities Act, but

9
<PAGE> 10

may be resold upon the expiration of the lockup period in accordance with the
volume and manner of sale restrictions of Rule 144 promulgated under the
Securities Act. See "Shares Eligible for Future Sale" and "Underwriting."

ANTITAKEOVER PROVISIONS

Certain provisions of the Corporation's Amended and Restated Articles of
Incorporation (the "Articles") and Amended and Restated Code of Regulations (the
"Regulations") and of the Ohio General Corporation Law (the "OGCL"), together or
separately, could discourage potential acquisition proposals, delay or prevent a
change in control of the Corporation and limit the price that certain investors
might be willing to pay in the future for the Common Stock. Among other things,
these provisions (i) require certain supermajority votes; (ii) establish certain
advance notice procedures for nomination of candidates for election as directors
and for shareholder proposals to be considered at shareholders' meetings; and
(iii) provide for a classified Board of Directors, and for the removal of
directors by the shareholders only upon the affirmative vote of the holders of
three-quarters of the shares entitled to vote.

Pursuant to the Corporation's Articles, upon the closing of the offering,
the Board of Directors of the Corporation will have authority to issue up to ten
million preferred shares without further shareholder approval. Such preferred
shares could have dividend, liquidation, conversion, voting and other rights and
privileges that are superior or senior to the shares of Common Stock. Issuance
of preferred shares could result in the dilution of the voting power of the
shares of Common Stock, adversely affect holders of the Common Stock in the
event of liquidation of the Corporation or delay, defer or prevent a change in
control of the Corporation. See "Description of Capital Stock -- Potential
Anti-Takeover Effects of Articles, Regulations and OGCL."

10
<PAGE> 11

RECENT DEVELOPMENTS

The following tables set forth certain selected financial data for
Metropolitan as of September 30, 1996, June 30, 1996 and December 31, 1995, and
for the three and nine months ended September 30, 1996 and 1995. In the opinion
of management, all adjustments (which consist of normal recurring accruals)
necessary for a fair presentation have been included. The results of operations
and other data for the three and nine months ended September 30, 1996, are not
necessarily indicative of the results of operations that may be expected for any
other period.

<TABLE>
<CAPTION>
AT AT AT
SEPTEMBER 30, JUNE 30, DECEMBER 31,
1996 1996 1995
------------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets......................................... $ 719,968 $672,786 $590,095
Loans receivable, net................................ 602,736 563,883 478,345
Loans held for sale.................................. 6,877 10,686 1,504
Mortgage-backed securities........................... 42,255 41,821 39,156
Securities........................................... 12,186 12,136 22,806
Cost in excess of fair value of net assets
acquired.......................................... 3,029 3,079 3,188
Cost of loan servicing rights........................ 8,363 8,693 9,130
Deposits............................................. 584,749 558,794 503,742
Borrowings........................................... 90,424 77,074 46,874
Shareholder's equity................................. 25,536 26,614 25,466
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- ---------------------
1996 1995 1996 1995
------- ------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
SELECTED OPERATIONS DATA:
Total interest income........................... $14,008 $11,403 $ 38,996 $ 31,771
Total interest expense.......................... (8,619) (7,217) (24,068) (19,605)
------- ------- -------- --------
Net interest income............................. 5,389 4,186 14,928 12,166
Provision for loan losses....................... (650) (240) (1,335) (719)
------- ------- -------- --------
Net interest income after provision for loan
losses....................................... 4,739 3,946 13,593 11,447
Loan servicing income, net...................... 307 354 939 745
Gain on sale of loans and securities............ 104 131 140 244
Other non-interest income....................... 955 360 2,333 1,818
SAIF assessment................................. (2,928) -- (2,928) --
Other non-interest expense...................... (4,822) (3,641) (13,185) (10,393)
------- ------- -------- --------
Income (loss) before income taxes............... (1,645) 1,150 892 3,861
Income tax (expense) benefit.................... 516 (435) (440) (1,467)
------- ------- -------- --------
Net income (loss)............................... $(1,129) $ 715 $ 452 $ 2,394
======= ======= ======== ========
PER SHARE DATA:(1)
Net income (loss)............................... $(0.36) $0.23 $0.14 $0.77
Book value...................................... 8.17 7.59 8.17 7.59
Tangible book value............................. 7.14 6.46 7.14 6.46
<FN>
- ---------------

(1) Per share data has been calculated to reflect the 3,125,635-for-one stock
split which occurred prior to completion of the offering.
</TABLE>

11
<PAGE> 12

<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:
Return on average assets(1).............. (0.64)% 0.50% 0.09% 0.60%
Return on average equity(1).............. (17.51) 12.24 2.33 14.49
Interest rate spread(1).................. 3.04 2.71 2.97 2.92
Net interest margin(1)(2)................ 3.27 3.08 3.23 3.22
Average interest-earning assets to
average interest-bearing
liabilities........................... 104.43 106.84 104.94 105.72
Non-interest expense to average
assets(1)............................. 4.39 2.54 3.27 2.61
Efficiency ratio(3)...................... 113.99 71.28 86.99 68.30
Non-performing loans to total loans(4)... 0.77 0.69 0.77 0.69
Non-performing assets to total
assets(4)............................. 0.87 0.58 0.87 0.58
Allowance for losses on loans to total
loans(4).............................. 0.66 0.58 0.66 0.58
Net charge-offs to average loans(1)...... 0.02 0.01 0.01 0.02
Loans serviced for others................ $1,115,550 $1,209,012 $1,115,550 $1,209,012
Number of full service offices........... 14 12 14 12
Number of loan production offices........ 6 4 6 4
</TABLE>

<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996 AT JUNE 30, 1996
---------------------- ----------------------
PERCENT OF PERCENT OF
AMOUNT ASSETS AMOUNT ASSETS
------- ---------- ------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
REGULATORY CAPITAL COMPLIANCE:
Tangible Capital:
Actual......................................... $38,192 5.35% $39,279 5.89%
Required....................................... 10,712 1.50 10,003 1.50
------- ---- ------- ----
Excess......................................... $27,480 3.85% $29,276 4.39%
======= ==== ======= ====
Core Capital:
Actual......................................... $38,390 5.37% $39,571 5.93%
Required....................................... 28,574 4.00 26,687 4.00
------- ---- ------- ----
Excess......................................... $ 9,816 1.37% $12,884 1.93%
======= ==== ======= ====
Risk-based Capital:
Actual......................................... $41,550 8.25% $42,462 8.82%
Required....................................... 40,284 8.00 38,500 8.00
------- ---- ------- ----
Excess......................................... $ 1,266 0.25% $ 3,962 0.82%
======= ==== ======= ====
<FN>
- ---------------

(1) Annualized.

(2) Represents the ratio of net interest income to average interest-earning
assets.

(3) Equals non-interest expense less amortization of intangible assets divided
by net interest income plus non-interest income (excluding gains or losses
on securities transactions).

(4) Ratios are calculated based on period end balances.
</TABLE>

Financial Condition. Total assets amounted to $720.0 million at September
30, 1996, as compared to $672.8 million at June 30, 1996, an increase of $47.2
million, or 7.0%. During the three month period ended September 30, 1996,
Metropolitan continued to experience loan growth which was funded by increased
retail deposits and other borrowings.

Loans receivable including loans held for sale increased $35.0 million, or
6.1%, to $609.6 million, during the three months ended September 30, 1996. This
increase was primarily due to a $23.6 million increase in loans secured by one-
to four-family real estate loans, a $5.6 million increase in construction and
land loans

12
<PAGE> 13

(net of loans in process) and a $5.3 million increase in commercial real estate
loans. The 25.6% increase in one- to four-family real estate loans reflected a
continuation of the high demand for adjustable rate loans which Metropolitan
holds in its portfolio.

Mortgage-backed securities increased by $434,000, or 1.0%, to $42.3
million, during the three months ended September 30, 1996. Securities increased
by $50,000, or 0.4%, to $12.2 million, during the three months ended September
30, 1996.

Deposits increased by $26.0 million, or 4.6%, to $584.7 million, during the
three months ended September 30, 1996. This increase was primarily due to
management's marketing efforts and growth at newer retail sales offices.

Other borrowings increased by $13.4 million, or 17.3%, to $90.4 million,
during the three months ended September 30, 1996. Based on the lower cost of
wholesale funds as compared to comparable maturity retail deposits, management
chose to fund a portion of the loan growth discussed above with FHLB advances
and reverse repurchase agreements.

Shareholder's equity decreased by $1.1 million, or 4.1%, to $25.5 million,
during the three months ended September 30, 1996. This decrease was due to the
net loss recorded for the three months ended September 30, 1996. The net loss
was a result of the SAIF assessment recorded in the third quarter of 1996 and is
described further below.

Net income/loss. The Corporation incurred a net loss of $1.1 million for
the three months ended September 30, 1996, a decrease in net income of $1.8
million from net income of $715,000 for the same period in 1995. The reason for
the decline in net income was the special assessment on SAIF-insured deposits of
$2.9 million ($1.9 million after tax) imposed by the FDIC which was recorded by
Metropolitan on September 30, 1996.

On September 30, 1996, President Clinton signed into law the Omnibus Bill
which includes provisions designed to recapitalize the SAIF and to mitigate the
BIF/SAIF premium disparity. The Omnibus Bill requires the FDIC to impose a
special assessment on SAIF-insured deposits which were held at March 31, 1995.
The FDIC has announced that the special assessment rate will be set at 65.7
basis points. The assessment will be paid on November 27, 1996 from working
capital of the Bank. When the SAIF reaches its required reserve ratio following
the one-time assessment, the FDIC has indicated that it will reduce the annual
assessment rates for SAIF insured institutions to bring them in line with BIF
assessment rates.

Net income was $452,000 for the nine months ended September 30, 1996, a
decrease of $1.9 million from the same period in 1995. Similar to the
three-month decrease, the decline in net income was due to the $1.9 million
after-tax effect of the SAIF assessment recorded during the third quarter of
1996.

Interest income. Total interest income increased $2.6 million and $7.2
million in the three and nine months ended September 30, 1996, respectively. The
increase in interest income resulted primarily from an increase in average
earning assets and was also affected by a slight increase in the yield on
interest earning assets.

Interest expense. Total interest expense increased $1.4 million and $4.5
million in the three and nine months ended September 30, 1996, respectively.
Interest expense increased due to a higher average balance of interest-bearing
liabilities outstanding and due to a slightly higher cost of funds during the
three and nine months ended September 30, 1996.

Provision for loan losses. The provision for loan losses increased $410,000
and $616,000 for the three and nine months ended September 30, 1996,
respectively. While net charge-offs to average loans for the three and nine
months ended September 30, 1996 were only 0.02% and 0.01%, respectively,
management increased the provision for loan losses due to continued loan growth.
Non-performing loans as a percentage of total loans declined from 1.03% at June
30, 1996 to 0.77% at September 30, 1996, while the allowance for loan losses as
a percentage of total loans increased from 0.59% at June 30, 1996 to 0.66% at
September 30, 1996. The ratio of allowance for loan losses to non-performing
loans increased from 59.01% at June 30, 1996 to 65.31% at September 30, 1996.

13
<PAGE> 14

Non-interest income. Non-interest income increased $521,000 and $605,000
for the three and nine months ended September 30, 1996, respectively. The
increase was due to various factors including an increase in loan option income,
an increase in fee income earned on checking accounts due primarily to the
increased size and number of business checking accounts, an increase in ATM fees
due to an increase in transaction fees and number of ATM transactions, an
increase in credit card fees due to the increase in the credit card portfolio
and increased credit card transactions and an increase in other miscellaneous
fee income due to the increased size and number of retail sales offices.

Non-interest expense. Non-interest expense increased $4.1 million and $5.7
million for the three and nine months ended September 30, 1996, respectively.
The increase was substantially due to the $2.9 million SAIF assessment
previously discussed. In addition, other non-interest expenses increased due to
increases in personnel related expenses, occupancy costs and other non-interest
expenses related to the increased size and number of retail sales offices.

Income tax expense. Income tax expense decreased $951,000 and $1.0 million
for the three and nine months ended September 30, 1996, respectively. The
decrease was due to the reduction in taxable income primarily due to the SAIF
assessment.

14
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Corporation from the sale of the Common Stock are
estimated to be $3.4 million after deduction of the underwriting discount and
estimated expenses. The Corporation anticipates that all of the proceeds to the
Corporation will be contributed as paid-in capital to the Bank and will be added
to the Bank's funds to be used for general corporate purposes, thereby
increasing the level of its regulatory capital.

DIVIDEND POLICY

The Corporation anticipates that future earnings will be retained to
finance the Corporation's operations and to support the continued growth of the
Bank. Accordingly, the Corporation does not currently anticipate paying cash
dividends on its Common Stock in the foreseeable future. The payment of future
dividends will be subject to the discretion of the Board of Directors of the
Corporation and will depend on the Corporation's results of operations,
financial position and capital requirements, general business conditions,
restrictions imposed by financing arrangements and legal restrictions on the
payment of dividends. The terms of the 1993 Subordinated Notes prohibit the
Corporation from paying any cash dividend while any of the 1993 Subordinated
Notes are outstanding. In addition, both the Indenture covering the 1995
Subordinated Notes and the Huntington Loan Agreement prohibit the Corporation
from paying a dividend or other distribution on its equity securities unless the
Corporation's ratio of tangible equity to total assets is in excess of 7.0%. For
these purposes, both the Indenture and the Huntington Loan Agreement define
tangible equity as Consolidated Net Worth less goodwill. See "Description of
Subordinated Notes."

DILUTION

The net tangible book value of the Corporation at June 30, 1996 was $23.3
million, or $7.46 per share of Common Stock, after giving effect to the
3,125,635-for-one stock split which was effected prior to the closing of this
offering. Net tangible book value per share is equal to the Corporation's total
tangible assets and cost of loan servicing rights less total tangible
liabilities, divided by the total number of shares of Common Stock outstanding.
Net tangible book value dilution per share represents the difference between the
amount per share paid by purchasers of shares of Common Stock in this offering
and the net tangible book value per share of Common Stock immediately after
completion of this offering. After giving effect to the sale by the Corporation
of the 400,000 shares of Common Stock offered hereby at an initial public
offering price of $10.00 per share and after deducting the underwriting discount
and estimated offering expenses, the pro forma net tangible book value of the
Corporation as of June 30, 1996 would have been $26.7 million, or $7.58 per
share of Common Stock. This represents an immediate increase in pro forma net
tangible book value of $0.12 per share to the Selling Shareholder and an
immediate dilution of $2.42 per share to new investors purchasing shares in this
offering. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share............................ $10.00
Net tangible book value per share as of June 30, 1996............ $7.46
Increase per share attributable to new investors................. 0.12
-----
Pro forma net tangible book value per share as of June 30, 1996.... 7.58
------
Net tangible book value dilution per share to new investors........ $ 2.42
======

</TABLE>

15
<PAGE> 16

CAPITALIZATION

The following table sets forth the capitalization of the Corporation,
including deposits and borrowings, as of June 30, 1996, and as adjusted to
reflect the sale of 400,000 shares of Common Stock offered by the Corporation
hereby and the application of the net proceeds therefrom as described under "Use
of Proceeds." The historical data has been derived from the Corporation's
Consolidated Financial Statements included elsewhere in this Prospectus and
should be read in conjunction with such financial statements and the notes
thereto.

<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Deposits............................................................. $ 558,794 $ 558,794
FHLB advances........................................................ 58,200 58,200
1993 Subordinated Notes.............................................. 4,874 4,874
1995 Subordinated Notes.............................................. 14,000 14,000
-------- --------
Total borrowings................................................ 77,074 77,074
-------- --------
Total deposits and borrowings................................... $ 635,868 $ 635,868
======== ========
Shareholder's equity:
Common stock, no par value, 250,000 shares authorized, one share
issued and outstanding at June 30, 1996 and 10,000,000 shares
authorized, 3,525,635 shares issued and outstanding, as
adjusted........................................................ -- --
Additional paid-in capital......................................... $ 7,801 $ 11,196
Retained earnings.................................................. 18,510 18,510
Unrealized gain on securities available for sale................... 303 303
-------- --------
Total shareholder's equity...................................... $ 26,614 $ 30,009
======== ========
</TABLE>

Minimum capital requirements to determine whether an institution is "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," or "critically undercapitalized" define adequately
capitalized institutions as having a total risk-based capital ratio of 8% or
greater; a Tier 1 risk-based capital ratio of 4% or greater and either (i) a
leverage ratio of 4% or greater or (ii) a leverage ratio of 3% or greater and a
rating of composite 1 under the MACRO rating system. The Bank's ratios at June
30, 1996 were 8.82%, 8.22% and 5.89% respectively. As a result, the Bank meets
the capital requirements of an adequately capitalized institution. See
"Regulation and Supervision -- The Bank -- Prompt Corrective Action."

16
<PAGE> 17

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth certain selected consolidated financial and
other data of the Corporation at or for the dates indicated. The information
with respect to the six month periods ended June 30, 1996 and 1995 has been
derived from Metropolitan's unaudited financial statements. In the opinion of
management, all adjustments (which consist of normal recurring accruals)
necessary for a fair presentation have been included. This information should be
read in conjunction with the Consolidated Financial Statements and notes
thereto, and Management's Discussion and Analysis of Financial Condition and
Results of Operations included elsewhere herein. The results of operations for
the six month period ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the entire year.

(1) Per share data has been calculated to reflect the 3,125,635-for-one stock
split which occurred prior to the completion of the offering.

(2) Ratios for interim periods are stated on an annualized basis.

(3) Represents the ratio of net interest income to average interest-earning
assets.

(4) Equals non-interest expense less amortization of intangible assets divided
by net interest income plus non-interest income (excluding gains or losses
on securities transactions).

(5) Ratios are calculated based on period end balances.
</TABLE>

17
<PAGE> 18

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

For a comprehensive understanding of Metropolitan's financial condition and
performance, this discussion should be considered in conjunction with the
Consolidated Financial Statements, accompanying notes, and other information
contained herein.

OVERVIEW

The reported results of Metropolitan primarily reflect the operations of
the Bank. Metropolitan's results of operations are dependent on a variety of
factors, including the general interest rate environment, competitive conditions
in the industry, governmental policies and regulations and conditions in the
markets for financial assets. Like most financial institutions, the primary
contributor to Metropolitan's income is net interest income, the difference
between the interest Metropolitan earns on interest-earning assets, such as
loans and securities, and the interest Metropolitan pays on interest-bearing
liabilities, such as deposits and borrowings. Metropolitan's operations are also
affected by non-interest income, such as loan servicing fees, gains or losses
from sales of loans and securities and loan option income. Metropolitan's
principal operating expenses, aside from interest expense, consist of
compensation and employee benefits, occupancy costs, federal deposit insurance
premiums, and other general and administrative expenses.

Average Balances 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 both in dollars and
rates, and the net interest margin. Net interest margin refers to net interest
income divided by total interest-earning assets and is influenced by the level
and relative mix of interest-earning assets and interest-bearing liabilities.
All average balances are daily average balances. Non-accruing loans are
considered in average loan balances.

18
<PAGE> 19

AVERAGE BALANCES AND YIELDS

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------------
1996 1995
------------------------------- -------------------------------
(DOLLARS IN THOUSANDS)
AVERAGE AVERAGE AVERAGE AVERAGE
INTEREST-EARNING ASSETS: BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------- -------- -------- -------
Loans receivable............................................ $538,347 $ 23,040 8.56% $453,516 $ 19,317 8.52%
Mortgage-backed securities available for sale(1)............ 38,301 1,265 6.61 20,684 656 6.34
Other(1).................................................... 21,720 683 6.29 13,604 395 5.81
-------- ------- -------- -------
Total interest-earning assets............................. 598,368 24,988 8.35 487,804 20,368 8.35
------- -------
Nonearning assets........................................... 36,781 24,597
-------- --------
Total assets.............................................. $635,149 $512,401
======== ========
INTEREST-BEARING LIABILITIES:
Deposits.................................................... $507,053 13,345 5.29 $424,215 10,951 5.21
Other borrowings............................................ 61,624 2,104 6.87 39,890 1,437 7.26
-------- ------- -------- -------
Total interest-bearing liabilities........................ 568,677 15,449 5.46 464,105 12,388 5.38
------- -------
Noninterest-bearing liabilities............................. 40,480 26,750
Shareholder's equity........................................ 25,992 21,546
-------- --------
Total liabilities and shareholder's equity................ $635,149 $512,401
======== ========
Net interest income and interest rate spread................ $ 9,539 2.89 $ 7,980 2.97
======= =======
Net interest margin......................................... 3.19 3.27
Average interest-earning assets to average interest-bearing
liabilities............................................... 105.22% 105.11%

YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------- ------------------------------- -------------------------------
(DOLLARS IN THOUSANDS)
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------- -------- -------- ------- -------- -------- -------
INTEREST-EARNING ASSETS:
Loans receivable......... $458,423 $ 39,655 8.65 % $361,627 $ 29,762 8.23 % $267,120 $ 22,584 8.45 %
Mortgage-backed
securities available
for sale(1)(2)......... 39,342 2,493 6.34 13,636 693 5.08 23,181 1,143 4.93
Other(1)................. 14,610 979 6.70 22,261 934 4.20 20,179 721 3.57
-------- ------- -------- ------- -------- -------
Total interest-earning
assets............... 512,375 43,127 8.42 397,524 31,389 7.90 310,480 24,448 7.87
------- ------- -------
Nonearning assets........ 31,881 21,986 22,241
-------- -------- --------
Total assets........... $544,256 $419,510 $332,721
======== ======== ========
INTEREST-BEARING
LIABILITIES:
Deposits................. $439,286 23,522 5.35 $363,553 14,918 4.10 $287,173 10,778 3.76
Other borrowings......... 48,066 3,294 6.85 13,146 1,074 8.17 6,778 437 6.45
-------- ------- -------- ------- -------- -------
Total interest-bearing
liabilities.......... 487,352 26,816 5.50 376,699 15,992 4.25 293,951 11,215 3.82
------- ------- -------
Noninterest-bearing
liabilities............ 35,032 23,533 23,516
Shareholder's equity..... 21,872 19,278 15,254
-------- -------- --------
Total liabilities and
shareholder's equity
..................... $544,256 $419,510 $332,721
======== ======== ========
Net interest income and
interest rate spread... $ 16,311 2.92 $ 15,397 3.65 $ 13,233 4.05
======= ======= =======
Net interest margin...... 3.18 3.87 4.26
Average interest-earning
assets to average
interest-bearing
liabilities............ 105.13% 105.53% 105.62%
<FN>
- ---------------

(1) The average balances of mortgage-backed securities and securities available
for sale are presented at historical cost.
(2) Mortgage-backed securities were classified as held for sale in 1993, prior
to the adoption of Statement of Financial Accounting Standards ("SFAS") No.
115. The average balances of mortgage-backed securities held for sale are
reported at historical cost.
</TABLE>

19
<PAGE> 20

Rate and Volume Variances. Net interest income is affected by changes in
the level of interest-earning assets and interest-bearing liabilities and
changes in yields earned on assets and rates paid on liabilities. The following
table sets forth, for the periods indicated, a summary of the changes in
interest earned and interest paid resulting from changes in average asset and
liability balances and changes in average rates. Changes attributable to the
combined impact of volume and rate have been allocated proportionately to change
due to volume and change due to rate.

YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ------------------------------------------------------
JUNE 30, 1996 VS. 1995 1995 VS. 1994 1994 VS. 1993
INCREASE (DECREASE) INCREASE (DECREASE) INCREASE (DECREASE)
-------------------------- ------------------------- ------------------------
(IN THOUSANDS)
CHANGE CHANGE CHANGE CHANGE CHANGE CHANGE
TOTAL DUE TO DUE TO TOTAL DUE TO DUE TO TOTAL DUE TO DUE TO
CHANGE VOLUME RATE CHANGE VOLUME RATE CHANGE VOLUME RATE
------ ------ ------ ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME ON:
Loans receivable.............. $3,723 $3,630 $ 93 $ 9,893 $7,966 $1,927 $7,178 $7,990 $ (812)
Mortgage-backed securities.... 609 581 28 1,800 1,306 494 (450) (471) 21
Other......................... 288 253 35 45 (321) 366 213 75 138
------ ------ ---- ------- ------ ------ ------ ------ ------
Total interest income .......... 4,620 $4,464 $156 11,738 $8,951 $2,787 6,941 $7,594 $ (653)
------ ====== ==== ------- ====== ====== ------ ====== ======
INTEREST EXPENSE ON:
Deposits...................... 2,394 $2,205 $189 8,604 $3,108 $5,496 4,140 $2,867 $1,273
Other borrowings.............. 667 742 (75) 2,220 2,853 (633) 637 411 226
------ ------ ---- ------- ------ ------ ------ ------ ------
Total interest expense.......... 3,061 $2,947 $114 10,824 $5,961 $4,863 4,777 $3,278 $1,499
------ ====== ==== ------- ====== ====== ------ ====== ======
Increase in net interest
income........................ $1,559 $ 914 $2,164
====== ======= ======
</TABLE>

COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995

Net Income. Net income was $1.6 million for the six months ended June 30,
1996, a decrease of 5.8% as compared to $1.7 million for the same period in
1995. Net interest income and non-interest income increased 19.5% and 4.3%,
respectively, in the six month period ended June 30, 1996 as compared to the
same period in 1995; however, the provision for loan losses and non-interest
expense increased 43.1% and 23.9%, respectively, in the six months ended June
30, 1996.

Metropolitan's net interest margin declined eight basis points to 3.19% for
the six month period ended June 30, 1996, as compared to 3.27% for the same
period in 1995, largely as a result of an increase in the costs paid for
deposits as compared to the first half of 1995. Rates paid on deposits increased
in response to slightly higher market interest rates and as a result of
Metropolitan's efforts to increase deposits in order to fund the significant
growth in loans.

Interest Income. Total interest income increased 22.7% to $25.0 million in
the six month period ended June 30, 1996, as compared to $20.4 million in the
same period in 1995. This increase resulted primarily from a 22.7% increase in
average interest-earning assets between the two respective periods. The average
balance of loans increased $84.8 million, which was a result of Metropolitan's
consistent strategy of increasing assets so long as quality loans with
acceptable yield and term characteristics are available. Metropolitan originated
$103.1 million and purchased $81.8 million in loans in the six months ended June
30, 1996, as compared to $72.1 million and $53.0 million, respectively, for the
same period in 1995. The weighted average yield on interest-earning assets
remained flat at 8.35% during the six month period ended June 30, 1996, as
compared to the same period in 1995.

Interest Expense. Total interest expense increased 24.7% to $15.4 million
for the six month period ended June 30, 1996, as compared to $12.4 million for
the same period in 1995. Interest expense increased due to a higher average
balance of interest-bearing liabilities outstanding and due to a higher cost of
funds for the six month period ending June 30, 1996 compared to the same period
in 1995. In accordance with Metropolitan's strategy of increasing time and core
deposits at a rate consistent with the increase in interest-earning assets, the
average balance of deposit accounts increased $82.8 million, or 19.5%, during
the six months ended June 30, 1996 compared to 1995. Metropolitan's cost of
funds increased to 5.46% in the six months ended

20
<PAGE> 21

June 30, 1996, as compared to 5.38% in the same period in 1995, due primarily to
increases in the rates paid on deposits.

Provision for Loan Losses. The provision for loan losses increased 43.1% to
$685,000 in the six month period ended June 30, 1996, as compared to $479,000
for the comparable period in 1995. The increase was related to the increase in
total loans and management's estimate of the adequacy of the allowance for
losses on loans. Total loans (including loans held for sale) increased 19.8% to
$578.0 million at June 30, 1996 from $482.6 million at December 31, 1995. The
allowance for losses on loans at June 30, 1996 was $3.4 million or 0.59% of
total loans, as compared to $2.8 million, or 0.57% of total loans, at December
31, 1995, while net charge-offs were only $13,000 during the six month period.
Management's estimate of the adequacy of the allowance for losses on loans is
based upon an analysis of such factors as historical loan loss experience, the
status of impaired loans, economic conditions affecting real estate markets,
regulatory considerations and other matters.

Non-Interest Income. Total non-interest income increased 4.3% to $2.0
million in the six months ended June 30, 1996, as compared to the same period in
1995. The following table sets forth Metropolitan's non-interest income for the
periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------ ------------------------------
1996 1995 1995 1994 1993
------ ------ ------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loan servicing income, net............. $ 632 $ 391 $1,068 $ 642 $ 602
Gain on sale of loans.................. 36 113 444 52 1,394
Gain on sale of securities............. -- -- 389 34 318
Loan option income..................... 406 420 559 -- --
Loan credit discount income............ -- 406 640 -- --
Other.................................. 972 632 1,432 1,123 1,067
------ ------ ------ ------ ------
Total.................................. $2,046 $1,962 $4,532 $1,851 $3,381
====== ====== ====== ====== ======
</TABLE>

Net loan servicing income increased 61.9% to $632,000 in the six month
period ended June 30, 1996, as compared to $391,000 in the same period in 1995
due to the increase in the portfolio being serviced for others. The increase in
net loan servicing fees was a result of Metropolitan's strategy of increasing
non-credit based fee income. Although the portfolio of loans serviced for others
declined to $1.1 billion at June 30, 1996 compared to $1.2 billion at June 30,
1995, servicing rights for $371.2 million were acquired in June 1995, and had
not been serviced long enough to contribute to loan servicing income during the
first half of 1995. The benefit of this acquisition did not begin to be realized
until the third quarter of 1995. Metropolitan remains committed to this business
and continues to evaluate new acquisitions; however, Metropolitan will only
acquire the rights to service portfolios where the loan characteristics and
pricing are consistent with management's long-term profitability objectives.

Gain on sale of loans was $36,000 in the six months ended June 30, 1996, as
compared to a gain of $113,000 in the same six month period in 1995. This income
was dependent upon both the amount of loans sold, secondary market pricing, and
the value allocated to mortgage servicing rights, and these variables in turn
were directly affected by prevailing interest rates. The proceeds from sale of
loans decreased $2.6 million to $24.6 million during the six month period ended
June 30, 1996, as compared to $27.2 million in the same period in 1995.

Loan option income was $406,000 in the six month period ended June 30,
1996, as compared to $420,000 in the same period in 1995. Loan option income has
been a source of non-interest income for Metropolitan since the second quarter
of 1995. In these option transactions Metropolitan purchased loans and sold
nonrefundable options to a third party to purchase these same loans at a
specified price within a specified time period. The third party was a loan
broker and the loan option fee was negotiated based on the principal amount of
the loans involved. These option transactions provided the loan broker a period
of time to find a buyer who was willing to pay a higher price for the loans.

Loan credit discount income was $406,000 during the six month period ended
June 30, 1995. Metropolitan frequently purchases multifamily and commercial real
estate loans in the secondary market.

21
<PAGE> 22

These loans are often purchased at a discount based on a comparison of loan
rates to market interest rates. The discount attributable to interest rate is
accreted to interest income over the life of the loan. From time to time,
however, Metropolitan purchases loans at a discount due to Metropolitan's
assessment of credit risk and the value of the underlying collateral. These
collateral discounts are not recognized in income over the life of the loan.
When these loans pay off, if Metropolitan receives the full contractual
principal due, any discount related to management's initial assessment of the
deficiency in collateral values is recognized as non-interest income.
Metropolitan had no loan credit discount income in the six months ended June 30,
1996 and does not expect this source of non-interest income to be recurring.

Other non-interest income increased $340,000 or 54.0% for the six months
ended June 30, 1996 compared to the same period in the previous year. This
increase was primarily due to fee income earned on checking accounts and from
ATM transactions as both the number of retail sales offices and the number of
checking accounts were up in 1996 compared with 1995.

Non-Interest Expense. Total non-interest expense increased to $8.4 million
in the six month period ended June 30, 1996, as compared to $6.8 million for the
same period in 1995, or an increase of 23.9%. The following table sets forth
Metropolitan's non-interest expense for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------ --------------------------------
1996 1995 1995 1994 1993
------ ------ ------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Personnel related costs.............. $4,071 $3,259 $ 6,819 $ 5,349 $3,834
Occupancy costs...................... 1,124 1,025 2,135 1,488 1,130
Federal deposit insurance............ 640 548 1,132 929 794
Data processing expense.............. 295 328 586 381 361
State franchise tax.................. 232 152 307 284 178
Marketing expense.................... 285 226 543 392 256
Amortization of intangibles.......... 109 111 220 222 222
Other operating expenses............. 1,607 1,103 2,445 2,013 1,499
------ ------ ------- ------- ------
Total................................ $8,363 $6,752 $14,187 $11,058 $8,274
====== ====== ======= ======= ======
</TABLE>

Personnel related expenses increased $812,000, which represented 50.4% of
the increase in total non-interest expense in the six month period ended June
30, 1996, over the same period in 1995. The increase was a result of having two
additional full service retail sales offices open in the 1996 period, the
payment of incentives for loan and deposit production, the addition to staff of
loan production officers, the full effect of additions to staff in various
departments late in 1995 and the effects of merit increases. Other operating
expenses, which include miscellaneous general and administrative costs such as
loan servicing, loan processing, business development, check processing and ATM
expenses, increased $504,000, which represented 31.2% of the increase in total
non-interest expense in the six month period ended June 30, 1996, over the same
period in 1995. This increase was a result of the overall increase in business
levels, including an increase in loans, deposits and servicing. Occupancy costs
increased $99,000, which represented 6.2% of the increase in total non-interest
expense in the six month period ended June 30, 1996, over the same period in
1995, generally as a result of an increase in the number of full service retail
sales offices.

Provision for Income Taxes. The provision for income taxes decreased 7.4%
to $956,000 in the six month period ended June 30, 1996, as compared to $1.0
million in the same period in 1995. The effective tax rate was 37.7% for the six
month period ended June 30, 1996, as compared to 38.1% for the same period in
1995.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994.

Net Income. Net income for 1995 was $3.5 million as compared to $3.4
million for 1994, a 3.1% increase. Net interest income and non-interest income
increased 5.9% and 144.9%, respectively, in 1995, as compared to 1994; however,
in 1995 the provision for loan losses and non-interest expense increased 25.2%
and 28.3%, respectively.

22
<PAGE> 23

Interest Income. Total interest income increased 37.4% to $43.1 million in
1995 as compared to $31.4 million in 1994. This increase primarily resulted from
a 28.9% increase in average interest-earning assets between the two periods. The
average balance of loans increased $96.8 million which was a result of
Metropolitan's consistent strategy of increasing assets so long as quality loans
with acceptable yield and term characteristics are available. Metropolitan
originated $161.9 million and purchased $103.7 million in loans in 1995, as
compared to $186.5 million and $74.1 million, respectively, for 1994. In
addition, as a result of the generally higher interest rate environment, the
weighted average yield on interest-earning assets increased to 8.42% during 1995
as compared to 7.90% during 1994.

Metropolitan's net interest margin declined 69 basis points to 3.18% for
1995 as compared to 3.87% for 1994, largely as a result of market-driven
increases in interest rates and the interest sensitivity of the Bank's balance
sheet. Rates paid on deposits increased in response to higher market interest
rates and in order to fund the significant growth in loans, resulting in
increased cost of funds. The rate earned on interest-earning assets increased
more slowly during the period because (i) the portfolio of fixed rate loans
increased from 22.2% of the portfolio at December 31, 1994 to 31.4% of the
portfolio at December 31, 1995; and (ii) increases in rates of adjustable rate
mortgages generally lag the market due to contractual timing of adjustments
(i.e., monthly, annually).

Interest Expense. Total interest expense increased 67.7% to $26.8 million
for 1995 as compared to $16.0 million for 1994. Interest expense increased due
to a higher average balance of interest-bearing liabilities outstanding and due
to a higher cost of funds during 1995 as compared to 1994. In accordance with
Metropolitan's strategy of increasing time and core deposits at a rate
consistent with the increase in interest-earning assets, the average balance of
deposit accounts increased $75.7 million, or 20.8%, from December 31, 1994 to
December 31, 1995.

Metropolitan's cost of funds increased to 5.50% in 1995 as compared to
4.25% in 1994, due to the higher level of market interest rates and
Metropolitan's pursuit of higher deposit growth in order to fund the significant
growth in loans.

Provision for Loan Losses. The provision for loan losses increased 25.2%
to $959,000 in 1995 as compared to $766,000 in 1994. The increase was related to
the increase in total loans and management's estimate of the adequacy of the
allowance for losses on loans. Total loans (including loans held for sale)
increased 13.2% to $482.6 million at December 31, 1995 from $426.5 million at
the same date in 1994. The allowance for losses on loans at December 31, 1995
was $2.8 million, or 0.57% of total loans, as compared to $1.9 million, or 0.45%
of total loans, at the same date in 1994. Management's estimate of the adequacy
of the allowance for losses on loans is based upon an analysis of such factors
as historical loan loss experience, the status of impaired loans, economic
conditions affecting real estate markets, regulatory considerations, and other
matters.

Non-Interest Income. Total non-interest income increased 144.9% to $4.5
million in 1995 as compared to $1.9 million in 1994. Net loan servicing income
increased 66.4% to $1.1 million in 1995 as compared to $642,000 in 1994 due to
the increase in the portfolio being serviced for others. The increase in the
servicing portfolio and related net loan servicing fees was a result of
Metropolitan's strategy of increasing non-credit based fee income. In that
regard, the portfolio of loans serviced for others was increased to $1.2 billion
at December 31, 1995 from $739.4 million at December 31, 1994.

Gain on sale of loans was $444,000 in 1995 as compared to $52,000 in 1994.
This income was dependent upon both the amount of loans sold and secondary
market pricing, and these variables in turn were directly affected by prevailing
interest rates. The proceeds from sale of loans increased 17.4% to $59.8 million
during 1995 as compared to $51.0 million in the same period in 1994. The pricing
achieved in the 1995 period was more favorable due to the general stability of
interest rates even at higher levels. In addition, during 1995 the gain on sale
of loans was favorably affected by the adoption of SFAS No. 122, "Accounting for
Mortgage Servicing Rights," which requires lenders who sell originated loans and
retain the servicing rights to recognize the rights to service mortgage loans
for others as separate assets. Modest gains on loan sales during the last half
of 1994 partially offset losses which were incurred in the early months of 1994
as interest rates were increasing sharply.

23
<PAGE> 24

Gain on sale of securities was $389,000 in 1995 as compared to $34,000 in
1994. During 1995, Metropolitan elected to securitize certain of its one- to
four-family loans into mortgage-backed securities guaranteed by FNMA, in order
to reduce the risk-based capital requirements, to reduce credit risk by
acquiring the investor guarantee, and to create collateral that is a more
efficient source of funds in the market place. These securities were classified
as held-to-maturity upon securitization. On November 15, 1995, the Financial
Accounting Standards Board ("FASB") issued a special report entitled "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities -- Questions and Answers" ("Special Report"). The Special
Report primarily provided additional guidance for implementation of SFAS No.
115, based upon inquiries made to the FASB since the statement was issued in May
1993. The Special Report allowed an enterprise to reassess the appropriateness
of the classifications of all securities held at that time. In light of the
guidance provided in the Special Report, Metropolitan reclassified all the FNMA
securities created through securitization of the Bank originated one- to
four-family loans to available-for-sale. In addition $29.2 million of those
securities, representing the greatest degree of interest rate risk, were sold at
a gain of $389,000.

Loan option income was $559,000 in 1995. This represented a new source of
non-interest income for the Bank in 1995. In these option transactions
Metropolitan purchased loans and sold nonrefundable options to a third party to
purchase these same loans at a specified price within a specified time period.
The third party was a loan broker and the loan option fee was negotiated based
on the principal amount of loans involved. These option transactions provided
the loan broker a period of time to find a buyer who was willing to pay a higher
price for the loans.

Loan credit discount income was $640,000 in 1995. Since 1993, Metropolitan
has purchased multifamily and commercial real estate loans in the secondary
market. These loans are often purchased at a discount based on a comparison of
loan rates to market interest rates. The discount attributable to interest rate
is accreted to interest income over the life of the loan. From time to time,
however, Metropolitan purchases loans at a discount due to Metropolitan's
assessment of credit risk and the value of the underlying collateral. These
collateral discounts are not recognized in income over the life of the loan.
When these loans pay off, if Metropolitan receives the full contractual
principal due, any discount related to management's initial assessment of the
deficiency in collateral values is recognized as non-interest income.

Non-Interest Expense. Total non-interest expense increased 28.3% to $14.2
million in 1995 as compared to $11.1 million in 1994. Personnel related expenses
increased $1.5 million, which represented 47.0% of the increase in 1995 over
1994. The increase was primarily a result of having three additional full
service retail sales offices open in 1995. In addition, during 1995 Metropolitan
staffed a business lending department, a trust department and a facilities
maintenance department, none of which existed during 1994. Occupancy costs
increased $647,000, which represented 20.7% of the increase in 1995 over 1994,
generally as a result of an increase in the number of full service retail sales
offices. Other operating expenses, which include miscellaneous general and
administrative costs such as loan servicing, loan processing, business
development, check processing and ATM expenses, increased $432,000, which
represented 13.8% of the increase in 1995 over 1994. This increase was a result
of the overall increase in business levels, including an increase in loans,
deposits and servicing.

Provision for Income Taxes. The provision for income taxes was $2.2
million in 1995 as compared to $2.0 million in 1994. The effective tax rate was
37.8% for 1995 and 36.6% for 1994. The higher effective tax rate in the 1995
period was largely due to premium payments for a key man life insurance policy,
which are not deductible for income tax purposes.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993

Net Income. Net income for 1994 was $3.4 million as compared to $4.5
million for 1993. This 23.1% decrease was primarily a result of a 45.3% decline
in non-interest income. Non-interest income decreased due to a sharp decline in
gains on sale of loans. Net interest income increased 16.4% in 1994 as compared
to 1993; however, the significant decline in non-interest income and increases
in the provision for loan losses and non-interest expense of 3.5% and 33.6%,
respectively, more than offset the increase in interest income.

24
<PAGE> 25

Interest Income. Total interest income increased 28.4% to $31.4 million
for 1994 as compared to $24.4 million for 1993. This increase primarily resulted
from a 28.0% increase in average interest-earning assets between the years. The
average balance of loans increased $94.5 million, which was a result of
Metropolitan's strategy of increasing assets when quality loans with acceptable
portfolio characteristics are available. Metropolitan originated $186.5 million
and purchased $74.1 million in loans in 1994. The weighted average yield on
interest-earning assets increased to 7.90% during 1994 as compared to 7.87%
during 1993.

Metropolitan's net interest margin declined 39 basis points to 3.87% for
1994 as compared to 4.26% for 1993, largely as a result of market-driven
increases in interest rates and the interest sensitivity of the Bank's balance
sheet. Rates paid on deposits increased in response to higher market interest
rates and in order to fund the significant growth in loans, resulting in
increased cost of funds. The rate earned on interest-earning assets increased
more slowly during the period because (i) the fixed rate loan portfolio
increased from 17.6% of the portfolio at December 31, 1993 to 22.2% of the
portfolio at December 31, 1994; (ii) the proportion of adjustable rate one- to
four-family loans, which have the smallest spread to their market index of all
adjustable rate loans in the portfolio, increased from 6.1% at December 31, 1993
to 14.8% at December 31, 1994; and (iii) increases in rates of adjustable rate
mortgages generally lag the market due to contractual timing of adjustments
(i.e., monthly, annually).

Interest Expense. Total interest expense increased 42.6% to $16.0 million
for 1994 as compared to $11.2 million for 1993. Interest expense increased due
to a higher average balance of interest-bearing liabilities outstanding and due
to a higher cost of funds during 1994. The average balance of deposit accounts
increased $76.4 million in 1994 compared to 1993 as a result of Metropolitan's
strategy of increasing time and core deposits at a rate consistent with the
increase in interest-earning assets.

Metropolitan's cost of funds increased to 4.25% in 1994 as compared to
3.82% in 1993 generally due to the higher overall level of interest rates as
well as a shift in mix of deposits toward higher cost time deposits. At December
31, 1994, Metropolitan's percentage of deposits held as certificates was 60.0%
compared to 50.0% a year earlier.

Provision for Loan Losses. The provision for loan losses increased 3.5% to
$766,000 in 1994 as compared to $740,000 in 1993. The modest increase reflected
management's assessment that the improvement in the level of non-performing
assets during 1994 offset the increase in total loans. The allowance for losses
on loans at December 31, 1994 was $1.9 million, or 0.45% of total loans, as
compared to $1.2 million, or 0.43% of total loans, at the same date in 1993.

Non-Interest Income. Total non-interest income decreased 45.3% to $1.9
million in 1994 as compared to $3.4 million in 1993 due to a sharp decline in
gain on sale of loans. Gain on sale of loans was $52,000 in 1994 as compared to
$1.4 million in 1993. This income was dependent upon both the amount of loans
sold and secondary market pricing, and these variables were in turn directly
affected by prevailing interest rates. The proceeds of loans sold were $51.0
million during 1994 as compared to $132.3 million in 1993. The generally higher
interest rate environment of 1994 affected both the volume of loans which could
be originated for sale and the pricing available in the secondary market. Losses
were incurred in the early months of 1994 as interest rates were increasing
sharply, while gains were enhanced in 1993 during that period of slowly falling
interest rates.

Net loan servicing income increased 6.7% to $642,000 in 1994 as compared to
$602,000 in 1993. The increase in net loan servicing fees was a result of
Metropolitan's strategy of increasing non-credit based fee income. During 1994,
the portfolio of loans serviced for others was increased from $504.7 million to
$739.4 million.

Non-Interest Expense. Total non-interest expense increased 33.6% to $11.1
million in 1994 as compared to $8.3 million in 1993. Personnel related expenses
increased $1.5 million, which represented 54.4% of the increase in 1994 over
1993. The increase was largely due to retail sales office expansion. One office,
opened late in 1993, had a full year of staff in 1994 and two additional offices
were staffed and opened in the last half of 1994. In addition, during 1994 a
residential loan production office was established in Westlake, Ohio and staffed
with commissioned loan officers. Also during 1994, a construction loan
production office was opened in

25
<PAGE> 26

Columbus, Ohio and multifamily/commercial real estate loan production offices
were opened in Detroit, Michigan and Covington, Kentucky, each with one loan
officer.

Occupancy costs increased $357,000, which represented 12.8% of the increase
of non-interest expense in 1994 over 1993, as a result of the retail sales
office expansion and loan origination office expansion discussed above. Other
operating expenses, which include miscellaneous general and administrative
costs, loan servicing, loan processing, business development, check processing
and ATM expenses, increased $514,000, which represented 18.5% of the increase in
non-interest expense in 1994 over 1993. This increase was a result of the
overall increase in business levels including an increase in loans, deposits and
servicing.

Provision for Income Taxes. The provision for income taxes decreased 29.8%
to $2.0 million in 1994 as compared to $2.8 million in 1993 because income
before taxes declined. The effective tax rate was 36.6% for 1994 and 37.2% for
1993. The higher effective tax rate in 1993 was due to a capital loss on the
sale of a mutual fund investment which was not deductible for income tax
purposes.

ASSET QUALITY

Non-Performing Assets. Metropolitan's goal is to maintain the above
average asset quality of its loan portfolio through conservative lending
policies and prudent underwriting. Detailed reviews of the loan portfolio are
undertaken regularly to identify potential problem loans or trends early and to
provide for adequate estimates of potential losses. In performing these reviews,
Metropolitan's management considers, among other things, current economic
conditions, portfolio characteristics, delinquency trends, and historical loss
experiences. Metropolitan normally considers loans to be non-performing when
payments are 90 days or more past due or when the loan review analysis indicates
that repossession of the collateral may be necessary to satisfy the loan. In
addition, Metropolitan considers loans to be impaired when, in management's
opinion, it is probable that the borrower will be unable to meet the contractual
terms of the loan. When loans are classified as non-performing, an assessment is
made as to the collectibility of the unpaid interest. Interest determined to be
uncollectible is reversed from interest income and future interest income is
recorded only if the loan principal and interest due is considered collectible
and is less than the estimated fair value of the underlying collateral.

The table below sets forth the amounts and categories of Metropolitan's
non-performing assets as of the dates indicated. At June 30, 1996, all loans
classified by management as impaired were also classified as non-performing.

<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, ----------------------------
1996 1995 1994 1993
----------- ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Non-accrual loans.................................... $ 4,750 $3,103 $2,240 $2,819
Loans past due greater than 90 days or impaired,
still accruing..................................... 1,074 204 128 277
----- ----- ----- -----
Total non-performing loans........................... 5,824 3,307 2,368 3,096
Real estate owned.................................... 219 258 53 941
----- ----- ----- -----
Total non-performing assets.......................... $ 6,043 $3,565 $2,421 $4,037
===== ===== ===== =====
Non-performing loans to total loans.................. 1.03% 0.68% 0.55% 1.08%
Non-performing assets to total assets................ 0.90 0.60 0.51 1.08
</TABLE>

Non-performing loans at June 30, 1996 increased $2.5 million, or 72.2%, to
$5.8 million as compared to $3.3 million at December 31, 1995. The increase was
due to four large credits, two secured by multifamily properties and two secured
by retail strip shopping centers. The loans secured by multifamily properties
have principal amounts of $1.3 million and $631,000, respectively, and the
underlying collateral is located in Southern California and Northeastern Ohio,
respectively. The loans secured by retail strip shopping centers have principal
amounts of $1.1 million and $925,000, respectively, and the underlying
collateral is located in Eastern Pennsylvania and Central New Jersey,
respectively. The multifamily loan located in Northeastern Ohio was current but
management elected to classify it as non-performing because the debt service
coverage ratio was below 1.0. Management will likely move to foreclose on the
remaining three properties and therefore

26
<PAGE> 27

expects the status of those loans to remain non-performing through the rest of
1996 and into 1997. Management considers all four of these loans to be impaired
because it does not expect that all principal and interest amounts will be
collected according to the loan contract. Based upon recent appraisals of the
underlying collateral, the loans are adequately secured by the collateral value
and no material losses are anticipated.

Non-performing loans at December 31, 1995 and 1994 included a $1.5 million
loan secured by an apartment building in Southern California which was damaged
in the January 1994 earthquake. The apartment building has been reconstructed.
Under the terms of a loan workout agreement the borrower has resumed regular
principal and interest payments, and is also repaying interest accrued during
the reconstruction period. Management expects that deferred interest and
principal will be fully collected and therefore this loan was no longer
considered impaired by management at June 30, 1996.

Allowance for Losses on Loans. The provision for loan losses and allowance
for losses on loans is based on an analysis of individual loans, prior loss
experience, growth in and trends in the performance of the loan portfolio,
changes in the mix of the loan portfolio and other factors including current
economic conditions. See Note 1 of Notes to Consolidated Financial Statements.
The following table sets forth an analysis of Metropolitan's allowance for
losses on loans at the dates indicated.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED --------------------------------
JUNE 30, 1996 1995 1994 1993
---------------- ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at beginning of period............ $2,765 $1,911 $1,239 $ 725
CHARGE-OFFS:
One- to four-family..................... -- (23) (23) (50)
Multifamily............................. -- -- (64) (100)
Commercial real estate.................. -- (27) -- (74)
Construction and land................... -- -- -- --
Consumer................................ (14) (56) (14) (5)
Business................................ -- -- -- --
----- ----- ----- -----
Total charge-offs............... (14) (106) (101) (229)
----- ----- ----- -----
RECOVERIES:
One- to four-family..................... 1 1 1 3
Multifamily............................. -- -- 6 --
Commercial real estate.................. -- -- -- --
Construction and land................... -- -- -- --
Consumer................................ -- -- -- --
Business................................ -- -- -- --
----- ----- ----- -----
Total recoveries................ 1 1 7 3
----- ----- ----- -----
Net charge-offs........................... (13) (105) (94) (226)
Provision for loan losses................. 685 959 766 740
----- ----- ----- -----
Balance at end of period........ $3,437 $2,765 $1,911 $1,239
===== ===== ===== =====
Net charge-offs to average loans(1)....... 0.00% 0.02% 0.03% 0.09%
Provision for loan losses to average
loans(1)................................ 0.25 0.21 0.21 0.29
Allowance for losses on loans to total
non-performing loans at end of period... 59.01 83.61 80.70 40.02
Allowance for losses on loans to total
loans at end of period.................. 0.59 0.57 0.45 0.43
<FN>
- ---------------

(1) Ratio for the interim period is stated on an annualized basis.
</TABLE>

The allowance for losses on loans as a percentage of total loans was 0.59%
at June 30, 1996 as compared to 0.57% at December 31, 1995 and 0.45% at December
31, 1994. In each period, the provision for loan losses and allowance for losses
on loans were based on an analysis of individual credits, prior and current loss

27
<PAGE> 28

experience, overall growth in the portfolio and current economic conditions.
Based on such analysis, Metropolitan increased the allowance for losses on loans
in excess of net charge-offs by $672,000, $854,000 and $672,000, during the
periods ended June 30, 1996, and December 31, 1995 and 1994, respectively.

COMPARISON OF JUNE 30, 1996 AND DECEMBER 31, 1995 FINANCIAL CONDITION

Total assets amounted to $672.8 million at June 30, 1996, as compared to
$590.1 million at December 31, 1995, an increase of $82.7 million, or 14.0%. The
increase in assets was funded with deposit growth of $55.1 million and an
increase in FHLB advances and other borrowings of $30.2 million.

Cash and cash equivalents decreased $5.8 million, or 32.1%, to $12.3
million at June 30, 1996. The decline was due to a lower volume of transactions
in process at month end June 30, 1996. Such balances normally fluctuate from day
to day.

Securities decreased $10.7 million, or 46.8%, to $12.1 million at June 30,
1996. The decline was largely due to a reduction in excess short-term liquidity
which was used to fund loan purchases early in 1996.

Net loans receivable increased $85.5 million, or 17.9%, to $563.9 million
at June 30, 1996. This increase was consistent with Metropolitan's overall
strategy of increasing assets while adhering to prudent underwriting standards
and preserving its adequately capitalized status. The mix of loan types did not
change significantly from December 31, 1995 to June 30, 1996. The following
increases by loan category were experienced: multifamily loans -- $38.6 million;
one- to four-family loans -- $15.8 million; commercial real estate loans --
$12.6 million; consumer loans -- $9.6 million; business loans -- $6.3 million;
and construction and land loans (net of loans in process) -- $3.4 million.

Loans held for sale increased $9.2 million, to $10.7 million at June 30,
1996. The increase was attributable to loans purchased for sale for which
Metropolitan had outstanding contracts providing a third party the option to
purchase these loans.

Cost of loan servicing rights decreased $437,000, or 4.8%, to $8.7 million
at June 30, 1996. The decline occurred when amortization of existing rights
exceeded the amount capitalized for new acquisitions during the period.
Metropolitan assesses the fair value of the capitalized mortgage servicing
rights for impairment quarterly and carries these rights on the balance sheet at
the lower of cost or fair value. Although purchases of loan servicing rights
decreased, Metropolitan remains committed to this line of business and continues
to evaluate new acquisitions.

Deposits totalled $558.8 million at June 30, 1996, an increase of $55.1
million, or 10.9%, over the balance at December 31, 1995. The increase resulted
from management's marketing efforts and growth at newer retail sales offices.

Other borrowings increased $30.2 million to $77.1 million at June 30, 1996,
as compared to $46.9 million at December 31, 1995. Based on the lower cost of
wholesale funds as compared to comparable maturity retail deposits, management
chose to fund a portion of the loan growth discussed above with wholesale funds.
FHLB advances were the source of borrowings.

COMPARISON OF DECEMBER 31, 1995 AND DECEMBER 31, 1994 FINANCIAL CONDITION

Total assets amounted to $590.1 million at December 31, 1995, as compared
to $479.4 million at December 31, 1994, an increase of $110.7 million, or 23.1%.
The increase in assets was funded with deposit growth of $67.5 million and an
increase in FHLB advances and other borrowings of $31.4 million and an increase
in shareholder's equity of $5.2 million.

Securities increased by $15.2 million, or 198.5%, to $22.8 million.
Securities available for sale are primarily maintained by Metropolitan to meet
the 5.0% regulatory liquidity requirement and were increased in response to the
increase in average daily balance of withdrawable accounts and short-term
borrowings during the period. See "-- Liquidity and Capital Resources." In
addition, at December 31, 1995, liquid assets were higher than required in
anticipation of a loan purchase completed in early 1996.

Mortgage-backed securities increased $22.3 million, to $39.2 million. The
increase was primarily due to the securitization of bank originated one- to
four-family loans into FNMA mortgage-backed securities.

28
<PAGE> 29

Loans receivable increased $53.4 million, or 12.6%, to $478.3 million at
December 31, 1995. One- to four-family loans decreased $36.6 million due to the
securitization of loans. During 1995, Metropolitan elected to securitize certain
of its one- to four-family loans into mortgage-backed securities guaranteed by
FNMA. The loans selected for securitization included only loans which were
originated by Metropolitan and which met investor requirements for pooling loans
(e.g., maturity date, consistent adjustment terms, caps, floors and margins for
adjustable rate loans, and range of interest rates for fixed rate loans). By
securitizing these loans, Metropolitan reduced its risk-based capital
requirement, reduced credit risk by acquiring the investor guarantee, and
created collateral that is a more efficient source of funds in the market place.
The cost of securitizing loans is the investor guarantee fee, which is
negotiated for each transaction but averaged 31 basis points on the loans
securitized by Metropolitan in 1995. In addition, the service fee earned by
Metropolitan on loans that it securitizes, which ranges from 25 basis points for
fixed rate loans to 37.5 basis points for adjustable rate loans, was previously
reported in interest income but is subsequently reported in non-interest income.
The average service fee on the loans securitized by Metropolitan was 34 basis
points. The effect on interest income of securitizing these loans was to lower
the yield on this portion of interest-earning assets approximately 65 basis
points. In categories other than one- to four-family loans, the following
increases were experienced: commercial real estate loans -- $26.0 million;
construction and land loans (net of loans in process ) -- $5.9 million; business
loans -- $8.5 million; consumer loans -- $6.3 million; and multifamily
loans -- $43.5 million. These increases were consistent with Metropolitan's
overall strategy of increasing assets while adhering to prudent underwriting
standards and preserving its adequately capitalized status. See "-- Liquidity
and Capital Resources -- Capital."

Premises and equipment increased $4.4 million, or 138.1%, to $7.5 million.
This increase was directly a result of retail sales office expansion. In 1995,
Metropolitan embarked on a strategy of building and owning new retail sales
offices, rather than leasing. In that regard, land and a building were acquired
in Mayfield Heights for an office which opened in September 1995. Land was
acquired and construction completed for an office in Macedonia, which opened in
November 1995. Land was also acquired in Auburn, Aurora and Twinsburg for
construction of future retail sales offices.

Cost of loan servicing rights increased $4.3 million, or 89.2%, to $9.1
million. This asset includes both purchased mortgage servicing rights ("PMSRs")
and originated mortgage servicing rights ("OMSRs"). PMSRs increased as a result
of Metropolitan's strategy of increasing non-interest income by focusing on non-
credit products. The portfolio of loans serviced for others underlying this
asset increased to $872.7 million at December 31, 1995 from $481.5 million at
December 31, 1994. In May 1995, the FASB issued SFAS No. 122, "Accounting for
Mortgage Servicing Rights." This statement requires lenders who sell originated
loans and retain the servicing rights to recognize as separate assets the rights
to service mortgage loans for others. It also requires that capitalized mortgage
servicing rights be assessed for impairment based on the fair value of those
rights. Management elected to adopt this statement effective January 1, 1995. At
December 31, 1995, the value of these OMSRs on the balance sheet was $542,000.
The fair value of such rights was in excess of that amount.

Deposits totalled $503.7 million at December 31, 1995, an increase of $67.5
million, or 15.5%, over the balance at December 31, 1994. The increase resulted
from management's marketing efforts, continued growth at newer retail sales
offices and increased custodial checking balances, which are maintained for the
benefit of investors in the loan servicing segment of the business.

Other borrowings increased $31.4 million, to $46.9 million at December 31,
1995, as compared to $15.5 million at December 31, 1994. Based on the lower cost
of these funds, management chose to fund a large portion of the asset growth
discussed above with wholesale funds. FHLB advances were the predominant source
of borrowings. During 1995 Metropolitan issued $14.0 million in principal amount
of 1995 Subordinated Notes. See "Description of Subordinated Notes."

LIQUIDITY AND CAPITAL RESOURCES

Liquidity. The term "liquidity" refers to Metropolitan's ability to
generate adequate amounts of cash to meet its needs, typically for funding loan
originations and purchases. Metropolitan's primary sources of internally
generated funds are principal repayments and payoffs of loans receivable, cash
flows from operations

29
<PAGE> 30

and proceeds from sales of loans. External sources of funds include increases in
deposits, FHLB advances, and reverse repurchase agreements.

While principal repayments and FHLB advances are fairly stable sources of
funds, deposit flows and loan prepayments are greatly influenced by prevailing
interest rates, economic conditions, and competition. Metropolitan regularly
reviews cash flow needed to fund its operations and believes that the
aforementioned resources are adequate for its foreseeable requirements.

The Bank is required by regulation to maintain a liquidity ratio (average
daily balance of liquid assets to average daily balance of net withdrawable
accounts and short-term borrowings) of 5%. See "Regulation and
Supervision -- The Bank -- Liquidity." The Bank's liquidity ratio for June 1996
was 5.74%. Historically, Metropolitan has maintained its liquidity close to the
required minimum since the yield available on qualifying investments is lower
than alternative uses of funds and is generally not at an attractive spread over
incremental cost of funds.

The Corporation's primary source of funds currently is dividends from the
Bank, which are subject to restrictions imposed by federal bank regulatory
agencies. See "Risk Factors -- Capital Distribution Regulations" and "Regulation
and Supervision -- The Bank -- Restrictions on Dividends and Other Capital
Distributions." The Corporation's primary use of funds is for interest payments
on its existing debt. See "Business -- Sources of Funds." At June 30, 1996, the
Corporation, excluding the Bank, had cash of $756,000.

Metropolitan's liquidity, represented by cash equivalents, is a result of
its operating, investing, and financing activities. These activities are
summarized as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
--------------------- ----------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash from operating
activities........................ $ (8,745) $(10,751) $ 8,204 $ 15,552 $ (545)
Net cash used for investing
activities........................ (82,289) (57,546) (100,338) (146,949) (49,508)
Net cash provided by financing
activities........................ 85,206 67,707 98,739 103,234 67,143
-------- -------- -------- -------- --------
Net change in cash and cash
equivalents....................... (5,828) (590) 6,605 (28,163) 17,090
Cash and cash equivalents at
beginning of period............... 18,170 11,565 11,565 39,728 22,638
-------- -------- -------- -------- --------
Cash and cash equivalents at end of
period............................ $ 12,342 $ 10,975 $ 18,170 $ 11,565 $ 39,728
======== ======== ======== ======== ========
</TABLE>

Cash provided or used by operating activities is determined largely by
changes in the level of loans held for sale. The level of loans held for sale
depends on the level of loan originations and the time until an investor funds
the purchase of the loan from the Bank.

Cash provided from investing activities consists primarily of principal
payments on loans and mortgage-backed securities. The level of these payments
increases and decreases depending on the size of the loan and mortgage-backed
securities portfolios and the general trend and level of interest rates, which
influences the level of refinancings and mortgage repayments. During the 1993,
1994 and 1995 years and during the six months ended June 30, 1996, net cash was
used in investing activities, primarily to fund and purchase new loans.

At June 30, 1996, $43.8 million, or 7.8%, of Metropolitan's deposits were
in the form of certificates of deposit of $100,000 and over. If a large number
of these certificates of deposits matured at approximately the same time and
were not renewed there could be an adverse effect on Metropolitan's liquidity.
Metropolitan monitors maturities to attempt to minimize the potential adverse
effect on liquidity. See "Business -- Sources of Funds."

When evaluating sources of funds Metropolitan considers the cost of various
alternatives such as local retail deposits, FHLB advances and other wholesale
borrowings. One option considered and utilized in the past has been the
acceptance of out-of-state time deposits from individuals and entities,
predominantly credit

30
<PAGE> 31

unions. These deposits, which are not accepted through brokers, typically have
balances of $90,000 to $100,000 and have a term of one year or more. At June 30,
1996, approximately $43.2 million of time deposits, or 7.7% of Metropolitan's
total deposits, were held by these individuals and entities. Of that amount,
$4.4 million were in the form of certificates of deposit of $100,000 and over.
If Metropolitan were unable to replace these deposits upon maturity, it could
have an adverse effect on Metropolitan's liquidity.

Capital. The OTS imposes capital requirements on savings associations.
Savings associations are required to meet three minimum capital standards: (i) a
leverage requirement, (ii) a tangible capital requirement, and (iii) a
risk-based capital requirement. Such standards must be no less stringent than
those applicable to national banks. In addition, the OTS is authorized to impose
capital requirements in excess of these standards on individual associations on
a case-by-case basis.

The OTS leverage requirement expressly requires that core capital be
maintained in an amount not less than 3% of adjusted total assets. The OTS has
taken the position, however, that the Prompt Corrective Action regulatory scheme
has effectively raised the leverage ratio requirement for all but the most
highly rated savings associations to 4%. Core capital is defined to include
shareholders' equity less intangibles other than qualifying supervisory goodwill
and certain qualifying intangibles, less investments in subsidiaries engaged in
activities not permissible for national banks. See "Regulation and
Supervision -- The Bank -- Regulatory Capital Requirements and -- Prompt
Corrective Action."

Under the tangible capital requirement, tangible capital (defined as core
capital less all intangible assets, except a limited amount of qualifying
PMSRs), must be maintained in an amount equal to at least 1.5% of adjusted total
assets. Adjusted total assets, for the purpose of the tangible capital ratio,
include total assets less all intangible assets except qualifying PMSRs.

The risk-based capital ratio is calculated based on the risk weight
assigned to on-balance sheet assets and off-balance sheet commitments, which
ranges from 0% to 100% of the book value of the asset and is based upon the risk
inherent in the asset. The risk weights assigned by the OTS for principal
categories of assets are (i) 0% for cash and securities issued by the U.S.
Government or unconditionally backed by the full faith and credit of the U.S.
Government; (ii) 20% for securities (other than equity securities) issued by
U.S. Government sponsored agencies and mortgage-backed securities issued by, or
fully guaranteed as to principal and interest by, FNMA or FHLMC except for those
classes with residual characteristics or stripped mortgage-related securities;
(iii) 50% for prudently underwritten permanent one- to four-family first lien
mortgage loans not more than 90 days delinquent and having a loan to value ratio
of not more than 80% at origination unless insured to such ratio by an insurer
approved by FNMA or FHLMC, certain qualifying multifamily first lien mortgage
loans and residential construction loans; and (iv) 100% for all other loans and
investments, including consumer loans, commercial loans, repossessed assets and
loans more than 90 days delinquent. The risk-based capital requirement mandates
total capital of 8.0% of risk-weighted assets. Total capital consists of core
capital, as defined above, and supplementary capital. Supplementary capital
consists of certain permanent and maturing capital instruments that do not
qualify as core capital and general valuation loan and lease loss allowances up
to a maximum of 1.25% of risk-weighted assets. Supplementary capital may be used
to satisfy the risk-based requirement only to the extent of core capital.

The Bank's regulatory capital ratios at June 30, 1996 were in excess of the
capital requirements specified by OTS regulations as shown by the following
table:

<TABLE>
<CAPTION>
TANGIBLE RISK-BASED
CAPITAL CORE CAPITAL CAPITAL
-------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Capital amount
Actual.......................... $39,279 5.89% $39,571 5.93% $42,462 8.82%
Required........................ 10,003 1.50 26,687 4.00 38,500 8.00
------- ---- ------- ---- ------- ----
Excess.......................... $29,276 4.39% $12,884 1.93% $ 3,962 0.82%
======= ==== ======= ==== ======= ====
</TABLE>

The permissible level of investment in loans secured by non-residential
real property is 400% of "total capital" (defined to include general loan loss
reserves). For purposes of this limitation, non-residential loans exclude loans
secured by apartments, condominiums and improved one- to four-family building
lots. At

31
<PAGE> 32

June 30, 1996, Metropolitan had $122.7 million of non-residential loans
(including those held for sale) which represented 289% of total capital.

Savings associations must deduct from capital the amount of investments in
subsidiaries which are engaged in activities not permitted for national banks.
The Bank's subsidiaries are not engaged in activities which are not permitted
for national banks.

ASSET/LIABILITY MANAGEMENT

Metropolitan, like other financial institutions, is subject to interest
rate risk to the extent that its interest-earning assets reprice differently
than its interest-bearing liabilities. The Bank's Asset and Liability Committee,
which includes representatives of senior management, monitors the level and
relative mix of its interest-earning assets and interest-bearing liabilities.

The steps being taken by the Bank to manage interest rate risk include: (i)
continuing to focus on originating and purchasing adjustable rate assets for
portfolio; (ii) selling fixed rate one- to four-family loans with servicing
retained; (iii) focusing on shortening the term of fixed rate lending by
increasing the percent of the fixed rate loan portfolio represented by consumer
loans; (iv) increasing business lending which will generally result in loans
with adjustable rates and shorter terms; (v) increasing the loan servicing
portfolio; (vi) emphasizing transaction account deposit products which are less
susceptible to repricing in a rising interest rate environment; (vii)
maintaining competitive pricing on longer term certificates of deposit; and
(viii) utilizing term advances and other borrowings rather than short-term
funds.

At June 30, 1996, 66.2% of the total loan portfolio had adjustable rates.
In order to remain competitive in the mortgage loan market and meet customer
needs, Metropolitan also offers a variety of fixed rate products. Metropolitan
has managed its investment in fixed rate loans in several ways in order to
minimize interest rate risk. It has long been Metropolitan's policy to sell the
majority of its fixed rate one- to four-family loan production in the secondary
market. At June 30, 1996, Metropolitan had 6.5% of its total loans comprised of
fixed rate residential one- to four-family loans. The fixed rate residential
loans held in the loan portfolio typically have maturities of 15 years. Within
the remaining fixed rate portfolio, Metropolitan has focused on short-term loan
types. Fixed rate multifamily and commercial real estate loans comprised 16.5%
of total loans at June 30, 1996, and had a weighted average contractual term to
maturity of approximately five years. Fixed rate consumer loans, with a weighted
average contractual term of maturity of approximately seven years, comprised
5.8% of total loans at June 30, 1996. In both cases the effective term to
maturity is anticipated to be less than the contractual term.

At June 30, 1996, Metropolitan had a portfolio of mortgage loan servicing
of $1.1 billion comprised of predominantly fixed rate loans. In periods of
rising interest rates these loans prepay at a slower rate which results in a
stable source of fee income, thereby increasing the economic value of this
portfolio.

As part of its effort to monitor and manage interest rate risk, the Bank
uses the NPV methodology adopted by the OTS. Generally, NPV is the discounted
present value of the difference between incoming cash flows on interest-earning
and other assets and outgoing cash flows on interest-bearing and other
liabilities. The application of the methodology attempts to quantify interest
rate risk as the change in NPV which would result from theoretical instantaneous
and sustained parallel shifts of 100 basis points in market interest rates.

32
<PAGE> 33

Presented below, as of June 30, 1996 and 1995, is an analysis of the Bank's
interest rate risk measured by the NPV methodology. The table also contains the
policy limits set by the Board of Directors of the Bank established with
consideration of the dollar impact of various rate changes and the Bank's
capital position.

<TABLE>
<CAPTION>
CHANGES IN JUNE 30, 1996 JUNE 30, 1995
INTEREST RATE ---------------------- ----------------------
(BASIS BOARD LIMIT CHANGE IN % CHANGE CHANGE IN % CHANGE
POINTS) % CHANGE NPV IN NPV NPV IN NPV
- ------------- ----------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
+400 (75)% $(23,339) (43)% $(26,493) (61)%
+300 (50) (17,235) (32) (19,072) (44)
+200 (25) (11,114) (21) (11,864) (28)
+100 (10) (5,205) (10) (5,268) (12)
-100 (10) 4,164 8 4,883 11
-200 (25) 9,387 17 9,866 23
-300 (50) 18,071 33 15,741 37
-400 (75) 30,127 56 22,287 52
</TABLE>

As illustrated in the table, the Bank's NPV is unfavorably affected in the
rising rate scenarios. This occurs principally because the interest rates paid
on deposits would increase more rapidly than interest rates earned on assets
because deposits generally have shorter periods to repricing. In addition, the
fixed rate assets in portfolio will only reprice as the loans are repaid and new
loans at higher rates are made. Furthermore, even for the adjustable rate
assets, repricing may lag behind the rate change due to contractual time frames.

The Bank's sensitivity to rising rates at June 30, 1996 was improved
compared to the sensitivity at the same point in time in 1995 due to the
increased capital level and the changing mix of assets. At June 30, 1996, the
Bank was within the Board established limits for various changes in interest
rates.

As with any method of measuring interest rate risk, certain shortcomings
are inherent in the NPV approach. For example, although certain assets and
liabilities may have similar maturities or periods of repricing, they may react
in different degrees to changes in market interest rates. Also, as a result of
competition, the interest rates on certain assets and liabilities may fluctuate
in advance of changes in market interest rates, while interest rates on other
types of assets and liabilities may lag behind changes in market rates. Further,
in the event of a change in interest rates, expected rates of repayment on
assets and early withdrawal levels from certificates of deposit would likely
deviate from those scheduled. Despite its limitations, management considers NPV
the best method for monitoring interest rate risk since core repricing and
maturity relationships are very clearly seen. The clarity of the risk relations
is enhanced by the simplicity of the rate changes and the fact that all rates,
short-term and long-term, change by the same degree.

ACCOUNTING DEVELOPMENTS

In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No. 125
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities based on a financial
components approach that focuses on control. SFAS No. 125 is effective for
transfers and servicing of financial assets and extinguishment of liabilities
occurring after December 31, 1996 and is to be prospectively applied. Management
is currently evaluating the impact of adoption of SFAS No. 125 on its financial
position and results of operations.

In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights." This statement requires lenders who sell originated loans and
retain the servicing rights to recognize as separate assets the rights to
service mortgage loans for others. It also requires that capitalized mortgage
servicing rights be assessed for impairment based on the fair value of those
rights. The provisions of this statement were adopted effective January 1, 1995.
The balance capitalized with respect to originated mortgage servicing rights was
$667,000 and $542,000 at June 30, 1996 and December 31, 1995, respectively. The
fair value of those rights exceeded the amount capitalized at both dates.

In October 1994, the FASB issued SFAS No. 119, "Disclosure About Derivative
Financial Instruments and Fair Value of Financial Instruments," which requires
disclosures about derivative financial instruments

33
<PAGE> 34

including futures, forward, swap and option contracts, and other financial
instruments with similar characteristics. This statement, which is effective for
fiscal years ending after December 15, 1994, has limited applicability to
Metropolitan, since it has no off-balance sheet derivative financial instruments
other than the loan commitments disclosed in the notes to the financial
statements.

In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan." This statement was amended in October 1994 by SFAS No.
118, "Accounting by Creditors for Impairment of a Loan -- Income Recognition and
Disclosures." SFAS No. 114 requires that impaired loans be measured at the
present value of expected future cash flows discounted at the loan's effective
interest rate, or as a practical expedient, at the loan's observable market
price or at the fair value of the collateral if the loan is collateral
dependent. SFAS No. 118 amends certain accounting and disclosure requirements
set forth in SFAS No. 114. The provisions of these statements were adopted
effective January 1, 1995. Under this standard, loans considered to be impaired
are reduced to the present value of expected future cash flows or to the fair
value of collateral, by allocating a portion of the allowance for loan losses to
such loans. If these allocations require an increase in the allowance for loan
losses, such increase is reported as bad debt expense. Based on the analysis
prepared, no bad debt expense was recorded by Metropolitan in connection with
adopting this standard. As allowed, management excludes all consumer loan and
residential single family loans with balances less than $200,000 from possible
classification as impaired.

Effective January 1, 1994, Metropolitan adopted the provisions of SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS
No. 115 requires the classification of debt and equity securities as held to
maturity, trading or available for sale upon their acquisition. Securities
classified as trading would be carried at market value with the unrealized
holding gain or loss recorded in the statement of operations. Securities
available for sale are carried at their estimated market value with the
unrealized holding gain or loss reflected as a separate component of
shareholders' equity. The cumulative effect on Metropolitan's shareholder's
equity at January 1, 1994, of adopting SFAS No. 115, is included as a separate
component of shareholder's equity in the consolidated statement of financial
condition and represents the after-tax effect of adjusting securities available
for sale to fair value. Securities classified as held to maturity are carried at
amortized cost unless there is a permanent impairment in value.

In February 1992, the FASB issued SFAS No. 109, "Accounting for Income
Taxes." This Statement calls for a balance sheet approach in calculating current
and deferred taxes based on the difference between financial statement balances
and the tax basis of assets and liabilities at currently enacted tax rates. This
Statement superseded SFAS No. 96 by which the Corporation calculated its
provision for income taxes during 1990, 1991 and 1992. SFAS No. 109 became
effective for fiscal years beginning after December 15, 1992 and Metropolitan
implemented it in early 1993. The impact on Metropolitan as a result of adopting
this statement was a reduction of $300,000 in net income for the year ended
December 31, 1993.

IMPACT OF INFLATION AND CHANGING PRICES

The consolidated financial statements and notes included herein have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering the changes in relative purchasing power
of money over time due to inflation. The impact of inflation is reflected in and
a component of the increased cost of Metropolitan's operations.

In management's opinion, changes in interest rates affect the financial
condition of a financial institution to a far greater degree than changes in the
inflation rate. While interest rates are influenced by changes in the inflation
rate, they do not change at the same rate or in the same magnitude as the
inflation rate. Rather, interest rate volatility is based on changes in the
expected rate of inflation, as well as changes in monetary and fiscal policies.
Metropolitan's ability to match the interest rate sensitivity of its financial
assets to the interest sensitivity of its financial liabilities in its
asset/liability management may tend to minimize the effect of changes in
interest on its financial performance.

34
<PAGE> 35

BUSINESS

GENERAL

Metropolitan is a savings and loan holding company incorporated in 1972
that is engaged in the principal business of originating and purchasing mortgage
and other loans through its wholly-owned subsidiary, the Bank. Funds for lending
and other investment activities are obtained primarily from savings deposits,
principal repayments on loans, wholesale borrowings and the sale of loans. The
activities of the Corporation are limited and have no significant impact on the
results of operations on a consolidated basis. Unless otherwise noted, all of
the activities discussed below are of the Bank. Metropolitan's corporate
headquarters is located at 6001 Landerhaven Drive, Mayfield Heights, Ohio 44124.

The Bank is a state chartered savings association established in 1958. The
Bank operates 14 full service retail offices throughout Eastern Cuyahoga, Lake,
Summit, Portage and Geauga Counties. An additional full service retail office is
currently under construction in Summit County which will open in the first
quarter of 1997 and land has been acquired for three additional full service
retail office locations in Summit and Geauga Counties. The Bank also maintains
six residential, construction and multifamily loan production offices. At June
30, 1996, Metropolitan had total assets of $672.8 million, total deposits of
$558.8 million and shareholder's equity of $26.6 million. The deposits of the
Bank are insured by the FDIC up to applicable limits.

In addition to the Bank, Metropolitan has four other subsidiaries, each of
which are either directly or indirectly wholly-owned by Metropolitan. These
subsidiaries include: MetroCapital Corporation; Kimberly Construction Company,
Incorporated ("Kimberly Construction"); Metropolitan Savings Service
Corporation; and Metropolitan Securities Corporation. Each of these
subsidiaries, with the exception of Kimberly Construction, is inactive.
Currently, Kimberly Construction's sole business function is to serve as a
principal party to various construction contracts entered into in connection
with the construction of Bank premises.

METROPOLITAN'S OPERATING STRATEGY

In recent years, Metropolitan has pursued a strategy of maximizing long
term profitability by pursuing balance sheet growth designed to enhance the
franchise value of the Bank. Metropolitan has experienced significant growth in
terms of total assets, total deposits, and shareholder's equity over the last
five years. Metropolitan's total assets have grown by a 24.5% compound annual
rate, total deposits have increased by a 21.1% compound annual rate and
shareholder's equity has grown by a 23.9% compound annual rate from December 31,
1991 to June 30, 1996. Metropolitan seeks to maintain strong growth through (i)
increasing total interest-earning assets by continuing to focus on multifamily,
commercial real estate and residential loan origination while maintaining a high
level of asset quality and adequately capitalized status pursuant to FDIC
guidelines, (ii) growing time and core deposits at a rate that is consistent
with the overall level of growth of interest-earning assets, (iii) increasing
non-interest income as a non-credit based source of income that requires a lower
commitment of capital than credit-based products, and (iv) increasing the
capital of the Bank through retained earnings.

Multifamily Origination. With a total multifamily loan portfolio of $270.0
million, at June 30, 1996, Metropolitan was one of the largest multifamily
lenders in Ohio. Approximately 43.8% of the growth in total loans from December
31, 1991 to June 30, 1996 has been in the category of multifamily lending.
However, the dynamics of this market have changed in recent years due to
experienced developers and managers of multifamily properties returning to the
market because of increasingly attractive returns, and stabilization of property
values. In order to continue its growth and in response to increased
competition, Metropolitan has been expanding its market area. The Bank now has
multifamily loan production offices in Detroit, Cincinnati and Pittsburgh.

Metropolitan intends to continue penetration of its primary lending markets
for variable rate multifamily mortgage lending, including Ohio, Central and
Northern New Jersey, Northern Kentucky, Southeastern Michigan, and Western
Pennsylvania, by capitalizing on management's collective knowledge of these
specific markets and its relationships with existing and potential sources of
multifamily mortgages. Metropolitan has longstanding relationships with owners
of multifamily units in all of its primary lending markets, and

35
<PAGE> 36

management believes that a certain degree of geographic diversity serves to
enhance Metropolitan's asset quality.

One- to Four-family ARM Origination. Metropolitan currently originates
one- to four-family adjustable rate mortgages ("ARMs") in its primary Ohio
markets of Cuyahoga, Lorain, Lake, Summit, Portage and Geauga Counties. As part
of its overall strategy to expand interest-earning assets with primarily
variable rate mortgages, Metropolitan has and will continue to increase the
origination of ARMs by (i) maintaining price competitiveness through offering
variable rate mortgages consistent with the local market, (ii) expanding the
number of loan originators, and (iii) continuing to market its mortgage
products, including Metropolitan's mortgage preapproval program and its five-day
unconditional loan approval program for new purchasers.

Approximately 12.9% of the growth in total loans from December 31, 1991 to
June 30, 1996, has been in one- to four-family lending. Adjustable rate one- to
four-family loans have increased from 5.2% of total loans at December 31, 1991
to 8.7% at June 30, 1996.

One- to Four-family and Multifamily ARM Purchases. In addition to
increasing the origination of ARMs, as part of its goal to increase total
earning assets, Metropolitan from time to time purchases seasoned one- to
four-family and multifamily ARMs that are underwritten by a process similar to
the underwriting process for its own originations.

Commercial Real Estate Lending and Purchases. Metropolitan originates
commercial real estate loans secured by strip shopping centers and small office
buildings. In addition, over the past three years, this segment of the loan
portfolio has significantly increased mainly through purchases of commercial
real estate loans. Approximately 23.3% of the growth in total loans from
December 31, 1991 to June 30, 1996 has been in commercial real estate lending.

Business Lending. Metropolitan expanded its lending activities beginning
in late 1994 by adding experienced commercial lenders to originate business
loans in Metropolitan's Ohio markets. These loans may be secured or unsecured
term loans or lines of credit. At June 30, 1996, Metropolitan had $15.0 million
of business loans outstanding and unfunded commitments of $3.6 million.

Consumer Lending. Metropolitan's consumer lending activities include the
origination of home equity loans and lines of credit and installment loans
secured by automobiles, boats, recreational vehicles, mobile homes, and
motorcycles. In addition, Metropolitan purchases automobile and second mortgage
loans through brokers and in March 1996, a $4.6 million credit card portfolio
was acquired. Approximately 9.4% of the growth in total loans from December 31,
1991 to June 30, 1996, has been in consumer loans.

Retail Deposits. One of the elements of Metropolitan's strategy is to
increase deposits at a rate that is consistent with its growth in earning assets
and to maintain a stable ratio of core deposits to time deposits so that
Metropolitan can obtain a stable and reasonably priced source of funds. The Bank
has opened three new full service retail sales offices over the past eighteen
months and seeks to maintain this rate of growth in coming years to expand its
depositor base. In September 1995, a new office was opened in Mayfield Heights
and in November 1995, another new full service retail sales office was opened in
Macedonia. In July 1996, a full service retail office was opened in Aurora. An
additional full service retail office is under construction in Hudson which is
scheduled to open in early 1997. The Bank has purchased land in Auburn, Stow and
Twinsburg in anticipation of opening full service retail offices in these cities
within the next two years.

Non-Interest Income Growth. One of Metropolitan's long-term objectives is
to increase the ratio of non-interest income to non-interest expense.
Metropolitan intends to achieve this objective through an increased emphasis on
fee-based/non-credit products, which are expected to increase non-interest
income at a greater rate than the increase in overhead to support such growth.

A significant source of fee income for Metropolitan is revenue generated
through its loan servicing portfolio. Accordingly, Metropolitan has
significantly increased its servicing portfolio, increasing its servicing income
from $226,000 in 1991 to $1.1 million in 1995. In the six months ended June 30,
1996, servicing income was $632,000. Metropolitan competes regionally to
purchase mortgage loan servicing rights for loan pools generally under $100
million. Management believes that it is successful in purchasing these servicing
rights at attractive prices because it seeks to purchase smaller size loan
pools, which typically attract less competition among bidders, and because of
its ability to expedite the transaction and transfer process.

36
<PAGE> 37

Metropolitan retains servicing rights on the fixed rate loans it sells.
Metropolitan is also working to increase the number of fixed rate mortgages it
originates for sale by hiring additional loan production officers and expanding
its retail sales office delivery network.

Metropolitan generates fees from a variety of other sources including ATM
transactions, money orders, travelers checks, consumer loans and credit cards.
In 1995, Metropolitan established a trust department and began offering trust
services. Metropolitan anticipates that, as this line of business becomes
established, it will also contribute to the growth of non-interest income.

In 1995, Metropolitan also began a program to generate loan option income.
In these transactions Metropolitan purchases loans and issues a nonrefundable
option to a third party to purchase these same loans at a later date. The loan
option fee is recognized in income when it is collected.

LENDING ACTIVITIES

General. Metropolitan primarily originates and purchases mortgage loans
secured by multifamily residential real estate. Metropolitan also originates
one- to four-family residential, construction and commercial real estate loans,
and to a lesser extent, consumer and business loans. In order to minimize
interest rate risk, the majority of the residential real estate loans retained
by Metropolitan in its portfolio are ARMs.

Loan Portfolio Composition. The following information presents the
composition of Metropolitan's loan portfolio, including loans held for sale, in
dollar amounts and in percentages (before deductions for loans in process,
deferred fees, premiums and discounts, net, and allowance for losses) as of the
dates indicated.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
--------------- --------------- --------------- ---------------- ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ ------- ------- ------- -------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REAL
ESTATE
LOANS:
One-to
four-family... $ 92,055 15.1% $ 76,259 15.0% $112,840 25.2% $ 39,510 12.7% $ 36,351 15.3% $ 37,758 20.3%
Multifamily..... 270,049 44.4 231,459 45.8 187,928 41.9 166,221 53.2 129,599 54.7 84,974 45.8
Commercial...... 122,006 20.1 109,403 21.5 83,354 18.6 54,819 17.5 36,717 15.5 23,610 12.7
Construction
and land...... 56,323 9.3 48,210 9.5 38,270 8.5 30,894 9.9 24,255 10.2 25,386 13.7
Held for sale... 10,686 1.8 1,504 0.2 84 0.0 10,391 3.3 5,082 2.2 11,839 6.4
------- ---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Total real
estate
loans....... 551,119 90.7 466,835 92.0 422,476 94.2 301,835 96.6 232,004 97.9 183,567 98.9
CONSUMER
LOANS............ 41,787 6.9 32,214 6.3 25,946 5.8 10,687 3.4 5,022 2.1 2,068 1.1
BUSINESS
AND OTHER
LOANS.......... 15,034 2.4 8,703 1.7 171 0.0 50 0.0 50 0.0 50 0.0
------- ---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Total
loans...... 607,940 100.0% 507,752 100.0% 448,593 100.0% 312,572 100.0% 237,076 100.0% 185,685 100.0%
===== ===== ===== ===== ===== =====
LESS:
Loans
in process..... 28,095 23,373 19,338 14,656 11,222 6,982
Deferred
fees, premiums
and discounts,
net............ 1,839 1,764 2,317 1,998 3,359 1,386
Allowance
for losses
on loans....... 3,437 2,765 1,911 1,239 725 495
-------- -------- -------- -------- -------- --------
Total loans
receivable,
net......... $574,569 $479,850 $425,027 $294,679 $221,770 $176,822
======== ======== ======== ======== ======== ========
</TABLE>

Metropolitan had commitments to originate or purchase loans of $42.6
million and $29.7 million at June 30, 1996 and December 31, 1995, respectively.
In addition, Metropolitan had firm commitments to sell loans of $1.5 million and
$2.0 million and optional commitments to sell loans of $10.0 million and
$458,000 at June 30, 1996 and December 31, 1995, respectively.

37
<PAGE> 38

The following table shows the composition of Metropolitan's loan portfolio,
including loans held for sale, by fixed and adjustable rate at the dates
indicated.

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
--------------- ---------------- --------------- --------------- ----------------- -----------------
AMOUNT PER- AMOUNT PER- AMOUNT PER- AMOUNT PER- AMOUNT PER- AMOUNT PER-
CENT CENT CENT CENT CENT CENT
-------- ----- -------- ----- -------- ----- -------- ----- -------- ----- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIXED-RATE
LOANS:
Real estate:
One-to
four-family... $ 39,386 6.5% $ 35,042 6.9% $ 46,418 10.4% $ 20,448 6.5% $ 19,571 8.3% $ 28,127 15.2%
Multifamily... 100,307 16.5 71,909 14.2 19,852 4.4 5,281 1.7 10,370 4.4 10,574 5.7
Commercial.... 18,546 3.0 17,615 3.5 7,948 1.8 8,325 2.7 8,291 3.5 8,478 4.6
Construction
and land..... 96 0.0 39 0.0 -- -- -- -- -- -- -- --
Held for
sale.......... 8,868 1.5 1,504 0.3 84 0.0 10,391 3.3 5,082 2.1 79 0.0
------- --- -------- ------ ------- ----- -------- ---- -------- ----- -------- -----
Total fixed
rate real
estate
loans....... 167,203 27.5 126,109 24.9 74,302 16.6 44,445 14.2 43,314 18.3 47,258 25.5
Consumer........ 35,305 5.8 30,817 6.0 25,228 5.6 10,687 3.4 5,022 2.1 2,068 1.1
Business and
other.......... 3,273 0.5 2,744 0.5 20 0.0 -- -- -- -- -- --
-------- ----- -------- ----- -------- ------ -------- ----- -------- ----- -------- -----
Total fixed
rate loans.. 205,781 33.8% 159,670 31.4% 99,550 22.2% 55,132 17.6% 48,336 20.4% 49,326 26.6%
-------- ===== -------- ===== -------- ===== -------- ===== -------- ===== -------- =====
ADJUSTABLE-RATE
LOANS:
Real estate:
One-to
four-family.. 52,669 8.7% 41,217 8.1% 66,422 14.8% 19,062 6.1% 16,780 7.1% 9,631 5.2%
Multifamily... 169,742 27.9 159,550 31.4 168,076 37.5 160,940 51.5 119,229 50.3 74,400 40.1
Commercial.... 103,460 17.1 91,788 18.1 75,406 16.8 46,494 14.9 28,426 12.0 15,132 8.1
Construction
and land.... 56,227 9.2 48,171 9.5 38,270 8.5 30,894 9.9 24,255 10.2 25,386 13.7
Held for sale. 1,818 0.3 -- -- -- -- -- -- -- -- 11,760 6.3
-------- ----- -------- ----- -------- ------ -------- ----- -------- ----- -------- -----
Total
adjustable-
rate real
estate loans 383,916 63.2 340,726 67.1 348,174 77.6 257,390 82.4 188,690 79.6 136,309 73.4
Consumer........ 6,482 1.1 1,397 0.3 718 0.2 -- -- -- -- -- --
Business
and other..... 11,761 1.9 5,959 1.2 151 0.0 50 0.0 50 0.0 50 0.0
-------- ----- -------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total
adjustable-
rate loans.. 402,159 66.2% 348,082 68.6% 349,043 77.8% 257,440 82.4% 188,740 79.6% 136,359 73.4%
-------- ===== -------- ===== -------- ===== -------- ===== -------- ===== -------- =====
LESS:
Loans in process 28,095 23,373 19,338 14,656 11,222 6,982
Deferred fees,
premiums and
discounts, net. 1,839 1,764 2,317 1,998 3,359 1,386
Allowance
for losses
on loans....... 3,437 2,765 1,911 1,239 725 495
-------- -------- -------- -------- -------- --------
Total loans
receivable,
net......... $574,569 $479,850 $425,027 $294,679 $221,770 $176,822
======== ======== ======== ======== ======== ========

</TABLE>

38
<PAGE> 39

The following table illustrates the contractual maturities of
Metropolitan's loan portfolio at June 30, 1996. Loans that have adjustable or
renegotiable interest rates are shown as maturing in the period during which the
contract is due. The schedule does not reflect the effects of possible
prepayments, enforcements of due-on-sale clauses, or the effect of the
amortization of deferred loan fees.

<TABLE>
<CAPTION>
DUE IN ONE DUE AFTER ONE YEAR DUE AFTER
YEAR OR LESS(1) THROUGH FIVE YEARS FIVE YEARS TOTAL
---------------------- ----------------------- ----------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AMOUNT AVERAGE RATE AMOUNT AVERAGE RATE AMOUNT AVERAGE RATE AMOUNT AVERAGE RATE
------- ------------ -------- ------------ -------- ------------ -------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REAL ESTATE:
One- to
four-family........ $ 516 6.67% $ 2,121 8.00% $ 93,021 7.57% $ 95,658 7.58%
Multifamily.......... 7,125 9.16 85,573 8.94 183,696 8.26 276,394 8.50
Commercial........... 13,230 9.65 58,509 9.27 51,006 8.83 122,744 9.13
Construction and
land............... 47,604 9.27 8,719 9.33 -- -- 56,323 9.28
CONSUMER............... 7,370 11.02 15,081 8.99 19,335 9.94 41,787 9.79
BUSINESS............... 8,197 9.86 3,246 9.56 3,591 9.76 15,034 9.77
------- -------- -------- --------
Total.................. $84,042 9.52 $173,249 9.07 $350,649 8.27 $607,940 8.67
======= ======== ======== ========
</TABLE>

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

(1) Includes demand loans, loans having no stated maturity and overdraft loans.

The total amount of loans due after June 30, 1997 which have predetermined
interest rates is $205.7 million, while the total amount of loans due after that
date which have floating or adjustable rates is $318.2 million.

LOAN ORIGINATIONS AND PURCHASES

Metropolitan's strategy in recent years has been to increase
interest-earning assets, primarily by increasing the total loan portfolio, as
long as quality assets with the necessary portfolio characteristics are
available. Specifically, Metropolitan has sought to add (i) adjustable rate
loans or (ii) fixed rate loans with higher yields and shorter terms to maturity.
Both of these types of loans must continue to meet the underwriting criteria
that have resulted in Metropolitan's low level of charge-offs. Over 70% of loan
additions in each of the last three years have been a result of internal
origination efforts. The remaining loans are purchased, seasoned loans which
have been subjected to a similar underwriting and approval process.

39
<PAGE> 40

The following table sets forth loan origination, purchase, sale and
repayment activities of Metropolitan for the periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------
1996 1995 1995 1994 1993
-------- -------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ORIGINATIONS BY TYPE
ADJUSTABLE RATE:
Real estate:
One- to four-family........................... $ 17,640 $ 15,382 $ 22,503 $ 47,136 $ 3,034
Multifamily................................... 12,891 13,847 24,542 20,588 43,961
Commercial.................................... 2,679 2,452 5,919 8,486 1,375
Construction and land......................... 23,165 22,363 41,559 44,053 35,376
Consumer........................................ 58 -- -- -- --
Business........................................ 5,866 2,665 6,814 20 --
--------- --------- --------- --------- ---------
Total adjustable rate......................... 62,299 56,709 101,337 120,283 83,746
--------- --------- --------- --------- ---------
FIXED RATE:
Real estate:
One- to four-family........................... 30,788 5,732 24,230 37,030 112,048
Multifamily................................... 4,233 -- 13,957 8,745 8,322
Commercial.................................... -- 1,200 4,400 3,220 --
Construction and land......................... 30 38 37 -- --
Consumer........................................ 3,762 7,748 15,048 17,124 7,401
Business........................................ 1,977 728 2,915 101 --
--------- --------- --------- --------- ---------
Total fixed rate.............................. 40,790 15,446 60,587 66,220 127,771
--------- --------- --------- --------- ---------
Total loans originated........................ 103,089 72,155 161,924 186,503 211,517
--------- --------- --------- --------- ---------
PURCHASES BY TYPE
ADJUSTABLE RATE:
Real estate:
One- to four-family........................... 1,835 -- -- 4,939 9,140
Multifamily................................... 30,882 2,955 3,694 10,129 21,651
Commercial.................................... 6,112 12,480 13,939 23,632 32,777
Construction and land......................... -- -- -- -- --
Consumer........................................ 5,018 -- -- -- --
Business........................................ -- -- -- -- --
--------- --------- --------- --------- ---------
Total adjustable rate......................... 43,847 15,435 17,633 38,700 63,568
--------- --------- --------- --------- ---------
FIXED RATE:
Real estate:
One- to four-family........................... 1,125 19,345 19,381 13,079 5,798
Multifamily................................... 14,838 9,920 50,420 12,218 --
Commercial.................................... 15,326 8,234 15,879 3,904 283
Construction and land......................... -- -- -- -- --
Consumer........................................ 6,692 86 387 6,213 616
Business........................................ -- -- -- -- --
--------- --------- --------- --------- ---------
Total fixed rate.............................. 37,981 37,585 86,067 35,414 6,697
--------- --------- --------- --------- ---------
Total loans purchased......................... 81,828 53,020 103,700 74,114 70,265
--------- --------- --------- --------- ---------
REDUCTIONS
SALES:
Real estate:
One- to four-family........................... (25,697) (2,700) (35,770) (23,000) (103,788)
Multifamily................................... (5,312) (16,835) (27,094) (22,082) (22,138)
Commercial.................................... -- -- (1,835) (6,285) (7,425)
Construction and land......................... -- -- -- -- --
Consumer........................................ -- -- -- -- --
Business........................................ -- -- -- -- --
--------- --------- --------- --------- ---------
Total loan sales.............................. (31,009) (19,535) (64,699) (51,367) (133,351)
Loans securitized............................... -- (7,803) (53,795) -- --
Principal repayments............................ (53,720) (37,477) (87,972) (73,229) (72,930)
--------- --------- --------- --------- ---------
Total reductions.............................. (84,729) (64,815) (206,466) (124,596) (206,281)
Decrease in other items, net.................... (5,469) (6,224) (4,336) (5,673) (2,592)
--------- --------- --------- --------- ---------
Net increase.................................... $ 94,719 $ 54,136 $ 54,822 $ 130,348 $ 72,909
========= ========= ========= ========= =========
</TABLE>

40
<PAGE> 41

Multifamily Residential Lending. Metropolitan focuses its primary
portfolio lending efforts on multifamily residential real estate loans.

Multifamily loans are originated by Metropolitan from referrals by present
customers of the Bank and mortgage and real estate brokers. Through its existing
referral network and advertising efforts, Metropolitan has become known for
multifamily lending in its primary multifamily lending markets of Ohio, Northern
Kentucky, Southeastern Michigan, Western Pennsylvania, and Northern and Central
New Jersey. Although Metropolitan operates full service retail sales offices
solely in Northeastern Ohio, it has origination offices in Southern Ohio,
Southeastern Michigan and Western Pennsylvania to pursue opportunities in
growth-oriented communities.

At June 30, 1996, Metropolitan's multifamily loans totaled $270.0 million,
with an average loan size of approximately $672,000. Of this amount, $152.4
million, or 56.4%, were originated by Metropolitan. Currently, Metropolitan
emphasizes the origination of ARMs with principal amounts of less than $2.0
million and maturities of 10 years. The loans are adjustable on a one-, three-
or five-year schedule with an amortization of 25 or 30 years. Rate adjustments
are based on the appropriate term U.S. Treasury securities plus a margin. The
loans are subject to a maximum individual aggregate interest rate adjustment as
well as a maximum aggregate adjustment over the life of the loan (generally 6%).
Due to increasing demand for fixed rate loans, Metropolitan has allocated some
funds for fixed rate programs, typically those with 7- to 10-year maturities.
The maximum loan to value ratio of Metropolitan's multifamily residential loans
is 75%.

Metropolitan recognizes that multifamily residential property loans
generally involve a higher degree of risk than the financing of one- to
four-family residential real estate because they typically involve larger loan
balances to single borrowers or groups of related borrowers. The payment
experience on these loans is typically dependent upon the successful operation
of the related real estate project and is subject to certain risks including
excessive vacancy rates or inadequate rental income levels. In order to manage
and reduce these risks, Metropolitan uses strict underwriting standards in its
multifamily residential lending process.

The loans originated in this area are typically less than $2.0 million in
principal amount and are secured by garden-style apartments with generally under
75 residential units. The underwriting process includes a site evaluation which
considers such factors as location, access by roadways, condition of the
apartments and amenities. In addition, a Metropolitan employee visits each
location before a loan approval is made. The underwriting process also involves
an evaluation of the borrower, whether the borrower is an individual or a group
of individuals acting as a separate entity. The financial statements of each of
the individual borrowers are reviewed and personal guarantees in an amount equal
to the original principal amount of the loan are generally obtained. The
financial statements of individual guarantors are reviewed by senior officers of
Metropolitan. Another important aspect of Metropolitan's underwriting of its
multifamily residential loans is the debt service coverage test of the property.
Debt service coverage requirements are determined based upon the individual
characteristics of each loan, and are typically at least 1.15. In order to
factor in the adjustable rate of the multifamily loans, the debt service
coverage is calculated at a rate in excess of the initial interest rate of the
loan.

At June 30, 1996, $117.6 million, or 43.6%, of Metropolitan's multifamily
residential loan portfolio was purchased. The loans purchased are selected
seasoned loans and are obtained from a variety of sources. Prior to purchasing
these loans, Metropolitan utilizes a similar underwriting process with
substantially the same standards as for its originated loans. Real estate
located in Northeastern Ohio secures 61.7% of Metropolitan's multifamily
residential loan portfolio. Underlying real estate for these loans is also
located primarily in Eastern Pennsylvania, Michigan and New Jersey. In addition,
at June 30, 1996, 9.7% of the multifamily residential loan portfolio was secured
by real estate in California. This percentage has been steadily declining since
1990, and these loans are primarily a result of purchases by the Bank prior to
1990.

Commercial Real Estate Lending. Although Metropolitan has always held a
limited investment in loans secured by commercial real estate, this portion of
the portfolio has increased mainly through purchases in the last three years.
These loans were part of larger packages of loans that included multifamily
residential loans or had the yield and term requirements and underwriting
criteria sought by Metropolitan. At June 30, 1996, Metropolitan's loans secured
by commercial real estate totalled $122.0 million, or 20.1%, of Metropolitan's

41
<PAGE> 42

total portfolio, with an average loan size of $439,000. Of this amount, $32.3
million, or 26.5%, was originated by Metropolitan and $89.7 million, or 73.5%,
represented seasoned loans purchased from a variety of sources.

Loans secured by commercial real estate are purchased by Metropolitan when
they are in the primary lending markets being targeted by Metropolitan, are
secured by retail strip shopping centers or office buildings, and meet
Metropolitan's yield and term requirements. The $89.7 million of purchased
commercial real estate loans were acquired by Metropolitan from 1993 to 1996.

To a much lesser extent Metropolitan originates commercial real estate
loans secured by strip shopping centers and small office buildings. Through
customer referrals and real estate brokers, Metropolitan lends on commercial
real estate in Northern and Central Ohio, Northern Kentucky, and Southeastern
Michigan. These loans are adjustable on a one-, three- or five-year schedule
with amortization of 25 or 30 years at a margin over the appropriate term
treasuries. The maximum loan to value ratio is 75%.

The following table presents information as to the locations and types of
properties securing Metropolitan's multifamily and commercial real estate
portfolio as of June 30, 1996:

<TABLE>
<CAPTION>
NUMBER
OF LOANS % PRINCIPAL %
-------- ----- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Ohio:
Multifamily............................. 240 35.3% $166,507 42.5%
Office buildings........................ 58 8.6 23,801 6.0
Retail centers.......................... 39 5.7 27,757 7.1
Other................................... 49 7.2 10,922 2.8
--- ----- ------- -----
Total................................ 386 56.8 228,987 58.4
--- ----- ------- -----
Michigan:
Multifamily............................. 22 3.3 31,858 8.1
Office buildings........................ 1 0.1 1,014 0.3
Retail centers.......................... 3 0.4 3,502 0.9
Other................................... 13 1.9 24,106 6.1
--- ----- ------- -----
Total................................ 39 5.7 60,480 15.4
--- ----- ------- -----
California:
Multifamily............................. 41 6.1 26,275 6.7
Office buildings........................ -- -- -- --
Retail centers.......................... -- -- -- --
Other................................... 7 1.0 6,075 1.6
--- ----- ------- -----
Total................................ 48 7.1 32,350 8.3
--- ----- ------- -----
New Jersey:
Multifamily............................. 26 3.8 9,499 2.4
Office buildings........................ 28 4.1 5,191 1.3
Retail centers.......................... 23 3.4 5,860 1.5
Other................................... 26 3.8 4,042 1.1
--- ----- ------- -----
Total................................ 103 15.1 24,592 6.3
--- ----- ------- -----
Other states:(1)
Multifamily............................. 73 10.7 35,910 9.2
Office buildings........................ 8 1.2 2,081 0.5
Retail centers.......................... 6 0.9 4,200 1.1
Other................................... 17 2.5 3,455 0.8
--- ----- ------- -----
Total................................ 104 15.3 45,646 11.6
--- ----- ------- -----
680 100.0% $392,055 100.0%
=== ===== ======= =====
<FN>
- ---------------

(1) Properties securing loans in other states are located in seven other states,
none of which exceed 5.0% of the outstanding principal balance of the total
multifamily and commercial real estate portfolio.
</TABLE>

42
<PAGE> 43

The following table presents aggregate information as to the type of
security within the multifamily and commercial real estate portfolio as of June
30, 1996:

<TABLE>
<CAPTION>
NUMBER AVERAGE BALANCE
OF LOANS PER LOAN PRINCIPAL %
-------- --------------- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Multifamily.................................... 402 $ 672 $270,049 63.0%
Office buildings............................... 95 338 32,087 10.8
Retail centers................................. 71 582 41,319 16.1
Other.......................................... 112 434 48,600 10.1
--- -------- -----
Total........................................ 680 577 $392,055 100.0%
=== ======== =====
</TABLE>

One- to Four-family Residential Lending. About 50% of Metropolitan's one-
to four-family residential loans are originated through its full service retail
sales offices. The remainder are originated by commissioned loan officers.
Metropolitan has focused its one- to four-family residential lending efforts
primarily on the origination of loans secured by first mortgages on
owner-occupied residences. As of June 30, 1996, Metropolitan's one- to
four-family residential mortgages totaled $92.1 million or 15.1% of
Metropolitan's loan portfolio.

Metropolitan emphasizes the origination of conventional ARM loans for
retention in Metropolitan's portfolio and fixed rate loans suitable for sale in
the secondary market. In addition, Metropolitan offers fixed rate end loan
financing to purchasers building homes with Metropolitan's approved construction
loan builders. Metropolitan retains only a limited dollar amount of this fixed
rate end loan financing in its portfolio. The amount being originated and
subsequently retained is monitored very closely. Substantially all of
Metropolitan's one- to four-family residential mortgage loans originated for
retention in Metropolitan's portfolio are secured by property located in its
Northeastern Ohio market area. At June 30, 1996, Metropolitan's fixed rate
residential mortgage loan portfolio totaled $39.4 million, or 6.5% of
Metropolitan's total loan portfolio.

Metropolitan is presently originating three types of ARM products for
retention in its portfolio. The first product is a one-year adjustable ARM, the
interest rate being subject to change annually. The adjustments are based upon
the weekly average yield on U.S. Treasury securities adjusted to a constant
maturity of one year, and are generally limited to a 2% maximum annual interest
rate adjustment, as well as a maximum lifetime adjustment of 6%. The second
product, known as a five/one ARM, has the same index and caps as the one year
ARM; the five/one ARM, however, retains its initial interest rate for the first
five years of the loan and then begins to adjust annually in the sixth year. The
third product, the three-year ARM, allows for interest rate adjustments every
three years. The adjustments are based upon the weekly average yield on U.S.
Treasury securities adjusted to a constant maturity of three years, and are
generally limited to a 2% maximum interest rate adjustment per change, as well
as a maximum lifetime adjustment of 6%.

Metropolitan's originated ARMs do not permit negative amortization of
principal and most of them are convertible into fixed rate mortgages. If
converted, they are typically sold in the secondary market. ARMs are originated
with terms to maturity of up to 30 years, and borrowers are qualified based upon
secondary market requirements.

Construction Lending and Land Development. Metropolitan originates
construction loans on single family homes to small, local builders (who
typically build less than fifteen homes per year) in Metropolitan's primary
lending market and to individual borrowers on owner-occupied properties.
Metropolitan also makes loans to builders for the purchase of fully-improved
single family lots and to developers for the purpose of developing land into
single family lots. Metropolitan's market area for construction lending is in
Ohio and primarily in Cuyahoga County, but loans are also made in Lake, Geauga,
Summit, Medina, Portage, and Lorain counties. Metropolitan has a loan
origination office in the high volume Columbus, Ohio construction market to
originate single family construction loans and improved lot loans.

43
<PAGE> 44

The following table presents the number, amount, and type of properties
securing Metropolitan's construction and land development loans at June 30,
1996:

NUMBER PRINCIPAL
OF LOANS BALANCE
-------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
RESIDENTIAL CONSTRUCTION LOANS:
Owner-occupied.................................. 2 $ 970
Builder presold................................. 44 7,326
Builder spec/model.............................. 72 14,238
Allocated construction loans (LOC).............. 19 17,480
Lot loans....................................... 46 5,727
Development loans............................... 17 8,156
COMMERCIAL CONSTRUCTION LOAN...................... 1 2,325
LAND LOANS........................................ 6 101
--- -------
Total........................................... 207 $56,323
=== =======
</TABLE>

Metropolitan's risk of loss on a construction loan is largely dependent
upon the accuracy of the initial estimate of the property's value upon
completion of the project and the estimated cost of the project. The application
process includes a submission of the cost, specifications and plans.
Metropolitan also reviews the borrower's financial position and requires a
personal guarantee on all builder loans. All loans are based upon the appraised
value of the underlying collateral, as completed. Appraisals are completed by
qualified outside fee appraisers who have been approved by Metropolitan's Board
of Directors.

Each type of loan has a maximum loan to value ratio which is established by
the contract price, cost estimate or appraised value, whichever is less. The
maximum loan to value ratio for each type of construction loan is as follows:
owner-occupied homes-80%; builder presold homes-80%; builder models or
speculative homes-75%; lot loans-75%; development loans-70% (development of
single-family home lots for resale to builders) and 75% (development of land for
cluster or condominium projects which will be part of an allocated construction
loan).

All of Metropolitan's construction loans that are made to builders are made
for relatively short terms (six to 24 months) and are made with an adjustable
rate of interest. Owner-occupied loans are initially adjustable rate loans with
the option to convert to a fixed rate product only upon the completion of the
home. These loans increase the yield on, and the proportion of interest rate
sensitive loans in, Metropolitan's portfolio.

Lines of credit or allocated construction loans are used to build single
family homes only and cannot be used for any other purpose. All lines of credit
are secured by the homes that are built with the draws under such credit
agreements. Most of the homes built with the line of credit funds are presold
homes, and the number of spec and model homes allowed to be built is limited by
the financial strength of the builder. Lines of credit can only be utilized
where a builder owns a specific number of lots in a development. Draws are based
upon the percentage of completion, and at all times, funds remain to complete
the home. Disbursements are only made after receipt of a property inspection and
a mechanic's lien update from the title company.

To a much lesser extent, Metropolitan originates construction loans secured
by commercial real estate. One such loan in the amount of $2.3 million was
outstanding at June 30, 1996 and was made for development of an art gallery.

Consumer Lending. Since 1990, Metropolitan has instituted a controlled
growth strategy for its consumer loan portfolio, increasing the size of its
portfolio each year, while ensuring an acceptable level of delinquency. This
strategy has been successfully accomplished through the introduction of new
products on a gradual basis, and through purchases of seasoned portfolios. As
new products are introduced to the mix of existing products, Metropolitan
expects to gain the benefits of increased loan volume.

The underwriting standards employed by Metropolitan for consumer loans
include a determination of the applicant's payment history on other debts and an
assessment of the applicant's ability to meet existing obligations and payments
on the proposed loan. Although creditworthiness of the applicant is a primary

44
<PAGE> 45

consideration, the underwriting process also includes a comparison of the value
of the security, if any, in relation to the proposed loan amount.

Consumer loans entail greater risk than do residential mortgage loans,
particularly in the case of consumer loans which are unsecured or are secured by
rapidly depreciable assets, such as automobiles. At June 30, 1996, $33.2 million
or 79.4% of Metropolitan's $41.8 million consumer loan portfolio was secured.
However, even in the case of secured loans, repossessed collateral for a
defaulted consumer loan may not provide an adequate source of repayment of the
outstanding loan balance due to the higher likelihood of damage, loss or
depreciation. In addition, consumer loan collections are dependent upon the
borrower's continuing financial stability, and thus are more likely to be
affected by adverse personal circumstances. Furthermore, the application of
various federal and state laws, including bankruptcy and insolvency laws, may
limit the amount that can be recovered on such loans.

In 1994, Metropolitan introduced credit cards to its offering of consumer
credit products. At December 31, 1995 the outstanding balance was $1.4 million
with $4.8 million in unused credit lines. In March 1996, Metropolitan acquired a
$4.6 million existing portfolio from a Chicago lender and consequently increased
the outstanding balance of credit cards at June 30, 1996 to $6.5 million with
$17.9 million in unused credit lines. Metropolitan plans to continue to review
credit card portfolios which are available for sale and may, from time to time,
purchase additional credit card portfolios.

Business Lending. Metropolitan began offering business loans in late 1994.
At June 30, 1996, Metropolitan had $15.0 million of business loans outstanding,
or 2.4% of Metropolitan's total loan portfolio, against available lines and
letters of credit on existing business loans totaling $18.6 million.
Metropolitan's business lending activities encompass loans with a variety of
purposes and security, including loans to finance accounts receivable, inventory
and equipment. Generally, Metropolitan's business lending has been limited to
borrowers headquartered, or doing business in, Metropolitan's retail market
area.

The following table sets forth information regarding the number and amount
of Metropolitan's business loans as of June 30, 1996:

<TABLE>
<CAPTION>
TOTAL OUTSTANDING
NUMBER LOAN PRINCIPAL
OF LOANS COMMITMENT BALANCE
-------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
LOANS SECURED BY:
Accounts receivable, inventory and
equipment................................ 75 $ 7,542 $ 4,926
Certificates of deposit..................... 3 208 44
Stand-by letters of credit.................. 1 61 --
Stocks and bonds............................ 3 127 123
First lien on real estate................... 14 4,241 4,023
Second lien on real estate.................. 9 6,137 5,815
UNSECURED LOANS............................... 3 255 53
--- ------- -------
Total business loans.......................... 108 $ 18,571 $14,984
=== ======= =======
</TABLE>

Unlike residential mortgage loans, which generally are made on the basis of
the borrower's ability to make repayment from his or her employment and other
income and which are secured by real property whose value tends to be more
easily ascertainable, business 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 business loans may be substantially dependent upon the success of
the business itself. Furthermore, the collateral securing the loans may
depreciate over time, may be difficult to appraise and may fluctuate in value
based on the success of the business.

SECONDARY MARKET ACTIVITIES

In addition to originating loans for its own portfolio, Metropolitan
participates in secondary mortgage market activities by selling whole loans to
FNMA and FHLMC. Secondary market sales allow Metropolitan to make loans during
periods when deposit flows decline, or are not otherwise available, and at times
when customers prefer loans with long-term fixed interest rates which
Metropolitan does not choose to originate for

45
<PAGE> 46

its own portfolio. Metropolitan's primary focus in its mortgage banking
operations is on the sale of fixed rate one- to four-family residential mortgage
loans.

The secondary market for mortgage loans is comprised of institutional
investors who purchase loans meeting certain underwriting specifications with
respect to loan-to-value ratios, maturities and yields. Subject to market
conditions, Metropolitan tailors certain real estate loan programs to meet the
specifications of FHLMC and FNMA, two of the largest institutional investors.
Metropolitan may retain a portion of the loan origination fee paid by the
borrower and receive annual servicing fees as compensation for retaining
responsibility for and performing the servicing of all loans sold to
institutional investors. See "--Loan Servicing Activities." The sale of
substantially all loans to FHLMC and FNMA is nonrecourse to Metropolitan.

The terms and conditions under which such sales are made depend upon, among
other things, the specific requirements of each institutional investor, the type
of loan, the interest rate environment and Metropolitan's relationship with the
institutional investor. In the case of single-family residential loans,
Metropolitan periodically obtains formal commitments primarily with FHLMC.
Pursuant to these commitments, FHLMC is obligated to purchase a specific dollar
amount of whole loans over a specified period of time. The terms of the
commitments range from ten to sixty days. The pricing will vary, depending upon
the length of each commitment. Management expects to enter into additional
formal commitments in the future as it develops working relationships with
additional institutional investors. Loans are classified as held for sale while
Metropolitan is negotiating for the sale of specific loans that meet selected
criteria to a specific investor.

Metropolitan also sells multifamily and commercial real estate loans to
private investors. The majority of Metropolitan's sales of multifamily and
commercial real estate loans are made pursuant to individually negotiated whole
loan or participation sales agreements for individual loans or for a package of
such loans.

LOAN SERVICING ACTIVITIES

At June 30, 1996, Metropolitan's overall servicing portfolio was $1.5
billion. Of such amount, loans serviced for others totalled $1.1 billion. The
following table summarizes the portfolio by investor and source:

<TABLE>
<CAPTION>
ORIGINATED PURCHASED
SERVICING SERVICING TOTAL
---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
ONE- TO FOUR-FAMILY:
Metropolitan portfolio........................... $ 73,187 -- $ 73,187
FHLMC............................................ 158,728 $563,584 722,312
FNMA............................................. 65,955 234,451 300,406
Private investors................................ -- 12,475 12,475
-------- -------- ----------
Total one- to four-family..................... 297,870 810,510 1,108,380
-------- -------- ----------
MULTIFAMILY AND COMMERCIAL:
Metropolitan portfolio........................... 321,171 -- 321,171
FHLMC............................................ 17,024 9,949 26,973
FNMA............................................. 28,313 25,642 53,955
Private investors................................ 19,047 447 19,494
-------- -------- ----------
Total multifamily and commercial.............. 385,555 36,038 421,593
-------- -------- ----------
Total......................................... $683,425 $846,548 $1,529,973
======== ======== ==========
</TABLE>

Metropolitan services the loans that it originates. When Metropolitan sells
loans to an investor, such as FHLMC or FNMA, it retains the servicing rights for
the loans. Servicing fee income is generated from the loans sold to investors.
In order to further increase Metropolitan's servicing fee income, the Bank has
aggressively pursued purchases of servicing portfolios from other originating
institutions. These purchased servicing portfolios are primarily FHLMC and FNMA
single family loans that are geographically located within the eastern half of
the nation. Metropolitan's purchasing activities began in 1992 and have steadily
increased through the present. Metropolitan increased its purchased servicing
portfolio from $261.2 million at December 31, 1993 to $846.5 million as of June
30, 1996. During the same period, the Corporation's PMSRs increased from $2.3
million at December 31, 1993 to $8.0 million as of June 30, 1996.

46
<PAGE> 47

Approximately 74% of the overall servicing portfolio (by dollar volume) is
comprised of loans sold to investors, primarily FHLMC and FNMA. Metropolitan
receives fee income for servicing these sold loans, ranging from 0.125% on
multifamily loans to 0.250% on fixed rate or 0.375% on adjustable rate
residential loans (percentage based upon unpaid principal balances of the loans
serviced). Servicing fees are collected and retained by Metropolitan out of
monthly mortgage payments.

Loan servicing functions include collecting and remitting loan payments,
accounting for principal and interest, holding escrow (impound) funds for
payment of taxes and insurance, making rate and payment changes to contractually
adjustable loans, managing loans in payment default, processing foreclosure and
other litigation activities to recover mortgage debts, conducting property
inspections and risk assessment for investment loans in addition to general
administration of loans for the investors to whom they are sold, or for
Metropolitan as mortgagee.

LOAN OPTION INCOME

During 1995, Metropolitan developed a program to purchase loans and sell
loan options in order to take advantage of its underwriting capabilities,
increase net interest income and increase non-interest income. In these
transactions, Metropolitan purchases loans and sells nonrefundable options to a
third party to purchase these same loans at a specified price within a specified
time period. The Bank, prior to purchasing the loans that will be subject to the
options, utilizes a similar underwriting process with substantially the same
standards as in its origination process. In the event the option is not
exercised, Metropolitan would sell the underlying loans or transfer them to the
Bank's portfolio at its fair value at the date of the transfer. A nonrefundable
option fee is negotiated based on a percentage of the principal amount of the
loans involved. The third party acquiring the option is a loan broker who
markets the loans to potential buyers who may be willing to pay a higher price
for the loans. To date, Metropolitan has entered into these option transactions
with one loan broker. At June 30, 1996, loans with a carrying value of $10.0
million were held for sale in connection with outstanding options and $406,000
had been recognized in income in the six month period then ended.

LOAN DELINQUENCIES AND NON-PERFORMING ASSETS

When a borrower fails to make a required payment on a loan, Metropolitan
attempts to cause the delinquency to be cured by contacting the borrower. In the
case of real estate loans, a late notice is sent 15 days after the due date. If
the delinquency is not cured by the 30th day, contact with the borrower is made
by phone. Additional written and verbal contacts are made with the borrower
between 30 and 90 days after the due date. If the delinquency continues for a
period of 90 days, Metropolitan usually institutes appropriate action to
foreclose on the property. If foreclosed, the property is sold at public auction
and may be purchased by Metropolitan. Delinquent consumer loans are handled in a
generally similar manner, except that initial contacts are made when the payment
is 10 days past due and appropriate action may be taken to collect any loan
payment that is delinquent for more than 30 days. Metropolitan's procedures for
repossession and sale of consumer collateral are subject to various requirements
under state consumer protection laws.

The following table sets forth information concerning delinquent loans at
June 30, 1996, in dollar amounts and as a percentage of each category of
Metropolitan's loan portfolio. The amounts presented represent the total
remaining principal balances of the related loans, rather than the actual
payment amounts which are overdue.

<TABLE>
<CAPTION>
LOANS DELINQUENT FOR
-------------------------------------------------------------
60-89 DAYS 90 DAYS AND OVER TOTAL DELINQUENT LOANS
----------------------------- ----------------------------- -----------------------------
PERCENT PERCENT PERCENT
OF LOAN OF LOAN OF LOAN
NUMBER AMOUNT CATEGORY NUMBER AMOUNT CATEGORY NUMBER AMOUNT CATEGORY
------ ------ ----------- ------ ------ ----------- ------ ------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate
One- to four-family...... 4 $557 0.57% 5 $ 525 0.54% 9 $1,082 1.11%
Multifamily.............. -- -- -- 4 1,981 0.71 4 1,981 0.71
Commercial............... 2 49 0.04 2 2,065 1.68 4 2,114 1.72
Construction and land.... 1 172 0.61 1 15 0.05 2 187 0.66
Consumer................... 32 116 0.28 151 517 1.24 183 633 1.51
Business................... -- -- -- 1 90 0.60 1 90 0.60
-- ---- --- ------ --- ------
Total.................... 39 $894 0.15 164 $5,193 0.89 203 $6,087 1.04
== ==== === ====== === ======
</TABLE>

47
<PAGE> 48

Non-performing assets include all non-accrual loans, loans past due greater
than 90 days still accruing and real estate acquired in foreclosure. Interest is
not accrued on loans contractually past due 90 days or more as to interest or
principal payments unless in the judgment of management the loan is well
secured, and no loss in principal or interest is expected.

When a loan reaches non-accrual status, interest accruals are discontinued
and prior accruals are reversed. The classification of a loan on non-accrual
status does not necessarily indicate that the principal is uncollectible in
whole or in part. A determination as to collectibility is made by management of
Metropolitan on a case-by-case basis. Metropolitan considers both the adequacy
of the collateral and the other resources of the borrower in determining the
steps to be taken to collect non-accrual loans. The final determination as to
these steps is made on a case-by-case basis. Alternatives that are considered
are commencing foreclosure, collecting on guarantees, restructuring the loan or
instituting collection lawsuits.

The following table summarizes non-performing assets by category as of the dates
indicated.

<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, ------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ------ ------ ------ ------ ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Non-accruing loans
One- to four-family............... $ 233 $ 293 $ 337 $ 475 $ 258 $197
Multifamily....................... 1,981 2,138 1,585 549 180 --
Commercial real estate............ 2,065 391 150 691 -- 244
Construction and land
development.................... 15 15 15 1,051 518 --
Consumer.......................... 367 266 153 53 21 19
Business.......................... 90 -- -- -- -- --
------ ------ ------ ------ ------ ----
Total non-accruing loans....... 4,751 3,103 2,240 2,819 977 460
Loans past due greater than 90 days
or impaired, still accruing....... 1,073 204 128 277 -- --
------ ------ ------ ------ ------ ----
Total non-performing loans.......... 5,824 3,307 2,368 3,096 977 460
Real estate owned................... 219 258 53 941 230 147
------ ------ ------ ------ ------ ----
Total non-performing assets......... $6,043 $3,565 $2,421 $4,037 $1,207 $607
====== ====== ====== ====== ====== ====
Non-performing loans to total
loans............................. 1.03% 0.68% 0.55% 1.08% 0.44% 0.26%
Non-performing assets to total
assets............................ 0.90 0.60 0.51 1.08 0.40 0.24
</TABLE>

For the six months ended June 30, 1996, and for the year ended December 31,
1995, gross interest income which would have been recorded had the non-accruing
loans been current in accordance with their original terms amounted to $72,000
and $86,000, respectively. The amounts that were included in interest income on
such loans were $45,000 and $10,000 for the six months ended June 30, 1996 and
for the year ended December 31, 1995, respectively.

Non-performing assets were $6.0 million at June 30, 1996, an increase of
$2.4 million from $3.6 million at December 31, 1995, primarily due to two retail
strip shopping centers and two multifamily properties. Based upon current
appraisals the fair value of each property exceeds the investment and no loss is
anticipated. The loans secured by multifamily properties have principal amounts
of $1.3 million and $631,000, respectively, and the underlying collateral is
located in Southern California and Northeastern Ohio, respectively. The loans
secured by retail strip shopping centers have principal amounts of $1.1 million
and $925,000, respectively, and the underlying collateral is located in Eastern
Pennsylvania and Central New Jersey, respectively. The multifamily loan located
in Northeastern Ohio was current but management elected to classify it as non-
performing because the debt service coverage ratio was below 1.0. Management
will likely foreclose on the remaining three properties and therefore expects
the status of these loans to remain non-performing through the rest of 1996 and
1997. During the same time period net loans receivable increased $85.5 million
to $563.9 million at June 30, 1996. Non-performing assets at December 31, 1995,
increased $1.1 million from December 31, 1994, primarily in the multifamily and
consumer loan categories. Non-performing assets at December 31, 1994 decreased
$1.5 million from December 31, 1993, primarily due to the sale of real estate

48
<PAGE> 49

owned. Non-performing assets increased in 1993 as a result of five multifamily
loans to one troubled borrower, one commercial construction loan and two
residential construction projects. All three situations were resolved in a
timely manner. At June 30, 1996, all loans classified by management as impaired
were included in non-performing loans.

Metropolitan adopted SFAS No. 114 and SFAS No. 118 effective January 1,
1995. All loans identified as impaired by Metropolitan were also classified as
non-performing loans at June 30, 1996 and therefore the adoption of SFAS No. 114
and SFAS No. 118 had no effect on the comparability of non-performing assets at
June 30, 1996 to prior periods.

ALLOCATION OF ALLOWANCE FOR LOSSES ON LOANS

Because some loans may not be repaid in full, an allowance for losses on
loans is maintained. The allowance is maintained by management at a level
considered adequate to cover possible 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 loans, the whole allowance is available for any loan
charge-offs that occur. A loan is charged off against the allowance by
management as a loss when deemed uncollectible, although collection efforts
continue and future recoveries may occur.

The following table sets forth an allocation of the allowance for losses on
loans among categories as of the dates indicated. Management believes that any
allocation of the allowance for losses on loans into categories lends an
appearance of precision which does not exist. The allowance is utilized as a
single unallocated allowance available for all loans. The following allocation
table should not be interpreted as an indication of the specific amounts or the
relative proportion of future charges to the allowance.
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------------------------------------
AT JUNE 30,
1996 1995 1994 1993 1992 1991
---------------- --------------- --------------- ---------------- --------------- -------------------
PERCENT PERCENT PERCENT PERCENT PERCENT PERCENT
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
IN EACH IN EACH IN EACH IN EACH IN EACH IN EACH
CATEGORY CATEGORY CATEGORY CATEGORY CATEGORY CATEGORY
TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ -------- ------ -------- ------ -------- ------- -------- ------ -------- ------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
One- to four-family.... $ 191 15.7% $ 172 15.2% $ 189 25.2% $ 93 16.0% $ 50 17.5% $ 27 26.7%
Multifamily............ 1,008 45.5 887 45.8 733 41.9 494 53.2 361 54.7 175 45.8
Commercial real estate. 839 20.2 676 21.5 358 18.6 314 17.5 195 15.5 229 12.7
Construction and land.. 172 9.3 167 9.5 99 8.5 90 9.9 56 10.2 27 13.7
Consumer............... 761 6.9 512 6.3 340 5.8 124 3.4 53 2.1 23 1.1
Business............... 140 2.4 74 1.7 1 0.0 -- -- -- -- -- --
Unallocated............ 326 -- 277 -- 191 -- 124 -- 11 -- 14 --
------ ----- ------ ----- ------ ----- ------ ----- ---- ----- ---- -----
Total................ $3,437 100.0% $2,765 100.0% $1,911 100.0% $1,239 100.0% $726 100.0% $495 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ==== ===== ==== =====
</TABLE>
With the uncertainties that could adversely impact the overall quality of
Metropolitan's loan portfolio, Metropolitan's management considers an adequate
allowance for losses on loans essential. The unallocated allowance is considered
adequate to cover losses from the existing loans that have not demonstrated
problems such as late payments, financial difficulty of the borrower or
deterioration of collateral values. The risks associated with off-balance sheet
commitments are insignificant in the opinion of Metropolitan's management and
therefore, no allowance for such commitments is provided.

At June 30, 1996, management had allocated $175,000 of the allowance for
losses on loans to impaired loans with balances of $1.9 million. The remaining
$2.6 million of impaired loan balances did not require an allocation of the
allowance for losses on loans in the opinion of management. The adoption of SFAS
No. 114
49
<PAGE> 50

had no impact on the comparability of the June 30, 1996 allowance for losses on
loans allocation to prior periods.

The following table provides an analysis of Metropolitan's allowance for
losses on loans for the periods indicated. In each period, the provision for
loan losses was based on an analysis of individual credits, prior and current
loss experience, overall growth in the portfolio and current economic
conditions.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED --------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
---------------- ------ ------ ------ ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period........ $2,765 $1,911 $1,239 $ 725 $495 $617
CHARGE-OFFS:
One- to four-family................. -- (23) (23) (50) (6) --
Multifamily......................... -- -- (64) (100) -- --
Commercial real estate.............. -- (27) -- (74) (174) --
Construction and land............... -- -- -- -- -- (167)
Consumer............................ (14) (56) (14) (5) (8) --
Business............................ -- -- -- -- -- --
------ ------ ------ ------ ----- -----
Total charge-offs................. (14) (106) (101) (229) (188) (167)
------ ------ ------ ------ ----- -----
RECOVERIES:
One- to four-family................. -- 1 1 3 -- --
Multifamily......................... -- -- 6 -- -- --
Commercial real estate.............. -- -- -- -- -- --
Construction and land............... -- -- -- -- 51 --
Consumer............................ 1 -- -- -- -- --
Business............................ -- -- -- -- -- --
------ ------ ------ ------ ----- -----
Total recoveries.................. 1 1 7 3 51 --
------ ------ ------ ------ ----- -----
Net charge-offs....................... (13) (105) (94) (226) (137) (167)
Provision for loan losses........... 685 959 766 740 367 45
------ ------ ------ ------ ----- -----
Balance........................... $3,437 $2,765 $1,911 $1,239 $725 $495
====== ====== ====== ====== ===== =====
Net charge-offs to average loans(1)... 0.00% 0.02% 0.03% 0.09% 0.07% 0.10%
Provision for loan losses to average
loans(1)............................ 0.25 0.21 0.21 0.29 0.19 0.03
Allowance for losses on loans to total
non-performing loans................ 59.01 83.61 80.70 40.02 74.21 107.61
Allowance for losses on loans to total
loans............................... 0.59 0.57 0.45 0.43 0.32 0.28
<FN>
- ---------------

(1) Ratio for the interim period is stated on an annualized basis.
</TABLE>

INVESTMENT PORTFOLIO

Metropolitan maintains its investment portfolio based on regulatory
requirements and restrictions which dictate the type of securities that can be
held. As a member of the FHLB System, the Bank is required to hold a minimum
amount of FHLB stock based upon asset size and mix. As the Bank grows, this
investment will increase.

50
<PAGE> 51

The following table summarizes the amounts and the distribution of
Metropolitan's securities held as of the dates indicated:

<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, --------------------------------
1996 1995 1994 1993(1)
----------- ------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Securities available for sale:
Mutual funds.................................. $ 1,131 $10,364 -- --
U.S. Treasury securities...................... 6,030 12,442 $7,641 $10,168
FNMA preferred stock.......................... 4,975 -- -- --
FHLB stock.................................... 3,852 3,569 2,311 2,139
------- ------- ------- -------
Total...................................... $15,988 $26,375 $9,952 $12,307
======= ======= ======= =======
Other interest-earning assets:
U.S. Treasury securities...................... -- -- -- $14,950
Interest-bearing deposits with banks.......... $ 300 $ 4,788 $1,080 1,375
Overnight repurchase agreements............... -- -- -- 9,900
Federal funds sold............................ -- -- -- 1,000
------- ------- ------- -------
Total...................................... $ 300 $ 4,788 $1,080 $27,225
======= ======= ======= =======
</TABLE>

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

(1) Securities classified as held for sale.

The following table sets forth the contractual maturities and approximate
weighted average yields of Metropolitan's securities available for sale at June
30, 1996.

<TABLE>
<CAPTION>
DUE IN
---------------------------------------------
ONE YEAR OR LESS ONE YEAR TO FIVE YEARS TOTAL
---------------- ---------------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Mutual funds................................. $1,131 -- $ 1,131
U.S. Treasury securities..................... -- $6,030 6,030
FNMA preferred stock......................... 4,975 -- 4,975
FHLB stock................................... 3,852 -- 3,852
------ ------ -------
Total........................................ $9,958 $6,030 $15,988
====== ====== =======
Weighted average yield....................... 6.54% 6.61% 6.57%
</TABLE>

MORTGAGE-BACKED SECURITIES PORTFOLIO

The FNMA pass-through certificates represent securitization of the Bank's
single family loans. These securities, in addition to having a lower risk-based
capital requirement, are available as collateral for wholesale borrowings. The
FHLMC participation certificates are held to meet regulatory liquidity needs.

The following table sets forth Metropolitan's mortgage-backed securities
portfolio at the dates indicated. All securities are classified as available for
sale, or prior to 1994, held for sale.

<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, -----------------------------------
1996 1995 1994 1993
----------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
FNMA pass-through certificates.............. $20,123 $22,549 -- --
GNMA pass-through certificates.............. 10,460 11,348 $11,274 $12,642
FHLMC participation certificates............ 10,748 4,715 4,956 --
Sears Mortgage Corporation obligations...... 490 544 555 673
Collateralized mortgage obligations......... -- -- -- 17
------- ------- ------- -------
Total..................................... $41,821 $39,156 $16,785 $13,412
======= ======= ======= =======
</TABLE>

51
<PAGE> 52

The following table sets forth the contractual maturities and approximate
weighted average yields of Metropolitan's mortgage-backed securities at June 30,
1996.

<TABLE>
<CAPTION>
DUE IN
----------------------------------------
ONE TO FIVE TO OVER BALANCE
FIVE YEARS TEN YEARS TEN YEARS OUTSTANDING
---------- --------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
FNMA pass-through certificates............... -- $ 1,190 $18,933 $20,123
GNMA pass-through certificates............... -- 200 10,260 10,460
FHLMC participation certificates............. $ 10,748 -- -- 10,748
Sears Mortgage Corporation obligations....... -- -- 490 490
------- ------- ------- -------
Total available for sale................ $ 10,748 $ 1,390 $29,683 $41,821
======= ======= ======= =======
Weighted average yield.................. 6.98% 6.51% 6.51% 6.63%
</TABLE>

SOURCES OF FUNDS

The Bank's primary sources of funds are deposits, amortization and
repayment of loan principal, borrowings, sales of mortgage loans, sales or
maturities of mortgage-backed securities, securities, and short-term
investments.

Deposits are the principal source of Metropolitan's funds for lending and
investment purposes. The following paragraphs provide a brief description of the
types of accounts offered by Metropolitan:

Passbook and Statement Savings Accounts. Savings may be invested in and
withdrawn from regular passbook, tiered passbook and statement savings accounts
without restriction. Interest on tiered passbook accounts is compounded monthly
and credited monthly. Interest on regular passbook and statement savings
accounts is compounded quarterly and credited quarterly.

Checking Accounts. Metropolitan offers two interest-bearing checking and
one noninterest-bearing checking account. The non-interest checking requires no
minimum balance and has no monthly service fees. The rate paid on the interest
checking account is dependent upon the balance in the account. Monthly service
charges can be waived on the interest-bearing checking accounts by maintaining
either a $1,000 minimum balance or greater than $3,000 minimum balance in
another deposit account. All accounts have no minimum maturity or prepayment
penalty and no restrictions on the size and frequency of the withdrawals or
additional deposits. Metropolitan regularly reviews the interest rate paid on
the interest-bearing checking accounts and adjusts the rate based on cash flow
projections and market interest rates.

IRA Accounts. Metropolitan offers Individual Retirement Accounts. Funds
may be invested in a passbook account or any Certificate of Deposit offered by
Metropolitan.

Certificates of Deposit. Metropolitan offers fixed rate, fixed term
certificates of deposit. Terms are from seven days to five years, and there are
no regulatory rate ceilings. Certificates of deposit require a penalty for
withdrawal prior to maturity dates. These accounts are the highest cost deposit
product offered by Metropolitan. Interest rates offered on certificates of
deposit are regularly reviewed and adjusted based on cash flow projections and
market interest rates.

52
<PAGE> 53

The following table sets forth information regarding trends in
Metropolitan's average deposits for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1996 1995 1994 1993
------------------------ ------------------------- ------------------------- -----------------------
(DOLLARS IN THOUSANDS)
AVERAGE PERCENT RATE AVERAGE PERCENT RATE AVERAGE PERCENT RATE AVERAGE PERCENT PAID
AMOUNT OF TOTAL PAID AMOUNT OF TOTAL PAID AMOUNT OF TOTAL PAID AMOUNT OF TOTAL RATE
-------- -------- ---- -------- -------- ---- -------- -------- ---- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest-bearing
demand deposits(1)..$ 33,308 6.2% -- $ 24,636 5.3% -- $ 18,388 4.8% -- $ 16,257 5.4% --
Interest-bearing
demand deposits..... 35,949 6.7 2.63% 37,695 8.1 2.57% 57,124 15.0 2.52% 88,987 29.3 2.95%
Savings deposits...... 161,733 29.9 4.79 118,475 25.5 4.76 88,723 23.2 3.57 63,707 21.0 2.96
Time deposits......... 309,371 57.2 5.85 283,186 61.1 5.98 217,706 57.0 4.74 134,479 44.3 4.66
-------- ----- -------- ----- -------- ----- -------- -----
Total average
deposits............$540,361 100.0% 4.96 $463,992 100.0% 5.07 $381,941 100.0% 3.91 $303,430 100.0% 3.55
======== ===== ======== ===== ======== ===== ======== =====
- --------------
<FN>
(1) Includes principal and interest custodial accounts and taxes and insurance
custodial accounts for loans serviced for FHLMC, FNMA and private investors.

Deposits have increased steadily from December 31, 1993 to June 30, 1996
consistent with the overall growth of the Bank. The composition over this time
period shows a shift toward increased time deposits. Non-interest checking was
also increased during this time period as a result of principal and interest
custodial accounts and taxes and insurance custodial accounts for the loan
servicing portfolio. The tiered passbook savings account, because of its tiered
pricing structure, attracted funds away from the interest checking product.

</TABLE>

The following table shows rate and maturity information for Metropolitan's
certificates of deposit as of June 30, 1996.

<TABLE>
<CAPTION>
2.00- 5.00- 6.00- PERCENT
4.99% 5.99% 7.99% TOTAL OF TOTAL
------- -------- ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CERTIFICATE ACCOUNTS MATURING IN QUARTER
ENDING:
September 30, 1996....................... $21,857 $ 41,600 $14,676 $ 78,133 24.8%
December 31, 1996........................ 4,277 42,982 3,970 51,229 16.2
March 31, 1997........................... 8,810 58,493 8,895 76,198 24.1
June 30, 1997............................ 56 38,043 11,356 49,455 15.7
September 30, 1997....................... 4 7,566 5,701 13,271 4.2
December 31, 1997........................ 71 4,095 3,593 7,759 2.5
March 31, 1998........................... 61 4,606 4,426 9,093 2.9
June 30, 1998............................ 51 1,673 761 2,485 0.8
September 30, 1998....................... 18 879 238 1,135 0.4
December 31, 1998........................ 19 1,052 210 1,281 0.4
March 31, 1999........................... 1,585 148 459 2,192 0.7
June 30, 1999............................ 24 285 367 676 0.2
Thereafter............................... 4 4,218 18,351 22,573 7.1
------- -------- ------- -------- -----
Total............................... $36,837 $205,640 $73,003 $315,480 100.0%
======= ======== ======= ======== =====
Percent of total.................... 11.7% 65.2% 23.1% 100.0%
</TABLE>

53
<PAGE> 54

The following table sets forth the remaining maturity for time deposits of
$100,000 or more at the date indicated.

<TABLE>
<CAPTION>
JUNE 30, 1996
--------------
(IN THOUSANDS)
<S> <C>
Three months or less........................................... $ 8,925
Over three through six months.................................. 4,624
Over six through twelve months................................. 18,651
Over twelve months............................................. 11,632
-------
Total..................................................... $ 43,832
=======
</TABLE>

In addition to deposits, Metropolitan relies on borrowed funds. The
following describes Metropolitan's current borrowings:

Line of Credit. The Huntington Loan Agreement is a revolving line of
credit for the first 24 month period and then it converts to a 36 month term
note. The maximum permitted borrowing amount is $4.0 million. The terms of the
Huntington Loan Agreement require interest only payments for 24 months, then
quarterly principal payments based on a 60-month amortization with a balloon
payment due in May 2001. The interest rate during the first 24 months is tied to
LIBOR or Huntington National Bank prime at Metropolitan's option. After
conversion to a term loan in May 1998, the interest rate is prime. In connection
with the completion of the offering, Metropolitan renegotiated the terms of its
existing revolving credit agreement with The Huntington National Bank. As
collateral for the Huntington Loan Agreement, Mr. Kaye will pledge a portion of
his shares of Common Stock of Metropolitan in an amount at least equal in value
to 200% of any outstanding balance. At June 30, 1996, there was no outstanding
balance under the Huntington Loan Agreement.

Subordinated Note Offerings. In 1993 and early 1994, Metropolitan issued
the 1993 Subordinated Notes with an aggregate principal balance of $4.9 million
through a private placement offering. The interest rate on the notes is 10%,
which is paid quarterly, and principal will be repaid when the notes mature on
December 31, 2001. The 1993 Subordinated Notes are unsecured. The Corporation
may redeem the 1993 Subordinated Notes, in whole or in part, at any time from
time to time, by paying the outstanding principal amount plus accrued interest
and a prepayment premium. The prepayment premium is 10% of the principal amount
prepaid if such prepayment is made during the first year following the issuance
of the 1993 Subordinated Notes and the prepayment premium is reduced by 1% for
each year the 1993 Subordinated Notes are outstanding. If the 1993 Subordinated
Notes are prepaid more than seven years after issuance, the prepayment premium
is 3%. The 1993 Subordinated Notes may also be repurchased in privately
negotiated transactions. See "Description of Subordinated Notes."

In December 1995, Metropolitan issued the 1995 Subordinated Notes with an
aggregate principal balance of $14.0 million through a public offering. The
interest rate on the 1995 Subordinated Notes is 9 5/8%, which is paid monthly
and principal will be repaid when the notes mature January 1, 2005. The 1995
Subordinated Notes are unsecured. The 1995 Subordinated Notes are not
redeemable, in whole or in part, by the Corporation prior to December 1, 1998.
After December 1, 1998, the 1995 Subordinated Notes may be redeemed by the
Corporation at a declining premium which begins at 3% of the prepaid principal
amount. After December 1, 2000, the 1995 Subordinated Notes may be prepaid at
par plus accrued interest. The 1995 Subordinated Notes may also be repurchased
in privately negotiated or open market transactions. See "Description of
Subordinated Notes."

FHLB Advances. The FHLB makes funds available for housing finance to
eligible financial institutions like Metropolitan. The FHLB generally limits
advances to 25% of assets with a total borrowing limit of 40% of assets from all
borrowing sources. Advances are collateralized by any combination of the
following assets and collateralization rates: one- to four-family first mortgage
loans, not past due greater than 90 days, pledged on a blanket basis at 150% of
the advance amount, specifically identified mortgage loans at 125% of the
advance amount and various types of investment and mortgage backed securities at
rates ranging from 101-110% of the advance amount. FHLB stock owned by the Bank
is pledged as additional collateral but is not available as primary collateral.

54
<PAGE> 55

Reverse Repurchase Agreements. From time to time the Bank borrows funds by
using its investment or mortgage-backed securities to issue reverse repurchase
agreements. This type of borrowing provides an alternative source of funds to
FHLB borrowings and at times, more favorable rates. At June 30, 1996, there were
no borrowings under reverse repurchase agreements.

The following table sets forth the maximum month-end balance and average
balance of other borrowings during the periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ----------------------------
1996 1995 1995 1994 1993
------- ------- ------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
MAXIMUM BALANCE:
FHLB advances................................. $58,200 $45,000 $51,000 $23,000 $7,000
Term loan..................................... -- 3,280 3,280 3,640 3,820
Qualifying subordinated debt.................. -- 1,200 1,200 1,600 2,000
1993 Subordinated Notes....................... 4,874 4,874 4,874 4,874 3,505
1995 Subordinated Notes....................... 14,000 -- 14,000 -- --
Line of credit................................ -- 5,000 5,000 -- --
Reverse repurchase agreements................. -- 9,000 9,000 -- --
AVERAGE BALANCE:
FHLB advances................................. $42,750 $24,026 $28,467 $ 3,914 $1,069
Term loan..................................... -- 997 485 3,420 3,712
Qualifying subordinated debt.................. -- 1,085 923 1,220 1,610
1993 Subordinated Notes....................... 4,874 4,874 4,874 4,593 387
1995 Subordinated Notes....................... 14,000 -- 690 -- --
Line of credit................................ -- 2,908 3,834 -- --
Reverse repurchase agreements................. -- 6,000 7,591 -- --
</TABLE>

The following table sets forth the end of period balances and interest
rates at the dates indicated.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------
1996 1995 1994 1993
-------- ------- ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE:
FHLB advances.......................................... $58,200 $28,000 $6,150 $7,000
Term loan.............................................. -- -- 3,280 3,640
Qualifying subordinated debt........................... -- -- 1,200 3,505
1993 Subordinated Notes................................ 4,874 4,874 4,874 1,600
1995 Subordinated Notes................................ 14,000 14,000 -- --
Line of credit......................................... -- -- -- --
Reverse repurchase agreements.......................... -- -- -- --
WEIGHTED AVERAGE INTEREST RATE:
FHLB advances.......................................... 5.70 % 5.75% 7.00% 3.60%
Term loan.............................................. N/A N/A 8.50 6.00
Qualifying subordinated debt........................... N/A N/A 10.75 9.00
1993 Subordinated Notes................................ 10.00 10.00 10.00 10.00
1995 Subordinated Notes................................ 9.63 9.63 N/A N/A
Line of credit......................................... N/A N/A N/A N/A
Reverse repurchase agreements.......................... N/A N/A N/A N/A
</TABLE>

RETAIL SALES OFFICES

Metropolitan's goal is to open two de novo retail sales offices per year in
growing communities in Northeastern Ohio with demographic and market
characteristics that can support new retail sales offices. Prior to 1995,
Metropolitan's strategy had been to lease retail sales offices. In 1995,
Metropolitan embarked on a new strategy. Although the characteristics of the
communities targeted are the same, the strategy now employed is to build and own
retail sales offices. The facilities are constructed larger than initially
required to

55
<PAGE> 56

provide the option to expand as needed. Until that time, Metropolitan may lease
excess space reducing the overall cost of retail sales office occupancy.

The planned new retail sales offices are expanding Metropolitan's primary
market south toward Akron, Ohio, and increasing Metropolitan's presence in
Geauga, Portage and Summit counties. It is anticipated that these new retail
sales offices will provide new opportunities for residential, consumer and
business lending, in addition to increasing retail deposits to fund asset
growth.

TRUST DEPARTMENT

In June 1995, the Bank received all of the necessary regulatory approvals
to enable it to establish a Trust Services Department to manage investment
assets for individual and institutional clients. Services offered through the
Trust Department include investment management for individuals, families, other
fiduciaries and corporations, acting as trustee for revocable and irrevocable
living trusts, acting as executor, guardian and conservator of estates, cash
management for corporations, trustees and non-profit entities, and management of
corporate and self-employed employee benefit programs. At June 30, 1996, there
were $3.7 million of assets under administration.

COMPETITION

Metropolitan faces strong competition, both in originating real estate and
other loans and in attracting deposits. Competition in originating loans comes
primarily from other savings institutions, commercial banks, mortgage companies,
credit unions, finance companies and insurance companies. The Bank competes for
loans principally on the basis of the interest rates and loan fees it charges,
the type of loans it originates and the quality of services it provides to
borrowers. Some of the Bank's competitors, however, have higher lending limits
and substantially greater financial resources than the Bank.

The Bank attracts its deposits through its retail sales offices, primarily
from the communities in which those retail sales offices are located; therefore,
competition for those deposits is principally from other savings institutions,
commercial banks, credit unions, mutual funds and brokerage companies located in
the same communities. The Bank competes for these deposits by offering a variety
of deposit accounts at competitive rates, convenient business hours and
convenient branch locations.

EMPLOYEES

At June 30, 1996, Metropolitan had a total of 247 employees, including
part-time employees. The Corporation's employees are not represented by any
collective bargaining group. Management considers its employee relations to be
excellent.

PROPERTIES

Metropolitan's corporate headquarters, which is leased under a long-term
lease agreement, is located at 6001 Landerhaven Drive, Mayfield Heights, Ohio
44124. The Bank operates 14 retail sales office locations, eight of which are
leased under long-term lease agreements with various parties. The other six
retail sales offices, located in Cleveland, Willoughby Hills, Mayfield Heights,
Cleveland Heights, Macedonia and Aurora, are owned by Metropolitan. In addition,
Metropolitan owns land in Twinsburg, Auburn and Stow and land and a building in
Hudson. Each of Twinsburg, Auburn, Stow and Hudson are planned sites for future
full service retail sales offices. The Bank also leases office space for its
loan production offices in Detroit, Cincinnati, Pittsburgh, Strongsville, North
Olmsted and Columbus.

LEGAL PROCEEDINGS

The Corporation is involved in various legal proceedings incidental to the
conduct of its business. The Corporation does not expect that any such
proceedings will have a material adverse effect on the Corporation's financial
position or results of operations.

56
<PAGE> 57

REGULATION AND SUPERVISION

INTRODUCTION

Metropolitan is registered as a savings and loan holding company within the
meaning of the Home Owners' Loan Act (the "HOLA"). As a savings and loan holding
company, Metropolitan is subject to the regulations, examination, supervision
and reporting requirements of the OTS. The Bank is an Ohio-chartered savings and
loan association, is a member of the FHLB System, and its deposits are insured
by the FDIC through the SAIF. The Bank is subject to examination and regulation
by the OTS, the FDIC and the Ohio Superintendent of Savings and Loan
Associations and to regulations regarding such matters as capital standards,
mergers, establishment of branch offices, subsidiary investments and activities,
and general investment authority. Such examination and regulation is intended
primarily for the protection of depositors.

Legislation in recent years has significantly changed laws and regulations
applicable to savings associations. Such legislation includes the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") and
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). The
descriptions of the statutes and regulations which are applicable to
Metropolitan and the Bank and the effects thereof, which are set forth below and
elsewhere in this document, do not purport to be a complete description of such
statutes and regulations and their effects on Metropolitan or the Bank or to
identify every statute and regulation that may apply to Metropolitan or the
Bank.

METROPOLITAN

As a savings and loan holding company, Metropolitan is subject to certain
restrictions with respect to its activities and investments. Among other things,
Metropolitan is generally prohibited, either directly or indirectly, from
acquiring control of any other savings association or savings and loan holding
company, absent prior approval of the OTS, and from acquiring more than 5% of
the voting stock of any savings association or savings and loan holding company
that is not a subsidiary of Metropolitan.

Similarly, OTS approval must be obtained prior to any person's acquiring
control of the Bank or Metropolitan. Control is conclusively presumed to exist
if, among other things, a person acquires more than 25% of any class of voting
stock of the institution or holding company or controls in any manner the
election of a majority of the directors of the institution or the holding
company. Control is rebuttably presumed to exist if, among other things, a
person acquires more than 10% of any class of voting stock (or 25% of any class
of stock) and is subject to any of certain specified "control factors."

Savings and loan holding companies that control only one savings
association that is a qualified thrift lender ("QTL") (as defined below) are
exempt from certain restrictions on the conduct of unrelated business activities
applicable to other savings and loan holding companies and similar restrictions
on the conduct of unrelated business activities applicable to bank holding
companies. Although Metropolitan currently has no significant unrelated business
activities, as long as Metropolitan controls only the Bank and the Bank remains
a QTL, Metropolitan will be exempt from such restrictions and could pursue such
activities. Some of the activities permitted as a result of such exemption may
involve risks different from, or greater than, the risks generally associated
with owning a savings association.

THE BANK

General. The OTS also has enforcement authority over all savings
associations. This enforcement authority includes the ability to impose
penalties for and to seek correction of violations of laws and regulations and
unsafe or unsound practices by assessing civil money penalties, issuing cease
and desist or removal and prohibition orders against an institution, its
directors, officers or employees and other persons, or initiating injunctive
actions.

As a lender and a financial institution, the Bank is subject to various
regulations promulgated by the Federal Reserve Board including, without
limitation, Regulation B (Equal Credit Opportunity), Regulation D (Reserves),
Regulation E (Electronic Fund Transfers), Regulation F (Interbank Liabilities),
Regulation Z (Truth in Lending), Regulation CC (Availability of Funds) and
Regulation DD (Truth in Savings). As lenders under loans secured by real
property, and as owners of real property, financial institutions, including

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the Bank, are subject to compliance with various statutes and regulations
applicable to property owners generally, including statutes and regulations
relating to the environmental condition of the property.

Insurance of Accounts and Regulation by the FDIC. The Bank is a member of
the SAIF, which is administered by the FDIC. Deposits are insured up to
applicable limits by the FDIC and such insurance is backed by the full faith and
credit of the United States Government. As insurer, the FDIC imposes deposit
insurance premiums and is authorized to conduct examinations of and to require
reporting by FDIC-insured institutions. It also may prohibit any FDIC-insured
institution from engaging in any activity the FDIC determines by regulation or
order to pose a serious risk to the FDIC. The FDIC also has the authority to
initiate enforcement actions against savings associations, after giving the OTS
an opportunity to take such action, and may terminate the deposit insurance if
it determines that the institution has engaged or is engaging in unsafe or
unsound practices, or is in an unsafe or unsound condition.

Under the FDIC risk-based deposit insurance assessment system, all insured
depository institutions are placed into one of nine categories and assessed
insurance premiums based upon their level of capital and supervisory evaluation.
Under the system, institutions classified as well-capitalized and requiring
little supervision would pay the lowest premium while institutions that are
classified as undercapitalized and considered of substantial supervisory concern
would pay the highest premium. Risk classification of all insured institutions
is made by the FDIC for each semi-annual assessment period.

With respect to the SAIF, the FDIC is authorized to increase assessment
rates, on a semi-annual basis, if it determines that the reserve ratio of the
SAIF will be less than the designated reserve ratio of 1.25% of SAIF-insured
deposits. In setting these increased assessments, the FDIC must seek to restore
the reserve ratio to that designated reserve level, or such higher reserve ratio
as established by the FDIC. In addition, under FDICIA, the FDIC may impose
special assessments on SAIF members to repay amounts borrowed from the United
States Treasury or for any other reason deemed necessary by the FDIC.

Similarly, with respect to deposits insured by the BIF, the FDIC is
authorized to adjust the assessment rates in order to maintain the reserve ratio
at 1.25% of BIF-insured deposits. In setting the BIF assessment rates, the FDIC
must maintain the reserve ratio at that designated reserve level, or such higher
reserve ratio as established by the FDIC.

BIF and SAIF assessment rates, however, have not remained comparable. Under
the current assessment rate structure, BIF members generally pay lower premiums
than SAIF-insured institutions, placing SAIF-insured institutions, including
Metropolitan, at a competitive disadvantage to institutions whose deposits are
exclusively or primarily BIF-insured. The disparity between BIF and SAIF
assessment rates was created after BIF reached its required reserve ratio during
May 1995, resulting in a reduction of BIF assessment rates. Beginning January 1,
1996 and effective through December 31, 1996, the BIF assessment rate for "well
capitalized" institutions without any significant supervisory concerns was
reduced to the statutory minimum of $2,000 annually. BIF assessment rates were
reduced for other BIF-insured institutions to rates ranging from 0.03% to 0.27%
of deposits.

At the time assessment rates were determined for the period beginning
January 1, 1996 and effective through December 31, 1996, SAIF was not predicted
to reach its required reserve ratio until the year 2001. As a result, the SAIF
rates were not adjusted. The FDIC determined that, for the period beginning
January 1, 1996 and effective through December 31, 1996, SAIF-insured
institutions should continue to pay assessments at rates ranging from 0.23% to
0.31% of deposits.

As a result of this disparity in insurance premium rates, on September 30,
1996 President Clinton signed into law the Omnibus Bill which includes
provisions designed to recapitalize the SAIF and to mitigate the BIF/SAIF
premium disparity. The Omnibus Bill requires the FDIC to impose a special
assessment on SAIF-insured deposits held by institutions as of March 31, 1995.
The FDIC has announced that the special assessment rate will be set at 65.7
basis points. The assessment will be paid on November 27, 1996 from working
capital of the Bank.

When the SAIF reaches its required reserve ratio following the one-time
assessment, the FDIC has indicated that it will reduce the annual assessment
rates for SAIF-insured institutions to bring them in line with BIF assessment
rates.

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<PAGE> 59

In addition, the Omnibus Bill requires the merger of the BIF and SAIF into
a single insurance fund no later than January 1, 1999. In connection with the
merger of the BIF and the SAIF, SAIF-insured institutions could be forced to
convert to state bank charters or national bank charters. If such a proposal
became law, the Corporation would become a bank holding company and be subject
to regulation by the Federal Reserve Board, which imposes capital requirements
on bank holding companies. The Corporation is not currently subject to capital
requirements.

FIRREA and FDICIA generally imposed a moratorium on conversions from SAIF
membership to BIF membership before the later of August 9, 1994 or the date on
which the SAIF meets its designated reserve ratio. Subject to certain
limitations, however, a savings association may convert to a bank charter if the
resulting bank remains a member of the SAIF. FDICIA lessened the restrictions on
bank and savings institution mergers and acquisitions by permitting any insured
depository institution to participate in merger transactions, with the resulting
merged institution being subject to proportionate assessments by the BIF and the
SAIF. Acquisitions of state-chartered institutions, however, continue to be
subject to state law restrictions.

Regulatory Capital Requirements. FIRREA and the capital regulations of the
OTS issued thereunder (the "Capital Regulations") established a "leverage
limit," a "tangible capital requirement" and a "risk-based capital requirement."
These capital standards are required by FIRREA to be generally no less stringent
than the capital standards applicable to national banks. The OTS may establish,
on a case by case basis, individual minimum capital requirements for a savings
association that vary from the requirements that would otherwise apply under the
Capital Regulations. The OTS has not established such individual minimum capital
requirements for the Bank.

A savings association that fails to meet one or more of the applicable
capital requirements is subject to various regulatory limitations and sanctions,
including a prohibition on growth and the issuance of a capital directive by the
OTS requiring the following: an increase in capital, reduction of rates paid on
savings accounts; cessation of or limitations on deposit-taking and lending,
limitations on operational expenditures, an increase in liquidity, and such
other actions deemed necessary or appropriate by the OTS. In addition, a
conservator or receiver may be appointed under certain circumstances.

The leverage limit currently requires a savings association to maintain
"core capital" of not less than 3% of adjusted total assets. The OTS has taken
the position, however, that the prompt corrective action regulatory scheme (See
"--Prompt Corrective Action") has effectively raised the leverage ratio
requirement for all but the most highly-rated institutions to 4% since an
institution is "undercapitalized" for such purpose if, among other things, its
leverage ratio is less than 4% (3% for MACRO 1 rated institutions).

The tangible capital requirement requires a savings association to maintain
"tangible capital" in an amount not less than 1.5% of adjusted total assets.

The risk-based capital requirement generally provides that a savings
association must maintain total capital in an amount at least equal to 8.0% of
its risk-weighted assets. The risk-based capital regulations are similar to
those applicable to national banks. The regulations assign each asset and
certain off-balance sheet assets held by a savings association to one of four
risk-weighting categories, based upon the degree of credit risk associated with
the particular type of asset.

Savings associations are required to incorporate interest rate risk in
their capital calculations for determining compliance with capital requirements.
Interest rate risk is measured by the decline in "net portfolio value" that
would result from a hypothetical 200 basis point increase or decrease in market
interest rates, whichever is lower, divided by the estimated economic value of
assets. An institution whose measured interest rate exposure exceeds 2% must
deduct an amount equal to one-half of the difference between its measured
interest rate risk and 2%, multiplied by the estimated economic value of its
total assets, from total capital in determining whether it meets its risk-based
capital requirement.

Banking regulators continue to indicate their desire to raise capital
requirements applicable to financial institutions beyond their current levels.
No prediction can be made as to whether and when higher capital requirements
would be imposed and, if so, to what levels and on what schedule.

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For purposes of determining compliance with the capital standards, a
savings association's investments in and extensions of credit to any subsidiary
engaged in activities not permissible for national banks are generally deducted
from the savings association's capital. The assets and liabilities of each of a
savings association's subsidiaries generally are consolidated with the assets
and liabilities of the savings association for capital purposes unless all of
the investments in and extensions of credit to such subsidiary are deducted from
capital.

FDICIA also directs each bank regulatory agency and the OTS to review each
of their capital standards every two years to determine whether those standards
require sufficient capital to facilitate prompt corrective action to prevent or
minimize loss to the deposit insurance funds. This provision also requires that
each bank regulatory agency and the OTS revise each of their risk-based capital
standards to ensure that those standards take adequate account of interest rate
risk, concentration of credit risk and the risk of non-traditional activities,
and reflect the actual performance and expected risk of loss of multifamily
mortgages.

At June 30, 1996, the Bank complied with each of the tangible capital, the
minimum leverage and the risk-based capital requirements. The following table
presents the Bank's regulatory capital position at June 30, 1996.

<TABLE>
<CAPTION>
PERCENT OF
REGULATORY
AMOUNT ASSETS(1)
------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Tangible capital.................................... $39,279 5.89%
Tangible capital requirement........................ 10,003 1.50
------- ----
Excess.............................................. $29,276 4.39%
======= ====
Core capital........................................ $39,571 5.93%
Core capital requirement(2)......................... 26,687 4.00
------- ----
Excess.............................................. $12,884 1.93%
======= ====
Risk-based capital.................................. $42,462 8.82%
Risk-based capital requirement...................... 38,500 8.00
------- ----
Excess.............................................. $ 3,962 0.82%
======= ====
<FN>
- ---------------

(1) Represents the percentage of adjusted total assets for tangible and core
capital purposes and the percentage of risk-weighted assets for risk-based
capital purposes.

(2) The "prompt corrective action" regulatory scheme (See "--Prompt Corrective
Action") has effectively raised the leverage requirement to 4% for all but
the most highly-rated institutions since an institution is considered
"undercapitalized" for such purposes if, among other things, it has a
leverage ratio of under 4% (3% for MACRO 1 rated institutions).
</TABLE>

Prompt Corrective Action. FDICIA contains "prompt corrective action"
provisions pursuant to which banks and savings associations are classified into
one of five categories based upon capital adequacy, ranging from
"well-capitalized" to "critically undercapitalized" and require (subject to
certain exceptions) the appropriate federal banking agency to take prompt
corrective action with respect to an institution which becomes
"undercapitalized" and to take additional actions if the institution becomes
"significantly undercapitalized" or "critically undercapitalized."

The federal banking agencies have issued a joint rule for this purpose
under which, in general, an institution is: "well-capitalized" if it has total
risk-based capital of 10% or greater, Tier 1 risk-based capital of 6% or
greater, a leverage ratio of 5% or greater, and is not subject to an order or
other supervisory directive to meet and maintain a specific capital level for
any capital measure; "adequately capitalized" if it has total risk-based capital
of 8% or greater, Tier 1 risk-based capital of 4% or greater, and a leverage
ratio of 4% or greater (3% or greater if rated Composite 1 under the MACRO
rating system); "undercapitalized" if it has total risk-based capital of less
than 8%, Tier 1 risk-based capital of less than 4%, or a leverage ratio of less
than 4% (3% if rated Composite 1 under the MACRO rating system); "significantly
undercapitalized" if it has total risk-based capital of less than 6%, Tier 1
risk-based capital of less than 3%, or a leverage ratio of less than 3%; and
"critically undercapitalized" if it has a ratio of tangible equity to total
assets equal to or less than 2%. Based on these requirements, the Bank is an
"adequately capitalized" institution.

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The appropriate federal banking agency has the authority to reclassify a
well-capitalized institution as adequately capitalized, and to treat an
adequately capitalized or undercapitalized institution as if it were in the next
lower capital category, if it is determined, after notice and an opportunity for
a hearing, to be in an unsafe or unsound condition or to have received and not
corrected a less-than-satisfactory rating for any of the categories of asset
quality, management, earnings or liquidity in its most recent examination. As a
result of such reclassification or determination, the appropriate federal
banking agency may require an adequately capitalized or under-capitalized
institution to comply with certain mandatory or discretionary supervisory
actions. A significantly undercapitalized savings association may not be
reclassified, however, as critically undercapitalized.

Restrictions on Dividends and Other Capital Distributions. Savings
association subsidiaries of holding companies generally are required to provide
their OTS District Director not less than thirty days' advance notice of any
proposed declaration of a dividend on the association's stock. Any dividend
declared within the notice period, or without giving the prescribed notice, is
invalid.

OTS regulations impose limitations upon certain "capital distributions" by
savings associations, including cash dividends, payments to repurchase or
otherwise acquire an association's shares, payments to shareholders of another
institution in a cash-out merger and other distributions charged against
capital. The regulation establishes a three-tiered system of regulation, with
the greatest flexibility being afforded to well-capitalized associations.

An association that has capital immediately prior to, and on a pro forma
basis after giving effect to, a proposed capital distribution that is at least
equal to its capital requirement is considered a Tier 1 institution ("Tier 1
Institution"). An association that has capital immediately prior to, and on a
pro forma basis after giving effect to, a proposed capital distribution that is
at least equal to its minimum regulatory capital requirement but less than its
fully phased-in capital requirement, is considered a Tier 2 institution ("Tier 2
Institution"). An association that does not meet its minimum regulatory capital
requirement immediately prior to, or on a pro forma basis after giving effect
to, a proposed capital distribution is considered a Tier 3 institution ("Tier 3
Institution"). The OTS retains discretion to treat a Tier 1 Institution as a
Tier 2 or Tier 3 Institution if the OTS determines that the institution is in
need of more than normal supervision and has provided the institution with
notice to that effect.

A Tier 1 Institution may, after prior notice but without the approval of
the OTS, make capital distributions during a calendar year up to the higher of:
(i) 100% of its net income to date during the calendar year plus the amount that
would reduce the association's "surplus capital ratio" (the excess over its
fully phased-in capital requirement) to one-half of its surplus capital ratio at
the beginning of the calendar year or (ii) 75% of its net income over the most
recent four-quarter period. Any additional capital distributions would require
prior regulatory non-objection. A Tier 2 Institution may, after prior notice but
without the approval of the OTS, make capital distributions in accordance with
the following schedule: if the association's capital satisfies the risk-based
capital standard applicable to the association as of January 1, 1993, the
association may make distributions up to 75% of its net income over the most
recent four-quarter period, and, if the association's capital satisfies the
risk-based capital standard applicable as of January 1, 1991, it may make
distributions up to 50% of its net income over the most recent four-quarter
period. A Tier 3 Institution is not authorized under the regulation to make any
capital distributions unless it receives prior written approval from the OTS or
in accordance with the express terms of an approved capital plan.

The OTS retains the authority to prohibit any capital distribution
otherwise authorized under the regulation if the OTS determines that the capital
distribution would constitute an unsafe or unsound practice. The regulation also
states that the capital distribution limitations apply to direct and indirect
distributions to affiliates, including those occurring in connection with
corporate reorganizations.

Under the "prompt corrective action" provisions of FDICIA (See "--Prompt
Corrective Action"), an FDIC-insured institution may not make a "capital
distribution" (which includes, among other things, cash dividends and stock
purchases) if, after making the distribution, the institution would be
"undercapitalized" for such purposes.

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<PAGE> 62

The OTS has proposed regulations that would revise the current capital
distribution restrictions. The proposal eliminates the current tiered structure
and the safe-harbor percentage limitations. In their current form, the proposed
regulations would not apply to the Bank as it is owned by a holding company.
Under the proposal, a savings association may make a capital distribution
without notice to the OTS provided that it has a MACRO 1 or 2 rating, is not in
troubled condition, and would remain adequately capitalized (as defined in the
OTS prompt corrective action regulations) following the proposed distribution.
Savings associations that would remain adequately capitalized following the
proposed distribution but do not meet the other noted requirements must notify
the OTS 30 days prior to declaring a capital distribution. The OTS stated it
will generally regard as permissible that amount of capital distributions that
do not exceed 50% of the institution's excess regulatory capital plus net income
to date during the calendar year. A savings association may not make a capital
distribution without prior approval of the OTS and the FDIC if it is
undercapitalized before, or as a result of, such a distribution. A savings
association will be considered in troubled condition if it has a MACRO rating of
4 or 5, is subject to an enforcement action relating to its safety and soundness
or financial viability, or has been informed in writing by the OTS that it is in
troubled condition. As under the current rule, the OTS may object to a capital
distribution if it would constitute an unsafe or unsound practice. No assurance
may be given as to whether or in what form the regulations may be adopted.

Liquidity. Federal regulations currently require savings associations to
maintain, for each calendar month, an average daily balance of liquid assets
(including cash, certain time deposits, bankers' acceptances, and specified
United States Government, state or federal agency obligations) equal to at least
5% of the average daily balance of its net withdrawable accounts plus short-term
borrowings during the preceding calendar month. This liquidity requirement may
be changed from time to time by the OTS to an amount within a range of 4% to 10%
of such accounts and borrowings depending upon economic conditions and the
deposit flows of savings associations. Federal regulations also require each
savings association to maintain, for each calendar month, an average daily
balance of short-term liquid assets (generally those having maturities of 12
months or less) equal to at least 1% of the average daily balance of its net
withdrawable accounts plus short-term borrowings during the preceding calendar
month. Monetary penalties may be imposed for failure to meet liquidity ratio
requirements. At June 30, 1996, the liquidity and short-term liquidity ratios of
the Bank were 5.74% and 2.94%, respectively, which exceeded the applicable
requirements.

Qualified Thrift Lender Test. Pursuant to the Qualified Thrift Lender test,
a savings institution must invest at least 65% of its portfolio assets in
"qualified thrift investments" on a monthly average for nine out of twelve
months on a rolling "look-back" basis. Portfolio assets are an institution's
total assets less goodwill and other intangible assets, the institution's
business property, and a limited amount of the institution's liquid assets.

A savings association's failure to remain a QTL may result in: (i)
limitations on new investments and activities; (ii) imposition of branching
restrictions; (iii) loss of FHLB borrowing privileges; and (iv) limitations on
the payment of dividends. If a savings institution that is a subsidiary of a
savings and loan holding company fails to regain QTL status within one year of
its loss of such status, the holding company must register as and will be deemed
to be a bank holding company subject to, among other things, the business
activity restrictions of the Bank Holding Company Act.

The Bank's qualified thrift investments comprised 76.4% of its portfolio
assets as of June 30, 1996.

Classification of Assets. Savings associations are required to review their
assets on a regular basis and classify them as "substandard," "doubtful" or
"loss," if warranted. Adequate valuation allowances, consistent with generally
accepted accounting principles, are required to be established for classified
assets. If an asset is classified as a loss, the association must either
establish a specific valuation allowance equal to the amount classified as loss
or charge off such amount. An asset which does not currently warrant
classification as substandard but which possesses potential weaknesses deserving
close attention is required to be designated as "special mention." The
association's OTS District Director has the authority to approve, disapprove or
modify any asset classification and amount established as an allowance pursuant
to such classification.

Loans to One Borrower. Savings associations are generally subject to the
loans to one borrower limitations that are applicable to national banks. With
certain limited exceptions, the maximum amount that a savings association may
lend to one borrower (including certain related entities of such borrower) is an

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<PAGE> 63

amount equal to 15% of the savings association's unimpaired capital and
unimpaired surplus, plus an additional 10% for loans fully secured by readily
marketable collateral. Real estate is not included within the definition of
"readily marketable collateral." At June 30, 1996, the maximum amount which the
Bank could have loaned to any one borrower (and related entities) was $6.4
million. At such date, the largest aggregate amount of loans which the Bank had
outstanding to any one borrower was $5.6 million.

Additional Limitations on Activities. FIRREA generally provides that
state-chartered savings associations may not engage as principal in any type of
activity, or in any activity in an amount, not permitted for federally-chartered
associations, or directly acquire or retain any equity investment of a type or
in an amount not permitted for federally-chartered associations. The FDIC has
authority to grant exceptions from these prohibitions (other than with respect
to non-service corporation equity investments) if it determines no significant
risk to the insurance fund is posed by the amount of the investment or the
activity to be engaged in if the association is and continues to be in
compliance with fully phased-in capital standards.

FIRREA generally prohibits any savings association (state or Federal) from
directly or indirectly acquiring or retaining any corporate debt security that
is not of investment grade. FIRREA also generally requires any savings
association that proposes to establish or acquire a new subsidiary, or to
conduct new activities through an existing subsidiary, to notify the FDIC and
the OTS at least 30 days prior to the establishment or acquisition of any such
subsidiary, or at least 30 days prior to conducting any such new activity. Any
such activities must be conducted in accordance with the regulations and orders
of the OTS.

Ohio Regulation. As a savings and loan association organized under the laws
of the State of Ohio, the Bank is subject to regulation by the Ohio Division of
Financial Institutions (the "Division"). Regulation by the Division affects the
Bank's internal organization as well as its savings, mortgage lending, and other
investment activities. Periodic examinations by the Division are usually
conducted on a joint basis with the OTS. Ohio law requires that the Bank
maintain federal deposit insurance as a condition of doing business.

Under Ohio law and regulations, an Ohio association may invest in loans and
interests in loans, secured or unsecured, of any type or amount and for any
purpose, subject to certain requirements including but not limited to: loans
secured by liens on income-producing real estate may not exceed 20% of an
association's assets; all loans for educational purposes may not exceed 5% of an
association's assets; consumer loans, commercial paper and corporate debt
securities may not exceed 20% of an association's assets; and loans for
commercial, corporate, business or agricultural purposes may not exceed 10% of
an association's assets (subject to certain exceptions). In addition, no
association may make loans for the acquisition and development of undeveloped or
partially developed land for primarily residential use to one borrower in excess
of 2% of assets of the association. The total investment in commercial paper or
corporate debt of any issuer cannot exceed 1% of an association's assets, with
certain exceptions.

Ohio law authorizes Ohio-chartered associations to, among other things: (i)
invest up to 15% of assets in the capital stock, obligations and other
securities of service corporations organized under the laws of Ohio, and an
additional 20% of net worth may be invested in loans to majority owned service
corporations; (ii) invest up to 10% of assets in corporate equity securities,
bonds, debentures, notes, or other evidence of indebtedness; (iii) exceed limits
otherwise applicable to certain types of investments (other than investments in
service corporations) by between 3% and 10% of assets, depending upon the level
of the institution's permanent stock, general reserves, surplus and undivided
profits; and (iv) invest up to 15% of assets in any loans or investments not
otherwise specifically authorized or prohibited, subject to authorization by the
institution's board of directors.

An Ohio association may invest in such real property or interests therein
as its board of directors deems necessary or convenient for the conduct of the
business of the association, but the amount so invested may not exceed the net
worth of the association at the time the investment is made. Additionally, an
association may invest an amount equal to 10% of its assets in any other real
estate. This limitation does not apply, however, to real estate acquired by
foreclosure, conveyance in lieu of foreclosure or other legal proceedings in
relation to loan security interests.

Notwithstanding the above powers authorized under Ohio law and regulation,
a state-chartered savings association, such as the Bank, is subject to certain
limitations on its permitted activities and investments under

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federal law which may restrict the ability of an Ohio-chartered association to
engage in activities and make investments otherwise authorized under Ohio law.
See "--Additional Limitations on Activities."

Ohio has adopted a statutory limitation on the acquisition of control of an
Ohio savings and loan association which requires the written approval of the
Division prior to the acquisition by any person or entity of a controlling
interest in an Ohio association. Control exists, for purposes of Ohio law, when
any person or entity, either directly or indirectly, or acting in concert with
one or more other persons or entities, owns, controls, holds with power to vote,
or holds proxies representing, 15% or more of the voting shares or rights of an
association, or controls in any manner the election or appointment of a majority
of the directors.

Under certain circumstances, interstate mergers and acquisitions involving
associations incorporated under Ohio law are permitted by Ohio law. A savings
and loan association or savings and loan holding company with its principal
place of business in another state may acquire a savings and loan association or
savings and loan holding company incorporated under Ohio law if the laws of such
other state permit an Ohio savings and loan association or an Ohio holding
company reciprocal rights.

Ohio law requires prior written approval of the Ohio Superintendent of a
merger of an Ohio association with another savings and loan association or a
holding company affiliate.

FEDERAL AND STATE TAXATION

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 Corporation or the Bank.

Savings associations such as the Bank are generally taxed in the same
manner as other corporations. For taxable years beginning prior to January 1,
1996, savings associations such as the Bank which met certain definitional tests
primarily relating to their assets and the nature of their supervision and
business operations ("qualifying thrifts") were permitted to establish a reserve
for bad debts and to make annual additions thereto, which additions may, within
specified formula limits, have been deducted in arriving at their taxable
income. The Bank's deduction with respect to "qualifying real property loans,"
which are generally loans secured by certain interests in real property, may
have been computed using an amount based on the Bank's actual loss experience,
or a percentage equal to 8% of the Bank's taxable income, computed with certain
modifications and reduced by the amount of any permitted additions to the
reserve for nonqualifying loans (the "percentage of taxable income method"). The
Bank's deduction with respect to nonqualifying loans was computed under the
experience method, which essentially allows a deduction based on the Bank's
actual loss experience over a period of several years. Each year the Bank
selected the most favorable way to calculate the deduction attributable to an
addition to the tax bad debt reserve.

Recently enacted legislation repealed the existing reserve method of
accounting for bad debt reserves for tax years beginning after December 31,
1995. As a result, savings associations will no longer be able to calculate
their deduction for bad debts using the percentage of taxable income method.
Instead, savings associations will be required to compute their deduction based
on specific charge offs during the taxable year or, if the savings association
or its controlled group had assets of not more than $500 million, based on
actual loss experience over a period of years. This legislation also requires a
savings association (or its controlled group) with assets of more than $500
million to recapture into income over a six-year period their post-1987
additions to their bad debt tax reserves for qualifying real property loans and
nonqualifying loans, thereby generating additional tax liability. A savings
association (or its controlled group) with assets of not more than $500 million
are required to recapture their bad debt tax reserve to the extent it exceeds
the greater of (i) the applicable bad debt tax reserve as of the close of the
last taxable year beginning before January 1, 1988, or (ii) what the savings
association's applicable bad debt tax reserve would have been at the close of
its last taxable year beginning before January 1, 1996 under the experience
method. At December 31, 1995, the Bank's post-1987 reserves totalled
approximately $3.9 million. The recapture may be suspended for up to two years
if, during those years, the savings association satisfies a residential loan
requirement.

Under prior law, if the Bank failed to satisfy the qualifying thrift
definitional tests in any taxable year, it would be unable to make additions to
its bad debt reserve. Instead, the Bank would be required to deduct bad debts as
they occur and would additionally be required to recapture its bad debt reserve
deductions ratably over a multi-year period. At December 31, 1995, the Bank's
total bad debt reserve for tax purposes was

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<PAGE> 65

approximately $6.8 million. Among other things, the qualifying thrift
definitional tests required the Bank to hold at least 60% of its assets as
"qualifying assets." Qualifying assets generally include cash, obligations of
the United States or any agency or instrumentality thereof, certain obligations
of a state or political subdivision thereof, loans secured by interests in
improved residential real property or by savings accounts, student loans and
property used by the Bank in the conduct of its banking business. Under current
law, a savings association will not be required to recapture its pre-1988 bad
debt reserves if it ceases to meet the qualifying thrift definitional tests.

To the extent that a savings association has (i) pre-1988 bad debt reserves
or (ii) supplemental reserves for losses on loans ("Excess"), such Excess may
not, without adverse tax consequences, be utilized for the payment of cash
dividends or other distributions to a shareholder (including distributions on
redemption, dissolution or liquidation) or for any other purpose (except to
absorb bad debt losses). Distributions of a cash dividend by a savings
association to a shareholder is treated as made: first out of the savings
association's current and post-1951 accumulated earnings and profits; second out
of the pre-1988 bad debt reserves; third out of the supplemental reserve for
losses on loans; and fourth out of such other accounts as may be proper.
Distributions in redemption of stock and distributions in partial or complete
liquidation are treated as first made out of the pre-1988 bad debt reserves,
then out of the supplemental reserve for losses on loans, then out of post-1951
accumulated earnings and profits and finally out of such other accounts as may
be proper. To the extent a distribution to the Corporation by the Bank is deemed
paid out of the Excess under these rules, the Excess would be reduced and the
Bank's gross income for tax purposes would be increased by the amount of the
distribution plus a "gross-up" reflecting the tax attributable to the
distribution. Additionally, there are certain regulatory restrictions on the
Bank's ability to pay dividends to the Corporation.

In addition to the regular income tax, corporations, including savings
associations such as the Bank, generally are subject to an alternative minimum
tax. An alternative minimum tax is imposed at a tax rate of 20% on alternative
minimum taxable income ("AMTI"), which is the sum of a corporation's regular
taxable income (with certain adjustments) and tax preference items, less any
available exemption. Adjustments and preferences include depreciation deductions
in excess of those allowable for alternative minimum tax purposes, tax-exempt
interest on most private activity bonds issued after August 7, 1986 (reduced by
any related interest expense disallowed for regular tax purposes), and, for 1990
and succeeding years, 75% of the excess of adjusted current earnings ("ACE")
over AMTI. ACE equals pre-adjustment AMTI (i) increased or decreased by certain
ACE adjustments, which include tax-exempt interest on municipal bonds,
depreciation deductions in excess of those allowable for ACE purposes and, in
certain cases, the dividend received deduction, and (ii) determined without
regard to the ACE adjustment and the alternative tax net operating loss. The
alternative minimum tax is imposed to the extent it exceeds the corporation's
regular income tax, and alternative tax net operating losses can offset no more
than 90% of AMTI. The payment of alternative minimum tax will give rise to a
minimum tax credit which will be available with an indefinite carry forward
period to reduce federal income taxes in future years (but not below the level
of alternative minimum tax arising in each of the carry forward years). For
taxable years beginning after 1986 and before 1996, corporations, including
savings associations such as the Bank, were also subject to an environmental tax
equal to 0.12% of the excess of AMTI for the taxable year (determined without
regard to alternative tax net operating losses and the deduction for the
environmental tax) over $2 million.

The Corporation, the Bank and other includable subsidiaries file
consolidated federal income tax returns on a December 31 calendar year basis
using the accrual method of accounting. The Corporation, the Bank and other
includable subsidiaries have been audited by the Internal Revenue Service
through December 31, 1994.

The Bank is subject to the Ohio corporate franchise tax. As a financial
institution, the Bank computes its franchise tax based on its net worth. Under
this method, the Bank will compute its Ohio corporate franchise tax by
multiplying its net worth (as determined under generally accepted accounting
principles) as specifically adjusted pursuant to Ohio law, by the applicable tax
rate, which is currently 1.5%. As an Ohio-chartered savings and loan
association, the Bank also receives a credit against the franchise tax for a
portion of the state supervisory fees paid by it.

The Corporation is subject to an Ohio corporation franchise tax payable in
an amount equal to the greater of a specified percentage of net income
(currently 5.1% of the first $50,000 and 8.9% of the remainder, with an

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<PAGE> 66

additional add-on tax not to exceed $5,000) or a specified percentage of net
worth (currently approximately 0.6%, plus an add-on tax). In calculating net
income for this purpose, dividends from wholly-owned subsidiaries, such as the
Bank, would be excluded. In addition, in calculating net worth, the
Corporation's investment and intercompany deposit in the Bank would be excluded
for this purpose.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS OF METROPOLITAN

The name and age of the directors and executive officers of Metropolitan
and their position with Metropolitan and the Bank, are set forth in the
following table. All persons who serve as directors of the Corporation also
serve as directors of the Bank.

<TABLE>
<CAPTION>
POSITIONS WITH CORPORATION
NAME AGE AND BANK
- ------------------------------------- -------- --------------------------------------------
<S> <C> <C>
Robert M. Kaye....................... 59 Chairman of Corporation and Chairman of Bank
David G. Lodge....................... 57 President, Assistant Secretary, Assistant
Treasurer and Director of Corporation and
President of Bank
Malvin E. Bank....................... 66 Secretary, Assistant Treasurer and Director
of Corporation and Secretary of Bank
David P. Miller...................... 64 Treasurer, Assistant Secretary and Director
of Corporation
Ralph D. Ketchum..................... 70 Director of Corporation
James A. Karman...................... 59 Director of Corporation
Robert R. Broadbent.................. 75 Director of Corporation
Marjorie M. Carlson.................. 55 Director of Corporation
Lois K. Goodman...................... 62 Director of Corporation
Marguerite B. Humphrey............... 54 Director of Corporation
Alfonse M. Mattia.................... 54 Director of Corporation
Patrick W. Bevack.................... 50 Executive Vice President, Treasurer and
Assistant Secretary of Bank
</TABLE>

Upon consummation of the offering, the Corporation's Regulations will
provide for the Board of Directors to be divided into three classes of directors
to be as nearly equal in number as possible. Class I will consist of Ms.
Goodman, Ms. Humphrey and Mr. Mattia and their term of office will expire at the
next annual meeting of shareholders; Class II will consist of Messrs. Ketchum,
Karman, Broadbent and Ms. Carlson and their term of office will expire one year
thereafter; and Class III will consist of Messrs. Kaye, Lodge, Bank and Miller
and their term of office will expire two years thereafter; and at each annual
shareholders' meeting, that class of directors whose term has expired shall be
elected for a term of three years. Upon the consummation of the offering, the
Regulations will provide that the number of directors shall be determined from
time to time only by a vote of the majority of the Board of Directors. See
"Description of the Capital Stock" and "Risk Factors -- Antitakeover
Provisions." All of the officers listed will hold office until successors are
appointed by the Board of Directors. There are no arrangements or understandings
between any of the directors or officers or any other persons, pursuant to which
any of the above directors have been selected as directors, or officers have
been selected as officers. If any of the directors holds a directorship in a
company or institution subject to the reporting requirements of the Securities
Exchange Act of 1934 ("Exchange Act"), that fact is noted below. There are no
family relationships between the directors and executive officers of
Metropolitan.

Metropolitan's Board of Directors has established certain committees,
including an Audit Committee consisting of Messrs. Bank, Miller, Ketchum, Karman
and Broadbent, and a Compensation Committee consisting of Messrs. Kaye, Bank,
Ketchum and Karman. The committees meet periodically during the intervals
between meetings of the entire authorized Board of Directors.

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<PAGE> 67

During the past five years, the business experience of each of the
directors and executive officers has been as follows:

Mr. Kaye has served as Chairman of Metropolitan and the Bank since 1987. He
has also served as President of Planned Residential Communities, Inc. since
1960. Planned Residential Communities, Inc. is actively engaged in every aspect
of multifamily housing from new construction and rehabilitation to acquisition
and management. He has also been a member of the Corporate Council of the
Cleveland Museum of Art since its inception in 1993 and has been a member of the
Board of Trustees of The Peddie School since 1988. Mr. Kaye has a BS from the
University of Connecticut.

Mr. Lodge joined Metropolitan in December 1988 as Executive Vice President.
He has served as President of the Corporation and the Bank since August 1991.
Mr. Lodge has also served as a Director of the Corporation and the Bank since
1991. Mr. Lodge has also served as Assistant Secretary and Assistant Treasurer
of the Corporation since 1992. Mr. Lodge has served as a Director of University
Circle Incorporated and Vocational Guidance Services since 1994 and became a
member of the Board of Trustees of The Cleveland Play House in June 1995.

Mr. Bank has served as a Director and as Secretary of the Corporation and
the Bank since 1991. Mr. Bank also serves as Assistant Treasurer of the
Corporation. Mr. Bank is a senior partner with the Cleveland law firm of
Thompson Hine & Flory LLP. Mr. Bank also serves as a Director of Oglebay Norton
Company. He has a BA from Pennsylvania State University and an LLB from Yale Law
School.

Mr. Miller has served as a Director of the Corporation and the Bank since
1992. Mr. Miller also serves as Treasurer and Assistant Secretary of the
Corporation. Since 1986, Mr. Miller has been the Chairman and Chief Executive
Officer of Columbia National Group, Inc., a Cleveland-based scrap and waste
materials wholesaler and steel manufacturer. He has also been a member of the
Board of Trustees of The Cleveland Play House since 1992, and is currently
commissioner of the Ohio Lottery. Mr. Miller has a BA from Ohio Wesleyan
University.

Mr. Ketchum has served as a Director of the Corporation and the Bank since
1991. Since 1987, Mr. Ketchum has been President of RDK Capital Inc., a general
partner in a partnership formed for the purposes of acquiring and managing
companies serving the aircraft industry. Prior thereto, he was a Senior Vice
President and Group Executive for the General Electric Company, Lighting Group.
Mr. Ketchum is also a member of the Board of Directors of Oglebay Norton
Company, Thomas Industries, Pacific Scientific and Lithium Technology Corp. Mr.
Ketchum has a BNS and BMSE from Tufts University.

Mr. Karman has served as a Director of the Corporation and the Bank since
1992. Mr. Karman has been affiliated with RPM, Inc. since 1963, and in 1978 he
became President of RPM, Inc., a manufacturer of protective coatings, sealants
and specialty chemicals. Mr. Karman serves as a member of the Board of Directors
of RPM, Inc., McDonald & Company Investments, Inc., A. Schulman, Inc., Shiloh
Industries, Inc. and Sudbury, Inc. He has a BA from Miami University (Ohio) and
an MBA from the University of Wisconsin.

Mr. Broadbent has served as a Director of the Corporation and the Bank
since 1992. From 1984 to 1989, Mr. Broadbent served as Chairman and Chief
Executive Officer of The Higbee Company, a Cleveland-based clothing and
housewares retailer. Mr. Broadbent served as the Chairman of the Rock and Roll
Hall of Fame Museum, Inc. until May 1994 and is now on the advisory board. Mr.
Broadbent also serves as a Director of Cardinal American and Physician Insurance
Co. as well as a Trustee of the Murphy Foundation and a Trustee of Kent State
University. Mr. Broadbent has a BS from the University of Akron.

Ms. Carlson has served as a Director of the Corporation and the Bank since
1994. She also is the Director of Donor Relations for the Cleveland Foundation.
Ms. Carlson is a member of the Board of Trustees for the College of Wooster, the
Musical Arts Association, Judson Park Retirement Community, the Playhouse Square
Foundation, and the Northern Planned Giving Council. Ms. Carlson has a BA from
the College of Wooster and an MA from Case Western Reserve University.

Ms. Goodman has served as a Director of the Corporation and the Bank since
1994. Since 1991, she has been President of the Work and Family Group, Inc., a
consulting service for employers on managing working families. Ms. Goodman is
also a member of the Board of Trustees for the Cleveland Opera, WomanSpace,

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<PAGE> 68

and the Jewish Community Federation. Ms. Goodman has a BA from the University of
Michigan and an MA from Case Western Reserve University.

Ms. Humphrey has served as a Director of the Corporation and the Bank since
1994. Ms. Humphrey has been developing and implementing workshops for trustee
education for the Cultural Arts Trustee Forum at the Cleveland Mandel Center
from 1992 to 1995 and is a trustee for the American Symphony Orchestra League,
the Cleveland Institute of Music, the Musical Arts Association, and Rainbow
Babies and Children's Hospital. Ms. Humphrey has a BA from Vassar College.

Mr. Mattia has served as a consultant to the Bank since 1987 and as a
Director of the Corporation and the Bank since 1996. Mr. Mattia is a CPA and a
founding partner of Amper, Politziner & Mattia, a New Jersey-based accounting
and consulting firm. Mr. Mattia serves as an advisor to Rutgers University and
has a BS from Rider University. He has also completed the OPM program at Harvard
Business School.

Mr. Bevack has been Executive Vice President of the Bank since May 1992.
Mr. Bevack became Treasurer and Assistant Secretary of the Bank in 1993. Prior
to joining Metropolitan, Mr. Bevack was Executive Vice President of TransOhio
Savings Bank. He has a BA and an MBA from Cleveland State University and is a
CPA in the State of Ohio.

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to
compensation provided by Metropolitan during the year ended December 31, 1995,
to its Chief Executive Officer and Metropolitan's other executive officers whose
annual salary and bonus exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
FISCAL ANNUAL COMPENSATION
NAME AND YEAR ENDED ------------------- ALL OTHER
PRINCIPAL POSITION DECEMBER 31 SALARY BONUS COMPENSATION(1)
- -------------------------------------------- ------------ -------- ------- ---------------
<S> <C> <C> <C> <C>
Robert M. Kaye,
Chairman of the Board..................... 1995 $253,654 -- $ 4,620
1994 218,846 -- 3,150
David G. Lodge,
President................................. 1995 175,757 $50,000 4,571
1994 151,078 40,000 3,150
Patrick W. Bevack,
Executive Vice President(2)............... 1995 128,740 7,000 4,620
1994 117,403 4,000 2,549
<FN>
- ---------------
(1) Represents the Bank's contribution to the Metropolitan Savings Bank of
Cleveland 401(k) Plan.

(2) Mr. Bevack is Executive Vice President, Treasurer and Assistant Secretary of
the Bank.
</TABLE>

DIRECTOR COMPENSATION

For their services as directors, each member of the Board of Directors of
the Bank who is not an employee of the Corporation or the Bank receives a
monthly consulting fee of $1,000. The Chairman of the Board of the Bank and all
other members of the Board of the Bank, who are not employees of the Corporation
or the Bank, receive a $250 attendance fee for each meeting of the Board
attended. Members of the Board of Directors of the Corporation receive no fees
for their services as such.

COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION AND CERTAIN
TRANSACTIONS

The Compensation Committee of Metropolitan's Board of Directors consists of
Robert M. Kaye, Malvin E. Bank, Ralph D. Ketchum and James A. Karman.

Mr. Kaye, the Selling Shareholder, is the sole shareholder of Planned
Residential Communities, Inc. which receives a $96,000 annual fee for employee
benefit related services and multifamily property consulting services provided
to Metropolitan. Mr. Kaye was reimbursed by the Corporation for certain expenses
incurred during 1994 and 1995 which were subsequently determined not to be
deductible business expenses. Mr. Kaye has repaid the Corporation for these
expenses and the Corporation has clarified its expense reporting policies.

The law firm of Thompson Hine & Flory LLP, of which Malvin E. Bank is a
partner, provided legal services to the Corporation in 1995 and during the
current fiscal year.

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<PAGE> 69

The accounting firm of Amper, Politziner & Mattia, of which Alfonse M.
Mattia is a partner, provided tax services to the Corporation in 1995 and during
the current fiscal year.

Several of the directors and executive officers of the Corporation
purchased 1993 Subordinated Notes from Metropolitan during the private offering
of the 1993 Subordinated Notes. These purchases were made on the same terms and
at the same prices offered to unaffiliated investors. The 1993 Subordinated
Notes earn interest at the rate of 10% per annum and mature on December 31,
2001. The directors and executive officers of the Corporation who are also
holders of more than $60,000 principal amount of 1993 Subordinated Notes are set
forth below.

<TABLE>
<S> <C>
Robert M. Kaye.................................................................... $515,000
Ralph D. Ketchum.................................................................. 200,000
David P. Miller................................................................... 200,000
</TABLE>

In addition, the Metropolitan Savings Bank of Cleveland 401(k) Plan and the
Planned Residential Communities Management Co. Inc. and Affiliates 401(k) Plan
jointly own $400,000 principal amount of 1993 Subordinated Notes. Also, the
Amper, Politziner & Mattia Profit Sharing Trust, of which Alfonse M. Mattia is a
trustee, owns $200,000 principal amount of 1993 Subordinated Notes.

The Bank has had, and expects to have in the future, banking transactions
in the ordinary course of business with Metropolitan's and the Bank's directors,
officers, shareholders and associates on substantially the same terms, including
interest rates and collateral on loans, as those prevailing at the time for
comparable transactions with other persons, and that do not involve more than
the normal risk of collectibility or present other unfavorable terms.

SELLING SHAREHOLDER AND BENEFICIAL OWNERSHIP

The following table sets forth certain information with respect to the
Selling Shareholder, Robert M. Kaye and his beneficial ownership of the Common
Stock. Mr. Kaye currently owns all of the outstanding capital stock of the
Corporation and following completion of the offering, Mr. Kaye will continue to
own approximately 80.1% of the outstanding Common Stock of the Corporation
(77.2% if the Underwriter's over-allotment option is exercised in full). No
other director or executive officer currently has any beneficial ownership of
the Corporation's Common Stock. However, the Underwriter has agreed to reserve a
maximum of 120,000 shares of Common Stock for offering and sale at the public
offering price to certain directors, officers and employees of the Corporation.

<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK SHARES OF SHARES OF COMMON STOCK
BENEFICIALLY COMMON STOCK BENEFICIALLY
OWNED PRIOR TO THE TO OWNED AFTER THE
OFFERING BE SOLD OFFERING
-------------------- IN THE -----------------------
NAME AND ADDRESS NUMBER PERCENT OFFERING NUMBER PERCENT
- ----------------------------------- --------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Robert M. Kaye..................... 3,125,635(1) 100% 300,000(2) 2,825,635(3) 80.1%(3)
21 Sheraton Lane
Rumson, NJ 07760
<FN>
- ---------------

(1) After giving effect to the Corporation's 3,125,635-for-one stock split which
occurred prior to the completion of the offering.

(2) 405,000 shares if the Underwriter's over-allotment option is exercised in
full.

(3) 2,720,635 shares, or 77.2%, of the Corporation's outstanding Common Stock if
the Underwriter's over-allotment option is exercised in full.
</TABLE>

As collateral for the Huntington Loan Agreement, Mr. Kaye will pledge a
portion of his shares of Common Stock of Metropolitan in an amount at least
equal in value to 200% of any outstanding balance. At June 30, 1996, there was
no outstanding balance under the Huntington Loan Agreement. If an Event of
Default (as defined in the Huntington Loan Agreement), would occur, there could
be a change in control of the Corporation. See "Business -- Sources of
Funds -- Line of Credit."

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<PAGE> 70

DESCRIPTION OF THE CAPITAL STOCK

Prior to the closing of the offering, the Corporation will amend and
restate its Articles to increase the number of authorized shares of Common
Stock, no par value, to 10,000,000 shares and authorize 10,000,000 shares of
Preferred Stock, no par value. The amendment will also effect a
3,125,635-for-one stock split of the single share of Common Stock currently
outstanding. Upon the completion of the offering, the Corporation will have
3,525,635 shares of Common Stock issued and outstanding and no shares of
Preferred Stock issued and outstanding.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the shareholders. See "Potential
Anti-Takeover Effects of Articles, Regulations and OGCL." Subject to preferences
that may be applicable to any outstanding Preferred Stock, holders of shares of
Common Stock are entitled to receive dividends ratably if, as, and when,
declared by the Board out of funds legally available therefor. In the event of a
liquidation, dissolution, or winding up of the Corporation, holders of shares of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities and the liquidation preferences of any outstanding Preferred
Stock. Holders of shares of Common Stock have no preemptive rights and no right
to convert their shares of Common Stock into any other securities. There are no
redemption or sinking fund provisions applicable to the shares of Common Stock.
All outstanding shares of Common Stock are, and all shares of Common Stock to be
outstanding upon completion of the offering will be, fully paid and
nonassessable.

PREFERRED STOCK

The Board has the authority, without further action by the shareholders, to
issue up to 5,000,000 shares of Class A Preferred Stock, without par value, and
5,000,000 shares of Class B Preferred Stock, without par value. The Class A
Preferred Stock and the Class B Preferred Stock may be issued in one or more
series, and the Board may fix the rights, designations, preferences, privileges,
qualifications and restrictions thereof, including dividend rights, conversion
rights, rights and terms of redemption, liquidation preferences, and sinking
fund terms, any or all of which may be greater than the rights of the Common
Stock. The Board, without shareholder approval, can issue Class A Preferred
Stock and Class B Preferred Stock with voting, conversion, and other rights
which could adversely affect the voting power and other rights of the holders of
Common Stock, including the likelihood that such holders will receive dividend
payments and payments upon liquidation. Holders of Class A Preferred Stock would
be entitled to one vote per share for each share of Class A Preferred Stock held
by them. Holders of Class B Preferred Stock would not be entitled to vote upon
matters presented to the shareholders except in limited circumstances. Class A
Preferred Stock and Class B Preferred Stock could thus be issued quickly with
terms calculated to delay or prevent a change in control of the Corporation or
to make removal of management more difficult. Such issuance could have the
effect of decreasing the market price of the Common Stock. The issuance of Class
A Preferred Stock and Class B Preferred Stock may have the effect of delaying,
deterring, or preventing a change in control of the Corporation without any
further action by the shareholders. The Corporation has no present plans to
issue any Class A Preferred Stock or Class B Preferred Stock.

POTENTIAL ANTI-TAKEOVER EFFECTS OF ARTICLES, REGULATIONS AND OGCL

As an Ohio corporation, the Corporation is subject to certain provisions of
Ohio law which may discourage or render more difficult an unsolicited takeover
of the Corporation. Among these are provisions that prohibit any person who owns
10% or more of a corporation's stock from engaging in mergers, consolidations,
majority share acquisitions, asset sales, loans and certain other transactions
with the corporation for a three-year period after acquiring the 10% ownership,
unless approval is first obtained from the corporation's board of directors.
After the three-year waiting period, the 10% shareholder can complete the
transaction only if, among other things: (i) approval is received from
two-thirds of all voting shares and from a majority of shares not held by the
10% shareholder or certain affiliated persons; or (ii) the transaction meets
certain criteria designed to ensure fairness to all remaining shareholders.

In addition, under Ohio law, the acquisition of shares entitling the holder
to exercise certain levels of voting power of a corporation (one-fifth or more,
one-third or more, or a majority) can be made only with the

70
<PAGE> 71

prior authorization of (i) the holders of at least a majority of the total
voting power and (ii) the holders of at least a majority of the total voting
power held by shareholders other than the proposed acquirer, officers of the
corporation elected or appointed by the directors, and directors of the
corporation who are also employees and excluding certain shares that are
transferred after the announcement of the proposed acquisition and prior to the
vote with respect to the proposed acquisition. In light of the fact that, upon
completion of the offering, the Selling Shareholder will own approximately 80.1%
of the Corporation's outstanding Common Stock (77.2% if the Underwriter's
over-allotment option is exercised in full), acquisitions of the foregoing
levels of voting power by third parties will not be possible unless the Selling
Shareholder votes in favor thereof.

Upon consummation of the offering, the Corporation's Regulations will
require reasonable advance notice by a shareholder of a proposal or director
nomination that such shareholder desires to present at any annual meeting of
shareholders. In addition, the Regulations will provide that vacancies created
by an increase in the size of the Board of Directors may be filled by the
affirmative vote of a majority of the directors in office, although less than a
quorum. Only vacancies resulting from an increase in the size of the Board due
to action by the shareholders may be filled by holders of a majority of the
Corporation's voting stock.

The Corporation's Regulations will also require the holders of at least 75%
of the voting stock to approve any amendment to certain provisions of the
Regulations, including the provisions regarding the number and classification of
directors, filling of Board vacancies, the removal of directors, advance notice
of shareholder proposals, and nominations. See "Management -- Directors and
Executive Officers of Metropolitan."

It is possible that these provisions, as well as the classification of the
Board of Directors provided for in the Articles and the ability of the Board of
Directors to issue Preferred Stock, may have the effect of deterring hostile
takeovers or delaying or preventing changes in control or management of the
Corporation. See "Risk Factors -- Antitakeover Provisions."

TRANSFER AGENT AND REGISTRAR

Fifth Third Bank has been appointed as the transfer agent and registrar for
the Corporation's Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, the Corporation will have 3,525,635 shares
of Common Stock outstanding. All shares of Common Stock sold in the offering
will be freely transferable without restriction under the Securities Act, except
for any such shares which may be acquired by an affiliate of the Corporation (as
that term is defined in Rule 144 under the Securities Act). The remaining
2,825,635 outstanding shares of Common Stock (2,720,635 if the Underwriter's
over-allotment option is exercised in full) held by Mr. Kaye constitute
"restricted securities," within the meaning of Rule 144 and are eligible for
sale in the open market after the offering subject to the contractual lockup
provisions and applicable requirements of Rule 144 described below.

In general, under Rule 144, as currently in effect, beginning 90 days after
the date of this Prospectus, if a period of at least two years has elapsed since
the later of the date on which restricted securities were acquired from the
Corporation and the date on which they were acquired from an affiliate, then the
holder of such restricted securities (including an affiliate) is entitled to
sell a number of shares of Common Stock within any three-month period that does
not exceed the greater of (i) one percent of the then outstanding shares of
Common Stock (approximately 35,256 shares immediately after the offering) or
(ii) the average weekly reported volume of trading of the shares of Common Stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also subject to certain requirements pertaining to the manner of such sales,
notices of such sales and the availability of current public information
concerning the Corporation. Affiliates also must sell shares of Common Stock not
constituting restricted securities in accordance with the foregoing volume
limitations and other requirements but without regard to the two-year holding
period. Under Rule 144(k), if a period of at least three years has elapsed
between the later of the date on which restricted securities were acquired from
the Corporation and the date on which they were acquired from an affiliate, a
holder of such restricted securities who is not an affiliate at the time of the
sale and has not been an affiliate for

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<PAGE> 72

at least three months prior to the sale would be entitled to sell the shares of
Common Stock immediately without regard to the volume limitations and other
conditions described above.

Sales of a significant number of shares of Common Stock could have an
adverse impact on the market price of the shares of Common Stock. The
Corporation, the Selling Shareholder, and all of the Corporation's executive
officers and directors have agreed not to offer, sell or otherwise dispose of,
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for such shares, for a period of 180 days after the date of this
Prospectus, without the prior written consent of the Underwriter.

DESCRIPTION OF SUBORDINATED NOTES

By Private Placement Memorandum dated October 25, 1993, Metropolitan sold
$4.9 million principal amount of 1993 Subordinated Notes for an aggregate
purchase price of $4.9 million. The 1993 Subordinated Notes will mature on
December 31, 2001. Interest on the 1993 Subordinated Notes accrues at the rate
of 10% per annum and is payable quarterly in arrears on the last day of each
March, June, September and December. The terms of the 1993 Subordinated Notes
prohibit the Corporation from paying any cash dividend while any of the 1993
Subordinated Notes are outstanding. The Corporation may redeem the 1993
Subordinated Notes, in whole or in part, at any time and from time to time, by
paying the outstanding principal amount plus accrued interest and a prepayment
premium. The prepayment premium is 10% of the principal amount prepaid during
the first year following the issuance of the 1993 Subordinated Notes and is
reduced by 1% for each year thereafter. If the 1993 Subordinated Notes are
prepaid more than seven years after issuance, the prepayment premium is 3%. The
1993 Subordinated Notes may also be repurchased in privately negotiated
transactions.

If Robert M. Kaye desires to sell, transfer, or exchange a majority
interest in the capital stock of the Corporation to any other person or entity
while any of the 1993 Subordinated Notes are outstanding, each holder will have
the option to have its 1993 Subordinated Notes redeemed at the outstanding
principal amount plus accrued interest. In addition, upon the death of Robert M.
Kaye, if Mr. Kaye continues to own a majority interest in the capital stock of
the Corporation immediately prior thereto, each holder of the 1993 Subordinated
Notes will have the option to have a fraction of the principal amount of the
holder's 1993 Subordinated Notes redeemed.

In December 1995, $14.0 million of the 1995 Subordinated Notes were issued
in a public offering pursuant to the Indenture. The 1995 Subordinated Notes will
mature on January 1, 2005. Interest on the 1995 Subordinated Notes accrues at
the rate of 9 5/8% per annum and is payable monthly. The 1995 Subordinated Notes
are not redeemable, in whole or in part, by the Corporation prior to December 1,
1998. After December 1, 1998, the 1995 Subordinated Notes may be redeemed by the
Corporation according to the following schedule:

<TABLE>
<CAPTION>
IF REDEEMED DURING THE REDEMPTION
12 MONTHS BEGINNING PRICE
---------------------- ----------
<S> <C>
December 1, 1998.................. 103%
December 1, 1999.................. 101 1/2%
December 1, 2000 and thereafter... 100%
</TABLE>

The 1995 Subordinated Notes may also be repurchased in privately negotiated
or open market transactions.

The terms of the 1995 Subordinated Notes are governed by the Indenture. The
Indenture limits the amount of Funded Indebtedness of the Corporation and all of
its subsidiaries to 80% of Consolidated Net Worth. "Funded Indebtedness" and
"Consolidated Net Worth" are defined in the Indenture. In addition, the
Indenture prohibits the Corporation from paying dividends on its equity
securities (except in the form of those securities) unless the Corporation's
ratio of tangible equity to total assets is in excess of 7.0%. For purposes of
the Indenture "tangible equity" is Consolidated Net Worth (as defined in the
Indenture) less goodwill.

The terms of the Indenture further state that in the event of a Fundamental
Structural Change or a Significant Subsidiary Disposition (both as defined in
the Indenture), each holder of the 1995 Subordinated Notes will have the right
to have the Corporation purchase the holder's 1995 Subordinated Notes at the

72
<PAGE> 73

outstanding principal amount plus accrued interest. The right of the holders is
not exercisable if within 40 days after the occurrence of such event the 1995
Subordinated Notes have received a specified rating from a nationally recognized
statistical rating organization. This offering does not constitute a Fundamental
Structural Change for purposes of the Indenture.

UNDERWRITING

McDonald & Company Securities, Inc. has agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase 400,000 shares of Common
Stock from the Corporation and 300,000 shares of Common Stock from the Selling
Shareholder.

The Underwriter has advised the Corporation and the Selling Shareholder
that the Underwriter proposes to offer the Common Stock to the public initially
at the public offering price set forth on the cover page of this Prospectus. The
Underwriter may allow selected dealers a concession not exceeding $.40 per
share, and the Underwriter may allow, and such selected dealers may re-allow, a
concession not exceeding $.10 per share to certain other dealers. After the
initial public offering, the public offering price and the concession to dealers
may be changed by the Underwriter.

The Selling Shareholder has granted to the Underwriter an option,
exercisable within 30 days of the date of this Prospectus, to purchase up to an
additional 105,000 shares of Common Stock at the public offering price, less the
underwriting discount, as set forth on the cover page of this Prospectus. The
Underwriter may exercise such option only to cover over-allotments, if any, made
in connection with the sale of the shares of Common Stock offered hereby.

The nature of the Underwriter's obligation under the Underwriting Agreement
is such that all shares of Common Stock being offered, excluding shares covered
by the over-allotment option granted to the Underwriter, must be purchased if
any shares of Common Stock are purchased.

Prior to this offering, there has been no public market for any class of
the Corporation's capital stock. The initial public offering price for the
shares of Common Stock offered hereby has been determined by negotiations among
the Corporation, the Selling Shareholder, and the Underwriter. Among the factors
considered in determining the initial public offering price were prevailing
market and general economic conditions, the price-to-earnings ratio of publicly
traded companies that the Corporation and the Underwriter believed to be
somewhat comparable to the Corporation, the revenues and earnings of the
Corporation in recent periods, the current financial condition of the
Corporation, estimates of the business potential of the Corporation, the present
state of the Corporation's development, and other factors deemed relevant.
Additionally, consideration was given to the general status of the securities
market, the market conditions for new issues of securities, and the demand for
securities of comparable companies at the time the offering is made.

The Corporation and the Selling Shareholder have agreed to indemnify the
Underwriter against certain liabilities which may be incurred in connection with
the offering including liabilities under the Securities Act.

The Underwriter has agreed to reserve a maximum of 120,000 shares of Common
Stock for offering and sale at the public offering price to certain directors,
officers and employees of the Corporation.

The Corporation and its directors and officers, who will, upon completion
of this offering, in the aggregate hold at least 2,720,635 shares of Common
Stock, have agreed that they will not offer, sell or otherwise dispose of any
shares of Common Stock, or any securities convertible into or exchangeable for
shares of Common Stock, owned directly by such holders or with respect to which
they have the power of disposition, for a period of 180 days from the date of
this Prospectus without the prior written consent of McDonald & Company
Securities, Inc.

73
<PAGE> 74

LEGAL MATTERS

Thompson Hine & Flory LLP, 3900 Key Center, 127 Public Square, Cleveland,
Ohio will render an opinion on the legality of the Common Stock being offered
hereby. No members of the law firm currently own stock of Metropolitan or the
Bank, but members of the law firm may own shares of Common Stock as a result of
the offering. Malvin E. Bank, a partner of Thompson Hine & Flory LLP, is a
member of Metropolitan's and the Bank's Board of Directors. The law firm is not
employed on a contingent basis. Calfee, Halter & Griswold, 1400 McDonald
Investment Center, 800 Superior Avenue, Cleveland, Ohio will pass upon certain
legal matters for the Underwriter.

EXPERTS

The financial statements of Metropolitan as of December 31, 1995 and 1994
and for each of the three years in the period ended December 31, 1995 included
in this Prospectus have been audited by Crowe, Chizek and Company LLP
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon their authority as experts in accounting and
auditing.

AVAILABLE INFORMATION

Metropolitan is subject to the informational requirements of the Exchange
Act and the rules and regulations thereunder and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed with the Commission may be inspected, without charge, at the offices of
the Commission at Room 1024 Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 or at its regional offices at Seven World Trade Center, Suite 1300,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material may be obtained at
prescribed rates from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site at http://www.sec.gov that contains reports, proxy
statements and other information regarding registrants that file electronically
with the Commission, including Metropolitan.

This Prospectus does not contain all of the information set forth in the
Registration Statement which Metropolitan has filed with the Commission under
the Securities Act of which this Prospectus is a part, and to which reference is
made for further information with respect to Metropolitan and the shares of
Common Stock offered hereby.

74
<PAGE> 75

METROPOLITAN FINANCIAL CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors....................................................... F-2
Consolidated Financial Statements
Consolidated Statements of Financial Condition as of June 30, 1996, (unaudited)
December 31, 1995 and 1994...................................................... F-3
Consolidated Statements of Operations for the Six Months Ended June 30, 1996 and
1995 (unaudited) and for the Years Ended December 31, 1995, 1994 and 1993....... F-4
Consolidated Statements of Shareholder's Equity for the Six Months Ended June 30,
1996 (unaudited) and for the Years Ended December 31, 1995, 1994 and 1993....... F-5
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1996 and
1995 (unaudited) and for the Years Ended December 31, 1995, 1994 and 1993....... F-6
Notes to Consolidated Financial Statements........................................... F-8
</TABLE>

F-1
<PAGE> 76

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Metropolitan Financial Corp.
Cleveland, Ohio

We have audited the accompanying consolidated statements of financial
condition of Metropolitan Financial Corp. as of December 31, 1995 and 1994, and
the related consolidated statements of operations, shareholder's equity and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Metropolitan
Financial Corp. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

As discussed in Note 1 to the financial statements, the Corporation changed
its method of accounting for mortgage servicing rights and impaired loans in
1995 and for certain investment securities in 1994 to comply with new accounting
guidance.

Crowe, Chizek and Company LLP

Cleveland, Ohio
February 23, 1996

F-2
<PAGE> 77

METROPOLITAN FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -----------------------------
1996 1995 1994
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents....................... $ 12,342,110 $ 18,170,473 $ 11,565,524
Securities available for sale (Note 2).......... 12,136,190 22,806,178 7,640,625
Mortgage-backed securities available for sale
(Notes 2, 3 and 9)............................ 41,820,903 39,155,500 16,785,141
Loans held for sale............................. 10,686,026 1,504,348 83,500
Loans receivable, net (Notes 4 and 9)........... 563,883,170 478,345,398 424,943,995
Federal Home Loan Bank stock, at cost (Note
9)............................................ 3,852,000 3,568,700 2,311,200
Accrued interest receivable (Note 5)............ 4,239,664 3,707,742 2,707,826
Premises and equipment, net (Note 6)............ 8,791,012 7,499,939 3,149,733
Real estate owned, net.......................... 218,821 257,593 53,283
Cost in excess of fair value of net assets
acquired...................................... 3,079,295 3,188,412 3,408,527
Cost of loan servicing rights (Note 7).......... 8,692,737 9,129,558 4,824,586
Prepaid expenses and other assets............... 3,043,688 2,761,156 1,909,841
------------ ------------ ------------
Total assets............................. $672,785,616 $590,094,997 $479,383,781
=========== =========== ===========
LIABILITIES
Deposits (Note 8)............................... $558,793,688 $503,742,420 $436,197,716
Other borrowings (Note 9)....................... 77,073,673 46,873,673 15,503,673
Accrued interest payable........................ 3,126,741 4,551,061 1,713,803
Official check float account.................... 3,778,038 2,778,632 1,313,176
Other liabilities............................... 3,399,954 6,682,796 4,375,436
------------ ------------ ------------
Total liabilities........................ 646,172,094 564,628,582 459,103,804
------------ ------------ ------------
Commitments (Notes 10 and 13)
SHAREHOLDER'S EQUITY (Note 14)
Common stock, no par value, 250,000 shares
authorized, 1 share issued and outstanding.... 100 100 100
Additional paid-in capital...................... 7,801,283 7,801,283 7,801,283
Retained earnings............................... 18,509,139 16,928,083 13,385,664
Unrealized gain (loss) on securities available
for sale, net of tax.......................... 303,000 736,949 (907,070)
------------ ------------ ------------
Total shareholder's equity............... 26,613,522 25,466,415 20,279,977
------------ ------------ ------------
Total liabilities and shareholder's
equity.............................. $672,785,616 $590,094,997 $479,383,781
=========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 78

METROPOLITAN FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------------- ---------------------------------------
1996 1995 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans............. $23,040,268 $19,316,433 $39,654,779 $29,762,338 $22,584,198
Interest on mortgage-backed
securities.......................... 1,264,530 655,955 2,492,744 692,673 1,142,744
Interest and dividends on other
investments......................... 682,824 395,160 979,566 933,594 720,999
----------- ----------- ----------- ----------- -----------
Total interest income............... 24,987,622 20,367,548 43,127,089 31,388,605 24,447,941
----------- ----------- ----------- ----------- -----------
INTEREST EXPENSE
Interest on deposits (Note 8).......... 13,345,349 10,950,522 23,521,751 14,917,447 10,777,828
Interest on other borrowings (Note
9).................................. 2,103,413 1,436,982 3,294,520 1,074,344 437,457
----------- ----------- ----------- ----------- -----------
Total interest expense.............. 15,448,762 12,387,504 26,816,271 15,991,791 11,215,285
----------- ----------- ----------- ----------- -----------
NET INTEREST INCOME...................... 9,538,860 7,980,044 16,310,818 15,396,814 13,232,656
Provision for loan losses (Note 4)....... 685,559 479,026 958,573 765,664 739,921
----------- ----------- ----------- ----------- -----------
Net interest income after provision for
loan losses............................ 8,853,301 7,501,018 15,352,245 14,631,150 12,492,735
----------- ----------- ----------- ----------- -----------
NON-INTEREST INCOME
Loan servicing income, net............... 632,387 390,645 1,067,767 641,625 601,595
Gain on sale of loans.................. 35,710 113,381 444,313 52,443 1,393,451
Net gain on sale of mortgage-backed
securities and mutual funds......... 388,581 34,204 318,279
Loan option income (Note 13)........... 406,296 420,000 559,256
Loan credit discount income (Note 4)... 406,205 640,262
Other operating income................. 972,190 631,483 1,431,946 1,122,460 1,067,274
----------- ----------- ----------- ----------- -----------
Total non-interest income........... 2,046,583 1,961,714 4,532,125 1,850,732 3,380,599
----------- ----------- ----------- ----------- -----------
NON-INTEREST EXPENSE
Salaries and related personnel costs... 4,071,117 3,258,984 6,819,383 5,348,509 3,834,309
Occupancy and equipment expense........ 1,124,386 1,024,821 2,134,862 1,487,558 1,130,121
Federal deposit insurance premiums..... 639,455 548,040 1,132,125 928,969 793,684
Data processing expense................ 295,069 327,816 586,260 381,431 360,644
Marketing expense...................... 284,682 225,515 542,838 392,481 256,231
State franchise taxes.................. 232,193 151,671 306,518 283,503 177,884
Amortization of intangibles............ 109,117 110,998 220,115 221,996 221,996
Other operating expenses............... 1,606,679 1,103,756 2,445,150 2,013,503 1,499,233
----------- ----------- ----------- ----------- -----------
Total non-interest expense.......... 8,362,698 6,751,601 14,187,251 11,057,950 8,274,102
----------- ----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
CHANGE IN ACCOUNTING PRINCIPLE......... 2,537,186 2,711,131 5,697,119 5,423,932 7,599,232
Provision for income taxes (Note 11)..... 956,130 1,032,200 2,154,700 1,987,143 2,829,200
----------- ----------- ----------- ----------- -----------
INCOME BEFORE CUMULATIVE CHANGE IN
ACCOUNTING PRINCIPLE................... 1,581,056 1,678,931 3,542,419 3,436,789 4,770,032
Cumulative change in accounting principle
(Note 1)............................... (300,000)
----------- ----------- ----------- ----------- -----------
NET INCOME............................... $ 1,581,056 $ 1,678,931 $ 3,542,419 $ 3,436,789 $ 4,470,032
=========== =========== =========== =========== ===========
EARNINGS PER SHARE (NOTE 1).............. $ 0.51 $ 0.54 $ 1.13 $ 1.10 $ 1.43
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE SHARES (NOTE 1)......... 3,125,635 3,125,635 3,125,635 3,125,635 3,125,635
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 79

METROPOLITAN FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
UNREALIZED
UNREALIZED GAIN/
LOSS ON (LOSS) ON
ADDITIONAL MARKETABLE SECURITIES TOTAL
COMMON PAID-IN RETAINED EQUITY AVAILABLE SHAREHOLDER'S
STOCK CAPITAL EARNINGS SECURITIES FOR SALE EQUITY
------ ---------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1993.............. $100 $7,801,283 $ 5,478,843 $ (169,244) $ 13,110,982
Recovery of unrealized loss on
marketable equity securities........ 169,244 169,244
Net income............................ 4,470,032 4,470,032
---- ---------- ----------- ---------- ------------
Balance, December 31, 1993............ 100 7,801,283 9,948,875 -0- 17,750,258
Unrealized gain on securities
available for sale upon adoption of
SFAS No. 115 on January 1, 1994
(Note 1)............................ $ 16,255 16,255
Net income............................ 3,436,789 3,436,789
Change in unrealized gain/ (loss) on
securities available for sale, net
of tax.............................. (923,325) (923,325)
----- ---------- ----------- ---------- ---------- ------------
Balance, December 31, 1994............ 100 7,801,283 13,385,664 -0- (907,070) 20,279,977
Net income............................ 3,542,419 3,542,419
Change in unrealized gain/ (loss) on
securities available for sale, net
of tax.............................. 1,644,019 1,644,019
----- ---------- ----------- ---------- ---------- ------------
Balance, December 31, 1995............ 100 7,801,283 16,928,083 -0- 736,949 25,466,415
Net income............................ 1,581,056 1,581,056
Change in unrealized gain/ (loss) on
securities available for sale, net
of tax.............................. (433,949) (433,949)
----- ---------- ----------- ---------- ---------- ------------
Balance, June 30, 1996................ $100 $7,801,283 $18,509,139 $ -0- $ 303,000 $ 26,613,522
===== ========== =========== ========== ========== ============
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 80

METROPOLITAN FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
--------------------------- ------------------------------------------
1996 1995 1995 1994 1993
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................ $ 1,581,056 $ 1,678,931 $ 3,542,419 $ 3,436,789 $ 4,470,032
Adjustments to reconcile net income to
net cash provided by operating
activities:
Net amortization and
depreciation................. 1,634,172 1,062,799 2,036,614 1,737,049 875,887
Gain on sale of mortgage-backed
securities and mutual
funds........................ (388,581) (34,204) (318,279)
Provision for loan losses...... 685,559 479,026 958,573 765,664 739,921
Deferred taxes................. 206,692 (454,764) (9,326) (121,000) 95,200
Loans originated for sale...... (22,716,870) (28,421,143) (45,327,774) (41,059,540) (138,660,080)
Loans purchased for sale....... (10,044,889) (15,476,148) (16,210,821)
Proceeds from sale of loans.... 24,561,840 27,242,098 59,830,616 50,965,820 132,256,830
Gain on sale of real estate
owned........................ (2,131) (11,693) 3,307 28,887 (248,017)
FHLB stock dividend............ (127,500) (93,600) (216,200) (126,900) (91,100)
Changes in:
Prepaid expenses and other
assets.................... (814,454) (2,566,187) (2,603,437) (1,634,617) 493,840
Other liabilities............ (3,708,930) 5,809,753 6,588,239 1,594,937 (159,672)
------------ ------------ ------------ ------------ ------------
Net cash provided by operating
activities................... (8,745,455) (10,750,928) 8,203,629 15,552,885 (545,438)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities, calls
and repayments of securities
available for sale............. 2,000,000 2,000,000
Purchases of securities available
for sale....................... (9,122,338) (4,101,250) (23,464,948) (10,167,902)
Proceeds from sale of securities
available for sale............. 19,405,161 7,000,000 19,759,740
Disbursement of loan proceeds..... (118,419,780) (41,572,713) (117,432,139) (143,508,572) (69,253,170)
Purchases of loans................ (33,584,461) (33,771,897) (86,134,911) (71,704,818) (69,988,227)
Proceeds from loan principal
repayments..................... 59,599,244 30,193,976 96,163,166 73,780,215 71,652,634
Purchase of mortgage-backed
securities available for
sale........................... (6,540,625) (6,078,881) (11,163,168)
Proceeds from mortgage-backed
security principal repayments
and maturities................. 3,607,371 3,525,478 706,239 5,218,546
Proceeds from sale of
mortgage-backed securities..... 29,142,705 1,245,585 16,224,114
Proceeds from sale of loans....... 4,914,956
Proceeds from sales of real estate
owned and premises and
equipment...................... 40,903 64,976 102,678 1,308,418 478,396
Purchase of premises and
equipment...................... (1,588,457) (2,632,197) (4,869,739) (1,135,060) (611,499)
Purchase of FHLB stock............ (155,800) (1,041,300) (1,041,300) (45,800) (223,100)
Purchase of mortgage loan
servicing rights............... (445,445) (4,685,882) (5,329,415) (3,516,570) (1,434,484)
------------ ------------ ------------ ------------ ------------
Net cash used for investing
activities................... (82,289,271) (57,546,287) (100,338,425) (146,949,244) (49,508,120)
------------ ------------ ------------ ------------ ------------
</TABLE>

(Continued)

F-6
<PAGE> 81

METROPOLITAN FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
--------------------------- -----------------------------------------
1996 1995 1995 1994 1993
------------ ------------ ------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposit accounts..... $ 55,006,363 $ 18,536,809 $ 67,369,745 $103,475,533 $63,217,915
Proceeds from borrowings........... 120,650,000 217,800,000 340,700,000 118,718,388 59,605,285
Repayment of borrowings............ (90,450,000) (168,630,000) (309,330,000) (118,960,000) (55,680,000)
------------ ------------ ------------ ------------ -----------
Net cash provided by financing
activities.................... 85,206,363 67,706,809 98,739,745 103,233,921 67,143,200
------------ ------------ ------------ ------------ -----------
Net change in cash and cash
equivalents........................ (5,828,363) (590,406) 6,604,949 (28,162,438) 17,089,642
Cash and cash equivalents at
beginning of year.................. 18,170,473 11,565,524 11,565,524 39,727,962 22,638,320
------------ ------------ ------------ ------------ -----------
Cash and cash equivalents at end of
year............................... $ 12,342,110 $ 10,975,118 $ 18,170,473 $ 11,565,524 $39,727,962
============ ============ ============ ============ ===========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest........................ $ 14,024,442 $ 11,582,151 $ 23,979,013 $ 15,156,138 $11,117,774
Income taxes.................... 895,000 804,000 2,749,000 1,751,200 2,857,318
Transfer from loans receivable to
other real estate............... 45,722 326,709 442,689 941,130
Securities classified as available
for sale upon adoption of SFAS
No. 115......................... 23,584,000
Loans securitized.................. 7,802,987 53,795,086
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE> 82

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Metropolitan Financial Corp. (the "Corporation") is an Ohio corporation
organized for the operation of a savings and loan holding company. The
accounting policies of the Corporation conform to generally accepted accounting
principles and prevailing practices within the banking and thrift industry. A
summary of the more significant accounting policies follows:

Consolidation Policy: The Corporation and its subsidiaries, MetroCapital
Corporation and Metropolitan Savings Bank (the "Bank"), and its wholly-owned
subsidiaries, Kimberly Construction Company, Incorporated, and Metropolitan
Savings Service Corporation and its wholly-owned subsidiary Metropolitan
Securities Corporation are included in the accompanying consolidated financial
statements. All significant intercompany balances have been eliminated.

Industry Segment Information: Metropolitan Financial Corp. is a savings and
loan holding company engaged in the business of originating and purchasing
multifamily and commercial real estate loans in Ohio, Central and Northern New
Jersey, Michigan, Kentucky and Western Pennsylvania and residential real estate
loans in Northeastern Ohio. The majority of the Corporation's income is derived
from commercial and retail lending activities.

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
losses on loans, the valuation of loan servicing rights, the value of loans held
for sale, fair value of certain securities, the carrying value and amortization
of intangibles, the determination and carrying value of impaired loans, and the
fair value of financial instruments. Estimates that are more susceptible to
change in the near term include the allowance for losses on loans, the valuation
of servicing rights, the value of loans held for sale and the fair value of
securities.

Statement of Cash Flows: For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, amounts due from depository institutions,
interest bearing deposits, investments purchased with an initial maturity of
three months or less, overnight repurchase agreements and federal funds sold.
Generally, federal funds and overnight repurchase agreements are sold for
one-day periods. The Corporation reports net cash flows for deposit transactions
and deposits made with other financial institutions.

Securities: Effective January 1, 1994, the Corporation adopted the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities." This
accounting guidance requires the Corporation to classify debt and marketable
equity securities as held to maturity, trading or available for sale. The
cumulative effect on shareholder's equity at January 1, 1994, of adopting SFAS
No. 115, is included as a separate component of shareholder's equity in the
consolidated statement of financial condition and represents the after tax
effect of adjusting securities available for sale to fair value. Prior to the
adoption of SFAS No. 115, the Corporation classified investment securities as
held for sale.

Securities classified as held to maturity are those that management has the
positive intent and ability to hold to maturity. Securities held to maturity are
stated at cost, adjusted for amortization of premiums and accretion of
discounts.

Securities classified as available for sale are those that management
intends to sell or that could be sold for liquidity, investment management, or
similar reasons, even if there is not a present intention for such a sale.
Securities available for sale are carried at fair value with unrealized gains
and losses included as a separate

F-8
<PAGE> 83

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

component of shareholder's equity, net of tax. Gains or losses on dispositions
are based on net proceeds and the adjusted carrying amount of securities sold,
using the specific identification method.

Loans: Loans held for investment are stated at the principal amount
outstanding adjusted for amortization of premium and accretion of discount using
the interest method. Sales of loans are dependent upon various factors,
including interest rate movements, deposit flows, the availability and
attractiveness of other sources of funds, loan demand by borrowers, and
liquidity and capital requirements. The Bank re-evaluates its intent to hold
loans at each balance sheet date based on the then current environment and, if
appropriate, reclassifies loans as held for sale and records them at the lower
of cost or market. For multifamily and commercial real estate loans held for
sale, the Bank enters into a sales agreement concurrent with loan origination.
As such, these loans are recorded at cost, which approximates market. At June
30, 1996 and December 31, 1995 and 1994, management had the intent and the Bank
had the ability to hold all loans being held for investment purposes for the
foreseeable future. Gains and losses on the sale of loans are determined by the
identified loan method and are reflected in operations at the time of sale.

Allowance for Losses on Loans: Because some loans may not be repaid in
full, an allowance for losses on loans is maintained. Increases to the allowance
are recorded by a provision for loan losses charged to expense. Estimating the
risk of 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 possible 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 loans, the whole allowance is available for any loan charge-offs that
occur. A loan is charged off against the allowance by management as a loss when
deemed uncollectible, although collection efforts continue and future recoveries
may occur.

SFAS No. 114 was adopted January 1, 1995. Under this standard, loans
considered to be impaired are reduced to the present value of expected future
cash flows or to the fair value of collateral, by allocating a portion of the
allowance for losses on loans to such loans. If these allocations cause the
allowance for losses on loans to require an increase, such increase is reported
as a provision for loan losses. Based on the analysis prepared, no provision for
loan losses was recorded in connection with adopting this standard. As allowed,
management excludes all consumer loans and residential single family loans with
balances less than $200,000 from classification as impaired.

SFAS No. 118 was adopted January 1, 1995. Under this standard a creditor is
allowed to use existing methods for income recognition on an impaired loan. All
impaired loans for purposes of SFAS No. 114 are placed on non-accrual status.

Real Estate Owned: Real estate owned is comprised of properties acquired
through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure.
These properties are recorded at fair value, less estimated selling costs. Any
reduction from carrying value of the related loan to fair value at the time of
acquisition is accounted for as a loan loss. Any subsequent reduction in fair
value is reflected in a valuation allowance account through a charge to income.
Expenses to carry real estate owned are charged to operations as incurred.

Premises and Equipment: Premises and equipment are recorded at cost less
accumulated depreciation and amortization. Depreciation is computed using the
straight-line method over the estimated useful lives of the related assets for
financial reporting purposes. For tax purposes, depreciation on certain assets
is computed using accelerated methods. Maintenance and repairs are charged to
expense as incurred and improvements are capitalized.

F-9
<PAGE> 84

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

Cost in Excess of Fair Value of Net Assets Acquired: The cost in excess of
fair value of the net assets acquired resulting from the acquisition of the Bank
is being amortized to expense on a straight-line basis over a period of 25 years
beginning in July 1987. This amount is a reduction from shareholder's equity in
calculating tangible capital for regulatory purposes.

Loan-Servicing Rights: The cost of loan-servicing rights acquired is
amortized in proportion to, and over the period of, estimated net servicing
revenues. The cost of loan-servicing rights purchased and the amortization
thereon is periodically evaluated in relation to estimated future net servicing
revenues. The Bank evaluates the carrying value of the servicing portfolio by
estimating the future net servicing income of the portfolio based on
management's best estimate of remaining loan lives.

Effective January 1, 1995 the Corporation adopted SFAS No. 122, "Accounting
for Mortgage Servicing Rights." SFAS No. 122 requires lenders who sell or
securitize originated loans and retain the servicing rights to recognize as
separate assets the rights to service mortgage loans for others. SFAS No. 122
also requires that capitalized mortgage servicing rights be assessed for
impairment based on the fair value of those rights. For purposes of measuring
impairment, management stratifies loans by loan type, interest rate and
investor.

Purchase Accounting Adjustment: The purchase accounting adjustment, which
was recorded as a result of the 1990 acquisition of Independent Share Corp. and
Independent Savings Bank approximated $1.4 million. It is being amortized on a
straight line basis over the expected lives of the deposits; five years for
demand deposits and ten years for savings deposits.

Interest Income on Loans: Interest on loans is accrued over the term of
the loans based upon the principal outstanding. Management reviews loans
delinquent 90 days or more to determine if interest accrual should be
discontinued based on the estimated fair market value of the collateral. Under
SFAS No. 114, as amended by SFAS No. 118, the carrying values of impaired loans
are 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 the provision for
loan losses.

Loan Fees and Costs: Origination and commitment fees received for loans,
net of direct origination costs, are deferred and amortized to interest income
over the contractual life of the loan using the level yield method. The net
amount deferred is reported in the consolidated statements of financial
condition as a reduction of loans.

Income Taxes: The Corporation and its subsidiaries are included in the
consolidated federal income tax return of the Corporation. Income taxes are
provided on a consolidated basis and allocated to each entity based on its
proportionate share of consolidated income. Deferred income taxes are provided
on items of income or expense that are recognized for financial reporting
purposes in periods different than when such items are recognized for income tax
purposes.

Effective January 1, 1993, the Corporation adopted SFAS No. 109,
"Accounting For Income Taxes." The statement requires, among other things, a
change from the deferred method to the liability method of accounting for
deferred income taxes. The cumulative effect of adopting SFAS No. 109 was to
reduce 1993 income by $300,000 and is included in the consolidated statements of
operations as a "cumulative effect of change in accounting principle."

Earnings Per Share: In connection with the initial public offering of
stock, the Board of Directors will approve a 3,125,635-for-one stock split,
effected in the form of a stock dividend during October 1996. All per share
information has been retroactively adjusted to reflect the effect of the stock
dividend.

F-10
<PAGE> 85

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

Concentration of Credit Risk: The Bank originates and purchases commercial
real estate loans, residential real estate loans, consumer loans and business
loans. At June 30, 1996, real estate loans secured by residential apartments
approximated 47% of the Bank's total loan portfolio. The remainder of the
portfolio was comprised of one- to four-family residential loans (16%)
commercial real estate loans (19%), residential construction and land
acquisition and development loans (9%), consumer loans (7%), and business loans
(2%). Additionally, at June 30, 1996, 62% of the Bank's total real estate loans
are secured by real estate in the State of Ohio, 12% in the State of Michigan,
6% in the state of California and 5% in the state of New Jersey. At December 31,
1995, real estate loans secured by residential apartments approximated 46% of
the Bank's total loan portfolio. The remainder of the portfolio was comprised of
one- to four-family residential loans (15%), commercial real estate (21%),
residential construction and land acquisition and development loans (10%),
consumer loans (6%) and business loans (2%). Additionally, 63% of the Bank's
total real estate loans are secured by real estate in the State of Ohio, 12% in
the State of Michigan and 8% in the States of New Jersey and California,
respectively. At December 31, 1994, real estate loans secured by residential
apartments approximated 44% of the Bank's total loan portfolio. The remainder of
the portfolio was comprised of one- to four-family residential loans (30%),
commercial real estate and land acquisition and development loans (20%), and
consumer loans (6%). Additionally, at December 31, 1994, 65% of the Bank's total
real estate loans were secured by real estate in the State of Ohio and 7% in the
State of California.

Loan Option Income: The Bank purchases real estate loans for sale and
simultaneously writes an option giving the holder the option to purchase those
loans at a specified price within a specified time period. At the time the
transaction is complete the Bank recognizes a non-refundable fee in income.

Trust Department Assets and Income: Property held by the Corporation in a
fiduciary or other capacity for its trust customers is not included in the
accompanying consolidated financial statements since such items are not assets
of the Corporation.

Interim Financial Statements: The interim financial statements as of June
30, 1996 and for the six months ended June 30, 1996 and 1995, are unaudited. The
interim financial statements reflect all adjustments, consisting of normal
recurring accruals, in the opinion of management which are necessary for a fair
presentation of the interim periods presented.

NOTE 2 -- SECURITIES

The amortized cost, gross unrealized gains and losses and fair values of
investment securities available for sale at June 30, 1996, are as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities.......... $ 6,112,385 $ 28,925 $ (111,790) $ 6,029,520
Mutual funds...................... 1,131,670 1,131,670
FNMA preferred stock.............. 5,000,000 (25,000) 4,975,000
----------- ---------- ---------- -----------
Totals....................... 12,244,055 28,925 (136,790) 12,136,190
Mortgage-backed securities........ 41,235,914 624,169 (39,180) 41,820,903
----------- ---------- ---------- -----------
Totals....................... $53,479,969 $ 653,094 $ (175,970) $53,957,093
========== ======== ========= ==========
</TABLE>

F-11
<PAGE> 86

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

The amortized cost and fair value of debt securities available for sale at
June 30, 1996, by contractual maturity are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Due after one year through five years..... $ 6,112,385 $ 6,029,520
Mortgage-backed securities................ 41,235,914 41,820,903
----------- -----------
Total debt securities available for
sale............................... $47,348,299 $47,850,423
=========== ===========
</TABLE>

The amortized cost, gross unrealized gains and losses and fair values of
investment securities available for sale at December 31, 1995 and 1994 are as
follows:

<TABLE>
<CAPTION>
1995
---------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities......... $12,195,274 $ 277,102 $ (29,896) $12,442,480
Mutual fund...................... 10,363,698 10,363,698
----------- ---------- ---------- -----------
Total investment securities.. 22,558,972 277,102 (29,896) 22,806,178
Mortgage-backed securities....... 38,286,116 869,384 39,155,500
----------- ---------- ---------- -----------
Totals....................... $60,845,088 $1,146,486 $ (29,896) $61,961,678
=========== ========== ========= ===========
</TABLE>

<TABLE>
<CAPTION>
1994
----------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities........ $ 8,168,505 $ (527,880) $ 7,640,625
Mortgage-backed securities...... 17,581,330 (796,189) 16,785,141
----------- ----------- -----------
Totals...................... $25,749,835 $(1,324,069) $24,425,766
=========== =========== ===========
</TABLE>

The amortized cost and fair value of debt securities available for sale at
December 31, 1995, by contractual maturity are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Due after one year through five years........... $12,195,274 $12,442,480
Mortgage-backed securities...................... 38,286,116 39,155,500
----------- -----------
Total debt securities available for sale.... $50,481,390 $51,597,980
=========== ===========
</TABLE>

Proceeds from the sale of securities available for sale were $19.4 million
for the six months ended June 30, 1996. Gross gains of $60,000 and gross losses
of $61,000 were realized on those sales. Proceeds from the sale of
mortgage-backed securities available for sale were $29.1 million in 1995, $1.2
million in 1994 and $16.2 million in 1993. Gross gains realized on those sales
were $476,000 in 1995, $38,000 in 1994 and $467,000 in 1993. Gross losses of
$87,000 and $3,000 were realized in 1995 and 1994, respectively. Proceeds from
the sale of mutual funds were $7 million in 1995 and $19.8 million in 1993. No
gain or loss was realized in 1995 and a gross loss of $149,000 was realized on
the sale in 1993.

On November 17, 1995, the Corporation transferred securities with an
amortized cost of $51,345,071 previously classified as held to maturity to
available for sale. The unrealized gain on the securities transferred totaled
$771,664. On November 17, 1995, the Corporation's equity increased $509,298 as a
result of the transfer.

F-12
<PAGE> 87

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

NOTE 3 -- MORTGAGE-BACKED SECURITIES

Mortgage-backed securities available for sale at June 30, 1996 are
summarized as follows:

<TABLE>
<CAPTION>
PRINCIPAL UNEARNED AMORTIZED FAIR
BALANCE DISCOUNTS COST VALUE
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
GNMA pass-through certificates....... $10,369,238 $ (51,382) $10,317,856 $10,460,072
FHLMC participation certificates..... 10,710,487 22,071 10,732,558 10,747,899
FNMA pass-through certificates....... 20,080,958 (385,919) 19,695,039 20,122,471
Sears Mortgage Corporation
pass-through certificates.......... 490,461 490,461 490,461
----------- --------- ----------- -----------
Totals.......................... $41,651,144 $(415,230) $41,235,914 $41,820,903
========== ========= ========== ==========
</TABLE>

Mortgage-backed securities available for sale at December 31, 1995 and 1994
are summarized as follows:

<TABLE>
<CAPTION>
1995
---------------------------------------------------
PRINCIPAL UNEARNED AMORTIZED FAIR
BALANCE DISCOUNTS COST VALUE
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
GNMA pass-through certificates....... $11,220,448 $ (55,923) $11,164,525 $11,348,122
FHLMC participation certificates..... 4,638,552 (21,012) 4,617,540 4,715,366
FNMA pass-through certificates....... 22,356,699 (395,468) 21,961,231 22,549,192
Sears Mortgage Corporation
pass-through certificates.......... 542,820 542,820 542,820
----------- --------- ----------- -----------
Totals.......................... $38,758,519 $(472,403) $38,286,116 $39,155,500
========== ========= ========== ==========
</TABLE>

<TABLE>
<CAPTION>
1994
---------------------------------------------------
PRINCIPAL UNEARNED AMORTIZED FAIR
BALANCE DISCOUNTS COST VALUE
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
GNMA pass-through certificates....... $12,032,366 $ (61,671) $11,970,695 $11,274,437
FHLMC participation certificates..... 5,088,007 (32,039) 5,055,968 4,956,037
Sears Mortgage Corporation
pass-through certificates.......... 554,667 554,667 554,667
----------- --------- ----------- -----------
Totals.......................... $17,675,040 $ (93,710) $17,581,330 $16,785,141
========== ========= ========== ==========
</TABLE>

F-13
<PAGE> 88

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

NOTE 4 -- LOANS RECEIVABLE

The composition of the loan portfolio at June 30, 1996 is as follows:

<TABLE>
<CAPTION>
ORIGINATED PURCHASED TOTAL
------------ ------------ ------------
<S> <C> <C> <C>
Real estate loans
Construction loans
Residential single family........... $ 39,424,251 $ 39,424,251
Commercial.......................... 2,325,000 2,325,000
Land................................ 14,472,855 14,472,855
Loans in process.................... (28,094,952) (28,094,952)
------------ ------------
Construction loans, net........... 28,127,154 28,127,154
Permanent loans
Residential single family........... 67,190,265 $ 24,864,437 92,054,702
Multifamily......................... 152,363,721 117,686,029 270,049,750
Commercial.......................... 32,302,917 89,703,000 122,005,917
Other............................... 95,302 5,617 100,919
------------ ------------ ------------
Total real estate loans........... 280,079,359 232,259,083 512,338,442
Consumer loans........................... 31,085,639 10,700,374 41,786,013
Business and other loans................. 15,034,386 15,034,386
------------ ------------ ------------
Total loans....................... $326,199,384 $242,959,457 569,158,841
============ ============
Discount on loans, net................... (84,309)
Deferred loan fees, net.................. (1,755,036)
Allowance for losses on loans............ (3,436,326)
------------
$563,883,170
============
</TABLE>

The composition of the loan portfolio at December 31, 1995 and 1994 is as
follows:

<TABLE>
<CAPTION>
1995
----------------------------------------------
ORIGINATED PURCHASED TOTAL
------------ ------------ ------------
<S> <C> <C> <C>
Real estate loans
Construction loans
Residential single family........... $ 37,118,087 $ 37,118,087
Commercial.......................... 440,000 440,000
Land................................ 10,613,217 10,613,217
Loans in process.................... (23,373,232) (23,373,232)
------------ ------------
Construction loans, net........... 24,798,072 24,798,072
Permanent loans
Residential single family........... 47,821,816 $ 28,437,082 76,258,898
Multifamily......................... 118,441,339 113,017,691 231,459,030
Commercial.......................... 24,303,645 85,098,474 109,402,119
Other............................... 36,415 2,394 38,809
------------ ------------ ------------
Total real estate loans........... 215,401,287 226,555,641 441,956,928
Consumer loans........................... 27,243,050 4,970,535 32,213,585
Business and other loans................. 8,703,794 8,703,794
------------ ------------ ------------
Total loans....................... $251,348,131 $231,526,176 482,874,307
============ ============
Discount on loans, net................... (543,770)
Deferred loan fees, net.................. (1,220,475)
Allowance for losses on loans............ (2,764,664)
------------
$478,345,398
============
</TABLE>

F-14
<PAGE> 89

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
1994
----------------------------------------------
ORIGINATED PURCHASED TOTAL
------------ ------------ ------------
<S> <C> <C> <C>
Real estate loans
Construction loans
Residential single family........... $ 31,691,460 $ 31,691,460
Commercial.......................... 440,000 440,000
Land................................ 6,138,884 6,138,884
Loans in process.................... (19,338,158) (19,338,158)
------------ ------------
Construction loans, net........... 18,932,186 18,932,186
Permanent loans
Residential single family........... 80,922,018 $ 31,917,896 112,839,914
Multifamily......................... 105,788,151 82,139,355 187,927,506
Commercial.......................... 18,790,480 64,563,886 83,354,366
------------ ------------ ------------
Total real estate loans........... 224,432,835 178,621,137 403,053,972
Consumer loans........................... 20,272,898 5,673,573 25,946,471
Business and other loans................. 171,400 171,400
------------ ------------ ------------
Total loans....................... $244,877,133 $184,294,710 429,171,843
============ ============
Discount on loans, net................... (836,530)
Deferred loan fees, net.................. (1,480,604)
Allowance for losses on loans............ (1,910,714)
------------
$424,943,995
============
</TABLE>

Loans with adjustable rates, included above, totaled $402,159,000,
$348,082,000 and $349,043,000 at June 30, 1996 and December 31, 1995 and 1994,
respectively. Substantially all such loans have contractual interest rates that
increase or decrease at periodic intervals of one month to five years.

During 1995, the Bank received payoffs on loans originally purchased at
discounts. The purchase discounts recorded were attributable to collectibility
concerns and at payoff, the unamortized discounts totaling $406,205 and $640,262
were recorded as income at June 30, 1995 and December 31, 1995, respectively.

Activity in the allowance for losses on loans is as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------------- ------------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at beginning of year......... $2,764,664 $1,910,714 $1,910,714 $1,239,147 $ 725,462
Provision for loan losses............ 685,559 479,026 958,573 765,664 739,921
Net charge-offs...................... (13,897) (39,981) (104,623) (94,097) (226,236)
---------- ---------- ---------- ---------- ----------
$3,436,326 $2,349,759 $2,764,664 $1,910,714 $1,239,147
========== ========== ========== ========== ==========
</TABLE>

Effective January 1, 1995, the Bank adopted the provisions of SFAS Nos.
114, "Accounting by Creditors for Impairment of a Loan" and 118, "Accounting by
Creditors for Impairment of a Loan-Income Recognition and Disclosures." SFAS No.
114 specifies that allowances for losses on impaired loans be determined using
the present value of estimated future cash flows of the loan, discounted using
the loan's effective interest rate. Management analyzes loans on an individual
basis and considers a loan to be impaired when it is probable that all principal
and interest amounts will not be collected according to the loan contract. Loans
which are past

F-15
<PAGE> 90

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

due two payments or less and that management feels are probable of being paid
current within 90 days are not considered to be impaired loans. SFAS No. 118
allows a creditor to use existing methods for income recognition on an impaired
loan.

Information regarding impaired loans at June 30, 1996 and December 31, 1995
is as follows:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
<S> <C> <C>
Balance of impaired loans....................................... $4,583,255 $3,569,074
Less portion for which no allowance for losses on loans is
allocated..................................................... 2,650,591 3,569,074
---------- ----------
Portion of impaired loan balance for which an allowance for
losses on loans is allocated.................................. $1,932,664 $ 0
========== ==========
Portion of allowance for losses on loans allocated to the
impaired loan balance......................................... $ 175,164 $ 0
========== ==========
</TABLE>

Information regarding impaired loans is as follows for the six months ended
June 30, 1996 and the year ended December 31, 1995:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
<S> <C> <C>
Average investment in impaired loans during the period.......... $4,958,205 $2,144,138
========== ==========
Interest income recognized on impaired loans including interest
income recognized on cash basis during the period............. $ 44,867 $ 35,884
========== ==========
</TABLE>

Loans on non-accrual status at December 31, 1994 approximated $2,240,000.
If interest had been accrued on non-accrual loans, interest income would have
increased by approximately $204,000 and $201,000 for the years ended December
31, 1994 and 1993, respectively.

NOTE 5 -- ACCRUED INTEREST RECEIVABLE

Accrued interest receivable is summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Loans receivable............................... $3,753,638 $3,210,849 $2,474,152
Mortgage-backed securities..................... 226,468 204,658 78,751
Other.......................................... 259,558 292,235 154,923
---------- ---------- ----------
$4,239,664 $3,707,742 $2,707,826
========== ========== ==========
</TABLE>

F-16
<PAGE> 91

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

NOTE 6 -- PREMISES AND EQUIPMENT

Premises and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Land........................................... $2,208,105 $2,223,354 $ 177,506
Office buildings............................... 2,271,134 1,617,812 660,890
Leasehold improvements......................... 2,287,875 2,239,329 1,919,851
Furniture, fixtures and equipment.............. 4,189,403 3,684,568 2,727,057
Construction in progress....................... 720,556 351,979 107,222
---------- ---------- ----------
Total..................................... 11,677,073 10,117,042 5,592,526
Accumulated depreciation....................... 2,886,061 2,617,103 2,442,793
---------- ---------- ----------
$8,791,012 $7,499,939 $3,149,733
========== ========== ==========
</TABLE>

Depreciation expense was $297,384 and $282,262 for the six months ended
June 30, 1996 and 1995, respectively. Depreciation expense was $519,533,
$369,946, and $304,020 for the years ended December 31, 1995, 1994 and 1993,
respectively.

NOTE 7 -- LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition. The unpaid principal balances of
these loans are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------------------
1996 1995 1994
-------------- -------------- ------------
<S> <C> <C> <C>
Mortgage loans underlying pass-through
securities
FNMA................................ $ 128,374,060 $ 112,657,048 $ 41,796,403
Mortgage loan portfolios serviced for
FHLMC............................... 749,284,480 781,402,395 507,758,889
FNMA................................ 225,987,229 224,544,952 150,662,382
Other............................... 31,969,759 63,611,413 39,207,397
-------------- -------------- ------------
$1,135,615,528 $1,182,215,808 $739,425,071
============== ============== ============
</TABLE>

Custodial escrow balances maintained in connection with the foregoing loan
servicing were approximately $13,413,000, $14,198,000, and $5,600,000 at June
30, 1996 and December 31, 1995 and 1994, respectively.

Following is an analysis of the changes in loan servicing rights acquired:

<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, -------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of period................ $8,587,831 $4,824,586 $2,295,017
Additions..................................... 445,446 5,329,415 3,516,570
Amortization.................................. (1,007,814) (1,566,170) (987,001)
---------- ---------- ----------
Balance at end of period...................... $8,025,463 $8,587,831 $4,824,586
========== ========== ==========
</TABLE>

F-17
<PAGE> 92

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

Following is an analysis of the changes in loan servicing rights
originated:

<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
<S> <C> <C>
Balance at beginning of period.......................... $541,727 $ 0
Additions............................................... 172,870 558,940
Amortization............................................ (47,323) (17,213)
-------- --------
Balance at end of period................................ $667,274 $541,727
======== ========
</TABLE>

NOTE 8 -- DEPOSITS

Deposits consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
JUNE 30, 1996 1995 1994
---------------------- ---------------------- ----------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------------ ------- ------------ ------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing checking
accounts..................... $ 28,777,902 5% $ 27,036,735 5% $ 19,526,478 5%
Interest-bearing checking
accounts -- 2.00% to 3.20%... 36,328,125 7 36,097,363 7 44,721,534 10
Passbook savings and statement
savings -- 2.75% to 5.73%.... 178,423,865 32 140,834,310 28 108,412,494 25
Certificates of deposit:
4.00% or less................ 22,619 -- 12,978,221 3
4.01% through 6.00%.......... 242,476,882 43 159,599,187 32 219,403,246 50
6.01% through 7.00%.......... 37,700,718 7 66,373,748 13 28,188,441 6
7.01% through 8.00%.......... 35,302,537 6 74,039,703 15 3,359,056 1
Greater than 8.00%........... 44,450
------------ --- ------------ --- ------------ ---
Total certificates of
deposit................... 315,480,137 56 300,035,257 60 263,973,414 60
------------ --- ------------ --- ------------ ---
Total deposits before premium
and purchase accounting
adjustment................ 559,010,029 100% 504,003,665 100% 436,633,920 100%
=== === ===
Premium on deposits............ 376
Purchase accounting
adjustment................... (216,341) (261,245) (436,580)
------------ ------------ ------------
$558,793,688 $503,742,420 $436,197,716
============ ============ ============
</TABLE>

The weighted average interest rate on deposits at June 30, 1996 and
December 31, 1995 and 1994 was 4.96%, 5.11% and 4.37%, respectively.

F-18
<PAGE> 93

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

At June 30, 1996, scheduled maturities of certificates of deposit are as
follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
INTEREST
AMOUNT RATE
------------ --------
<S> <C> <C>
Six months ended December 31, 1996.......................... $129,360,974 5.54%
Year ended December 31, 1997................................ 146,683,377 5.76%
Year ended December 31, 1998................................ 13,995,409 5.98%
Year ended December 31, 1999................................ 5,905,107 6.20%
Year ended December 31, 2000................................ 15,306,870 7.28%
Thereafter.................................................. 4,228,400 5.96%
------------
$315,480,137 5.76%
============
</TABLE>

The aggregate amount of certificates of deposit with a minimum denomination
of $100,000 was approximately $43,832,000 at June 30, 1996.

At December 31, 1995, scheduled maturities of certificates of deposit are
as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
YEAR INTEREST
ENDED AMOUNT RATE
----- ------------ --------
<S> <C> <C>
1996........................................ $235,484,349 6.03%
1997........................................ 36,597,071 5.94%
1998........................................ 7,864,953 6.27%
1999........................................ 4,084,951 6.78%
2000........................................ 14,313,721 7.27%
Thereafter.................................. 1,690,212 6.04%
------------
$300,035,257 6.10%
============
</TABLE>

The aggregate amount of certificates of deposit with a minimum denomination
of $100,000 was approximately $41,930,000 and $12,657,000 at December 31, 1995
and 1994, respectively.

Interest expense on deposits is summarized as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------
1996 1995 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NOW and interest-bearing
checking...................... $ 470,045 $ 490,867 $ 969,489 $ 1,441,566 $ 2,622,093
Passbook savings and statement
savings....................... 3,855,640 2,561,122 5,632,861 3,164,059 1,887,931
Certificates of deposit......... 9,019,664 7,898,533 16,919,401 10,311,822 6,267,804
----------- ----------- ----------- ----------- -----------
$13,345,349 $10,950,522 $23,521,751 $14,917,447 $10,777,828
=========== =========== =========== =========== ===========
</TABLE>

F-19
<PAGE> 94

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

NOTE 9 -- OTHER BORROWINGS

Other borrowings consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Federal Home Loan Bank advances (5.7%, 5.75%
and 7.0% at June 30, 1996, December 31,
1995 and 1994, respectively).............. $58,200,000 $28,000,000 $ 6,150,000
Qualifying subordinated debt maturing May
31, 1997 (10.75% variable rate)........... 1,200,000
Subordinated debt maturing December 31, 2001
(10% fixed rate).......................... 4,873,673 4,873,673 4,873,673
Subordinated debt maturing January 1, 2005
(9.625% fixed rate)....................... 14,000,000 14,000,000
Term loan maturing July, 1995 (8.5% variable
rate)..................................... 3,280,000
----------- ----------- -----------
$77,073,673 $46,873,673 $15,503,673
=========== =========== ===========
</TABLE>

Federal Home Loan Bank advances outstanding at June 30, 1996, mature as
follows: $38,200,000 in 1996, $5,000,000 in 1997, and $15,000,000 in 1998. All
advances outstanding at December 31, 1995 mature in 1996. Federal Home Loan Bank
advances are collateralized by FHLB stock, first mortgage loans and
mortgage-backed securities with an aggregate carrying value of $117,000,000,
$42,000,000 and $9,225,000 at June 30, 1996 and December 31, 1995 and 1994.

On May 31, 1990, the Bank issued a $2 million subordinated term note to
Robert M. Kaye due May 31, 1997. Mr. Kaye is the sole shareholder of the
Corporation. Interest accrued at a rate of 3% in excess of the prime rate
adjustable quarterly. The outstanding balance was paid in full during 1995.

In 1993 and early 1994, the Corporation issued subordinated notes totaling
$4,873,673. Interest on the notes is paid quarterly and principal will be repaid
when the notes mature December 31, 2001. Total issuance costs of approximately
$185,000 were incurred and will be amortized on a straight line basis over the
life of the notes. The notes are unsecured.

In December 1995, the Corporation issued subordinated notes totaling
$14,000,000. Interest on the notes is paid monthly and principal will be repaid
when the notes mature January 1, 2005. Total issuance costs of approximately
$1,170,000 will be amortized on a straight line basis over the life of the
notes. The notes are unsecured.

The term loan outstanding at December 31, 1994 was with another savings
bank. Interest on the loan was payable quarterly at the lender's prime rate. The
loan was secured by the stock of the Corporation and a personal guarantee of its
sole shareholder, Robert M. Kaye. The outstanding balance was paid in full
during 1995.

On February 22, 1995, the Corporation entered into an agreement for a
$5,000,000 variable rate 18-month revolving credit converting to a 30-month
variable rate term note. The terms of the loan require interest only payments
for eighteen months, then quarterly principal payments based on an 84-month
amortization with a balloon payment at maturity. The loan, which is guaranteed
by the Corporation's sole shareholder, Robert M. Kaye, and collateralized by
stock of the Corporation and the Bank, was paid in full during 1995. In May,
1996, the Corporation renegotiated certain terms of this agreement. The maximum
borrowing was decreased to $4,000,000, the revolving term was extended to May,
1998, at which time any then outstanding

F-20
<PAGE> 95

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

balance converts to a term loan with quarterly principal payments based on a
60-month amortization with a balloon payment due at maturity in May, 2001. At
June 30, 1996, there were no borrowings outstanding under this agreement.

Interest expense on borrowings is summarized as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Term loan............................. $ 42,640 $ 42,640 $ 246,076 $226,510
FHLB advances......................... $1,113,100 744,871 1,758,800 203,413 26,142
Qualifying subordinated debt.......... 62,170 108,773 121,192 152,877
Subordinated debt maturing December
31, 2001............................ 272,951 253,215 510,435 499,734 27,807
Subordinated debt maturing December
31, 2005............................ 710,904 73,263
Line of credit........................ 3,333 124,571 332,466
Reverse repurchase agreement.......... 207,515 462,848
Interest on escrows/impounds.......... 3,125 2,000 5,295 3,929 4,121
---------- ---------- ---------- ---------- --------
$2,103,413 $1,436,982 $3,294,520 $1,074,344 $437,457
========== ========== ========== ========== ========
</TABLE>

NOTE 10 -- LEASE COMMITMENTS

The Bank leases certain of its branches under lease agreements whose
initial lease terms are renewable periodically. Rent expense for the six months
ended June 30, 1996 and 1995, and the years ended December 31, 1995, 1994 and
1993 was $406,038, $442,130, $839,849, $539,636 and $351,839, respectively.

The future minimum annual rental commitments as of June 30, 1996 for all
noncancelable leases are as follows:

<TABLE>
<S> <C>
Six months ended December 31, 1996......................... $ 459,544
Year ended December 31, 1997............................... 839,752
Year ended December 31, 1998............................... 363,194
Year ended December 31, 1999............................... 293,243
Year ended December 31, 2000............................... 284,970
Year ended December 31, 2001............................... 171,802
Thereafter................................................. 462,585
----------
$2,875,090
==========
</TABLE>

F-21
<PAGE> 96

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

The future minimum annual rental commitments as of December 31, 1995 for
all noncancelable leases are as follows:

<TABLE>
<S> <C>
1996................................................... $ 820,253
1997................................................... 794,782
1998................................................... 318,223
1999................................................... 287,320
2000................................................... 284,970
Thereafter............................................. 634,388
----------
$3,139,936
==========
</TABLE>

NOTE 11 -- INCOME TAXES

The provision for income taxes consists of the following components:

Deferred income taxes are provided for temporary differences. The
components of the Corporation's net deferred tax asset (liability) consist of
the following:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- ---------------------------------
1996 1995 1995 1994 1993
----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Deferred tax assets
Deferred loan fees................. $ 232,765 $ 129,700 $ 283,118 $ 186,971 $ 327,584
Loan servicing rights.............. 252,978 159,129 6,801 1,701
Investments recorded at market
value for tax purposes.......... 26,829
Other.............................. 10,218 13,409 2,576 4,181 5,174
----------- --------- --------- --------- ---------
495,961 143,109 444,823 197,953 361,288
----------- --------- --------- --------- ---------
Deferred tax liabilities
Debt issuance costs................ (353,222) (373,738)
Bad debt deduction................. (272,497) (136,006) (54,465) (116,557) (459,268)
Employment contract................ (99,495) (114,906) (102,605) (108,823) (115,042)
Depreciation expense............... (46,800) (32,468) (25,666) (25,960) (31,389)
Other.............................. (109,989) (567) (67,699) (135,289) (9,080)
----------- --------- --------- --------- ---------
(882,003) (283,947) (624,173) (386,629) (614,779)
----------- --------- --------- --------- ---------
Net deferred tax liability...... $ (386,042) $(140,838) $(179,350) $(188,676) $(253,491)
=========== ========= ========= ========= =========
</TABLE>

F-22
<PAGE> 97

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

A reconciliation from income taxes at the statutory rate to the effective
provision for income taxes is as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ --------------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Statutory rate................ 34% 34% 34% 34% 34%
Income taxes at statutory
rate........................ $ 862,643 $ 921,785 $1,937,020 $1,844,137 $2,583,739
Officer's life premium........ 27,592 27,592 55,185 27,833
Amortization of purchased
intangibles................. 52,230 67,608 134,414 135,028 134,424
Tax exempt income............. (16,974) (43,248) (31,063)
Writedown of mutual fund...... 50,736
Other......................... (30,639) 15,215 28,081 23,393 91,364
---------- ---------- ---------- ---------- ----------
Provision for income
taxes.................... $ 956,130 $1,032,200 $2,154,700 $1,987,143 $2,829,200
========== ========== ========== ========== ==========
</TABLE>

Taxes attributable to security's gains totaled $121,548, $10,699 and
$99,558 for the years ended December 31, 1995, 1994 and 1993, respectively.

NOTE 12 -- SALARY DEFERRAL -- 401(K) PLAN

The Corporation maintains a 401(k) plan covering substantially all
employees who have attained the age of 21 and have completed one year of service
with the Corporation. This is a salary deferral plan, which calls for matching
contributions by the Corporation based on a percentage (50%) of each
participant's voluntary contribution (limited to a maximum of eight percent (8%)
of a covered employee's annual compensation). In addition to the Corporation's
required matching contribution, a contribution to the plan may be made at the
discretion of the Board of Directors. Employee voluntary contributions are
vested at all times, whereas employer contributions vest 20% per year through
year five at which time employer contributions are fully vested. The
Corporation's matching contributions were $60,775, $47,842, $96,902, $81,214 and
$59,105 for the six months ended June 30, 1996 and 1995, and the years ended
December 31, 1995, 1994 and 1993, respectively. No discretionary contributions
have been made by the Corporation for the periods presented.

The 401(k) plan has invested $400,000 in the 10% subordinated debt maturing
December 31, 2001, which was issued by the Corporation in late 1993 and early
1994.

NOTE 13 -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Bank can be a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet financing needs of its customers.
These financial instruments include commitments to make loans. The Bank's
exposure to credit loss in the event 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 Bank follows the same credit policy
to make such commitments as is followed for those loans recorded in the
financial statements.

As of June 30, 1996, the Bank had fixed and variable rate commitments to
originate and/or purchase loans (at market rates) of approximately $18,891,000
and $23,724,000, respectively. In addition, the Bank had commitments to sell
loans totaling $1,483,000 at June 30, 1996.

As of December 31, 1995, the Bank had fixed and variable rate commitments
to originate and/or purchase loans (at market rates) of approximately
$18,543,000 and $11,152,000, respectively. In addition, the Bank had commitments
to sell loans totaling $2,006,500 at December 31, 1995.

F-23
<PAGE> 98

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

During the first six months of 1996, the Bank purchased approximately
$10,000,000 of real estate loans and sold non-refundable options to a third
party to purchase these same loans at a later date. A gain of $406,296 was
recognized on the sale of these options. All of these loans were held for sale
at June 30, 1996.

During 1995, the Corporation purchased approximately $16,000,000 of real
estate loans and sold non-refundable options to a third party to purchase these
same loans at a later date. Substantially all of the options had been exercised
at December 31, 1995 and the Corporation recognized a gain of $559,256 on the
sale of these options during the year ended December 31, 1995. At December 31,
1995, loans with a carrying value of $458,146 were held for sale in connection
with an outstanding purchase option.

NOTE 14-RESTRICTIONS ON RETAINED EARNINGS AND CAPITAL REQUIREMENTS

Under the Internal Revenue Code, the Bank is permitted to determine taxable
income after deducting a provision for bad debts in excess of such provision
recorded in the financial statements. Accordingly, retained earnings at June 30,
1996 and December 31, 1995 and 1994, includes approximately $2,883,000, for
which no provision for federal income taxes has been made. If this portion of
retained earnings is used in the future for any purpose other than to absorb bad
debts, it will be added to future taxable income.

Savings institutions insured by the Federal Deposit Insurance Corporation
are required to meet three regulatory capital requirements. If a requirement is
not met, regulatory authorities may take legal or administrative actions,
including restrictions on growth or operations or, in certain cases, seizure.
Institutions not in compliance may submit a recapitalization plan.

Under these capital requirements, at June 30, 1996, the subsidiary Bank
had:

<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
----------- ----------- -----------
<S> <C> <C> <C>
GAAP capital................................ $42,821,678 $42,821,678 $42,821,678
Nonallowable assets
Goodwill.................................. (2,947,902) (2,947,902) (2,947,902)
Unrealized gain on securities available
for sale............................... (303,000) (303,000) (303,000)
Purchase accounting adjustment............ (216,245)
Other identifiable intangibles............ (75,559)
Additional capital items
General valuation allowance............... 2,891,000
----------- ----------- -----------
Regulatory capital.......................... 39,278,972 39,570,776 42,461,776
Minimum capital requirement................. 10,003,000 26,687,000 38,500,000
----------- ----------- -----------
Regulatory capital-excess................... $29,275,972 $12,883,776 $ 3,961,776
=========== =========== ===========
</TABLE>

F-24
<PAGE> 99

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

Under these capital requirements, at December 31, 1995, the subsidiary Bank
had:

<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
----------- ----------- -----------
<S> <C> <C> <C>
GAAP capital................................ $37,549,253 $37,549,253 $37,549,253
Nonallowable assets
Goodwill.................................. (3,040,023) (3,040,023) (3,040,023)
Nonqualifying PMSR........................ (715,519) (715,519) (715,519)
Unrealized gain on securities available
for sale............................... (736,949) (736,949) (736,949)
Purchase accounting adjustment............ (261,245)
Other identifiable intangibles............ (90,809)
Additional capital items
General valuation allowance............... 2,473,202
----------- ----------- -----------
Regulatory capital.......................... 32,704,708 33,056,762 35,529,964
Minimum capital requirement................. 8,747,000 23,361,000 32,892,000
----------- ----------- -----------
Regulatory capital-excess................... $23,957,708 $ 9,695,762 $ 2,637,964
========== ========== ==========
</TABLE>

The Bank is required to maintain certain minimum capital levels. Minimum
capital requirement ratios for tangible, core and risk-based capital are 1.5%,
4.0% and 8.0%, respectively. Actual tangible core and risk-based capital ratios
were 5.89%, 5.93%. and 8.82%, respectively, at June 30, 1996. Therefore, the
Bank had excess tangible core and risk-based capital ratios at June 30, 1996 of
4.39%, 1.93%, and 0.82%, respectively. Actual tangible, core and risk-based
capital ratios were 5.6%, 5.7% and 8.6%, respectively, at December 31, 1995.
Therefore, the Bank had excess tangible, core and risk-based capital ratios at
December 31, 1995 of 4.1%, 1.7% and 0.6%, respectively.

The subordinated debt maturing December 31, 2001 prohibits the payment of
any dividends by the Corporation until the notes are retired. The subordinated
debt maturing January 1, 2005 prohibits the payment of dividends when the Bank's
tangible equity to total assets is less than 7%. At June 30, 1996 and December
31, 1995 the Corporation was precluded from paying dividends based on these
restrictions.

NOTE 15 -- RELATED PARTY TRANSACTIONS

In the six months ended June 30, 1996 and 1995, the Corporation expensed
$48,000 for management fees relating to services provided by an affiliate. In
each of the years ended December 31, 1995, 1994 and 1993 the Corporation
expensed $96,000 for management fees relating to services provided by an
affiliate.

Certain directors and executive officers of the Corporation and its
subsidiaries were loan customers of the Corporation. The aggregate borrowings of
related parties totaled $1,385,639, $1,136,770 and $390,524 at June 30, 1996 and
December 31, 1995 and 1994, respectively.

Certain directors and executive officers of the Corporation and its
subsidiaries hold an interest in the subordinated debt maturing December 31,
2001. The aggregate interest in the subordinated debt held by related parties
totaled $1,065,284 at June 30, 1996, and December 31, 1995 and 1994. In
addition, the Corporation's 401(k) salary deferral plan held a $400,000 interest
in the subordinated debt at June 30, 1996, and December 31, 1995 and 1994.

NOTE 16 -- FAIR VALUES OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires that the Corporation disclose the estimated fair values of its
financial instruments. The following table shows those values and the related
carrying values. Items which are not financial instruments are not included.

F-25
<PAGE> 100

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------------------- ----------------------------- -----------------------------
CARRYING ESTIMATED CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Cash and equivalents.......... $ 12,342,110 $ 12,342,110 $ 18,170,473 $ 18,170,473 $ 11,565,524 $ 11,565,524
Securities.................... 12,136,190 12,136,190 22,806,178 22,806,178 7,640,625 7,640,625
Mortgage-backed securities.... 41,820,903 41,820,903 39,155,500 39,155,500 16,785,141 16,785,141
Loans, net.................... 574,569,196 571,221,419 479,849,746 483,330,240 425,027,495 418,725,605
Federal Home Loan Bank
stock....................... 3,852,000 3,852,000 3,568,700 3,568,700 2,311,200 2,311,200
Loan servicing rights......... 8,692,737 9,977,724 9,129,558 9,294,631 4,824,586 5,758,220
Accrued interest receivable... 4,239,664 4,239,664 3,707,742 3,707,742 2,707,826 2,707,826
Demand and savings deposits... (243,313,551) (243,313,551) (203,707,163) (203,707,163) (172,224,302) (172,224,302)
Time deposits................. (315,480,137) (317,971,737) (300,035,257) (302,230,363) (263,973,414) (261,001,496)
Other borrowings.............. (77,073,673) (75,664,181) (46,873,673) (46,983,664) (15,503,673) (15,503,673)
Official check float
account..................... (3,778,038) (3,778,038) (2,778,632) (2,778,632) (1,313,176) (1,313,176)
Accrued interest payable...... (3,126,741) (3,126,741) (4,551,061) (4,551,061) (1,713,803) (1,713,803)
</TABLE>

While these estimates of fair value are based on management's judgment of
the most appropriate factors, there is no assurance that were the Corporation to
have disposed of such items at June 30, 1996 or December 31, 1995 or 1994, the
estimated fair values would necessarily have been achieved at that date, since
market values may differ depending on various circumstances. The estimated fair
values at June 30, 1996 or December 31, 1995 or 1994 should not necessarily be
considered to apply at subsequent dates.

For purposes of the above disclosures of estimated fair value, the
following assumptions were used. The estimated fair value for cash and
equivalents, the official check float account, accrued interest receivable and
accrued interest payable is considered to approximate cost due to the short term
nature of these instruments. The estimated fair value for securities and
mortgage-backed securities is based on quoted market values for the individual
securities or for equivalent securities. Loans were segregated into three main
groups: those with adjustable rates, those with fixed rates and those which are
held for sale. For the loans held for sale, the carrying value was considered a
reasonable estimate of fair value. The fixed and adjustable rate loans held for
investment were further divided between those secured by one- to four-family
real estate and those secured by multifamily and commercial real estate. For
these loans, estimated fair value was determined using a discounted cash flow
analysis. The estimated fair value of Federal Home Loan Bank stock is considered
to approximate cost since it may be redeemed at par under certain circumstances.
Loan servicing rights includes loan servicing rights acquired and loan servicing
rights originated after the adoption of SFAS No. 122. The estimated fair value
of the servicing rights is based on a discounted cash flow analysis. The
estimated fair value of demand and savings deposits, which have no stated
maturity, is equal to the amount payable. The estimated fair value for
certificates of deposit, Federal Home Loan Bank advances and the fixed rate
subordinated debt is based on estimates of the rate the Corporation would pay on
such deposits, advances and debt, applied for the time period until maturity
using a discounted cash flow analysis. The estimated fair value of subordinated
debt with variable interest rate is based on the carrying value. The estimated
fair value of commitments is not material.

In addition, other assets and liabilities of the Corporation that are not
defined as financial instruments are not included in the above disclosures, such
as property and equipment. Also, nonfinancial instruments typically not
recognized in 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 trained work force, customer goodwill and similar
items.

NOTE 17 -- CONDENSED FINANCIAL INFORMATION

Below is condensed financial information of Metropolitan Financial Corp.
(parent company only). In this information, the parent's investment in
subsidiaries is stated at cost plus equity in undistributed earnings of the

F-26
<PAGE> 101

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

subsidiaries since acquisition. This information should be read in conjunction
with the consolidated financial statements.

PARENT COMPANY ONLY
STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
JUNE 30, ---------------------------
1996 1995 1994
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash........................................ $ 755,796 $ 4,790,234 $ 613,942
Securities available for sale............... 1,131,670 1,102,243
Loans receivable, net....................... 50,000 50,000 50,000
Investment in Metropolitan Savings Bank..... 42,821,678 37,549,253 27,826,334
Cost in excess of fair value of net assets
acquired.................................. 55,835 57,580 61,069
Prepaid expenses and other assets........... 1,207,324 1,253,500 212,020
----------- ----------- -----------
$46,022,303 $44,802,810 $28,763,365
=========== =========== ===========
LIABILITIES
Other borrowings............................ $18,873,673 $18,873,673 $ 8,153,673
Other liabilities........................... 535,108 462,722 329,715
----------- ----------- -----------
19,408,781 19,336,395 8,483,388
----------- ----------- -----------
SHAREHOLDER'S EQUITY
Common stock................................ 100 100 100
Additional paid-in capital.................. 7,801,283 7,801,283 7,801,283
Retained earnings........................... 18,509,139 16,928,083 13,385,664
Unrealized gains(losses) on securities
available for sale, net of tax............ 303,000 736,949 (907,070)
----------- ----------- -----------
26,613,522 25,466,415 20,279,977
----------- ----------- -----------
$46,022,303 $44,802,810 $28,763,365
=========== =========== ===========
</TABLE>

F-27
<PAGE> 102

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

PARENT COMPANY ONLY
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------------- ------------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest on loans and securities.... $ 31,757 $ 2,479 $ 7,211 $ 4,191 $ 3,500
Interest on other borrowings........ 987,188 420,425 958,804 745,810 254,317
---------- ---------- ---------- ---------- ----------
Net interest expense................ (955,431) (417,946) (951,593) (741,619) (250,817)
Non-interest income
Equity in net income of
Metropolitan Savings Bank...... 2,356,375 2,077,380 4,408,900 4,070,421 4,733,184
Other operating income............ 2,957 2,911 47,859 18,226 (35,801)
---------- ---------- ---------- ---------- ----------
2,359,332 2,080,291 4,456,759 4,088,647 4,697,383
---------- ---------- ---------- ---------- ----------
Non-interest expense
Amortization of intangibles....... 1,745 1,745 3,490 3,490 3,490
State franchise taxes............. 12,336 700 4,833 1,794 2,170
Other operating expenses.......... 165,764 142,969 315,424 186,955 104,674
---------- ---------- ---------- ---------- ----------
179,845 145,414 323,747 192,239 110,334
---------- ---------- ---------- ---------- ----------
Income before income taxes.......... 1,224,056 1,516,931 3,181,419 3,154,789 4,336,232
Federal income tax benefit..... (357,000) (162,000) (361,000) (282,000) (133,800)
---------- ---------- ---------- ---------- ----------
Net income.......................... $1,581,056 $1,678,931 $3,542,419 $3,436,789 $4,470,032
========== ========== ========== ========== ==========
</TABLE>

F-28
<PAGE> 103

METROPOLITAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995, 1994 AND 1993

PARENT COMPANY ONLY
STATEMENTS OF CASH FLOWS

F-29
<PAGE> 104

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
CORPORATION, THE SELLING SHAREHOLDER OR THE UNDERWRITER. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
CORPORATION SINCE THE DATE HEREOF OR THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Recent Developments................... 11
Use of Proceeds....................... 15
Dividend Policy....................... 15
Dilution.............................. 15
Capitalization........................ 16
Selected Consolidated Financial
Information......................... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 18
Business.............................. 35
Regulation and Supervision............ 57
Management............................ 66
Selling Shareholder and Beneficial
Ownership........................... 69
Description of the Capital Stock...... 70
Shares Eligible for Future Sale....... 71
Description of Subordinated Notes..... 72
Underwriting.......................... 73
Legal Matters......................... 74
Experts............................... 74
Available Information................. 74
Index to Consolidated Financial
Statements.......................... F-1
- ---------------------------------------------
- ---------------------------------------------
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------
700,000 SHARES
[Logo]
METROPOLITAN
FINANCIAL CORP.

COMMON STOCK
------------------------

Prospectus

------------------------
MCDONALD & COMPANY
SECURITIES, INC.
October 29, 1996
- ------------------------------------------------------
- ------------------------------------------------------