FOUNDATION BANCORP, S-1, 1996-06-14

FOUNDATION BANCORP
S-1, 1996-06-14

Previous: FIDELITY DEFINED TRUSTS SERIES 2, 497, 1996-06-14

Next: DRILEX INTERNATIONAL INC, S-1/A, 1996-06-14

<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE , 1996

REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

FOUNDATION BANCORP, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
OHIO 6036 31-1465239
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of Classification Code Number) identification
incorporation or organization) number)
</TABLE>

25 GARFIELD PLACE CINCINNATI, OHIO 45202
(513) 721-0120
(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)

LAIRD L. LAZELLE
FOUNDATION BANCORP, INC.
25 GARFIELD PLACE
CINCINNATI, OHIO 45202
(513) 721-0120
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
------------------------

WITH COPIES TO:
TERRI R. ABARE
RICK J. LANDRUM
Vorys, Sater, Seymour and Pease
Atrium Two, 221 East Fourth Street
Cincinnati, Ohio 45202
(513) 723-4000
------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE (2) PRICE (2) FEE
<S> <C> <C> <C> <C>
Common shares, without par
value........................ 462,875 $10.00 $4,628,750 $1,596
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 1 of pages. Index to Exhibits is on page .
<PAGE>
CROSS REFERENCE SHEET
SHOWING THE LOCATION IN THE PROSPECTUS OF THE ITEMS OF FORM S-1

<TABLE>
<CAPTION>
FORM S-1 ITEM AND CAPTION PROSPECTUS HEADING
- ------------------------------------------------------------------------ --------------------------------------------------
<C> <C> <S> <C>
1. Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus..................................... Cover Page
2. Inside Front and Outside Back Cover Pages of Prospectus...... Cover Page; Back Cover Page
3. Summary Information, Risk Factors and Ratio of Earnings to
Fixed Charges................................................ Prospectus Summary; Risk Factors
4. Use of Proceeds.............................................. Use of Proceeds
5. Determination of Offering Price.............................. Cover Page; The Conversion -- Pricing and Number
of Common Shares to be Sold
6. Dilution..................................................... Not Applicable
7. Selling Security Holders..................................... Not Applicable
8. Plan of Distribution......................................... Cover Page; The Conversion -- General;
-- Subscription Offering;
-- Community Offering;
-- Plan of Distribution
9. Description of Securities to be Registered................... Description of Authorized Shares
10. Interest of Named Experts and Counsel........................ Not Applicable
11. Information with Respect to the Registrant...................
(a) Description of Business........................... The Business of the Bank
(b) Description of Property........................... The Business of the Bank -- Properties
(c) Legal Proceedings................................. The Business of the Bank -- Legal Proceedings
(d) Market Price and Dividends........................ Cover Page; Market for Common Shares; Dividend
Policy
(e) Financial Statements.............................. Financial Statements
(f) Selected Financial Data........................... Selected Financial Information and Other Data
(g) Supplementary Financial Information............... Not Applicable
(h) Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................ Management's Discussion and Analysis of Financial
Condition and Results of Operations
(i) Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure........................................ Not Applicable
(j) Directors and Executive Officers.................. Management
(k) Executive Compensation............................ Management -- Compensation; -- Defined
Contribution Plan; and -- Stock Benefit Plans
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM S-1 ITEM AND CAPTION PROSPECTUS HEADING
- ------------------------------------------------------------------------ --------------------------------------------------
(l) Security Ownership of Certain Beneficial
Owners and Management............................. The Conversion -- Shares to be Purchased by
Management Pursuant to Subscription Rights
<C> <C> <S> <C>
(m) Certain Relationships and Related
Transactions...................................... Not Applicable
12. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................... Not Applicable
</TABLE>
<PAGE>
PROSPECTUS UP TO 402,500 COMMON SHARES
$10 PURCHASE PRICE PER SHARE

FOUNDATION BANCORP, INC.
(PROPOSED HOLDING COMPANY FOR FOUNDATION SAVINGS BANK)
CINCINNATI, OHIO

Foundation Bancorp, Inc., an Ohio corporation (the "Holding Company"), is
hereby offering for sale up to 402,500 common shares, without par value (the
"Common Shares"), in connection with its acquisition of all of the capital stock
to be issued by Foundation Savings Bank, an Ohio mutual savings and loan
association which has its principal office in Cincinnati, Ohio (the "Bank"),
upon the conversion of the Bank from a mutual savings and loan association to a
permanent capital stock savings and loan association incorporated under the laws
of the State of Ohio (the "Conversion"). The sale of the Common Shares is
subject to the approval of the Bank's Plan of Conversion (the "Plan") and the
adoption of the Amended Articles of Incorporation and Amended Constitution of
the Bank by the members of the Bank at a Special Meeting to be held at m.,
Eastern Time, on , 1996, at , Cincinnati, Ohio (the
"Special Meeting").

Based on an independent appraisal of the pro forma market value of the Bank,
as converted, as of May 14, 1996, the aggregate purchase price of the Common
Shares offered in connection with the Conversion ranges from a minimum of
$2,975,000 to a maximum of $4,025,000 (the "Valuation Range"), resulting in a
range of 297,500 to 402,500 Common Shares at $10 per share. See "THE CONVERSION
- -- Pricing and Number of Common Shares to be Sold." Applicable regulations
permit the Holding Company to offer additional Common Shares in an amount not to
exceed 15% above the maximum of the Valuation Range, which would permit the
issuance of up to 462,875 Common Shares with an aggregate purchase price of
$4,628,750. The actual number of Common Shares sold in connection with the
Conversion will be determined by the Boards of Directors of the Holding Company
and the Bank and will be based upon the final valuation of the Bank, as
determined by the independent appraiser upon the completion of this offering. If
the final valuation is greater than or equal to $2,975,000 and less than or
equal to $4,628,750, the number of Common Shares to be issued in connection with
the Conversion will not be less than 297,500, nor more than 462,875. If, due to
changing market conditions, the final valuation is less than $2,975,000 or more
than 462,875, subscribers will be given notice of such final valuation and a
resolicitation of subscribers will be conducted. See "THE CONVERSION -- Pricing
and Number of Common Shares to be Sold." Any upward or downward adjustment in
the number of Common Shares sold will have a corresponding effect on the
estimated net proceeds of the Conversion and the pro forma capitalization and
book value per share of the Holding Company. See "USE OF PROCEEDS,"
"CAPITALIZATION" and "PRO FORMA DATA."

(CONTINUED ON NEXT PAGE)

THE COMMON SHARES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), THE OFFICE OF THRIFT
SUPERVISION OF THE DEPARTMENT OF THE TREASURY (THE "OTS"), THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE "FDIC"), THE OHIO DEPARTMENT OF COMMERCE, DIVISION OF
FINANCIAL INSTITUTIONS (THE "DIVISION"), OR THE SECURITIES COMMISSION OF ANY
STATE, NOR HAS THE SEC, THE OTS, THE FDIC, THE DIVISION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY INVOLVES CERTAIN RISKS.
FOR A DISCUSSION OF SUCH RISKS AND OTHER FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS, SEE "RISK FACTORS" ON PAGE 10.

THE COMMON SHARES BEING OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS AND ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.

FOR INFORMATION ON HOW TO SUBSCRIBE, PLEASE CALL THE CONVERSION INFORMATION
CENTER AT (513) - .

<TABLE>
<CAPTION>
ESTIMATED EXPENSES
SUBSCRIPTION AND UNDERWRITING ESTIMATED NET
PRICE COMMISSIONS (1) PROCEEDS (2)
Per share Minimum..................................... $10 $0.84 $9.16
<S> <C> <C> <C>
Per share Mid-point................................... $10 $0.72 $9.28
Per share Maximum..................................... $10 $0.62 $9.38
Per share Maximum, as adjusted (3).................... $10 $0.54 $9.46
Total Minimum......................................... $2,975,000 $251,000 $2,724,000
Total Mid-point....................................... $3,500,000 $251,000 $3,249,000
Total Maximum......................................... $4,025,000 $251,000 $3,774,000
Total Maximum, as adjusted (3)........................ $4,628,750 $251,000 $4,377,750
</TABLE>

(1) Expenses of the Conversion payable by the Bank and the Holding Company
include legal, accounting, appraisal, printing, mailing and miscellaneous
expenses. Such expenses also include a financial advisory fee of $50,000,
payable to Charles Webb & Company ("Webb"). Such fee may be deemed to be
underwriting fees. See "THE CONVERSION -- Plan of Distribution." Actual
expenses may vary from the estimates.

(2) Includes the net proceeds from purchases intended to be made by the
Foundation Bancorp, Inc. Employee Stock Ownership Plan (the "ESOP") with
funds borrowed by the ESOP from the Holding Company. See "PRO FORMA DATA"
and "MANAGEMENT -- Stock Benefit Plans -- Employee Stock Ownership Plan."

(3) Gives effect to the increase in the number of Common Shares sold in
connection with the Conversion of up to 15% above the maximum of the
Valuation Range. Such shares may be offered without the resolicitation of
persons who subscribe for Common Shares in the Subscription Offering and the
Community Offering (collectively, the "Offering"). See "THE CONVERSION --
Pricing and Number of Common Shares to be Sold."

THE DATE OF THIS PROSPECTUS IS , 1996.

CHARLES WEBB & COMPANY
<PAGE>
In accordance with the Plan, nontransferable subscription rights to purchase
Common Shares at a price of $10 per share are offered hereby in a subscription
offering (the "Subscription Offering"), subject to the rights and restrictions
established by the Plan, to (a) eligible depositors of the Bank as of May 31,
1995 (the "Eligibility Record Date"), (b) the ESOP and (c) members of the Bank
eligible to vote at the Special Meeting ("Other Eligible Members"). ALL
SUBSCRIPTION RIGHTS TO PURCHASE COMMON SHARES IN THE SUBSCRIPTION OFFERING ARE
NONTRANSFERABLE AND WILL EXPIRE AT .M., EASTERN TIME, ON ,
1996 (the "Subscription Expiration Date"). See "THE CONVERSION -- Subscription
Offering."

To the extent that all of the Common Shares are not subscribed for in the
Subscription Offering, the remaining Common Shares are hereby concurrently being
offered to the general public in a direct community offering in which preference
will be given to natural persons residing in Hamilton County, Ohio (the
"Community Offering"). See "THE CONVERSION -- Community Offering."

Subscribers will not be permitted to modify or cancel their subscriptions
unless the final valuation of the Bank, as converted, is less than $2,975,000 or
more than $4,628,750 or the Community Offering extends beyond , 1996
(45 days after the Subscription Expiration Date). See "THE CONVERSION -- Pricing
and Number of Common Shares to be Sold."

The minimum number of Common Shares any person may purchase in the Offering
is 25. Except for the ESOP, which may purchase up to 8% of the total Common
Shares sold in the Offering, (i) no Eligible Account Holder (hereinafter
defined), Supplemental Eligible Account Holder (hereinafter defined), if any, or
Other Eligible Member may purchase in the Offering more than 2.5% of the total
Common Shares sold in the Offering, (ii) no person, together with his or her
Associates (hereinafter defined) and other persons acting in concert with him or
her, may purchase in the Community Offering more than 2.5% of the total Common
Shares sold in the Offering, and (iii) no person, together with his or her
Associates and other persons acting in concert with him or her, may purchase
more than 5% of the total Common Shares sold in the Offering. In connection with
the exercise of subscription rights arising from a deposit account or a loan
account in which two or more persons have an interest, the aggregate maximum
number of Common Shares which the persons having an interest in such account may
purchase is 2.5% of the total Common Shares sold in the Offering. Subject to OTS
regulations, the maximum purchase limitation may be increased or decreased after
the commencement of the Offering in the sole discretion of the Boards of
Directors of the Holding Company and the Bank. If the maximum purchase
limitation is increased to more than 2.5% of the Common Shares, persons who have
subscribed for 2.5% of the Common Shares will be given the opportunity to
increase their subscriptions. See "THE CONVERSION -- Limitations on Purchases of
Common Shares."

Common Shares may be subscribed for in the Offering by returning the
accompanying Stock Order Form and Certification Form (the "Stock Order Form")
along with full payment of the purchase price per share for all shares for which
subscription is made, so that it is received by the Bank no later than
m., Eastern Time, , 1996. See "THE CONVERSION -- Use of Order
Forms." Payment may be made in cash, if delivered in person, or by check or
money order and will be held at the Bank in a segregated account insured by the
FDIC up to the applicable limits and earning interest at the Bank's then current
passbook savings account rate from the date of receipt until the completion of
the Conversion. Payment may also be made by authorized withdrawal from an
existing deposit account at the Bank, the amount of which will continue to earn
interest until completion of the Conversion at the rate normally in effect from
time to time for such account. Individual Retirement Accounts ("IRAs") and Keogh
accounts at the Bank may also be used to purchase Common Shares. The beneficial
owner of the account must direct the Bank to transfer the funds in the account
to a self-directed IRA or Keogh account. THIS CANNOT BE DONE THROUGH THE MAIL.
See "THE CONVERSION -- Payment for Common Shares." Upon the completion of the
Conversion, the funds on deposit with the Bank for the purchase of Common Shares
will be withdrawn and paid to the Holding Company in exchange for the Common
Shares. The Common Shares will not be insured by the FDIC.

THE CONVERSION OF THE BANK FROM A MUTUAL SAVINGS AND LOAN ASSOCIATION TO A
PERMANENT CAPITAL STOCK SAVINGS AND LOAN ASSOCIATION IS CONTINGENT UPON (I) THE
APPROVAL OF THE PLAN AND THE ADOPTION OF THE AMENDED ARTICLES OF INCORPORATION
AND THE AMENDED CONSTITUTION BY THE BANK'S VOTING MEMBERS, (II) THE SALE OF THE
REQUISITE NUMBER OF COMMON SHARES, AND (III) CERTAIN OTHER FACTORS. SEE "THE
CONVERSION."

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING INFORMATION IS NOT COMPLETE AND IS QUALIFIED IN ITS ENTIRETY
BY THE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS AND ACCOMPANYING NOTES
APPEARING ELSEWHERE IN THIS PROSPECTUS.

FOUNDATION BANCORP, INC.

The Holding Company was incorporated under Ohio law in April 1996 at the
direction of the Bank for the purpose of purchasing all of the capital stock of
the Bank to be issued in connection with the Conversion. The Holding Company has
not conducted and will not conduct any business before the completion of the
Conversion other than business related to the Conversion. Upon the consummation
of the Conversion, the Holding Company will be a unitary savings and loan
holding company, the principal assets of which initially will be the capital
stock of the Bank, the investments made with the net proceeds retained from the
sale of Common Shares in connection with the Conversion and a loan to be made by
the Holding Company to the ESOP to facilitate the ESOP's purchase of Common
Shares in the Conversion. See "USE OF PROCEEDS."

The office of the Holding Company is located at 25 Garfield Place,
Cincinnati, Ohio 45202, and its telephone number is (513) 721-0120.

FOUNDATION SAVINGS BANK

The Bank is a mutual savings and loan association which was organized under
Ohio law in 1888. As an Ohio savings and loan association, the Bank is subject
to supervision and regulation by the OTS and the Division. The Bank is a member
of the Federal Home Loan Bank (the "FHLB") of Cincinnati, and the deposits of
the Bank are insured up to applicable limits by the FDIC in the Savings
Association Insurance Fund (the "SAIF"). See "REGULATION."

The Bank conducts business from its office at 25 Garfield Place in
Cincinnati, Ohio. The principal business of the Bank is the origination of
permanent mortgage loans secured by first mortgages on one- to four-family
residential real estate located in Hamilton County, Ohio and the contiguous Ohio
counties of Clermont, Butler and Warren and the Kentucky counties of Boone and
Kenton. The Bank also originates mortgage loans secured by multifamily real
estate (over four units) and nonresidential real estate in its primary market
area. See "THE BUSINESS OF THE BANK -- Lending Activities." In addition to real
estate lending, the Bank originates a limited number of secured and unsecured
consumer loans. For liquidity and interest rate risk management purposes, the
Bank invests in interest-bearing deposits in other financial institutions, U.S.
Government and agency obligations, mortgage-backed securities and other
investments permitted by applicable law. See "THE BUSINESS OF THE BANK --
Investment Activities." Funds for lending and other investment activities are
obtained primarily from savings deposits, which are insured up to applicable
limits by the FDIC, and principal repayments on loans. Advances from the FHLB of
Cincinnati are utilized from time to time when other sources of funds are
inadequate to fund loan demand. See "THE BUSINESS OF THE BANK -- Deposits and
Borrowings."

In 1994, the Bank changed its operating strategy to become less reliant on
retirement deposits and to increase its loan originations. The Bank now has a
full-time loan originator who solicits mortgage loan applications. Loans
originated by the Bank are underwritten in accordance with national secondary
mortgage market standards. Depending on market conditions, the Bank either sells
or portfolios its loans. The Bank attempts to maintain an adequate net interest
margin, control expenses and enhance earnings with fee income and gains on the
sale of loans. Although the Bank intends to pursue a policy of prudent growth in
assets and deposits, its downtown location is not conducive to attracting lower
cost deposits such as checking and passbook accounts. Some of the results of
this strategy are summarized as follows:

- MORTGAGE LENDING. Approximately 50% of the Bank's mortgage loan portfolio
at March 31, 1996, consists of loans originated during the period from
January 1, 1994, to March 31, 1996. During such period, the Bank increased
its total investment in mortgage loans from $18.5 million to $21.3
million, an increase of $2.8 million, or 15.2%. At March 31, 1996,
approximately $19.0 million, or 88.9%, of the Bank's total loans were
secured by one- to four-family real estate. See "THE BUSINESS OF THE BANK
-- Lending Activities -- Loans Secured by One- to Four-Family Real
Estate."

3
<PAGE>
- ASSET QUALITY. Maintaining a high level of asset quality is a top priority
of the board and management of the Bank. The Bank's efforts to control
non-performing assets begin with prudent lending policies and stringent
underwriting standards. The Bank moves quickly to resolve delinquencies
and to dispose of real estate acquired through foreclosure. At April 30,
1996, the Bank had only one loan, with a principal balance of
approximately $2,000, delinquent in excess of sixty days and no real
estate owned acquired through foreclosure. See "THE BUSINESS OF THE BANK
-- Lending Activities -- Delinquent Loans, Nonperforming Assets and
Classified Assets."

- CAPITAL POSITION. At March 31, 1996, the Bank's equity to assets ratio was
8.73%. In addition, the Bank's ratio of tangible capital to total assets
and its risk-based capital ratio were 8.73% and 19.59%, respectively, both
of which substantially exceed the OTS requirements. See "REGULATION --
Office of Thrift Supervision -- Regulatory Capital Requirements."

- ASSET AND DEPOSIT GROWTH. From January 1, 1994, through March 31, 1996,
there was little or no change in the Bank's asset and deposit growth, with
assets remaining at approximately $31.7 million and deposits at
approximately $27.8 million. Although total assets and total deposits have
remained relatively constant over that period, the mix of the assets and
deposits has changed significantly as the Bank has focused on loan
originations. Cash and equivalents declined by $1.0 million, or 20.0%, and
mortgage-backed securities declined by $1.7 million, or 25.4%, with the
proceeds invested primarily in mortgage loans, which increased $2.8
million, or 15.2%. Retirement accounts, which totalled approximately 60%
of deposits at January 1, 1994, had been reduced to 40% of deposits at
March 31, 1996. During such period, capital increased $353,000, or 14.6%.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" and "THE BUSINESS OF THE BANK."

- PROFITABILITY. The Bank's return on assets was .62%, .41% and .28% for
fiscal 1994, fiscal 1995 and the nine months ended March 31, 1996,
respectively. Such ratios have been, on average, 33 basis points below the
Bank's peer group average, as compiled by the OTS. The Bank's return on
average equity for fiscal 1994, fiscal 1995 and the nine months ended
March 31, 1996, averaged 5.28%. The Bank's cost of deposits has been, on
average, 69 basis points higher than the Bank's peer group average. The
higher cost of deposits has been partially offset by general and
administrative expenses approximately 19 basis points lower than the peer
group. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS."

THE CONVERSION

GENERAL. The Boards of Directors of the Holding Company and the Bank have
unanimously approved the Plan. The Plan provides for the Conversion of the Bank
from a mutual savings and loan association to a permanent capital stock savings
and loan association incorporated under the laws of the State of Ohio. The OTS
and the Division have approved the Plan, subject to the approval of the Plan by
the Bank's voting members at the Special Meeting and the satisfaction of certain
other conditions. See "THE CONVERSION -- Conditions and Termination."

The principal factors considered by the Bank's Board of Directors in
reaching the decision to pursue a mutual-to-stock conversion are the numerous
competitive disadvantages which the Bank faces if it maintains its mutual form.
These disadvantages relate to a variety of factors, including growth
opportunities, employee retention and regulatory uncertainty. The Conversion
will also provide the Bank with additional capital which will support future
growth. See "THE CONVERSION -- Reasons for the Conversion."

THE SUBSCRIPTION AND COMMUNITY OFFERINGS. Pursuant to the Plan,
subscription rights to purchase Common Shares at a price of $10 per share are
hereby offered to (a) each account holder who has one or more deposit accounts
with an aggregate balance of $50 or more (a "Qualifying Deposit") with the Bank
at the close of business on the Eligibility Record Date (the "Eligible Account
Holders"), (b) the ESOP and (c) Other Eligible Members. See "THE CONVERSION --
Subscription Offering."

Concurrently with the Subscription Offering, the Common Shares not
subscribed for in the Subscription Offering are hereby offered to the general
public in the Community Offering, in which preference will

4
<PAGE>
be given to natural persons residing in Hamilton County, Ohio. The Boards of
Directors of the Holding Company and the Bank have the right to reject, in whole
or in part, any subscription for Common Shares submitted in the Community
Offering. See "THE CONVERSION -- Community Offering."

The Plan authorizes the Boards of Directors of the Holding Company and the
Bank to establish limits on the amount of Common Shares which may be purchased
by various categories of persons. Pursuant to the Plan, the Boards of Directors
have set the preliminary limitation that (i) no Eligible Account Holder,
Supplemental Eligible Account Holder, if any, or Other Eligible Member may
purchase in the Offering more than 2.5% of the total Common Shares sold in the
Offering, (ii) no person, together with his or her Associates (hereinafter
defined) and other persons acting in concert with him or her, may purchase in
the Community Offering more than 2.5% of the total Common Shares sold in the
Offering, and (iii) no person, together with his or her Associates and other
persons acting in concert with him or her, may purchase more than 5% of the
total Common Shares sold in the Offering. In connection with the exercise of
subscription rights arising from a deposit account or a loan account in which
two or more persons have an interest, the aggregate maximum number of Common
Shares which the persons having an interest in such account may purchase is 2.5%
of the total Common Shares sold in the Offering. Such limitations do not apply
to the ESOP, which intends to purchase up to 8% of the Common Shares sold in the
Offering. Subject to applicable regulations, the purchase limitation may be
increased or decreased after the commencement of the Offering in the sole
discretion of the Boards of Directors. See "THE CONVERSION -- Limitations on
Purchases of Common Shares." In addition to the purchase limitations established
by the Plan, OTS regulations impose restrictions on the acquisition of more than
10% of the outstanding shares of the Bank by any person or company individually
or acting in concert with others. See "RESTRICTIONS ON ACQUISITION OF THE
HOLDING COMPANY AND THE BANK." The sale of Common Shares pursuant to
subscriptions received in the Offering will be subject to the approval of the
Plan by the voting members of the Bank at the Special Meeting, to the
determination by the Boards of Directors of the Holding Company and the Bank of
the total number of Common Shares to be sold and to certain other conditions.
See "THE CONVERSION -- Subscription Offering; -- Community Offering; and --
Pricing and Number of Common Shares to be Sold."

The Subscription Offering will terminate and subscription rights will expire
if not exercised by .m., Eastern Time, on , 1996. The
Community Offering may be terminated at any time after orders for at least
462,875 shares have been received, but in no event later than ,
1996, unless extended. Any extension of the Community Offering beyond
, 1996, will require the consent of the OTS and the Division, and
persons who have subscribed for Common Shares in the Offering will be given
notice that they have the right to increase, decrease or rescind their
subscriptions for Common Shares. Persons who do not affirmatively elect to
continue their subscription or who elect to rescind their subscriptions during
any such extension will have all of their funds promptly refunded with interest.
Persons who elect to decrease their subscriptions will have the appropriate
portion of their funds promptly refunded with interest. See "THE CONVERSION --
Pricing and Number of Common Shares to be Sold."

NON-TRANSFERABILITY OF SUBSCRIPTION RIGHTS. Federal and Ohio regulations
provide that subscription rights are non-transferable. OTS regulations
specifically prohibit any person from transferring or entering into any
agreement or understanding before the completion of the Conversion to transfer
the ownership of the subscription rights issued in the Conversion or the shares
to be issued upon the exercise of such subscription rights. Persons attempting
to violate such provision may lose their rights to purchase Common Shares in the
Conversion and may be subject to penalties imposed by the OTS. Each person
exercising subscription rights will be required to certify that a purchase of
Common Shares is solely for the subscriber's own account and that there is no
agreement or understanding regarding the sale or transfer of such Common Shares.

PARTICIPATION OF WEBB IN THE OFFERINGS. The Holding Company and the Bank
have retained Charles Webb & Company ("Webb") to consult, advise and assist in
the sale of the Common Shares in the Offering on a "best efforts" basis. Webb
will receive a financial advisory fee in the amount of $50,000. In addition, the
Holding Company will reimburse Webb for certain expenses, including reasonable
legal fees. Such expenses shall not exceed $30,000. If the Holding Company and
Webb deem necessary, Webb may enter into

5
<PAGE>
agreements ("Selected Dealers Agreements") with other National Association of
Securities Dealers, Inc. ("NASD") member firms ("Selected Dealers") for
assistance in the sale of Common Shares. Selected Dealers will receive fees
equal to 4% of the purchase price of Common Shares sold, if any, pursuant to
Selected Dealer Agreements. Webb is not obligated to purchase any Common Shares.

PRICING OF THE COMMON SHARES. Keller & Company, Inc. ("Keller"), a
Columbus, Ohio, firm experienced in valuing thrift institutions, has prepared an
independent valuation of the estimated pro forma market value of the Bank, as
converted. Keller's valuation of the estimated pro forma market value of the
Bank, as converted, is $3,500,000 as of May 14, 1996 (the "Pro Forma Value").
Based on the Pro Forma Value of the Bank, the Valuation Range established in
accordance with the Plan is $2,975,000 to $4,025,000.

In the event that Keller determines at the close of the Offering that the
aggregate pro forma value of the Bank is higher or lower than the Pro Forma
Value, but is within the Valuation Range, the Holding Company will make an
appropriate adjustment by raising or lowering the total number of Common Shares
sold in the Conversion consistent with the final valuation. The total number of
Common Shares sold in the Conversion will be determined by the Board of
Directors consistent with the final valuation. If, due to changing market
conditions, the final valuation is outside the Valuation Range, subscribers will
be given notice of such final valuation and the right to increase, decrease or
rescind their subscriptions. Any person who does not affirmatively elect to
continue his subscription or elects to rescind his subscription before the date
specified in the notice will have all of his funds promptly refunded with
interest. Any person who elects to decrease his subscription will have the
appropriate portion of his funds promptly refunded with interest. See "THE
CONVERSION -- Pricing and Number of Common Shares to be Sold."

USE OF PROCEEDS. The Holding Company will retain up to 50% of the net
proceeds from the sale of the Common Shares, estimated to be $1.62 million at
the midpoint of the Valuation Range. The balance of the net proceeds will be
used to purchase all of the capital stock to be issued by the Bank and will
increase the regulatory capital of the Bank. The Bank anticipates that the net
proceeds will initially be invested in short-term U.S. Government and agency
obligations and will be available for general corporate purposes, including loan
originations. See "USE OF PROCEEDS."

The funds retained by the Holding Company will be used by the Holding
Company to make a loan to the ESOP and will be available for general corporate
purposes, including the payment of dividends. The funds retained by the Holding
Company will be available for the repurchase of shares, although the Holding
Company has no current intentions to pursue stock repurchases. OTS regulations
generally prohibit stock repurchases in the first six months following the
completion of the Conversion without OTS prior approval. See "THE CONVERSION --
Restrictions on Repurchase of Common Shares."

TAX CONSEQUENCES

The consummation of the Conversion is expressly conditioned upon the receipt
by the Holding Company and the Bank of a private letter ruling from the Internal
Revenue Service or an opinion of counsel to the effect that the Conversion will
constitute a tax-free reorganization as defined in Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Holding Company and
the Bank intend to proceed with the Conversion based upon an opinion rendered by
Vorys, Sater, Seymour and Pease, special counsel to the Bank and the Holding
Company, that states, in part, that (1) no gain or loss will be recognized by
the Bank in connection with the Conversion or the receipt from the Holding
Company of proceeds from the sale of the Common Shares, and (2) assuming that
the subscription rights received by deposit account holders in connection with
the Conversion have no ascertainable fair market value, no gain or loss will be
recognized to the deposit account holders of the Bank upon issuance to them of
subscription rights or interests in the Liquidation Account (hereinafter
defined) and no taxable income will be realized by deposit account holders as a
result of their exercise of such subscription rights. Although the Internal
Revenue Service (the "IRS") could challenge the assumption that the subscription
rights have no ascertainable fair market value, the Holding Company and the Bank
have received an opinion from Keller supporting such assumption. See "THE
CONVERSION -- Principal Effects of the Conversion -- Tax Consequences."

6
<PAGE>
MARKET FOR THE COMMON SHARES

There is presently no market for the Common Shares. The existence of a
market in the Common Shares upon the completion of the Conversion will depend
upon the presence in the marketplace of both willing buyers and willing sellers
at any given time. It is expected that the Common Shares will be traded in the
over-the-counter market and will be quoted through brokers participating on the
Nation Daily Quotation Service (the "NDQS"). Because of the limited size of the
Offering, however, it is unlikely that an active market for the Common Shares
will develop after the completion of the Conversion or, if such market does
develop, that it will continue. See "RISK FACTORS -- Limited Market for the
Common Shares" and "MARKET FOR THE COMMON SHARES."

DIVIDEND POLICY

The declaration and payment of dividends by the Holding Company will be
subject to the discretion of the Board of Directors of the Holding Company, to
the earnings and financial condition of the Holding Company and to general
economic conditions. If the Board of Directors of the Holding Company determines
in the exercise of its discretion that the net income, capital and consolidated
financial condition of the Holding Company and the general economy justify the
declaration and payment of dividends by the Holding Company, the Board of
Directors of the Holding Company may authorize the payment of dividends on the
Common Shares, subject to the limitation under Ohio law that a corporation may
pay dividends only out of surplus. There can be no assurance that dividends will
be paid on the Common Shares or, if paid, will continue to be paid.

BENEFITS OF THE CONVERSION TO DIRECTORS, OFFICERS AND EMPLOYEES OF THE HOLDING
COMPANY AND THE BANK

GENERAL. Among the factors considered by the Board of Directors of the Bank
in making the decision to pursue the Conversion is the ability of the Holding
Company and the Bank to utilize various types of stock benefit plans to attract
and retain qualified directors and employees. See "THE CONVERSION -- Reasons for
the Conversion."

EMPLOYEE STOCK OWNERSHIP PLAN. In connection with the Conversion, the
Holding Company has established the ESOP, which intends to purchase 8.0% of the
Common Shares issued in the Conversion. All full-time employees of the Holding
Company and the Bank who meet certain age and years of service criteria will be
eligible to participate in the ESOP. See "MANAGEMENT -- Stock Benefit Plans --
Employee Stock Ownership Plan."

STOCK OPTION PLAN. After the Conversion, the Holding Company intends to
establish a stock option and incentive plan (the "Stock Option Plan"). Under OTS
regulations, the Stock Option Plan cannot be implemented for at least six months
after the completion of the Conversion. See "MANAGEMENT -- Stock Benefit Plans
- -- Stock Option Plan." The Board of Directors of the Holding Company anticipates
that a number of shares equal to 10% of the Common Shares issued in the
Conversion will be reserved for issuance to directors, officers and employees
under the Stock Option Plan. The Stock Option Plan will be administered by a
committee comprised of three directors who are not employees of the Holding
Company (the "Committee"). Persons eligible for Awards under the Stock Option
Plan will consist of directors and managerial and other key employees of the
Holding Company or the Bank who hold positions with significant responsibilities
or whose performance or potential contribution, in the judgment of the
Committee, will benefit the future success of the Holding Company or the Bank.
The Committee will consider the position, duties and responsibilities of the
directors and employees of the Holding Company and the Bank, the value of their
services to the Holding Company and the Bank and any other factors the Committee
may deem relevant. No determination has been made with respect to option
recipients.

Based on the purchase price of $10 per share in the Conversion, the
aggregate market value of shares which could be issued under the Stock Option
Plan would be between $297,500 and $462,875, based on the Valuation Range. Under
OTS regulations, if the Stock Option Plan is implemented during the first year
after the Conversion, the following restrictions will apply: (i) the number of
shares that may be awarded under the Stock Option Plan to directors who are not
full-time employees of the Holding Company or the Bank cannot

7
<PAGE>
exceed 5% of the plan shares per person and 30% of the plan shares in the
aggregate, or $23,144 and $138,863, respectively, based on a per share value of
$10 and the adjusted maximum of the Valuation Range; (ii) the number of shares
that may be awarded to any individual who is a full-time employee of the Holding
Company or the Bank may not exceed 25% of the plan shares, or $115,720 based on
a per share value of $10 and the adjusted maximum of the Valuation Range; and
(iii) stock options must be awarded with an exercise price of at least fair
market value at the time of grant. The ultimate value of any option granted at
fair market value will depend on future appreciation in the fair market value of
the shares to which the option relates. No decision has been made as to
anticipated awards under the Stock Option Plan.

RECOGNITION AND RETENTION PLAN. The Bank intends to establish a recognition
and retention plan (the "RRP") after the Conversion. Under OTS regulations, the
RRP cannot be implemented for at least six months after the completion of the
Conversion. See "MANAGEMENT -- Stock Benefit Plans -- Recognition and Retention
Plan." The Board of Directors of the Bank anticipates that a number of shares
equal to 4.0% of the Common Shares sold in the Conversion will be purchased by
or issued to the RRP. Shares held in the RRP will be available for awards to
selected directors, officers and employees of the Bank. The RRP will be
administered by a committee comprised of three directors who are not employees
of the Bank (the "RRP Committee"). In selecting the directors and employees to
whom awards will be granted and the number of shares covered by such awards, the
RRP Committee will consider the position, duties and responsibilities of the
directors and employees, the value of their services to the Bank and any other
factors the RRP Committee may deem relevant. No determination has been made with
respect to RRP award recipients.

Assuming the purchase of a number of shares equal to 4.0% of the Common
Shares issued in the Conversion at a purchase price of $10 per share, the shares
available for distribution under the RRP would have an aggregate market value of
between $119,000 and $185,150, based on the Valuation Range. See "PRO FORMA
DATA" for a discussion of the impact of the RRP on pro forma earnings per share.

Under OTS regulations, if the RRP is implemented during the first year after
the Conversion, the number of shares that could be awarded under each plan to
directors who are not full-time employees of the Holding Company cannot exceed
5% of the plan shares per person and 30% of the plan shares in the aggregate, or
$9,258 and $55,545, respectively, based on a per share value of $10 at the
adjusted maximum of the Valuation Range, and the number of shares that could be
awarded to any individual who is a full-time employee of the Holding Company or
its subsidiaries could not exceed 25% of the plan shares, or $46,288 based on a
per share value of $10 at the adjusted maximum of the Valuation Range. No
decision has been made as to anticipated awards under the RRP.

EMPLOYMENT AGREEMENT. In connection with the Conversion, the Bank will
enter into an employment agreement with Laird L. Lazelle, the President of the
Bank. The employment agreement with Mr. Lazelle will be for a term of three
years, with a salary not less than his current salary, which is $65,000. The
employment agreement also will provide for severance payments if the agreement
is terminated prior to the expiration of the term upon a change of control of
the Bank or for any reason other than just cause, as defined therein. The
payment that would have been made to Mr. Lazelle pursuant to the proposed
employment agreement, assuming termination of his employment agreement at March
31, 1996, following a change of control of the Bank, would have been
approximately $195,000. See "MANAGEMENT -- Employment Agreement."

INVESTMENT RISKS

An investment in the Common Shares involves certain risks. Special attention
should be given to the matters discussed under "RISK FACTORS -- Interest Rate
Risk; -- Low Return on Assets and Return on Equity; -- Competition in Market
Area; -- Legislation and Regulation Which May Adversely Affect Operations and
Earnings; -- Potential Impact of Benefit Plans on Net Earnings and Shareholders'
Equity; -- Limited Market for the Common Shares; -- Anti-Takeover Provisions
Which May Discourage Sales of Common Shares for Premium Prices; and -- Reliance
on Key Personnel."

8
<PAGE>
SELECTED FINANCIAL INFORMATION AND OTHER DATA

The following table sets forth certain information concerning the financial
condition, earnings and other data regarding the Bank at the dates and for the
periods indicated. Such information should be read in conjunction with the
financial statements and notes thereto appearing elsewhere herein.

<TABLE>
<CAPTION>
AT MARCH 31, AT JUNE 30,
-------------------- -----------------------------------------------------
SELECTED FINANCIAL CONDITION AND OTHER DATA: 1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Total amount of:
Assets........................................ $ 31,738 $ 29,898 $ 31,849 $ 31,056 $ 31,635 $ 30,091 $ 27,470
Cash and equivalents.......................... 4,236 1,477 3,943 2,462 4,639 3,110 2,949
Investment securities......................... 674 1,406 1,310 2,691 1,644 1,242 248
Mortgage-backed securities.................... 4,957 5,843 5,532 6,593 5,303 3,167 1,132
Loans receivable, net......................... 21,359 20,670 20,511 18,794 19,550 22,038 22,663
Deposits...................................... 27,780 25,777 27,737 27,348 29,062 27,617 25,363
FHLB advances................................. 842 1,208 1,192 955 -- -- --
Retained earnings............................. 2,772 2,673 2,706 2,581 2,385 2,259 2,025
Number of full-service offices.................. 1 1 1 1 1 1 1
</TABLE>

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED MARCH 31, YEAR ENDED JUNE 30,
-------------------- -----------------------------------------------------
SUMMARY OF EARNINGS: 1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income........................................ $ 1,783 $ 1,593 $ 2,162 $ 2,069 $ 2,297 $ 2,479 $ 2,446
Interest expense....................................... 1,207 988 1,368 1,339 1,499 1,713 1,855
--------- --------- --------- --------- --------- --------- ---------
Net interest income.................................... 576 605 794 730 798 766 591
Provision for loan losses.............................. 34 9 12 33 83 5 5
--------- --------- --------- --------- --------- --------- ---------
Net interest income after provision for loan losses.... 542 596 782 697 715 761 586
Other income........................................... 52 47 70 204 136 135 86
General, administrative and other expense.............. 496 509 679 627 639 537 514
--------- --------- --------- --------- --------- --------- ---------
Net income before provision for income taxes........... 98 134 173 274 212 359 158
Provision for income taxes............................. 32 43 48 79 85 125 39
--------- --------- --------- --------- --------- --------- ---------
Net income........................................... $ 66 $ 91 $ 125 $ 195 $ 127 $ 234 $ 119
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED MARCH 31, AT OR FOR THE YEAR ENDED JUNE 30,
---------------------- ----------------------------------------------------------
SELECTED FINANCIAL RATIOS: 1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Performance ratios:
Return on average assets................ 0.28% 0.41% 0.41% 0.62% 0.40% 0.81% 0.45%
Return on average equity................ 3.20 4.66 4.72 7.92 5.42 10.89 6.02
Interest rate spread.................... 2.00 2.33 2.25 2.02 2.22 2.27 1.75
Net interest margin..................... 2.47 2.73 2.66 2.35 2.57 2.69 2.28
Non-interest expense to average
assets................................. 2.08 2.25 2.23 1.99 2.03 1.85 1.96
Average equity to average assets........ 8.66 8.73 8.71 7.80 7.42 7.40 7.53
Equity to assets, end of period......... 8.73 8.94 8.50 8.32 7.54 7.51 7.37
Nonperforming assets to [average]
assets................................. 0.35 0.23 0.64 0.29 1.05 0.96 1.00
Nonperforming loans to total loans...... 0.52 0.34 0.95 0.49 1.70 0.98 1.16
Asset quality ratios:
Allowance for loan losses to [gross]
loans.................................. 0.48 0.47 0.47 0.38 0.51 0.07 0.04
Allowance for loan losses to
nonperforming loans.................... 93.69 140.00 50.52 77.42 30.33 6.98 3.44
Net (charge-offs) recoveries to average
loans.................................. (.18) .10 .07 (.32) .02 -- --
Average interest-earning assets to
average interest-bearing liabilities... 109.01 108.99 108.92 107.70 107.33 106.97 107.50
</TABLE>

9
<PAGE>
RISK FACTORS

INVESTMENT IN THE COMMON SHARES INVOLVES CERTAIN RISKS. BEFORE INVESTING,
PROSPECTIVE PURCHASERS SHOULD CONSIDER CAREFULLY THE FOLLOWING MATTERS.

INTEREST RATE RISK

The Bank's operating results are dependent to a significant degree on its
net interest income, which is the difference between interest income from loans
and investments and interest expense on deposits and borrowings. Like most
thrift institutions, the interest income and interest expense of the Bank change
as the interest rates on mortgages, securities and other assets and on deposits
and other liabilities change. Interest rates generally may change because of
general economic conditions, the policies of various regulatory authorities and
other factors beyond the Bank's control. The interest rates on specific assets
and liabilities of the Bank will change or "reprice" in accordance with the
contractual terms of the asset or liability instrument and in accordance with
customer reaction to general economic trends.

In the event that interest rates rise from their recent low levels, the
Bank's net interest income could be expected to be negatively affected if the
Bank's liabilities reprice at a faster rate than its assets. Moreover, rising
interest rates could negatively affect the Bank's earnings due to diminished
loan demand. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- Asset and Liability Management."

LOW RETURN ON ASSETS AND RETURN ON EQUITY

For the last five years, the Bank's return on assets has ranged from a high
of .81% in 1992 to a low of .41% for 1995, with a median of .45%, and its return
on equity has ranged from a high of 10.89% for 1992 to a low of 4.72% for 1995,
with a median of 6.02%. For the nine months ended March 31, 1996, the Bank's
return on assets declined even further, to .28%, and its return on equity
declined to 3.20%. These ratios are significantly lower than those of comparable
institutions. While different factors have contributed to the Bank's results
each year, the persistent challenge facing the Bank is its cost of funds.
Although the Bank has taken steps to lower its cost of funds by eliminating
adjustable-rate retirement accounts, the Bank still has nearly 90% of its
deposits in certificates of deposit. Certificates of deposit are typically more
expensive than passbook savings and transaction accounts, but the Bank has had
limited success attracting the lower cost account types because of the
limitations of its downtown location. Although the Conversion proceeds will
provide the Bank with a source of interest-earning assets without an attendant
carrying cost, there can be no assurance that the Bank's return on assets will
improve substantially after the Conversion. Moreover, the increased capital
resulting from the Conversion is expected to further reduce the Bank's return on
equity for a prolonged period after the Conversion, which may adversely affect
the market value of the Common Shares.

COMPETITION IN MARKET AREA

The Bank faces strong direct competition for deposits and loans from
commercial banks, other savings associations, credit unions and mortgage banking
companies. Mortgage banking companies and other non-FDIC insured providers of
financial services are not subject to the same degree of regulatory oversight as
savings associations and thus have greater operational flexibility, without the
costs and burdens associated with compliance with OTS and FDIC regulations. The
Bank is also at a competitive disadvantage due to its small size and single
office location, which result in limited marketing capability and restricted
ability to keep up with technological advancements.

LEGISLATION AND REGULATION WHICH MAY ADVERSELY AFFECT OPERATIONS AND EARNINGS

The Bank is subject to extensive regulation by the OTS, the FDIC and the
Division and is periodically examined by such regulatory agencies to test
compliance with various regulatory requirements. As a savings and loan holding
company, the Holding Company will also be subject to regulation and examination
by the OTS. Such supervision and regulation of the Bank and the Holding Company
are intended primarily for the protection of depositors and not for the
maximization of shareholder value and may affect the ability of the

10
<PAGE>
Holding Company to engage in various business activities. The assessments,
filing fees and other costs associated with reports, examinations and other
regulatory matters are significant and may have an adverse effect on the Holding
Company's net earnings. See "REGULATION."

The deposit accounts of the Bank and of other savings associations are
insured by the FDIC in the SAIF. The reserves of the SAIF are currently below
the level required by law, because of a higher than anticipated reduction in the
amount of SAIF deposits and because a significant portion of the assessments
paid into the fund are used to pay the principal and interest on bonds issued by
the Financing Corp. ("FICO") to pay the cost of resolving past thrift failures.
The deposit accounts of commercial banks are insured by the Bank Insurance Fund
(the "BIF") administered by the FDIC, except to the extent that such banks have
acquired SAIF deposits. The reserves of the BIF reached the level required by
law in May 1995. As a result of the respective reserve levels of the funds,
deposit insurance assessments paid by healthy savings associations exceeded
those paid by healthy commercial banks by approximately $.19 per $100 in
deposits in late 1995 and will exceed such assessments by $.23 per $100 in
deposits in 1996. This premium disparity could have a negative competitive
impact on the Bank and other institutions with SAIF deposits.

Congress is considering legislation to recapitalize the SAIF and eliminate
the significant premium disparity. The pending recapitalization plan provides
for the payment of a special assessment of approximately $.85 per $100 of SAIF
deposits held at a date to be determined, in order to increase SAIF reserves to
the level required by law. SAIF assessments for healthy savings associations
would be set significantly below the current level after payment of the special
assessment is made by all SAIF institutions and could never be reduced below the
level imposed on BIF institutions. In addition, the FICO payments would be
shared by both the SAIF and the BIF. Contributions by BIF institutions to the
FICO payments might increase BIF assessments by $.02 to $.025 per $100 in
deposits. These projected assessment levels may change if commercial banks
holding SAIF deposits are provided some relief from the special assessment or
are allowed to transfer to the BIF.

The Bank had $25.8 million in deposits at March 31, 1995. If the special
assessment is $.85 per $100 in deposits, the Bank could pay an aggregate
additional assessment of approximately $219,000. Although the assessment should
be tax-deductible, it will reduce earnings and capital for the quarter in which
it is reported.

The recapitalization plan also provides for the merger of the SAIF and BIF
on January 1, 1998, and for the elimination of the federal thrift charter or of
the separate federal regulation of thrifts prior thereto. Under the legislation,
the OTS would cease to exist and the Bank would be regulated under federal law
as a bank and, as a result, would become subject to the more restrictive
activity limitations imposed on national banks. Proposed legislation would also
eliminate the deduction for income tax purposes of amounts designated as
reserved for bad debts. See Note 12 of the Notes to the Financial Statements.
Such legislation would require, generally, that bad debt reserves taken by such
savings associations after 1987 using the percentage of taxable income method
would be included in future taxable income of the Bank over a six-year period,
although a two-year delay may be permitted for institutions meeting a
residential mortgage loan origination test. No recapture would be required for
pre-1988 bad debt reserves. The requirement that the Bank convert to a bank
charter and the proposed tax legislation could have an adverse effect on the
Holding Company and the Bank, although until such proposals are acted upon by
Congress, the extent of such effect is uncertain.

No assurances can be given that the SAIF recapitalization plan will be
enacted into law or in what form it may be enacted. If the proposed legislation
is not adopted, SAIF premiums may increase and the disparity between BIF and
SAIF premiums may become more pronounced, which would negatively impact the
Bank. See "REGULATION -- Federal Deposit Insurance Corporation -- Deposit
Insurance."

POTENTIAL IMPACT OF BENEFIT PLANS ON NET EARNINGS AND SHAREHOLDERS' EQUITY

Statement of Position No. 93-6, "Employers' Accounting for Employee Stock
Ownership Plans" ("SOP 93-6"), published by the American Institute of Certified
Public Accountants (the "AICPA") requires an employer to record compensation
expense in an amount equal to the fair value of shares committed to be released
to employees from an employee stock ownership plan. If the Common Shares
acquired by the

11
<PAGE>
ESOP appreciate in value over time, the Holding Company may incur increased
compensation expense relating to the ESOP. In addition, SOP 93-6 requires that,
for the purpose of computing primary and fully diluted earnings per share, ESOP
shares that have not been committed to be released are not considered
outstanding. See "PRO FORMA DATA" for pro forma information which includes the
effects of SOP 93-6 on net earnings and shareholders' equity.

If the ESOP is unable to purchase all or part of the Common Shares for which
it subscribes, the ESOP may purchase Common Shares on the open market or may
purchase authorized but unissued shares of the Holding Company. If the ESOP
purchases authorized but unissued shares from the Holding Company, such
purchases could have a dilutive effect on the interests of the Holding Company's
shareholders. If the ESOP purchases authorized but unissued shares from the
Holding Company, such purchases would have a dilutive effect of up to
approximately 7.4% on the interests of the Holding Company's shareholders.

It is expected that, following the consummation of the Conversion, the
Holding Company will adopt the Stock Option Plan and the RRP. If adopted during
the first year after the Conversion, the Stock Option Plan and the RRP are
required to be approved by the Holding Company's shareholders prior to
implementation. Under the RRP, directors, officers and employees of the Bank
could be awarded an aggregate amount of shares equal to 4% of the Common Shares
issued in the Conversion. Under the Stock Option Plan, directors, officers and
employees could be granted options to purchase an aggregate amount of shares
equal to 10% of the Common Shares issued in the Conversion. See "MANAGEMENT --
Recognition and Retention Plan."

The shares issued to participants under the RRP could be newly issued shares
or shares purchased in the market. In the event the shares issued under the RRP
consist of newly issued common shares, the interests of existing shareholders
would be diluted. Shares issued pursuant to the exercise of options under the
Stock Option Plan will be authorized but unissued shares, unless the Holding
Company has treasury shares at the time of exercise and elects to use the
treasury shares. At the midpoint of the estimated Valuation Range, if all shares
under these plans were newly issued and the exercise price for the option shares
were equal to the $10 per share purchase price in the Conversion, the pro forma
book value per share of the outstanding common shares at March 31, 1996, would
decrease from $16.00 to $15.77. See "PRO FORMA DATA" and "MANAGEMENT -- Stock
Benefit Plans -- Stock Option Plan."

LIMITED MARKET FOR THE COMMON SHARES

There is presently no market for the Common Shares. The existence of a
market in the Common Shares upon the completion of the Conversion will depend
upon the presence in the marketplace of both willing buyers and willing sellers
at any given time. It is expected that the Common Shares will be traded in the
over-the-counter market and will be quoted through brokers participating on the
NDQS. Because of the limited size of the Offering, however, it is unlikely that
an active market for the common shares will develop after the completion of the
Conversion or, if such market does develop, that it will continue. Investors
should consider, therefore, the potentially illiquid and long-term nature of an
investment in the Common Shares.

The aggregate offering price for the Common Shares is based upon an
independent appraisal of the Bank. The appraisal is not a recommendation as to
the advisability of purchasing Common Shares. See "THE CONVERSION -- Pricing and
Number of Common Shares to be Sold." No assurance can be given that persons
purchasing Common Shares will thereafter be able to sell such shares at a price
at or above the offering price. The appraisal of the pro forma market value of
the Bank, as converted, does not represent Keller's opinion as to the price at
which the Common Shares may trade. There can be no assurance that the Common
Shares may later be resold at the price at which they are purchased in
connection with the Conversion.

ANTI-TAKEOVER PROVISIONS WHICH MAY DISCOURAGE SALES OF COMMON SHARES FOR PREMIUM
PRICES

The Articles of Incorporation and Code of Regulations of the Holding Company
and the Amended Articles of Incorporation of the Bank contain certain provisions
that could deter or prohibit non-negotiated changes in the control of the
Holding Company and the Bank. Such provisions include a restriction on the
direct or indirect acquisition of more than 10% of the outstanding shares of the
Bank by any person during the five-year period following the effective date of
the Conversion, the ability to issue additional common

12
<PAGE>
shares and a supermajority voting requirement for certain transactions. See
"DESCRIPTION OF AUTHORIZED SHARES" and "RESTRICTIONS ON ACQUISITION OF THE
HOLDING COMPANY AND THE BANK."

The Articles of Incorporation of the Holding Company provide that if the
Board of Directors recommends that shareholders approve certain matters,
including mergers, acquisitions of a majority of the shares of the Holding
Company or the transfer of substantially all of the assets of the Holding
Company, the affirmative vote of the holders of only a majority of the voting
shares of the Holding Company is required to approve such matter. If, however,
the Board of Directors recommends against the approval of any such matter, the
affirmative vote of the holders of at least 75% of the voting shares of the
Holding Company is required to approve such matters. The existence of such 75%
provision in the Articles of Incorporation of the Holding Company may make more
difficult actions which certain shareholders may deem to be in their best
interests.

Officers and directors of the Holding Company are expected to purchase
approximately 21% of the shares issued in connection with the Conversion. In
addition, officers of the Holding Company will be able to vote shares allocated
to their accounts under the ESOP, which intends to purchase approximately 8% of
the shares issued in connection with the Conversion. The ESOP trustee must vote
shares allocated under the ESOP as directed by the participants to whom the
shares are allocated and vote unallocated shares in his sole discretion. The RRP
may acquire Common Shares in the open market or acquire authorized but unissued
common shares from the Holding Company following approval of the RRP by the
shareholders of the Holding Company in an amount equal to up to 4% of the Common
Shares issued in connection with the Conversion. The RRP trustees, who are
expected to be three directors of the Bank, will vote shares awarded but not
distributed under the RRP in their discretion.

In view of the various provisions of the Articles of Incorporation and the
stock benefit plans of the Holding Company and the Bank, the aggregate ownership
by the ESOP, the RRP and the directors and officers of the Holding Company and
the Bank may have the effect of facilitating the perpetuation of current
management and discouraging proxy contests and takeover attempts. Thus, officers
and directors, who are anticipated to be allocated or awarded shares under such
plans, will have a significant influence over the vote on any such transaction
and may be able to defeat such a proposal. The Boards of Directors of the
Holding Company and the Bank believe that such provisions will be in the best
interests of shareholders by encouraging prospective acquirors to negotiate a
proposed acquisition with the directors. Such provisions could, however,
adversely affect the market value of the Common Shares or deprive shareholders
of the opportunity to sell their shares for premium prices.

Federal law and Ohio law also restrict the acquisition of control of the
Holding Company and the Bank. Any or all of these provisions may facilitate the
perpetuation of current management and discourage proxy contests or takeover
attempts not first negotiated with the Board of Directors. See "RESTRICTIONS ON
ACQUISITION OF THE HOLDING COMPANY AND THE BANK."

Regulations of the OTS also restrict the ability of any person to acquire
the beneficial ownership of more than 10% of any class of voting equity security
of the Bank or the Holding Company without the prior written approval of or lack
of objection by the OTS. Such restrictions could restrict the use of revocable
proxies. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE BANK."

13
<PAGE>
RELIANCE ON KEY PERSONNEL

The Bank depends to a considerable degree on a limited number of key
management personnel. In particular, the loss of the services of Laird L.
Lazelle, the President and Chief Executive Officer of the Bank, could adversely
impact the Bank. In order to minimize the likelihood of such negative impact,
the Bank intends to enter into an employment agreement with Mr. Lazelle. See
"MANAGEMENT -- Employment Agreement."

USE OF PROCEEDS

The following table presents the estimated gross and net proceeds from the
sale of the Common Shares in connection with the Conversion based on the
Valuation Range:

<TABLE>
<CAPTION>
MINIMUM MID-POINT MAXIMUM MAXIMUM, AS ADJUSTED
------------ ------------ ------------ ---------------------
<S> <C> <C> <C> <C>
Gross proceeds................................... $ 2,975,000 $ 3,500,000 $ 4,025,000 $ 4,628,750
Less estimated expenses.......................... 251,000 251,000 251,000 251,000
------------ ------------ ------------ -----------
Total net proceeds............................... $ 2,724,000 $ 3,249,000 $ 3,774,000 $ 4,377,750
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
</TABLE>

The net proceeds may vary depending upon financial and market conditions at
the time of the completion of the Offering. See "THE CONVERSION -- Pricing and
Number of Common Shares to be Sold." Actual expenses may be more or less than
estimated. See "THE CONVERSION -- Plan of Distribution ."

The Holding Company will retain 50% of the net proceeds from the sale of the
Common Shares, approximately $1.62 million at the mid-point of the Valuation
Range. Such proceeds will be used by the Holding Company to lend up to $370,300,
at the maximum, as adjusted, of the Valuation Range, to the ESOP to acquire
Common Shares in the Offering and for general corporate purposes, which may
include dividends, repurchases of Common Shares and acquisitions of other
financial institutions. The Holding Company presently has no plans or agreements
relating to any such acquisitions or repurchases. OTS regulations generally
prohibit stock repurchases in the six months following the completion of the
Conversion without the prior approval of the OTS. See "THE CONVERSION --
Restrictions on Repurchase of Common Shares."

The remainder of the net proceeds received from the sale of the Common
Shares, approximately $1.34 million at the mid-point of the Valuation Range,
will be invested by the Holding Company in the capital stock to be issued by the
Bank to the Holding Company as a result of the Conversion. Such investment will
increase the regulatory capital of the Bank and will permit the Bank to expand
its lending and investment activities and to enhance customer services. The Bank
anticipates that such net proceeds will be used to originate mortgage loans.

MARKET FOR THE COMMON SHARES

There is presently no market for the Common Shares. The existence of a
market in the Common Shares upon the completion of the Conversion will depend
upon the presence in the marketplace of both willing buyers and willing sellers
at any given time. It is expected that the Common Shares will be traded in the
over-the-counter market and will be quoted through brokers participating on the
NDQS. Because of the limited size of the Offering, however, it is unlikely that
an active market for the common shares will develop after the completion of the
Conversion or, if such market does develop, that it will continue. Investors
should consider, therefore, the potentially illiquid and long-term nature of an
investment in the Common Shares. See "RISK FACTORS -- Limited Market for the
Common Shares."

The appraisal of the pro forma market value of the Bank, as converted, does
not represent Keller's opinion as to the price at which the Common Shares may
trade. There can be no assurance that the Common Shares may later be resold at
the price at which they are purchased in connection with the Conversion.

14
<PAGE>
DIVIDEND POLICY

Other than earnings on the investment of the proceeds retained by the
Holding Company, the only source of income of the Holding Company will be
dividends periodically declared and paid by the Board of Directors of the Bank
on the common shares of the Bank held by the Holding Company. The declaration
and payment of dividends by the Bank to the Holding Company will be subject to
the discretion of the Board of Directors of the Bank, to the earnings and
financial condition of the Bank, to general economic conditions and to federal
and state restrictions on the payment of dividends by thrift institutions. Under
regulations of the OTS applicable to converted savings associations, the Bank
will not be permitted to pay a cash dividend on its capital stock after the
Conversion if its regulatory capital would, as a result of the payment of such
dividend, be reduced below the amount required for the Liquidation Account or
the applicable regulatory capital requirement prescribed by the OTS. See "THE
CONVERSION -- Principal Effects of the Conversion -- Liquidation Account" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- Liquidity and Capital Resources." The Bank may not pay a dividend
unless such dividend also complies with a regulation of the OTS limiting capital
distributions by savings associations. Capital distributions, for purposes of
such regulation, include, without limitation, payments of cash dividends,
repurchases and certain other acquisitions by an association of its shares and
payments to stockholders of another association in an acquisition of such other
association. See "REGULATION -- Office of Thrift Supervision -- Limitations on
Capital Distributions."

15
<PAGE>
REGULATORY CAPITAL COMPLIANCE

The following table sets forth the historical and pro forma regulatory
capital of the Bank at March 31, 1996, based on the receipt of 50% of the net
proceeds for the number of Common Shares indicated. Estimated expenses used in
determining the net proceeds are $251,000:
<TABLE>
<CAPTION>
PRO FORMA CAPITAL AT MARCH 31, 1996, ASSUMING THE SALE OF:
------------------------------------------------------------------------------------------------------
297,500 COMMON SHARES 350,000 COMMON SHARES 402,500 COMMON SHARES
HISTORICAL AT MARCH 31, (OFFERING PRICE OF (OFFERING PRICE OF (OFFERING PRICE OF
1996 $10.00 PER SHARE) $10.00 PER SHARE) $10.00 PER SHARE)
------------------------ ------------------------ ------------------------ ------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital under generally
accepted accounting
principles, before
adjustments (1)........... $ 2,772 8.73% $ 4,134 12.40% $ 4,397 13.07% $ 4,659 13.72%
----------- ----- ----------- ----- ----------- ----- ----------- -----
----------- ----- ----------- ----- ----------- ----- ----------- -----
Current tangible capital:
Capital level............ $ 2,772 8.73% $ 4,134 12.40% $ 4,397 13.07% $ 4,659 13.72%
Requirement (2).......... 476 1.50 500 1.50 505 1.50 509 1.50
----------- ----- ----------- ----- ----------- ----- ----------- -----
Excess................... $ 2,296 7.23% $ 3,634 10.90% $ 3,892 11.57% $ 4,150 12.22%
----------- ----- ----------- ----- ----------- ----- ----------- -----
----------- ----- ----------- ----- ----------- ----- ----------- -----
Current core capital:
Capital level............ $ 2,772 8.73% $ 4,134 12.40% $ 4,397 13.07% $ 4,659 13.72%
Requirement (2).......... 952 3.00 1,000 3.00 1,009 3.00 1,018 3.00
----------- ----- ----------- ----- ----------- ----- ----------- -----
Excess................... $ 1,820 5.73% $ 3,134 9.40% $ 3,388 10.07% $ 3,641 10.72%
----------- ----- ----------- ----- ----------- ----- ----------- -----
----------- ----- ----------- ----- ----------- ----- ----------- -----
Current risk-based
capital: (1)
Capital level (3)........ $ 2,868 19.59% $ 4,230 28.28% $ 4,493 29.91% $ 4,755 31.53%
Requirement (2).......... 1,171 8.00 1,197 8.00 1,202 8.00 1,207 8.00
----------- ----- ----------- ----- ----------- ----- ----------- -----
Excess................... $ 1,697 11.59% $ 3,033 20.28% $ 3,291 21.91% $ 3,548 23.53%
----------- ----- ----------- ----- ----------- ----- ----------- -----
----------- ----- ----------- ----- ----------- ----- ----------- -----

462,875 COMMON SHARES

(OFFERING PRICE OF
$10.00 PER SHARE)
------------------------
AMOUNT PERCENT
----------- -----------

<S> <C> <C>
Capital under generally
accepted accounting
principles, before
adjustments (1)........... $ 4,961 14.46%
----------- -----
----------- -----
Current tangible capital:
Capital level............ $ 4,961 14.46%
Requirement (2).......... 514 1.50
----------- -----
Excess................... $ 4,447 12.96%
----------- -----
----------- -----
Current core capital:
Capital level............ $ 4,961 14.46%
Requirement (2).......... 1,029 3.00
----------- -----
Excess................... $ 3,932 11.46%
----------- -----
----------- -----
Current risk-based
capital: (1)
Capital level (3)........ $ 5,057 33.37%
Requirement (2).......... 1,212 8.00
----------- -----
Excess................... $ 3,845 25.37%
----------- -----
----------- -----
</TABLE>

- ------------------------------
(1) Assumes that the net proceeds received by the Bank will be invested in
assets having a risk-weighting of 0%.

(2) Tangible and core capital are shown as a percent of adjusted total assets,
and risk-based capital levels are shown as a percent of risk-weighted
assets in accordance with OTS regulations. Reflects a reduction for
unearned ESOP and RRP shares equal to 8% and 4%, respectively, of the
Offering.

(3) Risk-weighted capital includes $96,000 of qualifying general loan loss
allowances.

16
<PAGE>
CAPITALIZATION

Set forth below is the historical capitalization of the Bank at March 31,
1996, and the pro forma consolidated capitalization of the Holding Company as
adjusted to give effect to the sale of Common Shares based on the Valuation
Range and estimated expenses. See "USE OF PROCEEDS" and "THE CONVERSION --
Pricing and Number of Common Shares to be Sold."

<TABLE>
<CAPTION>
PRO FORMA CAPITALIZATION OF THE HOLDING COMPANY
AT MARCH 31, 1996, ASSUMING THE SALE OF:
----------------------------------------------------------------------
HISTORICAL 297,500 COMMON 350,000 COMMON 402,500 COMMON 462,875 COMMON
CAPITALIZATION SHARES (OFFERING SHARES (OFFERING SHARES (OFFERING SHARES (OFFERING
OF THE BANK AT PRICE OF $10.00 PRICE OF $10.00 PRICE OF $10.00 PRICE OF $10.00
MARCH 31, 1996 PER SHARE) PER SHARE) PER SHARE) PER SHARE)
-------------- ---------------- ---------------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Deposits (1).................. $ 27,780 $ 27,780 $ 27,780 $ 27,780 $ 27,780
FHLB advances................. 842 842 842 842 842
------- ------- ------- ------- -------
Total deposits and borrowed
funds...................... $ 28,662 $ 28,662 $ 28,662 $ 28,662 $ 28,662
Capital and retained earnings:
Common Shares, no par value
per share:
authorized -- 1,000,000
shares; assumed outstanding
-- as shown (2).............. -- -- -- -- --
Additional paid-in capital
(3).......................... -- 2,724 3,249 3,774 4,378
Retained earnings............. 2,772 2,772 2,772 2,772 2,772
Less:
Common Shares acquired by the
ESOP (4)..................... -- (238) (280) (322) (370)
Common Shares acquired by
the RRP(5)................. -- (119) (140) (161) (185)
Total capital and retained
earnings................... $ 2,772 $ 5,139 $ 5,601 $ 6,063 $ 6,595
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>

- ------------------------
(1) No effect has been given to withdrawals from savings accounts for the
purpose of purchasing Common Shares in the Conversion. Any such withdrawals
will reduce pro forma deposits by the amount of such withdrawals.

(2) The number of Common Shares to be issued will be determined on the basis of
the final valuation of the Bank. See "THE CONVERSION -- Pricing and Number
of Common Shares to be Sold." Common Shares assumed outstanding does not
reflect the issuance of any common shares which may be reserved for issuance
under the Stock Option Plan. See "MANAGEMENT -- Stock Benefit Plans -- Stock
Option Plan."

(3) Reflects receipt of the proceeds from the sale of the Common Shares, net of
estimated expenses, of approximately $2,724,000, $3,249,000, $3,774,000 and
$4,377,750 at the minimum, mid-point, maximum and maximum, as adjusted,
respectively, of the Valuation Range.

(4) Assumes that 8.0% of the Common Shares sold in connection with the
Conversion will be acquired by the ESOP with funds borrowed by the ESOP from
the Holding Company for a term of seven years at a rate of 6.11%. The ESOP
loan will be secured solely by the Common Shares purchased by the ESOP. The
Bank has agreed, however, to use its best efforts to fund the ESOP based on
future earnings, which

17
<PAGE>
best efforts funding will reduce the Bank's total capital and retained
earnings, as reflected in the table. If the ESOP is unable to purchase all
or part of the Common Shares for which it subscribes, the ESOP may purchase
common shares on the open market or may purchase authorized but unissued
shares of the Holding Company. If the ESOP purchases authorized but unissued
shares from the Holding Company, such purchases would have a dilutive effect
of approximately 7.4% on the interests of the Holding Company's
shareholders. See "MANAGEMENT -- Stock Benefit Plans -- Employee Stock
Ownership Plan" and "RISK FACTORS -- Potential Impact of Benefit Plans on
Net Earnings and Shareholders' Equity."

(5) Assumes that 4.0% of the Common Shares will be acquired in the open market
by the RRP after the Conversion at a price of $10 per share. There can be no
assurance that the RRP will be implemented, that a sufficient number of
shares will be available for purchase by the RRP, that shares could be
purchased at a price of $10 per share or that the shareholders will approve
the RRP if it is implemented during the first year after the Conversion. A
higher price per share, assuming the purchase of the entire 4.0% of the
shares, would reduce pro forma net earnings and pro forma shareholders'
equity. The RRP may purchase shares in the open market or may purchase
authorized but unissued shares from the Holding Company. If authorized but
unissued shares are purchased, the interests of existing shareholders would
be diluted approximately 3.85%. See "MANAGEMENT -- Stock Benefit Plans --
Recognition and Retention Plan."

PRO FORMA DATA

Set forth below are the pro forma consolidated net income of the Holding
Company for the nine months ended March 31, 1996, and for the year ended June
30, 1995, and the pro forma consolidated shareholders' equity of the Holding
Company at March 31, 1996, and June 30, 1995, along with the related pro forma
earnings per share and pro forma shareholders' equity per share amounts, giving
effect to the sale of the Common Shares in connection with the Conversion. The
computations are based on the assumed issuance of 297,500 Common Shares (minimum
of the Valuation Range), 350,000 Common Shares (mid-point of the Valuation
Range), 402,500 Common Shares (maximum of the Valuation Range) and 462,875
Common Shares (15% above the maximum of the Valuation Range). See "THE
CONVERSION -- Pricing and Number of Common Shares to be Sold." The pro forma
data is based on the following assumptions: (i) the sale of the Common Shares
occurred at the beginning of the period and yielded the net proceeds indicated;
(ii) such net proceeds were invested at the beginning of the period to yield
annualized after-tax net returns of 3.60%; and (iii) no withdrawals from
existing deposit accounts were made to purchase the Common Shares. The assumed
returns are based on the one-year U.S. Treasury bill yield of 5.45% in effect at
March 31, 1996. This rate was used as an alternative to the arithmetic average
of the Banks' interest-earning assets and interest-bearing liabilities.
Management believes that the U.S. Treasury bill yield is more indicative of the
rate of return that can be achieved on the investment of the Conversion
proceeds. Actual yields may differ, however, from the assumed returns. The pro
forma consolidated net income amounts derived from the assumptions set forth
herein should not be considered indicative of the actual results of operations
of the Holding Company that would have been attained for any period if the
Conversion had been actually consummated at the beginning of such period.

As the table demonstrates, pro forma consolidated earnings per share and pro
forma consolidated shareholders' equity per share decrease as the amount of
Common Shares sold moves from the minimum of the Valuation Range to the adjusted
maximum of the Valuation Range. Conversely, the offering price as a multiple of
pro forma earnings per share and as a percent of pro forma shareholders' equity
per share increase as the amount of Common Shares sold moves from the minimum of
the Valuation Range to the adjusted maximum of the Valuation Range.

THE PRO FORMA DATA AND ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION WITH
THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE HEREIN. THE PRO
FORMA DATA IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT PURPORT TO
REPRESENT WHAT THE HOLDING COMPANY'S FINANCIAL POSITION OR RESULTS OF OPERATIONS
ACTUALLY WOULD HAVE BEEN HAD THE AFOREMENTIONED

18
<PAGE>
TRANSACTIONS BEEN COMPLETED AS OF THE DATE OR AT THE BEGINNING OF THE PERIODS
INDICATED, OR TO PROJECT THE HOLDING COMPANY'S FINANCIAL POSITION OR RESULTS OF
OPERATIONS AT ANY FUTURE DATE OR FOR ANY FUTURE PERIOD.

<TABLE>
<CAPTION>
AT AND FOR THE NINE MONTHS ENDED MARCH 31, 1996, ASSUMING THE SALE OF:
--------------------------------------------------------------------------
297,500 350,000 402,500 462,875
COMMON SHARES COMMON SHARES COMMON SHARES COMMON SHARES
(OFFERING PRICE (OFFERING PRICE (OFFERING PRICE (OFFERING PRICE
OF OF OF OF
$10.00 PER SHARE) $10.00 PER SHARE) $10.00 PER SHARE) $10.00 PER SHARE)
----------------- ----------------- ----------------- -----------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Gross proceeds................................. $ 2,975 $ 3,500 $ 4,025 $ 4,629
Estimated expenses............................. (251) (251) (251) (251)
------ ------ ------ ------
Estimated net proceeds......................... 2,724 3,249 3,774 4,378
Less common stock acquired by the ESOP (1)..... (238) (280) (322) (370)
Less common stock acquired by the RRP (1)...... (119) (140) (161) (185)
------ ------ ------ ------
Net cash proceeds.............................. $ 2,367 $ 2,829 $ 3,291 $ 3,823
------ ------ ------ ------
------ ------ ------ ------
Net income:....................................
Historical..................................... $ 66 $ 66 $ 66 $ 66
Pro forma net income on net proceeds........... 64 76 89 102
Pro forma adjustment for the ESOP (1).......... (17) (20) (23) (27)
Pro forma adjustment for the RRP (2)........... (12) (14) (16) (19)
------ ------ ------ ------
Pro forma net income........................... $ 101 $ 108 $ 116 $ 122
------ ------ ------ ------
------ ------ ------ ------
Per share net income:
Historical..................................... $ 0.30 $ 0.25 $ 0.22 $ 0.20
Pro forma net income on net proceeds........... 0.29 0.29 0.29 0.29
Pro forma adjustment for the ESOP (1).......... (0.08) (0.08) (0.08) (0.08)
Pro forma adjustment for the RRP (2)........... (0.05) (0.05) (0.05) (0.06)
------ ------ ------ ------
Pro forma earnings per share (3)(4)............ $ 0.46 $ 0.41 $ 0.38 $ 0.35
------ ------ ------ ------
------ ------ ------ ------
Offering price as a multiple of pro forma
earnings per share............................ 20.52 22.71 24.22 25.84
Shareholders' equity (5):
Historical..................................... $ 2,772 $ 2,772 $ 2,772 $ 2,772
Estimated net proceeds from the sale of Common
Shares........................................ 2,724 3,249 3,774 4,378
Less unearned ESOP shares (1).................. (238) (280) (322) (370)
Less unearned RRP shares (2)................... (119) (140) (161) (185)
------ ------ ------ ------
Pro forma shareholders' equity................. $ 5,139 $ 5,601 $ 6,063 $ 6,595
------ ------ ------ ------
------ ------ ------ ------
Per share shareholders' equity:
Historical..................................... $ 9.32 $ 7.92 $ 6.89 $ 5.99
Estimated net proceeds......................... 9.16 9.29 9.38 9.46
Less unearned ESOP shares (1).................. (0.80) (0.80) (0.80) (0.80)
Less unearned RRP shares (2)................... (0.40) (0.40) (0.40) (0.40)
------ ------ ------ ------
Pro forma shareholders' equity per share (3)... $ 17.28 $ 16.00 $ 15.07 $ 14.25
------ ------ ------ ------
------ ------ ------ ------
Ratio of offering price to pro forma
shareholders' equity per share................ 57.89% 62.49% 66.39% 70.19%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>

- ------------------------
(Footnotes on page 22)

19
<PAGE>

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED JUNE 30, 1995, ASSUMING THE SALE OF:
--------------------------------------------------------------------------
297,500 350,000 402,500 462,875
COMMON SHARES COMMON SHARES COMMON SHARES COMMON SHARES
(OFFERING PRICE (OFFERING PRICE (OFFERING PRICE (OFFERING PRICE
OF OF OF OF
$10.00 PER SHARE) $10.00 PER SHARE) $10.00 PER SHARE) $10.00 PER SHARE)
----------------- ----------------- ----------------- -----------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Gross proceeds................................. $ 2,975 $ 3,500 $ 4,025 $ 4,629
Estimated expenses............................. (251) (251) (251) (251)
------ ------ ------ ------
Estimated net proceeds......................... 2,724 3,249 3,774 4,378
Less common stock acquired by the ESOP (1)..... (238) (280) (322) (370)
Less common stock acquired by the RRP (2)...... (119) (140) (161) (185)
------ ------ ------ ------
Net cash proceeds.............................. $ 2,367 $ 2,829 $ 3,291 $ 3,823
------ ------ ------ ------
------ ------ ------ ------
Net income:
Historical..................................... $ 125 $ 125 $ 125 $ 125
Pro forma net income on net proceeds........... 85 102 118 137
Pro forma adjustment for the ESOP (1).......... (22) (26) (30) (35)
Pro forma adjustment for the RRP (2)........... (16) (18) (21) (24)
------ ------ ------ ------
Pro forma net income........................... $ 172 $ 183 $ 192 $ 203
------ ------ ------ ------
------ ------ ------ ------
Per share net income:
Historical..................................... $ 0.42 $ 0.36 $ 0.31 $ 0.27
Pro forma net income on net proceeds........... 0.29 0.29 0.29 0.29
Pro forma adjustment for the ESOP (1).......... (0.08) (0.08) (0.08) (0.08)
Pro forma adjustment for the RRP (2)........... (0.05) (0.05) (0.05) (0.05)
------ ------ ------ ------
Pro forma earnings per share (3)(6)............ $ 0.58 $ 0.52 $ 0.47 $ 0.43
------ ------ ------ ------
------ ------ ------ ------
Offering price as a multiple of pro forma
earnings per share............................ 16.07 18.11 19.51 21.28
Shareholders' equity (5):
Historical..................................... $ 2,706 $ 2,706 $ 2,706 $ 2,706
Estimated net proceeds from the sale of Common
Shares........................................ 2,724 3,249 3,775 4,378
Less unearned ESOP shares (1).................. (238) (280) (322) (370)
Less unearned RRP shares (2)................... (119) (140) (161) (185)
------ ------ ------ ------
Pro forma shareholders' equity................. $ 5,073 $ 5,535 $ 5,998 $ 6,529
------ ------ ------ ------
------ ------ ------ ------
Per share shareholders' equity:
Historical..................................... $ 9.10 $ 7.73 $ 6.72 $ 5.85
Estimated net proceeds......................... 9.16 9.29 9.38 9.46
Less unearned ESOP shares (1).................. (0.80) (0.80) (0.80) (0.80)
Less unearned RRP shares (2)................... (0.40) (0.40) (0.40) (0.40)
------ ------ ------ ------
Pro forma shareholders' equity per share (3)... $ 17.06 $ 15.82 $ 14.90 $ 14.11
------ ------ ------ ------
------ ------ ------ ------
Ratio of offering price to pro forma
shareholders' equity per share................ 58.64% 63.23% 67.12% 70.90%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>

- ------------------------
(Footnotes on next page)

20
<PAGE>
(1) Assumes that 8.0% of the Common Shares sold in connection with the
Conversion will be purchased by the ESOP and that the funds used to acquire
such shares will be borrowed by the Bank from the Holding Company with
repayment thereof secured solely by the Common Shares purchased by the ESOP.
The Bank has agreed, however, to use its best efforts to fund the ESOP based
on future earnings, which best efforts funding will reduce the income on the
equity raised in connection with the Conversion, as reflected in the table.
Assumes the level amortization of the ESOP loan over a period of seven
years, with assumed tax benefits of 34%. See "MANAGEMENT -- Employee Stock
Ownership Plan." The Board of Directors may elect to issue the ESOP shares
from authorized but unissued shares. The issuance of authorized but unissued
shares to the ESOP would have the effect of diluting the percentage interest
of existing shareholders by 7.41%.

(2) Assumes that 4.0% of the Common Shares sold in connection with the
Conversion will be purchased by the RRP after the Conversion at a price of
$10 per share and that one-fifth of the purchase price of the RRP shares
will be expensed in each of the first five years after the Conversion. If
the RRP is implemented in the first year after the completion of the
Conversion, it will be subject to various OTS requirements, including the
requirement that the RRP be approved by the shareholders of the Holding
Company. There can be no assurance that the RRP will be approved by the
shareholders, that a sufficient number of shares will be available for
purchase by the RRP or that the shares could be purchased at $10 per share.
A higher per share price, assuming the purchase of the entire 4.0% of the
shares, would reduce pro forma net earnings and pro forma shareholders'
equity. If an insufficient number of shares is available in the open market
to fund the RRP at the desired level, the Holding Company may issue
additional authorized shares. The issuance of authorized but unissued shares
in an amount equal to 4.0% of the Common Shares issued in the Conversion
would result in a 3.85% dilution in earnings per share and book value per
share on a pro forma basis. See "MANAGEMENT -- Recognition and Retention
Plan and Trust."

(3) No effect has been given to shares reserved for issuance upon the exercise
of options pursuant to the Stock Option Plan. See "MANAGEMENT -- Stock
Option Plan."

(4) Assumes that the ESOP holds 23,800 shares, 28,000 shares, 32,200 shares and
37,030 shares, at the minimum, mid-point, maximum and adjusted maximum of
the Valuation Range, respectively, for purposes of computing earnings per
share. Pursuant to SOP 93-6, only ESOP shares which will be allocated over
the period are included in the earnings per share calculation. Application
of SOP 93-6 to the nine months ended March 31, 1996, would result in an
earnings per share presentation of $.49, $.44, $.41 and $.39, reflecting
weighted average shares outstanding of 277,100 shares, 326,000 shares,
374,900 shares and 431,135 shares at the minimum, mid-point, maximum and
adjusted maximum of the Valuation Range, respectively. SOP 93-6 also
requires ESOP expense to be measured based on the fair value of the shares
to be allocated. The table reflects the ESOP cost at the $10 offering price
of the Common Shares in the Conversion, which may be more or less than the
fair value at which the shares are ultimately allocated.

(5) The effect of the Liquidation Account is not included in these computations.
For additional information concerning the Liquidation Account, see "THE
CONVERSION -- Principal Effects of the Conversion -- Liquidation Account."
The amounts shown do not reflect the federal income tax consequences of the
potential restoration of the bad debt reserves to income for tax purposes,
which would be required in the event of liquidation. See "TAXATION --
Federal Taxation."

(6) Assumes that ESOP shares of 23,800 shares, 28,000 shares, 32,200 shares and
37,030 shares, at the minimum, mid-point, maximum and adjusted maximum of
the Valuation Range, respectively, are outstanding for purposes of computing
earnings per share. Pursuant to SOP 93-6, only ESOP shares which will be
allocated over the period are included in the earnings per share
calculation. Application of SOP 93-6 to the year ended June 30, 1995, would
result in an earnings per share presentation of $.62, $.55, $.51 and $.47,
reflecting weighted average shares outstanding of 277,100 shares, 326,000
shares, 374,900 shares and 431,135 shares at the minimum, mid-point, maximum
and adjusted maximum of the Valuation Range, respectively. SOP 93-6 also
requires ESOP expense to be measured based on the fair value of the shares
to be allocated. The table reflects the ESOP cost at the $10 offering price
of the Common Shares in the Conversion, which may be more or less than the
fair value at which the shares are ultimately allocated.

21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Bank is primarily engaged in the business of attracting savings deposits
from the general public and investing such funds in mortgage loans secured by
one- to four-family residential real estate located in the Bank's primary market
area. The Bank also originates loans for the construction or improvement of one-
to four-family residential real estate, loans secured by multi-family
residential real estate (over four units) and nonresidential real estate and
consumer loans, and invests in U.S. Government and agency obligations,
interest-bearing deposits in other financial institutions, mortgage-backed
securities and other investments permitted by law.

Prior to 1994, Foundation's primary business activity was offering
retirement savings accounts, with those specialized accounts constituting as
much as 60% of total deposits. Lending activity was not pursued aggressively,
and the loans that were originated during that time did not conform to secondary
market underwriting and documentation standards.

In 1994, the Bank experienced a management change following the death of its
long-time managing officer. The Bank's business plan was revised and a new
course was charted to diversify the business of the Bank. In general, the new
business plan focused on the restructuring of the Bank's deposit liabilities,
primarily the discontinuation of short-term adjustable-rate individual
retirement accounts ("IRAs"), and the development of a lending program that
emphasized the active origination of loans.

The restructuring of the deposit liabilities occurred over a period of
approximately 18 months in 1994 and 1995. As existing accounts matured during
that period, the account holders were encouraged to transfer their retirement
accounts into more traditional fixed-rate time deposits. At March 31, 1996, the
Bank's deposits totalled $27.8 million, approximately 40% of which were IRAs
that were invested in the Bank's standard certificate of deposit products.

To increase its lending business, the Bank has become an approved
seller/servicer for the Federal National Mortgage Association ("FNMA") and has
established correspondent lending relationships with several national
institutional mortgage investors. Other enhancements to the lending function
include the addition to the Bank's staff of a loan originator and technological
improvements which enable the Bank to approve loans quickly, often within 24
hours of receipt of an application.

The principal determinants of the Bank's net income are the Bank's net
interest income and its operating expenses. As a result of its location in
downtown Cincinnati, the Bank generally has not attracted a significant number
of passbook and checking accounts, but has instead had to rely heavily on time
deposits. Moreover, the Bank has historically had to price its time deposits at
the top of the market to attract and retain accounts. These competitive
pressures have resulted in the Bank having a higher cost of funds than its peer
group. To some extent, the Bank has compensated for its lower than average net
interest income by maintaining expenses at levels below its peer group. Because
of its high concentration of certificate accounts, which are not as
labor-intensive as transaction accounts, and the automation of the lending
function, the Bank has approximately one-third fewer employees than its peer
group and a ratio of noninterest expense to assets that is approximately 50
basis points lower than its peer group average.

ANALYSIS OF FINANCIAL CONDITION

The Bank's assets totalled $31.7 million at March 31, 1996, a decrease in
total assets of $111,500, or 0.4%, from June 30, 1995, assets of $31.8 million.
The decrease in asset levels was attributable to the repayment of FHLB advances
in the amount of $350,000, resulting in a 29.3% reduction of total borrowings.

During the nine-month period ended March 31, 1996, investment securities
declined by $650,000, or 61.9%, as a result of maturities and prepayments, and
mortgage-backed securities balances decreased by $575,000, or 10.4%, as a result
of increased levels of repayments as the underlying mortgages were refinanced by
borrowers seeking lower interest rates. Also during the period, deposits
increased $43,000, or 0.2%, accrued expenses increased $22,000, or 18.9%, and
advances from borrowers for taxes and insurance increased $96,369, or 246.6%, as
a result of both a new loan policy requiring borrowers to maintain escrow
accounts and the timing of such tax and insurance payments.

22
<PAGE>
The foregoing changes funded an increase in cash and interest bearing
accounts of $293,400, or 7.4%, an increase in loans receivable of $848,500, or
4.1%, and the repayment of FHLB advances of $350,000, or 29.3%. Retained
earnings increased $66,000, or 2.4%, as a result of equivalent net income for
the nine months ended March 31, 1996.

The Bank's allowance for losses on loans totalled $103,700 at March 31,
1996, as compared to $98,100 at June 30, 1995. The $5,600 increase in the
allowance during the nine-month period was the result of a $34,000 provision and
write-offs, net of recoveries, of $28,400.

COMPARISON OF OPERATING RESULTS FOR THE NINE MONTH PERIODS ENDED MARCH 31, 1996
AND 1995

GENERAL. The Bank's net income totalled $66,000 for the nine months ended
March 31, 1996, a decrease of $25,500, or 27.9%, from the $91,500 in net
earnings for the same period in 1995. The decrease in earnings was the result of
a decrease in net interest income of $28,400, or 4.7%, and an increase in the
provision for losses on loans of $25,000, or 277.8%. These amounts were
partially offset by an increase in other income of $4,900, or 10.4%, a reduction
in general and administrative expense of $12,000, or 2.4%, and a decrease of
$11,000 in federal income taxes.

NET INTEREST INCOME. Total interest income for the nine months ended March
31, 1996, increased $190,200, or 11.9%, compared to the same period in the 1995
fiscal year, while interest expense increased $218,600, or 22.1%, resulting in a
decrease in net interest income of $28,400, or 4.7%. During the nine-month
period, which was a period of rising interest rates, the Bank's liabilities were
repricing more rapidly than its assets.

Interest income on loans increased $133,000, or 10.9%, for the nine months
ended March 31, 1996, as compared to the 1995 period. The increase resulted from
a higher portfolio balance and an increased weighted average yield. From July 1,
1995, to March 31, 1996, the weighted average yield on loans increased
approximately 30 basis points, despite borrowers refinancing to obtain lower
interest rates. Interest income on mortgage-backed securities decreased $8,700,
or 3.6%, due to lower portfolio balances, but aided by increased yields as the
adjustable rate securities repriced upward. From July 1, 1994, to March 31,
1996, the weighted average yield on the Bank's mortgage-backed securities
increased approximately 75 basis points. Interest on investments increased
$1,100, or 2.2%, and interest on interest-bearing deposits increased $64,800, or
86.2%, due to higher balances and higher interest rates. From July 1, 1995, to
March 31, 1996, the yield on interest-bearing deposits increased approximately
75 basis points.

Interest expense on deposits for the nine months ended March 31, 1996,
increased $220,800, or 23.3%, as a result of higher interest rates paid on
deposits. From June 30, 1994, to March 31, 1996, the weighted cost of deposits
increased 114 basis points. Interest on borrowings for the nine month period
decreased $2,200, or 5.3%, from 1995 to 1996 as the level of FHLB advances was
reduced.

Although both interest income and the cost of funds increased during the
nine months ended March 31, 1996, interest rates have been more volatile for
assets. The downward pressure on rates during the first quarter of 1996 was
greater in the 15 year to 30 year range than in the short end of the rate curve.
Consequently, mortgage loan rates dropped rapidly, resulting in higher yielding
mortgage loans being refinanced for lower rates. The Bank sold all of the
long-term, fixed-rate loans it originated during the period, which resulted in
an increase in lower-yielding cash and interest-bearing deposits. Rates then
stabilized in March 1996, effectively slowing the refinancing activity. The Bank
intends to reduce its cash balances by reinvesting in the mortgage market at
market rates which are currently 100 basis points higher than rates were in
February 1996.

PROVISION FOR LOSSES ON LOANS. The provision for losses on loans totalled
$34,000 for the nine months ended March 31, 1996, an increase of $25,000, or
277.8%, when compared to the $9,000 provision for the same period in 1995.
Additions to the allowance for loan losses are generally predicated on past loss
experience, the level of nonperforming loans, charge-offs, the outstanding
portfolio balance and the inherent risk related to the lending function. After
giving effect to loan charge-offs of $28,000 incurred during the period, the
provision resulted in a net increase of approximately $5,600 in the allowance
for loan losses.

23
<PAGE>
OTHER INCOME. Other income totalled $52,000 for the nine months ended March
31, 1996, an increase of $4,900, or 10.4%, from the $47,100 in other income for
the comparable 1995 period. The gain on sale of loans increased $4,800, or
177.0%, due to a higher volume of loan sales as loan rates declined to levels
below management's requirements for portfolio investment. Other operating income
increased $1,200, or 17.4%, which was offset by a decrease in net investment
property income of $1,100, or 2.7%, due to higher real estate taxes.

GENERAL, ADMINISTRATIVE AND OTHER EXPENSE. General, administrative and
other expense decreased by $12,000, or 2.4%, for the nine months ended March 31,
1996, as compared to the same period in 1995. The decline resulted primarily
from a decrease in compensation, fees and benefits of $13,500, or 4.9%, which
was partially offset by an increase in franchise tax of $1,400, or 5.9%.

FEDERAL INCOME TAXES. The provision for federal income taxes totalled
$32,100 for the nine months ended March 31, 1996, a decrease of $11,000, or
25.4%, from the $43,100 provision for the comparable 1995 period, as a result of
a reduction of $38,300, or 28.45% in pretax earnings for the current period.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED JUNE 30, 1995 AND 1994

GENERAL. The Bank's net income totalled $125,400 for the year ended June
30, 1995, a decrease of $69,900, or 35.8%, from the $195,300 in net earnings for
the 1994 fiscal year. The decrease was the result of an increase in general,
administrative and other expense of $51,200, or 8.2%, and the absence of a gain
on sale of investments of $132,400 which occurred during the 1994 fiscal year.
These decreases were partially offset by higher net interest income after
provision for loan losses of $85,000, or 12.2%, resulting from higher spreads.

NET INTEREST INCOME. Total interest income for the year ended June 30,
1995, increased $93,300, or 4.5%. The higher total interest income was partially
offset by an increase in the cost of funds of $29,000, or 2.2%, resulting in an
increase in net interest income of $64,400, or 8.8%.

Interest on loans for the year ended June 30, 1995, increased $61,000, or
3.8%, primarily as a result of a $1.7 million increase in loans receivable.
Interest on mortgage-backed securities increased $34,300, or 12.0%, which more
than offset the effects of a $1.1 million decrease in the portfolio as the
adjustable rate securities repriced upward. Interest on investment securities
increased $41,500, or 150.2%, as the securities were held for the full year in
1995, compared to 9.5 months in 1994. Interest on interest-bearing deposits
decreased $43,500, or 27.0%, as the average amount invested declined, due to
increased mortgage demand.

Interest paid on deposits for the year ended June 30, 1995, increased
$11,700, or 0.9%, the result of a larger portfolio balance and higher rates paid
for savings. Interest on borrowings increased $17,300, or 41.2%, due to a
$300,000 six month FHLB advance which was obtained in February 1995 and repaid
in September 1995.

PROVISION FOR LOAN LOSSES. The provision for loan losses for the year ended
June 30, 1995, was $12,000, a decrease of $20,600, or 63.2%, from the 1994
provision. The decrease was predicated on the reduction in loans 90 or more days
delinquent and loans in foreclosure.

OTHER INCOME. Other income for the year ended June 30, 1995, was $69,700, a
decrease of $134,200 from 1994. In the 1995 period, other income included
$12,200 in gains on sale of loans. Prior to that time, the Bank had not sold
loans. Investment property income decreased $14,500, or 22.3%, due to a new
lease at a lower rental figure and higher real estate taxes. Other operating
income increased $1,700, or 30.7%, due to higher fees collected. Other income
for 1994 included nonrecurring gain on sale of equipment of $1,200 and a gain on
sale of investments of $132,400, resulting from the sale of Federal Home Loan
Mortgage Corporation ("FHLMC") stock.

GENERAL, ADMINISTRATIVE AND OTHER EXPENSE. General, administrative and
other expense increased $51,200, or 8.2%, for the year ended June 30, 1995, as
compared to the 1994 fiscal year. The increase was principally the result of an
increase in compensation, fees and benefits totaling $72,400, or 24.8%, due to
the addition of one new employee and two new directors. Computer processing
expense increased $3,000, or

24
<PAGE>
9.8%, and franchise taxes increased $500, or 1.7%. These increases were
partially offset by a decrease in deposit insurance expense of $3,600, or 5.5%,
and a decrease in other operating expense of $20,100, or 15.3%, resulting from
cost saving measures instituted by management.

FEDERAL INCOME TAXES. Federal income taxes for the year ended June 30,
1995, decreased by $30,600, or 39.0%, as a direct result of lower net earnings
for the 1995 fiscal year, compared to 1994.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED JUNE 30, 1994 AND 1993

GENERAL. Net income for the year ended June 30, 1994, totalled $195,300, an
increase of $68,800, or 54.3%, as compared to the 1993 fiscal year. The increase
was the result of an increase in other income of $67,700, or 49.6%, a decrease
in general, administrative and other expense of $12,200, or 1.9%, and a decrease
in the provision for loan losses of $50,000, or 60.5%, which were partially
offset by a decrease in net interest income of $68,000, or 8.5%. During the
first half of the 1994 fiscal year, which was a time of significant refinancing
activity generally, the Bank experienced significant loan payoffs, but was
inactive with respect to loan originations. The higher volume of payoffs
resulted in increased levels of cash, interest-bearing deposits and
mortgage-backed securities. Total interest income for the year ended June 30,
1994, decreased $228,200, or 9.9%, primarily the result of decreased interest on
loans. The cost of funds also decreased $160,200, or 10.7%, due to lower deposit
levels and a declining weighted average cost as interest rates generally
declined.

NET INTEREST INCOME. Interest income on loans for the year ended June 30,
1994, decreased $288,200, or 15.3%, as the portfolio was reduced due to
refinancing by borrowers to obtain lower rates. Interest on mortgage-backed
securities increased $54,300, or 23.4%, due to increased portfolio balances as
funds generated by loan prepayments were used purchase mortgage-backed
securities. Interest on investment securities increased $14,700, or 113.3%, due
to increased portfolio balances, and interest on interest-bearing deposits
decreased $8,900, or 5.3%, as the average balance declined.

Interest expense on deposits for the year ended June 30, 1994, decreased
$202,200, or 13.5%, as the Bank experienced an outflow of deposits as depositors
sought higher-yielding investments in the declining rate environment. Interest
expense on borrowings increased $42,000 as FHLB advances were obtained for the
first time as an alternative source to replace the declining deposit levels.

PROVISION FOR LOSSES ON LOANS. The provision for loan losses for the year
ended June 30, 1994, decreased by $50,000, or 60.5%, as a result of the lower
level of nonaccrual loans.

OTHER INCOME. Other income for the year ended June 30, 1994, increased
$67,700, or 49.6%, resulting from an increase in the gain on sale of investment
securities of $71,100, or 116.1%, a nonrecurring gain on sale of equipment of
$1,200 and an increase in investment property income of $700, or 1.0%, which
were partially offset by a decrease of $5,300, or 49.7%, in other operating
income.

GENERAL, ADMINISTRATIVE AND OTHER EXPENSE. General, administrative and
other expense for the year ended June 30, 1994, decreased $12,300, or 1.9%,
compared to the 1993 fiscal year resulting from a decrease in compensation, fees
and benefits of $14,200, or 4.6%, and a decrease in occupancy and equipment of
$6,600, or 7.9%, due to benefits paid in connection with the death of the Bank's
former managing officer in 1993. These amounts were partially offset by
increased deposit insurance costs of $5,300, or 8.9%, increased franchise tax of
$2,200, or 7.7%, and increased computer servicing costs of $1,700, or 6.2%.

FEDERAL INCOME TAXES. Federal income tax for the year ended June 30, 1994,
decreased $6,800, or 8.0%, due to changes in accounting for taxes.

The following table sets forth certain average balance sheet information,
including the average yield on interest-earning assets and the average cost of
interest-bearing liabilities for the years indicated. Such yields and costs are
derived by dividing income or expense by the average monthly balance of
interest-earning assets or interest-bearing liabilities, respectively, for the
years presented. Average balances are derived from monthly balances, which
include nonaccruing loans in the loan portfolio.

25
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31, YEAR ENDED JUNE 30,
-------------------------------------------------------------------------- ------------------------
1996 1995 1995
------------------------------------ ------------------------------------ ------------------------
AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE AVERAGE INTEREST
OUTSTANDING EARNED/ YIELD/ OUTSTANDING EARNED/ YIELD/ OUTSTANDING EARNED/
BALANCE PAID RATE BALANCE PAID RATE BALANCE PAID
----------- ----------- ---------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing
deposits................ $ 3,216 $ 140 5.80% $ 1,922 $ 75 5.20% $ 2,200 $ 117
Investment securities.... 1,164 51 5.84 1,302 51 5.22 1,304 69
Mortgage-backed
securities.............. 5,218 234 5.98 6,137 242 5.26 6,028 321
Loans receivable......... 21,608 1,358 8.38 20,231 1,225 8.07 20,318 1,655
----------- ----------- ----------- ----------- ----------- -----------
Total interest-earning
assets................ 31,206 1,783 7.62 29,592 1,593 7.18 29,850 2,162
Non-interest-earning
assets.................. 585 537 553
----------- ----------- -----------
Total assets........... $ 31,791 $ 30,128 $ 30,403
----------- ----------- -----------
----------- ----------- -----------
Interest-bearing
liabilities:
NOW and money market
accounts................ $ 2,055 $ 42 2.73% $ 3,076 $ 60 2.60 $ 2,964 $ 79
Passbook savings
accounts................ 1,189 25 2.80 1,613 35 2.89 1,539 45
Certificates of
deposit................. 24,452 1,100 6.00 21,467 851 5.29 21,858 1,185
----------- ----------- ----------- ----------- ----------- -----------
Total deposits......... 27,696 1,167 5.62 26,156 946 4.82 26,361 1,309
FHLB advances............ 931 39 5.59 995 42 5.63 1,046 59
----------- ----------- ---------- ----------- ----------- ---------- ----------- -----------
Total interest-bearing
liabilities........... 28,627 1,206 5.62 27,151 988 4.85 27,407 1,368
----------- ---------- ----------- ---------- -----------
Non-interest-bearing
liabilities............. 412 347 350
----------- ----------- -----------
Total liabilities...... 29,039 27,498 27,757
Retained earnings........ 2,752 2,631 2,646
----------- ----------- -----------
Total liabilities and
retained earnings..... $ 31,791 $ 30,128 $ 30,403
----------- ----------- -----------
----------- ----------- -----------
Net interest income...... $ 577 $ 605 $ 794
----------- ----------- -----------
----------- ----------- -----------
Interest rate spread..... 2.00% 2.33%
---------- ----------
---------- ----------
Net interest margin (net
interest income as a
percentage of average
interest-earning
assets)................. 2.47% 2.73%
---------- ----------
---------- ----------
Average interest-earning
assets to average
interest-bearing
liabilities............. 109.01% 108.99%
---------- ----------
---------- ----------

1994 1993
------------------------------------ ------------------------------------
AVERAGE AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE
YIELD/ OUTSTANDING EARNED/ YIELD/ OUTSTANDING EARNED/ YIELD/
RATE BALANCE PAID RATE BALANCE PAID RATE
---------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing
deposits................ 5.32% $ 4,727 $ 161 3.41% $ 5,472 $ 170 3.11%
Investment securities.... 5.29 573 28 4.89 244 13 5.32
Mortgage-backed
securities.............. 5.33 6,478 286 4.41 4,268 232 5.44
Loans receivable......... 8.15 19,242 1,594 8.28 21,028 1,882 8.95
----------- ----------- ----------- -----------
Total interest-earning
assets................ 7.24 31,020 2,069 6.67 31,012 2,297 7.41
Non-interest-earning
assets.................. 543 561
----------- -----------
Total assets........... $ 31,563 $ 31,573
----------- -----------
----------- -----------
Interest-bearing
liabilities:
NOW and money market
accounts................ 2.67 $ 3,425 $ 99 2.89 $ 2,870 $ 96 3.34
Passbook savings
accounts................ 2.92 2,245 67 2.98 2,698 145 5.37
Certificates of
deposit................. 5.42 22,318 1,131 5.07 23,325 1,258 5.39
----------- ----------- ----------- -----------
Total deposits......... 4.97 27,988 1,297 4.63 28,893 1,499 5.19
FHLB advances............ 5.64 815 42 5.16 -- -- --
---------- ----------- ----------- ---------- ----------- ----------- ----------
Total interest-bearing
liabilities........... 4.99 28,803 1,339 4.65 28,893 1,499 5.19
---------- ----------- ---------- ----------- ----------
Non-interest-bearing
liabilities............. 296 337
----------- -----------
Total liabilities...... 29,099 29,230
Retained earnings........ 2,464 2,343
----------- -----------
Total liabilities and
retained earnings..... $ 31,563 $ 31,573
----------- -----------
----------- -----------
Net interest income...... $ 730 $ 798
----------- -----------
----------- -----------
Interest rate spread..... 2.25% 2.02% 2.22%
---------- ---------- ----------
---------- ---------- ----------
Net interest margin (net
interest income as a
percentage of average
interest-earning
assets)................. 2.66% 2.35% 2.57%
---------- ---------- ----------
---------- ---------- ----------
Average interest-earning
assets to average
interest-bearing
liabilities............. 108.92% 107.70% 107.33%
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

26
<PAGE>
The following table sets forth, at the dates indicated, the weighted average
yields earned on the Bank's interest-earning assets, the weighted average
interest rates paid on interest-bearing liabilities and the interest rate spread
between the weighted average yields and rates at the dates presented.

<TABLE>
<CAPTION>
AT JUNE 30,
AT MARCH 31, -------------------------------------
1996 1995 1994 1993
--------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average yield on loans........................................ 8.14% 8.25% 7.80% 8.35%
Weighted average yield on investment securities portfolio.............. 6.33 5.72 4.99 5.30
Weighted average yield on mortgage-backed securities................... 5.41 4.52 5.06 5.30
Weighted average yield on interest-bearing deposits.................... 5.24 5.96 4.11 3.53
Weighted average yield on all interest-earning assets.................. 7.27 7.19 6.63 7.28
Weighted average rate paid on deposits................................. 5.58 5.62 4.40 4.88
Weighted average rate paid on FHLB advances............................ 5.51 5.85 5.50 --
Weighted average rate paid on all interest-bearing liabilities......... 5.58 5.57 4.48 4.88
Interest rate spread................................................... 1.69 1.62 2.15 2.40
</TABLE>

The table below describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected the Bank's interest income and interest expense during the years
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (i) changes in
volume (change in volume multiplied by prior year rate), (ii) changes in rate
(change in rate multiplied by prior year volume) and (iii) total changes in rate
and volume. The combined effects of changes in both volume and rate, which
cannot be separately identified, have been allocated proportionately to the
change due to volume and the change due to rate:
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31, YEAR ENDED JUNE 30,
------------------------------------- -------------------------------------------------------------
1996 VS. 1995 1995 VS. 1994 1994 VS. 1993
------------------------------------- ------------------------------------- ----------------------
INCREASE INCREASE INCREASE
(DECREASE) (DECREASE) (DECREASE)
DUE TO TOTAL DUE TO TOTAL DUE TO
---------------------- INCREASE ---------------------- INCREASE ----------------------
VOLUME RATE (DECREASE) VOLUME RATE (DECREASE) VOLUME RATE
----------- --------- ------------- ----------- --------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income attributable
to:
Interest-bearing
deposits.................. $ 55 $ 10 $ 65 $ (109) $ 65 $ (44) $ (24) $ 15
Investments................ (5) 5 -- 39 2 41 16 (1)
Mortgage-backed
securities.............. (39) 31 (8) (21) 56 35 104 (50)
Loans receivable........... 86 47 133 88 (27) 61 (154) (134)
--- --------- ----- ----- --------- ----- ----- ---------
Total interest income.... 97 93 190 (3) 96 93 (58) (170)
--- --------- ----- ----- --------- ----- ----- ---------
Interest-bearing liabilities
Deposits................... 58 163 221 (78) 90 12 (46) (156)
FHLB advances.............. (3) -- (3) (13) 4 17 21 21
--- --------- ----- ----- --------- ----- ----- ---------
Total interest expense... 55 163 218 (65) 94 29 (25) (135)
--- --------- ----- ----- --------- ----- ----- ---------
Increase (decrease) in net
interest income............. $ 42 $ (70) $ (28) $ (62) $ 2 $ 64 $ (33) $ (35)
--- --------- ----- ----- --------- ----- ----- ---------
--- --------- ----- ----- --------- ----- ----- ---------

TOTAL
INCREASE
(DECREASE)
-------------
<S> <C>
Interest income attributable
to:
Interest-bearing
deposits.................. $ (9)
Investments................ 15
Mortgage-backed
securities.............. 54
Loans receivable........... (288)
-----
Total interest income.... (228)
-----
Interest-bearing liabilities
Deposits................... (202)
FHLB advances.............. 42
-----
Total interest expense... (160)
-----
Increase (decrease) in net
interest income............. $ (68)
-----
-----
</TABLE>

ASSET AND LIABILITY MANAGEMENT

The Bank, 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. As part of its effort to monitor and manage
interest rate risk, the Bank uses the "net portfolio value" ("NPV") methodology
recently adopted by the OTS as part of its capital regulations. Although the
Bank is not currently subject to the NPV regulation because such regulation does
not apply to institutions with less than $300 million in assets and risk-based
capital in excess of 12%, the application of the NPV methodology illustrates
certain aspects of the Bank's interest rate risk.

27
<PAGE>
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 the NPV which would
result from a theoretical 200 basis point (1 basis point equals .01%) change in
market interest rates.

Presented below, as of December 31, 1995, is an analysis of the Bank's
interest rate risk as measured by changes in NPV for instantaneous and sustained
parallel shifts of 100 basis points in market interest rates. The table also
contains the policy limits set by the Board of Directors of the Bank as the
maximum change in NPV that the Board of Directors deems advisable in the event
of various changes in interest rates. Such limits have been established with
consideration of the dollar impact of various rate changes and the Bank's strong
capital position.

As illustrated in the table, NPV is more sensitive to rising rates than
declining rates. Such difference in sensitivity occurs principally because, as
rates rise, borrowers do not prepay fixed-rate loans as quickly as they do when
interest rates are declining. Thus, in a rising interest rate environment,
because the Bank has a significant amount of fixed-rate loans in its loan
portfolio, the amount of interest the Bank would receive on its loans would
increase relatively slowly as loans are slowly prepaid and new loans are made at
higher rates. Moreover, the interest the Bank would pay on its deposits would
increase rapidly because the Bank's deposits generally have shorter periods to
repricing. The assumptions used in calculating the amounts in this table are OTS
assumptions.

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------
CHANGE IN INTEREST RATE BOARD LIMIT % $ CHANGE % CHANGE IN
(BASIS POINTS) CHANGE IN NPV NPV
- ----------------------- -------------- --------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
+400 (60)% $ (1,678) (64)%
+300 (50) (1,185) (45)
+200 (35) (717) (28)
+100 (20) (302) (12)
0 0 0 0
-100 20 118 5
-200 35 90 3
-300 50 94 4
-400 60 171 7
</TABLE>

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, the interest
rates on certain types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag
behind changes in market rates. Further, in the event of a change in interest
rates, expected rates of prepayment on loans and mortgage-backed securities and
early withdrawal levels from certificates of deposit would likely deviate
significantly from those assumed in making the risk calculations.

In a rising interest rate environment, the Bank's net interest income could
be expected to be negatively affected. Moreover, rising interest rates could
negatively affect the Bank's earnings due to diminished loan demand.

LIQUIDITY AND CAPITAL RESOURCES

The Bank's principal sources of funds are deposits, loan and mortgage-backed
securities repayments, maturities of securities and other funds provided by
operations. The Bank also has the ability to borrow from the FHLB of Cincinnati.
See "REGULATION -- Federal Home Loan Banks." While scheduled loan repayments and
maturing investments are relatively predictable, deposit flows and early loan
and mortgage-backed securities prepayments are more influenced by interest
rates, general economic conditions and competition. The Bank maintains
investments in liquid assets based upon management's assessment of

28
<PAGE>
(i) the need for funds, (ii) expected deposit flows, (iii) the yields available
on short-term liquid assets and (iv) the objectives of the asset/liability
management program. During fiscal 1995, the Bank was able to increase total
deposits through a combined strategy involving both advertising and deposit
pricing.

OTS regulations presently require the Bank to maintain an average daily
balance of investments in United States Treasury securities, federal agency
obligations and other investments having maturities of five years or less in an
amount equal to 5% of the sum of the Bank's average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less. The
liquidity requirement, which may be changed from time to time by the OTS to
reflect changing economic conditions, is intended to provide a source of
relatively liquid funds upon which the Bank may rely if necessary to fund
deposit withdrawals or other short-term funding needs. At March 31, 1996, the
Bank's regulatory liquidity ratio was 15.7%. At such date, the Bank had
commitments to originate loans totaling approximately $726,000 and one
commitment to sell a loan in the amount of $71,000. The Bank considers its
liquidity and capital reserves sufficient to meet its outstanding short- and
long-term needs. At March 31, 1996, the Bank had no material commitments for
capital expenditures. See Notes 9 and 10 of the Notes to Consolidated Financial
Statements.

The Bank's liquidity, primarily represented by cash and cash equivalents, is
a result of the funds used in or provided by the Bank's operating, investing and
financing activities. These activities are summarized below for the nine months
ended March 31, 1996, and for the years ended June 30, 1995, 1994 and 1993.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
NINE MONTHS ENDED -------------------------------
MARCH 31, 1996 1995 1994 1993
------------------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income....................................................... $ 66 $ 125 $ 195 $ 127
Adjustments to reconcile net income to net cash from operating
activities...................................................... 192 12 (95) (30)
------ --------- --------- ---------
Net cash from operating activities............................... 258 137 100 97
Net cash provided by (used in) investment activities............. 342 718 (1,518) (13)
Net cash provided by (used in) financing activities.............. (307) 626 (759) 1,445
------ --------- --------- ---------
Net change in cash and cash equivalents.......................... 293 1,481 (2,177) 1,529
Cash and cash equivalents at beginning of period................. 3,943 2,462 4,639 3,110
------ --------- --------- ---------
Cash and cash equivalents at end of period....................... $ 4,236 $ 3,943 $ 2,462 $ 4,639
------ --------- --------- ---------
------ --------- --------- ---------
</TABLE>

The Bank is required by applicable law and regulation to meet certain
minimum capital standards. Such capital standards include a tangible capital
requirement, a core capital requirement or leverage ratio and a risk-based
capital requirement. See "REGULATION -- OTS Regulations -- Regulatory Capital
Requirements."

The tangible capital requirement requires savings associations to maintain
"tangible capital" of not less than 1.5% of the association's adjusted total
assets. Tangible capital is defined in OTS regulations as core capital minus any
intangible assets.

"Core capital" is comprised of common stockholders' equity (including
retained earnings), noncumulative preferred stock and related surplus, minority
interests in consolidated subsidiaries, certain nonwithdrawable accounts and
pledged deposits of mutual associations. OTS regulations require savings
associations to maintain core capital of at least 3% of the association's total
assets. The OTS has proposed to increase such requirement to 4% to 5%, except
for those associations with the highest examination rating and acceptable levels
of risk. See "REGULATION -- OTS Regulations -- Regulatory Capital Requirements."

OTS regulations require that savings associations maintain "risk-based
capital" in an amount not less than 8% of risk-weighted assets. Risk-based
capital is defined as core capital plus certain additional items of capital,
which in the case of the Bank includes a general loan loss allowance of $96,000
at March 31, 1996.

29
<PAGE>
The following table summarizes the Bank's regulatory capital requirements
and actual capital at March 31, 1996. See Note 9 of the Notes to Financial
Statements for a reconciliation of capital under generally accepted accounting
principles ("GAAP") and regulatory capital amounts.

<TABLE>
<CAPTION>
EXCESS OF ACTUAL
CURRENT REQUIREMENT CAPITAL OVER CURRENT
ACTUAL CAPITAL REQUIREMENT
---------------------- ----------------------- ---------------------- APPLICABLE
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ASSET TOTAL
--------- ----------- --------- ------------ --------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
MARCH 31, 1996
Tangible capital................ $ 2,772 8.7% $ 476 1.5% $ 2,296 7.2% $ 31,733
Core capital.................... 2,772 8.7 952 3.0 1,820 5.7 31,733
Risk-based capital.............. 2,868 19.6 1,171 8.0 1,697 11.6 14,640

JUNE 30, 1995
Tangible capital................ $ 2,706 8.5% $ 478 1.5% $ 2,228 7.0% $ 31,844
Core capital.................... 2,706 8.5 955 3.0 1,751 5.5 31,844
Risk-based capital.............. 2,776 19.3 1,153 8.0 1,623 11.3 14,418
</TABLE>

IMPACT OF NEW ACCOUNTING STANDARDS

In May 1993, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan" ("SFAS No. 114"). Under the provisions of SFAS No.
114, a loan is considered impaired when, based on current information and
events, it is probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement. SFAS No. 114 requires
creditors to measure impairment of a loan based on the present value of expected
future cash flows, discounted at the loan's effective interest rate. If the
measure of the impaired loan is less than the recorded investment in the loan, a
creditor must recognize an impairment by recording a valuation allowance with a
corresponding charge to bad debt expense. SFAS No. 114 also applies to
restructured loans and eliminates the requirement to classify loans that are
in-substance foreclosures as foreclosed assets, except for loans where the
creditor has physical possession of the underlying collateral, but not legal
title. SFAS No. 114 applies to financial statements for fiscal years beginning
after December 15, 1994. In October 1994, the FASB issued SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures" ("SFAS No. 118"), which amends SFAS No. 114 to allow a creditor to
use existing methods for recognizing interest income on impaired loans. The Bank
will be required to adopt SFAS No. 114 for the year ending June 30, 1996, and
does not anticipate that the implementation of SFAS No. 114 and its amendment,
SFAS No. 118, will have a material impact on its results of operations or
financial position.

In November 1993, the American Institute of Certified Public Accountants
("AICPA") issued SOP 93-6, "Employers' Accounting for Employee Stock Ownership
Plans" ("SOP 93-6"), which is effective for fiscal years beginning after
December 15, 1993. SOP 93-6 will apply to the Bank for its fiscal year beginning
July 1, 1996. SOP 93-6 requires the application of its guidance for shares
acquired by ESOPs after June 30, 1992, but not yet committed to be released as
of the beginning of the year SOP 93-6 is adopted. SOP 93-6 will, among other
things, change the measure of compensation expense recorded by employers for
leveraged ESOPs from the cost of ESOP shares to the fair value of ESOP shares.
Under SOP 93-6, the Company will recognize compensation cost equal to the fair
value of the ESOP shares during the periods in which they become committed to be
released. To the extent that the fair value of the Bank's ESOP shares differ
from the cost of such shares, this differential will be charged or credited to
equity. Employers with internally leveraged ESOPs such as the Holding Company
will not report the loan receivable from the ESOP as an asset and will not
report the ESOP debt from the employer as a liability. See "MANAGEMENT -- Stock
Benefit Plans -- Employee Stock Ownership Plan."

In December 1991, the FASB issued SFAS No. 107, "Disclosures About Fair
Value of Financial Statements" ("SFAS No. 107"), which would require disclosure
of fair value information about financial instruments, whether or not recognized
in the balance sheet, for which it is practicable to estimate that value.

30
<PAGE>
SFAS No. 107 excludes certain financial instruments and all nonfinancial
instruments from its disclosure requirements. The Bank will be required to adopt
SFAS No. 107 for the year ended June 30, 1996. Management does not anticipate
that the implementation of SFAS No. 107 will have a material impact on the
results of operations or financial position of the Bank.

In October, 1994, the FASB issued SFAS No. 119 "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments" ("SFAS No. 119").
SFAS No. 119 requires disclosures about the amounts, nature and terms of
derivative financial instruments which do not result in off-balance-sheet risk
of accounting loss. It requires that a distinction be made between financial
instruments held or issued for trading purposes (including dealing and other
trading activities measured at fair value with gains and losses recognized in
earnings) and financial instruments held or issued for purposes other than
trading. SFAS No. 119 is effective for financial statements issued for fiscal
years ended after December 31, 1995. Management does not expect any material
impact from the adoption of SFAS 119.

In May 1993, the FASB issued SFAS No. 115. SFAS No. 115 requires that
investments be classified as "held to maturity," "available for sale" or
"trading securities." The statement defines investments in securities as "held
to maturity" based upon a positive intent and ability to hold those securities
to maturity. Investments held to maturity would be reported at amortized cost.
Debt and equity securities that are bought and held principally for the purpose
of selling them in the near term are classified as "trading securities" and
would be reported at fair value, with unrealized gains and losses included in
operations. Equity and debt securities not classified as "held to maturity" or
"trading securities" are classified as "available for sale" and would be
recorded at fair value, with unrealized gains and losses excluded from
operations and reported as a separate component of stockholders' equity. The
Bank adopted SFAS No. 115 effective July 1, 1995. The adoption of SFAS No. 115
did not have an impact on the Bank's results of operations or financial
position. The Bank holds all investments as "held to maturity" carried at
amortized cost.

In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights." This statement requires that a mortgage banking enterprise
recognize as separate assets rights to service mortgage loans for others,
however those servicing rights are acquired. A mortgage banking enterprise that
acquires mortgage servicing rights through either the purchase or origination of
mortgage loans and sells or securitizes those loans with servicing rights
retained would allocate the total cost of the mortgage loans to the mortgage
servicing rights and the loans based on their relative fair value. Statement No.
122 is effective for fiscal years beginning after December 15, 1995. Management
does not expect an impact from the adoption of this standard.

In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed of." SFAS No. 121
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles and goodwill related to those assets to be held
and used and for long-lived assets and certain identifiable intangibles to be
disposed of. The standard requires an impairment loss to be recognized when the
carrying amount of the asset exceeds the fair value of the asset. The fair value
of the asset is the amount at which the asset would be bought or sold in a
current transaction between willing parties, that is, other than in a forced
liquidation sale. An entity that recognizes an impairment loss shall disclose
additional information in the financial statements related to the impaired
asset. All long-lived assets and certain identifiable intangibles to be disposed
of and for which management has committed to a plan to dispose of the assets,
whether by sale or abandonment, shall be reported at the lower of the carrying
amount or fair value less cost to sell. Subsequent revisions in estimates of
fair value less cost to sell shall be reported as adjustments to the carrying
amount of assets to be disposed of, provided that the carrying amount of the
asset does not exceed the carrying amount of the asset before an adjustment was
made to reflect the decision to dispose of the asset. The statement requires
additional disclosure in the footnotes regarding assets to be disposed of.

31
<PAGE>
In December 1994, the Accounting Standards Division of the AICPA approved
SOP 94-6, "Disclosure of Certain Significant Risks and Uncertainties." SOP 94-6
requires disclosure in the financial statements beyond those now being required
or generally made in the financial statements about the risks and uncertainties
existing as of the date of those financial statements in the following areas:
nature of operations, use of estimates in the preparation of financial
statements, certain significant estimates, and current vulnerability due to
certain concentrations. The standard is effective for financial statements
issued for fiscal years ending after December 15, 1995.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," establishing financial accounting and reporting standards for
stock-based employee compensation plans. SFAS No. 123 encourages all entities to
adopt a new method of accounting to measure compensation cost of all employee
stock compensation plans based on the estimated fair value of the award at the
date it is granted. Companies are, however, allowed to continue to measure
compensation cost for those plans using the intrinsic value based method of
accounting, which generally does not result in compensation expense recognition
for most plans. Companies that elect to remain with the existing accounting are
required to disclose in a footnote to the financial statements pro forma net
income and, if presented, earnings per share, as if SFAS No. 123 had been
adopted. The accounting requirements of SFAS No. 123 are effective for
transactions entered into during fiscal years that begin after December 15,
1995. Companies are required, however, to disclose information for awards
granted in their first fiscal year ending after December 15, 1994. Management
has not completed an analysis of the potential effects of SFAS No. 123 on its
financial condition or results of operations.

IMPACT OF INFLATION AND CHANGING PRICES

The consolidated financial statements and notes thereto included herein have
been prepared in accordance with GAAP. GAAP requires the Bank to measure
financial position and operating results in terms of historical dollars. Changes
in the relative value of money due to inflation or recession are generally not
considered.

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 greatly 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 on changes in monetary and fiscal
policies.

THE BUSINESS OF THE BANK

GENERAL

The Bank is a mutual savings and loan association which was organized under
Ohio law in 1888 as "The Foundation Building and Loan Company." In February
1942, the name of the Bank was changed to "The Foundation Savings and Loan
Company" and in October 1990, the Bank adopted its present name. As an Ohio
savings and loan association, the Bank is subject to supervision and regulation
by the OTS, the Division and the FDIC. The Bank is a member of the FHLB of
Cincinnati, and the deposits of the Bank are insured up to applicable limits by
the FDIC in the SAIF. See "REGULATION."

The Bank conducts business from its office at 25 Garfield Place in
Cincinnati, Ohio. The principal business of the Bank is the origination of
permanent mortgage loans secured by first mortgages on one- to four-family
residential real estate located in Hamilton County, Ohio and the contiguous Ohio
counties of Clermont, Butler and Warren and the Kentucky counties of Boone and
Kenton. The Bank also originates mortgage loans secured by multifamily real
estate (over four units) and nonresidential real estate in its primary market
area. See "Lending Activities." In addition to real estate lending, the Bank
originates a limited number of secured and unsecured consumer loans. For
liquidity and interest rate risk management purposes, the Bank invests in
interest-bearing deposits in other financial institutions, U.S. Government and
agency obligations, mortgage-backed securities and other investments permitted
by applicable law. See "Investment Activities." Funds for lending and other
investment activities are obtained primarily from

32
<PAGE>
savings deposits, which are insured up to applicable limits by the FDIC, and
principal repayments on loans. Advances from the FHLB of Cincinnati are utilized
from time to time when other sources of funds are inadequate to fund loan
demand. See "Deposits and Borrowings."

Interest on loans and investments is the Bank's primary source of income.
The Bank's principal expense is interest paid on deposit accounts. Operating
results are dependent to a significant degree on the "net interest income" of
the Bank, which is the difference between interest income earned on loans,
mortgage-backed securities and other investments and interest paid on deposits
and borrowings. Like most thrift institutions, the Bank's interest income and
interest expense are significantly affected by general economic conditions and
by the policies of various regulatory authorities. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

MARKET AREA

The Bank conducts business from its office in Cincinnati, Ohio. The Bank's
primary market area for lending and deposit activity is Hamilton County, Ohio.
The Bank also frequently receives deposits from, and makes loans to, customers
in the contiguous Ohio counties of Clermont, Butler and Warren and the Kentucky
counties of Kenton and Boone.

LENDING ACTIVITIES

GENERAL. The Bank's principal lending activity is the origination of
conventional real estate loans secured by one- to four-family homes located in
the Bank's primary market area. Loans secured by multifamily properties
containing five units or more and nonresidential properties are also offered by
the Bank. The Bank does not originate first mortgage loans insured by the
Federal Housing Authority or guaranteed by the Veterans Administration. In
addition to real estate lending, the Bank originates a limited number of
consumer loans, including loans secured by deposit accounts, automobile loans
and unsecured loans.

LOAN PORTFOLIO COMPOSITION. The following table presents certain
information in respect of the composition of the Bank's loan portfolio at the
dates indicated:

<TABLE>
<CAPTION>
AT JUNE 30,
----------------------------------------------------------------------
AT MARCH 31, 1996 1995 1994 1993
---------------------- ---------------------- ---------------------- ----------------------
PERCENT PERCENT PERCENT PERCENT
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
AMOUNT NET LOANS AMOUNT NET LOANS AMOUNT NET LOANS AMOUNT NET LOANS
--------- ----------- --------- ----------- --------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
One- to four-family............ $ 18,990 88.91% $ 18,300 89.22% $ 16,714 88.93% $ 17,305 88.52%
Nonresidential................. 1,302 6.09 1,124 5.48 882 4.69 1,030 5.27
Multifamily.................... 798 3.74 636 3.10 688 3.66 722 3.69
Commercial loans............... -- -- -- -- -- -- 2 0.01
Consumer loans:
Property improvement loans..... -- -- -- -- 14 0.07 19 0.10
Passbook loans................. 58 0.27 111 0.54 66 0.35 579 2.96
ther consumer loans............ 353 1.65 501 2.44 566 3.01 81 0.41
--------- ----------- --------- ----------- --------- ----------- --------- -----------
Total loans...................... $ 21,501 100.66% $ 20,672 100.78% $ 18,930 100.72% $ 19,738 100.96%
--------- ----------- --------- ----------- --------- ----------- --------- -----------
--------- ----------- --------- ----------- --------- ----------- --------- -----------
Less:
Loans in process............... 5 0.02 15 0.07 -- -- 5 0.02
Allowance for loan losses...... 104 0.49 98 0.48 72 0.38 101 0.52
Deferred loan fees............. 33 0.15 48 0.23 58 0.31 74 0.38
Unearned discounts............. -- -- -- -- 6 0.03 8 0.04
--------- ----------- --------- ----------- --------- ----------- --------- -----------
Net loans...................... $ 21,359 100.00% $ 20,511 100.00% $ 18,794 100.00% $ 19,550 100.00%
--------- ----------- --------- ----------- --------- ----------- --------- -----------
--------- ----------- --------- ----------- --------- ----------- --------- -----------
</TABLE>

33
<PAGE>
LOAN MATURITY. The following table sets forth certain information as of
March 31, 1996, regarding the dollar amount of loans maturing in the Bank's
portfolio based on their contractual terms to maturity. Demand loans and other
loans having no stated schedule of repayments or no stated maturity are reported
as due in one year or less.
<TABLE>
<CAPTION>
DUE DURING THE YEAR ENDING
DUE 4-5 DUE 6-10 DUE 11-20 DUE MORE
MARCH 31, YEARS YEARS YEARS THAN 20
------------------------------- AFTER AFTER AFTER YEARS AFTER
1997 1998 1999 3/31/96 3/31/96 3/31/96 3/31/96
--------- --------- --------- --------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
One- to four-family........................... $ 573 $ 669 $ 713 $ 1,578 $ 4,050 $ 3,992 $ 7,411
Nonresidential................................ 65 68 67 133 345 351 273
Multifamily................................... 30 33 36 78 221 284 116
--------- --------- --------- --------- ----------- ----------- -----------
Total real estate........................... $ 668 $ 770 $ 816 $ 1,788 $ 4,616 $ 4,627 $ 7,800
Consumer loans
Passbook loans................................ 52 212 58 31 -- -- --
Other consumer................................ 17 4 -- 37 -- -- --
--------- --------- --------- --------- ----------- ----------- -----------
Total....................................... $ 737 $ 986 $ 874 $ 1,856 $ 4,616 $ 4,627 $ 7,800
--------- --------- --------- --------- ----------- ----------- -----------
--------- --------- --------- --------- ----------- ----------- -----------

TOTAL
---------

<S> <C>
Real estate loans:
One- to four-family........................... $ 18,985
Nonresidential................................ 1,302
Multifamily................................... 798
---------
Total real estate........................... $ 21,085
Consumer loans
Passbook loans................................ 353
Other consumer................................ 58
---------
Total....................................... $ 21,496
---------
---------
</TABLE>

The next table sets forth the dollar amount of all loans due after one year
from March 31, 1996, which have predetermined interest rates and have floating
or adjustable interest rates:

<TABLE>
<CAPTION>
DUE MORE THAN ONE YEAR
AFTER MARCH 31, 1996
---------------------------
(IN THOUSANDS)
<S> <C>
Fixed rates of interest................................ $ 10,022
Adjustable rates of interest........................... 10,737
-------
$ 20,759
-------
-------
</TABLE>

LOANS SECURED BY ONE- TO FOUR-FAMILY REAL ESTATE. The principal lending
activity of the Bank is the origination of permanent conventional loans secured
by one- to four-family residences, primarily single-family residences, located
within the Bank's primary market area. Each of such loans is secured by a first
mortgage on the underlying real estate and improvements thereon, if any. At
March 31, 1996, the Bank's one- to four-family residential real estate loan
portfolio was approximately $19.0 million, or 88.9% of total loans.

OTS regulations and Ohio law limit the amount which the Bank may lend in
relationship to the appraised value of the real estate and improvements at the
time of loan origination. In accordance with such regulations and laws, the Bank
typically makes loans on owner-occupied one- to four-family residences of up to
80% of the value of the real estate and improvements (the "Loan-to-Value Ratio"
or "LTV") and also makes loans with higher LTVs. The Bank makes loans on
non-owner-occupied or investment properties with maximum LTVs of 75%. Since
1994, the Bank has required that the principal amount of any loan which exceeds
80% LTV at the time of origination be covered by private mortgage insurance at
the expense of the borrower.

Fixed-rate loans are offered by the Bank, currently for terms of up to 30
years. Adjustable-rate residential real estate loans ("ARMs") are also offered
by the Bank for terms of up to 30 years. The interest rate adjustment periods on
the ARMs are one and three years, with adjustments tied to the one-year and
three-year U.S. Treasury bill rate. In addition, the Bank offers loans on which
the interest rates remain fixed for a period of three, five, seven or ten years
and then adjust annually according to the one-year U.S. Treasury bill rate. The
new interest rate at each change date is determined by adding 2.5% to 3.0% to
the prevailing index. The maximum allowable adjustment at each adjustment date
is 2%, with a maximum adjustment of 6% over the term of the loan.

34
<PAGE>
The initial rate on ARMs originated by the Bank is sometimes less than the
sum of the index at the time of origination plus the specified margin. Such
loans may be subject to greater risk of default as the interest rate adjusts to
the fully-indexed level. The Bank attempts to reduce the risks by underwriting
such loans on the basis of the payment amount the borrower will be required to
pay during the second year of the loan, assuming the maximum possible rate
increase.

Adjustable-rate loans decrease the Bank's interest rate risk but involve
other risks, primarily credit risk, because as interest rates rise the payment
by the borrower rises to the extent permitted by the terms of the loan, thereby
increasing the potential for default. At the same time, the marketability of the
underlying property may be adversely affected by higher interest rates. The Bank
believes that these risks have not had a material adverse effect on the Bank to
date.

The Bank makes a limited number of loans for the construction and
improvement of single-family houses. At March 31, 1996, the Bank's loan
portfolio included approximately $124,000 in improvement loans, .58% of total
loans, net of the total of $5,000 in undisbursed portions of such loans.

LOANS SECURED BY MULTIFAMILY REAL ESTATE. In addition to loans on one- to
four-family properties, the Bank originates loans secured by multifamily
properties containing over four units. Multifamily loans are offered with fixed
or adjustable rates for terms of up to 20 years and have a maximum LTV of 75%.

Multifamily lending is generally considered to involve a higher degree of
risk than one- to four-family residential lending because the borrower typically
depends upon income generated by the project to cover operating expenses and
debt service. The profitability of a project can be affected by economic
conditions, government policies and other factors beyond the control of the
borrower. The Bank attempts to reduce the risk associated with multifamily
lending by evaluating the creditworthiness of the borrower and the projected
income from the project and by obtaining personal guarantees on loans made to
corporations and partnerships. The Bank requests that borrowers submit rent
rolls and financial statements annually to enable the Bank to monitor the loan.

At March 31, 1996, loans secured by multifamily properties totaled
approximately $798,000, or 3.7% of total loans.

LOANS SECURED BY NONRESIDENTIAL REAL ESTATE. At March 31, 1996,
approximately $1.3 million, or 6.1%, of the Bank's total loans were secured by
permanent mortgages on nonresidential real estate. Such loans have both fixed
and adjustable rates, terms of up to 20 years and LTVs of up to 70%. Among the
properties securing nonresidential real estate loans are office buildings and
other non-residential properties located in the Bank's primary market area. For
the last five years, the amount of the Bank's nonresidential real estate loans
as a percent of total loans has ranged from a low of 4.7% at June 30, 1994, to a
high of 6.1% at March 31, 1996.

Although the loans secured by nonresidential real estate typically have
higher interest rates than one- to four-family residential real estate loans,
nonresidential real estate lending is generally considered to involve a higher
degree of risk than residential lending due to the relatively larger loan
amounts and the effects of general economic conditions on the successful
operation of income-producing properties. The Bank has endeavored to reduce such
risk by limiting loan amounts and evaluating the credit history and past
performance of the borrower, the location of the real estate, the financial
condition of the borrower, the quality and characteristics of the income stream
generated by the property and appraisals supporting the property's valuation and
by obtaining personal guarantees from borrowers.

COMMERCIAL LOANS. In prior years, the Bank has made commercial loans to
businesses in its primary market area. Such loans are typically secured by a
security interest in inventory, accounts receivable or other assets of the
borrower. At March 31, 1996, the Bank had no commercial loan portfolio.

CONSUMER LOANS. The Bank occasionally makes various types of consumer
loans, including loans made to depositors on the security of their deposit
accounts, automobile loans and other secured loans and

35
<PAGE>
unsecured personal loans. Consumer loans are made at fixed rates of interest and
for terms of up to five years. At March 31, 1996, the Bank had approximately
$411,000, or 1.9% of total loans, invested in consumer loans.

Consumer loans, particularly consumer loans which are unsecured or are
secured by rapidly depreciating assets such as automobiles, may entail greater
risk than do residential real estate loans. Repossessed collateral for a
defaulted consumer loan may not provide an adequate source of repayment of the
outstanding loan balance. The risk of default on consumer loans increases during
periods of recession, high unemployment and other adverse economic conditions.

LOAN SOLICITATION AND PROCESSING. Loan originations are developed from a
number of sources, including continuing business with depositors and borrowers,
solicitations by the Bank's lending staff and walk-in customers.

Loan applications for permanent real estate loans are taken by a loan
originator. The Bank typically obtains a credit report, verification of
employment and other documentation concerning the creditworthiness of the
borrower. An appraisal of the fair market value of the real estate which will be
given as security for the loan is prepared by a fee appraiser approved by the
Board of Directors. Upon the completion of the appraisal and the receipt of
information on the credit history of the borrower, the application for a loan is
submitted for review in accordance with the Bank's underwriting guidelines.
Loans of amounts less than $250,000 and which meet secondary market standards
may be approved by management, while loans of amounts greater than $250,000 or
which do not meet secondary market standards must be submitted to the full Board
of Directors.

Under the Bank's loan guidelines, if a real estate loan application is
approved, title insurance is obtained on the real estate which will secure the
mortgage loan. Borrowers are required to carry satisfactory fire and casualty
insurance and flood insurance, if applicable, and to name the Bank as an insured
mortgagee.

The procedure for approval of construction loans is the same as for
permanent real estate loans, except that an appraiser evaluates the building
plans, construction specifications and estimates of construction costs. The Bank
also evaluates the feasibility of the proposed construction project and the
experience and record of the builder.

Consumer loans are underwritten on the basis of the borrower's credit
history and an analysis of the borrower's income and expenses, ability to repay
the loan and the value of the collateral, if any.

LOAN ORIGINATIONS, PURCHASES AND SALES. The Bank has sold a limited number
of loans in the secondary market in recent years. The Bank sells loans in order
to improve its liquidity or to manage its interest rate risk. The Bank has
released the right to service virtually all of the loans it has sold.

36
<PAGE>
The following table presents the Bank's loan origination, purchase and sale
activity for the periods indicated:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30,
-------------------- -------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loans receivable-beginning of period....................... $ 20,511 $ 18,794 $ 18,794 $ 19,550 $ 22,038
Loans originated:
One- to four-family residential.......................... 5,780 3,910 5,090 2,707 5,834
Nonresidential........................................... 268 210 370 -- 95
Multifamily residential.................................... 194 -- -- -- --
Consumer................................................. 53 49 127 201 435
Passbook................................................. 24 -- 50 54 14
--------- --------- --------- --------- ---------
Total loans originated................................. 6,319 4,169 5,637 2,962 6,378
Reductions:
Principal repayments....................................... 4,375 2,093 3,331 3,770 8,847
Loans sold................................................. 1,115 182 564 -- --
Total reductions........................................... 5,490 2,275 3,895 3,770 8,847
Other changes, net (1)..................................... 19 (18) (25) 52 (19)
Loans receivable, end of period............................ $ 21,359 $ 20,670 $ 20,511 $ 18,794 $ 19,550
</TABLE>

- ------------------------
(1) Other items consist of loans in process, deferred loan fees and allowances
for loan losses

LOANS TO ONE BORROWER LIMITS. OTS regulations generally limit the aggregate
amount that a savings association may lend to any one borrower to an amount
equal to 15% of the association's unimpaired capital and unimpaired surplus
(collectively, "Unimpaired Capital"). A savings association may loan to one
borrower and certain related persons or entities an additional amount not to
exceed 10% of the association's Unimpaired Capital if the additional amount is
fully secured by certain forms of "readily marketable collateral." Real estate
is not considered "readily marketable collateral." In addition, the regulations
require that loans to certain related or affiliated borrowers be aggregated for
purposes of such limits. The level of unimpaired capital and surplus
notwithstanding, a savings association may lend up to $500,000 to any one
borrower or group of related borrowers. See "REGULATION - Office of Thrift
Supervision -- Lending Limit."

Based on such limits, the Bank was able to lend $500,000 to one borrower at
March 31, 1996. The largest amount the Bank had outstanding to one borrower and
related persons or entities at March 31, 1996, was approximately $456,000,
consisting of two loans, the largest of which was $306,075. Each of such loans
is secured by commercial real estate located in the Bank's primary market area
and is performing in accordance with its terms.

LOAN ORIGINATION AND OTHER FEES. The Bank realizes loan origination fee and
other fee income from its lending activities and also realizes income from late
payment charges, application fees and fees for other miscellaneous services.

Loan origination fees and other fees are a volatile source of income,
varying with the volume of lending, loan repayments and general economic
conditions. All nonrefundable loan origination fees and certain direct loan
origination costs are deferred and recognized in accordance with SFAS No. 91 as
an adjustment to yield over the life of the related loan.

DELINQUENT LOANS, NONPERFORMING ASSETS AND CLASSIFIED ASSETS. The Bank
attempts to maintain a high level of asset quality through sound underwriting
policies and aggressive collection efforts.

Borrowers who become one to 30 days delinquent are not considered seriously
delinquent unless delinquency at such level continues for several months, in
which case a borrower is treated as chronically delinquent. Chronically
delinquent borrowers are referred to debt counseling, are advised to consider
selling

37
<PAGE>
the subject property and, if such efforts are unsuccessful, foreclosure
proceedings are initiated. In the absence of chronic delinquency, borrowers who
are one to 30 days delinquent receive delinquency notices at the end of the
month. Borrowers who are 30 to 59 days delinquent for two consecutive months or
who are 60 to 89 days delinquent receive telephone calls or personalized
letters. Borrowers who become more than 90 days delinquent receive default
notices and, absent corrective action, foreclosure proceedings are instituted.

The following table reflects the amount of loans in a delinquent status as
of the dates indicated:
<TABLE>
<CAPTION>
AT JUNE 30,
-------------------------------------------------------
AT MARCH 31, 1996 1995 1994
------------------------------------------ ---------------------------------------- -------------
PERCENT PERCENT
OF TOTAL OF TOTAL
NUMBER AMOUNT LOANS NUMBER AMOUNT LOANS NUMBER
--------------- ----------- ------------ ------------- ----------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Loans delinquent for:
30 - 59 days............. 4 $ 129 .60% 9 $ 468 2.26% 8
60 - 89 days............. 1 2 .01 3 48 .23 4
90 days and over......... 2 111 .52 4 194 .95 1
- -- --
----- --- ----- ---
Total delinquent
loans................. 7 $ 242 1.13% 16 $ 710 3.44% 13
- -- --
----- --- ----- ---

1993
----------------------------------------
PERCENT PERCENT
OF TOTAL OF TOTAL
AMOUNT LOANS NUMBER AMOUNT LOANS
----------- ------------ ------------- ----------- ------------

<S> <C> <C> <C> <C> <C>
Loans delinquent for:
30 - 59 days............. $ 469 2.48% 4 $ 123 .62%
60 - 89 days............. 115 .61% 5 157 .80
90 days and over......... 93 .49 5 333 1.70
--
----- --- ----- ---
Total delinquent
loans................. $ 677 3.58% 14 $ 613 3.12%
--
----- --- ----- ---
</TABLE>

Nonperforming assets include nonaccruing loans, accruing loans which are
delinquent 90 days or more, real estate acquired by foreclosure or by
deed-in-lieu thereof, in-substance foreclosures and repossessed assets. The Bank
ceases to accrue interest on real estate loans if the collateral value is not
adequate, in the opinion of management, to cover the outstanding principal and
interest.

The following table sets forth information with respect to the accrual and
nonaccrual status of the Bank's loans and other nonperforming assets at the
dates indicated:

<TABLE>
<CAPTION>
AT MARCH 31, AT JUNE 30,
------------------------ -------------------------------------
1996 1995 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Accruing loans delinquent 90+ days................... $ 111 $ 70 $ 194 $ -- $ --
Loans accounted for on a nonaccrual basis:
Real estate
One- to four-family.............................. -- -- -- 93 333
Multifamily...................................... -- -- -- -- --
Nonresidential................................... -- -- -- -- --
Consumer........................................... -- -- -- -- --
----- ----------- ----------- ----------- -----------
Total nonaccrual loans........................... -- -- -- -- --
----- ----------- ----------- ----------- -----------
Total nonperforming loans........................ $ 111 $ 70 $ 194 $ 93 $ 333
----- ----------- ----------- ----------- -----------
----- ----------- ----------- ----------- -----------
Real estate owned.................................. -- -- -- -- --
----- ----------- ----------- ----------- -----------
Total nonperforming assets....................... $ 111 $ 70 $ 194 $ 93 $ 333
----- ----------- ----------- ----------- -----------
----- ----------- ----------- ----------- -----------
Allowance for loan losses........................ $ 104 $ 98 $ 98 $ 72 $ 101
----- ----------- ----------- ----------- -----------
----- ----------- ----------- ----------- -----------
Nonperforming assets as a percent of total
assets.......................................... .35% .23 % .61 % 0.30 % 1.05 %
Nonperforming loans as a percent of total
loans........................................... .52 % .34 % .95 % 0.49 % 1.70 %
Allowance for loan losses as a percent of
nonperforming loans............................. 93.69 % 140.00 % 50.52 % 77.42 % 30.33 %
</TABLE>

For the quarter ended March 31, 1996, the Bank had no gross interest income
which would have been recorded had nonaccruing loans been current in accordance
with their original terms.

38
<PAGE>
Real estate acquired by the Bank as a result of foreclosure proceedings is
classified as real estate owned ("REO") until it is sold. When property is so
acquired it is recorded by the Bank at the estimated fair value of the real
estate, less estimated selling expenses, at the date of acquisition, and any
write-down resulting therefrom is charged to the allowance for loan losses.
Interest accrual, if any, ceases no later than the date of acquisition of the
real estate, and all costs incurred from such date in maintaining the property
are expensed. Costs relating to the development and improvement of the property
are capitalized to the extent of fair value.

The Bank classifies its own assets on a quarterly basis in accordance with
federal regulations. Problem assets are classified as "substandard," "doubtful"
or "loss." "Substandard" assets have one or more defined weaknesses and are
characterized by the distinct possibility that the Bank will sustain some loss
if the deficiencies are not corrected. "Doubtful" assets have the same
weaknesses as "substandard" assets, with the additional characteristics that (i)
the weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable and (ii) there is a high
possibility of loss. An asset classified "loss" is considered uncollectible and
of such little value that its continuance as an asset of the Bank is not
warranted.

The aggregate amounts of the Bank's classified assets at the dates indicated
were as follows:

<TABLE>
<CAPTION>
AT MARCH 31, AT JUNE 30,
-------------------- -------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Classified assets:
Substandard............................................................. $ 431 $ 474 $ 441 $ 367 $ 516
Doubtful................................................................ -- -- -- -- --
Loss.................................................................... 6 4 28 -- 50
--------- --------- --------- --------- ---------
Total classified assets............................................... $ 437 $ 478 $ 469 $ 367 $ 566
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

The Bank establishes general allowances for loan losses for any loan
classified as substandard or doubtful. If an asset, or portion thereof, is
classified as loss, the Bank must either establish a specific allowance for loss
in the amount of 100% of the portion of the asset classified loss or charge off
the amount of the loss classification. See "Allowance for Loan Losses."
Generally, the Bank has elected to charge off the portion of any real estate
loan deemed to be uncollectible.

The Bank analyzes each classified asset on a quarterly basis to determine
whether changes in the classifications are appropriate under the circumstances.
Such analysis focuses on a variety of factors, including the amount of any
delinquency and the reasons for the delinquency, if any, the use of the real
estate securing the loan, the status of the borrower and the appraised value of
the real estate. As such factors change, the classification of the asset will
change accordingly.

ALLOWANCE FOR LOAN LOSSES. Management, with oversight by the Board, reviews
on a quarterly basis the allowance for loan losses as it relates to a number of
relevant factors, including but not limited to, trends in the level of
delinquent and nonperforming assets and classified loans, current and
anticipated economic conditions in the primary lending area, past loss
experience and possible losses arising from specific problem assets. To a lesser
extent, management also considers loan concentrations to single borrowers and
changes in the composition of the loan portfolio. While management believes that
it uses the best information available to determine the allowance for loan
losses, unforeseen market conditions could result in adjustments, and net income
could be significantly affected if circumstances differ substantially from the
assumptions used in making the final determination.

39
<PAGE>
The following table sets forth an analysis of the Bank's allowance for loan
losses for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30,
---------------------- ----------------------
1996 1995 1995 1994
--------- ----- ----- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at beginning of period.............................................. $ 98 $ 72 $ 72 $ 101
Charge-offs................................................................. (28) (1) (4) (96)
Recoveries.................................................................. -- 18 18 34
--------- --- --- ---------
Net (charge-offs) recoveries................................................ (28) 17 14 (62)
Provision for loan losses................................................... 34 9 12 33
--------- --- --- ---------
Balance at end of period.................................................... $ 104 $ 98 $ 98 $ 72
--------- --- --- ---------
--------- --- --- ---------
Ratio of net (charge-offs) recoveries to average loans outstanding during
the period................................................................. .13 .08 .07 .32
Ratio of allowance for loan losses to total loans........................... .48 .47 .47 .38

1993
---------

<S> <C>
Balance at beginning of period.............................................. $ 15
Charge-offs.................................................................
Recoveries.................................................................. 3
---------
Net (charge-offs) recoveries................................................
Provision for loan losses................................................... 83
---------
Balance at end of period.................................................... $ 101
---------
---------
Ratio of net (charge-offs) recoveries to average loans outstanding during
the period................................................................. --
Ratio of allowance for loan losses to total loans........................... .51
</TABLE>

Management does not allocate portions of the allowance to particular types
of loans.

INVESTMENT ACTIVITIES

Federal regulation and Ohio law permit the Bank to invest in various types
of investments, including interest-bearing deposits in other financial
institutions, U.S. Treasury and agency obligations, mortgage-backed securities
and certain other specified investments. The Board of Directors of the Bank has
adopted an investment policy which authorizes management, under the supervision
of the Investment Committee of the Board, to make investments in U.S. Government
and agency securities, deposits in the FHLB, certificates of deposit in
federally-insured financial institutions, banker's acceptances issued by major
U.S. banks, corporate debt securities rated by a major statistical rating firm
as at least "AA," or equivalent, and municipal or other tax free obligations.
Laird L. Lazelle, the Bank's President, Michael S. Schwartz, the Chairman of the
Board and Dianne K. Rabe, its Vice President, have primary responsibility for
implementation of the investment policy. The Bank's investment policy is
designed primarily to provide and maintain liquidity within regulatory
guidelines, to maintain a balance of high quality investments to minimize risk
and to maximize return without sacrificing liquidity and safety. See
"REGULATION" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- Analysis of Financial Condition, and -- Liquidity
and Capital Resources."

The following table sets forth the composition of the Bank's
interest-bearing deposits and investment securities at the dates indicated:

<TABLE>
<CAPTION>
AT MARCH 31, AT JUNE 30,
---------------------- ----------------------------------------------------------------------
1996 1995 1994 1993
---------------------- ---------------------- ---------------------- ----------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
----------- --------- ----------- --------- ----------- --------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits.......... $ 85 $ 85 $ 786 $ 786 $ 1,827 $ 1,827 $ 3,477 $ 3,477
Certificates of deposit............ -- -- -- -- 1,400 1,400 1,400 1,400
Investment securities:
Federal funds.................... 4,136 4,136 3,100 3,100 575 575 500 500
U.S. Government obligations...... 400 393 1,050 1,035 1,050 1,004 233 233
FHLB stock....................... 274 274 260 260 241 241 11 155
Mortgage-backed securities....... 4,957 4,831 5,532 5,409 6,593 6,444 5,303 5,345
----------- --------- ----------- --------- ----------- --------- ----------- ---------
Total investments.............. $ 9,852 $ 9,719 $ 10,728 $ 10,590 $ 11,686 $ 11,491 $ 10,924 $ 11,110
----------- --------- ----------- --------- ----------- --------- ----------- ---------
----------- --------- ----------- --------- ----------- --------- ----------- ---------
</TABLE>

40
<PAGE>
The maturities of the Bank's interest-bearing deposits and investment
securities at June 30, 1995, are indicated in the following table:
<TABLE>
<CAPTION>
AT JUNE 30, 1995
------------------------------------------------------------------------------------------------------
AFTER ONE THROUGH FIVE AFTER FIVE THROUGH TEN
ONE YEAR OR LESS YEARS YEARS AFTER TEN YEARS
------------------------ ------------------------ ------------------------ ------------------------
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE
VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits... $ 786 5.95% $ -- -- % $ -- -- % $ -- -- %
Investment securities:
Federal funds............. 3,100 6.00 -- -- -- -- -- --
U.S. Government
obligations.............. 650 4.98 400 4.81 -- -- -- --
FHLB stock................ -- -- -- -- -- -- 260 6.50
Mortgage-backed
securities............... 131 3.28 91 7.25 146 6.92 5,164 5.83
----------- ----- ----- -----------
Total................... $ 4,667 5.77% $ 491 5.26% $ 146 6.92% $ 5,424 5.86%
----------- ----- ----- -----------
----------- ----- ----- -----------

TOTAL
--------------------------
CARRYING WEIGHTED
VALUE AVERAGE YIELD
----------- -------------

<S> <C> <C>
Interest-bearing deposits... $ 786 5.95%
Investment securities:
Federal funds............. 3,100 6.00%
U.S. Government
obligations.............. 1,050 4.92%
FHLB stock................ 260 6.50%
Mortgage-backed
securities............... 5,532 5.82%
-----------
Total................... $ 10,728 5.81%
-----------
-----------
</TABLE>

The maturities of the Bank's interest-bearing deposits and investment
securities at March 31, 1996, are indicated in the following table:
<TABLE>
<CAPTION>
AT MARCH 31, 1996
------------------------------------------------------------------------------------------------------
AFTER ONE THROUGH FIVE AFTER FIVE THROUGH TEN
ONE YEAR OR LESS YEARS YEARS AFTER TEN YEARS
------------------------ ------------------------ ------------------------ ------------------------
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE
VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits... $ 85 4.95% $ -- -- % $ -- -- % $ -- -- %
Investment securities:
Federal funds............. 4,136 5.25 -- -- -- -- -- --
U.S. Government
obligations.............. 250 5.75 150 6.06 -- -- -- --
FHLB stock................ -- -- -- -- -- -- 274 7.00
Mortgage-backed
securities............... 105 6.56 116 7.27 122 7.30 4,614 5.28
----------- ----- ----- -----------
Total................... $ 4,576 5.30% $ 266 6.59% $ 122 7.30% $ 4,888 5.38%
----------- ----- ----- -----------
----------- ----- ----- -----------

TOTAL
--------------------------
CARRYING WEIGHTED
VALUE AVERAGE YIELD
----------- -------------

<S> <C> <C>
Interest-bearing deposits... $ 85 4.95%
Investment securities:
Federal funds............. 4,136 5.25
U.S. Government
obligations.............. 400 5.87
FHLB stock................ 274 7.00
Mortgage-backed
securities............... 4,957 5.41
-----------
Total................... $ 9,852 5.40%
-----------
-----------
</TABLE>

DEPOSITS AND BORROWINGS

GENERAL. Deposits have traditionally been the primary source of the Bank's
funds for use in lending and other investment activities. In addition to
deposits, the Bank derives funds from interest payments and principal repayments
on loans and income on earning assets. Loan payments are a relatively stable
source of funds, while deposit inflows and outflows fluctuate more in response
to general interest rates and money market conditions. The Bank also utilizes
FHLB advances as an alternative source of funds. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

DEPOSITS. Deposits are attracted principally from within the Bank's primary
market area through the offering of a broad selection of deposit instruments,
including NOW accounts, demand deposit accounts, money market accounts, regular
passbook savings accounts, term certificate accounts, IRAs and Keogh accounts.
Interest rates paid, maturity terms, service fees and withdrawal penalties for
the various types of accounts are established periodically by management of the
Bank based on the Bank's liquidity requirements, growth goals and interest rates
paid by competitors. The Bank does not use brokers to attract deposits. The
amount of deposits from outside the Bank's primary market area is not
significant.

At March 31, 1996, the Bank's certificates of deposit totaled $24.7, or
89.0% of total deposits. Of such amount, approximately $18.8 million in
certificates of deposit mature within one year. Based on past experience and the
Bank's prevailing pricing strategies, management believes that a substantial
percentage of such certificates will be renewed with the Bank at maturity. If
there is a significant deviation from historical experience, the Bank can
utilize borrowings from the FHLB of Cincinnati as an alternative source of
funds.

41
<PAGE>
The following table sets forth the dollar amount of deposits in the various
types of accounts offered by the Bank at the dates indicated:

<TABLE>
<CAPTION>
AT JUNE 30,
----------------------------------------------------------------------
AT MARCH 31,
1996 1995 1994 1993
---------------------- ---------------------- ---------------------- ----------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF
TOTAL TOTAL TOTAL TOTAL
AMOUNT DEPOSITS AMOUNT DEPOSITS AMOUNT DEPOSITS AMOUNT DEPOSITS
--------- ----------- --------- ----------- --------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transaction accounts:
Passbook savings accounts
(1)..................... $ 1,085 3.91% $ 1,288 4.64% $ 1,835 6.71% 2,880 9.91%
NOW and money market
accounts (2)............ 1,962 7.06 2,507 9.04 3,306 12.09 3,313 11.40
--------- ----------- --------- ----------- --------- ----------- --------- -----------
Total transaction
accounts................ 3,047 10.97 3,795 13.68 5,141 18.80 6,193 21.31
Certificates of deposit
3.00% or less.......... 105 .38 425 1.53 250 .91 -- --
3.01 - 5.00%........... 1,593 5.73 4,157 14.99 18,975 69.38 6,550 22.54
5.01 - 7.00%........... 22,892 82.40 18,892 68.11 2,236 8.18 14,155 48.71
7.01 - 9.00%........... 143 .52 468 1.69 746 2.73 2,164 7.44
--------- ----------- --------- ----------- --------- ----------- --------- -----------
Total certificates of
deposit (3)............. 24,733 89.03 23,942 86.32 22,207 81.20 22,869 78.69
--------- ----------- --------- ----------- --------- ----------- --------- -----------
Total deposits........... $ 27,780 100.00% $ 27,737 100.00% $ 27,348 100.00% $ 29,062 100.00%
--------- ----------- --------- ----------- --------- ----------- --------- -----------
--------- ----------- --------- ----------- --------- ----------- --------- -----------
</TABLE>

- ------------------------
(1) The weighted average rate on passbook savings accounts was 2.52%, 2.87% and
2.84% at March 31, 1996 and at June 30, 1995 and 1994, respectively.

(2) The weighted average rate on NOW and money market accounts was 2.56%, 2.77%
and 2.81% at March 31, 1996 and at June 30, 1995 and 1994, respectively.

(3) The weighted average rate on all certificates of deposit was 5.96%, 6.01%
and 4.91% at March 31, 1996, and at June 30, 1995 and 1994, respectively.

The following table shows rate and maturity information for the Bank's
certificates of deposit at March 31, 1996:

<TABLE>
<CAPTION>
AMOUNT DUE
-----------------------------------------------------------
OVER 2
UP TO ONE OVER 1 YEAR YEARS TO 3 OVER 3
RATE YEAR TO 2 YEARS YEARS YEARS TOTAL
- ------------------------------------------------------------- --------- ----------- ----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
3.00% or less................................................ $ 105 $ -- $ -- $ -- $ 105
3.01% to 5.00%............................................... 1,280 78 161 74 $ 1,593
5.01% to 7.00%............................................... 17,226 4,514 646 506 $ 22,892
7.01% to 9.00%............................................... 143 -- -- -- $ 143
--------- ----------- ----- ----- ---------
Total certificates of deposit.............................. $ 18,754 $ 4,592 $ 807 $ 580 $ 24,733
--------- ----------- ----- ----- ---------
--------- ----------- ----- ----- ---------
</TABLE>

42
<PAGE>
The following table presents the amount of the Bank's certificates of
deposit of $100,000 or more by the time remaining until maturity at March 31,
1996:

<TABLE>
<CAPTION>
MATURITY
- -------------------------------------------------------------------------- AMOUNT
---------------
(IN THOUSANDS)
<S> <C>
Three months or less...................................................... $ 847
Over 3 months to 6 months................................................. 781
Over 6 months to 12 months................................................ 611
Over 12 months............................................................ 442
------
Total................................................................... $ 2,681
------
------
</TABLE>

The following table sets forth the Bank's deposit account balance activity
for the periods indicated:

BORROWINGS. The FHLB System functions as a central reserve bank providing
credit for its member institutions and certain other financial institutions. See
"REGULATION -- Federal Home Loan Banks." As a member in good standing of the
FHLB of Cincinnati, the Bank is authorized to apply for advances from the FHLB
of Cincinnati, provided certain standards of creditworthiness have been met.
Under current regulations, an association must meet certain qualifications to be
eligible for FHLB advances. The extent to which an association is eligible for
such advances will depend upon whether it meets the Qualified Thrift Lender Test
(the "QTL Test"). See "REGULATION -- Office of Thrift Supervision -- Qualified
Thrift Lender Test." If an association meets the QTL Test, it will be eligible
for 100% of the advances it would otherwise be eligible to receive. If an
association does not meet the QTL Test, it will be eligible for such advances
only to the extent it holds specified QTL Test assets. At March 31, 1996, the
Bank was in compliance with the QTL Test.

During fiscal 1995 the Bank obtained advances from the FHLB of Cincinnati as
indicated in the following table:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30,
-------------------- ---------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Average balance outstanding.............................................. 931 995 1,046 815 --
Maximum amount outstanding at any month end during the period............ 1,186 1,213 1,213 1,000 --
Balance outstanding at end of period..................................... 842 1,208 1,192 955 --
Weighted average interest rate during the period......................... 6.02% 5.36% 5.64% 5.16% --
Weighted average interest rate at end of period.......................... 5.51% 5.84% 5.85% 5.50% --
</TABLE>

COMPETITION

The Bank competes for deposits with other savings associations, savings
banks, commercial banks and credit unions and with the issuers of commercial
paper and other securities, such as shares in money market mutual funds. The
primary factors in competing for deposits are interest rates and convenience of
office location. In making loans, the Bank competes with other savings banks,
savings associations, commercial

43
<PAGE>
banks, mortgage brokers, consumer finance companies, credit unions, leasing
companies and other lenders. The Bank competes for loan originations primarily
through the interest rates and loan fees it charges and through the efficiency
and quality of services it provides to borrowers.

Competition in Hamilton County is intense due to the number of financial
institutions serving the area. Competition is affected by, among other things,
the general availability of lendable funds, general and local economic
conditions, current interest rate levels and other factors which are not readily
predictable. The Bank does not offer all of the products and services offered by
some of its competitors, particularly commercial banks. The Bank monitors the
product offerings of its competitors and adds new products when it can do so
competitively and cost effectively. The Bank's deposit market share in Hamilton
County is negligible.

The size of financial institutions competing with the Bank is likely to
increase as a result of changes in statutes and regulations eliminating various
restrictions on interstate and inter-industry branching and acquisitions. Such
increased competition may have an adverse effect upon the Bank.

PROPERTIES

The Bank leases the property at 25 Garfield Place where its office is
located.

EMPLOYEES

As of March 31, 1996, the Bank had eight full-time employees and no
part-time employees. The Bank provides health and long-term disability benefits,
life insurance, a 401(k) plan and a profit sharing plan for its employees. The
Bank believes that relations with its employees are excellent. None of the
employees of the Bank is represented by a collective bargaining unit.

LEGAL PROCEEDINGS

The Bank is not presently involved in any material legal proceedings. From
time to time, the Bank is a party to legal proceedings incidental to its
business to enforce its security interest in collateral pledged to secure loans
made by the Bank.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

THE HOLDING COMPANY. The Board of Directors of the Holding Company consists
of seven members divided into two classes. Each of the directors of the Bank is
also a director of the Holding Company. The terms of Ms. Emden, Mr. Silverglade
and Mr. Silverman will expire in 1996 and the terms of Ms. Dickhaut, Mr.
Lazelle, Mr. Levitch and Mr. Schwartz will expire in 1997.

The executive officers of the Holding Company are Laird L. Lazelle,
President and Dianne K. Rabe, Secretary and Treasurer.

THE BANK. The Constitution of the Bank provides for a Board of Directors
consisting of not less than five nor more than seven directors, with the number
to be fixed or changed by the members by resolution at the annual meeting. The
Board of Directors currently consists of seven directors divided into three
classes. One class of directors is elected each year. Each director serves for a
three-year term. The Board of Directors met 27 times during fiscal 1995 for
regular and special meetings. No director attended fewer than 75% of the
aggregate of such meetings and all meetings of the committees of which such
director was a member.

44
<PAGE>
The following table presents certain information with respect to the present
directors of the Bank, each of whom is also a director of the Holding Company,
and the executive officers of the Bank:

<TABLE>
<CAPTION>
YEAR OF
COMMENCEMENT
POSITION(S) WITH THE OF TERM
NAME AGE(1) BANK DIRECTORSHIP EXPIRES
- ------------------------------ --------- ------------------------------ -------------- ---------
<S> <C> <C> <C> <C>
Mardelle Dickhaut 63 Director and Secretary 1989 1996
Ruth C. Emden 69 Director 1994 1997
Laird L. Lazelle 57 Director and President 1994 1997
Robert E. Levitch 62 Director 1963 1998
Margo A. Liebert 52 Treasurer -- --
Dianne K. Rabe 44 Vice President -- --
Michael S. Schwartz 51 Chairman of the Board 1963 1998
Paul L. Silverglade 70 Director 1988 1996
Ivan J. Silverman 55 Director 1992 1997
</TABLE>

- ------------------------
(1) As of March 31, 1996.

MARDELLE DICKHAUT has served as Secretary of the Bank since 1979 and as a
director since 1989. Mrs. Dickhaut was employed at the Bank for 23 years prior
to her retirement in 1995.

RUTH C. EMDEN has served as a director of the Bank since 1994. Mrs. Emden is
the retired widow of Narvin I. Emden who served the Bank as President, Managing
Officer and Director for over 46 years. Mrs. Emden is active in community
service.

LAIRD L. LAZELLE is President and Chief Executive Officer of both the
Holding Company and the Bank and is the designated Managing Officer of the Bank.
Mr. Lazelle joined the Bank in January 1994. Mr. Lazelle has over 36 years of
financial institution experience, most recently as President and Chief Executive
Officer of The TriState Bancorp.

ROBERT E. LEVITCH has served as a director of the Bank since 1967. Mr.
Levitch has been a corrections officer with the Hamilton County Sheriff's
Department since 1980.

MARGO A. LIEBERT has served as Treasurer of the Bank since 1979 and is the
chief accounting officer for the Bank. Mrs. Liebert has been employed by the
Bank for 29 years.

DIANNE K. RABE is Vice President and is the chief operating officer of the
Bank and will also serve as Secretary/Treasurer of the Holding Company. Mrs.
Rabe is a Certified Public Accountant. Mrs. Rabe came to the Bank from another
Cincinnati thrift institution in 1992.

MICHAEL S. SCHWARTZ is an attorney at law practicing in Cincinnati, Ohio and
operates a title insurance agency. Mr. Schwartz is legal counsel to the Bank and
also provides title services for loans granted by the Bank. Mr. Schwartz has
served as a director of the Bank since 1967 and succeeded his father as Chairman
of the Board in 1993.

PAUL L. SILVERGLADE retired as the Corporate Office Personnel Director for
Federated Department Stores in 1981, after serving for 33 years. Mr. Silverglade
has been a director of the Bank since 1988 and serves as Chairman of the
Compensation Committee.

IVAN J. SILVERMAN is an investment consultant and Associate Vice President
with Gradison Division of McDonald & Company Securities, Inc. Mr. Silverman is
also the Mayor of the City of Montgomery, Ohio. Mr. Silverman has served as a
director of the Bank since 1992 and serves as Chairman of the Audit Committee.

COMMITTEES OF DIRECTORS

The Board of Directors of the Bank has an Audit Committee and a Compensation
Committee. The full Board of Directors serves as a nominating committee.

45
<PAGE>
The members of the Audit Committee are Mr. Silverman, Ms. Emden, Mr. Levitch
and Mr. Silverglade. The Audit Committee is responsible for selecting and
recommending to the Board of Directors a firm to serve as auditors for the Bank.
The Audit Committee met one time during fiscal 1995.

The Compensation Committee is comprised of Mr. Silverglade, Mr. Silverman
and Mr. Schwartz. The function of the Compensation Committee is to determine
compensation for the Bank's employees and to make recommendations to the Board
of Directors regarding employee benefits and related matters. The Compensation
Committee met once during fiscal 1995.

COMPENSATION

Each director of the Bank currently receives a fee of $7,500 per year.

The following table presents certain information regarding the cash
compensation received by Laird L. Lazelle, President of the Bank. No other
executive officer of the Bank received compensation exceeding $100,000 during
fiscal 1995:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1)
- --------------------------------------------------------- --------- --------- --------- -----------------
<S> <C> <C> <C> <C>
Laird L. Lazelle 1995 $ 69,488 $ 5,200 $ 6,000
President and Chief Executive Officer
</TABLE>

- ------------------------
(1) Consists of directors fees. Does not include amounts attributable to
miscellaneous benefits received by the named executive officer, the cost of
which was less than 10% of his annual salary and bonus.

DEFINED CONTRIBUTION PLAN

The Bank maintains a tax-qualified defined benefit plan (the "Pension Plan")
covering employees age 21 or older who have completed at least one year of
service to the Bank. Pursuant to the Pension Plan, a participant may elect to
allocate up to the lesser of 9% of his salary or $7,000 (multiplied by an
adjustment factor) to his account annually. The Bank makes a 50% matching
contribution and may also make additional discretionary contributions pursuant
to the Pension Plan. The Bank's contributions become vested at the rate of
one-fifth each year after two years of employment. The Bank's expense for
contributions to the Pension Plan for the nine months ended March 31, 1996, and
for the years ended June 30, 1995 and 1994, was $5,053, $10,585 and $10,167,
respectively.

STOCK BENEFIT PLANS

EMPLOYEE STOCK OWNERSHIP PLAN. The Holding Company intends to establish the
ESOP for the benefit of employees of the Holding Company and its subsidiaries,
including the Bank, who are age 21 or older and who have completed at least one
year of service with the Holding Company and its subsidiaries. The ESOP will
provide an ownership interest in the Holding Company to all full-time employees
of the Holding Company. The Board of Directors of the Holding Company believes
that the ESOP will be in the best interests of the Holding Company and its
shareholders.

The ESOP trust intends to borrow funds from the Holding Company with which
to acquire up to 8.0% of the Common Shares sold in the Conversion. Such loan
will be secured by the Common Shares purchased with the proceeds, and will be
repaid by the ESOP over a period of approximately seven years with discretionary
contributions to the ESOP and earnings on ESOP assets. Common Shares purchased
with such loan proceeds will be held in a suspense account for allocation among
participants as the loan is repaid.

Contributions to the ESOP and shares released from the suspense account will
be allocated among participants on the basis of compensation. Except for
participants who retire, become disabled or die during the plan year, all other
participants must have completed at least 1,000 hours of service in order to
receive an allocation. Benefits become fully vested after five years of service.
Existing employees of the Holding Company and the Bank will be given credit for
years of service to the Bank prior to the effective date of the

46
<PAGE>
ESOP for vesting purposes. Vesting will be accelerated upon retirement at or
after age 65, death, disability, termination of the ESOP or a change in control
of the Bank. Shares allocated to the account of a participant whose employment
by the Bank terminates prior to having satisfied the vesting requirement will be
forfeited. Forfeitures will be reallocated among remaining participating
employees. Benefits may be paid either in the Holding Company's common shares or
in cash. Benefits may be payable upon retirement, death, disability or
separation from service. Benefits payable under the ESOP cannot be estimated.

A Committee appointed by the Board of Directors of the Holding Company will
administer the ESOP. The Common Shares and other ESOP funds will be held and
invested by a trustee (the "ESOP Trustee"). The ESOP Committee may instruct the
ESOP Trustee regarding investments of funds contributed to the ESOP. The ESOP
Trustee must vote all allocated shares held in the ESOP in accordance with the
instructions of the participating employees. Shares for which employees do not
give instructions and unallocated shares will be voted by the ESOP Trustee.

The tax-qualified status of the ESOP and its purchase of the Common Shares
of the Holding Company are subject to the subsequent approval of the
Commissioner of the IRS (the "Commissioner"). The Holding Company will submit to
the Commissioner an application for approval of the ESOP. Although no assurances
can be given, the Holding Company expects that the ESOP will be approved by the
Commissioner.

STOCK OPTION PLAN. After the completion of the Conversion, the Board of
Directors of the Holding Company intends to adopt the Stock Option Plan, subject
to approval by the shareholders of the Holding Company. The purposes of the
Stock Option Plan include retaining and providing incentives to the directors,
officers and employees of the Holding Company and its subsidiaries by
facilitating their purchase of a stock interest in the Holding Company.

Options granted to the officers and key employees under the Stock Option
Plan may be "incentive stock options" within the meaning of Section 422 of the
Code (an "ISO"). Options granted under the Stock Option Plan to directors who
are not full-time employees of the Holding Company will not qualify under the
Code and thus will not be incentive stock options ("Non-qualified Options").
Although any eligible director, officer or employee of the Holding Company may
receive Non-qualified Options, it is anticipated that the non-employee directors
of the Holding Company will receive Non-qualified Options and other eligible
participants will receive ISOs.

The option exercise price shall be determined by the Committee at the time
of grant; provided, however, that the exercise price for an ISO or for any
option if the Stock Option Plan is implemented by the Holding Company during the
first year following the completion of the Conversion must not be less than 100%
of the fair market value of the shares on the date of the grant. No stock option
will be exercisable after the expiration of ten years from the date that it is
granted; provided, however, that in the case of an ISO granted to an employee
who owns more than 10% of the Bank's outstanding common shares at the time an
ISO is granted under the Stock Option Plan, the exercise price of the ISO may
not be less than 110% of the fair market value of the shares on the date of the
grant, and the ISO shall not be exercisable after the expiration of five years
from the date it is granted.

An option recipient cannot transfer or assign an option other than by will
or in accordance with the laws of descent and distribution. "Termination for
cause," as defined in the Stock Option Plan, will result in the annulment of any
outstanding options.

The Holding Company will receive no monetary consideration for the granting
of options under the Stock Option Plan. Upon the exercise of options, the
Holding Company will receive payment of cash, Holding Company common shares or a
combination of cash and common shares from option recipients in exchange for
shares issued.

The Committee may grant options under the Stock Option Plan at such times as
they deem most beneficial to the Holding Company on the basis of the individual
participant's responsibility, tenure and future potential to the Holding
Company.

47
<PAGE>
A number of shares equal to 10% of the Common Shares to be issued in
connection with the Conversion is expected to be reserved for issuance by the
Holding Company upon the exercise of options to be granted to certain directors,
officers and employees of the Holding Company and its subsidiaries from time to
time under the Stock Option Plan. Assuming the issuance of 462,875 Common Shares
in the Conversion, 46,288 Common Shares will be reserved for issuance under the
Stock Option Plan. No determination has been made regarding the recipients of
awards under the Stock Option Plan or the number of shares to be awarded to
individual recipients.

In accordance with OTS regulations, if the Stock Option Plan is implemented
by the Holding Company during the first year following the completion of the
Conversion, the following restrictions will apply: (i) the Stock Option Plan
must be approved by the shareholders of the Holding Company at an annual or
special meeting of shareholders, in either case to be held no earlier than six
months after the completion of the Conversion; (ii) awards to directors who are
not full-time employees of the Holding Company or the Bank may not exceed 5% of
the plan shares per person and 30% of the plan shares in the aggregate of the
total number of shares reserved for issuance under the plan, (iii) awards to
directors or other persons who are full-time employees of the Holding Company or
the Bank may not exceed 25% of the plan shares per person, and (iv) options will
become exercisable at the rate of one-fifth per year commencing no earlier than
one year from the date the Stock Option Plan is approved by the shareholders,
subject to acceleration of vesting only in the event of the death or disability
of a participant.

RECOGNITION AND RETENTION PLAN. After the completion of the Conversion, the
Bank intends to adopt the RRP. The purpose of the RRP is to provide directors
and certain key employees of the Bank with an ownership interest in the Bank in
a manner designed to compensate such directors and key employees for services to
the Bank. The Bank expects to contribute sufficient funds to enable the RRP to
purchase up to 18,515 Common Shares, assuming the issuance of 462,875 Common
Shares in connection with the Conversion.

The RRP Committee will consist of three directors who are not employees of
the Bank. The RRP Committee will administer the RRP and determine the number of
shares to be granted to eligible participants. Prior to being earned, each
participant granted shares under the RRP will be entitled to the benefit of any
dividends or other distributions paid on such shares. Compensation expense in
the amount of the fair market value of the RRP shares will be recognized as the
shares are earned.

No determination has been made regarding recipients of RRP awards or the
number of shares to be awarded to individual recipients. In accordance with OTS
regulations, if the RRP is implemented during the first year following the
completion of the Conversion, the following restrictions will apply: (i) the RRP
must be approved by the shareholders of the Holding Company; (ii) awards to
directors who are not full-time employees of the Holding Company or the Bank may
not exceed 5% of the plan shares per person and 30% of the plan shares in the
aggregate of the total number of shares reserved for issuance under the plan;
(iii) awards to directors or other persons who are full-time employees of the
Holding Company or the Bank may not exceed 25% of the plan shares per person;
and (iv) RRP shares will be earned and nonforfeitable at the rate of one-fifth
per year on each of the first five anniversaries of the award, subject to
acceleration only in the event of the death or disability of a participant.

EMPLOYMENT AGREEMENT

The Bank currently has no employment agreements with any of its officers.
The Bank intends to enter into an employment agreement with Laird L. Lazelle
(the "Employment Agreement") upon the completion of the Conversion. The
Employment Agreement will provide for a term of three years and a salary and
performance review by the Board of Directors not less often than annually and
will provide for inclusion of Mr. Lazelle in any formally established employee
benefit, bonus, pension and profit-sharing plans for which senior management
personnel are eligible. The Employment Agreement will also provide for vacation
and sick leave in accordance with the Bank's prevailing policies.

The Employment Agreement will be terminable by the Bank at any time. In the
event of termination by the Bank for "just cause," as defined in the Employment
Agreement, Mr. Lazelle will have no right to

48
<PAGE>
receive any compensation or other benefits for any period after such
termination. In the event of termination by the Bank other than for just cause,
at the end of the term of the Employment Agreement or in connection with a
"change of control," as defined in the Employment Agreement, Mr. Lazelle will be
entitled to a continuation of salary payments for a period of time equal to the
term of the Employment Agreement and a continuation of benefits substantially
equal to those being provided at the date of termination of employment until the
earliest to occur of the end of the term of the Employment Agreement or the date
Mr. Lazelle becomes employed full-time by another employer.

The Employment Agreement also contains provisions with respect to the
occurrence within one year of a "change of control" of (1) the termination of
employment of Mr. Lazelle for any reason other than just cause, retirement or
termination at the end of the term of the agreement, or (2) a constructive
termination resulting from change in the capacity or circumstances in which Mr.
Lazelle is employed or a material reduction in his responsibilities, authority,
compensation or other benefits provided under the Employment Agreement without
his written consent. In the event of any such occurrence, Mr. Lazelle will be
entitled to payment of an amount equal to three times his average annual
compensation for the three taxable years immediately preceding the termination
of employment. In addition, Mr. Lazelle would be entitled to continued coverage
under all benefit plans until the earliest of the end of the term of the
Employment Agreement or the date on which he is included in another employer's
benefit plans as a full-time employee. The maximum which Mr. Lazelle may
receive, however, is limited to an amount which will not result in the
imposition of a penalty tax pursuant to Section 280G(b)(3) of the Code.
"Control," as defined in the Employment Agreement, generally refers to the
acquisition by any person or entity of the ownership or power to vote 10% or
more of the voting stock of the Bank or the Holding Company, the control of the
election of a majority of the directors of the Bank or the Holding Company or
the exercise of a controlling influence over the management or policies of the
Bank or the Holding Company.

The aggregate payments that would have been made to Mr. Lazelle under the
Employment Agreement, assuming his termination at March 31, 1996, following a
change of control, would have been approximately $195,000.

CERTAIN TRANSACTIONS WITH THE BANK

In accordance with the OTS regulations, the Bank makes loans to executive
officers and directors of the Bank in the ordinary course of business and on the
same terms and conditions, including interest rates and collateral, as those of
comparable loans to other persons. Other than loans made to executive officers
and directors prior to 1989 for which closing costs were waived by the Bank, all
outstanding loans to executive officers and directors comply with such policy,
do not involve more than the normal risk of collectibility or present other
unfavorable features and are current in their payments. Loans to all directors
and executive officers of the Bank and their related interests totalled $247,127
at March 31, 1996. Such amount includes two loans, one in the amount of $66,642,
to a daughter of Ms. Emden, and the other in amount of $85,806, also to a
daughter of Ms. Emden.

REGULATION

GENERAL

As a savings and loan association incorporated under the laws of Ohio, the
Bank is subject to regulation, examination and oversight by the OTS and the
Superintendent of the Division (the "Ohio Superintendent"). Because the Bank's
deposits are insured by the FDIC, the Bank also is subject to general oversight
by the FDIC. The Bank must file periodic reports with the OTS, the Ohio
Superintendent and the FDIC concerning its activities and financial condition.
Examinations are conducted periodically by federal and state regulators to
determine whether the Bank is in compliance with various regulatory requirements
and is operating in a safe and sound manner. The Bank is a member of the FHLB of
Cincinnati.

The Holding Company will be a savings and loan holding company within the
meaning of the Home Owners Loan Act, as amended (the "HOLA"). Consequently, the
Holding Company will be subject to

49
<PAGE>
regulation, examination and oversight by the OTS and will be required to submit
periodic reports thereto. Because the Holding Company and the Bank are
corporations organized under Ohio law, they are also subject to the provisions
of the Ohio Revised Code applicable to corporations generally.

The United States Congress is considering legislation to recapitalize the
SAIF. See "-- Federal Deposit Insurance Corporation -- Assessments." In
connection with such legislation, Congress may eliminate the OTS and may require
that the Bank be regulated under federal law in the same fashion as banks. As a
result, the Bank may become subject to additional regulation, examination and
oversight by the FDIC. In addition, the Holding Company might become a bank
holding company, subject to examination, regulation and oversight by the Board
of Governors of the Federal Reserve ("FRB"), including greater activity and
capital requirements than imposed on it by the OTS.

OHIO SAVINGS AND LOAN LAW

The Ohio Superintendent is responsible for the regulation and supervision of
Ohio savings and loan associations in accordance with the laws of the State of
Ohio. Ohio law prescribes the permissible investments and activities of Ohio
savings and loan associations, including the types of lending that such
associations may engage in and the investments in real estate, subsidiaries and
corporate or government securities that such associations may make. The ability
of Ohio associations to engage in these state-authorized investments and
activities is subject to oversight and approval by the FDIC, if such investments
or activities are not permissible for a federally chartered savings and loan
association.

The Ohio Superintendent also has approval authority over any mergers
involving or acquisitions of control of Ohio savings and loan associations. The
Ohio Superintendent may initiate certain supervisory measures or formal
enforcement actions against Ohio associations. Ultimately, if the grounds
provided by law exist, the Ohio Superintendent may place an Ohio association in
conservatorship or receivership.

The Ohio Superintendent conducts regular examinations of the Bank
approximately once a year. Such examinations are usually conducted jointly with
one or both federal regulators. The Ohio Superintendent imposes assessments on
Ohio associations based on their asset size to cover the cost of supervision and
examination.

OFFICE OF THRIFT SUPERVISION

GENERAL. The OTS is an office in the Department of the Treasury and is
responsible for the regulation and supervision of all federally chartered
savings and loan associations and all other savings and loan associations the
deposits of which are insured by the FDIC. The OTS issues regulations governing
the operation of savings and loan associations, regularly examines such
associations and imposes assessments on savings associations based on their
asset size to cover the costs of this supervision and examination. The OTS also
may initiate enforcement actions against savings and loan associations and
certain persons affiliated with them for violations of laws or regulations or
for engaging in unsafe or unsound practices. If the grounds provided by law
exist, the OTS may appoint a conservator or receiver for a savings and loan
association.

REGULATORY CAPITAL REQUIREMENTS. The Bank is required by OTS regulations to
meet certain minimum capital requirements. For information regarding the Bank's
regulatory capital at March 31, 1996, and pro forma regulatory capital after
giving effect to the Conversion, see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and Capital
Resources" and "REGULATORY CAPITAL COMPLIANCE."

Current capital requirements call for tangible capital of 1.5% of adjusted
total assets, core capital (which for the Bank consists solely of tangible
capital) of 3.0% of adjusted total assets and risk-based capital (which for the
Bank consists of core capital and general valuation allowances) of 8.0% of
risk-weighted assets (assets, including certain off-balance sheet items, are
weighted at percentage levels ranging from 0% to 100% depending on the relative
risk).

The OTS has proposed to amend the core capital requirement so that those
associations that do not have the highest examination rating and an acceptable
level of risk will be required to maintain core capital

50
<PAGE>
of from 4% to 5%, depending on the association's examination rating and overall
risk. The Bank does not anticipate that it will be adversely affected if the
core capital requirement regulation is amended as proposed.

The OTS has adopted an interest rate risk component to the risk-based
capital requirement, though the implementation of that component has been
delayed. Pursuant to that requirement a savings association would have to
measure the effect of an immediate 200 basis point change in interest rates on
the value of its portfolio as determined under the methodology of the OTS. If
the measured interest rate risk is above the level deemed normal under the
regulation, the association will be required to deduct one-half of such excess
exposure from its total capital when determining its risk-based capital. In
general, an association with less than $300 million in assets and a risk-based
capital ratio in excess of 12% will not be subject to the interest rate risk
component, and the association qualifies for such exemption. Pending
implementation of the interest rate risk component, the OTS has the authority to
impose a higher individualized capital requirement on any savings association it
deems to have excess interest rate risk. The OTS also may adjust the risk-based
capital requirement on an individualized basis to take into account risks due to
concentrations of credit and non-traditional activities. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Asset and Liability Management."

The OTS has adopted regulations governing prompt corrective action to
resolve the problems of capital deficient and otherwise troubled savings and
loan associations. At each successively lower defined capital category, an
association is subject to more restrictive and numerous mandatory or
discretionary regulatory actions or limits, and the OTS has less flexibility in
determining how to resolve the problems of the institution. The OTS has defined
these capital levels as follows: (i) well-capitalized associations must have
total risk-based capital of at least 10%, core risk-based capital (consisting
only of items that qualify for inclusion in core capital) of at least 6% and
core capital of at least 5%; (ii) adequately capitalized associations are those
that meet the regulatory minimum of total risk-based capital of 8%, core
risk-based capital (consisting only of items that qualify for inclusion in core
capital) of 4%, and core capital of 4% (except for associations receiving the
highest examination rating, in which case the level is 3%) but are not well-
capitalized; (iii) undercapitalized associations are those that do not meet
regulatory limits, but that are not significantly undercapitalized; (iv)
significantly undercapitalized associations have total risk-based capital of
less than 6%, core risk-based capital (consisting only of items that qualify for
inclusion in core capital) of less than 3% or core capital of less than 3%; and
(v) critically undercapitalized associations are those with core capital of less
than 2% of total assets. In addition, the OTS generally can downgrade an
association's capital category, notwithstanding its capital level, if, after
notice and opportunity for hearing, the association is deemed to be engaging in
an unsafe or unsound practice because it has not corrected deficiencies that
resulted in it receiving a less than satisfactory examination rating on matters
other than capital or it is deemed to be in an unsafe or unsound condition. An
undercapitalized association must submit a capital restoration plan to the OTS
within 45 days after it becomes undercapitalized. Undercapitalized associations
will be subject to increased monitoring and asset growth restrictions and will
be required to obtain prior approval for acquisitions, branching and engaging in
new lines of business. Critically undercapitalized institutions must be placed
in conservatorship or receivership within 90 days of reaching that
capitalization level, except under limited circumstances. The Bank's capital at
March 31, 1996, meets the standards for a well-capitalized institution.

Federal law prohibits a savings and loan association from making a capital
distribution to anyone or paying management fees to any person having control of
the association if, after such distribution or payment, the association would be
undercapitalized. In addition, each company controlling an undercapitalized
association must guarantee that the association will comply with its capital
plan until the association has been adequately capitalized on an average during
each of four preceding calendar quarters and must provide adequate assurances of
performance. The aggregate liability pursuant to such guarantee is limited to
the lesser of (i) an amount equal to 50% of the association's total assets at
the time the association became undercapitalized or (ii) the amount that is
necessary to bring the association into compliance with all capital standards
applicable to such association at the time the association fails to comply with
its capital restoration plan.

51
<PAGE>
LIQUIDITY. OTS regulations require that savings associations maintain an
average daily balance of liquid assets (cash, certain time deposits, bankers'
acceptances and specified United States government, state or federal agency
obligations) equal to a monthly average of not less than 5% of its net
withdrawable savings deposits plus borrowings payable in one year or less.
Federal regulations also require each member institution to maintain an average
daily balance of short-term liquid assets of not less than 1% of the total of
its net withdrawable savings accounts and borrowings payable in one year or
less. Monetary penalties may be imposed upon member institutions failing to meet
liquidity requirements. The eligible liquidity of the Bank at March 31, 1996,
was approximately $4.6 million, or 15.69%, which exceeded the 5% liquidity
requirement by approximately $3.1 million. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and
Capital Resources."

QUALIFIED THRIFT LENDER TEST. Savings and loan associations are required to
maintain a specified level of investments in assets that are designated as
qualifying thrift investments. Such investments are generally related to
domestic residential real estate and manufactured housing and include stock
issued by any FHLB, the Federal Home Loan Mortgage Corporation or the Federal
National Mortgage Association. The QTL test requires that 65% of an
institution's "portfolio assets" (total assets less goodwill and other
intangibles, property used to conduct business and 20% of liquid assets) consist
of qualified thrift investments on a monthly average basis in 9 out of every 12
months. The OTS may grant exceptions to the QTL test under certain
circumstances. If a savings and loan association fails to meet the QTL Test, the
Bank and its holding company will be subject to certain operating restrictions.
A savings and loan association that fails to meet the QTL Test will not be
eligible for new FHLB advances. See "-- Federal Home Loan Banks." At March 31,
1996, the Bank had QTL investments in excess of 65% of its total portfolio
assets.

LENDING LIMIT. OTS regulations generally limit the aggregate amount that a
savings association can lend to one borrower or group of related borrowers to an
amount equal to 15% of the association's unimpaired capital, which is defined
for this purpose as total capital for regulatory purposes. A savings association
may loan to one borrower an additional amount not to exceed 10% of the
association's unimpaired capital if the additional amount is fully secured by
certain forms of "readily marketable collateral." Real estate is not considered
"readily marketable collateral." Notwithstanding the level of unimpaired capital
and surplus, a savings association may lend up to $500,000 to any one borrower
or group of related borrowers. See "THE BUSINESS OF THE BANK -- Lending
Activities -- Loan Originations, Purchases and Sales."

TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to insiders are also
subject to Sections 22(g) and (h) of the Federal Reserve Act ("FRA"), which
place restrictions on loans to executive officers, directors and principal
shareholders and their related interests. Generally, such loans must conform to
the lending limit on loans to one borrower, and the total of such loans to
executive officers, directors, principal shareholders and their related
interests cannot exceed the association's unimpaired capital and surplus or 200%
of unimpaired capital and surplus for eligible adequately capitalized
institutions with less than $100 million in assets. See "-- Lending Limits."
Most loans to directors, executive officers and principal shareholders must be
approved in advance by a majority of the "disinterested" members of the board of
directors of the association with any "interested" director not participating.
All loans to directors, executive officers and principal shareholders must be
made on terms substantially the same as offered in comparable transactions with
the general public. Loans to executive officers are subject to additional
limits. The Bank was in compliance with such restrictions at March 31, 1996. See
"MANAGEMENT -- Certain Transactions with the Bank."

Savings associations must comply with Sections 23A and 23B of the FRA,
pertaining to transactions with affiliates. An affiliate of a savings
association is any company or entity that controls, is controlled by or is under
common control with the savings and loan association. The Holding Company will
be an affiliate of the Bank. Generally, Sections 23A and 23B of the FRA (i)
limit the extent to which a savings and loan association or its subsidiaries may
engage in "covered transactions" with any one affiliate to an amount equal to
10% of such institution's capital stock and surplus, (ii) limit the aggregate of
all such transactions with all affiliates to an amount equal to 20% of such
capital stock and surplus, and (iii) require that all such transactions be on
terms substantially the same, or at least as favorable to the association, as
those provided in transactions with a non-affiliate. The term "covered
transaction" includes the making of loans, purchase

52
<PAGE>
of assets, issuance of a guarantee and other similar types of transactions. In
addition to the limits in Sections 23A and 23B, a savings association may not
make any loan or other extension of credit to an affiliate unless the affiliate
is engaged only in activities permissible for a bank holding company and may not
purchase or invest in securities of any affiliate except shares of a subsidiary.
The Bank was in compliance with these requirements and restrictions at March 31,
1996.

LIMITATIONS ON CAPITAL DISTRIBUTIONS. The OTS imposes various restrictions
or requirements on the ability of associations to make capital distributions,
according to ratings of associations based on their capital level and
supervisory condition. Capital distributions, for purposes of such regulation,
include, without limitation, payments of cash dividends, repurchases and certain
other acquisitions by an association of its shares and payments to stockholders
of another association in an acquisition of such other association.

For purposes of the capital distribution regulations, each institution is
categorized in one of three tiers. Tier 1 consists of associations that, before
and after the proposed capital distribution, meet their fully phased-in capital
requirement. Associations in this category may make capital distributions during
any calendar year equal to the greater of 100% of their net income, current
year-to-date, plus 50% of the amount by which the lesser of such association's
tangible, core or risk-based capital exceeds its fully phased-in capital
requirement for such capital component, as measured at the beginning of the
calendar year, or the amount authorized for a tier 2 association. Tier 2
consists of associations that, before and after the proposed capital
distribution, meet their current minimum, but not fully phased-in capital
requirement. Associations in this category may make capital distributions up to
75% of their net income over the most recent four quarters. Tier 3 associations
do not meet their current minimum capital requirement and must obtain OTS
approval of any capital distribution. A tier 1 association deemed to be in need
of more than normal supervision by the OTS may be downgraded to a tier 2 or tier
3 association.

The Bank meets the requirements for a tier 1 association and has not been
notified of any need for more than normal supervision. The Bank will also be
prohibited from declaring or paying any dividends or from repurchasing any of
its stock if, as a result, the net worth of the Bank would be reduced below the
amount required to be maintained for the liquidation account established in
connection with the Conversion. In addition, as a subsidiary of the Holding
Company, the Bank will also be required to give the OTS 30 day's notice prior to
declaring any dividend on its stock. The OTS may object to the dividend during
that 30-day period based on safety and soundness concerns. Moreover, the OTS may
prohibit any capital distribution otherwise permitted by regulation if the OTS
determines that such distribution would constitute an unsafe or unsound
practice.

In December 1994, the OTS issued a proposal to amend the capital
distributions limits. Under that proposal, associations not owned by a holding
company with a CAMEL examination rating of 1 or 2 could make a capital
distribution without notice to the OTS, if they remain adequately capitalized,
as described above, after the distribution is made. Any other association
seeking to make a capital distribution that would not cause the association to
fall below the capital levels to qualify as adequately capitalized or better,
would have to provide notice to the OTS. Except under limited circumstances and
with OTS approval, no capital distributions would be permitted if it caused the
association to become undercapitalized or worse.

HOLDING COMPANY REGULATION. After the Conversion, the Holding Company will
be a savings and loan holding company within the meaning of the HOLA. As such,
the Holding Company will register with the OTS and will be subject to OTS
regulations, examination, supervision and reporting requirements, in addition to
the reporting requirements of the SEC. Congress is considering legislation which
may require that the Holding Company become a bank holding company regulated by
the FRB. Bank holding companies with more than $150 million in assets are
subject to capital requirements similar to those imposed on the Bank. They are
also subject to more restrictive activity and investment limits than savings and
loan holding companies, although they have more extensive interstate acquisition
authority than savings and loan holding companies. No assurances can be given
that such legislation will be enacted, and the Holding Company cannot be certain
of the impact such legislation may have on its future operations.

The HOLA generally prohibits a savings and loan holding company from
controlling any other savings and loan association or savings and loan holding
company, without prior approval of the OTS, or from

53
<PAGE>
acquiring or retaining more than 5% of the voting shares of a savings and loan
association or holding company thereof, which is not a subsidiary. Under certain
circumstances, a savings and loan holding company is permitted to acquire, with
the approval of the OTS, up to 15% of the previously unissued voting shares of
an undercapitalized savings and loan association for cash without such savings
and loan association being deemed to be controlled by such holding company.
Except with the prior approval of the OTS, no director or officer of a savings
and loan holding company or person owning or controlling by proxy or otherwise
more than 25% of such company's stock may also acquire control of any savings
institution, other than a subsidiary institution, or any other savings and loan
holding company.

The Holding Company will be a unitary savings and loan holding company.
Under current law, there are generally no restrictions on the activities of
unitary savings and loan holding companies, and such companies are the only
financial institution holding companies which may engage in commercial,
securities and insurance activities without limitation. The broad latitude under
current law is restricted if the OTS determines that there is reasonable cause
to believe that the continuation by a savings and loan holding company of an
activity constitutes a serious risk to the financial safety, soundness or
stability of its subsidiary savings and loan association. The OTS may impose
such restrictions as deemed necessary to address such risk, including limiting
(i) payment of dividends by the savings and loan association; (ii) transactions
between the savings and loan association and its affiliates; and (iii) any
activities of the savings and loan association that might create a serious risk
that the liabilities of the holding company and its affiliates may be imposed on
the savings and loan association. Notwithstanding the foregoing rules as to
permissible business activities of a unitary savings and loan holding company,
if the savings and loan association subsidiary of a holding company fails to
meet the QTL Test, then such unitary holding company would become subject to the
activities restrictions applicable to multiple holding companies. At March 31,
1996, the Bank met the QTL Test. See "-- Qualified Thrift Lender Test."

If the Holding Company were to acquire control of another savings
institution, other than through a merger or other business combination with the
Bank, or if the Bank failed to meet the QTL Test, the Holding Company would
become a multiple savings and loan holding company. Unless the acquisition is an
emergency thrift acquisition and each subsidiary savings and loan association
meets the QTL Test, the activities of the Holding Company and any of its
subsidiaries (other than the Bank or other subsidiary savings and loan
associations) would thereafter be subject to activity restrictions. The HOLA
provides that, among other things, no multiple savings and loan holding company
or subsidiary thereof that is not a savings institution shall commence or
continue for a limited period of time after becoming a multiple savings and loan
holding company or subsidiary thereof, any business activity other than (i)
furnishing or performing management services for a subsidiary savings
institution; (ii) conducting an insurance agency or escrow business; (iii)
holding, managing or liquidating assets owned by or acquired from a subsidiary
savings institution; (iv) holding or managing properties used or occupied by a
subsidiary savings institution; (v) acting as trustee under deeds of trust; (vi)
those activities previously directly authorized by federal regulation as of
March 5, 1987, to be engaged in by multiple holding companies; or (vii) those
activities authorized by the FRB as permissible for bank holding companies
[unless the OTS by regulation prohibits or limits such activities for savings
and loan holding companies] and which have been approved by the OTS prior to
being engaged in by a multiple holding company.

The OTS may approve an acquisition resulting in the formation of a multiple
savings and loan holding company that controls savings and loan associations in
more than one state only if the multiple savings and loan holding company
involved controls a savings and loan association that operated a home or branch
office in the state of the association to be acquired as of March 5, 1987, or if
the laws of the state in which the institution to be acquired is located
specifically permit institutions to be acquired by state-chartered institutions
or savings and loan holding companies located in the state where the acquiring
entity is located (or by a holding company that controls such state-chartered
savings institutions). As under prior law, the OTS may approve an acquisition
resulting in a multiple savings and loan holding company controlling savings and
loan associations in more than one state in the case of certain emergency thrift
acquisitions.

54
<PAGE>
No subsidiary savings and loan association of a savings and loan holding
company may declare or pay a dividend on its permanent or nonwithdrawable stock
unless it first gives the OTS 30 days advance notice of such declaration and
payment. Any dividend declared during such period or without the giving of such
notice shall be invalid.

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPOSIT INSURANCE. The FDIC is an independent federal agency that insures
the deposits, up to prescribed statutory limits, of banks and thrifts and
safeguards the safety and soundness of the banking and thrift industries. The
FDIC administers two separate insurance funds, the BIF for commercial banks and
state savings banks and the SAIF for savings associations, state savings banks
that converted from savings associations and banks that have acquired deposits
from savings associations. The BIF and the SAIF are each required to maintain
designated levels of reserves. The FDIC has examination authority over all
insured depository institutions, including the Bank, and has authority to
initiate enforcement actions against federally insured savings associations if
the FDIC does not believe the OTS has taken appropriate action to safeguard
safety and soundness and the deposit insurance fund.

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

Because of the differing reserve levels of the SAIF and the BIF, deposit
insurance assessments paid by healthy commercial banks were recently reduced
significantly below the level paid by healthy savings associations. Assessments
paid by healthy savings associations exceeded those paid by healthy commercial
banks by approximately $.19 per $100 in deposits in late 1995 and will exceed
them by $.23 per $100 in deposits beginning in 1996. Such premium disparity
could have a negative competitive impact on the Bank and other institutions with
SAIF deposits.

55
<PAGE>
Congress is considering legislation to recapitalize the SAIF and to
eliminate the significant premium disparity between the BIF and the SAIF.
Currently, the recapitalization plan provides for the payment of a special
assessment of approximately $.85 per $100 of SAIF deposits held at some date to
be determined, in order to increase SAIF reserves to the level required by law.
Certain banks holding SAIF insured deposits would pay a lower special
assessment. In addition, the cost of prior thrift failures would be shared by
both the SAIF and the BIF. Such cost sharing might increase BIF assessments by
$.02 to $.025 per $100 in deposits. SAIF assessments for healthy savings
associations would be set at a significantly lower level after the special
assessment is paid by all SAIF institutions and could never be reduced below the
level set for healthy BIF institutions.

The recapitalization plan also provides for the merger of the SAIF and BIF
on January 1, 1998. However, the SAIF recapitalization legislation currently
provides for an elimination of the federal thrift charter or of the separate
federal regulation of thrifts prior to the merger of the deposit insurance
funds. The Bank would be regulated under federal law as a bank, and, as a
result, would become subject to the more restrictive activity limitations
imposed on national banks. Under current tax laws, savings associations meeting
certain requirements have been able to deduct from income for tax purposes
amounts designated as reserved for bad debts. See Note 13 of the Notes to the
Financial Statements. Currently, upon the conversion of a savings association to
a bank, certain amounts of such association's bad debt reserve must be
recaptured as taxable income over a six-year period if the association has used
the percentage of taxable income method to compute its reserve. Congress is
considering legislation requiring, generally, that even if a savings association
does not convert to a bank, bad debt reserves taken after 1987 using the
percentage of taxable income method must be included in future taxable income of
the association over a six-year period, although a two-year delay may be
permitted for institutions meeting a residential mortgage loan origination test.
The requirement that the Bank convert to a bank charter and the proposed tax
legislation could have an adverse effect on the Holding Company, although until
such proposals are acted upon by Congress, the extent of such effect is
uncertain.

The Bank had $25.8 million in deposits at March 31, 1995. If the one-time
special assessment in the legislative proposal is enacted into law, the Bank
will pay an additional assessment of approximately $219,000, net of tax effects,
which will reduce capital and earnings for the quarter in which the special
assessment is recorded. However, it is expected that quarterly SAIF assessments
would be reduced significantly after such special assessment is paid.

No assurances can be given that the SAIF recapitalization plan will be
enacted into law or in what form it may be enacted. In addition, the Holding
Company can give no assurances that the disparity between BIF and SAIF
assessments will be eliminated and cannot be certain of the impact of its being
regulated as a bank holding company, the Bank being regulated as a bank or the
change in tax accounting for bad debt reserves until the legislation requiring
such change is enacted. If the proposed legislation is not enacted, SAIF
premiums may increase and the disparity between BIF and SAIF premiums may become
more pronounced, which would negatively impact the Bank.

FRB RESERVE REQUIREMENTS

FRB regulations currently require savings associations to maintain reserves
of 3% of net transaction accounts (primarily NOW accounts) up to $52.0 million
(subject to an exemption of $4.3 million) and of 10% of net transaction accounts
over $52.0 million. At March 31, 1996, the Bank was in compliance with the FRB's
reserve requirements.

FEDERAL HOME LOAN BANKS

The FHLBs provide credit to their members in the form of advances. See "THE
BUSINESS OF THE BANK -- Deposits and Borrowings." The Bank is a member of the
FHLB of Cincinnati and must maintain an investment in the capital stock of the
FHLB of Cincinnati in an amount equal to the greater of 1% of the aggregate
outstanding principal amount of the Bank's residential mortgage loans, home
purchase contracts and similar obligations at the beginning of each year, and 5%
of its advances from the FHLB. The Bank is in compliance with this requirement
with an investment in stock of the FHLB of Cincinnati of $274,000 at March 31,
1996.

56
<PAGE>
FHLB advances to members such as the Bank who meet the QTL Test are
generally limited to the lower of (i) 25% of the member's assets and (ii) 20
times the member's investment in FHLB stock. At March 31, 1996, the Bank's
maximum limit on advances was approximately $5.48 million. The granting of
advances is subject also to the FHLB's collateral and credit underwriting
guidelines.

Upon the origination or renewal of a loan or advance, the FHLB of Cincinnati
is required by law to obtain and maintain a security interest in collateral in
one or more of the following categories: fully disbursed, whole first mortgage
loans on improved residential property or securities representing a whole
interest in such loans; securities issued, insured or guaranteed by the U.S.
Government or an agency thereof; deposits in any FHLB; or other real estate
related collateral (up to 30% of the member association's capital) acceptable to
the applicable FHLB, if such collateral has a readily ascertainable value and
the FHLB can perfect its security interest in the collateral.

Each FHLB is required to establish standards of community investment or
service that its members must maintain for continued access to long-term
advances from the FHLBs. The standards take into account a member's performance
under the Community Reinvestment Act and its record of lending to first-time
home buyers. All long-term advances by each FHLB must be made only to provide
funds for residential housing finance. The FHLBs have established an "Affordable
Housing Program" to subsidize the interest rate of advances to member
associations engaged in lending for long-term, low- and moderate-income,
owner-occupied and affordable rental housing at subsidized rates. The FHLB of
Cincinnati reviews and accepts proposals for subsidies under that program twice
a year. The Bank has not participated in such program.

TAXATION

FEDERAL TAXATION

The Holding Company is subject to the federal tax laws that apply to
corporations generally. With certain exceptions, the Bank is also subject to the
federal tax laws and regulations which apply to corporations generally. One such
exception permits thrift institutions such as the Bank which meet certain
definitional tests relating to the composition of assets and other conditions
prescribed by the Code to establish a reserve for bad debts and to make annual
additions thereto which may, within specified limits, be taken as a deduction in
computing taxable income. Legislation pending in Congress, however, may
eliminate this bad debt reserve provision in 1996 and may require the recapture
of post-1987 bad debt reserves over a six-year period beginning in 1998. See
"REGULATION -- Federal Deposit Insurance Corporation -- Assessments."

For purposes of the bad debt reserve deduction, loans are categorized as
"qualifying real property loans," which generally include loans secured by
improved real estate, and "nonqualifying loans," which include all other types
of loans. The amount of the bad debt reserve deduction for "nonqualifying loans"
is computed under the experience method. A thrift institution may elect annually
to compute its allowable addition to its bad debt reserves for qualifying loans
under either the experience method or the percentage of taxable income method.
For 1995, 1994 and 1993, the Bank used the percentage of taxable income method.

Under the experience method, the bad debt deduction for an addition to the
reserve for "qualifying real property loans" or "nonqualifying loans" is an
amount determined under a formula based upon a moving average of the bad debts
actually sustained by a thrift institution over a period of years or an amount
necessary to maintain a minimum reserve level amount for a statutory base year.

The percentage of specially computed taxable income that is used to compute
the percentage bad debt deduction is 8%. The percentage bad debt deduction thus
computed is reduced by the amount permitted as a deduction for nonqualifying
loans under the experience method. The availability of the percentage of taxable
income method permits qualifying thrift institutions to be taxed at a lower
effective federal income

57
<PAGE>
tax rate than that applicable to corporations generally. The effective maximum
federal income tax rate applicable to a qualifying thrift institution (exclusive
of any minimum tax or environmental tax), assuming the maximum percentage bad
debt deduction, is approximately 31.3%.

If less than 60% of the total dollar amount of an institution's assets (on a
tax basis) consist of specified assets (generally, loans secured by residential
real estate or deposits, educational loans, cash and certain governmental
obligations), such institution may not deduct any addition to a bad debt reserve
and generally must include reserves in excess of that allowable under the
experience method in income over a six-year period. At March 31, 1996, at least
60% of the Bank's total assets were specified assets. No representation can be
made as to whether the Bank will meet the 60% test for subsequent taxable years.

Under the percentage of taxable income method, the percentage bad debt
deduction cannot exceed the amount necessary to increase the balance in the
reserve for "qualifying real property loans" to an amount equal to 6% of such
loans outstanding at the end of the taxable year. Additionally, the total bad
debt deduction attributable to "qualifying real property loans" cannot exceed
the greater of (i) the amount deductible under the experience method and (ii)
the amount which, when added to the bad debt deduction for "nonqualifying
loans," equals the amount by which 12% of the amount comprising savings accounts
at year-end exceeds the sum of surplus, undivided profits and reserves at the
beginning of the year. At March 31, 1996, and for all prior years, the 6% and
12% limitations did not restrict the percentage bad debt deduction available to
the Bank. It is not expected that these limitations will be a limiting factor in
the foreseeable future.

In addition to the regular income tax, the Bank is subject to an alternative
minimum tax which is imposed at a minimum tax rate of 20% on "alternative
minimum taxable income" (which is the sum of a corporation's regular taxable
income, with certain adjustments, and tax preference items), less any available
exemption. Such tax preference items include (i) 100% of the excess of a thrift
institution's bad debt deduction over the amount that would have been allowable
based on actual experience and (ii) interest on certain tax-exempt bonds issued
after August 7, 1986. In addition, 75% of the amount by which a corporation's
"adjusted current earnings" exceeds its alternative minimum taxable income
computed without regard to this preference item and prior to reduction by net
operating losses, is included in alternative minimum taxable income. Net
operating losses can offset no more than 90% of alternative minimum taxable
income. The alternative minimum tax is imposed to the extent it exceeds the
corporation's regular income tax. Payments of alternative minimum tax may be
used as credits against regular tax liabilities in future years. In addition,
for taxable years after 1986 and before 1996, the Bank is also subject to an
environmental tax equal to 0.12% of the excess of alternative minimum taxable
income for the taxable year (determined without regard to net operating losses
and the deduction for the environmental tax) over $2.0 million.

To the extent earnings appropriated to a thrift institution's bad debt
reserves for qualifying real property loans and deducted for federal income tax
purposes exceed the allowable amount of such reserves computed under the
experience method, and to the extent of the institution's supplemental reserves
for losses on loans (the "Excess"), such Excess may not, without adverse tax
consequences, be utilized for payment of cash dividends or other distributions
to a shareholder (including distributions in dissolution or liquidation) or for
any other purpose (except to absorb bad debt losses). Distribution of a cash
dividend by a thrift institution to a shareholder is treated as made: first, out
of the institution's post-1951 accumulated earnings and profits; second, out of
the Excess; and third, out of such other accounts as may be proper. As of March
31, 1996, the Bank's Excess for tax purposes totaled approximately $614,000. The
Bank believes it had approximately $1.9 million of accumulated earnings and
profits for tax purposes as of March 31, 1996, which would be available for
dividend distributions, provided regulatory restrictions applicable to the
payment of dividends are met. See "DIVIDEND POLICY." No representation can be
made as to whether the Bank will have current or accumulated earnings and
profits in subsequent periods.

The tax returns of the Bank have been closed by statute or audited through
1992. In the opinion of management, any examination of open returns would not
result in a deficiency which could have a material adverse effect on the
financial condition of the Bank.

58
<PAGE>
OHIO TAXATION

The Bank is a "financial institution" for State of Ohio tax purposes. As
such, it is subject to the Ohio corporate franchise tax on "financial
institutions," which is imposed annually at a rate of 1.5% of the Bank's book
net worth determined in accordance with GAAP. As a "financial institution," the
Bank is not subject to any tax based upon net income or net profits imposed by
the State of Ohio.

The Holding Company is subject to the Ohio corporation franchise tax and a
special litter tax. The franchise tax, as applied to the Holding Company, is a
tax measured by both net earnings and net worth. The rate of tax is the greater
of (i) 5.1% on the first $50,000 of computed Ohio taxable income and 8.9% of
computed Ohio taxable income in excess of $50,000 and (ii) 0.582% times taxable
net worth.

In computing its tax under the net worth method, the Holding Company may
exclude 100% of its investment in the capital stock of the Bank after the
Conversion, as reflected on the balance sheet of the Holding Company, as long as
it owns at least 25% of the issued and outstanding capital stock of the Bank.
The calculation of the exclusion from net worth is based on the ratio of the
excludable investment (net of any appreciation or goodwill included in such
investment) to total assets multiplied by the net value of the stock. As a
holding company, the Holding Company may be entitled to various other deductions
in computing taxable net worth that are not generally available to operating
companies.

THE CONVERSION

THE OTS AND THE DIVISION HAVE APPROVED THE PLAN, SUBJECT TO THE APPROVAL OF
THE PLAN BY THE MEMBERS OF THE BANK ENTITLED TO VOTE ON THE PLAN AND SUBJECT TO
THE SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE OTS AND THE
DIVISION. OTS AND DIVISION APPROVAL DOES NOT CONSTITUTE A RECOMMENDATION OR
ENDORSEMENT OF THE PLAN.

GENERAL

The Board of Directors of the Bank has unanimously adopted the Plan and
recommends that the Voting Members of the Bank approve the Plan at the Special
Meeting. During and upon completion of the Conversion, the Bank will continue to
provide the services presently offered to depositors and borrowers, will
maintain its existing office and will retain its existing management and
employees.

Based on the current Valuation Range, between 297,500 and 402,500 Common
Shares are expected to be offered in the Subscription Offering and the
concurrent Community Offering at a price of $10 per share. The actual number of
shares sold in connection with the Conversion will be determined upon completion
of the Offering based on the final valuation of the Bank, as converted. See
"Pricing and Number of Common Shares to be Sold."

The Common Shares will be offered in the Subscription Offering to the ESOP
and certain present and former depositors of the Bank. Any Common Shares not
subscribed for in the Subscription Offering may be sold to the general public in
the Community Offering in a manner which will seek to achieve the widest
distribution of the Common Shares, but which will give preference to natural
persons residing in Hamilton County, Ohio. Under OTS regulations, the Community
Offering must be completed within 45 days following the Subscription Expiration
Date, unless such period is extended by the Bank with the approval of the OTS
and the Division. If the Community Offering is determined not to be feasible, an
occurrence that is not currently anticipated, the Boards of Directors of the
Holding Company and the Bank will consult with the OTS and the Division to
determine an appropriate alternative method of selling unsubscribed Common
Shares up to the minimum of the Valuation Range. No alternative sales methods
are currently planned.

OTS and Ohio regulations require the completion of the Conversion within 24
months after the date of the approval of the Plan by the Voting Members of the
Bank. The commencement and completion of the Conversion will be subject to
market conditions and other factors beyond the Bank's control. Due to changing
economic and market conditions, no assurance can be given as to the length of
time that will be required to complete the sale of the Common Shares. If delays
are experienced, significant changes may occur in the estimated pro forma market
value of the Bank. In such circumstances, the Bank may also incur

59
<PAGE>
substantial additional printing, legal and accounting expenses in completing the
Conversion. In the event the Conversion is not successfully completed, the Bank
will be required to charge all Conversion expenses against current earnings.

REASONS FOR THE CONVERSION

The principal factors considered by the Bank's Board of Directors in
reaching the decision to pursue a mutual-to-stock conversion are the uncertain
future of the mutual form of ownership generally and the numerous competitive
disadvantages which the Bank faces if it continues in mutual form. These
disadvantages relate to a variety of factors, including growth opportunities,
employee retention and regulatory uncertainty.

If the Bank is to continue to grow and prosper, the mutual form of
organization is the least desirable form from a competitive standpoint. The
opportunities for a mutual to expand through mutual-to-mutual mergers or
acquisitions are limited because cash is the only form of consideration a mutual
institution can offer to another institution. Although the Bank does not have
any specific acquisitions planned at this time, the Conversion will position the
Bank to take advantage of any acquisition opportunities which may present
themselves. Because a conversion to stock form is a time-consuming and complex
process, the Bank cannot wait until an acquisition is imminent to embark on the
conversion process.

As an increasing number of the Bank's competitors convert to stock form and
acquire the ability to use stock-based compensation programs, the Bank, in
mutual form, would be at a disadvantage when it comes to attracting and
retaining qualified management. The Bank believes that the ESOP for all
employees and the Stock Option Plan and the RRP for directors and management are
important tools in achieving such goals, even though the Bank will be required
to wait until after the Conversion to implement the Stock Option Plan and the
RRP. See "MANAGEMENT -- Stock Benefit Plans."

Another benefit of the Conversion will be an increase in capital.
Notwithstanding the Bank's current capital position, the importance of higher
levels of capital cannot be ignored in the current interest rate environment. As
has been amply demonstrated in the past, changing accounting principles,
interest rate shifts and changing regulations can threaten even well-capitalized
institutions. As a mutual institution, the Bank can only increase capital
through retained earnings or the issuance of subordinated debentures, which do
not count as tier 1 capital for regulatory capital purposes. Capital that may
seem unnecessary now may help the Bank withstand future threats to its capital.
See "REGULATION -- Office of Thrift Supervision -- Regulatory Capital
Requirements."

PRINCIPAL EFFECTS OF THE CONVERSION

VOTING RIGHTS. Savings account holders and borrowers who are members of the
Bank in its mutual form will have no voting rights in the Bank as converted and
will not participate, therefore, in the election of directors or otherwise
control the Bank's affairs. Voting rights in the Holding Company will be held
exclusively by its shareholders, and voting rights in the Bank will be held
exclusively by the Holding Company. Each holder of the Holding Company's common
shares will be entitled to one vote for each share owned on any matter to be
considered by the Holding Company's shareholders. See "DESCRIPTION OF AUTHORIZED
SHARES."

SAVINGS ACCOUNTS AND LOANS. Savings accounts in the Bank, as converted,
will be equivalent in amount, interest rate and other terms to the present
savings accounts in the Bank, and the existing FDIC insurance on such deposits
will not be affected by the Conversion. The Conversion will not affect the terms
of loan accounts or the rights and obligations of borrowers under their
individual contractual arrangements with the Bank.

60
<PAGE>
the Conversion will constitute a tax-free reorganization as defined in Section
368(a) of the Code. The Bank intends to proceed with the Conversion based upon
an opinion rendered by its special counsel, Vorys, Sater, Seymour and Pease, to
the following effect:

(1) The Conversion constitutes a reorganization within the meaning of
Section 368(a)(1)(F) of the Code, and no gain or loss will be recognized by
the Bank in its mutual form or in its stock form as a result of the
Conversion. The Bank in its mutual form and the Bank in its stock form will
each be a "party to a reorganization" within the meaning of Section 368(b)
of the Code;

(2) No gain or loss will be recognized by the Bank upon the receipt of
money from the Holding Company in exchange for the capital stock of the
Bank, as converted;

(3) The assets of the Bank will have the same basis in its hands
immediately after the Conversion as they had in its hands immediately prior
to the Conversion, and the holding period of the assets of the Bank after
the Conversion will include the period during which the assets were held by
the Bank before the Conversion;

(4) No gain or loss will be recognized by the deposit account holders of
the Bank upon the issuance to them, in exchange for their respective
withdrawable deposit accounts in the Bank immediately prior to the
Conversion, of withdrawable deposit accounts in the Bank immediately after
the Conversion, in the same dollar amount as their withdrawable deposit
accounts in the Bank immediately prior to the Conversion, plus, in the case
of Eligible Account Holders and Supplemental Eligible Account Holders
(hereinafter defined), the interests in the Liquidation Account of the Bank,
as described below;

(5) The basis of the withdrawable deposit accounts in the Bank held by
its deposit account holders immediately after the Conversion will be the
same as the basis of their deposit accounts in the Bank immediately prior to
the Conversion. The basis of the interests in the Liquidation Account
received by the Eligible Account Holders and Supplemental Eligible Account
Holders will be zero. The basis of the nontransferable subscription rights
received by Eligible Account Holders, Supplemental Eligible Account Holders
and Other Eligible Members will be zero (assuming that at distribution such
rights have no ascertainable fair market value);

(6) No gain or loss will be recognized by Eligible Account Holders,
Supplemental Eligible Account Holders or Other Eligible Members upon the
distribution to them of nontransferable subscription rights to purchase
Common Shares (assuming that at distribution such rights have no
ascertainable fair market value), and no taxable income will be realized by
such Eligible Account Holders, Supplemental Eligible Account Holders or
Other Eligible Members as a result of their exercise of such nontransferable
subscription rights;

(7) The basis of the Common Shares purchased by members of the Bank
pursuant to the exercise of subscription rights will be the purchase price
thereof (assuming that such rights have no ascertainable fair market value
and that the purchase price is not less than the fair market value of the
shares on the date of such exercise), and the holding period of such shares
will commence on the date of such exercise. The basis of the Common Shares
purchased other than by the exercise of subscription rights will be the
purchase price thereof (assuming in the case of the other subscribers that
the opportunity to buy in the Subscription Offering has no ascertainable
fair market value), and the holding period of such shares will commence on
the day after the date of the purchase;

(8) For purposes of Section 381 of the Code, the Bank will be treated as
if there had been no reorganization. The taxable year of the Bank will not
end on the effective date of the Conversion. Immediately after the
Conversion, the Bank in its stock form will succeed to and take into account
the tax attributes of the Bank in its mutual form immediately prior to the
Conversion, including the Bank's earnings and profits or deficit in earnings
and profits;

(9) The bad debt reserves of the Bank in its mutual form immediately
prior to the Conversion will not be required to be restored to the gross
income of the Bank in its stock form as a result of the

61
<PAGE>
Conversion and immediately after the Conversion such bad debt reserves will
have the same character in the hands of the Bank in its stock form as they
would have had if there had been no Conversion. The Bank in its stock form
will succeed to and take into account the dollar amounts of those accounts
of the Bank in its mutual form which represent bad debt reserves in respect
of which the Bank in its mutual form has taken a bad debt deduction for
taxable years ending on or before the Conversion; and

(10) Regardless of book entries made for the creation of the Liquidation
Account, the Conversion will not diminish the accumulated earnings and
profits of the Bank available for the subsequent distribution of dividends
within the meaning of Section 316 of the Code. The creation of the
Liquidation Account on the records of the Bank will have no effect on its
taxable income, deductions for additions to reserves for bad debts under
Section 593 of the Code or distributions to stockholders under Section
593(e) of the Code.

For Ohio tax purposes, the tax consequences of the Conversion will be as
follows:

(1) The Bank is a "financial institution" for State of Ohio tax
purposes, and the Conversion will not change such status;

(2) The Bank is subject to the Ohio corporate franchise tax on
"financial institutions," which is imposed annually at a rate of 1.5% of the
Bank's equity capital determined in accordance with GAAP, and the Conversion
will not change such status;

(3) As a "financial institution," the Bank is not subject to any tax
based upon net income or net profit imposed by the State of Ohio, and the
Conversion will not change such status;

(4) The Conversion will not be a taxable transaction to the Bank in its
mutual or stock form for purposes of the Ohio corporate franchise tax. As a
consequence of the Conversion, however, the annual Ohio corporate franchise
tax liability of the Bank will increase if the taxable net worth of the Bank
(i.e., book net worth computed in accordance with GAAP at the close of the
Bank's taxable year for federal income tax purposes) increases thereby; and

(5) The Conversion will not be a taxable transaction to any deposit
account holder or borrower member of the Bank in its mutual or stock form
for purposes of the Ohio corporate franchise tax and the Ohio personal
income tax.

The Bank has received an opinion from Keller to the effect that the
subscription rights have no ascertainable fair market value because the rights
are received by specified persons at no cost, may not be transferred and are of
short duration. The IRS could challenge the assumption that the subscription
rights have no ascertainable fair market value.

LIQUIDATION ACCOUNT. In the unlikely event of a complete liquidation of the
Bank in its present mutual form, each depositor in the Bank would receive a pro
rata share of any assets of the Bank remaining after payment of the claims of
all creditors, including the claims of all depositors to the withdrawable value
of their savings accounts. A depositor's pro rata share of such remaining assets
would be the same proportion of such assets as the value of such depositor's
savings deposits bears to the total aggregate value of all savings deposits in
the Bank at the time of liquidation.

In the event of a complete liquidation of the Bank in its stock form after
the Conversion, each savings depositor would have a claim of the same general
priority as the claims of all other general creditors of the Bank. Except as
described below, each depositor's claim would be solely in the amount of the
balance in such depositor's savings account plus accrued interest. The depositor
would have no interest in the assets of the Bank above that amount. Such assets
would be distributed to the shareholders of the Bank.

62
<PAGE>
establish the Liquidation Account in an amount equal to the retained earnings of
the Bank as of March 31, 1996. The Liquidation Account will not operate to
restrict the use or application of any of the regulatory capital of the Bank.

Each Eligible Account Holder and Supplemental Eligible Account Holder will
have a separate inchoate interest (the "Subaccount") in a portion of the
Liquidation Account for Qualifying Deposits held on the Eligibility Record Date
or the Supplemental Eligibility Record Date (hereinafter defined).

The balance of each initial Subaccount shall be an amount determined by
multiplying the amount in the Liquidation Account by a fraction, the numerator
of which is the closing balance in the account holder's account as of the close
of business on the Eligibility Record Date or the Supplemental Eligibility
Record Date and the denominator of which is the total amount of all Qualifying
Deposits of Eligible Account Holders on the Eligibility Record Date or the
Supplemental Eligibility Record Date. The balance of each Subaccount may be
decreased but will never be increased. If, at the close of business on the last
day of any fiscal year subsequent to the Eligibility Record Date or the
Supplemental Eligibility Record Date, the balance in the savings account to
which a Subaccount relates is less than the lesser of (i) the deposit balance in
such savings account at the close of business on any other annual closing date
subsequent to the Eligibility Record Date or the Supplemental Eligibility Record
Date or (ii) the amount of the Qualifying Deposit as of the Eligibility Record
Date or the Supplemental Eligibility Record Date, the balance of the Subaccount
for such savings account shall be adjusted proportionately to the reduction in
such savings account balance. In the event of any such downward adjustment, such
Subaccount balance shall not be subsequently increased notwithstanding any
increase in the deposit balance of the related savings account. If any savings
account is closed, its related Subaccount shall be reduced to zero upon such
closing.

In the event of a complete liquidation of the converted Bank (and only in
such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall receive from the Liquidation Account a distribution equal to the
current balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to the shareholders of the Bank. Any assets
remaining after satisfaction of such liquidation rights and the claims of the
Bank's creditors would be distributed to the shareholders of the Bank. No
merger, consolidation, purchase of bulk assets or similar combination or
transaction with another financial institution, the deposits of which are
insured by the FDIC, will be deemed to be a complete liquidation for this
purpose and, in any such transaction, the Liquidation Account shall be assumed
by the surviving institution.

COMMON SHARES. SHARES ISSUED UNDER THE PLAN CANNOT AND WILL NOT BE INSURED
BY THE FDIC. For a description of the characteristics of the Common Shares, see
"DESCRIPTION OF AUTHORIZED SHARES."

INTERPRETATION AND AMENDMENT OF THE PLAN

To the extent permitted by law, all interpretations of the Plan by the
Boards of Directors of the Holding Company and the Bank will be final. The Plan
may be amended by the Boards of Directors of the Holding Company and the Bank at
any time with the concurrence of the OTS and the Division. If the Bank
determines, upon advice of counsel and after consultation with the OTS and the
Division, that any such amendment is material, subscribers will be notified of
the amendment and will be provided the opportunity to increase, decrease or
cancel their subscriptions. Any person who does not affirmatively elect to
continue his subscription or elects to rescind his subscription before the date
specified in the notice will have all of his funds promptly refunded with
interest. Any person who elects to decrease his subscription will have the
appropriate portion of his funds promptly refunded with interest.

CONDITIONS AND TERMINATION

The completion of the Conversion requires the approval of the Plan by the
Voting Members of the Bank at the Special Meeting and completion of the sale of
the Common Shares within 24 months following the date of such approval. If these
conditions are not satisfied, the Plan will automatically terminate and the Bank
will continue its business in the mutual form of organization. The Plan may be
voluntarily terminated by the Board of Directors at any time before the Special
Meeting and at any time thereafter with the approval of the OTS and the
Division.

63
<PAGE>
SUBSCRIPTION OFFERING

THE SUBSCRIPTION OFFERING WILL EXPIRE AT .M., EASTERN TIME, ON THE
"SUBSCRIPTION EXPIRATION DATE." SUBSCRIPTION RIGHTS NOT EXERCISED BEFORE THE
SUBSCRIPTION EXPIRATION DATE WILL BE VOID, WHETHER OR NOT THE BANK HAS BEEN ABLE
TO LOCATE EACH PERSON ENTITLED TO SUCH SUBSCRIPTION RIGHTS.

Nontransferable subscription rights to purchase Common Shares are being
issued at no cost to all eligible persons and entities in accordance with the
preference categories established by the Plan, as described below. Each
subscription right may be exercised only by the person to whom it is issued and
only for his or her own account. EACH PERSON SUBSCRIBING FOR COMMON SHARES MUST
REPRESENT TO THE BANK THAT HE OR SHE IS PURCHASING THE COMMON SHARES FOR HIS OR
HER OWN ACCOUNT AND THAT HE OR SHE HAS NO AGREEMENT OR UNDERSTANDING WITH ANY
OTHER PERSON FOR THE SALE OR TRANSFER OF THE COMMON SHARES. ANY PERSON WHO
ATTEMPTS TO TRANSFER HIS OR HER SUBSCRIPTION RIGHTS MAY BE SUBJECT TO PENALTIES
AND SANCTIONS, INCLUDING LOSS OF THE SUBSCRIPTION RIGHTS.

The number of Common Shares which a person who has subscription rights may
purchase will be determined, in part, by the total number of Common Shares to be
issued and the availability of Common Shares for purchase under the preference
categories set forth in the Plan and certain other limitations. See "Limitations
on Purchases of Common Shares." The sale of any Common Shares pursuant to
subscriptions received is contingent upon approval of the Plan by the Voting
Members of the Bank at the Special Meeting.

The preference categories and preliminary purchase limitations which have
been established by the Plan, in accordance with applicable regulations, for the
allocation of Common Shares are as follows:

(a) Each Eligible Account Holder shall receive, without payment
therefor, the nontransferable right to purchase in the Subscription Offering
up to 2.5% of the total Common Shares sold in the Offering. If the exercise
of subscription rights in this Category 1 results in an over-subscription,
Common Shares will be allocated among subscribing Eligible Account Holders
in a manner which will, to the extent possible, make the total allocation of
each subscriber equal 100 shares or the amount subscribed for, whichever is
less. Any Common Shares remaining after such allocation has been made will
be allocated among the subscribing Eligible Account Holders whose
subscriptions remain unfilled in the proportion which the amount of their
respective Qualifying Deposits on the Eligibility Record Date bears to the
total Qualifying Deposits of all Eligible Account Holders on such date. For
purposes of this paragraph (a), increases in the Qualifying Deposits of
directors and executive officers of the Bank during the twelve months
preceding the Eligibility Record Date shall not be considered.
Notwithstanding the foregoing, Common Shares in excess of 402,500, the
maximum of the Valuation Range, may be sold to the ESOP before fully
satisfying the subscriptions of Eligible Account Holders. No fractional
shares will be issued.

(b) The ESOP shall receive, without payment therefor, the
nontransferable right to purchase in the Subscription Offering an aggregate
amount of up to 10% of the Common Shares sold in the Offering, provided that
shares remain available after satisfying the subscription rights of Eligible
Account Holders up to the maximum of the Valuation Range pursuant to
paragraph (a) above. Although the Plan and OTS regulations permit the ESOP
to purchase up to 10% of the Common Shares, the Holding Company anticipates
that the ESOP will purchase 8% of the Common Shares. If the ESOP is unable
to purchase all or part of the Common Shares for which it subscribes, the
ESOP may purchase Common Shares on the open market or may purchase
authorized but unissued shares of the Holding Company. If the ESOP purchases
authorized but unissued shares from the Holding Company, such purchases
could have a dilutive effect on the interests of the Holding Company's
shareholders. See "RISK FACTORS -- Potential Impact of Benefit Plans on Net
Earnings and Shareholders' Equity."

64
<PAGE>
subscription rights of Eligible Account Holders and the ESOP pursuant to
paragraphs (a) and (b) above. If the exercise of subscription rights by
Supplemental Eligible Account Holders results in an oversubscription, Common
Shares will be allocated among subscribing Supplemental Eligible Account
Holders in a manner which will, to the extent possible, make the total
allocation of each subscriber equal 100 shares or the amount subscribed for,
whichever is less. Any Common Shares remaining after such allocation has
been made will be allocated among the subscribing Supplemental Eligible
Account Holders whose subscriptions remain unfilled in the proportion which
the amount of their respective Qualifying Deposits on June 30, 1996 (the
"Supplemental Eligibility Record Date"), bears to the total Qualifying
Deposits of all Supplemental Eligible Account Holders on such date. No
fractional shares will be issued.

Subscription rights received by Supplemental Eligible Account Holders will
be subordinate to the subscription rights of Eligible Account Holders and the
ESOP.

(d) Each Other Eligible Member, other than an Eligible Account Holder or
Supplemental Eligible Account Holder, shall receive, without payment
therefor, the nontransferable right to purchase in the Subscription Offering
up to 2.5% of the Common Shares to be sold in the Offering, provided that
shares remain available after satisfying the subscription rights of Eligible
Account Holders, the ESOP and Supplemental Eligible Account Holders pursuant
to paragraphs (a), (b) and (c) above. In the event of an oversubscription by
Other Eligible Members, the available Common Shares will be allocated among
subscribing Other Eligible Members in the same proportion that their
subscriptions bear to the total amount of subscriptions by all Other
Eligible Members.

The subscription rights granted under this Plan are nontransferable. Each
subscription right may be exercised only by the person to whom it is issued and
only for such person's own account. Each person exercising subscription rights
will be required to certify that such person is purchasing for such person's own
account and that such person has no agreement or understanding for the sale or
transfer of the Common Shares to which such person subscribes. The Bank will use
the information provided on the Order Form to ensure that those persons
subscribing in the Subscription Offering have subscription rights and that the
orders submitted do not exceed applicable purchase limitations. In order to
ensure proper identification of subscription rights and proper allocations in
the event of an oversubscription, it is the responsibility of each subscriber to
provide correct account verification information and the correct address of the
subscriber's primary residence.

The Bank will make reasonable efforts to comply with the securities laws of
all states in the United States in which persons having subscription rights
reside. However, no such person will be offered or receive any Common Shares
under the Plan who resides in a foreign country or in a state of the United
States with respect to which each of the following apply: (i) under the
securities laws of such country or state, the granting of subscription rights or
the offer or sale of Common Shares to such persons would require the Holding
Company or its officers or directors to register as a broker or dealer or to
register or otherwise qualify its securities for sale in such country or state;
and (ii) such registration or qualification would be impracticable for reasons
of cost or otherwise.

COMMUNITY OFFERING

Concurrently with the Subscription Offering, the Holding Company is hereby
offering Common Shares in the Community Offering, subject to the limitations set
forth below, to the extent such shares remain available after the satisfaction
of all orders received in the Subscription Offering. If subscriptions are
received in the Subscription Offering for at least 462,875 Common Shares, Common
Shares may not be available for purchase in the Community Offering. All sales of
Common Shares in the Community Offering will be at the same price per share as
in the Subscription Offering. THE COMMUNITY OFFERING MAY BE TERMINATED AT ANY
TIME AFTER ORDERS FOR AT LEAST 462,875 COMMON SHARES HAVE BEEN RECEIVED, BUT IN
NO EVENT LATER THAN , 1996 (THE "COMMUNITY EXPIRATION DATE"), WITHOUT THE
CONSENT OF THE OTS AND THE DIVISION.

65
<PAGE>
In the event shares are available for the Community Offering, members of the
general public, each together with his or her Associates and other persons
acting in concert with him or her, may purchase up to 2.5% of the total Common
Shares sold in the Offering. If an insufficient number of Common Shares is
available to fill all of the orders received in the Community Offering, the
available Common Shares will be allocated in a manner to be determined by the
Boards of Directors of the Holding Company and the Bank, subject to the
following:

(i) Preference will be given to natural persons who are residents of
Hamilton County, Ohio, the county in which the office of the Bank is
located;

(ii) Orders received in the Community Offering will first be filled up
to the lesser of the number of shares subscribed for or 2% of the total
number of Common Shares offered, with any remaining shares allocated on an
equal number of shares per order basis until all orders have been filled;
and

(iii) The right of any person to purchase Common Shares in the Community
Offering is subject to the right of the Holding Company and the Bank to
accept or reject such purchases in whole or in part.

The term "resident", as used herein with respect to the Community Offering,
means any natural person who, on the date of submission of an Order Form,
maintained a bona fide residence within Hamilton County, Ohio.

LIMITATIONS ON PURCHASES OF COMMON SHARES

The Plan provides for certain additional limitations to be placed upon the
purchase of Common Shares. To the extent Common Shares are available, the
minimum number of Common Shares that may be purchased by any party is 25, or
$250. No fractional shares will be issued. Purchases in the Offering are further
subject to the limitations that (i) no Eligible Account Holder, Supplemental
Eligible Account Holder, if any, or Other Eligible Member may purchase in the
Offering more than 2.5% of the total Common Shares sold in the Offering, (ii) no
person, together with his or her Associates and other persons acting in concert
with him or her, may purchase in the Community Offering more than 2.5% of the
total Common Shares sold in the Offering, and (iii) no person, together with his
or her Associates and other persons acting in concert with him or her, may
purchase more than 5% of the total Common Shares sold in the Offering. In
connection with the exercise of subscription rights arising from a deposit
account or a loan account in which two or more persons have an interest, the
aggregate maximum number of Common Shares which the persons having an interest
in such account may purchase is 2.5% of the total Common Shares sold in the
Offering. Such limitation does not apply to the ESOP. Subject to applicable
regulations, the purchase limitation may be increased or decreased after the
commencement of the Offering by the Boards of Directors. A person's associates
consist of the following ("Associates"): (a) any corporation or organization
(other than the Bank) of which such person is an officer, partner or, directly
or indirectly, the beneficial owner of 10% or more of any class of equity
securities; (b) any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a similar
fiduciary capacity; and (c) any relative or spouse of such person, or relative
of such spouse, who either has the same home as such person or who is a director
or officer of the Bank.

Executive officers and directors of the Bank, together with their
Associates, may not purchase, in the aggregate, more than 35% of the total
Common Shares sold in the Offering. Shares acquired by the ESOP will not,
pursuant to regulations governing the Conversion, be aggregated with the shares
purchased by the directors, officers and employees of the Bank.

Purchases of Common Shares in the Offering are also subject to the change in
control regulations of the OTS which restrict direct and indirect purchases of
10% or more of the stock of any savings bank by any person or group of persons
acting in concert, under certain circumstances. See "RESTRICTIONS ON ACQUISITION
OF THE HOLDING COMPANY AND THE BANK -- Federal Law and Regulation."

After the Conversion, Common Shares, except for shares purchased by
affiliates of the Bank, will be freely transferable, subject to OTS and Division
regulations.

66
<PAGE>
PLAN OF DISTRIBUTION

The offering of the Common Shares is made only pursuant to this Prospectus,
copies of which are available at the office of the Bank. Officers and directors
of the Bank will be available to answer questions about the Conversion and may
also hold informational meetings for interested persons. Such officers and
directors will not be permitted to make statements about the Holding Company or
the Bank unless such information is also set forth in this Prospectus, nor will
they render investment advice. No officer, director or employee of the Holding
Company or the Bank will be compensated, directly or indirectly, for any
activities in connection with the offer or sale of Common Shares issued in the
Conversion.

To assist the Holding Company and the Bank in marketing the Common Shares,
the Holding Company and the Bank have retained Webb, a broker-dealer registered
with the SEC and a member of the NASD. Webb will consult with and advise the
Bank and assist with the sale of the Common Shares in connection with the
Conversion. The services to be rendered by Webb include the following: (1)
assisting the Holding Company and the Bank in conducting the Subscription
Offering and the Community Offering; (2) training and educating Bank personnel
about the Conversion process; (3) organizing and conducting meetings to provide
information to prospective investors about the Conversion; (4) keeping records
of orders for Common Shares; and (5) assisting in the collection of proxies from
members for use at the Special Meeting.

For its services, Webb will receive a financial advisory fee in the amount
of $50,000. Selected Dealers will receive fees equal to 4% of the purchase price
of Common Shares sold, if any, pursuant to Selected Dealer Agreements. In
addition, the Holding Company will reimburse Webb for certain expenses,
including reasonable legal fees. Such expenses shall not exceed $30,000. Webb is
not obligated to purchase any Common Shares.

The Holding Company and the Bank have agreed to indemnify Webb and its
directors, officers, employees, agents and any controlling person against any
and all loss, liability, claim, damage or expense arising out of any untrue
statement, or alleged untrue statement, of a material fact contained in the
Summary Proxy Statement or the Prospectus, any application to regulatory
authorities, any "blue sky" application, or any other related document prepared
or executed by or on behalf of the Holding Company or the Bank with its consent
in connection with, or in contemplation of, the Conversion, or any omission
therefrom of a material fact required to be stated therein, unless such untrue
statement or omission, or alleged untrue statement or omission, was made in
reliance upon certain information furnished to the Bank by Webb expressly for
use in the Summary Proxy Statement or the Prospectus.

The Common Shares will be offered principally by the distribution of this
Prospectus and through activities conducted at the Conversion Information
Center, which will be located at the office of the Bank. The Conversion
Information Center will be staffed by one or more of Webb's employees, who will
be responsible for mailing materials relating to the Offering, responding to
questions regarding the Conversion and the Offering and processing stock orders.

A conspicuous legend that the Common Shares are not a federally-insured or
guaranteed deposit or account appears on all offering documents used in
connection with the Conversion and will appear on the certificates representing
the Common Shares. Any person purchasing Common Shares will be required to
execute the Stock Order Form certifying such person's knowledge that the Common
Shares are not federally-insured or guaranteed and that the purchaser has
received a Prospectus and understands the investment risk involved.

Sales of Common Shares will be made by registered representatives affiliated
with Webb. Management and the employees of the Bank may participate in the
Offering in clerical capacities, providing administrative support in effecting
sales transactions or answering questions relating to the proper execution of
the Stock Order Form. Management of the Bank may answer questions regarding the
business of the Bank. Other questions of prospective purchasers, including
questions as to the nature of the investment, will be directed to registered
representatives. Management and the employees of the Bank have been instructed
not to solicit offers to purchase Common Shares or to provide advice regarding
the purchase of Common Shares.

67
<PAGE>
The Bank's personnel will assist in the above-described sales activities
pursuant to an exemption from registration as a broker or dealer provided by
Rule 3a4-1 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"). Rule 3a4-1 generally provides that an "associated person of an issuer" of
securities shall not be deemed a broker solely by reason of participation in the
sale of securities of such issuer if the associated person meets certain
conditions. Such conditions include, but are not limited to, that the associated
person participating in the sale of an issuer's securities not be compensated in
connection therewith at the time of participation, that such person not be
associated with a broker or dealer and that such person observe certain
limitations on his participation in the sale of securities. For purposes of this
exemption, "associated person of an issuer" is defined to include any person who
is a director, officer or employee of the issuer or a company that controls, is
controlled by or is under common control with the issuer.

EFFECT OF EXTENSION OF COMMUNITY OFFERING

If the Community Offering extends beyond , 1996, persons who have
subscribed for Common Shares in the Subscription Offering or in the Community
Offering will receive a written notice that they have the right to increase,
decrease or rescind their subscriptions for Common Shares at any time prior to
20 days before the end of the extension period. Any person who does not
affirmatively elect to continue his subscription or elects to rescind his
subscription during any such extension will have all of his funds promptly
refunded with interest. Any person who elects to decrease his subscription
during any such extension shall have the appropriate portion of his funds
promptly refunded with interest.

USE OF ORDER FORMS

Subscriptions for Common Shares in the Subscription Offering and the
Community Offering may be made only by completing and submitting a Stock Order
Form. Any person who desires to subscribe for Common Shares in the Subscription
Offering must do so by delivering to the Bank, by mail or in person, prior to
.m., Eastern Time, on , 1996, a properly executed and completed
Stock Order Form, together with full payment of the subscription price of $10
for each Common Share for which subscription is made. No facsimile or
photocopied Stock Order Forms will be accepted.

AN EXECUTED STOCK ORDER FORM, ONCE RECEIVED BY THE BANK, MAY NOT BE
MODIFIED, AMENDED OR RESCINDED WITHOUT THE CONSENT OF THE BANK, UNLESS (I) THE
COMMUNITY OFFERING IS NOT COMPLETED BY , 1996, OR (II) THE FINAL VALUATION
OF THE BANK, AS CONVERTED, IS LESS THAN $2,975,000 OR MORE THAN $4,628,750. IF
EITHER OF THOSE EVENTS OCCURS, PERSONS WHO HAVE SUBSCRIBED FOR COMMON SHARES IN
THE OFFERING WILL BE GIVEN A NOTICE THAT THEY HAVE A RIGHT TO INCREASE, DECREASE
OR RESCIND THEIR SUBSCRIPTIONS. ANY PERSON WHO DOES NOT AFFIRMATIVELY ELECT TO
CONTINUE HIS SUBSCRIPTION OR ELECTS TO RESCIND HIS SUBSCRIPTION DURING ANY SUCH
EXTENSION WILL HAVE ALL OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST. ANY PERSON
WHO ELECTS TO DECREASE HIS SUBSCRIPTION DURING ANY SUCH EXTENSION WILL HAVE THE
APPROPRIATE PORTION OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST. IN ADDITION,
IF THE MAXIMUM PURCHASE LIMITATION IS INCREASED TO MORE THAN 2.5% OF THE COMMON
SHARES, PERSONS WHO HAVE SUBSCRIBED FOR 2.5% OF THE COMMON SHARES WILL BE GIVEN
THE OPPORTUNITY TO INCREASE THEIR SUBSCRIPTIONS.

PAYMENT FOR COMMON SHARES

Payment of the subscription price for all Common Shares for which
subscription is made must accompany a completed Order Form in order for such
subscription to be valid. Payment for Common Shares may be made (i) in cash, if
delivered in person, (ii) by check, bank draft or money order, or (iii) by
authorization of withdrawal from savings accounts in the Bank (other than
non-self-directed IRAs and Keogh Accounts). The Bank cannot lend money or
otherwise extend credit to any person to purchase Common Shares.

Payments made in cash or by check, bank draft or money order will be placed
in a segregated savings account insured by the FDIC up to applicable limits
until the Conversion is completed or terminated. Interest will be paid by the
Bank on such account at the then current passbook savings account rate, which is
currently % with an annual percentage yield of %, from the date payment is
received until the Conversion is completed or terminated. Payments made by check
will not be deemed to have been received until such check has cleared for
payment.

68
<PAGE>
Instructions for authorizing withdrawals from savings accounts are provided
in the Order Form. Once a withdrawal has been authorized, none of the designated
withdrawal amount may be used by a subscriber for any purpose other than to
purchase Common Shares, unless the Conversion is terminated. All sums authorized
for withdrawal will continue to earn interest at the contract rate for such
account or certificate until the completion or termination of the Conversion.
Interest penalties for early withdrawal applicable to certificate accounts will
be waived in the case of withdrawals authorized for the purchase of Common
Shares. If a partial withdrawal from a certificate account results in a balance
less than the applicable minimum balance requirement, the certificate will be
cancelled and the remaining balance will earn interest at the Bank's passbook
rate subsequent to the withdrawal.

In order to utilize funds in an IRA or Keogh account maintained at the Bank,
the funds must be transferred to a self-directed IRA or Keogh account that
permits the funds to be invested in stock. The beneficial owner of the IRA or
Keogh account must direct the trustee of the account to use funds from such
account to purchase Common Shares in connection with the Conversion. This cannot
be done through the mail. Persons who are interested in utilizing IRAs or Keogh
accounts at the Bank to subscribe for Common Shares should contact the
Conversion Information Center at (513) - for instructions and assistance.

Subscriptions will not be filled by the Bank until subscriptions have been
received in the Offering for up to 297,500 Common Shares, the minimum point of
the Valuation Range. If the Conversion is terminated, all funds delivered to the
Bank for the purchase of Common Shares will be returned with interest, and all
charges to savings accounts will be rescinded. If subscriptions are received for
at least 297,500 Common Shares, subscribers and other purchasers will be
notified by mail, promptly on completion of the sale of the Common Shares, of
the number of shares for which their subscriptions have been accepted. The funds
on deposit with the Bank for the purchase of Common Shares will be withdrawn and
paid to the Holding Company in exchange for the Common Shares. Certificates
representing Common Shares will be delivered promptly thereafter. The Common
Shares will not be insured by the FDIC.

If the ESOP subscribes for Common Shares in the Subscription Offering, it
will not be required to pay for the shares subscribed for at the time it
subscribes but may pay for such Common Shares upon consummation of the
Conversion.

SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS

The following table sets forth certain information regarding the
subscription rights intended to be exercised by the directors and executive
officers of the Bank:

<TABLE>
<CAPTION>
TOTAL PERCENT OF TOTAL AGGREGATE PURCHASE
NAME SHARES OFFERING (1) PRICE
- ------------------------------------------------- ----------- --------------------------- -----------------------
<S> <C> <C> <C>
Mardelle Dickhaut................................ 3,500 1.00% $ 35,000
Ruth C. Emden.................................... 5,250 1.50 52,500
Laird L. Lazelle................................. 8,750 2.50 87,500
Robert E. Levitch................................ 7,000 2.00 70,000
Margo Liebert.................................... 2,500 0.71 25,000
Dianne K. Rabe................................... 3,500 1.00 35,000
Michael S. Schwartz.............................. 8,750 2.50 87,500
Paul L. Silverglade.............................. 8,750 2.50 87,500
Ivan J. Silverman................................ 8,750 2.50 87,500
All directors and executive
officers as a group (2)......................... 74,250 21.21% $ 742,500
</TABLE>

- ------------------------
(1) Assumes that 350,000 Common Shares will be sold in the Offering at $10 per
share and that a sufficient number of Common Shares will be available to
satisfy the intended purchases by directors and executive officers. See
"Pricing and Number of Common Shares to be Sold."

(2) Includes intended purchases by Associates of directors and executive
officers, to the extent known.

All purchases by executive officers and directors of the Bank are being made
for investment purposes only and with no present intent to resell.

69
<PAGE>
PRICING AND NUMBER OF COMMON SHARES TO BE SOLD

The aggregate offering price of the Common Shares sold in the Offering will
be based on the pro forma market value of the shares as determined by an
independent appraisal of the Bank. Keller, a firm which evaluates and appraises
financial institutions, was retained by the Bank to prepare an appraisal of the
estimated pro forma market value of the Bank, as converted. Keller will receive
a fee of $15,000 for its appraisal and one update. Such amount includes
out-of-pocket expenses.

Keller was selected by the Board of Directors because it has extensive
experience in the valuation of thrift institutions, particularly in the
mutual-to-stock conversion context. The Board of Directors interviewed Keller's
principal, reviewed the credentials of Keller's appraisal personnel and obtained
references and recommendations from other companies which have engaged Keller.
Keller is certified by the OTS as a mutual-to-stock conversion appraiser. The
Bank and Keller have no relationships which would affect Keller's independence.

The appraisal was prepared by Keller in reliance upon the information
contained herein. Keller also considered the following factors, among others:
the present and projected operating results and financial condition of the Bank
and the economic and demographic conditions in the Bank's existing market area;
the quality and depth of the Bank's management and personnel; certain historical
financial and other information relating to the Bank; a comparative evaluation
of the operating and financial statistics of the Bank with those of other thrift
institutions; the aggregate size of the Offering; the impact of the Conversion
on the Bank's regulatory capital and earnings potential; the trading market for
stock of comparable thrift institutions and thrift holding companies; and
general conditions in the markets for such stocks.

Three valuation methods were used by Keller: price to book value; price to
earnings; and price to assets. The most emphasis was placed on the price to book
value method. The price to book value method compares the pro forma book value
of the Bank, which takes into consideration the going concern value of a thrift
institution, to the book value of the comparable group. Upward and downward
adjustments are made, as appropriate, to account for variations between the Bank
and the comparable group on specific factors. The net Conversion proceeds are
included for purposes of determining the pro forma book value of the Bank. The
book value method focuses on the Bank's financial condition and does not give as
much consideration to earnings. The price to earnings method is used to
ascertain the multiple of earnings at which the Bank is likely to trade, based
on the multiple of earnings at which a comparable group of thrift institutions
trades. The comparable group consisted of ten thrift institutions located in the
Midwest which had similar operating and financial characteristics to the Bank.
In calculating the price to earnings ratio, Keller used the Bank's core earnings
for the 12 months ended March 31, 1996. The use of core earnings eliminates
items which are not generated by the principle business activities of the Bank.
The price to assets method does not consider the Bank's financial condition or
earnings. Consequently, it is not heavily relied on in valuing financial
institutions.

The Pro Forma Value of the Bank, as converted, determined by Keller, is
$3,500,000 as of May 14, 1996. The Valuation Range established in accordance
with the Plan is $2,975,000 to $4,025,000, which, based upon a per share
offering price of $10, will result in the sale of between 297,500 and 402,500
Common Shares. The total number of Common Shares sold in the Offering will be
determined in the discretion of the Board of Directors, based on the Valuation
Range. Pro forma shareholders' equity per share and pro forma earnings per share
decrease moving from the low end to the high end of the Valuation Range. See
"PRO FORMA DATA."

In the event that Keller determines at the close of the Conversion that the
aggregate pro forma value of the Bank is higher or lower than the Pro Forma
Value, but is nevertheless equal to or greater than $2,975,000 or equal to or
less than $4,628,750, the Holding Company will make an appropriate adjustment by
raising or lowering the total number of Common Shares sold in the Offering
consistent with the final valuation. The total number of Common Shares sold in
the Offering will be determined in the discretion of the Board of Directors
consistent with the final valuation. If, due to changing market conditions, the
final valuation is less than $2,975,000 or more than $4,628,750, subscribers
will be given notice of such final valuation and the right to affirm, increase,
decrease or rescind their subscriptions. Any person who does not affirmatively
elect to

70
<PAGE>
continue his subscription or elects to rescind his subscription before the date
specified in the notice will have all of his funds promptly refunded with
interest. Any person who elects to decrease his subscription will have the
appropriate portion of his funds promptly refunded with interest.

The appraisal by Keller is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing Common Shares or
voting to approve the Conversion. In preparing the valuation, Keller has relied
upon and assumed the accuracy and completeness of the audited financial
statements and statistical information provided by the Bank. Keller did not
independently verify the financial statements and other information provided by
the Bank, nor did Keller value independently the assets or liabilities of the
Bank. The valuation considers the Bank only as a going concern and should not be
considered as an indication of the liquidation value of the Bank. Moreover,
because such valuation is necessarily based upon estimates and projections of a
number of matters, all of which are subject to change from time to time, no
assurance can be given that persons purchasing Common Shares will thereafter be
able to sell such shares at the Conversion purchase price.

A copy of the complete appraisal is on file and open for inspection at the
offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552, at the Central
Regional Office of the OTS, 200 W. Madison Street, Suite 1300, Chicago, Illinois
60606, at the offices of the Division, 77 S. High Street, Columbus, Ohio 43215,
and at the offices of the Bank.

RESTRICTIONS ON REPURCHASE OF COMMON SHARES

Federal regulations generally prohibit the Holding Company from repurchasing
any of its capital stock for three years following the date of completion of the
Conversion, except as part of an open-market stock repurchase program during the
second and third years following the Conversion involving no more than 5% of the
Holding Company's outstanding capital stock during a twelve-month period. The
OTS has recently indicated, however, that it would permit repurchases beginning
after six months following the completion of the Conversion. In addition, after
such a repurchase, the Bank's regulatory capital must equal or exceed all
regulatory capital requirements. Before commencement of such a program, the
Holding Company must provide notice to the OTS, and the OTS may disapprove the
program if the OTS determines that it would adversely affect the financial
condition of the Bank or if it determines that there is no valid business
purpose for such repurchase. Such repurchase restrictions would not prohibit the
ESOP or the RRP from purchasing Common Shares during the first year following
the Conversion.

Ohio regulations prohibit the Holding Company from repurchasing shares
during the first year after the Conversion if the effect thereof would be the
failure of the Bank to meet its capital requirements.

RESTRICTIONS ON TRANSFERABILITY OF COMMON SHARES BY DIRECTORS AND OFFICERS

Common Shares purchased by directors and executive officers of the Holding
Company will be subject to the restriction that such shares may not be sold for
a period of one year following completion of the Conversion, except in the event
of the death of the shareholder. Common Shares issued by the Holding Company to
directors and executive officers will bear a legend giving appropriate notice of
the restriction imposed upon them. In addition, the Holding Company will give
appropriate instructions to the transfer agent (if any) for the Common Shares in
respect of the applicable restriction for transfer of any restricted shares. Any
shares issued as a stock dividend, stock split or otherwise in respect of
restricted shares will be subject to the same restrictions.

Subject to certain exceptions, for a period of three years following the
Conversion, no director or officer of the Holding Company or the Bank, or any of
their Associates, may purchase any common shares of the Holding Company without
the prior written approval of the OTS, except through a broker-dealer registered
with the SEC. This restriction will not apply, however, to negotiated
transactions involving more than 1% of a class of outstanding common shares of
the Holding Company or shares acquired by any stock benefit plan of the Holding
Company or the Bank.

71
<PAGE>
Shares received in the Conversion by persons who are not "affiliates" of the
Holding Company may be resold without registration. Common Shares received by
affiliates of the Holding Company will be subject to resale restrictions. An
"affiliate" of the Holding Company, for purposes of Rule 144, is a person who
directly, or indirectly through one or more intermediaries, controls, or is
controlled by or is under common control with, the Holding Company. Rule 144
generally requires that there be publicly available certain information
concerning the Holding Company and that sales subject to Rule 144 be made in
routine brokerage transactions or through a market maker. If the conditions of
Rule 144 are satisfied, each affiliate (or group of persons acting in concert
with one or more affiliates) is entitled to sell in the public market, without
registration, in any three-month period, a number of shares which does not
exceed the greater of (i) 1% of the number of outstanding shares of the Holding
Company or (ii) if the shares are admitted to trading on a national securities
exchange or reported through the automated quotation system of a registered
securities association, the average weekly reported volume of trading during the
four weeks preceding the sale.

RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE BANK

GENERAL

Federal law and regulations, Ohio law, the Articles of Incorporation and
Code of Regulations of the Holding Company, the Amended Articles of
Incorporation and Amended Constitution of the Bank and certain employee benefit
plans to be adopted by the Holding Company and the Bank contain certain
provisions which may deter or prohibit a change of control of the Holding
Company and the Bank. Such provisions are intended to encourage any acquiror to
negotiate the terms of an acquisition with the Board of Directors of the Holding
Company, thereby reducing the vulnerability of the Holding Company to takeover
attempts and certain other transactions which have not been negotiated with and
approved by the Board of Directors.

Anti-takeover devices and provisions may, however, have the effect of
discouraging certain takeover attempts which are not approved by the Board of
Directors, even under circumstances in which shareholders may deem such
takeovers to be in their best interests or in which shareholders may receive a
substantial premium for their shares over then current market prices. As a
result, shareholders who might desire to participate in such a transaction may
not have an opportunity to participate by virtue of such devices and provisions.
Such provisions may also benefit management by discouraging changes of control
in which incumbent management would be removed from office. The following is a
summary of certain provisions of such laws, regulations and documents.

FEDERAL LAW AND REGULATION

FEDERAL DEPOSIT INSURANCE ACT. The FDIA provides that no person, acting
directly or indirectly or in concert with one or more persons, shall acquire
control of any insured savings association or holding company unless 60 days'
prior written notice has been given to the OTS and the OTS has not issued a
notice disapproving the proposed acquisition. Control, for purposes of the FDIA,
means the power, directly or indirectly, to direct the management or policies of
an insured institution or to vote 25% or more of any class of securities of such
institution. This provision of the FDIA is implemented by the OTS in accordance
with the Regulations for Acquisition of Control of an Insured Institution, 12
C.F.R. Part 574 (the "Control Regulations"). Control, for purposes of the
Control Regulations, exists in situations in which the acquiring party has
direct or indirect voting control of at least 25% of the institution's voting
shares or controls in any manner the election of a majority of the directors of
such institution or the Director of the OTS determines that such person
exercises a controlling influence over the management or policies of such
institution. In addition, control is presumed to exist, subject to rebuttal, if
the acquiring party (which includes a group "acting in concert") has voting
control of at least 10% of the institution's voting stock and any of eight
control factors specified in the Control Regulations exists. There are also
rebuttable presumptions in the Control Regulations concerning whether a group
"acting in concert" exists, including presumed action in concert among members
of an "immediate family." With certain limited exceptions, the Control
Regulations, including the rebuttable presumptions, apply to acquisitions of
Common Shares in connection with the Conversion and to acquisitions after the
Conversion.

72
<PAGE>
Change in Control of Converted Banks. A regulation of the OTS provides that,
for a period of three years after the date of the completion of the Conversion,
no person shall, directly or indirectly, offer to acquire or acquire beneficial
ownership of more than 10% of any class of equity security of the Holding
Company or the Bank without the prior written approval of the OTS. In addition
to the actual ownership of more than 10% of a class of equity securities, a
person shall be deemed to have acquired beneficial ownership of more than 10% of
the equity securities of the Holding Company or the Bank if the person holds any
combination of stock and revocable and/or irrevocable proxies of the Holding
Company under circumstances that give rise to a conclusive control determination
or rebuttable control determination under the Control Regulations. Such
circumstances include (i) holding any combination of voting shares and revocable
and/or irrevocable proxies representing more than 25% of any class of voting
stock of the Holding Company enabling the acquiror (a) to elect one-third or
more of the directors, (b) to cause the Holding Company or the Bank's
shareholders to approve the acquisition or corporate reorganization of the
Holding Company, or (c) to exert a controlling influence on a material aspect of
the business operations of the Holding Company or the Bank, and (ii) acquiring
any combination of voting shares and irrevocable proxies representing more than
25% of any class of voting shares.

Such three-year restriction does not apply (i) to any offer with a view
toward public resale made exclusively to the Holding Company or the Bank or any
underwriter or selling group acting on behalf of the Holding Company or the
Bank, (ii) unless made applicable by the OTS by prior written advice, to any
offer or announcement of an offer which, if consummated, would result in the
acquisition by any person, together with all other acquisitions by any such
person of the same class of securities during the preceding 12-month period, of
not more than 1% of the class of securities, or (iii) to any offer to acquire or
the acquisition of beneficial ownership of more than 10% of any class of equity
security of the Holding Company or the Bank by a corporation whose ownership is
or will be substantially the same as the ownership of the Holding Company or the
Bank if made more than one year following the date of the Conversion. The
foregoing restriction does not apply to the acquisition of the capital stock of
the Holding Company or the Bank by one or more tax-qualified employee stock
benefit plans, provided that the plan or plans do not have the beneficial
ownership in the aggregate of more than 25% of any class of equity security of
the Holding Company or the Bank.

HOLDING COMPANY RESTRICTIONS. Federal law generally prohibits a savings and
loan holding company, without prior approval of the Director of the OTS, from
(i) acquiring control of any other savings association or savings and loan
holding company, (ii) acquiring substantially all of the assets of a savings
association or holding company thereof, or (iii) acquiring or retaining more
than 5% of the voting shares of a savings association or holding company thereof
which is not a subsidiary.

Under certain circumstances, a savings and loan holding company is permitted
to acquire, with the approval of the Director of the OTS, up to 15% of the
previously unissued voting shares of an undercapitalized savings association for
cash without such savings association being deemed to be controlled by the
holding company. Except with the prior approval of the Director of the OTS, no
director or officer of the savings and loan holding company or person owning or
controlling by proxy or otherwise more than 25% of such company's voting shares
may acquire control of any savings institution, other than a subsidiary
institution or any other savings and loan holding company.

OHIO LAW

MERGER MORATORIUM STATUTE. Ohio has a merger moratorium statute regulating
certain takeover bids affecting certain public corporations which have
significant ties to Ohio. The statute prohibits, with some exceptions, any
merger, combination or consolidation and any of certain other sales, leases,
distributions, dividends, exchanges, mortgages or transfers between such an Ohio
corporation and any person who has the right to exercise, alone or with others,
10% or more of the voting power of such corporation (an "Interested
Shareholder") for three years following the date on which such person first
becomes an Interested Shareholder. Such a business combination is permitted only
if, prior to the time such person first becomes an Interested Shareholder, the
Board of Directors of the issuing corporation has approved the purchase of
shares which resulted in such person first becoming an Interested Shareholder.

73
<PAGE>
After the initial three-year moratorium, such a business combination may not
occur unless (1) one of the exceptions referred to above applies, (2) the
holders of at least two-thirds of the voting shares, and of at least a majority
of the voting shares not beneficially owned by the Interested Shareholder,
approve the business combination at a meeting called for such purpose, or (3)
the business combination meets certain statutory criteria designed to ensure
that the issuing public corporation's remaining shareholders receive fair
consideration for their shares.

An Ohio corporation, under certain circumstances, may "opt out" of the
statute by specifically providing in its articles of incorporation that the
statute does not apply to any business combination of such corporation. The
statute still prohibits for 12 months, however, any business combination that
would have been prohibited but for the adoption of such an opt-out amendment.
The statute also provides that it will continue to apply to any business
combination between a person who became an Interested Shareholder prior to the
adoption of such an amendment as if the amendment had not been adopted. The
Articles of Incorporation of the Holding Company do not opt out of the
protection afforded by Chapter 1704.

CONTROL SHARE ACQUISITION STATUTE. Section 1701.831 of the Ohio Revised
Code (the "Control Share Acquisition Statute") requires that certain
acquisitions of voting securities which would result in the acquiring
shareholder owning 20%, 33 1/3% or 50% of the outstanding voting securities of
the Holding Company (a "Control Share Acquisition") must be approved in advance
by the holders of at least a majority of the outstanding voting shares
represented at a meeting at which a quorum is present and a majority of the
portion of the outstanding voting shares represented at such a meeting,
excluding the voting shares owned by the acquiring shareholder. The Control
Share Acquisition Statute was intended, in part, to protect shareholders of Ohio
corporations from coercive tender offers.

74
<PAGE>
TAKEOVER BID STATUTE. Ohio law also contains a statute regulating takeover
bids for any Ohio corporation. Such statute provides that no offeror may make a
takeover bid unless (i) at least 20 days prior thereto the offeror announces
publicly the terms of the proposed takeover bid and files with the Ohio Division
of Securities (the "Securities Division") and provides the target company with
certain information in respect of the offeror, his ownership of the company's
shares and his plans for the company, and (ii) within ten days following such
filing either (a) no hearing is required by the Securities Division, (b) a
hearing is requested by the target company within such time but the Securities
Division finds no cause for hearing exists, or (c) a hearing is ordered and upon
such hearing the Securities Division adjudicates that the offeror proposes to
make full, fair and effective disclosure to offerees of all information material
to a decision to accept or reject the offer.

The takeover bid statute also states that no offeror shall make a takeover
bid if he owns 5% or more of the issued and outstanding equity securities of any
class of the target company, any of which were purchased within one year before
the proposed takeover bid, and the offeror, before making any such purchase,
failed to announce his intention to gain control of the target company or
otherwise failed to make full and fair disclosure of such intention to the
persons from whom he acquired such securities. The United States District Court
for the Southern District of Ohio has determined that the Ohio takeover bid
statute is preempted by federal regulation.

ARTICLES OF INCORPORATION OF THE HOLDING COMPANY

ABILITY OF THE BOARD OF DIRECTORS TO ISSUE ADDITIONAL SHARES. The Articles
of Incorporation of the Holding Company permit the Board of Directors of the
Holding Company to issue additional common shares and preferred shares. The
ability of the Board of Directors to issue such additional shares may create
impediments to gaining, or otherwise discourage persons from attempting to gain,
control of the Holding Company.

MATTERS REQUIRING ENLARGED SHAREHOLDER VOTE. Article Sixth of the Articles
of Incorporation of the Holding Company provides that, in the event the Board of
Directors recommends against the approval of any of the following matters, the
holders of at least 75% of the voting shares of the Holding Company are required
to approve any such matters:

(1) A proposed amendment to the Articles of Incorporation of the Holding
Company;

(2) A proposed Amendment to the Code of Regulations of the Holding Company;

(3) A proposal to change the number of directors by action of the
shareholders;

(4) An agreement of merger or consolidation providing for the proposed
merger or consolidation of the Holding Company with or into one or more
other corporations;

(5) A proposed combination or majority share acquisition involving the
issuance of shares of the Holding Company and requiring shareholder
approval;

(6) A proposal to sell, exchange, transfer or otherwise dispose of all, or
substantially all, of the assets, with or without the goodwill, of the
Holding Company; or

(7) A proposed dissolution of the Holding Company.

ELIMINATION OF CUMULATIVE VOTING. Section 1701.55 of the Ohio Revised Code
provides in substance and effect that shareholders of a for profit corporation
which is not a savings and loan association and which is incorporated under Ohio
law must initially be granted the right to cumulate votes in the election of
directors. The right to cumulate votes in the election of directors will exist
at a meeting of shareholders if notice in writing is given by any shareholder to
the President, a Vice President or the Secretary of an Ohio corporation, not
less than 48 hours before a meeting at which directors are to be elected, that
the shareholder desires that the voting for the election of directors shall be
cumulative and if an announcement of the giving of such notice is made upon the
convening of such meeting by the Chairman or Secretary or by or on

75
<PAGE>
behalf of the shareholder giving such notice. If cumulative voting is invoked,
each shareholder would have a number of votes equal to the number of directors
to be elected, multiplied by the number of shares owned by him, and would be
entitled to distribute his votes among the candidates as he sees fit.

Section 1701.69 of the Ohio Revised Code provides that an Ohio corporation
may eliminate cumulative voting in the election of directors after the
expiration of 90 days after the date of initial incorporation by filing with the
Ohio Secretary of State an amendment to the articles of incorporation
eliminating cumulative voting. The Articles of Incorporation of the Holding
Company will be amended prior to the consummation of the Conversion to eliminate
cumulative voting. The elimination of cumulative voting may make it more
difficult for shareholders to elect as directors persons whose election is not
supported by the Board of Directors.

EMPLOYEE BENEFIT PLANS

The Stock Option Plan, the ESOP and the RRP also may be deemed to have
certain anti-takeover effects. See "DESCRIPTION OF AUTHORIZED SHARES" and
"MANAGEMENT -- Stock Benefit Plans -- Employee Stock Ownership Plan; -- Stock
Option Plan; and -- Recognition and Retention Plan."

DESCRIPTION OF AUTHORIZED SHARES

GENERAL

The Articles of Incorporation of the Holding Company authorize the issuance
of 2,000,000 common shares. The common shares authorized by the Holding
Company's Articles of Incorporation have no par value. Upon receipt by the
Holding Company of the purchase price therefor and subsequent issuance thereof,
each Common Share will be fully paid and nonassessable. The Common Shares of the
Holding Company will represent nonwithdrawable capital and will not and cannot
be insured by the FDIC. Each Common Share will have the same relative rights and
will be identical in all respects to every other Common Share.

The following is a summary description of the rights of the common shares of
the Holding Company, including the material express terms of such shares as set
forth in the Holding Company's Articles of Incorporation.

LIQUIDATION RIGHTS

In the event of the complete liquidation or dissolution of the Holding
Company, the holders of the Common Shares will be entitled to receive all assets
of the Holding Company available for distribution, in cash or in kind, after
payment or provision for payment of (i) all debts and liabilities of the Holding
Company, (ii) any accrued dividend claims, and (iii) any interests in the
Liquidation Account. See "THE CONVERSION -- Liquidation Account."

VOTING RIGHTS

The holders of the Common Shares will possess exclusive voting rights in the
Holding Company, unless preferred shares are issued. Each holder of Common
Shares will be entitled to one vote for each share held of record on all matters
submitted to a vote of holders of common shares. See "RESTRICTIONS ON
ACQUISITION OF THE HOLDING COMPANY AND THE BANK -- Articles of Incorporation of
the Holding Company -- Elimination of Cumulative Voting."

DIVIDENDS

The holders of the Common Shares will be entitled to the payment of
dividends when, as and if declared by the Board of Directors and paid out of
funds, if any, available under applicable laws and regulations for the payment
of dividends. The payment of dividends is subject to federal and state statutory
and regulatory restrictions. See "DIVIDEND POLICY," "REGULATION -- Office of
Thrift Supervision -- Limitations on Capital Distributions" and "TAXATION --
Federal Taxation" for a description of restrictions on the payment of cash
dividends.

76
<PAGE>
PREEMPTIVE RIGHTS

After the consummation of the Conversion, no shareholder of the Holding
Company will have, as a matter of right, the preemptive right to purchase or
subscribe for shares of any class, now or hereafter authorized, or to purchase
or subscribe for securities or other obligations convertible into or
exchangeable for such shares or which by warrants or otherwise entitle the
holders thereof to subscribe for or purchase any such share.

RESTRICTIONS ON ALIENABILITY

See "THE CONVERSION -- Restrictions on Transferability of Common Shares by
Directors and Officers" for a description of certain restrictions on the
transferability of Common Shares purchased by officers and directors; and
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE BANK" for
information regarding regulatory restrictions on acquiring Common Shares.

REGISTRATION REQUIREMENTS

The Holding Company will register its common shares pursuant to Section
12(g) of the Exchange Act upon the completion of the Conversion. The proxy and
tender offer rules, insider trading restrictions, annual and periodic reporting
and other requirements of the Exchange Act will apply to the Holding Company.

LEGAL MATTERS

Certain legal matters pertaining to the Common Shares and the federal and
Ohio tax consequences of the Conversion will be passed upon for the Holding
Company and the Bank by Vorys, Sater, Seymour and Pease, 221 E. Fourth Street,
Cincinnati, Ohio 45202. Certain legal matters are being passed upon for Webb by
Keating, Muething & Klekamp ("KMK"), One East Fourth Street, Cincinnati, Ohio
45202. Certain members of KMK may subscribe for Common Shares in the Offering,
to the extent they are eligible under the Plan.

EXPERTS

Keller has consented to the publication herein of the summary of its letter
to the Bank setting forth its opinion as to the estimated pro forma market value
of the Bank as converted and to the use of its name and statements with respect
to it appearing herein. The financial statements of the Bank as of March 31,
1996 and 1995, and for each of the years in the three-year period ended June 30,
1995, have been included herein in reliance upon the report of Clark, Schaefer,
Hackett & Co., independent certified public accountants, appearing elsewhere
herein, and upon the authority of such firm as experts in auditing and
accounting.

ADDITIONAL INFORMATION

The Bank has filed an Application for Approval of Conversion (the
"Application") with the OTS and the Division. This prospectus omits certain
information contained in the Application. The Application may be inspected at
the offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552, at the
Central Regional Office of the OTS, 200 W. Madison Street, Suite 1300, Chicago,
Illinois 60606 and at the offices of the Division, 77 S. High Street, Columbus,
Ohio 43215.

77
<PAGE>
FOUNDATION SAVINGS BANK
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
Independent Auditors' Report.............................. F-2

Financial Statements:

Statements of Financial Condition....................... F-3

Statements of Income.................................... F-4

Statements of Retained Earnings......................... F-5

Statements of Cash Flows................................ F-6 - F-7

Notes to Financial Statements........................... F-8 - F-20
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors
Foundation Savings Bank:

We have audited the statements of financial condition of Foundation Savings
Bank as of June 30, 1995 and 1994, and the related statements of income,
retained earnings, and cash flows for each of the three years in the period
ended June 30, 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 financial statements referred to above present fairly,
in all material respects, the financial position of Foundation Savings Bank as
of June 30, 1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended June 30, 1995 in conformity with
generally accepted accounting principles.

As discussed in Note 1 to the financial statements, the Savings Bank adopted
the provisions of Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" at July 1, 1993 and Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" at July 1, 1994.

/s/ Clark, Schaefer, Hackett & Co.

Cincinnati, Ohio
July 19, 1995

F-2
<PAGE>
FOUNDATION SAVINGS BANK
STATEMENTS OF FINANCIAL CONDITION
JUNE 30, 1995 AND 1994 AND MARCH 31, 1996 (UNAUDITED)
ASSETS

<TABLE>
<CAPTION>
JUNE 30
----------------------------
1995 1994
MARCH 31, 1996 ------------- -------------
--------------
(UNAUDITED)
<S> <C> <C> <C>
Cash............................................................... $ 15,202 57,374 59,309
Interest-bearing deposits in other financial institutions.......... 4,221,221 3,885,606 2,402,282
-------------- ------------- -------------
4,236,423 3,942,980 2,461,591
Certificates of deposit in other financial institutions............ -- -- 1,400,000
Investment securities -- at amortized cost (fair value of $393,338,
$1,034,812 and $1,004,188 at March 31, 1996 (unaudited) and June
30, 1995 and 1994 respectively)................................... 400,000 1,050,000 1,050,000
Mortgage-backed securities -- at amortized cost (fair value of
$4,831,501, $5,409,400 and $6,443,808 at March 31, 1996
(unaudited) and June 30, 1995 and 1994, respectively)............. 4,957,151 5,532,399 6,592,744
Loans receivable, net.............................................. 21,358,992 20,510,541 18,794,133
Accrued interest receivable:
Loans............................................................ 96,212 79,335 57,341
Investments and interest bearing deposits........................ 4,040 16,389 17,597
Mortgage-backed securities....................................... 39,469 41,522 44,183
Federal Home Loan Bank stock -- at cost............................ 274,100 260,400 241,200
Property and equipment, net........................................ 317,417 323,773 335,302
Refundable federal income tax...................................... -- 31,927 22,400
Prepaid expenses and other assets.................................. 53,926 60,050 39,670
-------------- ------------- -------------
$ 31,737,730 31,849,316 31,056,161
-------------- ------------- -------------
-------------- ------------- -------------

LIABILITIES AND RETAINED EARNINGS

Deposits........................................................... $ 27,780,306 27,737,204 27,348,162
Advances from Federal Home Loan Bank............................... 841,870 1,191,577 954,788
Advances by borrowers for taxes, insurance and other............... 135,445 39,076 21,614
Accrued expenses................................................... 136,441 114,747 108,049
Accrued federal income tax......................................... 8,063 -- --
Deferred federal income tax........................................ 63,500 60,600 42,800
-------------- ------------- -------------
28,965,625 29,143,204 28,475,413
Retained earnings, substantially restricted........................ 2,772,105 2,706,112 2,580,748
-------------- ------------- -------------
$ 31,737,730 31,849,316 31,056,161
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE>
FOUNDATION SAVINGS BANK
STATEMENTS OF INCOME
THREE YEARS ENDED JUNE 30, 1995 AND THE NINE MONTHS
ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, JUNE 30,
--------------------- -------------------------------
1996 1995 1995 1994 1993
---------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest income:
Loans............................................... $1,358,303 1,225,328 1,655,223 1,594,174 1,882,392
Mortgage-backed securities.......................... 233,510 242,173 320,376 286,084 231,785
Investment securities............................... 51,505 50,415 69,104 27,620 12,951
Interest-bearing deposits........................... 139,921 75,150 117,309 160,799 169,711
---------- --------- --------- --------- ---------
Total interest income............................. 1,783,239 1,593,066 2,162,012 2,068,677 2,296,839
---------- --------- --------- --------- ---------
Interest expense:
Deposits............................................ 1,167,132 946,303 1,308,686 1,297,024 1,499,192
Borrowings.......................................... 39,490 41,717 59,265 41,966 --
---------- --------- --------- --------- ---------
Total interest expense............................ 1,206,622 988,020 1,367,951 1,338,990 1,499,192
---------- --------- --------- --------- ---------
Net interest income................................... 576,617 605,046 794,061 729,687 797,647
Provision for loan losses............................. 34,000 9,000 12,000 32,600 82,600
---------- --------- --------- --------- ---------
Net interest income after provision for loan
losses........................................... 542,617 596,046 782,061 697,087 715,047
---------- --------- --------- --------- ---------
Other income:
Gain on sale of investment securities............... -- -- -- 132,431 61,291
Gain on sale of loans............................... 7,484 2,702 12,179 -- --
Net investment property income...................... 36,736 37,773 50,446 64,926 64,271
Gain on sale of equipment........................... -- -- -- 1,164 --
Other operating income.............................. 7,776 6,625 7,051 5,395 10,725
---------- --------- --------- --------- ---------
Total other income................................ 51,996 47,100 69,676 203,916 136,287
---------- --------- --------- --------- ---------
General, administration and other expense:
Employee compensation and benefits.................. 260,076 273,558 364,607 292,230 306,457
Occupancy and equipment............................. 58,431 57,614 76,604 77,488 84,122
Deposit insurance................................... 46,284 46,752 61,911 65,527 60,197
Franchise tax....................................... 25,204 23,798 31,916 31,372 29,134
Computer processing costs........................... 23,439 24,016 32,268 29,387 27,678
Other operating expense............................. 83,059 82,780 111,267 131,386 132,057
---------- --------- --------- --------- ---------
Total general, administration and other operating
expense.......................................... 496,493 508,518 678,573 627,390 639,645
---------- --------- --------- --------- ---------
Income before income taxes........................ 98,120 134,628 173,164 273,613 211,689
---------- --------- --------- --------- ---------
Federal income taxes (credits):
Current............................................. 29,227 31,381 30,000 62,263 93,176
Deferred............................................ 2,900 11,700 17,800 16,100 (8,000)
---------- --------- --------- --------- ---------
32,127 43,081 47,800 78,363 85,176
---------- --------- --------- --------- ---------
Net income........................................ $ 65,993 91,547 125,364 195,250 126,513
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>
FOUNDATION SAVINGS BANK
STATEMENTS OF RETAINED EARNINGS
THREE YEARS ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)

<TABLE>
<S> <C>
Balance at June 30, 1992........................................................ $2,258,985
Net income for the year ended June 30, 1993................................... 126,513
----------
Balance at June 30, 1993........................................................ 2,385,498
Net income for the year ended June 30, 1994................................... 195,250
----------
Balance at June 30, 1994........................................................ 2,580,748
Net income for the year ended June 30, 1995................................... 125,364
----------
Balance at June 30, 1995........................................................ 2,706,112
Net income for the nine months ended March 31, 1996 (unaudited)............. 65,993
----------
Balance at March 31, 1996 (unaudited)........................................... $2,772,105
----------
----------
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>
FOUNDATION SAVINGS BANK
STATEMENTS OF CASH FLOWS
THREE YEARS ENDED JUNE 30, 1995 AND THE NINE MONTHS ENDED
MARCH 31, 1996 AND 1995 (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEARS ENDED JUNE 30,
---------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Interest received................................ $1,774,495 1,584,429 2,145,841 2,065,169 2,267,264
Interest paid.................................... (1,204,903) (987,254) (1,365,659) (1,339,074) (1,500,248)
Cash paid to suppliers and employees............. (400,755) (465,902) (679,261) (648,076) (585,822)
Fees and commissions received.................... 27,298 30,195 7,051 6,332 19,211
Income taxes paid................................ 10,763 (23,527) (39,527) (67,463) (187,877)
Rental income received........................... 51,300 51,300 68,400 83,000 84,000
---------- ---------- ---------- ---------- ----------
Net cash provided by operating activities...... 258,198 189,241 136,845 99,888 96,528
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchase of mortgage-backed securities........... 82,714 -- -- (3,143,631) (3,048,520)
Repayments of mortgage-backed securities......... 471,651 728,932 1,029,624 1,798,427 887,113
Purchase of certificates of deposit.............. -- -- -- -- (400,000)
Maturities of certificates of deposit............ -- 1,300,000 1,400,000 -- --
Purchase of investment securities................ -- -- -- (1,050,000) --
Proceeds from sale of investment securities...... -- -- -- 143,272 66,712
Maturities of investment securities.............. 650,000 -- -- -- --
Loan disbursements............................... (6,319,728) (4,168,225) (5,637,576) (2,961,358) (6,377,791)
Loan principal repayments........................ 4,337,090 2,103,282 3,354,330 3,700,533 8,867,546
Proceeds from sale of loans...................... 1,123,109 184,202 576,584 -- --
Proceeds from sale of Federal Home Loan Bank
stock........................................... -- -- -- -- 2,900
Purchase of property and equipment............... (2,986) (3,869) (4,249) (5,526) (8,698)
Investment in foreclosed real estate............. -- -- -- -- (1,705)
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in) investing
activities.................................... 341,850 144,322 718,713 (1,518,283) (12,443)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Net increase (decrease) in deposits.............. 43,102 (1,571,482) 389,042 (1,713,715) 1,444,933
Proceeds from Federal Home Loan Bank advances.... -- 300,000 300,000 1,000,000 --
Repayment of Federal Home Loan Bank advances..... (349,707) (47,086) (63,211) (45,212) --
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in) financing
activities.................................... (306,605) (1,318,568) 625,831 (758,927) 1,444,933
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents....................................... 293,443 (985,005) 1,481,389 (2,177,322) 1,529,018
Cash and cash equivalents at beginning of period... 3,942,980 2,461,591 2,461,591 4,638,913 3,109,895
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents at end of period......... $4,236,423 1,476,586 3,942,980 2,461,591 4,638,913
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE>
FOUNDATION SAVINGS BANK
STATEMENTS OF CASH FLOWS
THREE YEARS ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEARS ENDED JUNE 30,
-------------------- -------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net income................................................ $ 65,993 91,547 125,364 195,250 126,513
Adjustments to reconcile net income to net cash provided
by operating activities:
Gain on sale of loans................................. (7,484) (2,702) (12,179) -- --
Gain on sale of investment securities................. -- -- -- (132,431) (61,291)
Depreciation and amortization......................... 9,342 11,797 15,778 16,497 22,960
Amortization of premiums and discounts on mortgage-
backed securities.................................... 20,883 21,194 30,721 55,881 24,574
Federal Home Loan Bank stock dividends................ (13,700) (15,000) (22,600) (11,300) (9,900)
Provision for loan losses............................. 34,000 9,000 12,000 32,600 82,600
Amortization of deferred loan fees.................... (11,388) (8,726) (9,567) (17,118) (27,438)
Increase in deferred loan fees........................ (4,050) 7,061 -- 937 7,804
Deferred federal income tax........................... -- -- 17,800 16,100 (8,000)
Effects of change in operating assets and liabilities:
Accrued interest receivable......................... (2,475) (3,618) (14,725) (30,971) (8,868)
Refundable federal income tax....................... 31,927 19,554 (9,527) (5,200) (17,200)
Prepaid expenses and other assets................... 6,124 (12,542) (20,380) 1,067 (16,072)
Advances by borrowers for taxes, insurance and
other.............................................. 96,369 71,651 17,462 (10,783) 4,941
Accrued expenses.................................... 21,694 25 6,698 (10,641) 53,405
Accrued federal income tax.......................... 10,963 -- -- -- (77,500)
--------- --------- --------- --------- ---------
Net cash provided by operating activities......... $ 258,198 189,241 136,845 99,888 96,528
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:

The Savings Bank compensated the widow of the former managing officer with a
car with a net book value of $10,135 in 1994.

The Savings Bank sold foreclosed real estate and financed the transaction
with loans receivable totaling $67,900 in 1993.

See accompanying notes to financial statements.

F-7
<PAGE>
FOUNDATION SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
THREE YEARS ENDED JUNE 30, 1995 AND THE NINE MONTHS
ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following describes the organization and the significant accounting
policies followed in the preparation of these financial statements.

ORGANIZATION

The Savings Bank is a state chartered savings and loan association and a
member of the Federal Home Loan Bank System and subject to regulation by the
Office of Thrift Supervision (OTS), an office of the U. S. Government Department
of the Treasury. As a member of this system, the Savings Bank maintains a
required investment in capital stock of the Federal Home Loan Bank of
Cincinnati.

Savings accounts are insured by the Savings Association Insurance Fund
(SAIF), administered by the Federal Deposit Insurance Corporation (FDIC), within
certain limitations. An annual premium is required by the SAIF for the insurance
of such savings accounts.

UNAUDITED FINANCIAL STATEMENTS

The unaudited financial statements at March 31, 1996 and for the nine months
ended March 31, 1996 and 1995, reflect all adjustments, consisting solely of
normal recurring accruals, which are, in the opinion of management, necessary
for a fair presentation of the financial position, results of operations and
cash flows for such periods. The financial position at March 31, 1996 and
results of operations for the nine months then ended are not necessarily
indicative of the financial position that may be expected at June 30, 1996, or
the results of operations that may be expected for the year ended June 30, 1996.

CASH AND CASH EQUIVALENTS

For the purpose of reporting cash flows, the Savings Bank considers all
highly liquid debt instruments with original maturity when purchased of three
months or less to be cash equivalents.

INVESTMENT AND MORTGAGE-BACKED SECURITIES

In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". This standard addresses the accounting and
reporting for securities based on management's intent and ability to hold such
securities to maturity. The Savings Bank adopted this standard on July 1, 1994.
Statement No. 115 requires the classification of investments in debt and equity
securities into three categories; held to maturity, trading, and available for
sale. Debt securities that the Savings Bank has the positive intent and ability
to hold to maturity are classified as held to maturity securities and reported
at amortized cost. Debt and equity securities that are bought and held
principally for the purpose of selling in the near-term are classified as
trading securities and reported at fair value, with unrealized gains and losses
included in earnings. The Savings Bank has no trading securities. Debt and
equity securities not classified as either held to maturity securities or
trading securities are classified as available for sale securities and reported
at fair value, with unrealized gains or losses excluded from earnings and
reported as a separate component of stockholders' equity, net of deferred taxes.
At the date of implementation of Statement No. 115, the Savings Bank had not
identified any investment or mortgage-backed securities as available for sale.

Premiums and discounts on investment securities and mortgage-backed
securities are amortized and accreted using the interest method over the
expected lives of the related securities.

The Savings Bank presently holds all investment securities as held to
maturity carried at amortized cost.

F-8
<PAGE>
LOANS RECEIVABLE

Loans held in portfolio are stated at the principal amount outstanding,
adjusted for deferred loan origination fees and costs, the allowance for loan
losses, and premiums and discounts on loans purchased. Premiums and discounts on
loans purchased are amortized and accreted to operations using the interest
method over the estimated life of the underlying loans.

Loan origination fees and certain direct origination costs are capitalized
and recognized as an adjustment of the yield on the related loan over the
contractual life of the loan.

Interest is accrued as earned unless the collectibility of the loan is in
doubt. Uncollectible interest on loans that are contractually past due is
charged off, or an allowance is established based on management's periodic
evaluation. The allowance is established by a charge to interest income equal to
all interest previously accrued, and income is subsequently recognized only to
the extent that cash payments are received until, in management's judgment, the
borrower's ability to make periodic interest and principal payments has returned
to normal, in which case the loan is returned to accrual status.

Loans held for sale are carried at the lower of cost or market, determined
in the aggregate. In computing cost, deferred loan origination fees and costs
are aggregated with the principal balances of the related loans. At March 31,
1996 and June 30, 1995 and 1994, the Savings Bank had not identified any loans
held for sale.

The Savings Bank will either sell the related servicing on loans or retain
the servicing on loans sold and agree to remit to the investor loan principal
and interest at agreed-upon rates. For loans where servicing is retained by the
Savings Bank, these rates can differ from the loan's contractual interest rate
resulting in a "yield differential". In addition to previously deferred loan
origination fees and cash gains, gains on sale of loans can represent the
present value of the future yield differential less a normal servicing fee,
capitalized over the estimated life of the loans sold. Normal servicing fees are
determined by reference to the stipulated minimum servicing fee set forth by the
government agencies to whom the loans are sold. Such servicing fees are
representative of the Savings Bank's normal servicing costs.

The resulting capitalized excess servicing fee is amortized to operations
over the life of the loans using the interest method. If prepayments are higher
than expected, an immediate charge to operations is made. if prepayments are
lower, then the related adjustments are made prospectively.

It is the Savings Bank's policy to provide valuation allowances for
estimated losses on loans based on past loss experience, trends in the level of
delinquent and problem loans, adverse situations that may affect the borrower's
ability to repay, the estimated value of any underlying collateral and current
and anticipated economic conditions in the primary lending area. When the
collection of a loan becomes doubtful, or otherwise troubled, the Savings Bank
records a loan loss provision equal to the difference between the fair value of
the property securing the loan and the loan's carrying value. Major loans and
major lending areas are reviewed periodically to determine potential problems at
an early date. The allowance for loan losses is increased by charges to earnings
and decreased by charge-offs (net of recoveries). The amount of actual
write-offs could differ from the estimate. Because of uncertainties inherent in
the estimation process, management's estimate of credit losses inherent in the
loan portfolio and the related allowance may change in the near term. However,
the amount of the change that is reasonably possible cannot be estimated.

In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan". This standard amends Statement No. 5 to clarify that a creditor
should evaluate the collectibility of both contractual interest and contractual
principal on all loans when assessing the need for a loss accrual. In October,
1994, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 118, "Accounting by Creditors for Impairment of a Loan
- -- Income Recognition and Disclosure", which amends Statement No. 114 to allow a
creditor to use existing methods for recognizing interest income on impaired
loans. The statements were effective for the fiscal year beginning July 1, 1995.
The Savings Bank adopted the statement effective July 1, 1995, without material
effect on financial condition or results of operations.

F-9
<PAGE>
For impairment recognized in accordance with SFAS No. 114, as amended, the
entire change in present value of expected cash flows is reported as bad debt
expense in the same manner in which impairment initially was recognized or as a
reduction in the amount of bad debt expense that otherwise would be reported.
Interest on impaired loans is reported on the cash basis. Impaired loans are
loans that are considered to be permanently impaired in relation to principal or
interest based on the original contract. Impaired loans would be charged off in
the same manner as all loans subject to charge off. The Savings Bank considers
its investment in one to four family and multi-family residential loans,
non-residential loans and consumer loans to be homogeneous and therefore
excluded from separate identification for evaluation of impairment. For the nine
months ended March 31, 1996, the Savings Bank had no loans that were impaired as
described in the pronouncement and therefore no interest income was recognized
or received on impaired loans.

REAL ESTATE ACQUIRED THROUGH FORECLOSURE

Real estate acquired through foreclosure results when property
collateralizing a loan is foreclosed upon or otherwise acquired by the
Association in satisfaction of the loan. Real estate acquired in settlement of
loans is recorded at the lower of the recorded investment in the loan satisfied
or the fair value of the assets received at the time of acquisition less
estimated costs to sell at the date of foreclosure. The fair value of the assets
received is based upon a current appraisal adjusted for estimated carrying and
selling costs. Valuations are periodically performed by management, and an
allowance for losses is established by a charge to operations if the carrying
value of a property exceeds its estimated net realizable value.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation of property and
equipment is provided by the straight-line method over the estimated useful
lives of the related classes of assets.

INCOME TAXES

Effective July 1, 1993, the Savings Bank adopted Financial Accounting
Standards Board Statement No. 109 (FAS 109), "Accounting for Income Taxes". The
adoption of FAS 109 changed the method of accounting for income taxes from the
deferred method to an asset and liability approach which requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities. The impact of adopting this standard had no
material effect on the financial statements.

Under FAS 109, deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment. Income tax expense is
the tax payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.

ACCOUNTING ESTIMATES

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

RECENT ACCOUNTING PRONOUNCEMENTS

Financial Accounting Standards Board Statement No. 107, "Disclosures About
Fair Value of Financial Statements", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
statement of condition, for which it is practicable to estimate that value.
Statement No. 107 excludes certain financial instruments and all nonfinancial
instruments from its disclosure requirements. The Savings Bank will be required
to adopt Statement No. 107 for the year ending June 30, 1996.

F-10
<PAGE>
In October, 1994, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments". This statement
requires disclosures about the amounts, nature and terms of derivative financial
instruments that are not subject to Statement No. 105, "Disclosures of
Information about Financial Instruments and Off-Balance-Sheet Risk and Financial
Instruments with Concentrations of Credit Risk", because they do not result in
off-balance-sheet risk of accounting loss.

It requires that a distinction be made between financial instruments held or
issued for trading purposes (including dealing and other trading activities
measured at fair value with gains and losses recognized in earnings) and
financial instruments held or issued for purposes other than trading. Statement
No. 119 is effective for financial statements issued for fiscal years ending
after December 15, 1995. Management does not expect an impact from the adoption
of this standard.

In May 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights". This statement requires that a mortgage banking enterprise recognize as
separate assets rights to service mortgage loans for others however those
servicing rights are acquired. A mortgage banking enterprise that acquires
mortgage servicing rights through either the purchase or origination of mortgage
loans and sells or securitizes those loans with servicing rights retained would
allocate the total cost of the mortgage loans to the mortgage servicing rights
and the loans based on their relative fair value. Statement No. 122 is effective
for fiscal years beginning after December 31, 1995. Management has not evaluated
the impact of this pronouncement.

2. INVESTMENT SECURITIES:

The amortized cost, gross unrealized gains, gross unrealized losses and fair
values of investment securities are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------------------
(UNAUDITED)
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Obligations of U.S. Government agencies............ $ 400,000 -- 6,662 393,338
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------

JUNE 30, 1995
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Obligations of U.S. Government agencies............ $ 1,050,000 -- 15,189 1,034,812
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
<CAPTION>

JUNE 30, 1994
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Obligations of U.S. Government agencies............ $ 1,050,000 -- 45,812 1,004,188
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>

F-11
<PAGE>
The amortized cost and fair value of investment securities at June 30, 1995
and 1994 by contractual maturity are shown below. Actual maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
JUNE 30, 1995
--------------------------
AMORTIZED
COST FAIR VALUE
------------ ------------
<S> <C> <C>
Due or callable in one year or less............................... $ 900,000 890,624
Due after one year through five years............................. 150,000 144,188
------------ ------------
$ 1,050,000 1,034,812
------------ ------------
------------ ------------

JUNE 30, 1994
--------------------------
AMORTIZED
COST FAIR VALUE
------------ ------------
<S> <C> <C>
Due or callable in one year or less............................... $ 900,000 855,688
Due after one year through five years............................. 150,000 148,500
------------ ------------
$ 1,050,000 1,004,188
------------ ------------
------------ ------------
</TABLE>

The above investment securities as of March 31, 1996 are all due or callable
in one year or less.

3. MORTGAGE-BACKED SECURITIES:

The amortized cost, gross unrealized gains, gross unrealized losses and fair
value of mortgage-backed securities are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------------------
(UNAUDITED)
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Federal Home Loan Mortgage Corp.................... $ 2,305,249 434 55,672 2,250,011
Federal National Mortgage Association.............. 2,431,224 959 71,648 2,360,535
Government National Mortgage Association........... 220,678 277 -- 220,955
------------ ----- ----------- ------------
$ 4,957,151 1,670 127,320 4,831,501
------------ ----- ----------- ------------
------------ ----- ----------- ------------

JUNE 30, 1995
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Federal Home Loan Mortgage Corp.................... $ 2,641,753 -- 59,504 2,582,249
Federal National Mortgage Association.............. 2,658,239 -- 59,770 2,598,469
Government National Mortgage Association........... 232,407 -- 3,725 228,682
------------ ----------- ----------- ------------
$ 5,532,399 -- 122,999 5,409,400
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
<CAPTION>

JUNE 30, 1994
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Federal Home Loan Mortgage Corp.................... $ 3,272,681 -- 65,808 3,206,873
Federal National Mortgage Association.............. 3,079,018 -- 70,410 3,008,608
Government National Mortgage Association........... 241,045 -- 12,718 228,327
------------ ----------- ----------- ------------
$ 6,592,744 -- 148,936 6,443,808
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>

The maturity of the mortgage-backed securities is based on the repayment of
the underlying mortgages.

F-12
<PAGE>
4. LOANS RECEIVABLE:

Loans receivable consists of the following:

<TABLE>
<CAPTION>
JUNE 30
--------------------------
1995 1994
MARCH 31, 1996 ------------ ------------
--------------
(UNAUDITED)
<S> <C> <C> <C>
Residential one to four family real estate........................... $ 18,989,394 18,299,896 16,713,603
Multi-family residential real estate................................. 797,771 636,068 688,065
Commercial real estate............................................... 1,302,591 1,124,131 882,603
Property improvement................................................. -- -- 14,175
Consumer............................................................. 353,098 500,643 565,873
Passbook............................................................. 57,814 111,282 66,229
-------------- ------------ ------------
21,500,668 20,672,020 18,930,548
Less:
Loans in process................................................... (5,000) (15,000) --
Allowance for loan losses.......................................... (103,773) (98,138) (72,107)
Deferred loan fees................................................. (32,903) (48,341) (57,908)
Unearned discounts................................................. -- -- (6,400)
-------------- ------------ ------------
$ 21,358,992 20,510,541 18,794,133
-------------- ------------ ------------
-------------- ------------ ------------
</TABLE>

At March 31, 1996 (unaudited) and June 30, 1995, adjustable rate loans
approximated $9,456,000 and $10,862,000.

Activity in the allowance for loan losses are as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
----------------------
YEAR ENDED JUNE 30,
(UNAUDITED) ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Beginning balance.................................... $ 98,138 72,107 72,107 100,725 14,625
Provision for loan losses............................ 34,000 9,000 12,000 32,600 82,600
Write-offs net of recoveries......................... (28,365) 16,476 14,031 (61,218) 3,500
---------- ---------- ---------- ---------- ----------
Ending balance....................................... $ 103,773 97,583 98,138 72,107 100,725
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

Gross proceeds on sales of loans were $1,123,109, $184,202 and $576,584 for
the nine months ended March 31, 1996 and 1995 (unaudited) and the year ended
June 30, 1995, respectively. Gross realized gains on sales of loans were $7,484,
$2,702 and $12,179 for the nine months ended March 31, 1996 and 1995 (unaudited)
and the year ended June 30, 1995. Loans serviced for others as of March 31, 1996
and 1995 (unaudited), June 30, 1995, 1994 and 1993 were $251,902, $-0-,
$198,076, $-0-, and $-0-, respectively.

The Savings Bank grants first mortgages and other loans to customers located
primarily in the Metropolitan Cincinnati area. As such, a substantial portion of
its debtors' ability to honor their contracts is dependent upon the health of
the local economy and market.

At March 31, 1996 (unaudited) and June 30, 1995 and 1994, the Savings Bank
had non-accrual loans of $-0-, $-0-, and $92,965, respectively.

F-13
<PAGE>
Loans to officers, directors and employees totalled approximately $94,896
and $100,142 at March 31, 1996 and 1995 (unaudited), respectively and $98,866
and $104,031 at June 30, 1995 and 1994, respectively. An analysis of loan
activity to such persons for the fiscal year ended June 30, 1995 and the nine
months ended March 31, 1996 (unaudited) is as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
MARCH 31, JUNE 30,
1996 1995
------------- -----------
(UNAUDITED)
<S> <C> <C>
Outstanding balance, beginning...................................... $ 98,866 104,031
New loans issued.................................................... -- --
Repayments.......................................................... 3,970 5,165
------------- -----------
Outstanding balance, ending......................................... $ 94,896 98,866
------------- -----------
------------- -----------
</TABLE>

5. PROPERTY AND EQUIPMENT:

Property and equipment are summarized as follows:

<TABLE>
<CAPTION>
MARCH 31,
1996 1995 1994
----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Real estate owned -- investment property....................... $ 251,847 251,847 251,847
Furniture and equipment........................................ 153,264 154,913 150,665
Leasehold improvements......................................... 34,246 34,246 34,246
----------- --------- ---------
439,357 441,006 436,758
Less accumulated depreciation.................................. 121,940 117,233 101,456
----------- --------- ---------
$ 317,417 323,773 335,302
----------- --------- ---------
----------- --------- ---------
</TABLE>

The Savings Bank leases its office facility under a ten year non-cancelable
lease which expires in March of 2001 with additional renewal options. Rent
expense was $40,017 and $40,017 for the nine months ended March 31, 1996 and
1995 (unaudited), respectively. Rent expense for the years ended June 30, 1995,
1994 and 1993 was $53,355, $53,355 and $53,305, respectively.

Minimum commitments under the term of the lease are as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, JUNE 30,
----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
1997...................... $ 51,628 1996 50,456
1998...................... 51,628 1997 51,628
1999...................... 51,628 1998 51,628
2000...................... 51,628 1999 51,628
Subsequent years.......... 51,628 Subsequent years.......... 90,350
----------- -----------
$ 258,140 295,690
----------- -----------
----------- -----------
</TABLE>

6. INVESTMENT PROPERTY:

The Savings Bank acquired real estate at the southeast corner of Eighth and
Vine Streets in 1980. The Savings Bank has a lease agreement on the property as
a parking lot under a three year lease beginning July 1, 1994. The lease
payments will be $5,700 per month for the first two years and $6,100 per month
for the third year. Rent income for the nine months ended March 31, 1996 and
1995 (unaudited) was $51,300 and $51,300, respectively. Rent income for the
years ended June 30, 1995 and 1994 was $68,400 and $83,000 respectively.

F-14
<PAGE>
7. DEPOSITS:

Deposits consist of the following:

<TABLE>
<CAPTION>
JUNE 30
MARCH 31, 1996 ----------------------------------------------------
-------------------------
1995 1994
(UNAUDITED) ------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE RATE AMOUNT AVERAGE RATE AMOUNT AVERAGE RATE AMOUNT
------------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Passbook................................... 2.52% $1,085,461 2.87% $1,287,943 2.84% $1,834,533
NOW and money market accounts.............. 2.55 1,961,727 2.66 2,507,150 2.79 3,306,537
---------- ---------- ----------
2.54 3,047,188 2.77 3,795,093 2.81 5,141,070
---------- ---------- ----------
Certificates of deposit:
3 months................................. 4.29 368,147 4.42 203,356 3.38 483,701
6 months................................. 5.40 1,520,044 5.79 1,192,710 3.32 1,422,754
10/11 months............................. 2.65 44,047 6.31 4,900,236 -- --
12 months................................ 5.83 10,544,843 5.71 4,454,225 4.25 3,997,547
18 months................................ 6.41 5,639,480 6.19 8,514,317 5.17 11,403,901
2 years................................. 6.11 4,599,236 5.62 3,065,798 4.64 2,539,935
3 years................................. 5.84 830,643 5.53 556,922 5.35 505,082
4 years................................. 5.37 207,131 5.24 127,306 6.80 284,029
5 years................................. 5.79 979,547 6.56 927,241 6.55 1,570,143
---------- ---------- ----------
5.96 24,733,118 6.01 23,942,111 4.91 22,207,092
---------- ---------- ----------
5.58% $27,780,306 5.57% $27,737,204 4.52% $27,348,162
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

Maturities of outstanding certificates of deposit are summarized as follows:

<TABLE>
<CAPTION>
JUNE 30,
--------------------
1995 1994
--------- ---------
MARCH 31,
1996
-----------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C>
One year or less................................................................ $ 18,756 15,647 15,634
1 - 2 years..................................................................... 4,591 7,445 5,363
2 - 3 years..................................................................... 807 549 276
Over 3 years.................................................................... 579 301 934
----------- --------- ---------
$ 24,733 23,942 22,207
----------- --------- ---------
----------- --------- ---------
</TABLE>

Interest expense on deposits is summarized as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH
31, JUNE 30,
----------------------- ----------------------------------
1996 1995 1995 1994 1993
------------ --------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Passbook.......................................... $ 25,379 35,326 45,278 66,769 144,852
NOW and money market accounts..................... 41,711 60,477 79,124 98,787 96,553
Certificates of deposit........................... 1,100,042 850,500 1,184,284 1,131,468 1,257,787
------------ --------- ---------- ---------- ----------
$ 1,167,132 946,303 1,308,686 1,297,024 1,499,192
------------ --------- ---------- ---------- ----------
------------ --------- ---------- ---------- ----------
</TABLE>

The aggregate amount of certificates of deposits in denominations of
$100,000 or more was $2,581,410 and $3,088,352 at March 31, 1996 (unaudited) and
June 30, 1995, respectively. Deposit accounts exceeding $100,000 are not
federally insured.

8. ADVANCES FROM FEDERAL HOME LOAN BANK:

The Savings Bank borrowed $1,000,000 in 1994 from the Federal Home Loan Bank
under a mortgage matched advance program. Interest is charged on the advance at
a weighted average rate of 5.50% and is due in 120 to 180 monthly installments
of $9,517 including interest. The Savings Bank borrowed an additional $300,000
in 1995. The note is an interest only bearing an interest rate of 6.85%. The
note matured September 1, 1995.

F-15
<PAGE>
Future maturities on the advance are as follows:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
- --------------------------------
(UNAUDITED) YEAR ENDED JUNE 30,
--------------------------------
<S> <C> <C> <C>
1997............................ $ 69,496 1996............................ $ 366,730
1998............................ 73,366 1997............................ 70,445
1999............................ 77,450 1998............................ 74,366
2000............................ 81,764 1999............................ 78,506
2001............................ 86,316 2000............................ 82,878
2002 and subsequent............. 453,478 2001 and subsequent............. 518,652
----------- ------------
$ 841,870 $ 1,191,577
----------- ------------
----------- ------------
</TABLE>

The advances are collateralized by a blanket agreement on residential
mortgage loans held by the Savings Bank. The Savings Bank has also pledged its
Federal Home Loan Bank stock and mortgage notes with unpaid principal balances
of approximately $1,275,000 for future advances.

9. CAPITAL REQUIREMENTS:

The Savings Bank is subject to minimum regulatory capital requirements
promulgated by the Office of Thrift Supervision (OTS). The minimum capital
standards generally require the maintenance of regulatory capital sufficient to
meet each of three tests, hereinafter described as the tangible capital
requirement, the core capital requirement and the risk-based capital
requirement.

The tangible capital requirement provides for minimum tangible capital
(defined as stockholders' equity less all intangible assets) equal to 1.5% of
adjusted total assets. The core capital requirement provides for minimum core
capital (tangible capital plus certain forms of supervisory goodwill and other
qualifying intangible assets) equal to 3.0% of adjusted total assets. The
risk-based capital requirement currently provides for the maintenance of core
capital plus general loss allowances equal to 8.0% of risk-weighted assets. In
computing risk-weighted assets, the Savings Bank multiplies the value of each
asset on its statement of financial condition by a defined risk-weighing factor,
e.g., one-to-four family residential loans carry a risk-weighted factor of 50%.

F-16
<PAGE>
The Savings Bank's regulatory capital exceed all minimum capital
requirements as shown in the following table:
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------------
REGULATORY CAPITAL
RISK-
TANGIBLE CORE BASED
CAPITAL % CAPITAL % CAPITAL %
-------- ---- -------- ---- -------- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Capital under generally accepted accounting principles...... $ 2,772 $ 2,772 $ 2,772
General valuation allowances................................ -- -- 96
-------- -------- --------
Regulatory capital computed................................. 2,772 8.7 2,772 8.7 2,868 19.6
Minimum capital requirements................................ 476 1.5 952 3.0 1,171 8.0
-------- -------- --------
Regulatory capital-excess................................... $ 2,296 7.2 $ 1,820 5.7 $ 1,697 11.6
-------- -------- --------
-------- -------- --------

JUNE 30, 1995
----------------------------------------------
REGULATORY CAPITAL
RISK-
TANGIBLE CORE BASED
CAPITAL % CAPITAL % CAPITAL %
-------- ---- -------- ---- -------- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Capital under generally accepted accounting principles...... $ 2,706 $ 2,706 $ 2,706
General valuation allowances................................ -- -- 70
-------- -------- --------
Regulatory capital computed................................. 2,706 8.5 2,706 8.5 2,776 19.3
Minimum capital requirements................................ 478 1.5 955 3.0 1,153 8.0
-------- -------- --------
Regulatory capital-excess................................... $ 2,228 7.0 $ 1,751 5.5 $ 1,623 11.3
-------- -------- --------
-------- -------- --------
</TABLE>

10. COMMITMENTS:

March 31, 1996, the Savings Bank had commitments to originate loans totaling
$726,005 (unaudited). The entire amount was for fixed rate residential loans. No
portion of these loans were disbursed prior to March 31, 1996, and the financial
statements do not reflect any liability for such commitments. Management
anticipates that all originations will be funded from existing liquidity and
normal monthly cash flows. Loan commitments as of June 30, 1995 and 1994 were
$411,000 and $628,000, respectively.

11. RETIREMENT PLAN:

The Savings Bank has a 401(K) Salary Savings Plan with the Ohio Savings and
Loan League. During the nine months ended March 31, 1996 and 1995 (unaudited)
and the years ended June 30, 1995, 1994, and 1993, respectively, retirement
expense amounted to $5,053, $9,074, $10,585, $10,167 and $10,952. The plan
covers all employees having completed one year of service and having attained
the age of twenty-one. The employee can contribute up to six percent with the
employer matching contribution of three percent and a discretionary three
percent employer matching contribution.

12. FEDERAL INCOME TAXES:

The Savings Bank has qualified under provisions of the Internal Revenue Code
which permits the Savings Bank to deduct from taxable income an allowance for
bad debts based on a percentage of taxable income before such deduction. The Tax
Reform Act of 1969 gradually reduced this reduction to 40% for years beginning
in 1979. The Tax Reform Act of 1986 reduced this deduction to 8% beginning in
1988.

Appropriated and unappropriated retained income at June 30, 1995 included
earnings of approximately $641,000, representing such bad debt deductions for
which no provision for federal income taxes has been made. In the future, if the
Savings Bank does not meet the federal income tax requirements necessary to
permit it to deduct an allowance for bad debts, the Savings Bank will be subject
to federal income tax at the then current corporate rate. Management does not
contemplate any action which would cause such cumulative bad debt deduction to
be subject to federal income taxes, although it is possible that changes in
legislation could, at a future date require recapture of all or part of this bad
debt deduction.

F-17
<PAGE>
An analysis of income tax expense, setting forth the reasons for the
variations from the statutory rate is as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30
---------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Federal income taxes at the statutory rate of 34%..... $ 33,361 45,774 58,876 93,028 71,974
Bad debt deduction.................................... -- -- -- (13,300) 22,000
Other, primarily surtax exemptions.................... (1,234) (2,693) (11,076) (1,365) (8,798)
---------- ---------- ---------- ---------- ----------
$ 32,127 43,081 47,800 78,363 85,176
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
32.7% 32.0% 27.6% 28.6% 40.2%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

The tax effect of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities are as follows:

<TABLE>
<CAPTION>
JUNE 30
------------------
1995 1994
MARCH 31, -------- --------
1996
------------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets arising from:
Loan loss reserve......................................... $ 23,700 15,000 13,300
Deferred loan fees and costs.............................. 11,200 15,500 19,700
Basis of investments...................................... 2,000 2,000 2,000
------------ -------- --------
Total deferred tax assets............................... 36,900 32,500 35,000
------------ -------- --------
Deferred tax liabilities arising from:
Accrual to cash conversion................................ 33,600 30,300 19,500
Depreciation.............................................. 20,100 20,800 21,700
FHLB stock................................................ 46,700 42,000 36,600
------------ -------- --------
Total deferred tax liabilities.......................... (100,400 ) (93,100) (77,800)
------------ -------- --------
Net deferred tax liability.................................. $ 63,500 60,600 42,800
------------ -------- --------
------------ -------- --------
</TABLE>

The Savings Bank has not recorded a valuation allowance, as the deferred tax
assets are presently considered to be realizable based on the level of
anticipated future taxable income. Net deferred tax liabilities and federal
income tax expense in future years can be significantly affected by changes in
enacted tax rates.

The components of deferred income tax expense (credit) are as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30
---------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Loan origination fees................................. $ 4,200 600 4,200 5,500 6,300
FHLB stock dividend................................... 4,700 5,100 5,400 3,900 3,000
Depreciation.......................................... (700) (700) (900) 200 2,000
Accrual to cash conversion............................ 3,500 6,300 10,800 19,800 (10,300)
Bad debt reserves and other........................... (8,800) 400 (1,700) (13,300) (9,000)
---------- ---------- ---------- ---------- ----------
$ 2,900 11,700 17,800 16,100 (8,000)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

13. CONTINGENCY -- SAIF RECAPITALIZATION:

The deposits of savings associations such as the Savings Bank are presently
insured by the SAIF, which together with the BIF, are the two insurance funds
administered by the FDIC. On November 14, 1995, the FDIC revised the premium
schedule for BIF-insured banks to provide a range of .00% to .27% (subject to a

F-18
<PAGE>
$2,000 minimum) of deposits (as compared to the current range of .23% to .31% of
deposits for SAIF-insured institutions) due to the BIF achieving its statutory
reserve ratio. As a result, BIF members generally pay substantially lower
premiums than the SAIF members. It is anticipated that the SAIF will not be
adequately recapitalized until 2002, absent a substantial increase in premium
rates or the imposition of special assessments or other significant
developments, such as a merger of the SAIF and the BIF. As a result of this
disparity, SAIF members have been placed at a significant, competitive
disadvantage to BIF members due to higher costs for deposit insurance. A
recapitalization plan under consideration by the Treasury Department, the FDIC,
the OTS and the Congress reportedly provides for a one-time assessment of .80%
to .85% to be imposed on all deposits assessed at the SAIF rates in order to
recapitalize the SAIF and eliminate the disparity, and an eventual merger of the
SAIF and the BIF.

The Savings Bank currently is unable to predict the likelihood of
legislation effecting these changes, although a consensus appears to be
developing in this regard. If such an assessment was effected based on deposits
as of March 31, 1995, as proposed, the Savings Bank's pro rate share would
amount to approximately $136,100 to $144,600 after taxes, respectively, assuming
a 34% tax rate.

14. PLAN OF CONVERSION:

On May 31, 1996, the Savings Bank's Board of Directors adopted a Plan of
Conversion (the "Plan") to convert the Savings Bank from a state chartered
mutual savings bank to a state chartered stock savings bank, which will then
become a wholly owned subsidiary of a holding company formed in connection with
the Conversion. The holding company will issue common stock to be sold in the
conversion and will use a portion of the net proceeds thereof which it does not
retain to purchase the capital stock of the Savings Bank. The Plan is subject to
approval by the regulatory authorities and the members of the Savings Bank at a
special meeting.

At the time of conversion, the Savings Bank will establish a liquidation
account in an amount equal to its net worth as reflected in its latest balance
sheet used in its final conversion Prospectus. The liquidation account will be
maintained for the benefit of eligible deposit account holders who continue to
maintain their deposit accounts in the Savings Bank after conversion. Only in
the event of a complete liquidation will each deposit account holder be entitled
to receive a liquidation distribution from the liquidation account in the amount
of the then current adjusted subaccount balance for deposit accounts then held
before any liquidation distribution may be made with respect to common stock.
Dividends paid by the Savings Bank subsequent to the conversion cannot be paid
from this liquidation account.

The Savings Bank may not declare or pay a cash dividend on or repurchase any
of its common stock if its net worth would thereby be reduced below either the
aggregate amount then required for the liquidation account or the minimum
regulatory capital requirements imposed by the federal and state regulations.

No conversion costs had been incurred as of March 31, 1996. If the
conversion is ultimately successful, conversion costs will be accounted for as a
reduction of the stock proceeds. If the conversion is unsuccessful, conversion
costs will be charged to the Savings Bank's operations.

F-19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE HOLDING COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITY, OTHER THAN THE
COMMON SHARES OFFERED HEREBY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM DELIVERY OF
THIS PROSPECTUS WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS TO ANY TIME SUBSEQUENT TO THE
DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUMMARY....................................................... 3
SELECTED FINANCIAL INFORMATION AND OTHER DATA............................ 9
RISK FACTORS............................................................. 10
USE OF PROCEEDS.......................................................... 14
MARKET FOR THE COMMON SHARES............................................. 14
DIVIDEND POLICY.......................................................... 15
REGULATORY CAPITAL COMPLIANCE............................................ 16
CAPITALIZATION........................................................... 17
PRO FORMA DATA........................................................... 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS........................................................... 22
THE BUSINESS OF THE BANK................................................. 32
MANAGEMENT............................................................... 44
REGULATION............................................................... 49
TAXATION................................................................. 57
THE CONVERSION........................................................... 59
RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE BANK.......... 72
DESCRIPTION OF AUTHORIZED SHARES......................................... 76
REGISTRATION REQUIREMENTS................................................ 77
LEGAL MATTERS............................................................ 77
EXPERTS.................................................................. 77
ADDITIONAL INFORMATION................................................... 77
FINANCIAL STATEMENTS..................................................... F-1
</TABLE>

UP TO 402,500 COMMON SHARES

FOUNDATION BANCORP, INC.

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

PROSPECTUS

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

CHARLES WEBB & COMPANY

, 1996

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<C> <S> <C>
* Legal Fees and Expenses........................................................ $ 85,000
* Printing, Postage and Mailing.................................................. $ 25,000
* Appraisal Fees and Expenses.................................................... $ 15,000
* Accounting Fees and Expenses................................................... $ 25,000
* Filing Fees.................................................................... $ 11,000
* Conversion Agent Fees.......................................................... $ 5,000
* Other Expenses................................................................. $ 5,000
** Underwriting Fees and Expenses................................................. $ 80,000
---------
Total estimated expenses..................................................... $ 251,000
---------
---------
</TABLE>

- ------------------------
* Estimated.

** The Holding Company and the Bank have retained Charles Webb & Company
("Webb") to consult, advise and assist in the sale of the Common Shares in
the Offering on a "best efforts" basis. Webb will receive a financial
advisory fee in the amount of $50,000. In addition, the Holding Company will
reimburse Webb for certain expenses, including reasonable legal fees, not to
exceed $30,000. If the Holding Company and Webb deem necessary, Webb may
enter into agreements ("Selected Dealers Agreements") with other National
Association of Securities Dealers, Inc., member firms ("Selected Dealers")
for assistance in the sale of Common Shares. Selected Dealers will receive
fees equal to 4% of the aggregate purchase price of Common Shares sold, if
any, pursuant to Selected Dealer Agreements.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

(a) OHIO REVISED CODE

Division (E) of Section 1701.13 of the Ohio Revised Code governs
indemnification by a corporation and provides as follows:

(E)(1) A corporation may indemnify or agree to indemnify any person who was
or is a party or is threatened to be made a party, to any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, other than an action by or in the right of the
corporation, by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust, or other enterprise, against expenses, including attorney's
fees, judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
or conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.

(2) A corporation may indemnify or agree to indemnify any person who was or
is a party or is threatened to be made a party, to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or agent of
another corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust, or other enterprise, against expenses, including
attorney's fees, actually and

II-1
<PAGE>
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any of the following:

(a) Any claim, issue, or matter as to which such person is adjudged to
be liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that the court of common pleas or
the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses as the court of common pleas or such other
court shall deem proper;

(b) Any action or suit in which the only liability asserted against a
director is pursuant to section 1701.95 of the Revised Code.

(3) To the extent that a director, trustee, officer, employee, or agent has
been successful on the merits or otherwise in defense of any action, suit, or
proceeding referred to in divisions (E)(1) and (2) of this section, or in
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the action, suit, or proceeding.

(4) Any indemnification under divisions (E)(1) and (2) of this section,
unless ordered by a court, shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
trustee, officer, employee, or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in divisions (E)(1) and (2)
of this section. Such determination shall be made as follows:

(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are not parties to or threatened
with any such action, suit, or proceeding;

(b) If the quorum described in division (E)(4)(a) of this section is not
obtainable or if a majority vote of a quorum of disinterested directors so
directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been
retained by or who has performed services for the corporation or any person
to be indemnified within the past five years;

(d) By the court of common pleas or the court in which such action,
suit, or proceeding was brought.

Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or brought
the action or suit by or in the right of the corporation under division (E)(2)
of this section, and within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which action or suit was brought to review the reasonableness of such
determination.

(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in divisions (E)(1) and
(2) of this section, the articles or the regulations of a corporation state by
specific reference to this division that the provisions of this division do not
apply to the corporation and unless the only liability asserted against a
director in an action, suit, or proceeding referred to in divisions (E)(1) and
(2) of this section is pursuant to section 1701.95 of the Revised Code,
expenses,

II-2
<PAGE>
including attorney's fees, incurred by a director in defending the action, suit,
or proceeding shall be paid by the corporation as they are incurred, in advance
of the final disposition of the action, suit, or proceeding upon receipt of an
undertaking by or on behalf of the director in which he agrees to do both of the
following:

(i) Repay such amount if it is proved by clear and convincing evidence
in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause
injury to the corporation or undertaken with reckless disregard for the best
interests of the corporation;

(ii) Reasonably cooperate with the corporation concerning the action,
suit, or proceeding.

(b) Expenses, including attorney's fees, incurred by a director, trustee,
officer, employee, or agent in defending any action, suit, or proceeding
referred to in divisions (E)(1) and (2) of this section, may be paid by the
corporation as they are incurred, in advance of the final disposition of the
action, suit, or proceeding as authorized by the directors in the specific case
upon receipt of an undertaking by or on behalf of the director, trustee,
officer, employee, or agent to repay such amount, if it ultimately is determined
that he is not entitled to be indemnified by the corporation.

(6) The indemnification authorized by this section shall not be exclusive
of, and shall be in addition to, any other rights granted to those seeking
indemnification under the articles or the regulations or any agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
trustee, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.

(7) A corporation may purchase and maintain insurance or furnish similar
protection, including but not limited to trust funds, letters of credit, or
self-insurance, on behalf of or for any person who is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee, or agent
of another corporation, domestic or foreign, nonprofit or profit, partnership,
joint venture, trust, or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under this section. Insurance may be purchased from
or maintained with a person in which the corporation has a financial interest.

(8) The authority of a corporation to indemnify persons pursuant to
divisions (E)(1) and (2) of this section does not limit the payment of expenses
as they are incurred, indemnification, insurance, or other protection that may
be provided pursuant to divisions (E)(5), (6), and (7) of this section.
Divisions (E)(1) and (2) of this section do not create any obligation to repay
or return payments made by the corporation pursuant to division (E)(5), (6), or
(7).

(9) As used in this division, references to "corporation" includes all
constituent corporations in a consolidation or merger and the new or surviving
corporation, so that any person who is or was a director, officer, employee, or
agent of such a constituent corporation, or is or was serving at the request of
such constituent corporation as a director, trustee, officer, employee, or agent
of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, shall stand in the same
position under this section with respect to the new or surviving corporation as
he would if he had served the new or surviving corporation in the same capacity.

(b) THE BANK'S AMENDED CONSTITUTION

Article Eight of the Amended Constitution of the Bank provides for
indemnification of officers and directors as follows:

II-3
<PAGE>
another corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust, or other enterprise, against expenses, including
attorney's fees, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of this Bank and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of this Bank and, with respect to any criminal action or proceeding,
he had reasonable cause to believe that his conduct was unlawful.

SECTION 2. This Bank shall indemnify or agree to indemnify any person who
was or is a party or is threatened to be made a party, to any threatened,
pending or completed action or suit by or in the right of this Bank to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of this Bank or is or was serving at the request of this Bank as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise, against expenses, including attorney's fees, actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of this Bank, except that no
indemnification shall be made in respect of any of the following:

(A) Any claim, issue or matter as to which such person is adjudged to be
liable for negligence or misconduct in the performance of his duty to this
Bank unless, and only to the extent that, the Court of Common Pleas of
Hamilton County, Ohio, or the court in which such action or suit was brought
determines upon application that, despite the adjudication of liability, but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the Court of Common
Pleas of Hamilton County, Ohio, or such other court shall deem proper;

(B) Any action or suit in which the only liability asserted against a
director is pursuant to 1701.95 of the Ohio Revised Code.

SECTION 3. To the extent that a director or officer has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections 1 or 2 of this Article Eight, or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses, including attorney's
fees, actually and reasonably incurred by him in connection with the action,
suit, or proceeding.

SECTION 4. Any indemnification under Sections 1 or 2 of this Article Eight,
unless ordered by a court, shall be made by this Bank only as authorized in the
specific case upon a determination that indemnification of the director or
officer is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article Eight. Such
determination shall be made as follows:

(A) By a majority vote of a quorum consisting of directors of this Bank
who were not and are not parties to or threatened with any such action,
suit, or proceeding;

(B) If the quorum described in Subsection (A) of this Section 4 is not
obtainable or if a majority vote of a quorum of disinterested directors so
directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been
retained by or who has performed services for this Bank or any person to be
indemnified within the past five years;

(D) By the Court of Common Pleas of Hamilton County, Ohio, or the court
in which such action, suit, or proceeding was brought.

II-4
<PAGE>
Article Eight, and within ten days after receipt of such notification, such
person shall have the right to petition the Court of Common Pleas of Hamilton
County, Ohio, or the court in which such action or suit was brought to review
the reasonableness of such determination.

SECTION 5.

(A) Expenses, including attorney's fees, incurred by a director in defending
the action, suit, or proceeding shall be paid by this Bank as they are incurred,
in advance of the final disposition of the action, suit, or proceeding upon
receipt of an undertaking by or on behalf of the director in which he agrees to
do both of the following:

(i) Repay such amount if it is proved by clear and convincing evidence
in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause
injury to this Bank or undertaken with reckless disregard for the best
interests of this Bank;

(ii) Reasonably cooperate with this Bank concerning the action, suit, or
proceeding.

(B) Expenses, including attorney's fees, incurred by a director, trustee,
officer, employee, or agent in defending any action, suit, or proceeding
referred to in Section 2 of this Article Eight, may be paid by this Bank as they
are incurred, in advance of the final disposition of the action, suit, or
proceeding as authorized by the directors in the specific case upon receipt of
an undertaking by or on behalf of the director, trustee, officer, employee, or
agent to repay such amount, if it ultimately is determined that he is not
entitled to be indemnified by this Bank.

SECTION 6. The indemnification authorized by this Article Eight shall not
be exclusive of, and shall be in addition to, any other rights granted to those
seeking indemnification under the Articles or the Constitution of this Bank or
any agreement, vote of shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of the heirs, executors,
and administrators of such a person.

SECTION 7. This Bank may purchase and maintain insurance or furnish similar
protection, including but not limited to trust funds, letters of credit, or
self-insurance, on behalf of or for any person who is or was a director,
officer, employee, or agent of this Bank, or is or was serving at the request of
this Bank as a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not this Bank would have the power to indemnify him against such
liability under this section. Insurance may be purchased from or maintained with
a person in which this Bank has a financial interest.

SECTION 8. The authority of this Bank to indemnify persons pursuant to
Sections 1 or 2 of this Article Eight does not limit the payment of expenses as
they are incurred, indemnification, insurance, or other protection that may be
provided pursuant to Sections 5, 6 and 7 of this Article Eight. Sections 1 and 2
of this Article Eight do not create any obligation to repay or return payments
made by this Bank pursuant to Sections 5, 6 or 7 of this Article Eight.

SECTION 9. As used in this Article Eight, references to this Bank include
all constituent corporations in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a director, officer,
employee, or agent of such a constituent corporation, or is or was serving at
the request of such constituent corporation as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise, shall stand in
the same position under this section with respect to the new or surviving
corporation as he would if he had served the new or surviving corporation in the
same capacity.

II-5
<PAGE>
Common Pleas of Hamilton County, Ohio. This Bank and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Hamilton County, Ohio, in any
such action, suit or proceeding.

Article Five of the Holding Company's Code of Regulations provides for the
indemnification of officers and directors as follows:

SECTION 5.01. MANDATORY INDEMNIFICATION. The corporation shall indemnify
any officer or director of the corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or agent of
another corporation (domestic or foreign, nonprofit or for profit), partnership,
joint venture, trust or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct was unlawful. A
person claiming indemnification under this Section 5.01 shall be presumed, in
respect of any act or omission giving rise to such claim for indemnification, to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal matter, to have had no reasonable cause to believe his conduct was
unlawful, and the termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption.

SECTION 5.02. COURT-APPROVED INDEMNIFICATION. Anything contained in the
Regulations or elsewhere to the contrary notwithstanding:

(A) the corporation shall not indemnify any officer or director of the
corporation who was a party to any completed action or suit instituted by or
in the right of the corporation to procure a judgment in its favor by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee or agent of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint venture,
trust or other enterprise, in respect of any claim, issue or matter asserted
in such action or suit as to which he shall have been adjudged to be liable
for acting with reckless disregard for the best interests of the corporation
or misconduct (other than negligence) in the performance of his duty to the
corporation unless and only to the extent that the Court of Common Pleas of
Hamilton County, Ohio, or the court in which such action or suit was brought
shall determine upon application that, despite such adjudication of
liability, and in view of all the circumstances of the case, he is fairly
and reasonably entitled to such indemnity as such Court of Common Pleas or
such other court shall deem proper; and

(B) the corporation shall promptly make any such unpaid indemnification
as is determined by a court to be proper as contemplated by this Section
5.02.

SECTION 5.03. INDEMNIFICATION FOR EXPENSES. Anything contained in the
Regulations or elsewhere to the contrary notwithstanding, to the extent that an
officer or director of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.

II-6
<PAGE>
conduct set forth in Section 5.01. Such determination may be made only (A) by a
majority vote of a quorum consisting of directors of the corporation who were
not and are not parties to, or threatened with, any such action, suit or
proceeding, or (B) if such a quorum is not obtainable or if a majority of a
quorum of disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the corporation, or any person to be indemnified, within the past five years, or
(C) by the shareholders, or (D) by the Court of Common Pleas of Hamilton County,
Ohio, or (if the corporation is a party thereto) the court in which such action,
suit or proceeding was brought, if any; any such determination may be made by a
court under division (D) of this Section 5.04 at any time including, without
limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have been denied
or disregarded by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders under
division (C) of this Section 5.04; and no failure for any reason to make any
such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders under
division (C) of this Section 5.04 shall be evidence in rebuttal of the
presumption recited in Section 5.01. Any determination made by the disinterested
directors under division (A) or by independent legal counsel under division (B)
of this Section 5.04 to make indemnification in respect of any claim, issue or
matter asserted in an action or suit threatened or brought by or in the right of
the corporation shall be promptly communicated to the person who threatened or
brought such action or suit, and within ten (10) days after receipt of such
notification such person shall have the right to petition the Court of Common
Pleas of Hamilton County, Ohio, or the court in which such action or suit was
brought, if any, to review the reasonableness of such determination.

SECTION 5.05. ADVANCES FOR EXPENSES. Expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs) incurred in defending any action, suit or proceeding referred to in
Section 5.01 shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only if such officer
or director shall first agree, in writing, to repay all amounts so paid in
respect of any claim, issue or other matter asserted in such action, suit or
proceeding in defense of which he shall not have been successful on the merits
or otherwise:

(A) if it shall ultimately be determined as provided in Section 5.04
that he is not entitled to be indemnified by the corporation as provided
under Section 5.01; or

(B) if, in respect of any claim, issue or other matter asserted by or in
the right of the corporation in such action or suit, he shall have been
adjudged to be liable for acting with reckless disregard for the best
interests of the corporation or misconduct (other than negligence) in the
performance of his duty to the corporation, unless and only to the extent
that the Court of Common Pleas of Hamilton County, Ohio, or the court in
which such action or suit was brought shall determine upon application that,
despite such adjudication of liability, and in view of all the
circumstances, he is fairly and reasonably entitled to all or part of such
indemnification.

SECTION 5.06. ARTICLE FIVE NOT EXCLUSIVE. The indemnification provided by
this Article Five shall not be deemed exclusive of any other rights to which any
person seeking indemnification may be entitled under the Articles or the
Regulations or any agreement, vote of shareholders or disinterested directors,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be an officer or director of the corporation and shall inure
to the benefit of the heirs, executors, and administrators of such a person.

II-7
<PAGE>
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
obligation or the power to indemnify him against such liability under the
provisions of this Article Five.

SECTION 5.08. CERTAIN DEFINITIONS. For purposes of this Article Five, and
as examples and not by way of limitation:

(A) A person claiming indemnification under this Article 5 shall be
deemed to have been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 5.01, or in defense of any
claim, issue or other matter therein, if such action, suit or proceeding
shall be terminated as to such person, with or without prejudice, without
the entry of a judgment or order against him, without a conviction of him,
without the imposition of a fine upon him and without his payment or
agreement to pay any amount in settlement thereof (whether or not any such
termination is based upon a judicial or other determination of the lack of
merit of the claims made against him or otherwise results in a vindication
of him); and

(B) References to an "other enterprise" shall include employee benefit
plans; references to a "fine" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
best interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" within the meaning of that term as used in
this Article Five.

SECTION 5.09. VENUE. Any action, suit or proceeding to determine a claim
for indemnification under this Article Five may be maintained by the person
claiming such indemnification, or by the corporation, in the Court of Common
Pleas of Hamilton County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Hamilton County, Ohio, in any
such action, suit or proceeding.

(i) AGREEMENT WITH KELLER & COMPANY, INC.

The Bank has agreed to indemnify Keller & Company, Inc. ("Keller"), the firm
retained by the Bank to provide the appraisal of the pro forma market value of
the Bank, as converted, in connection with certain matters related to the
appraisal. The Bank will indemnify Keller, its employees and affiliates, for
certain costs and expenses, including reasonable legal fees, in connection with
claims or litigation relating to the appraisal and arising out of any
misstatement or untrue statement of a material fact in information supplied to
Keller by the Bank or by an intentional omission by the Bank to state a material
fact in the information so provided, except where Keller has been negligent or
at fault.

(ii) AGREEMENT WITH WEBB

The Holding Company and the Bank have agreed to indemnify and hold Webb and
its directors, officers, employees, agents and any controlling person harmless
against any and all loss, liability, claim, damage or expense (including the
fees and disbursements of counsel reasonably incurred) arising out of any untrue
statement, or alleged untrue statement, of a material fact contained in the
Summary Proxy Statement or the Prospectus, any application to regulatory
authorities, any "blue sky" application, or any other related document prepared
or executed by or on behalf of the Bank with its consent in connection with, or
in contemplation of, the transactions contemplated by the Agency Agreement by
and among Webb, the Holding Company and the Bank, or any omission therefrom of a
material fact required to be stated therein, unless such untrue statement or
omission, or alleged untrue statement or omission, was made in reliance upon,
and in conformity with, written information regarding Webb furnished to the Bank
by Webb expressly for use in the Summary Proxy Statement or the Prospectus.

II-8
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

No securities of the Holding Company have been sold by the Holding Company
without registration pursuant to the Act, except as follows:

On April 16, 1996, in connection with the incorporation of the Holding
Company, 100 common shares, without par value, of the Holding Company (the
"Securities") were sold for an aggregate purchase price of $100 pursuant to
Section 4(2) of the Act in a transaction not involving any public offering. The
Securities were sold to Laird L. Lazelle, the President of the Holding Company,
who had access to all material information about the Holding Company. The
Securities were offered without the use of any form of general solicitation or
advertising. No underwriter was involved in the transaction, and no commission,
discount or other remuneration was paid or given in connection with the sale of
the Securities. Under the terms of the Subscription Agreement between the
Holding Company and Mr. Lazelle, the Securities will be repurchased by the
Holding Company for $100 on the effective date of the Conversion.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:

<TABLE>
<C> <S>
*1 Form of Agency Agreement with Charles Webb & Company
2 Plan of Conversion
3.1 Articles of Incorporation of Foundation Bancorp, Inc.
3.2 Code of Regulations of Foundation Bancorp, Inc.
5 Opinion of Vorys, Sater, Seymour and Pease regarding legality of securities being
registered
8 Opinion of Vorys, Sater, Seymour and Pease regarding tax matters
10.1 Foundation Bancorp, Inc. 1997 Stock Option and Incentive Plan (proposed)
10.2 Foundation Savings Bank Recognition and Retention Plan and Trust Agreement (proposed)
*10.3 Foundation Bancorp, Inc. Employee Stock Ownership Plan (proposed)
*10.4 Employment Agreement between Foundation Savings Bank and Laird L. Lazelle (proposed)
10.5 Lease Agreement
23.1 Consent of Clark, Schaefer, Hackett & Co.
23.2 Consent of Keller & Company, Inc.
23.3 Consent of Vorys, Sater, Seymour and Pease
99.1 Summary Proxy Statement
99.2 Stock Order Form and Form of Certification
99.3 Form of Proxy
99.4 Solicitation and Marketing Material
99.5 Appraisal Agreement between Foundation Savings Bank and Keller & Company, Inc.
*99.6 Appraisal Report
</TABLE>

- ------------------------
* To be filed supplementally or by amendment

(b) Financial Statement Schedules:

No financial statement schedules are filed because the required information
is not applicable or is included in the financial statements of the Bank or
related notes.

II-9
<PAGE>
ITEM 17. UNDERTAKINGS.

(a) The undersigned, Foundation Bancorp, Inc., hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.

(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of Foundation Bancorp,
Inc., pursuant to the foregoing provisions or otherwise, Foundation Bancorp,
Inc. has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act, and is therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Foundation
Bancorp, Inc. of expenses incurred or paid by a director, officer or controlling
person of Foundation Bancorp, Inc. in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Foundation Bancorp, Inc. will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

II-10
<PAGE>
REGISTRATION NO. 33-

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE , 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

EXHIBITS
TO
FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

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

FOUNDATION BANCORP, INC.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FOUNDATION BANCORP, INC.

REGISTRATION STATEMENT ON FORM S-1

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
*1 Agency Agreement with Charles Webb & Company

2 Plan of Conversion

3.1 Articles of Incorporation of Foundation Bancorp, Inc.

3.2 Code of Regulations of Foundation Bancorp, Inc.

5 Opinion of Vorys, Sater, Seymour and Pease regarding legality of securities being registered

8 Opinion of Vorys, Sater, Seymour and Pease regarding tax matters

10.1 Foundation Bancorp, Inc. 1997 Stock Option and Incentive Plan (proposed)

10.2 Foundation Savings Bank Recognition and Retention Plan and Trust (proposed)

*10.3 Foundation Bancorp, Inc. Employee Stock Ownership Plan (proposed)

*10.4 Employment Agreement between Foundation Savings Bank and Laird L. Lazelle (proposed)

10.5 Lease Agreement

23.1 Consent of Clark, Schaefer, Hackett & Co.

23.2 Consent of Keller & Company, Inc.

23.3 Consent of Vorys, Sater, Seymour and Pease

99.1 Summary Proxy Statement

99.2 Stock Order Form and Form of Certification

99.3 Form of Proxy

99.4 Solicitation and Marketing Material

99.5 Appraisal Agreement between Foundation Savings Bank and Keller & Company, Inc.

*99.6 Appraisal Report
</TABLE>

- ------------------------
* To be filed supplementally or by amendment

<PAGE>

FOUNDATION SAVINGS BANK

PLAN OF CONVERSION

TABLE OF CONTENTS

Introduction..................................................................1
1. Definitions...............................................................1
2. Procedures for the Conversion.............................................4
3. Purchase Price of Common Shares and Number of Shares to be Offered in
Connection with the Conversion............................................5
4. Subscription Rights of Eligible Account Holders...........................5
5. Subscription Rights of Tax-Qualified Employee Stock Benefit Plans.........6
6. Subscription Rights of Supplemental Eligible Account Holders..............6
7. Subscription Rights of Other Eligible Members.............................7
8. Community Offering........................................................7
9. Additional Limitations on Purchases.......................................8
10. Procedures for the Subscription Offering and the Community Offering.......9
11. Payment for Common Shares.................................................9
12. Expiration of Subscription Rights; Undelivered, Defective or Late Order
Forms; Insufficient Payment..............................................10
13. Compliance with Securities Laws..........................................11
14. Rights of Shareholders After Completion of Conversion....................11
15. Establishment of Liquidation Account.....................................11
16. Accounts in Converted Association........................................12
17. Restrictions on Purchases and Sales of Common Shares by Officers and
Directors Following Conversion...........................................12
18. Restrictions on Acquisition of the Bank or the Holding Company...........13
19. Amendment or Termination of this Plan....................................13
20. Consummation of Conversion...............................................13
21. Tax Rulings/Opinions.....................................................13
22. Directors and Officers of the Bank.......................................13
23. Stock Benefit Plans......................................................14
24. Registration of Common Shares; Market for Common Shares..................14
25. Expenses of Conversion...................................................14
26. Mailing of Proxy Materials...............................................14
27. Interpretation of the Plan...............................................14

<PAGE>

FOUNDATION SAVINGS BANK

PLAN OF CONVERSION

1. INTRODUCTION.

This Plan of Conversion, adopted by the Board of Directors of Foundation
Savings Bank (hereinafter referred to as the "Bank") on May 31, 1996
(hereinafter referred to as this "Plan"), provides for the conversion of the
Bank from a mutual savings and loan association incorporated under Ohio law to a
permanent capital stock savings and loan association incorporated under Ohio law
(hereinafter referred to as the "Conversion") and the acquisition by a holding
company to be formed at the direction of the Bank of all of the capital stock to
be issued by the Bank in the Conversion. The purpose of the Conversion is to
provide the Bank with additional capital to expand lending and investment
activities, enhance customer services and pursue other lawful activities which
the Board of Directors may deem to be in the best interests of the Bank.

After the completion of the Conversion, savings accounts in the Bank will
be equivalent in amount, interest rate and other terms to the savings accounts
in the Bank immediately prior to the Conversion and will continue to be insured
by the Federal Deposit Insurance Corporation to the maximum extent permitted by
law. Rights of account holders with respect to liquidation and voting will
change, however, as a result of the Conversion. As a permanent capital stock
savings and loan association, the Bank will succeed to all of the presently
existing rights, interests, duties and obligations of the Bank in mutual form to
the extent provided by law, including, but not limited to, all rights to and
interests in its assets and properties, both real and personal.

This Plan must be approved at the Special Meeting (hereinafter defined) of
Members (hereinafter defined) by the affirmative vote of a majority of the total
outstanding votes entitled to be cast at the Special Meeting. Before this Plan
may be submitted to the members of the Bank for approval at the Special Meeting,
however, this Plan must be approved by the OTS (hereinafter defined) and the
Division (hereinafter defined). The Amended Articles of Incorporation and
Amended Constitution of the Bank must also be approved at the Special Meeting by
the affirmative vote of at least three-fifths of the votes cast in person or by
proxy at the Special Meeting.

2. DEFINITIONS.

As used in this Plan, the following terms have the corresponding meanings:

ACTING IN CONCERT means (a) knowing participation in a joint activity or
interdependent conscious parallel action towards a common goal whether or
not pursuant to an express agreement, or (b) a combination or pooling of
voting or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise.

AFFILIATE, when used to indicate a relationship with a specified Person,
means a Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with
the Person specified.

AMENDED ARTICLES means the Amended Articles of Incorporation of the Bank
which are in the form attached hereto as Exhibit I and which authorize the
issuance of capital stock and which will be filed with the Ohio Secretary
of State on the date on which the Conversion becomes effective.

AMENDED CONSTITUTION means the Amended Constitution of the Bank which is in
the form attached hereto as Exhibit II and which will be filed with the
Division on the date on which the Conversion becomes effective.

APPLICATION means the Application for Conversion on Form AC to be filed by
the Bank with the OTS pursuant to Title 12, Code of Federal Regulations,
Part 563b and with the Division pursuant to Ohio Administrative Code
Section 1301-2-1-16.

ASSOCIATE, when used to indicate a relationship with any Person, means (i)
any corporation or organization (other than the Bank, the Holding Company
or a majority-owned subsidiary of the Bank or the Holding Company) of

<PAGE>

which such Person is an Officer or partner or is, directly or indirectly,
the beneficial owner of 10% or more of any class of equity securities, (ii)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar
fiduciary capacity, except that such term will not include a Tax-Qualified
Employee Stock Benefit Plan, and (iii) any relative or spouse of such
Person, or any relative of such spouse, who has the same home as such
Person or who is a director or Officer of the Bank, the Holding Company or
any of their subsidiaries.

BROKER means any Person engaged in the business of effecting transactions
in securities for the account of others.

THE BANK means Foundation Savings Bank, in its mutual form or stock form,
as appropriate.

COMMON SHARES means the common shares of the Holding Company to be offered
and sold by the Holding Company in connection with the Conversion.

COMMUNITY MEMBER means any natural person who, on the date of submission of
an Order Form, is a resident of Hamilton County, the county in which the
office of the Bank is located.

COMMUNITY OFFERING means the offering of Common Shares to the public
concurrently with or after the completion of the Subscription Offering in a
manner by which Community Members are given preference.

CONVERSION means the change in the form of the Bank from the mutual to the
permanent capital stock form upon (i) the filing of the Amended Articles
and the Amended Constitution; (ii) the sale and issuance of Common Shares
by the Holding Company in the Subscription Offering and the Community
Offering, and (iii) the purchase by the Holding Company of the capital
stock of the Bank.

DEALER means any Person who engages either for all or part of such person's
time, directly or indirectly, as an agent, Broker or principal, in the
business of offering, buying, selling or otherwise dealing or trading in
securities issued by another Person.

DIVISION means the Division of Financial Institutions of the Department of
Commerce of the State of Ohio.

ELIGIBILITY RECORD DATE means the close of business on May 31, 1995, the
record date set by the Bank for determining Eligible Account Holders.

ELIGIBLE ACCOUNT HOLDER means any person holding a Qualifying Deposit in
the Bank on the Eligibility Record Date.

FDIC means the Federal Deposit Insurance Corporation, an agency of the
United States Government.

HOLDING COMPANY means the corporation to be formed at the direction of the
Bank under Ohio law for the purpose of becoming a savings and loan holding
company through the acquisition of all of the capital stock to be issued by
the Bank in connection with the Conversion.

INDEPENDENT APPRAISER means the firm employed by the Bank to determine the
estimated pro forma market value of the Bank to be used as the basis for
determining the price of the Common Shares.

LIQUIDATION ACCOUNT means the account established in accordance with
Section 16 of this Plan for Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain a Savings Account at the
Bank after the Conversion.

MEMBER means any Person qualifying as a member of the Bank under its
Articles of Incorporation and Constitution.

OFFICER means an executive officer of the Holding Company or the Bank,
including the Chairman of the Board of Directors, the President, a Vice
President, the Secretary, the Treasurer or principal financial officer, or
the

-2-

<PAGE>

comptroller or principal accounting officer of the Holding Company or the
Bank and any other person performing similar functions for the Holding
Company or the Bank.

ORDER FORMS means the original forms which will be sent to the Eligible
Account Holders, Tax-Qualified Employee Stock Benefit Plans, Supplemental
Eligible Account Holders and Other Eligible Members to enable such Persons
to exercise their respective Subscription Rights in accordance with this
Plan and which may be sent to others in the Community Offering.

OTHER ELIGIBLE MEMBERS means those Persons, other than Eligible Account
Holders and Supplemental Eligible Account Holders, who are eligible to
purchase Common Shares pursuant to this Plan by reason of being Voting
Members.

OTS means the Department of the Treasury, Office of Thrift Supervision, an
agency of the United States Government.

PERSON means an individual, a corporation, a partnership, an association, a
joint-stock company, a trust, any unincorporated organization, or a
government or political subdivision thereof.

PROSPECTUS means the document describing the terms and conditions of the
Subscription Offering and the Community Offering, including a complete
description of the business and affairs of the Bank and the Holding
Company.

PROXY means the form of authorization by which a Person is, or may be
deemed to be, designated to act for a Voting Member in the exercise of his
or her voting rights in the affairs of the Bank.

PROXY MATERIALS means the Notice of Special Meeting, the Proxy Statement
and the form of Proxy used in connection with soliciting Proxies from
Members for use at the Special Meeting.

PURCHASE PRICE means the actual uniform price per share at which Common
Shares will be sold in the Subscription Offering and may be offered in the
Community Offering. Such price shall be based upon the appraised estimated
pro forma market value of such shares, determined as provided in Section 4
of this Plan.

QUALIFYING DEPOSIT means the aggregate balance of all Savings Accounts
owned by an Eligible Account Holder or a Supplemental Eligible Account
Holder at the close of business on the Eligibility Record Date or the
Supplemental Eligibility Record Date, respectively; provided, however, that
Savings Accounts with aggregate deposit balances of less than $50 will not
constitute Qualifying Deposits.

RESIDENT means any person who, on the Voting Record Date, maintains a bona
fide residence within Hamilton County, Ohio, as determined in the sole
discretion of the Bank and the Holding Company.

SAVINGS ACCOUNT has the same meaning as specified in Title 12, Code of
Federal Regulations, Part 561, as in effect on the date this Plan is
adopted by the Board of Directors of the Bank, and includes certificates of
deposit.

SEC means the Securities and Exchange Commission, an agency of the United
States Government.

SPECIAL MEETING means the meeting of the Voting Members of the Bank called
for the specific purpose of submitting this Plan to the Voting Members for
approval.

SUBSCRIPTION OFFERING means the offering of Common Shares to the holders of
Subscription Rights.

SUBSCRIPTION RIGHTS means the nontransferable rights issued by the Bank to
the Eligible Account Holders, the Tax-Qualified Employee Stock Benefit
Plans, Supplemental Eligible Account Holders and Other Eligible Members to
purchase Common Shares in the Subscription Offering pursuant to this Plan.

SUPPLEMENTAL ELIGIBILITY RECORD DATE means the record date used for
determining Supplemental Eligible Account Holders. Such date will be the
last day of the calendar quarter preceding the approval of the Application

-3-

<PAGE>

by the OTS; provided, however, that no Supplemental Eligibility Record Date
will be established if the Eligibility Record Date is 15 months or less
prior to the date of the latest amendment to the Application prior to
approval by the OTS.

SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER means any person holding a Qualifying
Deposit at the close of business on the Supplemental Eligibility Record
Date, except Officers and directors of the Bank and the Holding Company and
their Associates.

TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined benefit plan or
defined contribution plan of the Holding Company or the Bank, such as an
employee stock ownership plan, stock bonus plan, profit sharing plan or
other plan which, with its related trust, meets the requirements for
qualification under Section 401 of the Internal Revenue Code of 1986, as
amended.

VOTING MEMBER means any Member of the Bank eligible to vote at the Special
Meeting.

VOTING RECORD DATE means the record date fixed by the Board of Directors of
the Bank in accordance with Ohio law and the Articles of Incorporation and
Constitution of the Bank for determining the eligibility of Members to vote
on this Plan at the Special Meeting.

3. PROCEDURES FOR THE CONVERSION.

The following procedures will be followed to effect the Conversion:

(a) Promptly after the adoption of this Plan by a vote of at least
two-thirds of the members of the Board of Directors of the Bank, the Bank
will publish a notice of the adoption of this Plan in an English language
newspaper having general circulation in Cincinnati, Ohio. Copies of such
notice will also be made available for inspection by Members at the office
of the Bank.

(b) The Holding Company will be incorporated under Ohio law, after
which the Board of Directors of the Holding Company will consent to the
Plan by at least a two-thirds vote.

(c) The Bank will submit this Plan for approval, together with all
other requisite materials, to the OTS and the Division in the form of the
Application.

(d) After the filing of the Application with the OTS and the
Division, the Bank (i) will prominently post in the office of the Bank and
publish in an English language newspaper having general circulation in
Cincinnati, Ohio a notice to the effect that the Bank has filed the
Application with the OTS, and (ii) when advised by the Division, will
prominently post in the office of the Bank and publish in an English
language newspaper having general circulation in Cincinnati, Ohio a notice
to the effect that the Bank has filed the Application with the Division.

(e) After the OTS and the Division approve the Application, the Bank
will mail Proxy Materials to each of the Voting Members as of the Voting
Record Date at his or her last known address appearing on the records of
the Bank for the purpose of soliciting the Proxies of Voting Members for
use at the Special Meeting. The approval of this Plan will require the
affirmative vote, cast in person or by Proxy, of a majority of the total
outstanding votes entitled to be cast at the Special Meeting.

(f) Subject to the approval of this Plan by the Voting Members at the
Special Meeting, the following will occur:

(i) Common Shares will be offered simultaneously to the Eligible
Account Holders, the Tax-Qualified Employee Stock Benefit Plans, the
Supplemental Eligible Account Holders (if any) and the Other Eligible
Members in the respective priorities set forth in Sections 5, 6, 7 and
8 of this Plan. All sales of Common Shares to Eligible Account
Holders, the Tax-Qualified Employee Stock Benefit Plans, Supplemental
Eligible Account Holders (if any) and Other Eligible Members will be
completed at the earliest practicable date following expiration of the
Subscription Rights provided for in this Plan.

-4-

<PAGE>

Notwithstanding anything in this Plan to the contrary, the Bank, in
its sole discretion, may commence the Subscription Offering
concurrently with or at any time after the mailing to the Voting
Members of the Proxy Materials and may complete the Subscription
Offering before the Special Meeting if the completion of the offer and
sale of the Common Shares is conditioned upon the approval of this
Plan by the Voting Members. In the event that the Bank elects, in its
discretion, to commence the Subscription Offering after the Special
Meeting, the Subscription Offering will be commenced not later than 45
days after the date on which the Special Meeting is adjourned, except
as may otherwise be approved by the OTS.

(ii) Concurrently with, following the commencement of or
following the completion of the Subscription Offering, the Bank may
also offer Common Shares in the Community Offering, subject to the
prior satisfaction of the Subscription Rights of the Eligible Account
Holders, Tax-Qualified Employee Stock Benefit Plans, Supplemental
Eligible Account Holders (if any) and Other Eligible Members.

(g) All other steps considered necessary or desirable by the Boards
of Directors of the Bank and the Holding Company to effect the Conversion
will be taken pursuant to applicable laws and regulations.

4. PURCHASE PRICE OF COMMON SHARES AND NUMBER OF COMMON SHARES TO BE OFFERED
IN CONNECTION WITH THE CONVERSION.

The Purchase Price will be determined by the Boards of Directors of the
Bank and the Holding Company before the commencement of the Subscription
Offering, subject to adjustment as described below. The number of Common Shares
to be sold in connection with the Conversion will be determined by the Boards of
Directors of the Bank and the Holding Company before the completion of all sales
of Common Shares contemplated by this Plan on the basis of the estimated pro
forma market value of the Bank, as converted, and the Purchase Price. No
fractional shares will be issued in connection with the Conversion.

The estimated pro forma market value of the Bank, as converted, will be
determined by the Independent Appraiser, based upon such factors as the
Independent Appraiser deems appropriate and as are consistent with the
regulations of the OTS and the Division. Immediately before the commencement of
the Subscription Offering, a range will be established for the aggregate
Purchase Price of Common Shares to be offered in the Subscription Offering and
the Community Offering. The maximum of such range shall be 15% above the pro
forma market value of the Bank and the minimum of such range shall be 15% below
the pro forma market value of the Bank. The Independent Appraiser will review,
from time to time as appropriate or as required by law or regulation,
developments subsequent to its valuation to determine whether the estimated pro
forma market value of the Bank, as converted, should be revised. If, after the
commencement of the Subscription Offering, the Independent Appraiser determines
that the estimated pro forma market value of the Bank, as converted, has
increased or decreased due to subsequent developments, the Conversion may be
completed without notifying Persons who have subscribed for Common Shares and
without a resolicitation of subscriptions from such Persons if such pro forma
market value is not less than the minimum of the valuation range approved by the
OTS and the Division and does not exceed the maximum point of the valuation
range by more than 15%. If, however, as a result of any such change, the
estimated pro forma market value of the Bank is less than the minimum of the
valuation range or exceeds the maximum point of such valuation range by more
than 15%, a new estimated pro forma market valuation range may be established
and the Board of Directors may, with the approval of the OTS and the Division,
elect to increase or decrease the number of Common Shares to be sold in
connection with the Conversion or increase or decrease the Purchase Price, in
which case Persons who have subscribed for Common Shares will be notified and
will be given the opportunity to increase, decrease or rescind their
subscriptions.

5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.

Eligible Account Holders will have the following rights to subscribe for
and to purchase Common Shares:

(a) Each Eligible Account Holder will receive, without payment
therefor, nontransferable Subscription Rights to purchase a number of
Common Shares up to the greater of (i) the amount which may be purchased in
the Community Offering, (ii) .10% of the total number of Common Shares to
be sold in connection with the Conversion, and (iii) 15 times the product
(rounded down to the next whole number) obtained by multiplying the total
number of Common Shares to be sold in connection with the Conversion by a
fraction, the numerator of which is the amount of the Eligible Account
Holder's Qualifying Deposit and the denominator of which is the total
amount of Qualifying Deposits of all Eligible Account Holders, in each case
on the Eligibility

-5-

<PAGE>

Record Date, subject to the overall purchase limitations set forth in
Section 10 of this Plan and subject to adjustment by the Boards of
Directors of the Bank and the Holding Company as set forth in Section 10 of
this Plan.

(b) In the event that subscriptions for Common Shares are received
from Eligible Account Holders upon the exercise of Subscription Rights
pursuant to paragraph (a) of this Section 5 in excess of the number of
Common Shares available for such subscriptions, the Common Shares available
for purchase will be allocated among the subscribing Eligible Account
Holders in a manner by which each subscribing Eligible Account Holder, to
the extent possible, will be permitted to subscribe for a number of shares
sufficient to make such Eligible Account Holder's total allocation of
Common Shares equal to the lesser of (i) 100 shares and (ii) the number of
shares subscribed for by such Eligible Account Holder. Any shares
remaining after such allocation will be allocated among the subscribing
Eligible Account Holders whose subscriptions remain unsatisfied in the
proportion which the amount of each Eligible Account Holder's Qualifying
Deposit bears to the total of the Qualifying Deposits of all subscribing
Eligible Account Holders. No fractional shares will, however, be issued in
connection with the Conversion.

(c) Subscription Rights held by Eligible Account Holders who are also
Officers or directors of the Bank or the Holding Company, and their
Associates, to the extent that they are attributable to increased deposits
during the one-year period preceding the Eligibility Record Date, will be
subordinated to the Subscription Rights of all other Eligible Account
Holders.

(d) The Subscription Rights of the Eligible Account Holders will be
subordinated to the limited priority rights of the Tax-Qualified Employee
Stock Benefit Plans of the Bank as set forth in Section 6 of this Plan.

6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS.

The Tax-Qualified Employee Stock Benefit Plans of the Bank will receive
non-transferable Subscription Rights to purchase up to 10% of the Common Shares
to be sold in connection with the Conversion, subject to adjustment by the
Boards of Directors of the Bank and the Holding Company as set forth in Section
10 of this Plan. The Subscription Rights of the Tax-Qualified Employee Stock
Benefit Plans are subordinate to the Subscription Rights of the Eligible Account
Holders pursuant to Section 5 of this Plan, except that if the final pro forma
market value of the Bank exceeds the maximum of the valuation range determined
pursuant to Section 4 of this Plan, the Tax-Qualified Employee Stock Benefit
Plans to be adopted by the Holding Company in connection with the Conversion
shall have first priority with respect to the amount of Common Shares sold in
excess of the maximum of the valuation range.

7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS.

If the Eligibility Record Date is more than 15 months prior to the date of
the latest amendment to the Application prior to approval by the OTS,
Supplemental Eligible Account Holders will have the following rights to
subscribe for and to purchase Common Shares:

(a) Each Supplemental Eligible Account Holder will receive, without
payment therefor, nontransferable Subscription Rights to purchase a number
of Common Shares up to the greater of (i) the amount which may be purchased
in the Community Offering, (ii) .10% of the total number of Common Shares
to be sold in connection with the Conversion, and (iii) 15 times the
product (rounded down to the next whole number) obtained by multiplying the
total number of Common Shares to be sold in connection with the Conversion
by a fraction, the numerator of which is the amount of the Supplemental
Eligible Account Holder's Qualifying Deposit and the denominator of which
is the total amount of Qualifying Deposits of all Supplemental Eligible
Account Holders, in each case on the Supplemental Eligibility Record Date,
subject to the overall purchase limitations set forth in Section 10 of this
Plan and subject to adjustment by the Boards of Directors of the Bank and
the Holding Company as set forth in Section 10 of this Plan.

(b) In the event that subscriptions for Common Shares are received
from Supplemental Eligible Account Holders upon the exercise of
Subscription Rights pursuant to paragraph (a) of this Section 7 in excess
of the number of Common Shares available for such subscriptions, the Common
Shares available for purchase will be allocated among the subscribing
Supplemental Eligible Account Holders in a manner by which each subscribing
Supplemental Eligible Account Holder, to the extent possible, will be
permitted to subscribe for a number of

-6-

<PAGE>

Common Shares sufficient to make such Supplemental Eligible Account
Holder's total allocation of Common Shares equal to the lesser of (i) 100
shares and (ii) the number of Common Shares subscribed for by such
Supplemental Eligible Account Holder. Any Common Shares remaining after
such allocation will be allocated among the subscribing Supplemental
Eligible Account Holders whose subscriptions remain unsatisfied in the
proportion which the amount of each such Supplemental Eligible Account
Holder's Qualifying Deposit bears to the total amount of the Qualifying
Deposits of all such subscribing Supplemental Eligible Account Holders. No
fractional shares will be issued, however, in connection with the
Conversion.

(c) Subscription Rights received pursuant to this Section 7 will be
subordinated to all the Subscription Rights of Eligible Account Holders and
the Tax-Qualified Employee Stock Benefit Plans pursuant to Sections 5 and 6
of this Plan. Any Subscription Rights received by an Eligible Account
Holder pursuant to Section 5 of this Plan will be applied in partial
satisfaction of Subscription Rights received pursuant to this Section 7.

8. SUBSCRIPTION RIGHTS OF OTHER ELIGIBLE MEMBERS.

Other Eligible Members will have the following rights to subscribe for and
to purchase Common Shares:

a) Each Other Eligible Member will receive, without payment
therefor, nontransferable Subscription Rights to purchase a number of
Common Shares up to the greater of (i) the amount of Common Shares which
may be purchased in the Community Offering, and (ii) .10% of the total
number of Common Shares to be sold in connection with the Conversion,
subject to adjustment by the Boards of Directors of the Bank and the
Holding Company as set forth in Section 10 of this Plan.

b) In the event that subscriptions for Common Shares are received
from Other Eligible Members upon the exercise of Subscription Rights
pursuant to paragraph (a) of this Section 8 in excess of the number of
Common Shares available for such subscriptions, the Common Shares available
for purchase will be allocated among the subscribing Other Eligible Members
in the same proportion that their respective subscriptions bear to the
aggregate subscriptions of all Other Eligible Members; provided, however,
that, to the extent sufficient Common Shares are available, each
subscribing Other Eligible Member shall be permitted to purchase 25 Common
Shares before the remaining available Common Shares are allocated.

c) Subscription Rights received by Other Eligible Members pursuant
to this Section 8 will be subordinated to all the Subscription Rights
received by Eligible Account Holders, the Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders (if any) pursuant
to Sections 5, 6 and 7 of this Plan.

9. COMMUNITY OFFERING.

Concurrently with or at any time after the commencement or completion of
the Subscription Offering, the Holding Company may offer Common Shares in the
Community Offering in accordance with the following procedures and conditions:

a) Any Common Shares not subscribed for in the Subscription Offering
may be offered and sold in the Community Offering. If conducted, the
Community Offering will be conducted in a manner which will give Community
Members a preference in the purchase of Common Shares and will seek to
achieve the widest distribution of Common Shares.

b) The maximum number of Common Shares which may be subscribed for
or purchased in the Community Offering by any Person, together with his or
her Associates or group of Persons Acting in Concert, will be 2.5% of the
total Common Shares to be sold in connection with the Conversion, subject
to the overall purchase limitations set forth in Section 10 of this Plan
and subject to adjustment by the Boards of Directors of the Bank and the
Holding Company as set forth in Section 10 of this Plan.

c) Orders for Common Shares in the Community Offering will first be
filled up to a maximum of two percent of the Common Shares and thereafter
any remaining shares will be allocated on an equal number of shares per
order basis until all orders for Common Shares have been filled, subject to
the limitations provided in Section 10 of this Plan.

-7-

<PAGE>

d) The Bank or the Holding Company may retain a Broker to assist in
selling the Common Shares in the Community Offering.

e) The Bank and the Holding Company reserve the right to reject, in
whole or in part, any order to purchase Common Shares from any Person in
the Community Offering.

10. ADDITIONAL LIMITATIONS ON PURCHASES

The minimum number and maximum number of Common Shares which may be
subscribed for or purchased in connection with the Conversion are as follows:

(a) A minimum of 25 Common Shares must be purchased by each Person
purchasing Common Shares in connection with the Conversion to the extent
Common Shares are available; provided, however, that if the Purchase Price
is greater than $20 per share, the minimum number of Common Shares to which
a Person may subscribe will be adjusted in a manner by which the aggregate
Purchase Price required to be paid for such minimum number of Common Shares
does not exceed $500. No fractional shares will be issued, however, in
connection with the Conversion.

(b) The maximum number of Common Shares which may be subscribed for
or purchased in connection with the Conversion by any Person, together with
any Associate or group of Persons Acting in Concert, will be 5% of the
Common Shares to be sold in connection with the Conversion, except that any
one or more of the Tax-Qualified Employee Stock Benefit Plans may purchase
in the aggregate not more than 10% of the Common Shares to be sold in
connection with the Conversion and will be entitled to purchase such amount
regardless of the number of Common Shares purchased by other Persons.
Common Shares held by one or more Tax-Qualified Employee Stock Benefit
Plans or non-tax-qualified employee stock benefit plans and attributed to a
Person will not be aggregated with Common Shares purchased directly by or
otherwise attributable to such Person. For the purpose of this Section 10,
the members of the Boards of Directors of the Bank and the Holding Company
will not be deemed to be Associates or a group of Persons Acting in Concert
solely as a result of their membership on such Boards of Directors.

In connection with the exercise of subscription rights arising from a
deposit account or a loan account in which two or more persons have an
interest, the aggregate maximum number of Common Shares which the persons
having an interest in such account may purchase is 2.5% of the total Common
Shares sold in the Conversion.

(c) The maximum number of Common Shares which may be subscribed for
or purchased in connection with the Conversion by Officers and directors of
the Bank and their Associates will not exceed, in the aggregate, 35% of the
total number of Common Shares to be sold in connection with the Conversion.
Common Shares held by one or more Tax-Qualified Employee Stock Benefit
Plans or non-tax-qualified employee stock benefit plans and attributed to a
Person will not be aggregated with Common Shares purchased directly by or
otherwise attributable to such Person.

(d) Subject to any required regulatory approval and the requirements
of applicable laws and regulations, but without further approval of the
Members, the purchase limitations set forth in this Plan may be increased
or decreased at the sole discretion of the Boards of Directors of the Bank
and the Holding Company at any time. If such limitation is increased,
persons who subscribed for the maximum amount will be given the opportunity
to increase their subscriptions up to the then applicable limit, subject
to the rights and preferences of any person who has priority Subscription
Rights. The Boards of Directors of the Bank and the Holding Company may,
in their sole discretion, increase such maximum purchase limitation up to
9.99%; provided, however, that orders for Common Shares exceeding 5% of the
Common Shares to be sold in connection with the Conversion shall not
exceed, in the aggregate, 10% of the Common Shares to be sold in connection
with the Conversion. In the event that the purchase limitation is
decreased after commencement of the Subscription Offering, the order of any
Person who subscribed for the maximum number of Common Shares shall be
decreased by the minimum amount necessary so that such Person shall be in
compliance with the then maximum number of Common Shares permitted to be
subscribed for by such Person. The maximum purchase limitation for
Eligible

-8-

<PAGE>

Account Holders, Supplemental Eligible Account Holders and Other Eligible
Members shall not be decreased below 1% of the total number of Common
Shares to be issued in connection with the Conversion.

(e) The Subscription Rights granted under this Plan are
nontransferable. Each Subscription Right may be exercised only by the
Person to whom it is issued and only for such Person's own account. Each
Person exercising Subscription Rights will be required to certify that he
or she is purchasing for his or her own account and that he or she has no
agreement or understanding for the sale or transfer of the Common Shares
for which he or she subscribes. The Board of Directors of the Bank may
reject any subscription which it reasonably believes involves an
impermissible transfer of a Subscription Right. The Board of Directors of
the Bank may require any Person who the Board reasonably believes to be
involved in an impermissible transfer of a Subscription Right to provide
such information or assurances as the Board may request to verify the
validity of a Subscription Right.

11. PROCEDURES FOR THE SUBSCRIPTION OFFERING AND THE COMMUNITY OFFERING.

The Subscription Offering and the Community Offering shall be conducted in
the following manner:

(a) Prior to the commencement of the Subscription Offering, the
Holding Company will file a registration statement with the SEC. No
Prospectus may be distributed to Persons who have Subscription Rights or to
Community Members or to any other person who is not a participant in the
preparation of the Prospectus until and unless the SEC has declared the
Prospectus effective.

(b) At the time the Proxy Materials are mailed to the Voting Members
at their last known addresses appearing on the records of the Bank,
pursuant to the authorization of the OTS and the Division, the Bank and the
Holding Company may commence the Subscription Offering and the Community
Offering.

(c) The Prospectus will contain all the information required by the
OTS, the Division, the SEC and all applicable laws and regulations
necessary to enable the recipients of the Order Forms to make informed
investment decisions regarding the purchase of Common Shares.

(d) The Order Forms will contain all the information required by the
OTS, the Division and all applicable laws and regulations.

(e) The offer of Common Shares to Persons who have Subscription
Rights, to Community Members and to others will be conditioned upon the
approval of this Plan by the Voting Members at the Special Meeting.

(f) The Subscription Offering and the Community Offering may be
closed before the Special Meeting.

12. PAYMENT FOR COMMON SHARES.

Common Shares will be paid for in accordance with the following procedure:

(a) Full payment for all Common Shares subscribed for must be
received by the Bank, together with properly completed and executed Order
Forms therefor, before the expiration time, which will be specified on the
Order Forms, unless such date is extended by the Bank. Photocopied or
telecopied Order Forms will not be accepted. The amount of such required
payment will be the amount which equals the Purchase Price (which will be
specified in the Order Forms or accompanying materials), multiplied by the
number of Common Shares subscribed for in accordance with the terms of this
Plan.

(b) Payment for Common Shares ordered in the Subscription Offering
will be permitted to be made:

(i) In cash, if delivered in person;

(ii) By check, bank draft, money order or negotiable order of
withdrawal; provided, however, that any payment by check will be
accepted subject to payment of such check by the drawee of such check;
or

-9-

<PAGE>

(iii) By appropriate authorization of withdrawal from any Savings
Account at the Bank.

For the purpose of determining the withdrawal balance of any Savings
Account, such withdrawals will be deemed to have been made upon receipt of
appropriate authorization therefor, but interest at the rates applicable to
such accounts will be paid by the Bank on the amounts deemed to have been
withdrawn until the date on which the Conversion is completed or
terminated, at which time the authorized withdrawal actually will be made.
Interest will be paid by the Bank on payments for Common Shares paid in
cash or by check, negotiable order of withdrawal or money order at an
annual rate equal to the passbook account rate at the Bank or such higher
rate as may be determined by the Bank. Such interest will be paid from the
date payments are received by the Bank until consummation or termination of
the Conversion.

(c) The Order Forms will contain appropriate means by which
authorization of withdrawals from Savings Accounts may be made to pay for
subscribed Common Shares. Once a withdrawal has been authorized, none of
the designated withdrawal amount may be withdrawn from the designated
Savings Account (except by the Bank as payment for Common Shares) while
this Plan remains in effect. Savings Accounts will be permitted to be
established for the purpose of making payment for subscribed Common Shares.
Notwithstanding any regulatory provisions regarding penalties for early
withdrawal from certificate accounts and minimum qualifying balances for
such accounts, payment for Common Shares will be permitted through
authorization of withdrawals from such accounts without the assessment of
such penalties. If, after such withdrawal, the applicable minimum balance
requirement ceases to be met, such certificate account will be canceled and
the remaining balance thereof will earn interest only at the passbook
account rate at the Bank.

(d) The Bank will not lend funds or otherwise extend credit to any
Person to purchase Common Shares.

13. EXPIRATION OF SUBSCRIPTION RIGHTS; UNDELIVERED, DEFECTIVE OR LATE ORDER
FORMS; INSUFFICIENT PAYMENT.

Subscription Rights will expire or terminate in accordance with the
following:

(a) All Subscription Rights provided for in this Plan, including,
without limitation, the Subscription Rights of all Persons whose Order
Forms are returned by the United States Post Office as undeliverable, will
expire at a specified time on a specified date which will be not less than
20 days nor more than 45 days following the date on which Order Forms are
first sent to Eligible Account Holders, Supplemental Eligible Account
Holders (if any) and Other Eligible Members; provided, however, that the
Bank will have the power to extend such expiration time in its discretion
only for a reasonable time beyond such 45-day period.

(b) If the Bank is unable to locate particular persons granted
Subscription Rights under this Plan, or if Order Forms (i) are returned as
undeliverable by the United States Post Office, (ii) are not received by
the Bank prior to the expiration date specified thereon, (iii) are
defectively filled out or executed, or (iv) are not, when received by the
Bank, accompanied by the full required payment for the Common Shares
subscribed for (including cases in which Savings Accounts from which
withdrawals are authorized contain insufficient funds to satisfy the
required payment or the check, bank draft, negotiable order of withdrawal
or money order is not paid by the drawee thereof), the Subscription Rights
will lapse as though the Person to whom such rights have been granted
failed to return the completed Order Form within the time period specified
thereon. In any such case as discussed in this paragraph (b), all payments
accompanying the Order Forms will be refunded and, in the case of payments
authorized through withdrawal from Savings Accounts as permitted by Section
12 of this Plan, such withdrawals will not be made.

(c) The Bank may, but will not be obligated to, waive any
irregularity on any Order Form or require the submission of a corrected
Order Form or waive the remittance of full payment for shares subscribed
for by such date as it may specify. An executed Order Form, once received
by the Bank, may not be modified, amended or rescinded without the consent
of the Bank, unless (i) the Community Offering is not completed within 45
days after the expiration time of the Subscription Offering, or (ii) the
final valuation of the Bank, as converted, is less than the minimum of the
valuation range established by the Independent Appraiser before the
commencement of the Subscription Offering or exceeds the maximum of such
valuation range by more than 15%. If either of those events occurs,
persons who have subscribed for Common Shares in the Subscription Offering
will receive written notice that they have a right to affirm, increase,
decrease or rescind their subscriptions. Subject to the authority of

-10-

<PAGE>

the OTS and the Division, all interpretations by the Bank and the Holding
Company of the terms and conditions of this Plan and of the Order Forms
will be final.

(d) The sale of all Common Shares must be completed within 45 days
after the termination of the Subscription Offering, unless extended by the
Bank with the consent of the OTS and the Division, and within 24 months of
approval of this Plan by the Voting Members at the Special Meeting. The
24-month period may not be extended by the Bank, the OTS or the Division.

14. COMPLIANCE WITH SECURITIES LAWS.

The Bank and the Holding Company will make reasonable efforts to comply
with the securities laws of the United States and all other jurisdictions in
which Eligible Account Holders, Supplemental Eligible Account Holders (if any)
and Other Eligible Members reside. No person, however, will be offered any
Subscription Rights or sold any Common Shares under this Plan if such Person
resides in a foreign country or in any jurisdiction of the United States in
respect of which (a) the granting of Subscription Rights or the offer or sale of
Common Shares under this Plan to such persons would require the Bank, the
Holding Company or their directors, Officers or employees to register under the
securities laws of such jurisdiction as a Broker, Dealer or agent or to register
or otherwise qualify the Common Shares for sale in such state or (b) the Bank
determines that compliance with the securities laws of such jurisdiction would
be impracticable for reasons of cost or otherwise. No payments will be made in
lieu of the granting of Subscription Rights to such persons.

15. RIGHTS OF SHAREHOLDERS AFTER COMPLETION OF CONVERSION.

After the Conversion, the Holding Company will be the sole shareholder of
the Bank and will exercise all rights attendant to owning the shares of the
Bank. Voting rights in respect of the Holding Company will be held and
exercised exclusively by the holders of the issued and outstanding common shares
of the Holding Company. Neither borrowers from the Bank nor holders of Savings
Accounts in the Bank will have any voting rights in the Bank or the Holding
Company on the basis of such borrowings or Savings Accounts. The shareholders
of the Holding Company will have the exclusive rights, subject to the rights of
Eligible Account Holders and Supplemental Eligible Account Holders (if any) in
the Liquidation Account provided for in Section 16 of this Plan, to receive the
distribution of any assets remaining after payment of creditors' claims,
including the claims of Savings Account holders to the withdrawal value of their
accounts, in the event of any voluntary or involuntary liquidation of the Bank
after the Conversion.

16. ESTABLISHMENT OF LIQUIDATION ACCOUNT.

A Liquidation Account will be established on the effective date of the
Conversion in accordance with the following:

(a) For purposes of granting a limited priority claim to the assets
of the Bank in the event of a complete liquidation thereof to Eligible
Account Holders and Supplemental Eligible Account Holders (if any) who
continue to maintain a Savings Account at the Bank after the Conversion,
the Bank will, at the time of the Conversion, establish the Liquidation
Account in an amount equal to the retained earnings of the Bank as set
forth in its latest statement of financial condition contained in the
Prospectus for the sale of Common Shares. The Liquidation Account will not
operate to restrict the use or application of any of the regulatory capital
of the Bank.

(b) Each Eligible Account Holder and Supplemental Eligible Account
Holder (if any) will have a separate inchoate interest in a portion of the
Liquidation Account for each Savings Account making up such account
holder's Qualifying Deposit (herein referred to as the "Subaccount").

(c) The initial balance of each Subaccount will be an amount
determined by multiplying the amount in the Liquidation Account by a
fraction, the numerator of which is the amount of the account holder's
Qualifying Deposits as of the close of business on the Eligibility Record
Date or the Supplemental Eligibility Record Date, as the case may be, and
the denominator of which is the total amount of all Qualifying Deposits of
Eligible Account Holders and Supplemental Eligible Account Holders on the
corresponding record date. For Savings Accounts in existence on both the
Eligibility Record Date and the Supplemental Eligibility Record Date,
separate Subaccounts will be determined on the basis of the Qualifying
Deposits in such Savings Accounts on each such date. The balance of each
Subaccount will never be increased above the initial balance. If the
balance in the Savings Account to which a Subaccount relates, at the close
of business on the last day of each fiscal year of the Holding

-11-

<PAGE>

Company subsequent to the respective record dates, is less than the lesser
of (i) the deposit balance in such Savings Account at the close of business
on the last day of each fiscal year of the Holding Company subsequent to
the Eligibility Record Date or Supplemental Eligibility Record Date and
(ii) the amount of the Qualifying Deposit as of the Eligibility Record Date
or the Supplemental Eligibility Record Date, the balance of the Subaccount
for such Savings Account will be adjusted in proportion to the reduction in
such Savings Account balance. In the event of any such downward
adjustment, such Subaccount balance will not be subsequently increased
notwithstanding any increase in the deposit balance of the related Savings
Account. If any Savings Account is closed, its related Subaccount will be
reduced to zero upon such closing. The Subaccount of an account holder
will be maintained for as long as the account holder maintains the related
Savings Account with the same Social Security or tax identification number.

(d) In the event of a complete liquidation of the converted Bank (and
only in such event), each Eligible Account Holder and Supplemental Eligible
Account Holder (if any) will be entitled to receive from the Liquidation
Account a distribution equal to the current adjusted balance in each of
such account holder's Subaccounts before any liquidation distribution may
be made to any holders of the capital stock of the Bank. No merger,
consolidation, sale of bulk assets or similar combination or transaction
with another savings association, the accounts of which are insured by the
FDIC, will be deemed to be a complete liquidation for this purpose and, in
any such transaction, the Liquidation Account will be assumed by the
surviving insured institution.

17. ACCOUNTS IN CONVERTED ASSOCIATION.

Each Savings Account in the Bank at the time of the Conversion will
constitute, without payment or further action by the account holder, a Savings
Account in the Bank as converted, equal in withdrawable amount to the withdrawal
value, and subject to the same terms and conditions, except as to voting and
liquidation rights, as such Savings Account in the Bank immediately before the
Conversion.

18. RESTRICTIONS ON PURCHASES AND SALES OF COMMON SHARES BY OFFICERS AND
DIRECTORS FOLLOWING CONVERSION.

Purchases and sales of shares of the Holding Company after the Conversion
will be restricted in accordance with the following:

(a) All Common Shares purchased by Officers or directors of the
Holding Company or the Bank or their Associates pursuant to this Plan will
be subject to the restriction that no such shares will be sold for a period
of one year following the date of purchase of such shares, except in the
event of the death of the Officer, director or Associate.

(b) With respect to all Common Shares subject to the restriction on
subsequent disposition pursuant to paragraph (a) of this Section 18, each
of the following provisions will apply:

(i) Each certificate representing such shares will bear the
following legend prominently stamped thereon giving notice of such
restriction on transfer:

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD BY THE
REGISTERED HOLDER HEREOF FOR A PERIOD OF NOT LESS THAN ONE YEAR
FROM THE DATE OF ISSUANCE HEREOF, EXCEPT IN THE EVENT OF THE
DEATH OF THE REGISTERED HOLDER OF SUCH SHARES.

(ii) Instructions will be given to the transfer agent for the
Holding Company, if any, not to recognize or effect any transfer of
any certificates representing such shares or any change of record
ownership thereof in violation of such restriction on transfer; and

(iii) Any shares of capital stock of the Holding Company issued
as a stock dividend, stock split or otherwise with respect to
outstanding Common Shares subject to restrictions on transfer
hereunder will be subject to the same restrictions as are applicable
to the Common Shares with respect to which such shares of stock are
issued.

-12-

<PAGE>

(c) For a period of three years following the Conversion, no Officer
or director of the Bank or the Holding Company, or any Associates of such
Officer or director shall, without the prior written approval of the OTS,
purchase the capital stock of the Holding Company other than from a Broker
or Dealer registered with the SEC. This provision will not apply to (i)
negotiated transactions involving more than 1% of a class of outstanding
capital stock of the Holding Company or (ii) purchases of shares of capital
stock made by and held by any one or more tax-qualified or non-tax-
qualified employee stock benefit plans which may be attributable to
individual Officers or directors of the Holding Company or the Bank.

19. RESTRICTIONS ON ACQUISITION OF THE BANK OR THE HOLDING COMPANY.

Acquisition of the capital stock of the Bank or the Holding Company after
the Conversion will be subject to various restrictions contained in the Amended
Articles, the Amended Constitution, the Articles of Incorporation of the Holding
Company, the Code of Regulations of the Holding Company and various state and
federal laws and regulations. In addition, the Articles of Incorporation of the
Holding Company or the Amended Articles may include the limitation that, for a
period of up to five years from the date of completion of the Conversion of the
Bank from mutual to stock form, no Person may directly or indirectly offer to
acquire or acquire beneficial ownership of more than 10% of any class of an
equity security of the Bank or the Holding Company.

20. AMENDMENT OR TERMINATION OF THIS PLAN.

If deemed necessary or desirable by the Boards of Directors of the Bank and
the Holding Company, this Plan may be amended by the Boards of Directors of the
Bank and the Holding Company in their sole discretion at any time prior to the
solicitation of Proxies from Voting Members entitled to vote on this Plan and at
any time thereafter with the concurrence of the OTS and the Division. The
Conversion pursuant to this Plan may be terminated by the Boards of Directors of
the Bank and the Holding Company in their sole discretion at any time prior to
the Special Meeting and at any time thereafter with the concurrence of the OTS
and the Division.

21. CONSUMMATION OF CONVERSION.

The Conversion of the Bank from mutual to stock form will be deemed to have
taken place and to be effective at the time and date provided in the regulations
of the OTS and the Division. The Conversion must be completed within 24 months
of the approval of this Plan by the Members.

22. TAX RULINGS/OPINIONS.

The Conversion is expressly conditioned upon the prior receipt by the Bank
and the Holding Company of either rulings from the Internal Revenue Service and
the appropriate Ohio taxing authorities or opinions of legal counsel or other
tax advisors to the Bank in form and substance satisfactory to the Bank and to
the effect, among other things, that the Conversion will constitute a tax-free
"reorganization" as defined in Section 368(a) of the Internal Revenue Code of
1986, as amended, and comparable provisions of applicable state law, or that
consummation of the transactions provided for in this Plan will not otherwise
result in any federal, state or other tax consequences to the Bank or the
converted the Bank deemed materially adverse by the Board of Directors of the
Bank or the Board of Directors of the Holding Company.

23. DIRECTORS AND OFFICERS OF THE BANK.

It is not intended that the Conversion will result in any change in the
directors or Officers of the Bank. The persons serving as Officers on the date
the Application is filed with the OTS and the Division will continue to serve at
the discretion of the Board of Directors of the Bank in their respective
capacities as Officers of the converted the Bank. The persons serving as
directors of the Bank on the date the Application is filed with the OTS and the
Division will continue to serve as directors following the Conversion until
their terms expire or their earlier death, resignation or removal from office.

-13-

<PAGE>

24. STOCK BENEFIT PLANS.

Following the completion of the Conversion, the Bank or the Holding Company
may establish one or more stock option plans and management recognition plans to
the extent permitted by OTS regulations. The Bank and the Holding Company may
make scheduled or discretionary contributions to one or more stock benefit plans
maintained by the Bank or the Holding Company for the benefit of the directors,
Officers or employees of the Bank or the Holding Company, provided such
contributions do not cause the Bank to fail to meet its regulatory capital
requirement.

25. REGISTRATION OF COMMON SHARES; MARKET FOR COMMON SHARES.

(a) Before or promptly following the Conversion, the Holding Company
will register the Common Shares with the SEC pursuant to the Securities
Exchange Act of 1934 and will not deregister such shares for a period of
three years thereafter.

(b) While there is no assurance that an active market for the Common
Shares will develop following the Conversion, the Holding Company will use
its best efforts to encourage and assist a market maker to establish and
maintain a market for the Common Shares and will use its best efforts to
cause such shares to be quoted on The Nasdaq Stock Market (or any
comparable quotation system which may hereafter be developed) or listed on
a national or regional securities exchange.

26. EXPENSES OF CONVERSION.

The Bank and the Holding Company will use their best efforts to ensure that
the expenses incurred in connection with the Conversion will be reasonable.

27. MAILING OF PROXY MATERIALS.

The Proxy Materials will only be sent to Voting Members as of the Voting
Record Date.

28. INTERPRETATION OF THE PLAN.

The Boards of Directors of the Bank and the Holding Company will interpret
this Plan. To the extent permitted by law, all interpretations of this Plan by
the Boards of Directors of the Bank and the Holding Company will be final.

-14-

<PAGE>

EXHIBIT I
AMENDED
ARTICLES OF INCORPORATION
OF
FOUNDATION SAVINGS BANK

FIRST: The name of the corporation shall be Foundation Savings
Bank.

SECOND: The place in Ohio where the principal office of the
corporation is to be located is Cincinnati, Hamilton County.

THIRD: The purposes for which the corporation is formed are to
raise money to be loaned to its members and others and to engage in any other
lawful act or activity for which corporations may be formed under Chapter 1151
of the Ohio Revised Code.

FOURTH: The authorized capital of the corporation shall be Ten
Million Dollars ($10,000,000) divided into Ten Million (10,000,000) shares,
$1.00 par value per share.

FIFTH: To the extent permitted by law, the directors of the
corporation shall have the power to cause the corporation from time to time and
at any time to purchase, hold, sell, transfer or otherwise deal with (A) shares
of any class or series issued by it, (B) any security or other obligation of the
corporation which may confer upon the holder thereof the right to convert the
same into shares of any class or series authorized by the articles of the
corporation and (C) any security or other obligation which may confer upon the
holder thereof the right to purchase shares of any class or series authorized by
the articles of the corporation. To the extent permitted by law, the
corporation shall have the right to repurchase, if and when any shareholder
desires to sell, or on the happening of any event is required to sell, shares of
any class or series issued by the corporation. The authority granted in this
Article Fifth of these articles shall not otherwise limit the authority of the
directors to purchase, hold, sell, transfer or otherwise deal with shares of any
class or series, securities, or other obligations issued by the corporation or
authorized by its articles.

SIXTH: Until the expiration of five years from the date of the
acquisition by Foundation Bancorp, Inc. (the "Holding Company") of the capital
stock of the corporation to be issued in connection with the conversion of the
corporation from mutual to stock form, no Person (hereinafter defined) shall
directly or indirectly Offer (hereinafter defined) to Acquire (hereinafter
defined) or Acquire the Beneficial Ownership (hereinafter defined) of more than
10% of any class of any equity security of the corporation; provided, however,
that such prohibition shall not apply to the purchase of shares by underwriters
in connection with a public offering or the power of trustees to vote shares of
the corporation held by an employee stock ownership plan for the benefit of
employees of the corporation or the Holding Company. In the event that any
shares of the corporation are Acquired in violation of this Article Sixth, all
shares Beneficially Owned by any Person in excess of 10% of any class of equity
security of the corporation shall not be counted as shares entitled to vote,
shall not be voted by any Person and shall not be counted as voting shares in
connection with any matter submitted to the shareholders for a vote. For
purposes of this Article Sixth, the following terms shall have the meanings set
forth below:

(A) "Person" includes an individual, a group acting in concert, a
corporation, a partnership, an association, a joint stock
company, a trust, an unincorporated organization or similar
company, a syndicate or any other group formed for the purpose of
acquiring or disposing of the equity securities of the
corporation, but does not include an employee stock ownership
plan for the benefit of employees of the corporation or the
Holding Company.

<PAGE>

(B) "Offer" includes every offer to buy or otherwise acquire,
solicitations or an offer to sell, tender offer for, or request
or invitation for tenders of, a security or interest in a
security for value.

(D) "Acting in concert" means (i) participation in a joint activity
or conscious parallel action towards a common goal, whether or
not pursuant to an express agreement, or (ii) a combination or
pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contracts,
understanding, relationship, agreement or other arrangement,
whether written or otherwise.

(E) "Beneficial Ownership" shall include, without limitation, (i) all
shares directly or indirectly owned by a Person, by an Affiliate
(hereinafter defined) of such Person or by an Associate
(hereinafter defined) of such Person or such Affiliate, (ii) all
shares which such Person, Affiliate or Associate has the right to
acquire through the exercise of any option, warrant or right
(whether or not currently exercisable), through the conversion of
a security, pursuant to the power to revoke a trust,
discretionary account or similar arrangement, or pursuant to the
automatic termination of a trust, discretionary account or
similar arrangement, and (iii) all shares as to which such
Person, Affiliate or Associate directly or indirectly through any
contract, arrangement, understanding, relationship or otherwise
(including, without limitation, any written or unwritten
agreement to act in concert) has or shares voting power (which
includes the power to dispose or to direct the disposition of
such shares) or both.

(F) "Affiliate" shall mean a Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by,
or is under common control with, another Person.

(G) "Associate" of a Person shall mean (i) any corporation or
organization (other than the corporation or a subsidiary of the
corporation) of which the Person is an officer or partner or is,
directly or indirectly, the beneficial owner of ten percent or
more of any class of equity securities, (ii) any trust or other
estate in which the Person has a substantial beneficial interest
or as to which the Person serves as trustee or in a similar
fiduciary capacity, except a tax-qualified employee stock benefit
plan in which the Person has a substantial beneficial interest or
serves as a trustee or in a similar fiduciary capacity or a tax-
qualified employee stock benefit plan, and (iii) any relative or
spouse of the Person, or any relative of such spouse, who has the
same home as the Person or is a director or officer of the
corporation or any of its parents or subsidiaries.

SEVENTH: No shareholder of the corporation shall have, as a matter of
right, the pre-emptive right to purchase or subscribe for shares of any class,
now or hereafter authorized, or to purchase or subscribe for securities or other
obligations convertible into or exchangeable for such shares or which by
warrants or otherwise entitle the holders thereof to subscribe for or purchase
any such share.

EIGHTH: No shareholder of the corporation shall have the right to
vote cumulatively in the election of directors.

These Amended Articles of Incorporation supersede the existing
Articles of Incorporation of the corporation.

<PAGE>

EXHIBIT II
AMENDED
CONSTITUTION
OF
FOUNDATION SAVINGS BANK

ARTICLE ONE

SECTION 1. NAME. The name of this savings and loan association shall
be Foundation Savings Bank (this "Bank"), and the principal office of this Bank
shall be located in Hamilton County, Ohio.

ARTICLE TWO

SECTION 1. PURPOSES. The purposes for which this Bank is formed are
to raise money to be loaned to its members and others and to engage in any other
lawful act or activity for which corporations may be formed under Chapter 1151
of the Ohio Revised Code.

ARTICLE THREE

SECTION 1. AUTHORIZED SHARES. The authorized capital of this Bank
shall be $10,000,000 divided into 10,000,000 shares, $1.00 par value per share.

SECTION 2. REPURCHASE OF SHARES. This Bank shall have the power to
repurchase its common shares to the fullest extent provided by law.

ARTICLE FOUR

SECTION 1. MEMBERS. Any person who subscribes for, or in any manner
according to law becomes the owner of, any of the common shares of this Bank
shall be a member of this Bank entitled to all of the benefits and privileges
and subject to all of the liabilities and duties prescribed by this
Constitution, the Bylaws of this Bank and the laws of the State of Ohio.

SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders
of this Bank for the election of directors, the consideration of reports to be
laid before such meeting and the transaction of such other business as may
properly come before such meeting shall be held on the second Tuesday in October
in each year, at 4:00 p.m., or on such other date and at such time as may be
fixed from time to time by the directors.

SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders of
this Bank may be called only by the chairman of the board, president, vice
president, a majority of the members of the board of directors, or by persons
who hold at least twenty-five percent of all shares outstanding and entitled to
vote thereat.

SECTION 4. PLACE OF MEETINGS. All meetings of shareholders of this
Bank shall be held at the principal office of this Bank, unless otherwise
provided by action of the directors. Meetings of shareholders may be held at
any place within or outside the State of Ohio.

SECTION 5. NOTICE OF MEETINGS.

(A) Written notice stating the time, place and purposes of a meeting
of the shareholders of this Bank shall be given, by or at the direction of the
president or the secretary, either by personal delivery or by mail not less than
seven nor more than sixty days before the date of the meeting to each
shareholder of record entitled to notice of the meeting. If mailed, such notice
shall be addressed to the shareholder at his address as it appears on the
records of this Bank. Notice

<PAGE>

of adjournment of a meeting need not be given if the time and place to which it
is adjourned are fixed and announced at such meeting. In the event of a
transfer of shares after the record date for determining the shareholders who
are entitled to receive notice of a meeting of shareholders, it shall not be
necessary to give notice to the transferee. Nothing herein contained shall
prevent the setting of a record date in the manner provided by law, the Articles
of Incorporation of this Bank (the "Articles") or this Constitution for the
determination of shareholders who are entitled to receive notice of or to vote
at any meeting of shareholders or for any purpose required or permitted by law.

(B) Following receipt by the president or the secretary of a request
in writing, specifying the purpose or purposes for which the persons properly
making such request have called a meeting of the shareholders, delivered either
in person or by registered mail to such officer by any persons entitled to call
a meeting of shareholders, such officer shall cause to be given to the
shareholders entitled thereto notice of a meeting to be held on a date not less
than seven nor more than sixty days after the receipt of such request, as such
officer may fix. If such notice is not given within fifteen days after the
receipt of such request by the president or the secretary, then, and only then,
the persons properly calling the meeting may fix the time of the meeting and
give notice thereof in accordance with the provisions of this Constitution.

SECTION 6. WAIVER OF NOTICE. Notice of the time, place and purpose
or purposes of any meeting of shareholders of this Bank may be waived in
writing, either before or after the holding of such meeting, by any shareholder,
which writing shall be filed with or entered upon the records of such meeting.
The attendance of any shareholder, in person or by proxy, at any such meeting
without protesting the lack of proper notice, prior to or at the commencement of
the meeting, shall be deemed to be a waiver by such shareholder of notice of
such meeting.

SECTION 7. QUORUM. At any meeting of shareholders of this Bank, the
holders of a majority of the voting shares of this Bank then outstanding and
entitled to vote thereat, present in person or by proxy, shall constitute a
quorum for such meeting. The holders of a majority of the voting shares
represented at a meeting, whether or not a quorum is present, or the chairman of
the board, the president, or the officer of the corporation acting as chairman
of the meeting, may adjourn such meeting from time to time, and if a quorum is
present at such adjourned meeting any business may be transacted as if the
meeting had been held as originally called.

SECTION 8. VOTES REQUIRED. At all elections of directors the
candidates receiving the greatest number of votes shall be elected. Any other
matter submitted to the shareholders for their vote shall be decided by the vote
of such proportion of the shares, or of any class of shares, or of each class,
as is required by law, the Articles or this Constitution.

SECTION 9. ORDER OF BUSINESS. The order of business at any meeting
of shareholders shall be determined by the officer of this Bank acting as
chairman of such meeting unless otherwise determined by a vote of the holders of
a majority of the voting shares of this Bank then outstanding, present in person
or by proxy, and entitled to vote at such meeting.

SECTION 10. SHAREHOLDERS ENTITLED TO VOTE. Each shareholder of
record on the books of this Bank on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of this Bank standing in his
name on the books of this Bank on such record date. The directors may fix a
record date for the determination of the shareholders who are entitled to
receive notice of and to vote at a meeting of shareholders, which record date
shall not be a date earlier than the date on which the record date is fixed and
which record date may be a maximum of sixty days preceding the date of the
meeting of shareholders.

SECTION 11. PROXIES. At meetings of the shareholders, any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, but such instrument shall be filed with the secretary of the
meeting before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it shall have
specified therein the length of time it is to continue in force.

SECTION 12. INSPECTORS OF ELECTION. In advance of any meeting of
shareholders of this Bank, the directors may appoint one or more inspectors of
election to act at such meeting or any adjournment thereof. If inspectors are
not so appointed, the officer of this Bank acting as chairman of any such
meeting may make such appointment. In case any person appointed as inspector
fails to appear or act, the vacancy may be filled only by appointment made by
the directors in

<PAGE>

advance of such meeting or, if not so filled, at the meeting by the officer of
this Bank acting as chairman of such meeting. No other person or persons may
appoint or require the appointment of inspectors of election.

ARTICLE FIVE
DIRECTORS

SECTION 1. AUTHORITY AND QUALIFICATIONS. Except where the law, the
Articles or this Constitution otherwise provide, all authority of this Bank
shall be vested in and exercised by its directors. Directors need not be
shareholders of this Bank.

SECTION 2. NUMBER OF DIRECTORS AND TERM OF OFFICE.

(A) Until changed in accordance with the provisions of this
Constitution, the number of directors of this Bank shall be seven (7), divided
into three classes such that the terms of an equal number of directors, as
nearly as possible, will expire each year. Each director shall serve until his
successor is duly elected and qualified or until his earlier resignation,
removal from office or death.

(B) The number of directors may be fixed or changed, but in no event
to fewer than five (5) or more than ten (10) directors, by the directors or by
the shareholders at a meeting of the shareholders of this Bank called for the
purpose of electing directors at which a quorum is present, only by the
affirmative vote of the holders of not less than a majority of the voting shares
which are represented at the meeting, in person or by proxy, and entitled to
vote on such proposal.

(D) No reduction in the number of directors shall of itself have the
effect of shortening the term of any incumbent director.

SECTION 3. NOMINATION AND ELECTION.

(A) Any nominee for election as a director of this Bank may be
proposed only by the directors or by any shareholder entitled to vote for the
election of directors. No person, other than a nominee proposed by the
directors, may be nominated for election as a director of this Bank unless such
person shall have been proposed in a written notice, delivered or mailed by
first-class United States mail, postage prepaid, to the secretary of this Bank
at the principal offices of this Bank. In the case of a nominee proposed for
election as a director at an annual meeting of shareholders, such written notice
of a proposed nominee shall be received by the secretary of this Bank not later
than the close of business on the fourteenth calendar day preceding such annual
meeting. In the case of a nominee proposed for election as a director at a
special meeting of shareholders at which directors are to be elected, such
written notice of a proposed nominee shall be received by the secretary of this
Bank not later than the close of business on the fourteenth calendar day
preceding such special meeting.

Each such written notice of a proposed nominee shall set forth (i) the
name, age, business or residence address of each nominee proposed in such
notice, (ii) the principal occupation or employment of each such nominee, and
(iii) the number of common shares of this Bank owned beneficially and/or of
record by each such nominee and the length of time any such shares have been so
owned.

(B) If a shareholder shall attempt to nominate one or more persons
for election as a director at any meeting at which directors are to be elected
without having identified each such person in a written notice given as
contemplated by, and/or without having provided therein the information
specified in, subparagraph (A) of this Section 3, each such attempted nomination
shall be invalid and shall be disregarded unless the person acting as chairman
of the meeting determines that the facts warrant the acceptance of such
nomination.

<PAGE>

(C) The election of directors shall be by ballot whenever requested
by the person acting as chairman of the meeting or by the holders of a majority
of the outstanding shares entitled to vote at such meeting and present in person
or by proxy, but unless such request is made, the election shall be by voice
vote.

SECTION 4. REMOVAL. A director or directors may be removed from
office, with or without assigning any cause, only by the vote of the holders of
shares entitling them to exercise not less than 75% of the voting power of this
Bank to elect directors in place of those to be removed. In case of any such
removal, a new director may be elected at the same meeting for the unexpired
term of each director removed. Failure to elect a director to fill the
unexpired term of any director removed shall be deemed to create a vacancy in
the board.

SECTION 5. VACANCIES. Vacancies in the board may be filled in the
manner provided by law, the Articles or this Constitution. The directors shall
have the right to fill all vacancies occurring in the board for the unexpired
term.

SECTION 6. MEETINGS. A meeting of the directors shall be held
immediately following the adjournment of each annual meeting of shareholders of
this Bank at which directors are elected, and notice of such meeting need not be
given. The directors shall hold a regular meeting at least once each month at a
day and hour fixed by resolution of the board and may hold such other meetings
as may from time to time be called. Such meetings of directors may be called
only by the chairman of the board, the president, or any two directors.
Meetings of the directors may be held through any communications equipment if
all persons participating can hear each other, and participation in a meeting
pursuant to this provision shall constitute presence at such meeting.

SECTION 7. NOTICE OF MEETINGS. Notice of the time and place of each
meeting of directors for which such notice is required by law, the Articles,
this Constitution or the Bylaws shall be given to each of the directors by at
least one of the following methods:

(A) In a writing mailed not less than three days before such meeting
and addressed to the residence or usual place of business of a director, as such
address appears on the records of the corporation; or

(B) By telegraph, facsimile or a writing sent or delivered to the
residence or usual place of business of a director as the same appears on the
records of the corporation, not later than the day before the date on which such
meeting is to be held.

Notice given to a director by either one of the methods specified in this
Constitution shall be sufficient, and the method of giving notice to all
directors need not be uniform. Notice of any meeting of directors may be given
only by the chairman of the board, the president or the secretary of this Bank.
Any such notice need not specify the purpose or purposes of the meeting. Notice
of adjournment of a meeting of directors need not be given if the time and place
to which it is adjourned are fixed and announced at such meeting.

SECTION 8. WAIVER OF NOTICE. Notice of any meeting of directors may
be waived in writing, either before or after the holding of such meeting, by any
director, which writing shall be filed with or entered upon the records of the
meeting. The attendance of any director at any meeting of directors without
protesting, prior to or at the commencement of the meeting, the lack of proper
notice, shall be deemed to be a waiver by him of notice of such meeting.

SECTION 9. QUORUM. A majority of the whole authorized number of
directors shall be necessary to constitute a quorum for a meeting of directors,
except that a majority of the directors in office shall constitute a quorum for
filling a vacancy in the board. The act of a majority of the directors present
at a meeting at which a quorum is present is the act of the board, except as
otherwise provided by law, the Articles or this Constitution.

SECTION 10. EXECUTIVE COMMITTEE. The directors may create an
executive committee or any other committee of directors, to consist of not less
than three directors, and may authorize the delegation to such executive
committee or other committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors or in the
executive committee or in any other committee of the directors.

<PAGE>

Such executive committee or any other committee of directors shall
serve at the pleasure of the directors, shall act only in the intervals between
meetings of the directors, and shall be subject to the control and direction of
the directors. Such executive committee or other committee of directors may act
by a majority of its members at a meeting or by a writing or writings signed by
all of its members.

Any act or authorization of any act by the executive committee or any
other committee within the authority delegated to it shall be as effective for
all purposes as the act or authorization of the directors. No notice of a
meeting of the executive committee or of any other committee of directors shall
be required. A meeting of the executive committee or of any other committee of
directors may be called only by the president or by a member of such executive
or other committee of directors. Meetings of the executive committee or of any
other committee of directors may be held through any communications equipment if
all persons participating can hear each other, and participation in such a
meeting shall constitute presence thereat.

SECTION 11. COMPENSATION. The compensation of the directors shall be
fixed by the shareholders at the annual meeting of shareholders and shall be
reasonable in view of the services performed and the financial condition of this
Bank.

SECTION 12. DIRECTORS' BYLAWS. The directors shall have the power to
adopt, amend, repeal, and enforce such bylaws, resolutions and orders as they
may deem necessary to enable them to manage and control all the business,
property and rights of this Bank.

SECTION 13. ASSESSMENTS. The directors shall have the power to
assess and collect from members and others such fines for late payment of loans
and such premiums on loans made or other assessments as they may deem
appropriate.

SECTION 14. DIRECTORS EMERITUS. The directors may employ directors
emeritus to serve as consultants or advisers to the board and may provide for
their compensation.

ARTICLE SIX
OFFICERS

SECTION 1. OFFICERS. The officers of this Bank to be elected by the
directors shall include a president, a secretary and a treasurer and such other
officers and assistant officers as the directors may from time to time elect.
One officer shall be designated as the executive managing officer of the Bank.
The directors may elect a chairman of the board, who must be a director.
Officers need not be shareholders of this Bank, and may be paid such
compensation as the board of directors may determine. Any two or more offices
may be held by the same person, but no officer shall execute, acknowledge, or
verify any instrument in more than one capacity if such instrument is required
by law, the Articles, this Constitution or the Bylaws to be executed,
acknowledged, or verified by two or more officers.

SECTION 2. TENURE OF OFFICE. The officers of this Bank shall hold
office at the pleasure of the directors. Any officer may be removed, either
with or without cause, at any time, by the affirmative vote of a majority of all
of the directors then in office; such removal, however, shall be without
prejudice to the contract rights, if any, of the person so removed.

SECTION 3. DUTIES OF THE OFFICERS. The duties of the officers shall
be established by the directors either in the Bylaws of this Bank or by
resolution.

SECTION 4. COMPENSATION. The directors shall set the compensation of
the officers of this Bank. The compensation of all officers of this Bank shall
be reasonable in view of the services performed and the financial condition of
this Bank.

<PAGE>

ARTICLE SEVEN
SHARES

SECTION 1. CERTIFICATES. Certificates evidencing ownership of shares
of this Bank shall be issued to those entitled to them. Each certificate
evidencing shares of this Bank shall bear a distinguishing number, the
signatures of the chairman of the board, the president, or a vice president, and
of the secretary or an assistant secretary (except that when any such
certificate is countersigned by an incorporated transfer agent or registrar,
such signatures may be facsimile, engraved, stamped or printed), and such
recitals as may be required by law. Certificates evidencing shares of this Bank
shall be of such tenor and design as the directors may from time to time adopt
and may bear such recitals as are permitted by law.

SECTION 2. TRANSFERS. Where a certificate evidencing a share or
shares of this Bank is presented to this Bank or its proper agents with a
request to register transfer, the transfer shall be registered as requested if:

(1) An appropriate person signs on each certificate so presented or
signs on a separate document an assignment or transfer of shares evidenced by
each such certificate, or signs a power to assign or transfer such shares, or
when the signature of an appropriate person is written without more on the back
of each such certificate; and

(2) Reasonable assurance is given that the endorsement of each
appropriate person is genuine and effective; and

(3) All applicable laws, if any, relating to the collection of
transfer or other taxes have been complied with; and

(4) This Bank or its agents are not otherwise required or permitted
to refuse to register such transfer.

This Bank may refuse to register a transfer of shares unless the
signature of each appropriate person is guaranteed by a commercial bank or trust
company having an office or a correspondent in the City of New York or by a firm
having membership in the New York Stock Exchange.

SECTION 3. TRANSFER AGENTS AND REGISTRARS. The directors may appoint
one or more agents to transfer or to register shares of this Bank, or both.

SECTION 4. LOST, WRONGFULLY TAKEN OR DESTROYED CERTIFICATES. Except
as otherwise provided by law, where the owner of a certificate evidencing shares
of this Bank claims that such certificate has been lost, destroyed or wrongfully
taken, the directors must cause this Bank to issue a new certificate in place of
the original certificate if the owner:

(1) So requests before this Bank has notice that such original
certificate has been acquired by a bona fide purchaser; and

(2) Files with this Bank, unless waived by the directors, an
indemnity bond, with surety or sureties satisfactory to this Bank, in such sums
as the directors may, in their discretion, deem reasonably sufficient as
indemnity against any loss or liability that this Bank may incur by reason of
the issuance of each such new certificate; and

(3) Satisfies any other reasonable requirements which may be imposed
by the directors, in their discretion.

<PAGE>

ARTICLE EIGHT
INDEMNIFICATION AND INSURANCE

SECTION 1. To the fullest extent permitted by applicable law, this
Bank shall indemnify or agree to indemnify any person who was or is a party or
is threatened to be made a party, to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of this Bank, by reason
of the fact that he is or was a director or officer of this Bank, or is or was
serving at the request of this Bank as a director, trustee, officer, employee,
or agent of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of this Bank and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of this Bank and, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.

SECTION 2. This Bank shall indemnify or agree to indemnify any person
who was or is a party or is threatened to be made a party, to any threatened,
pending or completed action or suit by or in the right of this Bank to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of this Bank or is or was serving at the request of this Bank as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise, against expenses, including attorney's fees, actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of this Bank, except that no
indemnification shall be made in respect of any of the following:

(A) Any claim, issue or matter as to which such person is adjudged to
be liable for negligence or misconduct in the performance of his duty to this
Bank unless, and only to the extent that, the Court of Common Pleas of Hamilton
County, Ohio, or the court in which such action or suit was brought determines
upon application that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the Court of Common Pleas of Hamilton County,
Ohio, or such other court shall deem proper;

(B) Any action or suit in which the only liability asserted against a
director is pursuant to 1701.95 of the Ohio Revised Code.

SECTION 3. To the extent that a director or officer has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1 or 2 of this Article Eight, or in defense
of any claim, issue, or matter therein, he shall be indemnified against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the action, suit, or proceeding.

SECTION 4. Any indemnification under Sections 1 or 2 of this Article
Eight, unless ordered by a court, shall be made by this Bank only as authorized
in the specific case upon a determination that indemnification of the director
or officer is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article Eight. Such
determination shall be made as follows:

(A) By a majority vote of a quorum consisting of directors of this
Bank who were not and are not parties to or threatened with any such action,
suit, or proceeding;

(B) If the quorum described in Subsection (A) of this Section 4 is
not obtainable or if a majority vote of a quorum of disinterested directors so
directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been retained
by or who has performed services for this Bank or any person to be indemnified
within the past five years;

<PAGE>

(D) By the Court of Common Pleas of Hamilton County, Ohio, or the
court in which such action, suit, or proceeding was brought.

Any determination made by the disinterested directors under Subsection
(A) of this Section 4 or by independent legal counsel under Subsection (B) of
this Section 4 shall be promptly communicated to the person who threatened or
brought the action or suit by or in the right of this Bank under Section 2 of
this Article Eight, and within ten days after receipt of such notification, such
person shall have the right to petition the Court of Common Pleas of Hamilton
County, Ohio, or the court in which such action or suit was brought to review
the reasonableness of such determination.

SECTION 5.

(A) Expenses, including attorney's fees, incurred by a director in
defending the action, suit, or proceeding shall be paid by this Bank as they are
incurred, in advance of the final disposition of the action, suit, or proceeding
upon receipt of an undertaking by or on behalf of the director in which he
agrees to do both of the following:

(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause injury to
this Bank or undertaken with reckless disregard for the best interests of this
Bank;

(ii) Reasonably cooperate with this Bank concerning the action,
suit, or proceeding.

(B) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, or agent in defending any action, suit, or
proceeding referred to in Section 2 of this Article Eight, may be paid by this
Bank as they are incurred, in advance of the final disposition of the action,
suit, or proceeding as authorized by the directors in the specific case upon
receipt of an undertaking by or on behalf of the director, trustee, officer,
employee, or agent to repay such amount, if it ultimately is determined that he
is not entitled to be indemnified by this Bank.

SECTION 6. The indemnification authorized by this Article Eight shall
not be exclusive of, and shall be in addition to, any other rights granted to
those seeking indemnification under the Articles or the Constitution of this
Bank or any agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors, and administrators of such a person.

SECTION 7. This Bank may purchase and maintain insurance or furnish
similar protection, including but not limited to trust funds, letters of credit,
or self-insurance, on behalf of or for any person who is or was a director,
officer, employee, or agent of this Bank, or is or was serving at the request of
this Bank as a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not this Bank would have the power to indemnify him against such
liability under this section. Insurance may be purchased from or maintained
with a person in which this Bank has a financial interest.

SECTION 8. The authority of this Bank to indemnify persons pursuant
to Sections 1 or 2 of this Article Eight does not limit the payment of expenses
as they are incurred, indemnification, insurance, or other protection that may
be provided pursuant to Sections 5, 6 and 7 of this Article Eight. Sections 1
and 2 of this Article Eight do not create any obligation to repay or return
payments made by this Bank pursuant to Sections 5, 6 or 7 of this Article Eight.

<PAGE>

SECTION 9. As used in this Article Eight, references to this Bank
include all constituent corporations in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a director, officer,
employee, or agent of such a constituent corporation, or is or was serving at
the request of such constituent corporation as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise, shall stand in
the same position under this section with respect to the new or surviving
corporation as he would if he had served the new or surviving corporation in the
same capacity.

SECTION 10. Any action, suit or proceeding to determine a claim for
indemnification under this Article Eight may be maintained by the person
claiming such indemnification, or by the Bank, in the Court of Common Pleas of
Hamilton County, Ohio. This Bank and (by claiming such indemnification) each
such person consent to the exercise of jurisdiction over its or his person by
the Court of Common Pleas of Hamilton County, Ohio, in any such action, suit or
proceeding.

ARTICLE NINE
DISSOLUTION

SECTION 1. To dissolve this Bank, a resolution in writing asking for
such dissolution shall be adopted by the board of directors or requested in
writing in the form of a resolution by the holders of at least twenty-five
percent of the voting shares of this Bank.

SECTION 2. Upon the presentation to the board of directors of one of
the resolutions specified in Section 1 of this Article Nine, the board of
directors shall call a special meeting of the shareholders for the purpose of
considering and acting upon such resolution. If at such special meeting, the
holders of a majority of the voting shares of this Bank entitled to vote under
the provisions of this Constitution vote for dissolution, the board of directors
shall take the necessary steps to wind up the affairs of this Bank, subject to
the contract rights of its borrowers, in accordance with statutory requirements
existing at the date such action is taken.

ARTICLE TEN
MISCELLANEOUS

SECTION 1. AMENDMENTS. This Constitution may be amended at any
annual or special meeting of the shareholders of this Bank by the affirmative
vote of the holders of three-fifths of the shares of record represented in
person or by proxy at such meeting. All proposals to amend this Constitution
shall be presented in writing to the board of directors at a regular meeting
thereof at least thirty (30) days before such annual or special meeting of the
shareholders, and the amendment adopted shall be substantially the same as
proposed.

SECTION 2. ACTION BY SHAREHOLDERS OR DIRECTORS WITHOUT A MEETING.
Anything contained in this Constitution to the contrary notwithstanding, any
action which may be authorized or taken at a meeting of the shareholders or of
the directors or of a committee of the directors, as the case may be, may be
authorized or taken without a meeting with the affirmative vote or approval of,
and in a writing or writings signed by, all the shareholders who would be
entitled to notice of a meeting of the shareholders held for such purpose, or
all the directors, or all the members of such committee of the directors,
respectively, which writings shall be filed with or entered upon the records of
this Bank.

<PAGE>

ARTICLES OF INCORPORATION
OF
FOUNDATION BANCORP, INC.

The undersigned, desiring to form a corporation for profit under
Chapter 1701 of the Ohio Revised Code, does hereby certify:

FIRST: The name of the corporation shall be Foundation Bancorp,
Inc.

SECOND: The place in Ohio where the principal office of the
corporation is to be located is the City of Cincinnati, County of Hamilton.

THIRD: The purpose for which the corporation is formed is to engage
in any lawful act or activity for which corporations may be formed under Section
1701.01 to 1701.98, inclusive, of the Ohio Revised Code.

FOURTH: The authorized shares of the corporation shall be eight
hundred and fifty (850) common shares, each without par value. The directors of
the corporation may adopt an amendment to the Articles of Incorporation of the
corporation in respect of any unissued or treasury shares of any class and
thereby fix or change: the division of such shares into series and the
designation and authorized number of each series; the dividend rate; the dates
of payment of dividends and the dates from which they are cumulative; the
liquidation price; the redemption rights and price; the sinking fund
requirements; the conversion rights; and the restrictions on the issuance of
shares of any class or series.

<PAGE>

FIFTH: (A) The board of directors of the corporation shall have
the power to cause the corporation from time to time and at any time to
purchase, hold, sell, transfer or otherwise deal with (i) shares of any class or
series issued by it, (ii) any security or other obligation of the corporation
which may confer upon the holder thereof the right to convert the same into
shares of any class or series authorized by the articles of the corporation, and
(iii) any security or other obligation which may confer upon the holder thereof
the right to purchase shares of any class or series authorized by the Articles
of Incorporation of the corporation.

(B) The corporation shall have the right to repurchase, if and when
any shareholder desires to sell, or on the happening of any event is required to
sell, shares of any class or series issued by the corporation.

(C) The authority granted in this Article Fifth shall not limit the
plenary authority of the directors to purchase, hold, sell, transfer or
otherwise deal with shares of any class or series, securities or other
obligations issued by the corporation or authorized by the Articles of
Incorporation of the corporation.

SIXTH: Notwithstanding any provision of the Ohio Revised Code
requiring for any purpose the vote, consent, waiver or release of the holders of
shares of the corporation entitling them to exercise any proportion of the
voting power of the corporation or of any class or classes thereof, such action,
unless expressly otherwise provided by statute, may be taken by the vote,
consent, waiver or release of the holders of shares entitling them to exercise
not less than a majority of the voting power of the corporation or of such class
or classes; provided, however, that if the board of directors of the corporation
shall recommend against the approval of any of the following matters, the
affirmative vote of the holders of shares entitling them to exercise not less
than seventy-five percent (75%) of the voting power of any class or classes of
shares of the corporation which entitle the holders thereof to vote in respect
of any such matter as a class shall be required to adopt:

(A) A proposed amendment to the Articles of Incorporation of the
corporation;

(B) A proposed amendment to the Code of Regulations of the
corporation;

<PAGE>

(D) An agreement of merger or consolidation providing for the
proposed merger or consolidation of the corporation with or into
one or more other corporations;

(E) A proposed combination or majority share acquisition involving
the issuance of shares of the corporation and requiring
shareholder approval;

(F) A proposal to sell, exchange, transfer or otherwise dispose of
all, or substantially all, of the assets, with or without the
goodwill, of the corporation; or

(G) A proposed dissolution of the corporation.

IN WITNESS WHEREOF, I have hereunto signed my name this 10th day of
April, 1996.

/s/ Laird L. Lazelle
-----------------------------
Laird L. Lazelle, Incorporator

<PAGE>

CODE OF REGULATIONS
OF
FOUNDATION BANCORP, INC.

INDEX

Section Caption Page No.
- ------- ------- --------

ARTICLE ONE
MEETINGS OF SHAREHOLDERS

1.01 Annual Meetings . . . . . . . . . . . . . . . . . . . 1
1.02 Calling of Meetings . . . . . . . . . . . . . . . . . 1
1.03 Place of Meetings . . . . . . . . . . . . . . . . . . 1
1.04 Notice of Meetings. . . . . . . . . . . . . . . . . . 1
1.05 Waiver of Notice. . . . . . . . . . . . . . . . . . . 2
1.06 Quorum. . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 Votes Required. . . . . . . . . . . . . . . . . . . . 3
1.08 Order of Business . . . . . . . . . . . . . . . . . . 3
1.09 Shareholders Entitled to Vote . . . . . . . . . . . . 3
1.10 Cumulative Voting . . . . . . . . . . . . . . . . . . 3
1.11 Proxies . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Inspectors of Election. . . . . . . . . . . . . . . . 4

ARTICLE TWO
DIRECTORS

2.01 Authority and Qualifications. . . . . . . . . . . . . 4
2.02 Number of Directors and Term of Office. . . . . . . . 4
2.03 Nomination. . . . . . . . . . . . . . . . . . . . . . 5
2.04 Election. . . . . . . . . . . . . . . . . . . . . . . 6
2.05 Removal . . . . . . . . . . . . . . . . . . . . . . . 6
2.06 Vacancies . . . . . . . . . . . . . . . . . . . . . . 7
2.07 Meetings. . . . . . . . . . . . . . . . . . . . . . . 7
2.08 Notice of Meetings. . . . . . . . . . . . . . . . . . 7
2.09 Waiver of Notice. . . . . . . . . . . . . . . . . . . 8
2.10 Quorum. . . . . . . . . . . . . . . . . . . . . . . . 8
2.11 Executive Committee . . . . . . . . . . . . . . . . . 8
2.12 Compensation. . . . . . . . . . . . . . . . . . . . . 9
2.13 By-Laws . . . . . . . . . . . . . . . . . . . . . . . 9

<PAGE>

ARTICLE THREE
OFFICERS

Section Caption Page No.
- ------- ------- --------

3.01 Officers. . . . . . . . . . . . . . . . . . . . . . . 9
3.02 Tenure of Office. . . . . . . . . . . . . . . . . . . 9
3.03 Duties of the Chairman of the Board . . . . . . . . 10
3.04 Duties of the President . . . . . . . . . . . . . . 10
3.05 Duties of the Vice Presidents . . . . . . . . . . . 10
3.06 Duties of the Secretary . . . . . . . . . . . . . . 10
3.07 Duties of the Treasurer . . . . . . . . . . . . . . 10

ARTICLE FOUR
SHARES

4.01 Certificates. . . . . . . . . . . . . . . . . . . . 11
4.02 Transfers . . . . . . . . . . . . . . . . . . . . . 11
4.03 Transfer Agents and Registrars. . . . . . . . . . . 12
4.04 Lost, Wrongfully Taken or Destroyed
Certificates. . . . . . . . . . . . . . . . . . . 12
4.05 Uncertificated Shares . . . . . . . . . . . . . . . 12

ARTICLE FIVE
INDEMNIFICATION AND INSURANCE

5.01 Mandatory Indemnification . . . . . . . . . . . . . 13
5.02 Court-Approved Indemnification. . . . . . . . . . . 13
5.03 Indemnification for Expenses. . . . . . . . . . . . 14
5.04 Determination Required. . . . . . . . . . . . . . . 14
5.05 Advances for Expenses . . . . . . . . . . . . . . . 15
5.06 Article Five Not Exclusive. . . . . . . . . . . . . 15
5.07 Insurance . . . . . . . . . . . . . . . . . . . . . 16
5.08 Certain Definitions . . . . . . . . . . . . . . . . 16
5.09 Venue . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE SIX
MISCELLANEOUS

6.01 Amendments. . . . . . . . . . . . . . . . . . . . . 17
6.02 Action by Shareholders or Directors
Without a Meeting . . . . . . . . . . . . . . . . 17

<PAGE>

CODE OF REGULATIONS

FOUNDATION BANCORP, INC.

ARTICLE ONE

MEETINGS OF SHAREHOLDERS

SECTION 1.01. ANNUAL MEETINGS. The annual meeting of the
shareholders for the election of directors, for the consideration of reports to
be laid before such meeting and for the transaction of such other business as
may properly come before such meeting shall be held on the second Tuesday in
October each year or on such other date as may be fixed from time to time by the
directors.

SECTION 1.02. CALLING OF MEETINGS. Meetings of the shareholders may
be called only by the chairman of the board; the president or, in case of the
president's absence, death, or disability, the vice president authorized to
exercise the authority of the president; the secretary; the directors by action
at a meeting, or a majority of the directors acting without a meeting; or the
holders of at least twenty-five percent of all shares outstanding and entitled
to vote thereat.

SECTION 1.03. PLACE OF MEETINGS. All meetings of shareholders shall
be held at the principal office of the corporation, unless otherwise provided by
action of the directors. Meetings of shareholders may be held at any place
within or without the State of Ohio.

SECTION 1.04. NOTICE OF MEETINGS. (A) Written notice stating the
time, place and purposes of a meeting of the shareholders shall be given either
by personal delivery or by mail not less than seven nor more than sixty days
before the date of the meeting (1) to each shareholder of record entitled to
notice of the meeting, (2) by or at the direction of the president or the
secretary. If mailed, such notice shall be addressed to the shareholder at his
address as it appears on the records of the corporation. Notice of adjournment
of a meeting need not be given if the time and place to which it is adjourned
are fixed and announced at such meeting. In the event of a transfer of shares
after the record date for determining the shareholders who are entitled to
receive notice of a meeting of shareholders, it shall

<PAGE>

not be necessary to give notice to the transferee. Nothing herein contained
shall prevent the setting of a record date in the manner provided by law, the
Articles of Incorporation of the corporation (the "Articles") or elsewhere in
this Code of Regulations (the "Regulations") for the determination of
shareholders who are entitled to receive notice of or to vote at any meeting of
shareholders or for any purpose required or permitted by law.

(B) Following receipt by the president or the secretary of a request
in writing, specifying the purpose or purposes for which the persons properly
making such request have called a meeting of the shareholders, delivered either
in person or by registered mail to such officer by any persons entitled to call
a meeting of shareholders, such officer shall cause to be given to the
shareholders entitled thereto notice of a meeting to be held on a date not less
than seven nor more than sixty days after the receipt of such request, as such
officer may fix. If such notice is not given within fifteen days after the
receipt of such request by the president or the secretary, then, and only then,
the persons properly calling the meeting may fix the time of meeting and give
notice thereof in accordance with the provisions of the Regulations.

SECTION 1.05. WAIVER OF NOTICE. Notice of the time, place and
purpose or purposes of any meeting of shareholders may be waived in writing,
either before or after the holding of such meeting, by any shareholders, which
writing shall be filed with or entered upon the records of such meeting. The
attendance of any shareholder, in person or by proxy, at any such meeting
without protesting the lack of proper notice, prior to or at the commencement of
the meeting, shall be deemed to be a waiver by such shareholder of notice of
such meeting.

SECTION 1.06. QUORUM. At any meeting of shareholders, the holders of
a majority of the voting shares of the corporation outstanding and entitled to
vote thereat, present in person or by proxy, shall constitute a quorum for such
meeting. The holders of a majority of the voting shares represented at a
meeting, whether or not a quorum is present, or the chairman of the board, the
president, or the officer of the corporation acting as chairman of the meeting,
may adjourn such meeting from time to time, and if a quorum is present at such
adjourned meeting any business may be transacted as if the meeting had been held
as originally called.

<PAGE>

SECTION 1.07. VOTES REQUIRED. At all elections of directors the
candidates receiving the greatest number of votes shall be elected. Any other
matter submitted to the shareholders for their vote shall be decided by the vote
of such proportion of the shares, or of any class of shares, or of each class,
as is required by law, the Articles or the Regulations.

SECTION 1.08. ORDER OF BUSINESS. The order of business at any
meeting of shareholders shall be determined by the officer of the corporation
acting as chairman of such meeting unless otherwise determined by a vote of the
holders of a majority of the voting shares of the corporation then outstanding,
present in person or by proxy, and entitled to vote at such meeting.

SECTION 1.09. SHAREHOLDERS ENTITLED TO VOTE. Each shareholder of
record on the books of the corporation on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of the corporation standing
in his name on the books of the corporation on such record date. The directors
may fix a record date for the determination of the shareholders who are entitled
to receive notice of and to vote at a meeting of shareholders, which record date
shall not be a date earlier than the date on which the record date is fixed and
which record date may be a maximum of sixty days preceding the date of the
meeting of shareholders.

SECTION 1.10. CUMULATIVE VOTING. If notice in writing shall be given
by a shareholder to the president, a vice president or the secretary of the
corporation, not less than forty-eight hours before the time fixed for holding a
meeting of the shareholders for the purpose of electing directors if notice of
such meeting shall have been given at least ten days prior thereto, and
otherwise not less than twenty-four hours before such time, that such
shareholder desires that the voting at such election shall be cumulative, and if
an announcement of the giving of such notice is made upon the convening of the
meeting by the chairman or secretary or by or on behalf of the shareholder
giving such notice, each shareholder shall have the right to cumulate such
voting power as he possesses and to give one candidate as many votes as is
determined by multiplying the number of directors to be elected by the number of
votes to which such shareholder is entitled, or to distribute such number of
votes on the same principle among two or more candidates, as he sees fit;
provided, however, that the foregoing procedures shall not apply if the Articles
provide that no shareholder may cumulate his voting power.

<PAGE>

SECTION 1.11. PROXIES. At meetings of the shareholders, any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, but such instrument shall be filed with the secretary of the
meeting before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it shall have
specified therein the length of time it is to continue in force.

SECTION 1.12. INSPECTORS OF ELECTION. In advance of any meeting of
shareholders, the directors may appoint inspectors of election to act at such
meeting or any adjournment thereof; if inspectors are not so appointed, the
officer of the corporation acting as chairman of any such meeting may make such
appointment. In case any person appointed as inspector fails to appear or act,
the vacancy may be filled only by appointment made by the directors in advance
of such meeting or, if not so filled, at the meeting by the officer of the
corporation acting as chairman of such meeting. No other person or persons may
appoint or require the appointment of inspectors of election.

ARTICLE TWO

DIRECTORS

SECTION 2.01. AUTHORITY AND QUALIFICATIONS. Except where the law,
the Articles or the Regulations otherwise provide, all authority of the
corporation shall be vested in and exercised by its directors.

SECTION 2.02. NUMBER OF DIRECTORS AND TERM OF OFFICE.

(A) Until changed in accordance with the provisions of the
Regulations, the number of directors of the corporation shall be seven.
Directors shall be elected in such numbers and to serve for such terms that the
terms of an equal number of directors, as nearly as possible, will expire each
year. A term may not exceed three years. Directors shall serve until their
successors are duly elected and qualified or until their earlier resignation,
removal from office, or death.

(B) The number of directors may be fixed or changed at a meeting of
the shareholders called for the purpose of electing directors at which a quorum
is present, only by the affirmative vote of the holders of not less than a
majority of the voting

<PAGE>

shares which are represented at the meeting, in person or by proxy, and entitled
to vote on such proposal.

(C) The directors may fix or change the number of directors and may
fill any director's office that is created by an increase in the number of
directors; provided, however, that the directors may not increase the number of
directors to greater than ten (10) nor reduce the number of directors to fewer
than five (5).

(D) No reduction in the number of directors shall of itself have the
effect of shortening the term of any incumbent director.

SECTION 2.03. NOMINATION.

(A) Any nominee for election as a director of the corporation may be
proposed only by the directors or by any shareholder entitled to vote for the
election of directors. No person, other than a nominee proposed by the
directors, may be nominated for election as a director of the corporation unless
such person shall have been proposed in a written notice, delivered or mailed by
first class United States mail, postage prepaid, to the Secretary of the
corporation at the principal offices of the corporation. In the case of a
nominee proposed for election as a director at an annual meeting of
shareholders, such written notice of a proposed nominee shall be received by the
Secretary of the corporation on or before the the sixtieth (60th) day before the
first anniversary of the most recent annual meeting of shareholders of the
corporation held for the election of directors; provided, however, that if the
annual meeting for the election of directors in any year is not held on or
before the thirty-first (31st) day next following such anniversary, then the
written notice required by this subparagraph (A) shall be received by the
Secretary within a reasonable time prior to the date of such annual meeting. In
the case of a nominee proposed for election as a director at a special meeting
of shareholders at which directors are to be elected, such written notice of a
proposed nominee shall be received by the Secretary of the corporation no later
than the close of business on the seventh (7th) day following the day on which
notice of the special meeting was mailed to shareholders. Each such written
notice of a proposed nominee shall set forth (1) the name, age, business or
residence address of each nominee proposed in such notice, (2) the principal
occupation or employment of each such nominee, and (3) the number of common
shares of the corporation owned beneficially and/or of record by each such
nominee and the length of time any such shares have been so owned.

<PAGE>

(B) If a shareholder shall attempt to nominate one or more persons
for election as a director at any meeting at which directors are to be elected
without having identified each such person in a written notice given as
contemplated by, and/or without having provided therein the information
specified in, subparagraph (A) of this Section, each such attempted nomination
shall be invalid and shall be disregarded unless the person acting as Chairman
of the meeting determines that the facts warrant the acceptance of such
nomination.

(C) The election of directors shall be by ballot whenever requested
by the person acting as Chairman of the meeting or by the holders of a majority
of the voting shares outstanding, entitled to vote at such meeting and present
in person or by proxy, but unless such request is made, the election shall be by
voice vote.

SECTION 2.04. ELECTION. At each annual meeting of shareholders for
the election of directors, the successors to the directors whose term shall
expire in that year shall be elected, but if the annual meeting is not held or
if one or more of such directors are not elected thereat, they may be elected at
a special meeting called for that purpose. The election of directors shall be
by ballot whenever requested by the presiding officer of the meeting or by the
holders of a majority of the voting shares outstanding, entitled to vote at such
meeting and present in person or by proxy, but unless such request is made, the
election shall be viva voce.

SECTION 2.05. REMOVAL. A director or directors may be removed from
office, with or without assigning any cause, only by the vote of the holders of
shares entitling them to exercise not less than 75% of the voting power of the
corporation to elect directors in place of those to be removed; provided,
however, if the shareholders have a right to vote cumulatively in the election
of directors, unless all the directors, or all the directors of a particular
class (if the directors of the corporation are divided into classes), are
removed, no individual director shall be removed in case the votes of a
sufficient number of shares are cast against his removal that, if cumulatively
voted at an election of all directors, or all the directors of a particular
class, as the case may be, would be sufficient to elect at least one director.
In case of any such removal, a new director may be elected at the same meeting
for the unexpired term of each director removed. Failure to elect a director to
fill the unexpired term of any director removed shall be deemed to create a
vacancy in the board.

<PAGE>

SECTION 2.06. VACANCIES. The remaining directors, though less than a
majority of the whole authorized number of directors, may, by the vote of a
majority of their number, fill any vacancy in the board for the unexpired term.
A vacancy in the board exists within the meaning of this Section 2.06 in case
the shareholders increase the authorized number of directors but fail at the
meeting at which such increase is authorized, or an adjournment thereof, to
elect the additional directors provided for, or in case the shareholders fail at
any time to elect the whole authorized number of directors.

SECTION 2.07. MEETINGS. A meeting of the directors shall be held
immediately following the adjournment of each annual meeting of shareholders at
which directors are elected, and notice of such meeting need not be given. The
directors shall hold such other meetings as may from time to time be called, and
such other meetings of directors may be called only by the chairman of the
board, the president, or any two directors. All meetings of directors shall be
held at the principal office of the corporation or at such other place as the
directors may from time to time determine by resolution. Meetings of the
directors may be held through any communications equipment if all persons
participating can hear each other, and participation in a meeting pursuant to
this provision shall constitute presence at such meeting.

SECTION 2.08. NOTICE OF MEETINGS. Notice of the time and place of
each meeting of directors for which such notice is required by law, the
Articles, the Regulations or the By-Laws shall be given to each of the directors
by at least one of the following methods:

(A) In a writing mailed not less than three days before such meeting
and addressed to the residence or usual place of business of a
director, as such address appears on the records of the
corporation; or

(B) By telegraph, cable, radio, wireless, or a writing sent or
delivered to the residence or usual place of business of a
director as the same appears on the records of the corporation,
not later than the day before the date on which such meeting is
to be held; or

<PAGE>

Notice given to a director by any one of the methods specified in the
Regulations shall be sufficient, and the method of giving notice to all
directors need not be uniform. Notice of any meeting of directors may be given
only by the chairman of the board, the president or the secretary of the
corporation. Any such notice need not specify the purpose or purposes of the
meeting. Notice of adjournment of a meeting of directors need not be given if
the time and place to which it is adjourned are fixed and announced at such
meeting.

SECTION 2.09. WAIVER OF NOTICE. Notice of any meeting of directors
may be waived in writing, either before or after the holding of such meeting, by
any director, which writing shall be filed with or entered upon the records of
the meeting. The attendance of any director at any meeting of directors without
protesting, prior to or at the commencement of the meeting, the lack of proper
notice, shall be deemed to be a waiver by him of notice of such meeting.

SECTION 2.10. QUORUM. A majority of the whole authorized number of
directors shall be necessary to constitute a quorum for a meeting of directors,
except that a majority of the directors in office shall constitute a quorum for
filling a vacancy in the board. The act of a majority of the directors present
at a meeting at which a quorum is present is the act of the board, except as
otherwise provided by law, the Articles or the Regulations.

SECTION 2.11. EXECUTIVE COMMITTEE. The directors may create an
executive committee or any other committee of directors, to consist of not less
than three directors, and may authorize the delegation to such executive
committee or other committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors or in the
executive committee or in any other committee of the directors.

<PAGE>

required. A meeting of the executive committee or of any other committee of
directors may be called only by the president or by a member of such executive
or other committee of directors. Meetings of the executive committee or of any
other committee of directors may be held through any communications equipment if
all persons participating can hear each other and participation in such a
meeting shall constitute presence thereat.

SECTION 2.12. COMPENSATION. Directors shall be entitled to receive
as compensation for services rendered and expenses incurred as directors such
amounts as the directors may determine.

SECTION 2.13. BYLAWS. The directors may adopt, and amend from time
to time, bylaws for their own government, which bylaws shall not be inconsistent
with the law, the Articles or the Regulations.

ARTICLE THREE

OFFICERS

SECTION 3.01. OFFICERS. The officers of the corporation to be
elected by the directors shall be a president, a secretary, a treasurer, and, if
desired, one or more vice presidents and such other officers and assistant
officers as the directors may from time to time elect. The directors may elect
a chairman of the board, who must be a director. Officers need not be
shareholders of the corporation and may be paid such compensation as the board
of directors may determine. Any two or more offices may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity if such instrument is required by law, the Articles, the
Regulations or the bylaws to be executed, acknowledged or verified by two or
more officers.

SECTION 3.02. TENURE OF OFFICE. The officers of the corporation
shall hold office at the pleasure of the directors. Any officer of the
corporation may be removed, either with or without cause, at any time, by the
affirmative vote of a majority of all the directors then in office; such
removal, however, shall be without prejudice to the contract rights, if any, of
the person so removed.

<PAGE>

SECTION 3.03. DUTIES OF THE CHAIRMAN OF THE BOARD. The chairman of
the board, if any, shall preside at all meetings of the directors. He shall
have such other powers and duties as the directors shall from time to time
assign to him.

SECTION 3.04. DUTIES OF THE PRESIDENT. The president shall be the
chief executive officer of the corporation, shall exercise supervision over the
business of the corporation and shall have, among such additional powers and
duties as the directors may from time to time assign to him, the power and
authority to sign all certificates evidencing shares of the corporation and all
deeds, mortgages, bonds, contracts, notes and other instruments requiring the
signature of the president of the corporation. It shall be the duty of the
president to preside at all meetings of shareholders.

SECTION 3.05. DUTIES OF THE VICE PRESIDENTS. In the absence of the
president or in the event of his inability or refusal to act, the vice
president, if any (or in the event there be more than one vice president, the
vice presidents in the order designated, or in the absence of any designation,
then in the order of their election), shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all
restrictions upon the president. The vice presidents shall perform such other
duties and have such other powers as the directors may from time to time
prescribe.

SECTION 3.06. DUTIES OF THE SECRETARY. It shall be the duty of the
secretary, or of an assistant secretary, if any, in case of the absence or
inability to act of the secretary, to keep minutes of all the proceedings of the
shareholders and the directors and to make a proper record of the same; to
perform such other duties as may be required by law, the Articles or the
Regulations; to perform such other and further duties as may from time to time
be assigned to him by the directors or the president; and to deliver all books,
paper and property of the corporation in his possession to his successor, or to
the president.

SECTION 3.07. DUTIES OF THE TREASURER. The treasurer, or an
assistant treasurer, if any, in case of the absence or inability to act of the
treasurer, shall receive and safely keep in charge all money, bills, notes,
choses in action, securities and similar property belonging to the corporation,
and shall do with or disburse the same as directed by the president or the
directors; shall keep an accurate account of the finances and business of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, stated capital and shares, together with such
other accounts as may be required and hold the same open for inspection and
examination by the directors; shall

<PAGE>

give bond in such sum with such security as the directors may require for the
faithful performance of his duties; shall, upon the expiration of his term of
office, deliver all money and other property of the corporation in his
possession or custody to his successor or the president; and shall perform such
other duties as from time to time may be assigned to him by the directors.

ARTICLE FOUR

SECTION 4.01. CERTIFICATES. Certificates evidencing ownership of
shares of the corporation shall be issued to those entitled to them. Each
certificate evidencing shares of the corporation shall bear a distinguishing
number; the signatures of the chairman of the board, the president, or a vice
president, and of the secretary or an assistant secretary (except that when any
such certificate is countersigned by an incorporated transfer agent or
registrar, such signatures may be facsimile, engraved, stamped or printed); and
such recitals as may be required by law. Certificates evidencing shares of the
corporation shall be of such tenor and design as the directors may from time to
time adopt and may bear such recitals as are permitted by law.

SECTION 4.02. TRANSFERS. Where a certificate evidencing a share or
shares of the corporation is presented to the corporation or its proper agents
with a request to register transfer, the transfer shall be registered as
requested if:

(2) Reasonable assurance is given that the indorsement of each
appropriate person is genuine and effective; the corporation or its agents may
refuse to register a transfer of shares unless the signature of each appropriate
person is guaranteed by a commercial bank or trust company having an office or a
correspondent in the City of New York or by a firm having membership in the New
York Stock Exchange; and

(3) All applicable laws relating to the collection of transfer or
other taxes have been complied with; and

<PAGE>

(4) The corporation or its agents are not otherwise required or
permitted to refuse to register such transfer.

SECTION 4.03. TRANSFER AGENTS AND REGISTRARS. The directors may
appoint one or more agents to transfer or to register shares of the corporation,
or both.

SECTION 4.04. LOST, WRONGFULLY TAKEN OR DESTROYED CERTIFICATES.
Except as otherwise provided by law, where the owner of a certificate evidencing
shares of the corporation claims that such certificate has been lost, destroyed
or wrongfully taken, the directors must cause the corporation to issue a new
certificate in place of the original certificate if the owner:

(1) So requests before the corporation has notice that such original
certificate has been acquired by a bona fide purchaser; and

(2) Files with the corporation, unless waived by the directors, an
indemnity bond, with surety or sureties satisfactory to the corporation, in such
sums as the directors may, in their discretion, deem reasonably sufficient as
indemnity against any loss or liability that the corporation may incur by reason
of the issuance of each such new certificate; and

(3) Satisfies any other reasonable requirements which may be imposed
by the directors, in their discretion.

SECTION 4.05. UNCERTIFICATED SHARES. Anything contained in this
Article Fourth to the contrary notwithstanding, the directors may provide by
resolution that some or all of any or all classes and series of shares of the
corporation shall be uncertificated shares, provided that such resolution shall
not apply to (A) shares of the corporation represented by a certificate until
such certificate is surrendered to the corporation in accordance with applicable
provisions of Ohio law or (B) any certificated security of the corporation
issued in exchange for an uncertificated security in accordance with applicable
provisions of Ohio law. The rights and obligations of the holders of
uncertificated shares and the rights and obligations of the holders of
certificates representing shares of the same class and series shall be
identical, except as otherwise expressly provided by law.

<PAGE>

ARTICLE FIVE

INDEMNIFICATION AND INSURANCE

SECTION 5.01. MANDATORY INDEMNIFICATION. The corporation shall
indemnify any officer or director of the corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or agent of
another corporation (domestic or foreign, nonprofit or for profit), partnership,
joint venture, trust or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct was unlawful.
A person claiming indemnification under this Section 5.01 shall be presumed, in
respect of any act or omission giving rise to such claim for indemnification, to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal matter, to have had no reasonable cause to believe his conduct was
unlawful, and the termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption.

SECTION 5.02. COURT-APPROVED INDEMNIFICATION. Anything contained in
the Regulations or elsewhere to the contrary notwithstanding:

<PAGE>

the best interests of the corporation or misconduct (other than negligence) in
the performance of his duty to the corporation unless and only to the extent
that the Court of Common Pleas of Hamilton County, Ohio, or the court in which
such action or suit was brought shall determine upon application that, despite
such adjudication of liability, and in view of all the circumstances of the
case, he is fairly and reasonably entitled to such indemnity as such Court of
Common Pleas or such other court shall deem proper; and

(B) the corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contemplated by this
Section 5.02.

SECTION 5.03. INDEMNIFICATION FOR EXPENSES. Anything contained in
the Regulations or elsewhere to the contrary notwithstanding, to the extent that
an officer or director of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.

SECTION 5.04 DETERMINATION REQUIRED. Any indemnification required
under Section 5.01 and not precluded under Section 5.02 shall be made by the
corporation only upon a determination that such indemnification of the officer
or director is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 5.01. Such determination may be made
only (A) by a majority vote of a quorum consisting of directors of the
corporation who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (B) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written opinion
by independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the corporation, or any person to be indemnified, within the past five years, or
(C) by the shareholders, or (D) by the Court of Common Pleas of Hamilton County,
Ohio, or (if the corporation is a party thereto) the court in which such action,
suit or proceeding was brought, if any; any such determination may be made by a
court under division (D) of this Section 5.04 at any time including, without
limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have been denied
or disregarded by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders

<PAGE>

under division (C) of this Section 5.04; and no failure for any reason to make
any such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by shareholders under division
(C) of this Section 5.04 shall be evidence in rebuttal of the presumption
recited in Section 5.01. Any determination made by the disinterested directors
under division (A) or by independent legal counsel under division (B) of this
Section 5.04 to make indemnification in respect of any claim, issue or matter
asserted in an action or suit threatened or brought by or in the right of the
corporation shall be promptly communicated to the person who threatened or
brought such action or suit, and within ten days after receipt of such
notification such person shall have the right to petition the Court of Common
Pleas of Hamilton County, Ohio, or the court in which such action or suit was
brought, if any, to review the reasonableness of such determination.

(A) if it shall ultimately be determined as provided in Section 5.04
that he is not entitled to be indemnified by the corporation as provided under
Section 5.01; or

(B) if, in respect of any claim, issue or other matter asserted by or
in the right of the corporation in such action or suit, he shall have been
adjudged to be liable for acting with reckless disregard for the best interests
of the corporation or misconduct (other than negligence) in the performance of
his duty to the corporation, unless and only to the extent that the Court of
Common Pleas of Hamilton County, Ohio, or the court in which such action or suit
was brought shall determine upon application that, despite such adjudication of
liability, and in view of all the circumstances, he is fairly and reasonably
entitled to all or part of such indemnification.

SECTION 5.06. ARTICLE FIVE NOT EXCLUSIVE. The indemnification
provided by this Article Five shall not be deemed exclusive of any other rights
to which any person seeking indemni-

<PAGE>

fication may be entitled under the Articles or the Regulations or any agreement,
vote of shareholders or disinterested directors, or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be an officer or
director of the corporation and shall inure to the benefit of the heirs,
executors, and administrators of such a person.

SECTION 5.07. INSURANCE. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, trustee, officer, employee, or agent of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint venture,
trust or other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the obligation or the power to
indemnify him against such liability under the provisions of this Article Five.

SECTION 5.08. CERTAIN DEFINITIONS. For purposes of this Article
Five, and as examples and not by way of limitation:

(A) A person claiming indemnification under this Article 5 shall be
deemed to have been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 5.01, or in defense of any
claim, issue or other matter therein, if such action, suit or proceeding shall
be terminated as to such person, with or without prejudice, without the entry of
a judgment or order against him, without a conviction of him, without the
imposition of a fine upon him and without his payment or agreement to pay any
amount in settlement thereof (whether or not any such termination is based upon
a judicial or other determination of the lack of merit of the claims made
against him or otherwise results in a vindication of him); and

(B) References to an "other enterprise" shall include employee
benefit plans; references to a "fine" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests

<PAGE>

of the corporation" within the meaning of that term as used in this Article
Five.

SECTION 5.09. VENUE. Any action, suit or proceeding to determine a
claim for indemnification under this Article Five may be maintained by the
person claiming such indemnification, or by the corporation, in the Court of
Common Pleas of Hamilton County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Hamilton County, Ohio, in any
such action, suit or proceeding.

ARTICLE SIX

MISCELLANEOUS

SECTION 6.01. AMENDMENTS. The Regulations may be amended, or new
regulations may be adopted, at a meeting of shareholders held for such purpose,
only by the affirmative vote of the holders of shares entitling them to exercise
not less than a majority of the voting power of the corporation on such
proposal, or without a meeting by the written consent of the holders of shares
entitling them to exercise not less than a majority of the voting power of the
corporation on such proposal.

SECTION 6.02. ACTION BY SHAREHOLDERS OR DIRECTORS WITHOUT A MEETING.
Anything contained in the Regulations to the contrary notwithstanding, except as
provided in Section 6.01, any action which may be authorized or taken at a
meeting of the shareholders or of the directors or of a committee of the
directors, as the case may be, may be authorized or taken without a meeting with
the affirmative vote or approval of, and in a writing or writings signed by, all
the shareholders who would be entitled to notice of a meeting of the
shareholders held for such purpose, or all the directors, or all the members of
such committee of the directors, respectively, which writings shall be filed
with or entered upon the records of the corporation.

<PAGE>

(513) 723-4000

June 13, 1996

Board of Directors
Foundation Bancorp, Inc.
25 Garfield Place
Cincinnati, Ohio 45202

Dear Ladies and Gentleman:

We are familiar with the proceedings taken and proposed to be
taken by Foundation Bancorp, Inc. (the "Holding Company") in connection with the
issuance and sale by the Holding Company of up to 462,875 of its common shares,
without par value (the "Common Shares"). The Common Shares are being offered by
the Holding Company in connection with the conversion of Foundation Savings Bank
("Foundation") from a mutual savings and loan association to a permanent capital
stock savings and loan association incorporated under the laws of the State of
Ohio (the "Conversion").

The Holding Company has been incorporated at the direction of
Foundation for the purpose of purchasing all of the capital stock to be issued
by Foundation in connection with the Conversion. We have assisted Foundation
with matters related to the incorporation and organization of the Holding
Company. In addition, we have collaborated in the preparation of the
Registration Statement on Form S-1 (the "Registration Statement") to be filed by
the Holding Company with the Securities and Exchange Commission for the
registration of the Common Shares under the Securities Act of 1933, as amended.
In connection therewith, we have examined, among other things, such records and
documents as we have deemed necessary in order to express the opinions
hereinafter set forth.

Based upon the foregoing, we are of the opinion that the Holding
Company is a duly organized and legally existing corporation under the laws of
the State of Ohio. Assuming compliance with applicable federal and state
securities laws,

<PAGE>

Board of Directors
June 13, 1996
Page 2

we are also of the opinion that the Common Shares, when purchase orders have
been accepted and the purchase price for the Common Shares has been paid in
money as specified in the Registration Statement when it shall become effective,
will be validly issued and outstanding, fully paid and non-assessable.
Notwithstanding the foregoing, until payments are received by the Holding
Company from the Foundation Bancorp, Inc. Employee Stock Ownership Plan (the
"ESOP") in accordance with the terms of a loan agreement to be entered into by
and between the Holding Company and the ESOP, shares for which payment in money
has not been received will not be fully paid and non-assessable.

We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us in the Prospectus included
therein.

Very truly yours,

Vorys, Sater, Seymour and Pease

<PAGE>

(614) 464-6400

June 13, 1996

Board of Directors
Foundation Bancorp, Inc.
25 Garfield Place
Cincinnati, Ohio 45202

and

Board of Directors
Foundation Savings Bank
25 Garfield Place
Cincinnati, Ohio 45202

Re: Conversion from a Mutual Savings and Loan Association to a
Stock Savings and Loan Association - Federal and State Tax Matters
------------------------------------------------------------------

Dear Directors:

You have requested our opinion regarding certain federal income and state
tax consequences resulting from the proposed conversion (the "Conversion") of
Foundation Savings Bank (the "Bank") from a mutual savings and loan association
to a stock savings and loan association ("the Stock Bank") incorporated under
the laws of the State of Ohio and the simultaneous acquisition by Foundation
Bancorp, Inc., an Ohio corporation (the "Holding Company"), of all the capital
stock to be issued by the Stock Bank upon the Conversion.

We have reviewed the Plan of Conversion adopted by the Bank's Board of
Directors on May 31, 1996 (the "Plan"), the Application for Conversion on Form
AC (the "Application") filed with the Office of Thrift Supervision (the "OTS")
and the Ohio Department of Commerce, Division of Financial Institutions (the
"Division"), the Application H-(e)1-S filed with the OTS and the Summary Proxy
Statement, the Prospectus and other solicitation materials included in the
Application, and we have examined such other legal and factual matters as we
considered

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 2

appropriate. Unless otherwise indicated, defined terms in this letter have the
same meaning as in the Plan and the Prospectus.

We have not requested on your behalf nor have we received any rulings from
the Internal Revenue Service ("IRS") in connection with the Conversion or the
attendant federal income tax consequences.

FACTS

A. THE BANK

The Bank is a mutual savings and loan association which was organized under
Ohio law in 1888. As a savings and loan association, the Bank is subject to
supervision and regulation by the OTS, the Division and the Federal Deposit
Insurance Corporation ("FDIC"). The Bank is a member of the Federal Home Loan
Bank of Cincinnati. The deposits of the Bank are insured up to applicable
limits by the FDIC in the Savings Association Insurance Fund ("SAIF").

The principal business of the Bank is the origination of loans secured by
first mortgages on one- to four-family residential real estate located in the
Bank's primary market area. The Bank also originates loans secured by
multifamily real estate (over four units) and nonresidential real estate. In
addition to real estate lending, the Bank originates secured and unsecured
consumer loans. For liquidity and interest rate risk management purposes, the
Bank invests in mortgage-backed securities, U.S. Government and agency
obligations and other investments permitted by applicable law. Funds for
lending and other investment activities are obtained primarily from savings
deposits, which are insured up to applicable limits by the FDIC, and principal
repayments on loans and mortgage-backed securities.

The Bank conducts business from its office located at 25 Garfield Place,
Cincinnati, Ohio 45202.

B. FOUNDATION BANCORP, INC.

The Holding Company was incorporated under Ohio law in April, 1996, at the
direction of the Bank, for the purpose of purchasing all of the capital stock of
the Bank to be issued in connection with the Conversion. The Holding Company
has not conducted and will not conduct any business other than business related
to the Conversion prior to the completion of the Conversion. Upon the
consummation of the Conversion, the Holding Company will be a unitary savings
and loan holding company, and its principal asset initially will be the capital
stock of the Stock Bank and the investments made with the net proceeds retained
from the sale of common shares of the Holding Company (the "Common Shares") in
connection with the Conversion.

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 3

The office of the Holding Company is located at 25 Garfield Place,
Cincinnati, Ohio 45202.

C. THE PLAN OF CONVERSION

On May 31, 1996, the Board of Directors of the Bank adopted the Plan and
recommended that the Voting Members of the Bank approve the Plan at the Special
Meeting. Under the Plan, (i) the Bank will be converted under Ohio law from a
mutual savings and loan association to a stock savings and loan association, and
(ii) Common Shares of the Holding Company will be offered for sale and issued to
eligible persons in the Subscription Offering and to the general public in the
Community Offering, with preference being given to residents of Hamilton County,
Ohio.

The aggregate purchase price at which the Common Shares will be offered and
sold pursuant to the Plan will be based upon the estimated pro forma market
value of the Stock Bank, as determined by an independent appraiser. Keller &
Company ("Keller"), a firm experienced in valuing thrift institutions, has
prepared an independent appraisal of the pro forma market value of the Stock
Bank. Keller's valuation of the estimated pro forma market value of the Stock
Bank is $3,500,000 as of April 12, 1996. The Valuation Range established in
accordance with the Plan is $2,975,000 to $4,025,000, which, based upon a per
share offering price of $10, will result in the sale of between 297,500 and
402,500 Common Shares. The total number of Common Shares sold in the Conversion
will be determined based on the Valuation Range. Applicable regulations permit
the Holding Company to offer additional Common Shares in an amount not to exceed
15% above the maximum of the Valuation Range, which would permit the issuance of
up to 462,875 Common Shares with an aggregate purchase price of $4,628,750.

D. LIQUIDATION ACCOUNT

In the event of a complete liquidation of the Bank in its present mutual
form, each depositor in the Bank would receive a pro rata share of any assets of
the Bank remaining after payment of the claims of all creditors, including the
claims of all depositors to the withdrawable value of their savings accounts. A
depositor's pro rata share of such remaining assets would be the same proportion
of such assets as the value of such depositor's savings deposits bears to the
total aggregate value of all savings deposits in the Bank at the time of
liquidation.

In the event of a complete liquidation of the Stock Bank after the
Conversion, each savings depositor would have a claim of the same general
priority as the claims of all other general creditors of the Stock Bank. Except
as described below, each depositor's claim would be solely in the amount of the
balance in such depositor's savings account plus accrued interest. The

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 4

depositor would have no interest in the assets of the Stock Bank above that
amount. Such assets would be distributed to the Holding Company as the sole
shareholder of the Stock Bank.

For the purpose of granting a limited priority claim to the assets of the
Stock Bank in the event of a complete liquidation thereof to Eligible Account
Holders and Supplemental Eligible Account Holders who maintain their savings
accounts at the Stock Bank following the Conversion, the Bank will, at the time
of Conversion, establish the Liquidation Account in an amount equal to the
regulatory capital of the Bank as of the latest practicable date prior to the
Conversion at which such regulatory capital can be determined. The Liquidation
Account will not operate to restrict the use or application of any of the
regulatory capital of the Stock Bank.

Each Eligible Account Holder and Supplemental Eligible Account Holder will
have a separate inchoate interest (the "Subaccount") in a portion of the
Liquidation Account Qualifying Deposit held on the Eligibility Record Date and
the Supplemental Eligibility Record Date, respectively.

The balance of each initial Subaccount shall be an amount determined by
multiplying the amount in the Liquidation Account by a fraction, the numerator
of which is the closing balance in the account holder's account as of the close
of business on the applicable record date and the denominator of which is the
total amount of all Qualifying Deposits of all Eligible Account Holders and
Supplemental Eligible Account Holders on the applicable record date. The
balance of each Subaccount may be decreased but will never be increased. If, at
the close of business on any annual closing date of the Stock Bank subsequent to
the respective record dates, the balance in the savings account to which a
Subaccount relates is less than the lesser of (i) the deposit balance in such
savings account at the closing of business on any other annual closing date
subsequent to the applicable record date or (ii) the amount of the Qualifying
Deposit as of the applicable record date, the balance of the Subaccount for such
savings account shall be adjusted proportionately to the reduction in such
savings account balance. In the event of any such downward adjustment, such
Subaccount balance shall not be subsequently increased notwithstanding any
increase in the deposit balance of the related savings account. If any savings
account is closed, its related Subaccount shall be reduced to zero upon such
closing.

In the event of a complete liquidation of the Stock Bank (and only in such
event), each Eligible Account Holder and Supplemental Eligible Account Holder
shall receive from the Liquidation Account a distribution equal to the current
balance in each of such account holder's Subaccounts before any liquidation
distribution may be made to the shareholders of the Stock Bank. Any assets
remaining after satisfaction of such liquidation rights and the claims of the
Stock Bank's creditors would be distributed to the Holding Company as the sole
shareholder of the Stock Bank. No merger, consolidation, purchase of bulk
assets or similar combination or transaction with another association, the
deposits of which are insured by the FDIC under the

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 5

SAIF, will be deemed to be a complete liquidation for this purpose and, in any
such transaction, the Liquidation Account shall be assumed by the surviving
association.

E. ISSUANCE OF SHARES

1. SUBSCRIPTION OFFERING

Nontransferable subscription rights to purchase Common Shares will be
issued at no cost to all eligible persons and entities in accordance with the
preference categories established by the Plan, as described below. Each
subscription right may be exercised only by the person to whom it is issued and
only for his or her own account. Each person subscribing for shares must
represent to the Stock Bank that he or she is purchasing such shares for his or
her own account and that he or she has no agreement or understanding with any
other person for the sale or transfer of such shares.

The number of Common Shares which a person who has subscription rights
may purchase will be determined, in part, by the total number of Common Shares
to be issued and the availability of such shares for purchase under the
preference categories set forth in the Plan and certain other limitations. The
sale of any Common Shares pursuant to subscriptions received is contingent upon
approval of the Plan by the Voting Members of the Bank at the Special Meeting.

The preference categories which have been established by the Plan, in
accordance with applicable regulations, for the allocation of Common shares are
as follows:

(a) Each Eligible Account Holder shall receive, without payment
therefor, the nontransferable rights to purchase up to 2.5% of the total Common
Shares sold in the Offering, subject to the limitation that no person, together
with such person's Associates and other persons acting in concert with such
person, may purchase more than 5% of the Common Shares sold in the Offering. If
the exercise of subscription rights in this Category 1 results in an over-
subscription, Common Shares will be allocated among subscribing Eligible Account
Holders in a manner which will, to the extent possible, make the total
allocation of each subscriber equal 100 shares or the amount subscribed for,
whichever is less. Any Common Shares remaining after such allocation has been
made will be allocated among the subscribing Eligible Account Holders whose
subscriptions remain unfilled in the proportion which the amount of their
respective Qualifying Deposits on the Eligibility Date bears to the total
Qualifying Deposits of all Eligible Account Holders on such date. For purposes
of this paragraph (a), increases in the Qualifying Deposits of directors and
executive officers of the Bank during the twelve months preceding the
Eligibility Record Date shall not be considered. Notwithstanding the foregoing,
Common Shares in excess of 402,500, the maximum of the Valuation Range, may be
sold to the ESOP before fully satisfying the subscriptions of Eligible Account
Holders. No fractional shares will be issued.

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 6

(b) The ESOP shall receive, without payment therefor, the
nontransferable right to purchase Common Shares in an aggregate amount of up to
10% of the Common Shares sold in the Conversion, provided that shares remain
available after satisfying the subscription rights of Eligible Account Holders
up to the maximum of the Valuation Range pursuant to paragraph (a) above.
Although the Plan and OTS regulations permit the ESOP to purchase up to 10% of
the Common Shares, the Holding Company anticipates that the ESOP will purchase
8% of the Common Shares. If the ESOP is unable to purchase all or part of the
Common Shares for which it subscribes, the ESOP may purchase Common Shares on
the open market or may purchase authorized but unissued shares of the Holding
Company. If the ESOP purchases authorized but unissued shares from the Holding
Company, such purchases could have a dilutive effect on the interests of the
Holding Company's shareholders.

(c) If the Eligibility Record Date is more than 15 months prior
to the date of the latest amendment to the Bank's conversion application filed
with the OTS, each Supplemental Eligible Account Holder will receive, without
payment, non-transferable subscription rights to purchase up to 2.5% of the
total Common Shares sold in the Offering, provided that shares remain available
after satisfying the subscription rights of Eligible Account Holders and the
ESOP pursuant to paragraphs (a) and (b) above. If the exercise of subscription
rights by Supplemental Eligible Account Holders results in an oversubscription,
Common Shares will be allocated among subscribing Supplemental Eligible Account
Holders in a manner which will, to the extent possible, make the total
allocation of each subscriber equal 100 shares or the amount subscribed for,
whichever is less. Any Common Shares remaining after such allocation has been
made will be allocated among the subscribing Supplemental Eligible Account
Holders whose subscriptions remain unfilled in the proportion which the amount
of their respective Qualifying Deposits on the Supplemental Eligibility Record
Date bears to the total Qualifying Deposits of all Supplemental Eligible Account
Holders on such date. No fractional shares will be issued.

Subscription rights received by Supplemental Eligible Account
Holders will be subordinate to the subscription rights of Eligible Account
Holders and the ESOP.

(d) Each Other Eligible Member, other than an Eligible Account
Holder or Supplemental Eligible Account Holder, shall receive, without payment
therefor, the nontransferable right to purchase up to 2.5% of the total Common
Shares sold in the Offering, subject to (i) the limitation that no person,
together with such person's Associates and other persons acting in concert with
such person, may purchase more than 5% of the Common Shares sold in the Offering
and (ii) the limitation that shares remain available after satisfying the
subscription rights of Eligible Account Holders, the ESOP and Supplemental
Eligible Account Holders pursuant to paragraphs (a), (b) and (c) above. In the
event of an over-subscription by Other Eligible Members, the available Common
Shares will be allocated among subscribing Other

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 7

Eligible Members in the same proportion that their subscriptions bear to the
total amount of subscriptions by all Other Eligible Members.

2. COMMUNITY OFFERING

Concurrently with the Subscription Offering, the Holding Company is
offering Common Shares in the Community Offering, to the extent such shares
remain available after the satisfaction of all orders received in the
Subscription Offering. All sales of Common Shares in the Community Offering
will be at the same price in the Subscription Offering.

If subscriptions are received in the Subscription Offering for up to
462,875 Common Shares, Common Shares may not be available for purchase in the
Community Offering. In the event shares are available for the Community
Offering, members of the general public may purchase up to 2.5% of the total
Common Shares sold in the Offering, subject to the limitation that no person,
together with such person's Associates and other persons acting in concert with
such person, may purchase more than 5% of the total Common Shares sold in the
Offering. If an insufficient number of Common Shares is available to fill all
of the orders received in the Community Offering, the available shares will be
allocated in the discretion of the Board of Directors, subject to the following:

(i) Preference will be given to natural persons who are resident
of Hamilton County, Ohio;

(ii) Orders received in the Community Offering will first be
filled up to a maximum of 2% of the total number of Common Shares offered, with
any remaining shares allocated on an equal number of shares per order basis
until all orders have been filled; and

(iii) The right of any person to purchase shares in the
Community Offering is subject to the right of the Holding Company and the Stock
Bank to accept or reject such purchases in whole or in part.

F. RESULTS OF CONVERSION

Savings account holders and borrowers who are members of the Bank will have
no voting rights in the Stock Bank and will not participate, therefore, in the
election of directors or otherwise control the Stock Bank's affairs. After the
Conversion, voting rights in the Stock Bank will be vested exclusively in the
Holding Company as the sole shareholder of the Stock Bank. Each holder of
Common Shares will be entitled to one vote for each share owned on any matter to
be considered by the shareholders of the Stock Bank.

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 8

The Conversion will not interrupt the business of the Bank. During and
upon completion of the Conversion, the Bank will continue to provide the
services presently offered to depositors and borrowers, will maintain its
existing office and will retain its existing management and employees. All
savings accounts in the Stock Bank will be equivalent in amount, interest rate
and other terms to the present savings accounts in the Bank, and the existing
FDIC insurance of such deposits will not be affected by the Conversion. The
Conversion will not affect the terms of loan accounts or the rights and
obligations of borrowers under their individual contractual arrangements with
the Bank.

ADDITIONAL REPRESENTATIONS

You have made the following additional representations upon which we have
relied:

(1) The Holding Company and the Stock Bank each has no plan or
intention to redeem or otherwise acquire any of the Common Shares to be issued
in connection with the Conversion.

(2) Immediately following the consummation of the Conversion, the
Stock Bank will possess the same assets and liabilities as the Bank held
immediately prior to the Conversion, plus proceeds from the sale of the Common
Shares to the Holding Company in exchange for 50% of the net proceeds of the
Conversion. Assets used to pay expenses of the Conversion and all distributions
(except for regular, normal interest payments made by the Bank immediately
preceding the Conversion) will in the aggregate constitute less than one percent
of the net assets of the Bank and any such expenses and distributions will be
paid by the Bank and the Holding Company from the proceeds of the Subscription
Offering.

(3) Following the Conversion, the Stock Bank will continue to engage
in its business in substantially the same manner as engaged in by the Bank prior
to the Conversion and it has no plan or intention to sell or otherwise dispose
of any of its assets except in the ordinary course of business.

(4) The Bank is not under the jurisdiction of a court in any Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.

(5) The aggregate fair market value of the Qualifying Deposits held
by Eligible Account Holders and Supplemental Eligible Account Holders (if any)
as of the close of business on the Eligibility Record Date and the Supplemental
Eligibility Record Date, respectively, will equal or exceed ninety-nine percent
(99%) of the aggregate fair market value of all savings accounts (including
those accounts with less than $50) in the Bank as of the close of business on

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 9

such dates. No Common Shares will be issued to or purchased by depositor-
employees at a discount or as compensation in the Conversion.

(6) No cash or property will be given to Eligible Account Holders,
Supplemental Eligible Account Holders or Other Eligible Members in lieu of (a)
nontransferable subscription rights or (b) an interest in the Liquidation
Account of the Stock Bank.

(7) The Bank utilizes a reserve for bad debts in accordance with
Section 593 of the Code and, following the Conversion, the Stock Bank shall
likewise utilize a reserve for bad debts in accordance with Section 593 of the
Code.

(8) The Holding Company has no plan or intention to sell or otherwise
dispose of the shares of the Stock Bank purchased by it in the Conversion.

(9) The Bank's savings depositors will pay the expenses of the
Conversion solely attributable to them, if any. The Holding Company will pay
the expenses of the transaction and will not pay any expenses solely
attributable to the savings depositors or to the Holding Company's shareholders.

(10) No amount of savings accounts or deposits as of the Eligibility
Record Date or the Supplemental Eligibility Record will be excluded from
participation in the Liquidation Account.

(11) The fair market value of the withdrawable savings accounts plus
interests in the Liquidation Account of the Stock Bank to be constructively
received under the Plan will in each instance be equal to the fair market value
of the withdrawable savings accounts of the Bank surrendered in exchange
therefor. All proprietary rights in the Bank form an integral part of the
withdrawable savings accounts being surrendered in the exchange.

(12) The Board, as defined in Section 368(a)(3)(D)(iii) of the Code,
has not made the certification described in Section 368(a)(3)(D)(ii), nor will
such certification be made prior to or otherwise in connection with the
Conversion.

STATEMENT OF LAW

In Revenue Ruling 80-105, 1980-1 C.B. 78, the IRS ruled that a conversion
of a federal mutual savings and loan association into a state stock savings and
loan association constituted a tax-free reorganization under Section
368(a)(1)(F) of the Code. Since then, the IRS consistently has issued letter
rulings that conversions of savings and loans qualify as tax-free
reorganizations under the Code, with the attendant tax consequences to the
depositors and shareholders that

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 10

follow from such transactions. Although private rulings may not be relied upon
by taxpayers other than those to whom the ruling is directed, such rulings do
indicate the administrative position of the IRS.

OPINION OF COUNSEL

Based upon both our understanding of the facts and your representations set
forth above, and in reliance thereon, we are of the opinion that for federal
income tax purposes:

(1) The Conversion of the Bank from a mutual savings and loan
association incorporated under the laws of the State of Ohio to a stock savings
and loan association incorporated under the laws of the State of Ohio will
constitute a reorganization within the meaning of Section 368(a)(1)(F) of the
Code, and no gain or loss will be recognized to the Bank or to the Stock Bank as
a result of the Conversion. The Bank and the Stock Bank will each be a "party
to a reorganization" within the meaning of Section 368(b) of the Code.

(2) No gain or loss will be recognized to the Stock Bank upon the
receipt of money from the Holding Company in exchange for shares of the Stock
Bank.

(3) The assets of the Stock Bank will have the same basis in its
hands immediately after the Conversion as they had in the hands of the Bank
immediately prior to the Conversion, and the holding period of the assets of the
Stock Bank after the Conversion will include the period during which the assets
were held by the Bank before the Conversion.

(4) No gain or loss will be recognized to the deposit account holders
of the Bank upon the issuance to them, in exchange for their respective
withdrawable deposit accounts in the Bank immediately prior to the Conversion,
of withdrawable deposit accounts in the Stock Bank immediately after the
Conversion, in the same dollar amount as their withdrawable deposit accounts in
the Bank immediately prior to the Conversion, plus, in the case of Eligible
Account Holders and Supplemental Eligible Account Holders, the interests in the
Liquidation Account of the Stock Bank, as described above.

(5) The basis of the withdrawable deposit accounts in the Stock Bank
held by the deposit account holders of the Stock Bank immediately after the
Conversion will be the same as the basis of their deposit accounts in the Bank
immediately prior to the Conversion. The basis of the interests in the
Liquidation Account received by the Eligible Account Holders and Supplemental
Eligible Account Holders will be zero. The basis of the nontransferable
subscription rights received by members will be zero (assuming that at
distribution such rights have no ascertainable fair market value).

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 11

(6) No gain or loss will be recognized to Eligible Account Holders,
Supplemental Eligible Account Holders or Other Eligible Members upon the
distribution to them of nontransferable subscription rights to purchase Common
Shares (assuming that such rights have no readily ascertainable fair market
value), and no taxable income will be realized by such Eligible Account Holders,
Supplemental Eligible Account Holders and Other Eligible Members as a result of
their exercise of such nontransferable subscription rights.

(7) The basis of the Common Shares purchased by Eligible Account
Holders, Supplemental Eligible Account Holders and Other Eligible Members
pursuant to the exercise of subscription rights have no ascertainable fair
market value and that the purchase price is no less than the fair market value
of the shares on the date of such exercise), and the holding period of such
Common Shares will commence on the date of such exercise. The basis of the
Common Shares purchased in the Community Offering will be the purchase price
thereof and the holding period of such Common Shares will commence on the day
after the date of the purchase.

(8) For purposes of Section 381 of the Code, the Bank will be treated
as if there had been no reorganization. The taxable year of the Bank will not
end on the effective date of the Conversion, and immediately after the
Conversion, the Stock Bank will succeed to and take into account the tax
attributes of the Bank immediately prior to the Conversion, including the Bank's
earnings and profits or deficit in earnings and profits.

(9) The bad debt reserves of the Bank immediately prior to the
Conversion will not be required to be restored to the gross income of the Bank
or the Stock Bank as a result of the Conversion, and immediately after the
Conversion, such bad debt reserves will have the same character in the hands of
the Stock Bank that they would have if there had been no Conversion. The Stock
Bank will succeed to and take into account the dollar amounts of those accounts
of the Bank which represent bad debt reserves in respect of which the Bank has
taken a bad debt deduction for taxable years ending on or before the Conversion.

(10) Regardless of book entries made for the creation of the
Liquidation Account, the Conversion will not diminish the accumulated earnings
and profits of the Bank available for the subsequent distribution of dividends
within the meaning of Section 316 of the Code. The creation of the Liquidation
Account on the records of the Stock Bank will have no effect on its taxable
income, deductions for additions to reserves for bad debts under Section 593 of
the Code or distributions to shareholders under Section 593(e).

For Ohio tax purposes, we are of the opinion that:

(1) The Bank is a "financial institution" for State of Ohio tax
purposes, and the Conversion will not change such status.

<PAGE>

Boards of Directors
Foundation Bancorp, Inc. and
Foundation Savings Bank
6/13/96
Page 12

(2) The Bank is subject to the Ohio corporate franchise tax on
"financial institutions," which is currently imposed annually at a rate of 1.5%
of the Bank's book net worth determined in accordance with generally accepted
accounting principles ("GAAP"), and the Conversion will not change such status.

(3) As a "financial institution," the Bank is not subject to any tax
based upon net income or net profit imposed by the State of Ohio, and the
Conversion will not change such status.

(4) The Conversion will not be a taxable transaction to the Bank or
the Stock Bank, for purposes of the Ohio corporate franchise tax; however, as a
consequence of the Conversion, the annual Ohio corporate franchise tax liability
of the Stock Bank will increase if the taxable net worth of the Stock Bank
(i.e., book net worth computed in accordance with GAAP at the close of the Stock
Bank's taxable year for federal income tax purposes) increases thereby.

(5) The Conversion will not be a taxable transaction to any deposit
account holder or borrower member of the Bank or the Stock Bank for purposes of
the Ohio corporate franchise tax and the Ohio personal income tax.

Unlike private rulings, an opinion of counsel is not binding on the IRS,
and the Service could disagree with the conclusions reached in the opinion. In
the event of such disagreement, there can be no assurance that the Service would
not prevail in a judicial proceeding, although counsel believes that the
positions expressed in its opinion should prevail if the matters are litigated.

Very truly yours,

Vorys, Sater, Seymour and Pease

<PAGE>

FOUNDATION BANCORP, INC.
1997 STOCK OPTION AND INCENTIVE PLAN

1. PURPOSE. The purpose of the Foundation Bancorp, Inc. 1997 Stock
Option and Incentive Plan (this "Plan") is to promote and advance the interests
of Foundation Bancorp, Inc. (the "Company") and its shareholders by enabling the
Company to attract, retain and reward directors, managerial and other key
employees of the Company and any Subsidiary (hereinafter defined), and to
strengthen the mutuality of interests between such directors and employees and
the Company's shareholders by providing such persons with a proprietary interest
in pursuing the long-term growth, profitability and financial success of the
Company.

2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below:

(a) "Board" means the Board of Directors of the Company.

(b) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto, together with the rules, regulations and
interpretations promulgated thereunder.

(d) "Common Shares" means the common shares, without par value, of
the Company or any security of the Company issued in substitution, in
exchange or in lieu thereof.

(e) "Company" means Foundation Bancorp, Inc., an Ohio corporation, or
any successor corporation.

(f) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.

(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.

(h) "Fair Market Value" shall be determined as follows:

(i) If the Common Shares are traded on a national
securities exchange at the time of grant of the Stock Option, then the
Fair Market Value shall be the average of the highest and the lowest
selling price on such exchange on the date such Stock Option is
granted or, if there were no sales on such date, then on the next
prior business day on which there was a sale.

<PAGE>

(ii) If the Common Shares are quoted on The Nasdaq SmallCap
Market at the time of the grant of the Stock Option, then the Fair
Market Value shall be the mean between the closing high bid and low
asked quotation with respect to a Common Share on such date on The
Nasdaq SmallCap Market.

(iii) If the Common Shares are not traded on a national
securities exchange or quoted on The Nasdaq SmallCap Market, then the
Fair Market Value shall be as determined by the Committee.

(i) "Incentive Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 of this Plan that is intended to be and is
specifically designated as an "incentive stock option" within the meaning
of Section 422 of the Code.

(j) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is not an
Incentive Stock Option.

(k) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.

(l) "Participant" means an employee or director of the Company or a
Subsidiary who is granted an Award under this Plan. Notwithstanding the
foregoing, for the purposes of the granting of any Incentive Stock Option
under this Plan, the term "Participant" shall include only employees of the
Company or a Subsidiary.

(m) "Plan" means the Foundation Bancorp, Inc. 1997 Stock Option and
Incentive Plan, as set forth herein and as it may be hereafter amended from
time to time.

(n) "Stock Option" means an award to purchase Common Shares granted
pursuant to the provisions of Section 6 of this Plan.

(o) "Subsidiary" means any corporation or entity in which the Company
directly or indirectly controls 50% or more of the total voting power of
all classes of its stock having voting power and includes, without
limitation, Foundation Savings Bank.

(p) "Terminated for Cause" means any removal of a director or
discharge of an employee for the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of a material provision
of any law, rule or regulation (other than traffic violations or similar
offenses), a material violation of a final cease-and-desist order or any
other action of a director or employee which results in a substantial
financial loss to the Company or a Subsidiary.

-2-

<PAGE>

3. ADMINISTRATION.

(a) This Plan shall be administered by the Committee to be comprised
of not less than three of the members of the Board who are not employees of
the Company. The members of the Committee shall be appointed from time to
time by the Board. Members of the Committee shall serve at the pleasure of
the Board and the Board may from time to time remove members from, or add
members to, the Committee. A majority of the members of the Committee
shall constitute a quorum for the transaction of business. An action
approved in writing by a majority of the members of the Committee then
serving shall be fully as effective as if the action had been taken by
unanimous vote at a meeting duly called and held.

(b) The Committee is authorized to construe and interpret this Plan
and to make all other determinations necessary or advisable for the
administration of this Plan. The Committee may designate persons other
than members of the Committee to carry out its responsibilities under such
conditions and limitations as it may prescribe. Any determination,
decision or action of the Committee in connection with the construction,
interpretation, administration, or application of this Plan shall be final,
conclusive and binding upon all persons participating in this Plan and any
person validly claiming under or through persons participating in this
Plan. The Company shall effect the granting of Stock Options under this
Plan in accordance with the determinations made by the Committee, by
execution of instruments in writing in such form as approved by the
Committee.

4. DURATION OF, AND COMMON SHARES SUBJECT TO, THIS PLAN.

(a) TERM. This Plan shall terminate on the date which is ten (10)
years from the date on which this Plan is adopted by the Board, except with
respect to Stock Options then outstanding. Notwithstanding the foregoing,
no Incentive Stock Option may be granted under this Plan after the date
which is ten (10) years from the date on which this Plan is adopted by the
Board or the date on which this Plan is approved by the shareholders of the
Company, whichever is earlier.

(b) COMMON SHARES SUBJECT TO PLAN. The maximum number of Common
Shares in respect of which Stock Options may be granted under this Plan,
subject to adjustment as provided in Section 9 of this Plan, shall be ten
percent of the total Common Shares sold in connection with the conversion
Foundation Savings Bank from mutual to stock form.

For the purpose of computing the total number of Common Shares available
for Stock Options under this Plan, there shall be counted against the foregoing
limitations the number of Common Shares subject to issuance upon the exercise or
settlement of Stock Options as of the dates on which such Stock Options are
granted. If any Stock Options are forfeited, terminated or exchanged for other
Stock Options, or expire unexercised, the Common Shares which were

-3-

<PAGE>

theretofore subject to such Stock Options shall again be available for Stock
Options under this Plan to the extent of such forfeiture, termination or
expiration of such Stock Options.

Common Shares which may be issued under this Plan may be either authorized
and unissued shares or issued shares which have been reacquired by the Company.
No fractional shares shall be issued under this Plan.

5. ELIGIBILITY AND GRANTS. Persons eligible for Stock Options under this
Plan shall consist of directors and managerial and other key employees of the
Company or a Subsidiary who hold positions with significant responsibilities or
whose performance or potential contribution, in the judgment of the Committee,
will benefit the future success of the Company or a Subsidiary. In selecting
the directors and employees to whom Stock Options will be awarded and the number
of shares subject to such Stock Options, the Committee shall consider the
position, duties and responsibilities of the eligible directors and employees,
the value of their services to the Company and the Subsidiaries and any other
factors the Committee may deem relevant.

6. STOCK OPTIONS. Stock Options granted under this Plan may be in the
form of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions as the Committee
shall deem desirable:

(a) GRANT. Stock Options may be granted under this Plan on terms and
conditions not inconsistent with the provisions of this Plan and in such
form as the Committee may from time to time approve and shall contain such
additional terms and conditions, not inconsistent with the express
provisions of this Plan, as the Committee shall deem desirable; provided,
however, that no more than 25% of the shares subject to Stock Options may
be awarded to any individual who is an employee of the Company or a
Subsidiary, no more than 5% of such shares may be awarded to any director
who is not an employee of the Company or a Subsidiary and no more than 30%
of such shares may be awarded to non-employee directors in the aggregate.

(b) STOCK OPTION PRICE. The option exercise price per Common Share
purchasable under a Stock Option shall be determined by the Committee at
the time of grant; provided, however, that in no event shall the exercise
price of a Stock Option be less than 100% of the Fair Market Value of the
Common Shares on the date of the grant of such Stock Option.
Notwithstanding the foregoing, in the case of a Participant who owns Common
Shares representing more than 10% of the outstanding Common Shares at the
time an Incentive Stock Option is granted, the option exercise price shall
in no event be less than 110% of the Fair Market Value of the Common Shares
at the time an Incentive Stock Option is granted to such Participant.

(c) STOCK OPTION TERMS. Subject to the right of the Company to
provide for earlier termination in the event of any merger, acquisition or
consolidation involving the Company, the term of each Stock Option shall be
fixed by the Committee; except that the term of Incentive Stock Options
will not exceed ten years after the date the Incentive Stock Option is
granted; provided, however, that in the case of a Participant who owns a

-4-

<PAGE>

number of Common Shares representing more than 10% of the Common Shares
outstanding at the time an Incentive Stock Option is granted, the term of
the Incentive Stock Option granted to such Participant shall not exceed
five years.

(d) EXERCISABILITY. Except as set forth in Section 6(f) and Section
7 of this Plan, Stock Options awarded under this Plan shall become
exercisable at the rate of one-fifth per year commencing on the date that
is one year after the date of the grant of the Stock Option and shall be
subject to such other terms and conditions as shall be determined by the
Committee at the date of grant.

(e) METHOD OF EXERCISE. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Company specifying the
number of Common Shares to be purchased. Such notice shall be accompanied
by payment in full of the purchase price in cash or, if acceptable to the
Committee in its sole discretion, in Common Shares already owned by the
Participant, or by surrendering outstanding Stock Options. The Committee
may also permit Participants, either on a selective or aggregate basis, to
simultaneously exercise Options and sell Common Shares thereby acquired,
pursuant to a brokerage or similar arrangement, approved in advance by the
Committee, and use the proceeds from such sale as payment of the purchase
price of such shares.

(f) SPECIAL RULE FOR INCENTIVE STOCK OPTIONS. With respect to
Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the number of shares with respect to which Incentive
Stock Options are exercisable under all plans of the Company or a
Subsidiary for the first time by a Participant during any calendar year
exceeds $100,000, or such other limit as may be required by the Code, such
Stock Options shall be Non-Qualified Stock Options to the extent of such
excess.

7. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.

(a) Except in the event of the death or disability of a Participant,
upon the resignation, removal or retirement from the board of directors of
any Participant who is a director of the Company or a Subsidiary or upon
the termination of Employment of a Participant who is not a director of the
Company or a Subsidiary, any Stock Option which has not yet become
exercisable shall thereupon terminate and be of no further force or effect
and, subject to extension by the Committee, any Stock Option which has
become exercisable shall terminate if it is not exercised within 12 months
of such resignation, removal or retirement.

(b) Unless the Committee shall specifically state otherwise at the
time an Option is granted, all Options granted under this Plan shall become
exercisable in full on the date of termination of a Participant's
employment or directorship with the Company or a Subsidiary because of his
death or disability, and, subject to extension by the Committee, all
Options shall terminate if not exercised within 12 months of the
Participant's death or disability.

-5-

<PAGE>

(c) In the event the Employment or the directorship of a Participant
is Terminated for Cause, any Option which has not been exercised shall
terminate as of the date of such termination for cause.

8. NON-TRANSFERABILITY OF STOCK OPTIONS. No Stock Option under this Plan
and no rights or interests therein shall be assignable or transferable by a
Participant except by will or pursuant to the laws of descent and distribution.
During the lifetime of a Participant, Stock Options are exercisable only by, and
payments in settlement of Stock Options will be payable only to, the Participant
or his or her legal representative.

9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

(a) The existence of this Plan and the Stock Options granted
hereunder shall not affect or restrict in any way the right or power of the
Board or the shareholders of the Company to make or authorize the
following: any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business; any merger,
acquisition or consolidation of the Company; any issuance of bonds,
debentures, preferred or prior preference stocks ahead of or affecting the
Company's capital stock or the rights thereof; the dissolution or
liquidation of the Company or any sale or transfer of all or any part of
its assets or business; or any other corporate act or proceeding, including
any merger or acquisition which would result in the exchange of cash, stock
of another company or options to purchase the stock of another company for
any Stock Option outstanding at the time of such corporate transaction or
which would involve the termination of all Stock Options outstanding at the
time of such corporate transaction.

(b) In the event of any change in capitalization affecting the Common
Shares of the Company, such as a stock dividend, stock split,
recapitalization, merger, consolidation, split-up, combination or exchange
of shares or other form of reorganization, or any other change affecting
the Common Shares, such proportionate adjustments, if any, as the Board in
its discretion may deem appropriate to reflect such change shall be made
with respect to the aggregate number of Common Shares for which Stock
Options in respect thereof may be granted under this Plan, the maximum
number of Common Shares which may be sold or awarded to any Participant,
the number of Common Shares covered by each outstanding Stock Option, and
the exercise price per share in respect of outstanding Stock Options.

-6-

<PAGE>

(c) The Committee may also make such adjustments in the number of
shares covered by, and the exercise price or other value of, any
outstanding Stock Options in the event of a spin-off or other distribution
(other than normal cash dividends) of Company assets to shareholders. In
the event that another corporation or business entity is being acquired by
the Company and the Company agrees to assume outstanding employee stock
options and/or the obligation to make future grants of options or rights to
employees of the acquired entity, the aggregate number of Common Shares
available for Stock Options under Section 4 of this Plan may be increased
accordingly.

10. AMENDMENT AND TERMINATION OF THIS PLAN. Without further approval of
the shareholders, the Board may at any time terminate this Plan or may amend it
from time to time in such respects as the Board may deem advisable, except that
the Board may not, without approval of the shareholders, make any amendment
which would (a) increase the aggregate number of Common Shares which may be
issued under this Plan (except for adjustments pursuant to Section 9 of this
Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing to
Participants under this Plan. The above notwithstanding, the Board may amend
this Plan to take into account changes in applicable securities, federal income
tax and other applicable laws.

11. MODIFICATION OF OPTIONS. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests of
the Company; provided, however, that no such modification, extension or renewal
shall reduce the exercise price or confer on the holder of such Stock Option any
right or benefit which could not be conferred on him by the grant of a new Stock
Option at such time and shall not materially decrease the Participant's benefits
under the Stock Option without the consent of the holder of the Stock Option,
except as otherwise permitted under this Plan.

12. MISCELLANEOUS.

(a) TAX WITHHOLDING. The Company shall have the right to deduct from
any settlement made under this Plan, including the delivery or vesting of
Common Shares, any federal, state or local taxes of any kind required by
law to be withheld with respect to such payments or to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. If Common Shares are used to
satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.

(b) NO RIGHT TO EMPLOYMENT. Neither the adoption of this Plan nor
the granting of any Stock Option shall confer upon any employee of the
Company or a Subsidiary any right to continued Employment with the Company
or a Subsidiary, as the case may be, nor shall it interfere in any way with
the right of the Company or a Subsidiary to terminate the Employment of any
of its employees at any time, with or without cause.

-7-

<PAGE>

(c) ANNULMENT OF STOCK OPTIONS. The grant of any Stock Option under
this Plan payable in cash is provisional until cash is paid in settlement
thereof. The grant of any Stock Option payable in Common Shares is
provisional until the Participant becomes entitled to the certificate in
settlement thereof. In the event the Employment or the directorship of a
Participant is Terminated for Cause, any Stock Option which is provisional
shall be annulled as of the date of such termination.

(d) OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and
other benefits received by a Participant under a Stock Option made pursuant
to this Plan shall not be deemed a part of a Participant's regular,
recurring compensation for purposes of the termination indemnity or
severance pay law of any country and shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit
plan or similar arrangement provided by the Company or a Subsidiary unless
expressly so provided by such other plan or arrangement, or except where
the Committee expressly determines that a Stock Option or portion of a
Stock Option should be included to accurately reflect competitive
compensation practices or to recognize that a Stock Option has been made in
lieu of a portion of competitive annual cash compensation. Stock Options
under this Plan may be made in combination with or in tandem with, or as
alternatives to, grants, stock options or payments under any other plans of
the Company or a Subsidiary. This Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation programs and additional
compensation arrangements as it deems necessary to attract, retain and
reward directors and employees for their service with the Company and its
Subsidiaries.

(e) SECURITIES LAW RESTRICTIONS. No Common Shares shall be issued
under this Plan unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable federal and state securities
laws. Certificates for Common Shares delivered under this Plan may be
subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Shares are then listed, and any applicable federal or
state securities law. The Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.

(f) STOCK OPTION AGREEMENT. Each Participant receiving a Stock
Option under this Plan shall enter into an agreement with the Company in a
form specified by the Committee agreeing to the terms and conditions of the
Stock Option and such related matters as the Committee shall, in its sole
discretion, determine.

(g) COST OF PLAN. The costs and expenses of administering this Plan
shall be borne by the Company.

(h) GOVERNING LAW. This Plan and all actions taken hereunder shall
be governed by and construed in accordance with the laws of the State of
Ohio, except to the extent that federal law shall be deemed applicable.

-8-

<PAGE>

(i) EFFECTIVE DATE. This Plan shall be effective upon the later of
adoption by the Board and approval by the Company's shareholders. This
Plan shall be submitted to the shareholders of the Company for approval at
an annual or special meeting of shareholders to be held no sooner than six
months after the effective date of the Conversion.

-9-

<PAGE>
FOUNDATION SAVINGS BANK
RECOGNITION AND RETENTION PLAN
AND TRUST AGREEMENT

ARTICLE I
DEFINITIONS

The following words and phrases when used in this Agreement with an initial
capital letter shall have the meanings set forth below. Wherever appropriate,
the masculine pronoun shall include the feminine pronoun and the singular shall
include the plural:

1.01 "Agreement" means the Foundation Savings Bank Recognition and
Retention Plan and Trust Agreement.

1.02 "Award" means a right granted to a Director or an Employee under
this Plan to receive Plan Shares.

1.03 "Bank" means Foundation Savings Bank, a savings and loan association
organized under the laws of the State of Ohio.

1.04 "Beneficiary" means the person or persons designated by a Recipient
to receive any benefits payable under this Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's estate.

1.05 "Board" means the Board of Directors of the Bank.

1.06 "Committee" means the Recognition and Retention Plan Committee
appointed by the Board pursuant to Article IV hereof.

1.07 "Common Shares" means common shares of the Corporation.

1.08 "Conversion" means the conversion of the Bank from mutual to stock
form.

1.09 "Corporation" means Foundation Bancorp, Inc., a savings and loan
holding company incorporated under the laws of the State of Ohio for the purpose
of holding all of the common shares of the Bank issued in connection with the
Conversion.

1.10 "Director" means any person who is a member of the Board of
Directors of the Corporation, the Bank or a Subsidiary.

1.11 "Employee" means any person who is employed by the Corporation, the
Bank or a Subsidiary.

<PAGE>

1.12 "Person" means an individual, corporation, partnership, trust, bank,
joint venture, pool, syndicate, sole proprietorship, unincorporated organization
or any other form of entity not specifically listed herein.

1.13 "Plan" means the Recognition and Retention Plan established by this
Agreement.

1.14 "Plan Shares" means the Common Shares held pursuant to the Trust and
which are awarded or issuable to a Recipient pursuant to the Plan.

1.15 "Plan Share Reserve" means the Common Shares held by the Trustee
pursuant to Sections 5.02 and 5.03 of this Agreement.

1.16 "Recipient" means any Director or Employee who receives an Award
under the Plan.

1.17 "Subsidiaries" means subsidiaries of the Bank, if any, which, with
the consent of the Board, agree to participate in the Plan.

1.18 "Trust" means the trust established by this Agreement.

1.19 "Trustee" means the person or persons or entity approved by the
Board pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan assets
for the purposes set forth herein.

ARTICLE II
ESTABLISHMENT OF THE PLAN AND TRUST

2.01 The Bank hereby establishes a Recognition and Retention Plan and
Trust upon the terms and subject to the conditions set forth in this Agreement.

2.02 The Trustee hereby accepts the Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions of this Agreement.

ARTICLE III
PURPOSE OF THE PLAN

3.01 The purpose of the Plan is to reward and retain the Directors and
Employees of the Corporation, the Bank and the Subsidiaries who are in key
positions of responsibility by providing such Directors and Employees with an
equity interest in the Corporation as reasonable compensation for their
contributions to the Corporation, the Bank and the Subsidiaries.

<PAGE>

ARTICLE IV
ADMINISTRATION OF THE PLAN

4.01 ROLE OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, which shall consist of not less than three members
of the Board who are not employees of the Bank. The Committee shall have all of
the powers set forth in this Plan. The interpretation and construction by the
Committee of any provisions of this Agreement or of any Award granted hereunder
shall be final, conclusive and binding. The Committee shall act by the vote, or
the written consent, of a majority of its members. The Committee shall report
actions and decisions with respect to the Plan to the Board upon request by the
Board.

4.02 ROLE OF THE BOARD. The members of the Committee and the Trustee
shall be appointed or approved by and shall serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from or add
members to the Committee and may remove, replace or add one or more Trustees.
The Board, in its absolute discretion, may take any action under or with respect
to the Plan which the Committee is authorized to take and may reverse or
override any action taken or decision made by the Committee under or with
respect to the Plan or take any other action reserved to the Board under this
Agreement; provided, however, that the Board may not revoke any Award already
granted under this Agreement. All decisions, determinations and interpretations
of the Board shall be final, conclusive and binding upon all parties having an
interest in the Plan.

4.03 LIMITATION ON LIABILITY. No member of the Board or the Committee,
nor any Trustee, shall be liable for any determination made in good faith with
respect to the Plan or any Plan Shares or Awards granted under the Plan. If a
member of the Board or of the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of anything done or not done by such member in such capacity under or
with respect to this Plan, the Bank shall indemnify such member against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such member in connection with such action,
suit or proceeding if such member acted in good faith and in a manner such
member reasonably believed to be in or not opposed to the best interests of the
Corporation, the Bank and the Subsidiaries and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such member's conduct
was unlawful.

ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE

5.01 AMOUNT AND TIMING OF CONTRIBUTIONS. The Board shall determine the
amounts (or the method of computing the amounts) to be contributed by the Bank
to the Trust. Such amounts shall be paid to the Trustee at the time of
contribution. No contributions to the Trust by Directors or Employees shall be
permitted.

<PAGE>

5.02 INVESTMENT OF TRUST ASSETS. Except as otherwise permitted by
Section 8.02 of this Agreement, the Trustee shall invest all of the Trust's
assets, after providing for any required withholding as needed for tax purposes,
exclusively in Common Shares; provided, however, that the Trust shall not
purchase a number of Common Shares equal to more than 3% of the number of Common
Shares issued in connection with the Conversion, except that if the Bank's
tangible capital exceeds 10%, the Trust may purchase a number of Common Shares
equal to up to 4% of the Common Shares issued in connection with the Conversion.
After such investment, the Common Shares shall be held by the Trustee in the
Plan Share Reserve until such Common Shares are subject to one or more Awards.
Any funds held by the Trust before purchasing Common Shares shall be invested by
the Trustee in such interest-bearing account or accounts at the Bank as the
Trustee shall determine to be appropriate.

5.03 EFFECT OF ALLOCATIONS, RETURNS AND FORFEITURES UPON PLAN SHARE
RESERVES. Upon the allocation of Awards under Section 6.02 of this Agreement,
or the decision of the Committee to return Plan Shares to the Corporation, the
Plan Share Reserve shall be reduced by the number of Plan Shares so allocated or
returned. Any Plan Shares subject to an Award which is subject to forfeiture by
the Recipient pursuant to Section 7.01 of this Agreement shall be retained in
the Plan Share Reserve.

ARTICLE VI
ELIGIBILITY; ALLOCATIONS

6.01 ELIGIBILITY. Directors and Employees are eligible to receive Awards
within the sole discretion of the Committee.

6.02 ALLOCATIONS. The Committee will determine which of the Directors
and Employees will be granted Awards and the number of Plan Shares covered by
each Award; provided, however, that: (a) the aggregate number of Plan Shares
covered by Awards to any one Employee shall not exceed 25% of the total number
of Plan Shares, (b) no more than 5% of the Plan Shares shall be awarded to any
Director who is not an Employee, and (c) no more than 30% of the Plan Shares
shall be awarded in the aggregate to Directors who are not Employees. In the
event Plan Shares are forfeited for any reason or additional Plan Shares are
purchased by the Trustee, the Committee may, from time to time, determine which
of the Employees will be granted additional Awards to be awarded from forfeited
or additional Plan Shares.

In selecting the Directors and Employees to whom Awards will be granted and
the number of shares covered by such Awards, the Committee shall consider the
position, duties and responsibilities of the eligible Directors and Employees,
the value of their services to the Corporation, the Bank and the Subsidiaries
and any other factors the Committee may deem relevant. All allocations by the
Committee shall be subject to review and approval or rejection by the Board.

<PAGE>

6.03 FORM OF ALLOCATION. As promptly as practicable after a
determination is made pursuant to Section 6.02 of this Agreement that an Award
is to be made, the Committee shall notify the Recipient in writing of the grant
of the Award, the number of Plan Shares covered by the Award and the terms upon
which the Plan Shares subject to the Award may be earned. The date on which the
Committee determines that an Award is to be made or a later date designated by
the Committee shall be considered the date of grant of the Awards. The
Committee shall maintain records as to all grants of Awards under the Plan.

6.04 ALLOCATIONS NOT REQUIRED. None of the Directors or Employees,
either individually or as a group, shall have any right or entitlement to
receive an Award under the Plan. The Committee may, with the approval of the
Board, and shall, if so directed by the Board, return all Common Shares and
other assets in the Plan Share Reserve to the Corporation at any time and
thereafter cease issuing Awards.

6.05 SHAREHOLDER APPROVAL. This Agreement shall be submitted to the
shareholders of the Corporation at an annual or special meeting to be held no
sooner than six months after the effective date of the Conversion.
Notwithstanding anything to the contrary in this Agreement, no Awards shall be
granted hereunder until the shareholders of the Corporation approve this
Agreement.

ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

7.01 EARNING PLAN SHARES; FORFEITURES.

(a) GENERAL RULES. Unless the Committee shall specifically
state a longer period of time over which Awards shall be earned and non-
forfeitable at the time an Award is granted, Plan Shares covered by each Award
shall be earned and non-forfeitable by a Recipient over a period of five years
at the rate of one-fifth per year commencing on the date which is one year after
the date of the grant of such Award. As Plan Shares become earned and non-
forfeitable, any cash dividends, returned capital and earnings thereon shall
also be earned and non-forfeitable.

(b) REVOCATION. Unless otherwise permitted by applicable laws
and regulations, any Plan Shares and any cash dividends, returned capital and
earnings thereon that have not been earned and are not non-forfeitable in
accordance with Section 7.01(a) of this Agreement shall be forfeited in the
event that (i) a Recipient who is a Director ceases to serve on the Board or
(ii) a Recipient who is not a Director of the Bank ceases to be an Employee of
the Bank, except as otherwise provided in subsection (c) of this Section 7.01.

<PAGE>

(c) EXCEPTION FOR TERMINATIONS DUE TO DEATH OR DISABILITY. All
Plan Shares and cash dividends, returned capital and earnings thereon subject to
an Award held by a Recipient whose service as a Director or Employee of the
Corporation, the Bank or a Subsidiary terminates due to (i) death or (ii)
disability (as determined by the Committee) shall be deemed fully earned and
non-forfeitable as of the later of the Recipient's last day of service as a
Director or as an Employee and shall be distributed as soon as practicable
thereafter.

7.02 DISTRIBUTION OF PLAN SHARES.

(a) TIMING OF DISTRIBUTIONS: GENERAL RULE. Except as otherwise
provided in this Agreement, Plan Shares shall be distributed to the Recipient or
his or her Beneficiary, as the case may be, as soon as practicable after they
have been earned, together with any cash distributions, returned capital and
earnings thereon with respect to such Plan Shares that have been earned.

(b) FORM OF DISTRIBUTION. All distributions of Plan Shares,
together with any shares representing stock dividends, shall be distributed in
the form of Common Shares. No fractional shares shall be distributed. Payments
representing cash dividends, returned capital and earnings thereon shall be made
in cash.

(c) WITHHOLDING. The Trustee may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable withholding and
employment taxes and, if the amount of such cash payment is not sufficient, the
Trustee may require the Recipient or Beneficiary to pay to the Trustee the
amount required to be withheld as a condition of delivering the Plan Shares.
The Trustee shall pay over to the Bank or the Subsidiary which employs or
employed such Recipient or which the Recipient serves or served as a Director,
any such amount withheld from or paid by the Recipient or Beneficiary.

(d) REGULATORY EXCEPTIONS. Notwithstanding anything to the
contrary in this Agreement, no Plan Shares, upon becoming fully earned and non-
forfeitable, shall be distributed unless and until all of the requirements of
all applicable laws and regulations shall have been met.

7.03 VOTING OF PLAN SHARES. All Common Shares held by the Trustee in the
Plan Share Reserve which have not yet been earned by a Recipient pursuant to
Section 7.01 of this Agreement shall be voted by the Trustee. A Recipient shall
be entitled to direct the voting of Plan Shares which have been earned pursuant
to Section 7.01 of this Agreement but have not yet been distributed to him.

<PAGE>

ARTICLE VIII
TRUST

8.01 TRUST. The Trustee shall receive, hold, administer, invest and make
distributions and disbursements from the Trust in accordance with the provisions
of the Plan and the Trust and the applicable directions, rules, regulations,
procedures and policies established by the Committee pursuant to this Agreement.

8.02 MANAGEMENT OF TRUST. The Trustee shall have complete authority and
discretion with respect to the management, control and investment of the Trust,
and the Trustee shall invest all assets of the Trust, except those attributable
to cash dividends paid with respect to Plan Shares not held in the Plan Share
Reserve, in Common Shares to the fullest extent practicable, and except to the
extent that the Trustee determines that the holding of monies in cash or cash
equivalents is necessary to meet the obligations of the Trust. The Trustee
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper with respect to the duties of the Trustee hereunder,
including the following powers:

(a) To invest up to 100% of all Trust assets in Common Shares
without regard to any law now or hereafter in force limiting investments
for trustees or other fiduciaries. The investment authorized herein may
constitute the only investment of the Trust, and, in making such
investment, the Trustee is authorized to purchase Common Shares from the
Corporation or from any other source. Such Common Shares so purchased may
be outstanding, newly issued or treasury shares;

(b) To invest any Trust assets not otherwise invested in
accordance with Section 8.02(a) of this Agreement in such deposit accounts
and certificates of deposit (including those issued by the Bank),
obligations of the United States government or its agencies or such other
investments as shall be considered the equivalent of cash;

(d) To cause stocks, bonds or other securities to be registered
in the name of a nominee, without the addition of words indicating that
such security is an asset of the Trust (but accurate records shall be
maintained showing that such security is an asset of the Trust);

(e) To hold cash without interest in such amounts as may be
reasonable, in the opinion of the Trustee, for the proper operation of the
Plan and the Trust;

(f) To employ brokers, agents, custodians, consultants and
accountants;

(g) To hire counsel to render advice with respect to the rights,
duties and obligations of the Trustee hereunder, and such other legal
services or representation as the Trustee may deem desirable; and

<PAGE>

(h) To hold funds and securities representing the amounts to be
distributed to a Recipient or his or her Beneficiary as a consequence of a
dispute as to the disposition thereof, whether in a segregated account or
held in common with other assets of the Trust.

Notwithstanding anything herein contained to the contrary, the Trustee shall not
be required to make any inventory, appraisal or settlement or report to any
court, or to secure any order of court for the exercise of any power herein
contained, or to give bond.

8.03 RECORDS AND ACCOUNTS. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.

8.04 EARNINGS. All earnings, gains and losses with respect to Trust
assets shall be allocated, in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Recipients or to the general account
of the Trust, depending on the nature and allocation of the assets generating
such earnings, gains and losses. Without limiting the generality of the
foregoing, any earnings on cash dividends or returned capital received with
respect to Plan Shares shall be allocated (a) to accounts for Recipients, if
such shares which are the subject of outstanding Awards, and shall become earned
and distributed as specified in Article VII of this Agreement or (b) otherwise
to the Plan Share Reserve if such Plan Shares are not the subject of outstanding
awards.

8.05 EXPENSES. All costs and expenses incurred in the operation and
administration of the Plan shall be paid by the Bank.

ARTICLE IX
MISCELLANEOUS

9.01 ADJUSTMENTS FOR CAPITAL CHANGES. The aggregate number of Plan
Shares available for issuance pursuant to the Awards and the number of Plan
Shares to which any Award relates shall be proportionately adjusted for any
increase or decrease in the total number of outstanding Common Shares issued
subsequent to the effective date of the Plan if such increase or decrease
resulted from any split, subdivision or consolidation of shares or other capital
adjustment, or other increase or decrease in such shares effected without
receipt or payment of consideration by the Corporation.

9.02 AMENDMENT AND TERMINATION OF PLAN. The Board may, by resolution, at
any time amend or terminate the Plan. The power to amend or terminate the Plan
shall include the power to direct the Trustee to return to the Corporation or
the Bank all or any part of the assets of the Trust, including Common Shares
held in the Plan Share Reserve, as well as Common Shares and other assets
subject to Awards which are not yet earned by the Directors or Employees to whom
they are allocated; provided, however, that the termination of the Trust shall

<PAGE>

not affect a Recipient's right to earn Awards and to the distribution of Common
Shares relating thereto, including earnings thereon, in accordance with the
terms of this Agreement and the grant by the Committee or the Board.

9.03 NONTRANSFERABLE. Awards shall not be transferable by a Recipient.
During the lifetime of the Recipient, an Award may only be earned by and paid to
the Recipient who was notified in writing of the Award by the Committee pursuant
to Section 6.03 of this Agreement. No Recipient or Beneficiary shall have any
right in or claim to any assets of the Plan or the Trust, nor shall the
Corporation, the Bank or any Subsidiary be subject to any claim for benefits
hereunder.

9.04 DIRECTORSHIP RIGHTS. Neither this Agreement nor any grant of an
Award hereunder nor any action taken by the Trustee, the Committee or the Board
in connection with the Plan shall create any right, either express or implied,
on the part of any Director to continue to serve as a Director of the Bank or a
Subsidiary.

9.05 EMPLOYMENT RIGHTS. Neither this Agreement nor any grant of an Award
hereunder nor any action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right, either express or implied, on
the part of any Employee to continue in the employ of the Corporation, the Bank
or a Subsidiary.

9.06 VOTING AND DIVIDEND RIGHTS. No Recipient shall have any voting or
dividend rights or other rights of a shareholder in respect of any Plan Shares
covered by an Award, except as expressly provided in Sections 7.01, 7.02 and
7.03 of this Agreement, prior to the time such Plan Shares are actually
distributed to such Recipient.

9.07 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Ohio, except to the extent that federal law shall
be deemed applicable.

9.08 EFFECTIVE DATE. Subject to Section 6.05 of this Agreement, this
Agreement shall be effective as of the ___ day of ____________, 1997.

9.09 TERM OF PLAN. The Plan shall remain in effect until the earlier of
(a) the termination of the Plan by the Board or (b) the distribution of all
assets from the Trust. The termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in effect until they
have been earned and paid or by their terms expire or are forfeited.

9.10 TAX STATUS OF TRUST. It is intended that the trust established
hereby be treated as a grantor trust of the Bank under the provisions of Section
671, ET SEQ., of the Internal Revenue Code of 1986, as amended (26 U.S.C.
Section 671 ET SEQ.).

<PAGE>

IN WITNESS WHEREOF, the following Trustees execute this Agreement,
accepting and binding themselves to undertake and perform the obligations and
duties of the Trustee hereunder and consenting to the foregoing Agreement
effective the day of , 1996.
--- -----------------

By: (Trustee)
---------------------------

IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer and duly attested, all as of the day of
, 1996. ---
- -----------------

FOUNDATION SAVINGS BANK

By:
--------------------------------------
Laird L. Lazelle
its President

ATTEST:

- ---------------------------------
Dianne K. Rabe
its Vice President

<PAGE>

OFFICE SPACE LEASE AGREEMENT

Garfield Park Associates Limited Partnership, a Delaware Limited Partnership
("Lessor"), and The Foundation Savings & Loan Company or its name successor, an
Ohio Corporation (the "Lessee"), hereby enter into the following Office Space
Lease Agreement this 25th day of October, 1990.

1. THE PREMISES. Lessor leases to Lessee, and Lessee leases from Lessor, on
the terms and conditions set forth herein, a portion of the building (the
"Building") located at 25 Garfield Place, Cincinnati, Ohio on land described in
Exhibit A attached hereto (the "Land"). The portion of the Building hereby
leased to Lessee (the "Premises") contains approximately 3129 square feet of
leaseable space, is located on the first floor of the Building, and is shown on
the plan of such floor attached hereto as Exhibit B. This Lease includes the
right or Lessee to use three parking spaces at the rear of the building subject
to the lease agreement with the City of Cincinnati.

Lessor also grants to Lessee, together with and subject to the same rights
granted from time to time by Lessor to other tenants and occupants of the
Building, the right to use the lobbies, elevators, hallways, and other common
areas within the Building, and sidewalks, parking areas, driveways, landscaped
areas, and any other facilities or improvements located on the Land (the "Common
Areas").

2. TERM.

2.1 DEFINITIONS. As used in this Lease, the following terms shall have the
following meanings:

2.1.1 "Commencement Date" shall mean the date on which Lessor gives Lessee
written notice that the Premises are "Available for Occupancy" (as hereinafter
defined). Upon Lessor's request, Lessee shall execute and deliver a written
memorandum setting forth the Commencement Date of this Lease. The Commencement
date will be the 1st of the month following the delivery and occupancy by the
Lessee of the premises. Delivery is anticipated to be on or before January 7,
1991, and occupancy by Lessee is to be on or before January 27, 1991.

2.1.2 The Premises shall be deemed "Available for Occupancy" on the later to
occur of (i) the date that Lessor notifies Lessee that the "Tenant
Improvements," as defined in Section 3, have been completed, and (ii) the
earlier of the date that the City of Cincinnati has given permission to occupy
the Premises or the date that Lessee takes occupancy of the Premises.

2.1.3 "Lease "Year" shall mean the 12 month period beginning on the
Commencement Date if it is the first day of a month, or the first day of the
first month after the

<PAGE>

Commencement Date if it is other than the first day of a month, and on each
anniversary thereof throughout the term of this Lease and any renewals or
extensions.

2.2 TERM. This Lease shall be for a term (the "Term") of ten (10) Lease Years
beginning at the Commencement Date.

2.3 OPTION. Lessee shall have an option to extend this lease for two (2)
additional five-year (5) terms under the same terms and conditions as this
lease, with the base rent to be adjusted by the increase in the Consumer Price
Index as compared with the immediately preceding year. There will be a five per
cent (5%) cap on each C.P.I. annual increase. Lessee shall give Lessor ninety
(90) days' written notice upon the exercise of each of these options.

3. CONSTRUCTION.

3.1 INSTALLATION OF IMPROVEMENTS. Lessor shall complete and install within
the Premises substantially in accordance with plans and specifications prepared
by Lessor and approved by Lessee as provided in Section 3.2, such improvements
required by Lessee which are normally performed by the construction trades (the
"Tenant Improvements"). The quantities, character, location and manner of
installation of all of the foregoing items shall be subject to limitations
imposed by governmental authorities. Lessor is to pay $7.00 per square foot
toward the improvements.

3.2 APPROVAL OF PLANS AND COST ESTIMATE. As soon as possible after the
execution of this Lease, but no later than 14 days after the date hereof, Lessee
shall provide Lessor with a description of Lessee's requirements in sufficient
detail so as to enable Lessor to prepare complete plans and specifications for
the Tenant Improvements. Such plans and specifications (the "Plans and
Specifications") and a cost estimate (the "Cost Estimate") for the Tenant
Improvements shall then be prepared by Lessor and submitted to Lessee. Within 14
days after Lessor provided Lessee with the Plans and Specifications and the Cost
Estimate, Lessee shall approve the Plans and Specifications and the Cost
Estimate.

3.3 PAYMENTS OF COSTS. Lessee shall pay Lessor the cost less $7.00 per square
foot of the Tenant Improvements within 30 days after billing by Lessor. Invoices
may be rendered during the progress of the work as to enable Lessor to pay its
construction manager, architects, trade contractors and the like.

3.4 OTHER WORK BY LESSEE. Unless otherwise agreed, all work not within the
scope of the construction trades employed on the Building, such as installation
of furniture, telephone equipment and wiring, and office equipment, shall be
furnished and installed by Lessee at its expense. Lessee shall conduct such work
in a manner as not to interfere unreasonably with or delay the work Lessor's
contractors. Lessor shall give access and entry to the Premises to Lessee and
its contractors to perform such work, provided, however, that if such entry is
prior to the commencement of the Term of this Lease, such

-2-

<PAGE>

entry shall be subject to all of the terms and conditions of this Lease except
the payment of rent.

3.5 PUNCH LIST. Lessee's taking possession of the Premises shall be
conclusive evidence of (a) Lessee's acceptance of the Premises, (b) that the
Premises were in good order and satisfactory condition when Lessee took
possession, and (c) that the Tenant Improvements were satisfactorily completed,
except for such minor items as Lessor and Lessee shall describe on a "Punch
List" to be prepared and signed by both parties within fourteen (14) days after
Lessee's taking possession of the Premises.

4. RENT.

4.1 BASE RENT. See attached table.

4.2 MANNER OF PAYMENT OF BASE RENT. Lessee shall pay the Base rent for each
Lease Year in equal monthly installments, in advance, on the first day of each
month during such Lease Year, without demand, deduction, counterclaim or setoff,
at Lessor's notice address or at such other address as Lessor may designate by
notice to Lessee.

4.3 LATE CHARGES. If any installment of Base Rent, "Additional Rent" (as
hereinafter defined) or any other amount required to be under this Lease is not
paid when due or within 10 days thereafter, Lessee shall immediately pay Lessor
a service fee in the amount of 4% of such installment or amount. In addition, if
any installment of Base Rent or Additional Rent of any other amount required to
be paid under this Lease is not paid when due or within 20 days thereafter, each
such unpaid installment or amount shall bear interest from the date it was due
until paid at the rate of 2% per month or, if less, the maximum rate of interest
permitted by law.

5. ADDITIONAL RENT.

5.1 ADDITIONAL RENT. Lessee shall pay as additional rent ("Additional Rent")
for the Premises during each Lease Year, "Lessee's Share" of "Taxes" and
"Operating Expenses" in connection with the "Property".

5.2 DEFINITIONS. As used herein, the following terms have the following
meanings:

5.2.1 "Lessee's Share" means the Lessee's pro rata share of Taxes and Operating
Expenses. Lessee's Share is equal to the number of LEASEABLE square feet of
space in the premises divided by the total number of leaseable square feet of
space in the Building.

5.2.2 "Taxes" shall mean all real estate taxes and assessments, or substitutes
therefor, all charges in lieu of taxes, and all other payments in lieu of taxes
made by special agreement or otherwise incurred during any calendar year on the
Property, and any personal property taxes imposed upon the Property or any part
thereof. Reasonable expenses incurred by Lessor in obtaining or attempting to
obtain a reduction of any Taxes shall be included in

-3-

<PAGE>

the amount of any such Taxes. Taxes that are being contested by Lessor shall
nevertheless be included for purposes of the computation of Additional Rent;
provided, however, that if Lessee shall have paid any amount of Additional Rent
and Lessor thereafter received a refund of any portion of any Taxes on which
such payment was based, Lessor shall refund to Lessee the appropriate portion of
such refund. Lessor shall have no obligation to contest the imposition of any
Taxes and may settle, consent to, waive or otherwise resolve any such contest in
its sole discretion.

5.2.3 "Operating Expenses" shall mean and include all costs of a non-capital
nature incurred in any calendar year in operating and maintaining, managing,
servicing, and repairing the PROPERTY and the Common Areas, including without
limitation, all maintenance, utilities, management, repair, replacement,
insurance costs, licenses, permit and inspection fees, the costs of wages and
other employee renumerations and taxes, ground rents, materials and services for
the operation, management, security (if any) and maintenance of the Property and
the Common Areas.

5.2.4 "Property" shall mean and include the Land, the Building and the other
improvements on the Land, including without limitation, all fixtures, machinery,
equipment, apparatus and appurtenances in, on or used in connection with the
operation thereof.

5.3 BUDGET. For each calendar year during the Term, Lessor shall prepare and
submit to Lessee a budget showing estimated Taxes and Operating Expenses for
such calendar year ("Budgeted Taxes and Operating Expenses"). Lessee shall pay
as Additional Rent in equal monthly installments, in advance, on the first day
of each month during the Term, without demand, deduction, counterclaim or
setoff, at Lessor's notice address, one-twelfth (1.12) of Lessee's Share of the
Budgeted Taxes and Operating Expenses. Subject to caps as agreed.

5.4 STATEMENTS. Following the end of each calendar year ending during the
Term, Lessor shall furnish to Lessee a statement (a "Statement") showing a
comparison of Lessee's Share of the actual Taxes and Operating Expenses incurred
for the calendar year just ended with the amount of Additional Rent paid by
Lessee during such year. If the amount of Additional Rent paid by Lessee for the
calendar year just ended is less than Lessee's Share of the actual Taxes and
Operating Expenses for such year, the Statement shall notify Lessee of Lessee's
Share of such deficiency (a "Tax and Expenses Deficiency"), and Lessee shall pay
the amount of such Tax and Expense Deficiency within thirty (30) days of such
Statement subject to caps as agreed. If the amount of Additional Rent paid by
Lessee for the calendar year just ended is greater than Lessee's Share of the
Taxes and Operating Expenses for such year, the Statement shall notify Lessee of
Lessee's Share of such excess ( a "Tax and Expenses Excess"), and Lessee shall
be entitled to a credit against the Additional Rent next becoming due in an
amount equal to Lessee's Share of such Tax and Expenses Excess, or if the Term
has ended, a refund in the amount of any unapplied portion of Lessee's share of
such Tax and Expenses Excess. As used in this

-4-

<PAGE>

Section 5.4, "Additional Rent" excludes payments made by Lessee pursuant to
Section 7.2 for Lessee's Share of electrical expenses.

5.5 FINES, PENALTIES, COSTS, INTERESTS. Every fine, penalty, cost, and
interest which may be added for nonpayment or late payment of any amounts which
Lessee is required to pay pursuant to this Lease, shall also constitute
Additional Rent. If Lessee fails to pay, Lessor shall have all rights, powers,
and remedies with respect thereto as are provided herein or by law in the case
of non-payment of Base Rent.

5.6 FISCAL YEAR. Lessor reserves the right to establish a Fiscal Year for
purposes of making the Budgets and Statements of annual Taxes and Operating
Expenses. If such Fiscal Year is established, the Taxes and Operating Expenses
and Additional Rent payments described in this Section 5 shall be determined on
a Fiscal year to Fiscal Year basis, with appropriate prorations being made for
any Lease Year beginning before or ending after a full fiscal year.

6. OBLIGATIONS OF LESSOR. Lessor agrees during the Term of this Lease to
furnish the following so long as Lessee is not in default hereunder:

6.1 SERVICES. Lessor shall furnish daily cleaning services for the Premises
after hours on business days, Lessor shall also furnish unheated water and sewer
service for drinking, lavatory and toilet purposes, drawn through fixtures
installed by Lessor or with Lessor's consent.

6.2 BUSINESS DAYS. Building services shall be available and provided on
business days. Business days are Monday through Friday 8:00 a.m. to 6:00 p.m.
The following Holidays are excepted: Christmas, Thanksgiving, New year's Day,
July Fourth, Memorial Day and Labor Day (the latter two being celebrated on
Mondays).

6.3 EXTRAORDINARY USE. Lessee acknowledges that the services to be supplied
by Lessor and the load bearing capacity of the Building will be sufficient only
for ordinary general office purposes. Any additional capacity or structural
support needed for computers, heat-generating machines or other equipment or
uses beyond ordinary general office uses shall be subject to Lessor's prior
written approval and shall be installed and maintained at Lessee's sole
expenses.

6.4 INTERRUPTION OF SERVICES. Lessor reserves the right, without being liable
to Lessee and without abatement or diminution in Base Rent, to suspend, delay or
stop any of the services to be furnished and provided by Lessor under this
Section 6 whenever necessary due to any cause specified in Section 15 or any
other cause beyond Lessor's control, or for emergency, inspection, cleaning,
repairs, replacements, alterations, improvements or renewals which in Lessor's
judgment are desirable or necessary; and Lessor may suspend any such services
until completion of any such work or until the cause of the suspension has been
removed. Failure by Lessor to any extent to furnish any defined services, or any
cessation of services due to any caused described in the preceding sentence,
shall not

-5-

<PAGE>

render Lessor liable in any respect for damages to either person or property,
nor be construed as an eviction of Lessee, nor work an abatement of Base Rent,
nor relieve Lessee from fulfillment of any covenant or agreement of this Lease.
Should any of the equipment or machinery utilized in supplying the services
breakdown, or for any cause cease to function properly, Lessor shall use
reasonable diligence to repair the same promptly, but Lessee shall have no right
to terminate or repudiate this Lease, and shall have no claim for rebate or
abatement of rent or damages, on account of any resulting interruptions in
service.

6.5 REPAIRS. Lessor shall provide for maintenance of the exterior and
structure of the Building and Premises (including the heating, ventilation and
air conditioning system serving the Premises, if any), and shall contract for
the repair and replacement of electric lighting in the Common Areas, and
maintenance of the Common Areas and the underlying land and improvements, all in
a manner compatible with good quality office space.

7. OBLIGATIONS OF LESSEE. During the Term of this Lease, Lessee agrees as
follows:

7.1 USE OF PREMISES. Lessee shall continuously throughout the Term occupy and
use the Premises. Lessee shall use the Premises for general office purposes and
for no other purpose. Without limiting the generality of the foregoing, Lessee
shall not place, or permit to be placed, any vending machines in the Premises,
excluding an ATM.

7.2 ELECTRIC CURRENT. Lessee shall arrange with the appropriate company to
have electrical service supplied to the Premises and to be billed directly for
Lessee's consumption of electricity. Lessee shall pay for all electricity used
at the Premises on a timely basis. Lessee shall not permit its use of electrical
current to exceed Lessee's proportionate share of the capacity of the feeders,
risers or other electrical installations serving Lessee's Premises. Any risers
or other installations required to meet Lessee's excess electrical requirements,
upon written request of Lessee, will be installed by Lessor at Lessee's expense,
provided that in Lessor's sole judgment the same are necessary and will not (a)
cause permanent damage or injury to the Building or Premises, (b) cause or
create a dangerous or hazardous condition, (c) entail excessive or unreasonable
alterations, repairs or expenses, or (d) interfere with or disturb other tenants
or occupants of the Building. Lessee shall not make any alterations or additions
to the electrical equipment, appliances or installations without the prior
written consent of Lessor in each instance.

7.3 COMPLIANCE WITH LAWS AND REGULATIONS. Lessee shall comply with all laws,
regulations and orders of any governmental authority and with the rules and
regulations, as reasonably adopted and modified from time to time by Lessor (the
"Rules and Regulations"). The Rules and Regulations for the Building are
attached hereto and made a part hereof as Exhibit C. Lessee shall not do or
permit anything to be done in or about the Premises or the Common Areas which
will in any way obstruct or interferee with the rights of other tenants or
occupants of the Building or injure or annoy them or create a nuisance by

-6-

<PAGE>

permitting the emission of fumes or noxious odors or by the operation of
excessively loud or vibration-prone equipment or otherwise. Lessee shall not do
or permit anything to be done which will increase the premiums of fire insurance
for the Building. At no time during the Term shall Lessee store any inventory,
equipment or any other materials outside of the Premises except with agreement
of Lessor. Lessor shall not be responsible to Lessee for the nonobservance of
the Rules and Regulations by any other tenant or occupant of the Building or the
Office Park, but Lessor shall use reasonable efforts to enforce such Rules and
Regulations in a fair and non-discriminatory manner.

7.4 CARE OF PREMISES. Lessee at its expense shall maintain the Premises in
good condition and repair, and shall commit no waste therein or damage thereto,
excluding ordinary wear and tear.

7.5 MAJOR ALTERATIONS. Lessee shall make no major alterations in or
installations of equipment or to the Premises, unless and until plans and
specifications therefor have been approved by Lessor in writing. Lessee may
remove its moveable trade fixtures prior to the expiration or earlier
termination of this Lease, provided that Lessee repairs any damage to the
Premises caused by such removal. Nothing in this Lease shall, however, be
construed to constitute the consent of Lessor to the creation of any lien, and
no person shall be entitled to any lien on the Building, the Common Areas, the
Office Park or the underlying land or related improvements. In the event,
despite this provision, a lien is placed thereon, Lessee shall cause such lien
to be removed or shall, immediately upon request of Lessor, provide a corporate
surety bond satisfactory to Lessor which shall save Lessor harmless under such
lien and from any interest incurred by Lessor in connection therewith. Lessee
shall indemnify Lessor from any and all costs and expenses incurred by Lessor as
a result of such liens. All approved major installations, alterations, additions
or other improvements made by Lessee shall be made in a good and workmanlike
manner, between such hours and by such contractors or mechanics as may be
approved in writing by Lessor, and in such a way that utilities will not be
interrupted and other tenants and occupants of the Building will not suffer
unreasonable inconvenience or interference. Both during and after the
performance of any such work, Lessor shall have access, by prior arrangement
with Lessee, to any and all mechanical installations in the Premises, including,
but not limited to, air conditioning, fans, ventilating systems, machine rooms
and electrical closets; and Lessee agrees not to construct or permit the
installation of partitions and/or other obstructions in the Premises, which
might interfere with Lessor's free access to the Premises or Building, or impede
the free flow of air to and from air vents and other portions of the heating,
air conditioning and ventilating systems in the Premises and Building.

7.6 ASSIGNMENT AND SUBLETTING. Lessee shall not assign, sublet, mortgage, or
pledge the Premises or this Lease, in whole or in part, without the prior
written consent of Lessor, such consent to have been secured no later than 60
days prior to the effective date of any assignment or sublease. Any purported
assignment, or sublease, entered into by Lessee with a third party for the
Premises or any portion thereof without Lessor's prior written consent shall be
void. In the event any assignment or subletting is approved, such

-7-

<PAGE>

assignment or subletting shall not become effective until the assignee or
sublessee has delivered to Lessor an acknowledged instrument in recordable form
assuming all of the obligations, covenants, and responsibilities of Lessee
hereunder. Lessee shall, notwithstanding any approved assignment or sublease,
remain primarily liable to perform the obligations imposed on Lessee hereunder.
In the event that the Lessee sub-leases to a third party and the sub-lessee
defaults on the approved lease agreement, then the lease terms will revert to
the original agreement and the original lessee will not be responsible for any
excess rent or any past due excess rents due to the default of sub-lessee. In
the event Lessor approves an assignment or sublease of this Lease, Lessee shall
pay to Lessor 100% of any "Excess Subletting Rent" (as hereafter defined) which
shall be paid at the same time as payments of Base Rent hereunder. As used
herein, "Excess Subletting Rent" shall mean that amount of "Subletting Rent:"
(as hereafter defined) for any month during the Term which is in excess of the
amount of Base Rent owed by Lessee under this Lease for the same month.
"Subletting Rent" shall mean the gross amount paid during the Lease Term to
Lessee as a sublessor or assignor, by a sublessee or assignee, pursuant to a
sublease or assignment which has been approved by Lessor, or in consideration of
such subletting or assignment. Provided, however, that should Lessee not be
released upon subletting, any Excess Subletting Rent may be retained by Lessee
and not paid to Lessor In any event, Lessor shall not unreasonably withhold its
consent to Lessee's subletting.

7.7 SIGNS. Lessee shall not place or permit to be placed or maintained any
sign or other advertising matter in or on any portion of the Building outside
the Premises, including, but not limited to, any exterior doors, walls, roof or
windows of the Premises, the Building or the Common Areas. Lessee shall be
permitted to place or maintain any decoration, lettering or advertising matter
on the interior of the glass of any window or door of the Premises, with
approval of Lessor, including ATM.

8. RIGHTS RESERVED TO LESSOR. Lessor shall have the following rights:

8.1 ENTRANCE. Lessor shall have the right to inspect the Premises at all
reasonable times, and to show them after Lessee gives notice of intended
vacation or within ninety (90) days prior to the expiration of the Lease Term,
and to enter the Premises at any reasonable time upon prior arrangement with
Lessee to make such repairs, additions or alterations as it may deem necessary
for the safety, improvements, or preservation of the Building, all of which
shall be done in such a manner as not to interfere materially with Lessee's use
of the Premises, except in the case of an emergency. In addition to Lessor's
unrestricted right to show the Premises as set forth above, Lessor may also show
the Premises to prospective tenants, mortgagees, or purchasers of the Building
after having given Lessee reasonable prior notice of such showing, provided such
showing is conducted in a manner that does not materially interfere with
Lessee's use of the Premises.

8.2 COMMON AREAS. All Common Areas, including without limitation automobile
parking areas, driveways, entrances, walkways and exits thereto, and other
facilities furnished by Lessor in or near the Office Park, including parking
areas, pedestrian sidewalks and ramps, landscaped areas, stairways, and other
areas and improvements, shall

-8-

<PAGE>

at all times be subject to the control and management of Lessor, and Lessor
shall have the right from time to time to establish, modify and enforce
reasonable rules and regulations with respect to the Common Areas. Lessor may
from time to time change the area, level, location and arrangement of parking
areas and other facilities; establish parking areas for tenants, their officers,
agents, invitees and employees; close temporarily all of any portion of the
parking areas or facilities for repairs thereto; discourage non-customer
parking; and do and perform such other acts in and to the Common Areas as Lessor
shall determine to be necessary or desirable under the circumstances.

8.3 RIGHT TO CURE. All costs, charges, adjustments and expenses which Lessee
is obligated to pay under this Lease (including but not limited to amounts
payable inorder to release liens) shall be collectible in the same manner as the
Base Rent and, in the event of nonpayment, Lessor shall have the same rights and
remedies provided for in the case of nonpayment of Base Rent. If Lessee fails to
make any payment which it is required to make (other than the payment of Base
Rent or Additional Rent), including but not limited to payment of any utility
costs, whether or not separately metered, or shall default in performing any of
its obligations under this Lease, Lessor, at its option, at any time after 12
days notice to Lessee, may (but shall not be obligated to) make such payment, or
cause any such obligation of Lessee to be performed for and on behalf of Lessee,
expending such sums as may be necessary to perform or satisfy any such
obligation of Lessee. All sums so expended by Lessor, together with interest at
the lesser of a per annum rate of 2% over the prime rate then in effect at The
Central Trust Company, N.A., or the maximum rate allowable by law, from the date
of such expenditure, shall be deemed additional rent, and shall be repaid by
Lessee to Lessor on demand; but no such payment, act, or expenditure by Lessor
shall be deemed a waiver of Lessee's default nor shall it affect any other
remedy of Lessor by reason such default.

9. RIGHTS OF THE PARTIES IN THE EVENT OF EMINENT DOMAIN OR CASUALTY.

9.1 EMINENT DOMAIN. In the event the Premises or any part thereof shall be
acquired by the exercise of eminent domain by any public or quasi-public body in
such a manner that the Premises shall become unusable by the Lessee for office
purposes, or the Building or Common Areas or a "material portion" (as
hereinafter defined) thereof shall be so acquired, then either party may
terminate this Lease as of the date that possession thereof is taken by the
condemning authority by giving written notice to the other. A portion of the
Building or Common Areas so acquired shall be deemed to be a "material portion"
thereof if Lessor determines in its sole discretion that the remainder thereof
is not suitable for use as an office building.

9.2 FIRE AND CASUALTY.

9.2.1 Except as provided in Section 9.2.2, if the Building or the Premises are
partially damaged by fire or other casualty, Lessor shall repair and restore the
damaged portion of the Building and Premises to substantially their condition
prior to such fire or other

-9-

<PAGE>

casualty, except that Lessor shall not be required to repair or restore the
Tenant Improvements or any other leasehold improvement installed in the Premises
by Lessee, nor shall Lessor be required to expend sums in excess of the
insurance proceeds available for such purposes.

9.2.2 If all or a substantial portion of the Premises, the Building or the
Common Areas is damaged, destroyed or rendered unfit for occupancy as a result
of fire or other casualty, Lessor may elect, by giving written notice to Lessee
within ninety days after the casualty, date (i) to terminate this Lease as of
the casualty date; or (ii) to repair and restore the Building or the Common
Areas. If after such damage or destruction Lessor elects to repair and restore
the Building or the Common Areas, and the same shall not have been repaired and
restored to substantially their condition prior to the casualty (except for
repairs and restoration of the Tenant Improvements or any other leasehold
improvements installed in the Building by Lessee or other tenants) within 180
days after the date of giving of Lessor's notice to Lessee (subject to Section
15), either party shall have the right to terminate this Lease, as of the
casualty date, by giving written notice to the other within ten (10) days after
the expiration of such 180 day period, and the Base Rent and all additional
charges shall be prorated as of the date of the casualty.

9.2.3 The Base Rent, until such repairs as Lessor elects to undertake are
substantially completed, shall be abated in proportion to the part of the
Premises which is not tenantable by Lessee.

9.2.4 If this Lease is not terminated pursuant to Section 9.2.2, Lessee shall
as promptly as practicable after the occurrence of any damage or destruction
make such repairs and replacements in the Premises as are necessary to restore
Lessee's leasehold improvements, including without limitation Tenant
Improvements, to their condition immediately prior to the occurrence of such
casualty.

10. INSURANCE; DAMAGE TO LESSEE'S PROPERTY.

10.1 INSURANCE. Lessor shall maintain fire and extended coverage insurance on
the Building, but shall not insure Lessee's property. All of Lessee's personal
property placed in or about the Building or the premises shall be at Lessee's
sole risk, and Lessor and its agents and employees shall not be liable to
Lessee, or its agents or employees, for theft, non-negligent loss or
appropriation, or for any damage or injury due to any other non-negligent acts
or neglect of other tenants or occupants of the Building or of any other person
or from any other cause whatsoever, nor shall Lessor be liable for any latent
defect in the Premises or in the Building. Lessee shall give immediate notice to
Lessor in case of fire or accident in the Premises or of any defects, damage or
injury in the Premises or in any fixtures or equipment.

10.2 WAIVER OF CLAIMS. Notwithstanding any other provisions of this Lease,
Lessor shall not be liable for non-negligent loss or damage to the Tenant
Improvements or any fixtures, furnishings, leasehold improvements or personal
property located or found in or around

-10-

<PAGE>

the Premises caused by fire or other perils usually covered by an "all-risk" of
loss insurance policy, and Lessee waives all rights of subrogation against
Lessor with respect to such perils. Notwithstanding any other provision of this
lease, Lessee shall not be liable for loss or damage to the Premises, the
Building, or the Common Areas caused by fire or other perils usually covered by
an "all-risk" of loss insurance policy, and Lessor waives all rights of
subrogation against Lessee with respect to such perils.

10.3 LESSEE'S INSURANCE. Lessee shall carry and maintain public liability
insurance on the Premises throughout the Term covering Lessee, and naming Lessor
as additional insured and, if Lessor elects, also naming any mortgagee as an
additional insured, with terms and companies satisfactory to Lessor and for
limits of not less than $1,000,000.00 for personal injury or death arising out
of any one occurrence and not less than $500,000.00 for damage to property
arising out of any one occurrence. Lessee shall also carry insurance against
fire and such other risks as are from time to time included in an "all-risk" of
loss insurance policy, insuring the FULL replacement cost of all leasehold
improvements paid for by or in behalf of Lessee, including the Tenant
Improvements and all wall coverings, carpeting, furnishings, equipment and other
items of personal property located on or within the Premises, regardless of
whether any such items will constitute fixtures and be surrendered to Lessor
upon expiration of the Term. Lessee shall also carry plate glass insurance on
all interior and exterior glass in or on the Premises. All such policies shall
be cancelable only upon 30 days prior written notice to Lessor. Prior to the
commencement of the Term and within 15 days prior to the expiration of each such
policy, Lessee shall furnish Lessor with copies of such policies or certificates
evidencing that such insurance is in full force and effect and stating the terms
of the insurance.

11. LESSEE'S INDEMNIFICATION OF LESSOR. Lessor shall not be liable to Lessee
or any other person for damage to property, or injury or death to persons due to
the non-negligent condition of the Premises, the Building, or the Common Areas,
or due to any occurrence or happening in or about the premises, the Building or
the Common Areas or due to any act or neglect of Lessee or any other tenant or
occupant of the Building or of any other person. Lessee shall be responsible and
liable to Lessor for any damage to the Premises, the Building, or the Common
Areas resulting from the negligence of Lessee, its employees, licensees,
invitees, or agents, except as provided in Section 10.2. Lessee shall defend,
indemnify and save harmless Lessor against any and all claims arising from
Lessee's use and occupancy of the Premises or from any work or thing done by or
on behalf of Lessee in or about the Premises, including but not limited to the
construction of the Tenant Improvements, and Lessee will further defend,
indemnify and save Lessor harmless against any all claims arising from any
breach or default in the performance of any of Lessee's obligations under this
Lease or arising from any act or negligence of Lessee, its agents, contractors,
employees, invitees and licensees, and from and against all costs, counsel fees,
expenses and liabilities incurred in connection with any such claim.

12. DEFAULTS AND REMEDIES.

12.1 DEFAULTS BY LESSEE. Each of the following shall be deemed a default by
Lessee:

-11-

<PAGE>

12.1.1 Failure to pay Base Rent, Additional Rent, or any other amounts herein
provided to be paid when due or within thirty (30) days thereafter; after
written notice from Lessor to Lessee.

12.1.2 Failure to perform any other act to be performed by Lessee hereunder or
to comply with any condition or covenant contained herein on Lessee's part to be
kept or performed and such failure continues for a period of 30 days after
written notice from Lessor to Lessee; and

12.1.3 The abandonment of the premises by Lessee or Lessee's adjudication as a
bankrupt; the making by Lessee of a general assignment for the benefit of any
insolvency action or law; the appointment of a permanent receiver or trustee or
custodian in bankruptcy for Lessee or its assets; the appointment of a temporary
receiver for Lessee or its assets if such temporary receivership has not been
vacated or set aside within 30 days from the date of such appointment; the
initiation of an arrangement or similar proceedings for the benefit of creditors
by or against Lessee; termination of Lessee's existence, whether by dissolution,
agreement, death or otherwise.

12.2 REMEDIES OF LESSOR. In the event of any default of Lessee as provided in
Section 13.1, Lessor shall have the immediate right to re-enter and may remove
all persons and property from the Premises except under Regulations of Lessee's
supervisory authorities. Lessor may dispose of such property in any lawful
manner it deems expedient at the expense of Lessee. Whether or not Lessor elects
to re-enter, as herein provided, or take possession pursuant to legal
proceedings or pursuant to any notice provided by law, Lessor may at its option
terminate this Lease by giving written notice to Lessee specifying a date on
which this Lease shall terminate, and upon such date, this Lease shall
terminate.

In case of any such default, termination, re-entry, expiration and/or
dispossession by summary proceedings of otherwise, (1) all Base Rent and
Additional Rent shall become due thereupon and be paid to the time of such re-
entry, dispossession and/or expiration; or (2) Lessor may re-let the Premises or
any part or parts thereof, either in the name of Lessor or otherwise, for a term
or terms which may, at Lessor's option, be less than or exceed the period which
would otherwise have constituted the balance of the term of this Lease and may
grant concessions or free rent; and/or (3) Lessee shall also pay Lessor as
liquidated damages for the failure of sublessee to observe and perform Lessee's
covenants herein contained, any deficiency between the rent hereby reserved
and/or covenanted to be paid and the net amount, if any, of the rents collected
on account of the lease or leases of the Premises for each month of the period
which would otherwise have constituted the balance of the term of this Lease.
The failure or refusal of Lessor to relet the Premises or any part or parts
thereof shall not release or affect Lessee's liability for damages. In computing
such liquidated damages there shall be added to such deficiency such expenses as
Lessor may incur in connection with re-letting, such as legal expenses,
reasonable attorneys' fees, brokerage and for keeping the Premises in good order
or for preparing the same for re-letting, including all alterations, repairs,
replacements, redecorations as Lessor

-12-

<PAGE>

may make in its sole discretion. Any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Lessor to
collect the deficiency for any subsequent month by a similar proceeding. Lessor
shall in no event be liable in any way whatsoever for failure to re-let the
Premises, or in the event the Premises are re-let, for failure to collect the
rent under such re-letting. Mention in this Lease of any particular remedy shall
not preclude Lessor from any other remedy, in law or in equity. Lessee hereby
expressly waives any and all rights or redemption granted by or under any
present or future laws in the event of Lessor obtaining possession of the
Premises, by reason of the violation by sublessee of any of the covenants and
conditions of this Lease, or otherwise.

12.3 ATTORNEYS' FEES. In the event Lessee defaults in the performance of any
of the terms, covenants, agreements or conditions contained in this Lease and
Lessor places the enforcement of this Lease, or the collection of any rent due
or to become due, or recovery of possession of the Premises, in the hands of any
attorney, or files suit upon the same, Lessee agrees to pay Lessor all
reasonable attorney's fees incurred by Lessor.

12.4 CONDITION ON LESSOR'S LIABILITY. Lessee shall not be entitled to claim a
constructive eviction from the Premises unless Lessee shall have first notified
Lessor of the condition or conditions giving rise to such claim, and, if the
complaints are justified, Lessor shall have failed within a reasonable time
after receipt of such notice to remedy such conditions.

13. BROKER. As part of the consideration for the granting of this lease,
Lessee represents and warrants to Lessor that no broker negotiated or was
instrumental in negotiating or consummating this Lease, except for none.

14. ENTRY BY LESSOR. Lessee shall provide Lessor with the names of two
persons Lessor may contact for entry into the Premises, for Building
emergencies, and for other matters arising in administering this Lease. If a
representative of Lessee is not present to permit Lessor to enter the Premises
at any time that entry is necessary or permissible, Lessor its agents may enter
by a master key or may, if necessary, forcibly enter the same without any
liability, provided that, during such entry, reasonable care shall be used to
avoid damage or injury to Lessee's property.

15. INABILITY TO PERFORM. This Lease and the obligation of Lessee to pay any
amount payable hereunder and perform all of its other obligations shall not be
affected, impaired or excused because Lessor is unable to fulfill any of its
obligations under this Lease, or to supply, or is delayed in supplying, any
service expressly or impliedly to be furnished, or is unable to make, or is
delayed in making, any improvements (including the construction of the Building
or the construction of the Tenant Improvements), repairs, additions, alterations
or decorations, or is unable to supply or is delayed in supplying any equipment
or fixtures, if Lessor is so prevented or delayed by reason of strike, lockout
or labor dispute, lack or failure of customary sources of supply of fuel, labor
and materials, or due to any other cause beyond the reasonable control of
Lessor, including without limitation national emergency, any law or governmental
rule, order or regulation, war,

-13-

<PAGE>

civil commotion, riot, interference by civil or military authorities, fire or
other casualty or act of God.

16. LESSOR'S SUCCESSORS. The term "Lessor" as used in this Lease shall be
limited to mean and include only the owner or owners, at the time, of the fee of
the Building, their successors and assigns, or the sublessee under a lease of
the Building, so that in the event of any subsequent sale or sales of the
Building, or in the event of a lease or assignment of lease of the Building, the
previous Lessor shall be entirely released with respect to the performance of
all subsequently accruing covenants and obligations on the part of Lessor. The
retention of fee ownership by a Lessor of the Building or of the land on which
it is located under an underlying lease which is now or hereafter in effect,
shall not be deemed to impose on such underlying lessor any liability, initial
or continuing, for the performance of the covenants and obligations of Lessor.

17. LIMITATION UPON LIABILITY. Notwithstanding anything to the contrary
provided for herein, each and every term, covenant, condition, and provision of
this Lease is hereby made specifically subject to the provisions of this Section
17. It is specifically understood and agreed that Lessee's sole recourse in the
event Lessor fails to observe or perform any term, covenant, condition or
provision of this Lease on Lessor's part to be performed, is limited to Lessor's
interest in the Premises, and Lessee shall have no right to obtain judgment
against Lessor or any general or limited partner of Lessor or any officer,
director or employee of Lessor for any sum of money which is or may be payable
under this Lease, or FOR any deficiency after realization against the Premises,
or to enforce or attempt to enforce a claim for any such sum against any of the
other assets of Lessor or any general or limited partner or any officer,
director or employee of Lessor. Such exculpation of personal liability is
absolute and without any exception whatsoever.

18. MISCELLANEOUS PROVISIONS.

18.1 RIGHT OF QUIET ENJOYMENT. If Lessee shall perform all covenants and
agreements herein provided to be performed by Lessee, Lessee shall, at all times
during the Lease Term, have the peaceable and quiet enjoyment of possession of
the Premises, free of hindrance and molestation by Lessor, subject to the
provisions of this Lease.

18,2 SUBORDINATION. The Lease and all Lessee's right under this leases are
subject and subordinate to all underlying Leases, trust indentures and mortgages
(collectively, "Mortgages") now or hereafter placed on or affecting the Building
and/or the Land, or any interest therein, all renewals, modifications,
consolidation, replacements, substitutions, additions and extensions of any such
Mortgages. This provision shall be self-operative and no further instrument of
subordination shall be necessary. However, in confirmation of such
subordination, Lessee shall execute and deliver promptly any subordination
agreement that Lessor may request. In the event any proceedings are brought for
the foreclosure of any Mortgage, or in the event of a deed in lieu of such
foreclosure, or in the event of the termination of any underlying lease, Lessee
hereby agrees to attorney to the purchaser or transferee upon foreclosure,
and/or the holder of the reversion under any

-14-

<PAGE>

such underlying lease, and recognize such purchaser, transferee or holder as the
Lessor under this Lease TO the same extent and effect as the original Lessor.
Lessee agrees to execute and deliver upon the request of Lessor, or any such
purchaser, transferee or holder, any instrument necessary or desirable to
evidence such attornment. Lessee waives any right which it may have by law to
terminate this Lease or to surrender possession of the Premises by reason of any
such foreclosure proceedings or termination of any underlying lease. LESSOR
AGREES TO OBTAIN MORTGAGEE'S APPROVAL OF TERMS OF LEASE, AND MORTGAGEE'S
AGREEMENT (EXHIBIT D).

18.3 ESTOPPEL CERTIFICATES. Upon the request of Lessor, any owner, transferee,
or purchaser at foreclosure of the Building, any potential purchaser of the
Building pursuant to contract, or any holder OR potential holder of a Mortgage,
Lessee will execute estoppel certificates addressed to such person(s),
certifying as to such facts (if true) and agreeing to such reasonable notice
provisions and other matters, as such person(s) may reasonably require with
respect to the status of this Lease.

18.4 RIGHT OF ASSIGNS. Except where specifically limited, the rights and
liabilities of the parties hereto shall run to the benefit of and shall be
binding upon the personal representatives, devisees, assigns and successors in
interest of Lessor and Lessee.

18.5 SURRENDER AT END OF TERM. Lessee shall quit and surrender the Premises at
the expiration or earlier termination of this Lease. The Premises shall be broom
clean, in good condition and repair, except for ordinary wear and tear and
damage by fire and extended coverage hazards for which insurance is maintained,
with alterations, additions and improvements, except as otherwise provided
herein. Lessee's obligations under this Section shall survive the expiration or
earlier termination of this Lease.

18.6 HOLDING OVER. At the expiration or earlier termination of the term of
this Lease, any holdover shall be from month to month on the same terms and
conditions as herein provided, and in the event of such holdover this Lease may
be terminated by either party by 120 days prior written notice to the other.

18.7 WAIVER. No waiver of any covenant or condition, or the breach of any
covenant or condition of this Lease shall be taken to justify or authorize a
non-observance on any other occasion of such covenant or condition or any other
covenant OR condition or to constitute a waiver of any subsequent breach of such
covenant or condition. Acceptance of Base Rent, Additional Rent or any other
sums by Lessor at any time when Lessee is in default of any covenant or
condition hereof shall not be construed as a waiver of any such default or of
Lessor's right to terminate this Lease on account of such default.

18.8 NOTICE. Any notice, consent or waiver required or permitted to be given
or served by either party to This Lease Shall be in writing and either delivered
personally to the other party or mailed by certified or registered mail, return
receipt requested, addressed as follows:

-15-

<PAGE>

Lessor: Garfield Park Associates
19 Garfield Place
Cincinnati, Ohio 45202

Lessee: The Foundation Savings & Loan Co.
719 Vine Street
Cincinnati, OH 45202
Moving to: 25 Garfield Place, Cincinnati, Ohio 45202

Either party may, from time to time, change its notice address by notice to the
other in accordance with the provisions of this section.

19. SEVERABILITY. If any provision of this Lease or the application thereof
to any person or circumstance is invalid, such invalidity shall not affect other
provisions or applications of this Lease which can be given effect without the
invalid provision or application, and to this end the provisions of this Lease
are declared to be severable.

20. ENTIRE AGREEMENT. This Lease is intended by the parties hereto to be the
final expression of their agreement with respect to the matters herein contained
and is the complete and exclusive statement of the terms thereof,
notwithstanding any representation or statement to the contrary heretofore made.

21. HEADINGS; PRONOUNS. The headings contained herein are solely for
convenience and reference and are not to be construed as part of this Lease. All
terms used in this Lease, regardless of the number or gender in which they are
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context or
sense of this Lease or any section, subsection or clause herein may require as
if such terms had been fully and properly written in such number and gender.

22. EXCLUSIVE BUSINESS. Lessor agrees that it will not lease retail space to
another financial institution during the term of this lease without written
consent of Lessee.

IN WITNESS WHEREOF, The parties hereto have hereunder set their hands as of the
day and year first above written.

Lessor: Lessee:

Samuel Logan Narvin I. Emden
- -------------------------- ----------------------------
Garfield Park Associates The Foundation Savings
Limited Partnership & Loan Company

-16-

<PAGE>
EXHIBIT 23.1

ACCOUNTANTS' CONSENT

We have issued our report dated July 19, 1995 accompanying the financial
statements of Foundation Savings Bank in Forms S-1, AC, and OC to be filed with
the Securities and Exchange Commission and the Office of Thrift Supervision on
or about June 14, 1996. We consent to the use of the aforementioned report in
the Registration Statement and Prospectus, and all amendments, thereto, and to
the use of our name as it appears under the caption "Experts".

CLARK, SCHAEFER, HACKETT & CO.
Cincinnati, OH

<PAGE>
EXHIBIT 23.2

KELLER & COMPANY, INC.
555 METRO PLACE NORTH
SUITE 524
DUBLIN, OHIO 43017
(614) 766-1426
(614) 766-1459 FAX

May 21, 1996

Re: Valuation Appraisal of Foundation Bancorp, Inc.
Foundation Savings Bank
Cincinnati, Ohio

We hereby consent to the use of our firm's name, Keller & Company, Inc., and
the reference to our firm as experts in the Application for Conversion on Form
AC to be filed with the Office of Thrift Supervision and the Registration
Statement on Form S-1 to be filed with the Securities and Exchange Commission
and any amendments thereto, and to the statements with respect to us and the
references to our Valuation Appraisal Report in the Prospectus, in the said Form
AC and in the said Form S-1 and any amendments thereto.

Very truly yours,

KELLER & COMPANY, INC.

By: /s/ MICHAEL R. KELLER
---------------------------------------
Michael R. Keller
PRESIDENT

<PAGE>
EXHIBIT 23.3

(513) 723-4000

CONSENT

Board of Directors
Foundation Savings Bank
25 Garfield Place
Cincinnati, Ohio 45202

Ladies and Gentlemen:

We hereby consent to the use of our firm's name in the Registration
Statement on Form S-1 (the "Form S-1"), including all amendments thereto, filed
by Foundation Bancorp, Inc. (the "Company") to register 462,875 common shares,
without par value, of the Company, pursuant to the Securities Act of 1933; to
the statements with respect to our firm appearing under the headings "Prospectus
Summary", "Legal Matters" and "Principal Effects of the Conversion" in the
Prospectus which is included in the Form S-1; and to the filing of our opinion
regarding the legality of the common shares, included as Exhibit 5 to the Form
S-1, and our opinion regarding federal and state tax matters, included as
Exhibit 8 to the Form S-1.

Very truly yours,

VORYS, SATER, SEYMOUR AND PEASE

Cincinnati, Ohio
June 13, 1996

<PAGE>
<ARTICLE> 9

<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1995
<PERIOD-END> MAR-31-1996 JUN-30-1995
<CASH> 15 57
<INT-BEARING-DEPOSITS> 85 786
<FED-FUNDS-SOLD> 4136 3100
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 0 0
<INVESTMENTS-CARRYING> 5631 6842
<INVESTMENTS-MARKET> 5499 6704
<LOANS> 21359 20511
<ALLOWANCE> 104 98
<TOTAL-ASSETS> 31738 31849
<DEPOSITS> 27780 27737
<SHORT-TERM> 0 0
<LIABILITIES-OTHER> 344 214
<LONG-TERM> 842 1192
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 2772 2706
<TOTAL-LIABILITIES-AND-EQUITY> 31738 31849
<INTEREST-LOAN> 1358 1655
<INTEREST-INVEST> 285 390
<INTEREST-OTHER> 140 117
<INTEREST-TOTAL> 1783 2162
<INTEREST-DEPOSIT> 1167 1309
<INTEREST-EXPENSE> 1207 1368
<INTEREST-INCOME-NET> 576 794
<LOAN-LOSSES> 34 12
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 496 679
<INCOME-PRETAX> 98 173
<INCOME-PRE-EXTRAORDINARY> 98 173
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 66 125
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<YIELD-ACTUAL> 7.62 7.24
<LOANS-NON> 0 0
<LOANS-PAST> 111 194
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 431 441
<ALLOWANCE-OPEN> 98 72
<CHARGE-OFFS> 28 4
<RECOVERIES> 0 18
<ALLOWANCE-CLOSE> 104 98
<ALLOWANCE-DOMESTIC> 0 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 104 98

</TABLE>

<PAGE>
FOUNDATION SAVINGS BANK
25 GARFIELD PLACE
CINCINNATI, OHIO 45202
(513) 721-0120

NOTICE OF SPECIAL MEETING OF MEMBERS

Notice is hereby given that a Special Meeting of Members of Foundation
Savings Bank (the "Bank") will be held at , Cincinnati, Ohio, on
, 1996, at .m., local time (the "Special Meeting"), for the
following purposes, all of which are more completely set forth in the
accompanying Summary Proxy Statement:

1. To consider and act upon a resolution to approve the Plan of
Conversion (the "Plan"), a copy of which is attached to the Summary Proxy
Statement as Exhibit A, pursuant to which the Bank would convert from a
mutual savings and loan association incorporated under the laws of the State
of Ohio to a permanent capital stock savings and loan association
incorporated under the laws of the State of Ohio (the "Conversion") and
become a wholly-owned subsidiary of Foundation Bancorp, Inc., an Ohio
corporation organized for the purpose of acquiring all of the capital stock
to be issued by the Bank in the Conversion;

2. To consider and act upon a resolution to adopt the Amended Articles
of Incorporation of the Bank, a copy of which is attached to the Plan as
Exhibit I;

3. To consider and act upon a resolution to adopt the Amended
Constitution of the Bank, a copy of which is attached to the Plan as Exhibit
II; and

4. To transact such other business as may properly come before the
Special Meeting and any adjournments thereof.

Only those members of the Bank who have a savings deposit or a loan of
record at the Bank at the close of business on , 1996, are members of
the Bank entitled to notice of and to vote at the Special Meeting and any
adjournments thereof. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING,
WE URGE YOU TO CONSIDER THE ACCOMPANYING SUMMARY PROXY STATEMENT CAREFULLY, TO
COMPLETE THE ENCLOSED PROXY CARD(S) AND TO RETURN THE COMPLETED PROXY CARD(S) TO
THE BANK IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE AS SOON AS POSSIBLE TO
ASSURE THAT YOUR VOTE(S) WILL BE COUNTED.

By Order of the Board of Directors
Laird L. Lazelle,
President

Cincinnati, Ohio
, 1996
<PAGE>
FOUNDATION SAVINGS BANK
25 GARFIELD PLACE
CINCINNATI, OHIO 45202
(513) 721-0120

SUMMARY PROXY STATEMENT
INTRODUCTION

The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of Foundation Savings Bank (the "Bank") for use at a Special Meeting
of Members of the Bank to be held at , Cincinnati, Ohio, on
, 1996, at .m., local time, and at any adjournments thereof
(the "Special Meeting"). The Special Meeting is being held for the following
purposes:

1. To consider and act upon a resolution to approve the Plan of
Conversion (the "Plan"), a copy of which is attached hereto as Exhibit A,
pursuant to which the Bank would convert from a mutual savings and loan
association incorporated under the laws of the State of Ohio to a permanent
capital stock savings and loan association incorporated under the laws of
the State of Ohio (the "Conversion") and become a wholly-owned subsidiary of
Foundation Bancorp, Inc., (the "Holding Company"), an Ohio corporation
organized for the purpose of acquiring all of the capital stock to be issued
by the Bank in the Conversion;

2. To consider and act upon a resolution to adopt the Amended Articles
of Incorporation of the Bank (the "Amended Articles"), a copy of which is
attached to the Plan as Exhibit I;

3. To consider and act upon a resolution to adopt the Amended
Constitution of the Bank (the "Amended Constitution"), a copy of which is
attached to the Plan as Exhibit II; and

4. To transact such other business as may properly come before the
Special Meeting.

The Board of Directors of the Bank has unanimously adopted the Plan. The
Plan has also been approved by the Office of Thrift Supervision (the "OTS") and
the Ohio Department of Commerce, Division of Financial Institutions (the
"Division"), subject to the approval of the Plan by the members of the Bank at
the Special Meeting and the satisfaction of certain other conditions.

The approval of the Plan will have the effect of (i) terminating the voting
rights of the present members of the Bank and (ii) modifying, and eventually
eliminating, their right to receive any surplus in the event of a complete
liquidation of the Bank. Except for certain rights in the special liquidation
account established by the Plan (the "Liquidation Account"), such voting and
liquidation rights after the Conversion will vest exclusively in the holders of
the common shares of the Holding Company. See "THE CONVERSION -- Principal
Effects of the Conversion."

During and upon the completion of the Conversion, the Bank will continue to
provide services to depositors and borrowers pursuant to its current policies at
its existing office. In addition, the Bank will continue to be a member of the
Federal Home Loan Bank (the "FHLB") of Cincinnati and savings accounts at the
Bank will continue to be insured up to applicable limits by the Federal Deposit
Insurance Corporation (the "FDIC").

This Summary Proxy Statement is dated , 1996, and is first being
mailed, together with the Prospectus of the Holding Company dated ,
1996 (the "Prospectus"), in respect of the common shares of the Holding Company
to be issued in connection with the Conversion (the "Common Shares"), to members
of the Bank on or about , 1996.

VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL

All depositors having a savings account of record with the Bank on
, 1996 (the "Voting Record Date"), and all borrowers having a loan of
record on the Voting Record Date are members of the Bank eligible to vote at the
Special Meeting and at any adjournments thereof ("Voting Members").

2
<PAGE>
Voting Members who are depositors will be entitled to cast one vote for each
$100, and a proportionate fractional vote for an amount of less than $100, of
the withdrawable value of their savings accounts on the Voting Record Date.
Voting Members who are borrowers will be entitled to cast one vote each.

A savings account or a loan account in which one or more persons has an
interest shall be deemed to be held by only one Voting Member for the purpose of
voting at the Special Meeting. Any questions as to the eligibility of a member
to vote, the number of votes allocated to each Voting Member or any other matter
relating to voting will be resolved at the time of the Special Meeting by
reference to the records of the Bank.

The Bank records disclose that, as of the Voting Record Date, there were
votes entitled to be cast at the Special Meeting, a majority of which
are required to approve the Plan. A vote of three-fifths of the votes cast in
person or by proxy at the Special Meeting is required to adopt the Amended
Articles and the Amended Constitution of the Bank.

The Bank, as the custodian of the Individual Retirement Accounts ("IRAs") at
the Bank, is empowered to vote at the Special Meeting all votes eligible to be
cast with respect to each IRA. On the Voting Record Date, there were
votes eligible to be cast with respect to IRAs at the Bank, which represents
% of the total votes eligible to be cast at the Special Meeting. The Board of
Directors has indicated that it intends to cast all of the votes under IRAs in
favor of the approval of the Plan, unless contrary instructions are received
from IRA holders. IRA holders who wish to give such instructions may do so by
returning the enclosed Proxy.

PROXIES

Voting Members may vote in person or by proxy at the Special Meeting. For
Voting Members wishing to vote in person, ballots will be distributed at the
Special Meeting. For Voting Members wishing to vote by proxy at the Special
Meeting, the enclosed Proxy may be completed and given in accordance with this
Summary Proxy Statement. Any other proxy held by the Bank will not be used by
the Bank for the Special Meeting.

A Proxy will be voted in the manner indicated thereon or, in the absence of
specific instructions, will be voted FOR the approval of the Plan, FOR the
adoption of the Amended Articles and FOR the adoption of the Amended
Constitution. Without affecting any vote previously taken, a Voting Member may
revoke a Proxy at any time before such proxy is exercised by executing and
delivering a later dated proxy or by giving the Bank notice of revocation in
writing or in open meeting at the Special Meeting. Attendance at the Special
Meeting will not, of itself, revoke a Proxy.

Proxies may be solicited by the directors, officers and employees of the
Bank in person or by telephone, telegraph or mail, for use only at the Special
Meeting and any adjournments thereof and will not be used for any other meeting.
The cost of soliciting Proxies will be borne by the Bank.

MANAGEMENT'S RECOMMENDATIONS AND REASONS FOR CONVERSION

THE BOARD OF DIRECTORS RECOMMENDS THAT MEMBERS VOTE FOR THE APPROVAL OF THE
PLAN AND THE ADOPTION OF THE AMENDED ARTICLES AND THE AMENDED CONSTITUTION OF
THE BANK.

The principal factors considered by the Bank's Board of Directors in
reaching the decision to pursue a mutual-to-stock conversion are the uncertain
future of the mutual form of ownership generally and the numerous competitive
disadvantages which the Bank faces if it maintains its mutual form. These
disadvantages relate to a variety of factors, including growth opportunities,
employee retention and regulatory uncertainty.

If the Bank is to continue to grow and prosper, the mutual form of
organization is the least desirable form from a competitive standpoint. The
opportunities for a mutual savings and loan association to expand through
mutual-to-mutual mergers or acquisitions are limited because cash is the only
form of consideration a mutual institution can offer to another institution.
Although the

3
<PAGE>
Bank does not have any specific acquisitions planned at this time, the
Conversion will position the Bank to take advantage of any acquisition
opportunities which may present themselves. Because a conversion to stock form
is a time-consuming and complex process, the Bank cannot wait until a
prospective acquisition arises to embark on the conversion process.

As an increasing number of the Bank's competitors convert to stock form and
acquire the ability to use stock-based compensation programs, the Bank, in
mutual form, would be at a disadvantage when it comes to attracting and
retaining qualified management. The Bank believes that the employee stock
ownership plan (the "ESOP") established for all employees and the stock option
plan (the "Stock Option Plan") and the recognition and retention plan (the
"RRP") proposed for directors and management are important tools in achieving
such goals, even though the Bank will be required to wait until at least six
months after the Conversion to implement the Stock Option Plan and the RRP. See
"MANAGEMENT -- Stock Benefit Plans" in the Prospectus.

Another benefit of the Conversion will be an increase in capital.
Notwithstanding the Bank's currently strong capital position, the importance of
higher levels of capital cannot be ignored in the current interest rate
environment. As has been amply demonstrated in the past, changing accounting
principles, interest rate shifts and changing regulations can threaten even
well-capitalized institutions. As a mutual institution, the Bank can only
increase capital through retained earnings or the issuance of subordinated
debentures, which do not count as tier 1 capital for regulatory capital
purposes. Capital that may seem unnecessary now may help the Bank withstand
future threats to its capital. See "REGULATION -- Office of Thrift Supervision
- -- Regulatory Capital Requirements" in the Prospectus.

THE BUSINESS OF THE HOLDING COMPANY

The office of the Holding Company is located at 25 Garfield Place,
Cincinnati, Ohio 45202, and its telephone number is (513) 721-0120.

THE BUSINESS OF THE BANK

The Bank is a mutual savings and loan association which was organized under
Ohio law in 1888. As an Ohio savings and loan association, the Bank is subject
to supervision and regulation by the OTS and the Division. The Bank conducts
business from its office at 25 Garfield Place in Cincinnati, Ohio. The principal
business of the Bank is the origination of permanent mortgage loans secured by
first mortgages on one- to four-family residential real estate located in
Hamilton County, Ohio and the contiguous Ohio counties of Clermont, Butler and
Warren and the Kentucky counties of Boone and Kenton. The Bank also originates
mortgage loans secured by multifamily real estate (over four units) and
nonresidential real estate in its primary market area. See "THE BUSINESS OF THE
BANK -- Lending Activities" in the Prospectus. In addition to real estate
lending, the Bank originates a limited number of secured and unsecured consumer
loans. For liquidity and interest rate risk management purposes, the Bank
invests in interest-bearing deposits in other financial institutions, U.S.
Government and agency obligations, mortgage-backed securities and other
investments permitted by applicable law. See "THE BUSINESS OF THE BANK --
Investment Activities" in the Prospectus. Funds for lending and other investment
activities are obtained primarily from savings deposits, which are

4
<PAGE>
insured up to applicable limits by the FDIC in the Savings Association Insurance
Fund, and principal repayments on loans. Advances from the FHLB of Cincinnati
are utilized from time to time when other sources of funds are inadequate to
fund loan demand. See "THE BUSINESS OF THE BANK -- Deposits and Borrowings" in
the Prospectus.

THE CONVERSION

GENERAL

Based on an independent appraisal of the pro forma market value of the Bank,
as converted, as of April 12, 1996, the aggregate purchase price of the Common
Shares to be offered in a subscription offering (the "Subscription Offering")
and a concurrent community offering (the "Community Offering") ranges from a
minimum of $2,975,000 to a maximum of $4,025,000 (the "Valuation Range"),
resulting in a range of 297,500 to 402,500 Common Shares at $10 per share. The
actual number of shares sold in connection with the Conversion will be
determined upon completion of the Subscription Offering and the Community
Offering (collectively, the "Offering") based on the final valuation of the
Bank, as converted. See "Pricing and Number of Common Shares to be Sold."

In accordance with the Plan, nontransferable subscription rights to purchase
Common Shares at a price of $10 per share are being offered in the Subscription
Offering, subject to the rights and restrictions established by the Plan, to (a)
eligible depositors of the Bank as of May 31, 1995 (the "Eligibility Record
Date"), (b) the ESOP and (c) members of the Bank eligible to vote at the Special
Meeting ("Other Eligible Members"). To the extent that all of the Common Shares
are not subscribed for in the Subscription Offering, the remaining Common Shares
are concurrently being offered to the general public in the Community Offering,
in which preference will be given to natural persons residing in Hamilton
County, Ohio. See "Community Offering."

5
<PAGE>
OTS and Ohio regulations require the completion of the Conversion within 24
months after the date of the approval of the Plan by the Voting Members of the
Bank. The commencement and completion of the Conversion will be subject to
market conditions and other factors beyond the Bank's control. Due to changing
economic and market conditions, no assurance can be given as to the length of
time that will be required to complete the sale of the Common Shares. If delays
are experienced, significant changes may occur in the estimated pro forma market
value of the Bank. In such circumstances, the Bank may also incur substantial
additional printing, legal and accounting expenses in completing the Conversion.
In the event the Conversion is not successfully completed, the Bank will be
required to charge all Conversion expenses against current earnings.

PRINCIPAL EFFECTS OF THE CONVERSION

VOTING RIGHTS. Savings account holders and borrowers who are members of the
Bank in its mutual form will have no voting rights in the Bank as converted and
will not participate, therefore, in the election of directors or otherwise
control the Bank's affairs. Voting rights in the Holding Company will be held
exclusively by its shareholders and voting rights in the Bank will be held
exclusively by the Holding Company. Each holder of the Holding Company's common
shares will be entitled to one vote for each share owned on any matter to be
considered by the Holding Company's shareholders. See "DESCRIPTION OF AUTHORIZED
SHARES."

TAX CONSEQUENCES. The consummation of the Conversion is expressly
conditioned on receipt by the Bank of a private letter ruling from the Internal
Revenue Service or an opinion of counsel to the effect that the Conversion will
constitute a tax-free reorganization as defined in Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Bank intends to
proceed with the Conversion based upon an opinion rendered by its special
counsel, Vorys, Sater, Seymour and Pease, to the following effect:

(2) No gain or loss will be recognized by the Bank upon the receipt of
money from the Holding Company in exchange for the capital stock of the
Bank, as converted;

(3) The assets of the Bank will have the same basis in its hands
immediately after the Conversion as they had in its hands immediately prior
to the Conversion and the holding period of the assets of the Bank after the
Conversion will include the period during which the assets were held by the
Bank before the Conversion;

(4) No gain or loss will be recognized by the deposit account holders of
the Bank upon the issuance to them, in exchange for their respective
withdrawable deposit accounts in the Bank immediately prior to the
Conversion, of withdrawable deposit accounts in the Bank immediately after
the Conversion, in the same dollar amount as their withdrawable deposit
accounts in the Bank immediately prior to the Conversion, plus, in the case
of Eligible Account Holders and Supplemental Eligible Account Holders, the
interests in the Liquidation Account (hereinafter defined) of the Bank, as
described below;

6
<PAGE>
Account received by the Eligible Account Holders and Supplemental Eligible
Account Holders will be zero. The basis of the nontransferable subscription
rights received by Eligible Account Holders, Supplemental Eligible Account
Holders and Other Eligible Members will be zero (assuming that at
distribution such rights have no ascertainable fair market value);

(7) The basis of the Common Shares purchased by members of the Bank
pursuant to the exercise of subscription rights will be the purchase price
thereof (assuming that such rights have no ascertainable fair market value
and that the purchase price is not less than the fair market value of the
shares on the date of such exercise), and the holding period of such shares
will commence on the date of such exercise. The basis of the Common Shares
purchased other than by the exercise of subscription rights will be the
purchase price thereof (assuming in the case of the other subscribers that
the opportunity to buy in the Subscription Offering has no ascertainable
fair market value) and the holding period of such shares will commence on
the day after the date of the purchase;

(9) The bad debt reserves of the Bank in its mutual form immediately
prior to the Conversion will not be required to be restored to the gross
income of the Bank in its stock form as a result of the Conversion and
immediately after the Conversion such bad debt reserves will have the same
character in the hands of the Bank in its stock form as they would have had
if there had been no Conversion. The Bank in its stock form will succeed to
and take into account the dollar amounts of those accounts of the Bank in
its mutual form which represent bad debt reserves in respect of which the
Bank in its mutual form has taken a bad debt deduction for taxable years
ending on or before the Conversion; and

For Ohio tax purposes, the tax consequences of the Conversion will be
as follows:

(1) The Bank is a "financial institution" for State of Ohio tax
purposes, and the Conversion will not change such status;

(2) The Bank is subject to the Ohio corporate franchise tax on
"financial institutions," which is imposed annually at a rate of 1.5% of the
Bank's equity capital determined in accordance with generally accepted
accounting principles ("GAAP"), and the Conversion will not change such
status;

(3) As a "financial institution," the Bank is not subject to any tax
based upon net income or net profit imposed by the State of Ohio, and the
Conversion will not change such status;

7
<PAGE>
(4) The Conversion will not be a taxable transaction to the Bank in its
mutual or stock form for purposes of the Ohio corporate franchise tax. As a
consequence of the Conversion, however, the annual Ohio corporate franchise
tax liability of the Bank will increase if the taxable net worth of the Bank
(i.e., book net worth computed in accordance with GAAP at the close of the
Bank's taxable year for federal income tax purposes) increases thereby; and

The Bank has received an opinion from Keller & Company, a firm which
evaluates and appraises financial institutions ("Keller"), to the effect that
the subscription rights have no ascertainable fair market value because the
rights are received by specified persons at no cost, may not be transferred and
are of short duration. The IRS could challenge the assumption that the
subscription rights have no ascertainable fair market value.

For the purpose of granting a limited priority claim to the assets of the
Bank in the event of a complete liquidation thereof to Eligible Account Holders
and Supplemental Eligible Account Holders who continue to maintain savings
accounts at the Bank after the Conversion, the Bank will, at the time of the
Conversion, establish the Liquidation Account in an amount equal to the retained
earnings of the Bank as of March 31, 1996. The Liquidation Account will not
operate to restrict the use or application of any of the regulatory capital of
the Bank.

Each Eligible Account Holder and Supplemental Eligible Account Holder will
have a separate inchoate interest (the "Subaccount") in a portion of the
Liquidation Account for Qualifying Deposits held on the Eligibility Record Date
or June 30, 1996 (the "Supplemental Eligibility Record Date").

8
<PAGE>
In the event of a complete liquidation of the converted Bank (and only in
such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall receive from the Liquidation Account a distribution equal to the
current balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to the shareholders of the Bank. Any assets
remaining after satisfaction of such liquidation rights and the claims of the
Bank's creditors would be distributed to the shareholders of the Bank. No
merger, consolidation, purchase of bulk assets or similar combination or
transaction with another financial institution, the deposits of which are
insured by the FDIC, will be deemed to be a complete liquidation for this
purpose and, in any such transaction, the Liquidation Account shall be assumed
by the surviving institution.

COMMON SHARES. SHARES ISSUED UNDER THE PLAN CANNOT AND WILL NOT BE INSURED
BY THE FDIC. For a description of the characteristics of the Common Shares, see
"DESCRIPTION OF AUTHORIZED SHARES."

INTERPRETATION AND AMENDMENT OF THE PLAN

CONDITIONS AND TERMINATION

The completion of the Conversion requires the approval of the Plan by the
Voting Members of the Bank at the Special Meeting and the completion of the sale
of the Common Shares within 24 months following the date of such approval. If
these conditions are not satisfied, the Plan will automatically terminate and
the Bank will continue its business in the mutual form of organization. The Plan
may be voluntarily terminated by the Board of Directors at any time before the
Special Meeting and at any time thereafter with the approval of the OTS and the
Division.

SUBSCRIPTION OFFERING

THE SUBSCRIPTION OFFERING WILL EXPIRE AT .M., EASTERN TIME, ON
, 1996 (THE "SUBSCRIPTION EXPIRATION DATE"). SUBSCRIPTION RIGHTS NOT
EXERCISED BEFORE THE SUBSCRIPTION EXPIRATION DATE WILL BE VOID, WHETHER OR NOT
THE BANK HAS BEEN ABLE TO LOCATE THE PERSONS ENTITLED TO SUCH SUBSCRIPTION
RIGHTS.

9
<PAGE>
The preference categories and preliminary purchase limitations which have
been established by the Plan, in accordance with applicable regulations, for the
allocation of Common Shares are as follows:

(a) Each account holder who has a Qualifying Deposit with the Bank on
the Eligibility Record Date (the "Eligible Account Holders") shall receive,
without payment therefor, the nontransferable right to purchase in the
Subscription Offering up to 2.5% of the total Common Shares sold in the
Offering. If the exercise of subscription rights in this Category 1 results
in an over-subscription, Common Shares will be allocated among subscribing
Eligible Account Holders in a manner which will, to the extent possible,
make the total allocation of each subscriber equal 100 shares or the amount
subscribed for, whichever is less. Any Common Shares remaining after such
allocation has been made will be allocated among the subscribing Eligible
Account Holders whose subscriptions remain unfilled in the proportion which
the amount of their respective Qualifying Deposits on the Eligibility Record
Date bears to the total Qualifying Deposits of all Eligible Account Holders
on such date. Notwithstanding the foregoing, Common Shares in excess of
402,500, the maximum of the Valuation Range, may be sold to the ESOP before
fully satisfying the subscriptions of Eligible Account Holders. For purposes
of this paragraph (a), increases in the Qualifying Deposits of directors and
executive officers of the Bank during the twelve months preceding the
Eligibility Record Date shall not be considered. No fractional shares will
be issued.

(b) The ESOP shall receive, without payment therefor, the
nontransferable right to purchase in the Subscription Offering Common Shares
in an aggregate amount of up to 10% of the Common Shares sold in the
Offering, provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders up to the maximum of the
Valuation Range pursuant to paragraph (a) above. Although the Plan and OTS
regulations permit the ESOP to purchase up to 10% of the Common Shares, the
Holding Company anticipates that the ESOP will purchase 8% of the Common
Shares. If the ESOP is unable to purchase all or part of the Common Shares
for which it subscribes, the ESOP may purchase Common Shares on the open
market or may purchase authorized but unissued shares of the Holding
Company. If the ESOP purchases authorized but unissued shares from the
Holding Company, such purchases could have a dilutive effect on the
interests of the Holding Company's shareholders. See "RISK FACTORS --
Potential Impact of Benefit Plans on Net Earnings and Shareholders' Equity"
in the Prospectus.

(c) If the Eligibility Record Date is more than 15 months prior to the
date of the latest amendment to the Bank's conversion application filed with
the OTS, each account holder who has a Qualifying Deposit at the Bank as of
the Supplemental Eligibility Record Date (the "Supplemental Eligible Account
Holders"), will receive, without payment, the non-transferable right to
purchase in the Subscription Offering up to 2.5% of the total Common Shares
sold in the Offering, provided that shares remain available after satisfying
the subscription rights of Eligible Account Holders and the ESOP pursuant to
paragraphs (a) and (b) above. If the exercise of subscription rights by
Supplemental Eligible Account Holders results in an oversubscription, Common
Shares will be allocated among subscribing Supplemental Eligible Account
Holders in a manner which will, to the extent possible, make the total
allocation of each subscriber equal 100 shares or the amount subscribed for,
whichever is less. Any Common Shares remaining after such allocation has
been made will be allocated among the subscribing Supplemental Eligible
Account Holders whose subscriptions remain unfilled in the proportion which
the amount of their respective Qualifying Deposits on the Supplemental
Eligibility Record Date bears to the total Qualifying Deposits of all
Supplemental Eligible Account Holders on such date. No fractional shares
will be issued.

Subscription rights received by Supplemental Eligible Account Holders,
if any, will be subordinate to the subscription rights of Eligible Account
Holders and the ESOP.

(d) Each Other Eligible Member, other than an Eligible Account Holder or
Supplemental Eligible Account Holder, shall receive, without payment
therefor, the nontransferable right to

10
<PAGE>
purchase in the Subscription Offering up to 2.5% of the Common Shares to be
sold in the Offering, provided that shares remain available after satisfying
the subscription rights of Eligible Account Holders, the ESOP and
Supplemental Eligible Account Holders pursuant to paragraphs (a), (b) and
(c) above. In the event of an oversubscription by Other Eligible Members,
the available Common Shares will be allocated among subscribing Other
Eligible Members in the same proportion that their subscriptions bear to the
total amount of subscriptions by all Other Eligible Members.

COMMUNITY OFFERING

Concurrently with the Subscription Offering, the Holding Company is offering
Common Shares in the Community Offering, subject to the limitations set forth
below, to the extent such shares remain available after the satisfaction of all
orders received in the Subscription Offering. If subscriptions are received in
the Subscription Offering for at least 462,875 Common Shares, Common Shares may
not be available for purchase in the Community Offering. All sales of Common
Shares in the Community Offering will be at the same price per share as in the
Subscription Offering. THE COMMUNITY OFFERING MAY BE TERMINATED AT ANY TIME
AFTER ORDERS FOR AT LEAST 462,875 COMMON SHARES HAVE BEEN RECEIVED, BUT IN NO
EVENT LATER THAN , 1996 (THE "COMMUNITY EXPIRATION DATE"), WITHOUT THE
CONSENT OF THE OTS AND THE DIVISION.

In the event shares are available for the Community Offering, members of the
general public, each together with his or her Associates and other persons
acting in concert with him or her, may purchase up to 2.5% of the total Common
Shares sold in the Offering. If an insufficient number of Common Shares is
available to fill all of the orders received in the Community Offering, the
available Common Shares will be allocated in a manner to be determined by the
Boards of Directors of the Holding Company and the Bank, subject to the
following:

(i) Preference will be given to natural persons who are residents of
Hamilton County, Ohio, the county in which the office of the Bank is
located;

11
<PAGE>
(iii) The right of any person to purchase Common Shares in the Community
Offering is subject to the right of the Holding Company and the Bank to
accept or reject such purchases in whole or in part.

LIMITATIONS ON PURCHASES OF COMMON SHARES

After the Conversion, the Common Shares, except for shares purchased by
affiliates of the Bank, will be freely transferable, subject to OTS and Division
regulations.

PLAN OF DISTRIBUTION

The offering of the Common Shares is made only pursuant to the Prospectus, a
copy of which has been provided with this Summary Proxy Statement and copies of
which are available at the office of the Bank. Officers and directors of the
Bank will be available to answer questions about the Conversion and may also
hold informational meetings for interested persons. Such officers and directors
will not be permitted to make statements about the Holding Company or the Bank
unless such information is also set forth in the Prospectus, nor will they
render investment advice. No officer, director or employee of the Holding
Company or the Bank will be compensated, directly or indirectly, for any
activities in connection with the offer or sale of Common Shares issued in the
Conversion.

12
<PAGE>
To assist the Holding Company and the Bank in marketing the Common Shares,
the Holding Company and the Bank have retained Charles Webb & Company ("Webb"),
a broker-dealer registered with the SEC and a member of the National Association
of Securities Dealers. Webb will consult with and advise the Bank and assist
with the sale of the Common Shares in connection with the Conversion. The
services to be rendered by Webb include the following: (1) assisting the Holding
Company and the Bank in conducting the Subscription Offering and the Community
Offering; (2) training and educating Bank personnel about the Conversion
process; (3) organizing and conducting meetings to provide information to
prospective investors about the Conversion; (4) keeping records of orders for
Common Shares; and (5) assisting in the collection of proxies from members for
use at the Special Meeting.

The Bank's personnel will assist in the above-described sales activities
pursuant to an exemption from registration as a broker or dealer provided by
Rule 3a4-1 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"). Rule 3a4-1 generally provides that an "associated person of an issuer" of
securities shall not be deemed a broker solely by reason of participation in the
sale of securities of such issuer if the associated person meets certain
conditions. Such conditions include, but are not limited to, that the associated
person participating in the sale of an issuer's securities not be

13
<PAGE>
compensated in connection therewith at the time of participation, that such
person not be associated with a broker or dealer and that such person observe
certain limitations on his participation in the sale of securities. For purposes
of this exemption, "associated person of an issuer" is defined to include any
person who is a director, officer or employee of the issuer or a company that
controls, is controlled by or is under common control with the issuer.

EFFECT OF EXTENSION OF COMMUNITY OFFERING

USE OF ORDER FORMS

Subscriptions for Common Shares in the Subscription Offering and the
Community Offering may be made only by completing and submitting a Stock Order
Form. Any person who desires to subscribe for Common Shares in the Subscription
Offering must do so by delivering to the Bank, by mail or in person, prior to
.m., Eastern Time, on , 1996, a properly executed and completed Stock
Order Form, together with full payment of the subscription price of $10 for each
Common Share for which subscription is made. No facsimile or photocopied Stock
Order Forms will be accepted.

AN EXECUTED STOCK ORDER FORM, ONCE RECEIVED BY THE BANK, MAY NOT BE
MODIFIED, AMENDED OR RESCINDED WITHOUT THE CONSENT OF THE BANK, UNLESS (I) THE
COMMUNITY OFFERING IS NOT COMPLETED BY , 1996, OR (II) THE FINAL
VALUATION OF THE BANK, AS CONVERTED, IS LESS THAN $2,975,000 OR MORE THAN
$4,628,750. IF EITHER OF THOSE EVENTS OCCURS, PERSONS WHO HAVE SUBSCRIBED FOR
COMMON SHARES IN THE OFFERING WILL BE GIVEN NOTICE THAT THEY HAVE A RIGHT TO
INCREASE, DECREASE OR RESCIND THEIR SUBSCRIPTIONS. ANY PERSON WHO DOES NOT
AFFIRMATIVELY ELECT TO CONTINUE HIS SUBSCRIPTION OR ELECTS TO RESCIND HIS
SUBSCRIPTION DURING ANY SUCH EXTENSION WILL HAVE ALL OF HIS FUNDS PROMPTLY
REFUNDED WITH INTEREST. ANY PERSON WHO ELECTS TO DECREASE HIS SUBSCRIPTION
DURING ANY SUCH EXTENSION WILL HAVE THE APPROPRIATE PORTION OF HIS FUNDS
PROMPTLY REFUNDED WITH INTEREST. IN ADDITION, IF THE MAXIMUM PURCHASE LIMITATION
IS INCREASED TO MORE THAN 2.5% OF THE COMMON SHARES, PERSONS WHO HAVE SUBSCRIBED
FOR 2.5% OF THE COMMON SHARES WILL BE GIVEN THE OPPORTUNITY TO INCREASE THEIR
SUBSCRIPTIONS.

PAYMENT FOR COMMON SHARES

Payment of the subscription price for all Common Shares for which a
subscription is made must accompany a completed Order Form in order for such
subscription to be valid. Payment for Common Shares may be made (i) in cash, if
delivered in person, (ii) by check, bank draft or money order, or (iii) by
authorization of withdrawal from savings accounts in the Bank (other than
non-self-directed IRAs and Keogh Accounts). The Bank cannot lend money or
otherwise extend credit to any person to purchase Common Shares.

Payments made in cash or by check, bank draft or money order will be placed
in a segregated savings account insured by the FDIC up to applicable limits
until the Conversion is completed or terminated. Interest will be paid by the
Bank on such account at the Bank's then current passbook savings account rate,
which is currently % with an annual percentage yield of %, from the date
payment is received until the Conversion is completed or terminated. Payments
made by check will not be deemed to have been received until such check has
cleared for payment.

Instructions for authorizing withdrawals from savings accounts are provided
in the Order Form. Once a withdrawal has been authorized, none of the designated
withdrawal amount may be used by a subscriber for any purpose other than to
purchase Common Shares, unless the Conversion is terminated. All sums authorized
for withdrawal will continue to earn interest at the contract rate for such

14
<PAGE>
account or certificate until the completion or termination of the Conversion.
Interest penalties for early withdrawal applicable to certificate accounts will
be waived in the case of withdrawals authorized for the purchase of Common
Shares. If a partial withdrawal from a certificate account results in a balance
less than the applicable minimum balance requirement, the certificate will be
cancelled and the remaining balance will earn interest at the Bank's passbook
rate subsequent to the withdrawal.

In order to utilize funds in an IRA or Keogh account maintained at the Bank,
the funds must be transferred to a self-directed IRA or Keogh account that
permits the funds to be invested in stock. The beneficial owner of the IRA or
Keogh account must direct the trustee of the account to use funds from such
account to purchase Common Shares in connection with the Conversion. THIS CANNOT
BE DONE THROUGH THE MAIL. Persons who are interested in utilizing IRAs or Keogh
accounts at the Bank to subscribe for Common Shares should contact the
Conversion Information Center at (513) - for instructions and assistance.

SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS

The following table sets forth certain information regarding the
subscription rights intended to be exercised by the directors and executive
officers of the Bank:

<TABLE>
<CAPTION>
TOTAL PERCENT OF TOTAL AGGREGATE PURCHASE
NAME SHARES OFFERING(1) PRICE
- ------------------------------------------------- ----------- ------------------------- -----------------------
<S> <C> <C> <C>
Mardelle Dickhaut................................ 3,500 1.00% $ 35,000
Ruth C. Emden.................................... 5,250 1.50 52,500
Laird L. Lazelle................................. 8,750 2.50 87,500
Robert E. Levitch................................ 7,000 2.00 70,000
Margo Liebert.................................... 2,500 0.71 25,000
Dianne K. Rabe................................... 3,500 1.00 35,000
Michael S. Schwartz.............................. 8,750 2.50 87,500
Paul L. Silverglade.............................. 8,750 2.50 87,500
Ivan J. Silverman................................ 8,750 2.50 87,500
All directors and executive officers as a
group(2)........................................ 74,250 21.21% $ 742,500
</TABLE>

(2) Includes intended purchases by Associates of directors and executive
officers, to the extent known.

All purchases by executive officers and directors of the Bank are being made
for investment purposes only and with no present intent to resell.

15
<PAGE>
PRICING AND NUMBER OF COMMON SHARES TO BE SOLD

The aggregate offering price of the Common Shares sold in the Offering will
be based on the pro forma market value of the shares as determined by an
independent appraisal of the Bank. Keller was retained by the Bank to prepare
such independent appraisal. Keller will receive a fee of $15,000 for its
appraisal and one update. Such amount includes out-of-pocket expenses.

The pro forma value of the Bank, as converted, determined by Keller, is
$3,500,000 as of May 14, 1996. The Valuation Range established in accordance
with the Plan is $2,975,000 to $4,025,000, which, based upon a per share
offering price of $10, will result in the sale of between 297,500 and 402,500
Common Shares. The total number of Common Shares sold in the Offering will be
determined in the discretion of the Board of Directors, based on the Valuation
Range. Pro forma shareholders' equity per share and pro forma earnings per share
decrease moving from the low end to the high end of the Valuation Range. See
"PRO FORMA DATA" in the Prospectus.

In the event that Keller determines at the close of the Conversion that the
aggregate pro forma value of the Bank is higher or lower than the pro forma
value, but is nevertheless equal to or greater than $2,975,000 or equal to or
less than $4,628,750, the Holding Company will make an appropriate adjustment by
raising or lowering the total number of Common Shares sold in the Offering
consistent with the final valuation. The total number of Common Shares sold in
the Offering will be determined in the discretion of the Board of Directors
consistent with the final valuation. If, due to changing market conditions, the
final valuation is less than $2,975,000 or more than $4,628,750, subscribers

16
<PAGE>
will be given notice of such final valuation and the right to affirm, increase,
decrease or rescind their subscriptions. Any person who does not affirmatively
elect to continue his subscription or elects to rescind his subscription before
the date specified in the notice will have all of his funds promptly refunded
with interest. Any person who elects to decrease his subscription will have the
appropriate portion of his funds promptly refunded with interest.

THE APPRAISAL BY KELLER IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS A
RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING COMMON SHARES OR
VOTING TO APPROVE THE CONVERSION. IN PREPARING THE VALUATION, KELLER HAS RELIED
UPON AND ASSUMED THE ACCURACY AND COMPLETENESS OF THE AUDITED FINANCIAL
STATEMENTS AND STATISTICAL INFORMATION PROVIDED BY THE BANK. KELLER DID NOT
INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS AND OTHER INFORMATION PROVIDED BY
THE BANK, NOR DID KELLER VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE
BANK. THE VALUATION CONSIDERS THE BANK ONLY AS A GOING CONCERN AND SHOULD NOT BE
CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE OF THE BANK. MOREOVER,
BECAUSE SUCH VALUATION IS NECESSARILY BASED UPON ESTIMATES AND PROJECTIONS OF A
NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO CHANGE FROM TIME TO TIME, NO
ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING COMMON SHARES WILL THEREAFTER BE
ABLE TO SELL SUCH SHARES AT THE CONVERSION PURCHASE PRICE.

RESTRICTIONS ON REPURCHASE OF COMMON SHARES

RESTRICTIONS ON TRANSFERABILITY OF COMMON SHARES BY DIRECTORS AND OFFICERS

17
<PAGE>
broker-dealer registered with the SEC. This restriction will not apply, however,
to negotiated transactions involving more than 1% of a class of outstanding
common shares of the Holding Company or shares acquired by any stock benefit
plan of the Holding Company or the Bank.

The Common Shares, like the stock of most public companies, are subject to
the registration requirements of the Securities Act. Accordingly, the Common
Shares may be offered and sold only in compliance with such registration
requirements or pursuant to an applicable exemption from registration. Common
Shares received in the Conversion by persons who are not "affiliates" of the
Holding Company may be resold without registration. Common Shares received by
affiliates of the Holding Company will be subject to resale restrictions. An
"affiliate" of the Holding Company, for purposes of Rule 144, is a person who
directly, or indirectly through one or more intermediaries, controls, or is
controlled by or is under common control with, the Holding Company. Rule 144
generally requires that there be publicly available certain information
concerning the Holding Company and that sales subject to Rule 144 be made in
routine brokerage transactions or through a market maker. If the conditions of
Rule 144 are satisfied, each affiliate (or group of persons acting in concert
with one or more affiliates) is entitled to sell in the public market, without
registration, in any three-month period, a number of shares which does not
exceed the greater of (i) 1% of the number of outstanding shares of the Holding
Company or (ii) if the shares are admitted to trading on a national securities
exchange or reported through the automated quotation system of a registered
securities association, the average weekly reported volume of trading during the
four weeks preceding the sale.

OTHER

THE PLAN IS ATTACHED TO THIS SUMMARY PROXY STATEMENT AS EXHIBIT A AND SHOULD
BE REVIEWED CAREFULLY. ALL STATEMENTS MADE IN THIS SUMMARY PROXY STATEMENT AND
THE PROSPECTUS ARE HEREBY QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN.
THE ADOPTION OF THE PLAN BY THE VOTING MEMBERS AT THE SPECIAL MEETING WILL
AUTHORIZE THE BOARDS OF DIRECTORS OF THE HOLDING COMPANY AND THE BANK TO AMEND
OR TERMINATE THE PLAN. IF THE BOARDS OF DIRECTORS OF THE HOLDING COMPANY AND THE
BANK DETERMINE, UPON ADVICE OF COUNSEL AND AFTER CONSULTATION WITH THE OTS AND
THE DIVISION, THAT ANY SUCH AMENDMENT IS MATERIAL, SUBSCRIBERS WILL BE NOTIFIED
OF THE AMENDMENT AND WILL BE PROVIDED THE OPPORTUNITY TO INCREASE, DECREASE OR
CANCEL THEIR SUBSCRIPTIONS.

USE OF PROCEEDS

The following table presents the estimated gross and net proceeds from the
sale of the Common Shares in connection with the Conversion based on the
Valuation Range:

<TABLE>
<CAPTION>
MINIMUM MID-POINT MAXIMUM MAXIMUM, AS ADJUSTED
------------- ------------- ------------- ---------------------
<S> <C> <C> <C> <C>
Gross proceeds................................ $ 2,975,000 $ 3,500,000 $ 4,025,000 $ 4,628,750
Less estimated expenses....................... 251,000 251,000 251,000 251,000
------------- ------------- ------------- -----------
Total net proceeds............................ $ 2,724,000 $ 3,249,000 $ 3,774,000 $ 4,377,750
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
</TABLE>

The Holding Company will retain 50% of the net proceeds from the sale of the
Common Shares, approximately $1.62 million at the mid-point of the Valuation
Range. Such proceeds will be used by the Holding Company to lend up to $370,300
to the ESOP to acquire Common Shares in the Offering and for general corporate
purposes, which may include dividends, repurchases of Common Shares and

18
<PAGE>
acquisitions of other financial institutions. The Holding Company presently has
no plans or agreements relating to any such acquisitions or repurchases. OTS
regulations generally prohibit stock repurchases in the six months following the
completion of the Conversion without the prior approval of the OTS. See "THE
CONVERSION -- Restrictions on Repurchase of Common Shares."

The remainder of the net proceeds received from the sale of the Common
Shares, approximately $1.25 million at the mid-point of the Valuation Range,
will be invested by the Holding Company in the capital stock to be issued by the
Bank to the Holding Company as a result of the Conversion. Such investment will
increase the regulatory capital of the Bank and will permit the Bank to expand
its lending and investment activities and to enhance customer services. The Bank
anticipates that such net proceeds will be used to originate mortgage loans.

MARKET FOR COMMON SHARES

There is presently no market for the Common Shares. The existence of a
market in the Common Shares upon the completion of the Conversion will depend
upon the presence in the marketplace of both willing buyers and willing sellers
at any given time. It is expected that the Common Shares will be quoted and
traded on the over-the-counter market through brokers participating on the
National Daily Quotation Service. Because of the limited size of the Offering,
however, it is unlikely that an active market for the common shares will develop
after the completion of the Conversion or, if such market does develop, that it
will continue. Investors should consider, therefore, the potentially illiquid
and long-term nature of an investment in the Common Shares. See "RISK FACTORS --
Limited Market for the Common Shares" in the Prospectus.

DIVIDEND POLICY

The declaration and payment of dividends by the Holding Company will be
subject to the discretion of the Board of Directors of the Holding Company, to
the earnings and financial condition of the Holding Company and to general
economic conditions. If the Board of Directors of the Holding Company
determines, in the exercise of its discretion, that the net income, capital and
consolidated financial condition of the Holding Company and the general economy
justify the declaration and payment of dividends by the Holding Company, the
Board of Directors of the Holding Company may authorize the payment of dividends
on the Common Shares, subject to the limitation under Ohio law that a
corporation may pay dividends only out of surplus. There can be no assurance
that dividends will be paid on the Common Shares or, if paid, will continue to
be paid.

Other than earnings on the investment of the proceeds retained by the
Holding Company, the only source of income of the Holding Company will be
dividends periodically declared and paid by the Board of Directors of the Bank
on the common shares of the Bank held by the Holding Company. The declaration
and payment of dividends by the Bank to the Holding Company will be subject to
the discretion of the Board of Directors of the Bank, to the earnings and
financial condition of the Bank, to general economic conditions and to federal
and state restrictions on the payment of dividends by thrift institutions. Under
regulations of the OTS applicable to converted savings associations, the Bank
will not be permitted to pay a cash dividend on its capital stock after the
Conversion if its regulatory capital would, as a result of the payment of such
dividend, be reduced below the amount required for the Liquidation Account or
the applicable regulatory capital requirement prescribed by the OTS. See "THE
CONVERSION -- Principal Effects of the Conversion -- Liquidation Account" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- Liquidity and Capital Resources" in the Prospectus. The Bank may
not pay a dividend unless such dividend also complies with a regulation of the
OTS limiting capital distributions

19
<PAGE>
by savings associations. Capital distributions, for purposes of such regulation,
include, without limitation, payments of cash dividends, repurchases and certain
other acquisitions by an association of its shares and payments to stockholders
of another association in an acquisition of such other association. See
"REGULATION -- Office of Thrift Supervision -- Limitations on Capital
Distributions" in the Prospectus.

DESCRIPTION OF AUTHORIZED SHARES

GENERAL

LIQUIDATION RIGHTS

VOTING RIGHTS

DIVIDENDS

The holders of the Common Shares will be entitled to the payment of
dividends when, as and if declared by the Board of Directors and paid out of
funds, if any, available under applicable laws and regulations for the payment
of dividends. The payment of dividends is subject to federal and state statutory
and regulatory restrictions. See "DIVIDEND POLICY," "REGULATION -- Office of
Thrift Supervision -- Limitations on Capital Distributions" in the Prospectus
and "TAXATION -- Federal Taxation" in the Prospectus for a description of
restrictions on the payment of cash dividends.

PREEMPTIVE RIGHTS

RESTRICTIONS ON ALIENABILITY

See "THE CONVERSION -- Restrictions on Transferability of Common Shares by
Directors and Officers" for a description of certain restrictions on the
transferability of Common Shares purchased

20
<PAGE>
by officers and directors and "RESTRICTIONS ON ACQUISITION OF THE HOLDING
COMPANY AND THE BANK" in the Prospectus for information regarding regulatory
restrictions on acquiring Common Shares.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Each director of the Bank currently receives a fee of $7,500 per year.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- ------------------------------------------------------------------ --------- --------- --------- ----------------
<S> <C> <C> <C> <C>
Laird L. Lazelle 1995 $ 69,488 $ 5,200 $ 6,000
President and Chief Executive Officer
</TABLE>

EXPERTS

Keller has consented to the publication herein of the summary of its letter
to the Bank setting forth its opinion as to the estimated pro forma market value
of the Bank, as converted, and to the use of its name and statements with
respect to it appearing herein. The financial statements of the Bank as of March
31, 1996 and 1995, and for the fiscal years ended June 30, 1995, 1994 and 1993
have been included herein in reliance upon the report of Clark, Schaefer,
Hackett & Co., independent certified public accountants, appearing elsewhere
herein, and upon the authority of such firm as experts in auditing and
accounting.

LEGAL PROCEEDINGS

ADDITIONAL INFORMATION AND ORDER FORMS

The Prospectus contains the following: unaudited financial statements of the
Bank, including statements of income and retained earnings, for the nine months
ended March 31, 1996 and 1995; audited financial statements of the Bank,
including statements of income and retained earnings, for the three fiscal years
ended June 30, 1995, 1994 and 1993; management's discussion and analysis of
financial condition and results of operations; selected financial information of
the Bank for the five fiscal years ended September 30, 1995, 1994, 1993, 1992
and 1991; information concerning the capitalization of the Bank; a description
of the Bank's lending, savings and investment activities; and additional
information about the business and financial condition of the Bank. A copy of
the Prospectus accompanies this Summary Proxy Statement. To obtain an additional
copy of the Prospectus, contact the Bank's Conversion Information Center at
(513) - .

The Subscription Offering will commence on , 1996, and end at
.m., Eastern Time, on , 1996. Order Forms for purchases of
Common Shares in the Subscription Offering must be received by the Bank on or
before .m. Eastern Time, , 1996.

<PAGE>

<TABLE>
<S><C>
STOCK ORDER FORM FOUNDATION BANCORP, INC.
(Must be accompanied by CERTIFICATION FORM) (Proposed Holding Company for Foundation Savings Bank)
25 Garfiled Place
Cincinnati, Ohio 45202
Note: Please read the Stock Order Form Guide and Instructions on the back of this form before completion.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DEADLINE
- ------------------------------------------------------------------------------------------------------------------------------------
The Subscription and Community Offering ends at x:00 p.m., Cincinnati, Ohio time, XXX xx, 1996. Your Stock Order Form and
Certification Form, properly executed and with the correct payment, must be received at the address on the bottom of this form by
this deadline, or it will be considered void.
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
(1) NUMBER OF SHARES PRICE PER SHARE (2) TOTAL AMOUNT DUE
----------------------------- ---------------------------------
X $10.00 = $
----------------------------- ---------------------------------
(minimum 25)

The minimum number of shares that may be subscribed for is 25 and the maximum purchase is 2.5% of the total number of shares sold in
the Subscription Offering and the Community Offering (up to 11,571 shares based on anticipated sales of 462,875 shares). No person,
together with associates of and persons acting in concert with such person, may purchase more than 5% of the total number of shares
sold in the Subscription Offering and the Community Offering (up to 23,142 shares, based on anticipated sales of 462,875 shares).
The price per share is based on a valuation that is subject to review prior to filling individual orders.
- ------------------------------------------------------------------------------------------------------------------------------------
METHOD OF PAYMENT PURCHASER INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
(3)/ / Enclosed is a check, bank draft or money order payable to (5)/ / Check here if you are a director, officer or employee of
Foundation Bancorp, Inc. for $____________ (or cash if Foundation Savings Bank or a member of such person's
presented in person). immediate family.

(4)/ / I authorize Foundation Savings Bank to make the withdrawals / / Check here if you are a depositor and ENTER BELOW
from my Foundation Savings Bank account(s) shown below, and INFORMATION FOR ALL ACCOUNTS you had at the Eligibility
understand that the amounts will not otherwise be available Record Date (May 31, 1995) or Voting Record Date (XXXX
for withdrawal: xx, 1996). If additional space is needed, please
utilize the back of this form. PLEASE CONFIRM
ACCOUNT(S) BY INITIALING HERE. _________________.
ACCOUNT NUMBER(S) AMOUNT(S)
- -----------------------------------------------------------------
$
- ----------------------------------------------------------------- ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER
$ ------------------------------------------------------------
- -----------------------------------------------------------------
$ -- -- -- -- -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------
$ -- -- -- -- -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------
$ ------------------------------------------------------------
- -----------------------------------------------------------------
TOTAL WITHDRAWAL $ -- -- -- -- -- -- -- -- -- -- -- -- --
-------------------------
There is no penalty for early withdrawals used for this payment. -- -- -- -- -- -- -- -- -- -- -- -- --

------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
STOCK REGISTRATION
- ------------------------------------------------------------------------------------------------------------------------------------
(6) Form of stock ownership

/ / Individual / / Uniform Transfer to Minors / / Partnership
/ / Joint Tenants / / Uniform Gift to Minors / / Individual Retirement Account
/ / Tenants in Common / / Corporation / / Fiduciary/Trust (Under Agreement Dated
- ------------------------------------------------------------------------------------------------------------------------------------

(7) Name Social Security or Tax I.D.
- ------------------------------------------------------------------------------------------------------------------------------------

Name Daytime Telephone
- ------------------------------------------------------------------------------------------------------------------------------------

Street Address Evening Telephone
- ------------------------------------------------------------------------------------------------------------------------------------

City State Zip Code County of Residence
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NASD AFFILIATION (This section only applies to those individuals who meet the delineated criteria.)
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Check here if you are a member of the National Association of Securities Dealers, Inc. ("NASD"), a person associated with an
NASD member, a member of the immediate family of any such person to whose support such person contributes, directly or indirectly,
or the holder of an account in which an NASD member or person associated with an NASD member has a beneficial interest. To comply
with conditions under which an exemption from the NASD'S Interpretation With Respect to Free-Riding and Withholding is available,
you agree, if you have checked the NASD affiliation box, (i) not to sell, transfer or hypothecate the stock for a period of 90 days
following the issuance, and (ii) to report this subscription in writing to the applicable NASD member within one day of the payment
therefor.
- ------------------------------------------------------------------------------------------------------------------------------------
ACKNOWLEDGEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
By signing below, I acknowledge receipt of the Prospectus dated XXXX xx, 1996, and the provisions therein and understand that I
may not change or revoke my order once it is received by Foundation Bancorp, Inc. I ALSO CERTIFY THAT THIS STOCK ORDER IS FOR MY
ACCOUNT ONLY AND THERE IS NO AGREEMENT OR UNDERSTANDING REGARDING ANY FURTHER SALE OR TRANSFER OF THESE SHARES. FEDERAL
REGULATIONS PROHIBIT ANY PERSONS FROM TRANSFERRING, OR ENTERING INTO ANY AGREEMENT DIRECTLY OR INDIRECTLY TO TRANSFER, THE LEGAL OR
BENEFICIAL OWNERSHIP OF CONVERSION SUBSCRIPTION RIGHTS OR THE UNDERLYING SECURITIES TO THE ACCOUNT OF ANOTHER PERSON. FOUNDATION
SAVINGS BANK WILL PURSUE ANY AND ALL LEGAL AND EQUITABLE REMEDIES IN THE EVENT IT BECOMES AWARE OF THE TRANSFER OF SUBSCRIPTION
RIGHTS AND WILL NOT HONOR ORDERS KNOWN BY IT TO INVOLVE SUCH TRANSFER.

Under penalties of perjury, I further certify that: (1) the social security number or taxpayer identification number given above is
correct; and (2) I am not subject to backup withholding. You must cross out item (2) above if you have been notified by the
Internal Revenue Service that you are subject to backup withholding because of underreporting interest or dividends on your tax
return.
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE
- ------------------------------------------------------------------------------------------------------------------------------------
Sign and date the form. When purchasing as a custodian, corporate
officer, etc., include your full title. An additional signature is
required only when payment is by withdrawal from an account that
requires more than one signature to withdraw funds. --------------------------------------------------------------
Authorized Signature Title (if applicable) Date
YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH THE PROVISIONS SET
FORTH IN THE PROSPECTUS. THIS ORDER IS NOT VALID IF NOT SIGNED. --------------------------------------------------------------
NO FACSIMILIES, PHOTOCOPIES, OR OTHER REPRODUCTIONS OF THE STOCK Authorized Signature Title (if applicable) Date
ORDER FORM WILL BE ACCEPTED. If you need help completing this
Form, you may call the Conversion Information Center at --------------------------------------------------------------
(513) xxx-xxxx.

THE COMMON SHARES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER CORPORATION, FUND, OR GOVERNMENT AGENCY.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR OFFICE USE ONLY

Date Rec'd ______/______/______ Order # _________ Batch# ________ CONVERSION INFORMATION CENTER
25 Garfield Place
Check # _____________________ Category __________________ Cincinnati, Ohio 45202
(513) xxx-xxxx
Amount $ ____________________ Initials __________________
- --------------------------------------------------------------------------
</TABLE>

<PAGE>

FOUNDATION BANCORP, INC.

STOCK ORDER FORM
GUIDE AND INSTRUCTIONS
- --------------------------------------------------------------------------------
- ---------------------------
STOCK OWNERSHIP GUIDE
- ---------------------------
INDIVIDUAL

The shares are to be registered in an individual's name only. You may not list
beneficiaries for this ownership.

JOINT TENANTS

Joint tenants with right of survivorship identifies two or more owners. When
shares are held by joint tenants with rights of survivorship, ownership
automatically passes to the surviving joint tenant(s) upon the death of any
joint tenant. You may not list beneficiaries for this ownership.

TENANTS IN COMMON

Tenants in common may also identify two or more owners. When shares are held by
tenants in common, upon the death of one co-tenant, ownership of the shares will
be held by the surviving co-tenant(s) and by the heirs of the deceased
co-tenant. All parties must agree to the transfer or sale of shares held by
tenants in common. You may not list beneficiaries for this ownership.

INDIVIDUAL RETIREMENT ACCOUNT

Individual Retirement Account ("IRA") holders may make purchases of shares from
their deposits through a pre-arranged "trustee-to-trustee" transfer. Stock may
only be held in a self-directed IRA. Foundation Savings Bank does not offer a
self-directed IRA. Please contact the Conversion Information Center if you
have any questions about your IRA account or to obtain a list of local brokers
who will open a self-directed IRA, or check with your broker. There will be no
early withdrawal or IRS penalties incurred as a result of these transactions.

UNIFORM GIFT TO MINORS/UNIFORM TRANSFER TO MINORS

For residents of many states, shares may be held in the name of a custodian for
the benefit of a minor under the Uniform Transfer to Minors Act. For residents
in other states, shares may be held in a similar type of ownership under the
Uniform Gift to Minors Act of the individual states. For either form of
ownership, the minor is the actual owner of the shares with the adult custodian
being responsible for the investment until the minor reaches legal age.

INSTRUCTIONS: See your legal advisor if you are unsure about the correct
registration of your shares.

On the first "NAME" line, print the first name, middle initial, and last name of
the custodian, with the abbreviation "CUST" after the name. Print the first
name, middle initial, and last name of the minor on the second "NAME" line.
Only one custodian and one minor may be designated.

CORPORATION/PARTNERSHIP

Corporations/Partnerships may purchase stock. Please provide the
Corporation/Partnership's legal name and Tax I.D. To have depositor rights, the
Corporation/Partnership must have an account in its legal name. Please contact
the Conversion Information Center to verify depositor rights and purchase
limitations.

FIDUCIARY/TRUST

Generally, fiduciary relationships (such as Trusts, Estates, Guardianships,
etc.) are established under a form of trust agreement or pursuant to a court
order. Without a legal document establishing a fiduciary relationship, your
shares may not be registered in a fiduciary capacity.

INSTRUCTIONS: On the first "NAME" line, print the first name, middle initial,
and last name of the fiduciary if the fiduciary is an individual. If the
fiduciary is a corporation, list the corporate title on the first "NAME" line.
Following the name, print the fiduciary "title" such as trustee, executor,
personal representative, etc.

On the second "NAME" line, print either the name of the maker, donor, or
testator OR the name of the beneficiary. Following the name, indicate the type
of legal document establishing the fiduciary relationship (agreement, court
order, etc.). In the blank after "Under Agreement Dated", fill in the date of
the document governing the relationship. The date of the document need not be
provided for a trust created by a will.

An example of fiduciary ownership of shares in the case of a trust is: John D.
Smith, Trustee for Thomas A. Smith Under Agreement Dated 06/09/87.

- ---------------------------
ITEM INSTRUCTION
- ---------------------------

ITEMS 1 AND 2-

Fill in the number of shares that you wish to purchase and the total payment
due. The amount due is determined by multiplying the number of shares by the
subscription price of $10.00 per share. The minimum purchase is 25 shares. The
maximum purchase amount in the Conversion by any person is 2.5% of the total
number of shares sold in the Subscription Offering and the Community Offering
(up to 11,571 shares, based on anticipated sales of 462,875 shares). No
person, together with associates of and persons acting in concert with such
person, may purchase more than 5% of the total number of shares sold in the
Subscription Offering and the Community Offering (up to 23,142 shares, based on
anticipated sales of 462,875 shares).

Foundation Savings Bank has reserved the right to reject any order received in
the Community Offering, in whole or in part.

ITEM 3-

Payment for shares may be made in cash (only if delivered by you in person) or
by check, bank draft, or money order made payable to Foundation Bancorp, Inc.
DO NOT MAIL CASH. If you choose to make a cash payment, take your Stock Order
Form, signed Certification Form, and payment in person to the office of
Foundation Savings Bank. Your funds will earn interest at Foundation Savings
Bank's passbook rate, currently x.00% per annum.

ITEM 4-

To pay by withdrawal from a savings account or certificate at Foundation Savings
Bank, insert the account number(s) and the amount(s) you wish to withdraw from
each account. If more than one signature is required to withdraw, each must
sign in the "Signature" box on the front of this Form. To withdraw from an
account with checking privileges, please write a check. No early withdrawal
penalty will be charged on funds used to purchase shares in the Conversion. A
hold will be placed on the account(s) for the amount(s) you authorize. Payments
by withdrawal from certificate accounts will remain in certificate account(s)
until the offering closes and will continue to earn interest at the account rate
until then. However, if a partial withdrawal reduces the balance of a
certificate account to less than the applicable minimum, the remaining balance
will thereafter earn interest at Foundation Savings Bank's passbook rate.
Payments from other interrest-bearing accounts will continue to earn interest at
the account rate until the offering closes.

ITEM 5-

Please check this box if you were a depositor on the Eligibility Record Date
(May 31, 1995), and/or a depositor or borrower on the Voting Record Date (XXXX
xx, 1996 and list all names on the account(s) and all account number(s) of those
accounts you had at these dates to ensure proper identification of your purchase
rights.

ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER
- ----------------------------------------------------------------

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

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

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

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

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

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

ITEMS 6 AND 7-

The stock transfer industry has developed a uniform system of shareholder
registrations that we will use in the issuance of Foundation Bancorp, Inc.
common shares. Print the name(s) in which you want the shares registered and
the mailing address of the registrant. Include the first name, middle initial,
and last name of the shareholder. Avoid the use of two initials. Please omit
words that do not affect ownership rights, such as "Mrs.", "Mr.", "Dr.",
"special account", etc.

Subscription rights are not transferable. To protect the priority of your
subscription rights over other purchasers as described in the Prospectus, you
must take ownership in at least one of the account holder's name.

Enter the Social Security or Tax I.D. number of the registered owneron the first
"NAME" line. Be sure to include your telephone number because we will need to
contact you if we cannot execute your order as given. Review the Stock
Ownership Guide on this page and refer to the instructions for Uniform Gift to
Minors/Uniform Transfer to Minors and Fiduciaries.

<PAGE>
CERTIFICATION
(This Form Must Accompany A Signed Stock Order Form)

I ACKNOWLEDGE THAT THE COMMON SHARES, NO PAR VALUE PER SHARE ("COMMON
SHARES"), OF FOUNDATION BANCORP, INC. ("CORPORATION"), THE PROPOSED HOLDING
COMPANY FOR FOUNDATION SAVINGS BANK ("FOUNDATION"), ARE NOT FEDERALLY INSURED
AND ARE NOT GUARANTEED BY THE CORPORATION, FOUNDATION OR THE FEDERAL GOVERNMENT.

If anyone asserts that the Common Shares are federally insured or
guaranteed, or are as safe as an insured deposit, I should call the Office of
Thrift Supervision Central Regional Director, Ronald N. Karr, at (312) 917-5000.

I further certify that, before purchasing the Common Shares of the
Corporation, I received a copy of the Prospectus, dated XXXX xx, 1996, which
discloses the nature of the Common Shares being offered thereby and describes
the following risks involved in an investment in the Common Stock under the
heading "Risk Factors" beginning on page 10 of the Prospectus:

1. Interest Rate Risk

2. Low Return on Assets and Return on Equity

3. Competition in Market Area

4. Legislation and Regulation Which May Adversely Affect Operations and
Earnings

5. Possible Adverse Effects if Preferred Shares Are Issued

6. Potential Impact of Benefit Plans on Net Earnings and Shareholders'
Equity

7. Limited Market for the Common Shares

8. Anti-Takeover Provisions Which May Discourage Sales of Common Shares for
Premium Prices

9. Reliance on Key Personnel

<TABLE>
<S> <C>
Signature: ---------------------------------------

Signature:
---------------------------------------

(NOTE: IF SHARES ARE TO BE HELD JOINTLY, BOTH PARTIES MUST SIGN)

Date:
--------------------
</TABLE>

<PAGE>
REVOCABLE PROXY
FOUNDATION SAVINGS BANK

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF FOUNDATION SAVINGS BANK

The undersigned member of Foundation Savings Bank, a savings and loan
association incorporated under Ohio law (the "Bank"), hereby nominates,
constitutes and appoints and , or either one of them,
as proxy or proxies for the undersigned member, each with full power of
substitution and resubstitution, to vote all of the votes which the undersigned
member is entitled to cast at the Special Meeting of the Members of the Bank to
be held at .m., local time, on , 1996, at ,
Cincinnati, Ohio, and at any adjournments thereof (the "Special Meeting"), on
the following matters and in the manner specified below:

1. The approval of the Plan of Conversion, a copy of which is attached as
Exhibit A to the Summary Proxy Statement mailed to the undersigned member in
connection with the Special Meeting, pursuant to which the Bank would
convert from a mutual savings and loan association incorporated under Ohio
law to a permanent capital stock savings and loan association incorporated
under the laws of Ohio and become a wholly-owned subsidiary of Foundation
Bancorp, Inc., an Ohio corporation organized for the purpose of purchasing
all of the capital stock to be issued by the Bank in connection with the
Conversion.

FOR / / AGAINST / / ABSTAIN / /

2. The adoption of the Amended Articles of Incorporation of the Bank, a copy of
which is attached to the Plan of Conversion as Exhibit I.

FOR / / AGAINST / / ABSTAIN / /

3. The adoption of the Amended Constitution of the Bank, a copy of which is
attached to the Plan of Conversion as Exhibit II.
FOR / / AGAINST / / ABSTAIN / /

4. In their discretion, upon such other matters as may properly come before the
Special Meting.

IMPORTANT: PLEASE SIGN AND DATE THIS REVOCABLE PROXY ON THE REVERSE SIDE.
<PAGE>
PROXY

This Revocable Proxy will be voted as directed by the undersigned member. IF
NO DIRECTION IS GIVEN, THIS REVOCABLE PROXY WILL BE VOTED FOR THE APPROVAL OF
THE PLAN OF CONVERSION AND FOR THE ADOPTION OF THE AMENDED ARTICLES OF
INCORPORATION AND THE AMENDED CONSTITUTION.

Without affecting any vote previously taken, this Revocable Proxy may be
revoked by the undersigned at any time before it is exercised by (i) executing
and delivering to the Bank a later dated proxy, or (ii) giving notice of
revocation in writing to the Secretary of the Bank or in open meeting to the
inspectors of election.

Receipt of the Summary Proxy Statement of the Bank and the Prospectus of
Foundation Bancorp, Inc. dated , 1996, is hereby acknowledged by
the undersigned.
Signature _________________________
Dated _______________________, 1996

NOTE: Please sign your name exactly
as it appears on this Proxy. Joint
accounts require only one
signature. If you are signing this
Proxy as an attorney,
administrator, agent, corporation,
officer, executor, trustee or
guardian, etc., please add your
full title to your signature.

IMPORTANT: IF YOU RECEIVE MORE THAN
ONE CARD, PLEASE SIGN AND RETURN
ALL CARDS IN THE ACCOMPANYING
ENVELOPE.

<PAGE>
(RECEIPT OF ORDER LETTER - FOUNDATION SB LETTERHEAD)

DATE
NAME
ADDRESS TAX I.D. NUMBER XXX-XX-XXX
CITY, STATE, ZIP

RECEIPT OF ORDER

This letter is to acknowledge receipt of your order to purchase shares
offered by Foundation Bancorp, Inc. Please check the following information
carefully to ensure that we have entered your order correctly. Each order is
assigned a prioritized category described below. Acceptance of your order will
be subject to the allocation provisions of the Plan of Conversion, as well as
other conditions and limitations described in the Prospectus.

Our records indicate the following:

<TABLE>
<CAPTION>
Number of Shares Ordered:
<S> <C>
Purchase Price Per Share: $ 10.00
Total Order Amount: $
Date Order Received: / /
Category Assigned:
Category Description
</TABLE>

1. ELIGIBLE ACCOUNT HOLDERS AS OF MAY 31, 1995
2. EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
3. OTHER MEMBERS AS OF XXXX XX, 1996
4. GENERAL PUBLIC

If this does not agree with your records or if you have any questions,
please call our Conversion Information Center at (513) xxx-xxxx. Thank you for
your order.

Sincerely,
[Pasteup sig cut]
Laird L. Lazelle
President and Chief Executive Officer
<PAGE>

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

STOCK GRAM

We are pleased to announce that Foundation Bancorp, Inc. is offering common
shares in a subscription and community offering. The sale of shares in
connection with the offering will enable Foundation Savings Bank ("Foundation"),
Cincinnati, Ohio, to raise additional capital to support and enhance its current
franchise.

We previously mailed to you a PROSPECTUS providing detailed information about
Foundation's operations and the proposed offering. We urge you to read this
carefully.

We invite our loyal customers and community members to become shareholders of
FOUNDATION BANCORP, INC. (THE PROPOSED HOLDING COMPANY FOR FOUNDATION SAVINGS
BANK). If you are interested in purchasing the common shares of Foundation
Bancorp, Inc., you must submit you Stock Order Form, Certification Form and
payment prior to x:00 P.M., EASTERN TIME, ON XXXX xx, 1996.

Should you have additional questions regarding the stock offering or need
additional materials, please call the Conversion Information Center at
(513) 000-0000 or stop by our office at 25 Garfield Place in Cincinnati.

THE COMMON SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR
ANY OTHER GOVERNMENTAL AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SHARES. THE OFFER IS MADE ONLY BY THE PROSPECTUS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

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

PROXY GRAM

We recently forwarded to you a proxy statement and letter advising that
Foundation Savings Bank had received conditional approval to convert from a
mutual savings association to a capital stock savings association.

YOUR VOTE ON OUR PLAN OF CONVERSION HAS NOT YET BEEN RECEIVED. FAILURE TO
VOTE HAS THE SAME EFFECT AS VOTING AGAINST THE PLAN OF CONVERSION.

Your vote is important to us. Therefore, we are requesting that you sign
the enclosed proxy card and return it promptly in the enclosed postage-paid
envelope.

Voting for the Plan of Conversion does not obligate you to purchase shares
or affect the terms or insurance on your accounts.

The Board of Directors of Foundation Savings Bank unanimously recommends
that you vote "FOR" the Plan of Conversion.

FOUNDATION SAVINGS BANK
Cincinnati, Ohio

Laird L. Lazelle
President and Chief Executive Officer

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

If you mailed the proxy, please accept our thanks and disregard this
request. For further information call (513) 000-0000.

THE COMMON SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS NOT AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES. THE OFFER
IS MADE ONLY BY THE PROSPECTUS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
[HOURGLASS]

TIME IS RUNNING
OUT!
XXXX xx

is the last day to purchase common shares of
Foundation Bancorp, Inc.
(Proposed Holding Company for Foundation Savings Bank)
Orders must be received by x:00 p.m. Eastern Time
Contact our Conversion Information Center at 25 Garfield Place
or call (513) 000-0000

The common shares being offered are not savings accounts or deposits and are not
insured by the Federal Deposit Insurance Corporation, the Bank Insurance Fund
or any other governmental agency. This is not an offer to sell or a
solicitation of an offer to buy shares. The offer is made only by the
Prospectus.

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

<PAGE>
STOCK
OFFERING
QUESTIONS
AND
ANSWERS

FOUNDATION
BANCORP, INC.
<PAGE>
STOCK OFFERING
QUESTIONS & ANSWERS

FACTS ABOUT THE CONVERSION

THE BOARD OF DIRECTORS OF FOUNDATION SAVINGS BANK ("FOUNDATION") UNANIMOUSLY
ADOPTED A PLAN (THE "PLAN OF CONVERSION") TO CONVERT FROM A MUTUAL SAVINGS AND
LOAN ASSOCIATION INCORPORATED UNDER OHIO LAW TO A CAPITAL STOCK SAVINGS AND LOAN
ASSOCIATION (THE "CONVERSION").

THIS BROCHURE ANSWERS SOME OF THE MOST FREQUENTLY ASKED QUESTIONS ABOUT THE
CONVERSION AND ABOUT YOUR OPPORTUNITY TO INVEST IN FOUNDATION BANCORP, INC.
("FOUNDATION BANCORP"), THE HOLDING COMPANY FOR FOUNDATION.

INVESTMENT IN THE COMMON SHARES OF FOUNDATION BANCORP INVOLVES CERTAIN RISKS.
FOR A DISCUSSION OF THESE RISKS AND OTHER FACTORS, INVESTORS ARE URGED TO READ
THE ACCOMPANYING PROSPECTUS.

WHY IS FOUNDATION CONVERTING TO STOCK FORM?

The stock form of ownership is used by most business corporations and an
increasing number of savings institutions. Through the sale of common shares,
Foundation will raise additional capital enabling it to:

- support and expand its current
financial and other services.

- allow customers and friends to
purchase shares and participate in the future of Foundation Bancorp and
Foundation.
<PAGE>
WILL THE CONVERSION AFFECT ANY OF MY DEPOSIT ACCOUNTS OR LOANS?

No. The Conversion will have no effect on the balance or terms of any savings
account or loan, and your deposits will continue to be federally insured by the
Federal Deposit Insurance Corporation ("FDIC") to the maximum legal limit. Your
savings account is not being converted to stock.

WHO IS ELIGIBLE TO PURCHASE SHARES IN THE SUBSCRIPTION AND COMMUNITY OFFERINGS?

Certain past and present depositors of Foundation, certain borrowers of
Foundation, the Foundation Bancorp, Inc. Employee Stock Ownership Plan and
members of the general public.

HOW MANY SHARES ARE BEING OFFERED AND AT WHAT PRICE?

Foundation Bancorp is offering up to 462,875 common shares at a price of $10.00
per share through the Prospectus.

HOW MANY SHARES MAY I BUY?

The minimum order is 25 shares. The maximum purchase per person is 2.5% of the
shares being sold in the Conversion, however, no person together with associates
of and persons acting in concert with such person may purchase more than 5% of
the common shares sold.

DO MEMBERS HAVE TO BUY SHARES?

No. However, the Conversion will allow Foundation's depositors and borrowers an
opportunity to buy shares and become charter shareholders of Foundation
<PAGE>
Bancorp, the holding company for the local financial institution with which they
do business.

HOW DO I ORDER SHARES?

You must complete the enclosed Stock Order Form and the Certification Form.
Instructions for completing your Stock Order Form and Certification Form are
contained in this packet. Your order must be received by Foundation by x:00 p.m.
XXXX xx, 1996.

HOW MAY I PAY FOR MY SHARES?

First, you may pay for shares by check, cash or money order. Interest will be
paid by Foundation on these funds at the passbook rate, which is currently x.00%
per annum, from the day the funds are received until the completion or
termination of the Conversion. Second, you may authorize us to withdraw funds
from your Foundation savings account or certificate of deposit for the amount of
funds you specify for payment. You will not have access to these funds from the
day we receive your order until the completion or termination of the Conversion.

CAN I PURCHASE SHARES USING FUNDS IN MY FOUNDATION IRA ACCOUNT?

Federal regulations do not permit the purchase of conversion shares from your
existing Foundation IRA account. To accommodate our depositors, however, we have
made arrangements with an outside trustee to allow such purchases. Please call
our Conversion Information Center for additional information.
<PAGE>
WILL THE SHARES BE INSURED?

No. Like any other common shares, Foundation Bancorp's shares will not be
insured.

WILL DIVIDENDS BE PAID ON THE SHARES?

The Board of Directors of Foundation Bancorp will consider whether to pay a cash
dividend in the future, subject to regulatory limits and requirements. No
decision has been made as to the amount or timing of such dividends.

HOW WILL THE SHARES BE TRADED?

Foundation Bancorp's shares will trade over-the-counter through the National
Daily Quotation Service. However, no assurances can be given that an active and
liquid market will develop.

ARE OFFICERS AND DIRECTORS OF FOUNDATION PLANNING TO PURCHASE STOCK?

Yes! Foundation's executive officers and directors plan to purchase, in the
aggregate, $xxx,xxx worth of shares or approximately xx% of the shares offered
at the midpoint of the offering range.

MUST I PAY A COMMISSION?

No. You will not be charged a commission or fee on the purchase of shares in the
Conversion.

SHOULD I VOTE?

Yes. Your "Yes" vote is very important!

WHY DID I GET SEVERAL PROXY CARDS?

If you have more than one account, you could receive more than one proxy card,
<PAGE>
depending on the ownership structure of your accounts. PLEASE VOTE, SIGN AND
RETURN ALL PROXY CARDS!

HOW MANY VOTES DO I HAVE?

Your proxy card(s) show the number of votes you have. Every depositor entitled
to vote may cast one vote for each $100, and a proportionate fractional vote for
any fraction thereof, on deposit as of the voting record date. Every borrower
entitled to vote may cast one vote.

MAY I VOTE IN PERSON AT THE SPECIAL MEETING?

Yes, but we would still like you to sign and mail your proxy today. If you
decide to revoke your proxy you may do so by submitting a later dated proxy or
by giving notice to Foundation in writing or in open meeting.

FOR ADDITIONAL INFORMATION YOU MAY CALL OUR CONVERSION INFORMATION CENTER AT
(513) XXX-XXXX, BETWEEN X:00 A.M. AND X:00 P.M., MONDAY THROUGH FRIDAY.

THE COMMON SHARES OFFERED IN THE CONVERSION ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.

THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES. THE
OFFER WILL BE MADE ONLY BY THE PROSPECTUS.
<PAGE>
[BLUE SKY LETTER -- CHARLES WEBB & COMPANY LETTERHEAD]

To Members and Friends of Foundation Savings Bank:

Charles Webb & Company, a member of the National Association of Securities
Dealers ("NASD"), is assisting Foundation Savings Bank ("Foundation") in its
conversion from a mutual savings and loan association incorporated under Ohio
law to a capital stock savings and loan association and the concurrent offering
of common shares by its holding company, Foundation Bancorp, Inc. (the "Holding
Company").

At the request of the Holding Company, we are enclosing materials explaining
this process and your options, including an opportunity to invest in the Holding
Company's common shares being offered to customers and the community through
XXXX xx, 1996. Please read the enclosed offering materials carefully. The
Holding Company has asked us to forward these documents to you in view of
certain requirements of the securities laws in your state.

If you have any questions, please visit our Conversion Information Center at
25 Garfield Place in Cincinnati, Ohio or feel free to call the Conversion
Information Center at (513) xxx-xxxx.

Very truly yours,

Charles Webb & Company

The common shares being offered are not savings accounts or deposits and are not
insured by the Federal Deposit Insurance Corporation, the Bank Insurance Fund,
the Savings Association Insurance Funds or any other governmental agency. This
is not an offer to sell or a solicitation of an offer to buy shares. The offer
is made only by the Prospectus.
<PAGE>
[DEAR MEMBER "DARK BLUE SKY" & FOREIGN ACCOUNTS -- ON FOUNDATION SB LETTERHEAD]

XXXX xx, 1996

Dear Member:

We are pleased to announce that Foundation Savings Bank ("Foundation") is
converting from a mutual savings and loan association incorporated under Ohio
law to a capital stock savings and loan association (the "Conversion"). In
conjunction with the Conversion, Foundation Bancorp, Inc., the newly-formed
holding company for Foundation, is offering common shares in a subscription
offering and community offering.

Unfortunately, Foundation Bancorp, Inc. is unable to either offer or sell
its common shares to you because the small number of eligible subscribers in
your jurisdiction makes registration or qualification of the common shares under
the securities laws of your jurisdiction impractical, for reasons of cost or
otherwise. Accordingly, this letter should not be considered an offer to sell or
a solicitation of an offer to buy the common shares of Foundation Bancorp, Inc.

However, as a member of Foundation, you have the right to vote on the Plan
of Conversion at the Special Meeting of Members to be held on XXXX xx, 1996.
Enclosed is a proxy card, a Proxy Statement (which includes the Notice of the
Special Meeting), a Prospectus (which contains information incorporated into the
Proxy Statement) and a return envelope for your proxy card.

I invite you to attend the Special Meeting on XXXX xx, 1996. However,
whether or not you are able to attend, please complete the enclosed proxy card
and return it in the enclosed envelope.

Sincerely,

Laird L. Lazelle
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
[DEAR MEMBER LETTER, FOUNDATION SAVINGS BANK LETTERHEAD]

XXXX xx, 1996

Dear Member:

The Board of Directors of Foundation believes that the Conversion will
result in a number of advantages, such as an opportunity for depositors and
customers of Foundation to become shareholders. Please remember:

-Your accounts at Foundation will continue to be insured up to the maximum
legal limit by the Federal Deposit Insurance Corporation ("FDIC").

-There will be no change in the balance, interest rate, or maturity of any
deposit accounts because of the Conversion.

-Members have a right, but no obligation, to buy shares before they are
offered to the public.

-Like all stock, the shares issued in this offering will not be insured by
the FDIC.

Enclosed are materials describing the offering. We urge you to read these
materials carefully. If you are interested in purchasing the common shares of
Foundation Bancorp, Inc., you must submit your Stock Order Form, Certification
Form, and payment prior to x:00 p.m. XXXX xx, 1996.

If you have additional questions regarding the offering, please call us at
(513) xxx-xxxx, Monday through Friday from x:00 a.m. to x:00 p.m., or stop by
the Conversion Information Center located at 25 Garfield Place in Cincinnati,
Ohio.

Sincerely,

Laird L. Lazelle
PRESIDENT AND CHIEF EXECUTIVE OFFICER

The common shares being offered in this offering are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Bank Insurance Fund or the Savings Association Insurance Fund or any other
government agency. This is not an offer to sell or a solicitation of an offer to
buy shares. The offer will be made only by the Prospectus.
<PAGE>
[DEAR FRIEND LETTER -- FOUNDATION SB LETTERHEAD]

XXXX xx, 1996

Dear Friend:

Because we believe you may be interested in learning more about the merits
of Foundation Bancorp, Inc.'s common shares as an investment, we are sending you
the following materials which describe the offering.

PROSPECTUS: This document provides detailed information about
operations at Foundation and the proposed offering.

QUESTIONS AND ANSWERS: Key questions and answers about the offering are
found in this pamphlet.

STOCK ORDER FORM: This form is used to purchase shares by returning it
with your payment in the enclosed business reply envelope. The deadline
for ordering shares is x:00 p.m., XXXX xx, 1996.

CERTIFICATION FORM: This form must be completed and returned with the
Stock Order Form in the enclosed business reply envelope if you wish to
purchase shares.

As a friend of Foundation, you will have the opportunity to buy shares
directly from Foundation Bancorp, Inc., without commission or fee. If you have
additional questions regarding the Conversion and offering, please call us at
(513) xxx-xxxx, Monday through Friday from x:00 a.m. to x:00 p.m., or stop by
the Conversion Information Center at 25 Garfield Place in Cincinnati, Ohio.

We are pleased to offer you this opportunity to become a charter shareholder
of Foundation Bancorp, Inc.

Sincerely,

Laird L. Lazelle
PRESIDENT AND CHIEF EXECUTIVE OFFICER

The common shares being offered are not savings accounts or deposits and are not
insured by the Federal Deposit Insurance Corporation, the Bank Insurance Fund,
the Savings Association Insurance Fund or any other governmental agency. This is
not an offer to sell or a solicitation of an offer to buy shares. The offer is
made only by the Prospectus.
<PAGE>
(PROSPECTIVE INVESTOR LETTER -- FOUNDATION SB LETTERHEAD)

XXXX xx, 1996

Dear Prospective Investor:

We have enclosed the following materials which will help you learn more
about the merits of Foundation Bancorp, Inc.'s common shares as an investment.
Please read and review the materials carefully.

PROSPECTUS: This document provides detailed information about
operations at Foundation and the proposed offering.

QUESTIONS AND ANSWERS: Key questions and answers about the offering are
found in this pamphlet.

STOCK ORDER FORM: This form is used to purchase shares by returning it
with your payment in the enclosed business reply envelope. The deadline
for ordering shares is x:00 p.m., XXXX xx, 1996.

CERTIFICATION FORM: This form must be completed and returned with the
Stock Order Form in the enclosed business reply envelope if you wish to
purchase shares.

We invite our loyal customers and local community members to become charter
shareholders of Foundation Bancorp, Inc. Through this offering you have the
opportunity to buy shares directly from Foundation Bancorp, Inc., without
commission or fee.

If you have additional questions regarding the Conversion and offering,
please call us at (513) xxx-xxxx, Monday through Friday from x:00 a.m. to x:00
p.m., or stop by the Conversion Information Center located at 25 Garfield Place
in Cincinnati, Ohio.

Sincerely,

Laird L. Lazelle
PRESIDENT AND CHIEF EXECUTIVE OFFICER

The common shares being offered are not savings accounts or deposits and are not
insured by the Federal Deposit Insurance Corporation, the Bank Insurance Fund,
the Savings Association Insurance Fund or any other governmental agency. This is
not an offer to sell or a solicitation of an offer to buy shares. The offer is
made only by the Prospectus.
<PAGE>
[CLOSING LETTER FOUNDATION BANCORP, INC. LETTERHEAD]

XXXX xx, 1996

Dear Subscriber,

I want to thank you for your interest in Foundation Bancorp, Inc. common
shares. We are extremely proud of the overwhelming support we received from our
customers and the community as we successfully completed the sale of xxx,xxx
common shares.

As you purchased your shares with a check or cash, we are enclosing a check
for payment of the interest on those funds. Your stock certificate(s) are being
mailed directly to you from our transfer agent, [ name ].

Again, thank you for your interest. If you have any questions, please do not
hesitate to contact me.

Sincerely,

Laird L. Lazelle
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
[OVERSUBSCRIPTION LETTER -- CHECK, FOUNDATION BANCORP, INC. LETTERHEAD]

XXXX xx, 1996

Dear Subscriber:

However, due to the oversubscription of our common shares during the
offering, we regret we were unable to fill a portion of your order. Enclosed is
a refund check for the amount of your order we were unable to fill plus
interest. The share certificates for the balance of your order are being sent to
you directly from our transfer agent, [ name ].

If you continue to be interested in acquiring common shares of Foundation
Bancorp, Inc., the following brokerage firms have indicated their intent to make
a market in our shares. You may contact any of them for assistance.

[LIST OF MARKET MAKERS]

Again, thank you for your interest. If you have any questions, please do not
hesitate to contact me.

Sincerely,

Laird L. Lazelle
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
[CLOSING LETTER, FOUNDATION BANCORP, INC. LETTERHEAD]

XXXX xx, 1996

Dear Shareholder:

It is my pleasure to welcome you as a shareholder of Foundation Bancorp,
Inc., the newly-formed holding company for Foundation Savings Bank. We are
extremely proud of the overwhelming support we received from our customers and
the community as we successfully completed the sale of 000,000 common shares.

Your new stock certificate is enclosed and should be kept in a safe place.
Please take a moment to be sure that the name(s), number of shares, and mailing
address are correct.

We have selected [Name of Transfer Agent] to serve as our transfer agent and
registrar. If there is an error on your stock certificate, if your address
changes, or if at any time you want to change the registration of your
certificate, you should contact [Name of Transfer Agent] at the address listed
below:

[TRANSFER AGENT]

If the original certificate must be forwarded to the transfer agent to be
reissued, the certificate should be sent registered mail. Lost or destroyed
certificates can be replaced, but an indemnity bond will be required to replace
the certificate.

Please be advised that Foundation Savings Bank will trade over-the-counter
through the National Daily Quotation Service. Should you be interested in
purchasing additional shares or selling your shares of Foundation Savings Bank,
the following brokerage firms have indicated their intent to make a market in
our shares. You may contact any of them for assistance.

[LIST OF MARKET MAKERS]

If you purchased your shares with a check or cash, you will receive a check
for payment of the interest earned on those funds in a separate mailing.

On behalf of Foundation Bancorp, Inc. and the Board of Directors and
employees of Foundation Savings Bank, we look forward to the opportunities now
ahead of us and pledge our best efforts to make your investment a profitable
one.

Sincerely,

Laird L. Lazelle
PRESIDENT AND CHIEF EXECUTIVE OFFICER

<PAGE>
Exhibit 99.5
[KELLER & COMPANY LETTERHEAD]

May 21, 1996

The Board of Directors
Foundation Savings Bank
25 Garfield Place
Cincinnati, Ohio 45202

Re: Conversion Valuation Agreement

Attn: Laird L. Lazelle, President

Keller & Company, Inc. (hereinafter referred to as KELLER) hereby
proposes to prepare an independent conversion appraisal of foundation Savings
Bank, Cincinnati, Ohio, (hereinafter referred to as FOUNDATION SAVINGS),
relating to the conversion of FOUNDATION SAVINGS from a mutual to a stock
institution. KELLER will provide a pro forma valuation of the market value of
the shares to be sold in the proposed conversion of FOUNDATION SAVINGS.

KELLER is a financial consulting firm that primarily serves the
financial institution industry. KELLER is experienced in evaluating and
appraising thrift institutions and thrift institution holding companies.
KELLER is an experienced conversion appraiser for filings with the Federal
Deposit Insurance Corporation ("FDIC") and the Office of thrift Supervision
("OTS"), and is also approved by the Internal Revenue Service as an expert in
thrift stock valuations.

KELLER agrees to prepare the conversion appraisal in the format required
by the OTS in a timely manner for prompt filing with the OTS and the
Securities and Exchange Commission, if applicable. KELLER will provide any
additional information as requested and will complete appraisal updates in
accordance with regulatory requirements.

<PAGE>

The appraisal report will provide a detailed description of FOUNDATION
SAVINGS, including its financial condition, operating performance, asset
quality, rate sensitivity position, liquidity level and management
qualifications. The appraisal will include a description of FOUNDATION
SAVINGS' market area, including both economic and demographic characteristics
and trends. An analysis of other publicly-traded thrift institutions will be
performed to determine a comparable group and adjustments to the appraised
value will be made based on a comparison of FOUNDATION SAVINGS with the
comparable group.

In making its appraisal, KELLER will rely upon the information in the
Subscription and Community Offering Circular (Prospectus), including the
financial statements. Among other factors, KELLER will also consider the
following: the present and projected operating results and financial
condition of FOUNDATION SAVINGS; the economic and demographic conditions in
FOUNDATION SAVINGS' existing marketing area; pertinent historical financial
and other information relating to FOUNDATION SAVINGS; a comparative
evaluation of the operating and financial statistics of FOUNDATION SAVINGS
with those of other thrift institutions; the proposed price per share; the
aggregate size of the offering of Common Stock; the impact of the Conversion
on FOUNDATION SAVINGS' capital position and earnings potential; FOUNDATION
SAVINGS' proposed dividend policy; and the trading market for securities of
comparable institutions and general conditions in the market for such
securities. In preparing the appraisal, KELLER will rely solely upon, and
assume the accuracy and completeness of, financial and statistical
information provided by FOUNDATION SAVINGS, and will not independently value
the assets or liabilities of FOUNDATION SAVINGS in order to prepare the
appraisal.

Upon completion of the conversion appraisal, KELLER will make a
presentation to the Board of Directors of FOUNDATION SAVINGS to review the
content of the appraisal, the format and the assumptions. A written
presentation will be provided to each board member.

For its services in making this appraisal, KELLER's fee will be a flat
fee of $15,000, including out-of-pocket expenses. The appraisal fee will
include the preparation of one valuation update. All additional valuation
updates will be subject to an additional fee of $1,000 each. Upon the
acceptance of this proposal, KELLER shall be paid a retainer of $3,000 to be
applied to the total appraisal fee of $15,000, the balance of which will be
payable at the time of the completion of the appraisal.

<PAGE>

FOUNDATION SAVINGS agrees, by the acceptance of this proposal, to
indemnify KELLER and its employees and affiliates for certain costs and
expenses, including reasonable legal fees, in connection with claims or
litigation relating to the appraisal and arising out of any misstatement or
untrue statement of a material fact in information supplied to KELLER by
FOUNDATION SAVINGS or by an intentional omission by FOUNDATION SAVINGS to
state a material fact in the information so provided, except where KELLER has
been negligent or at fault.

This proposal will be considered accepted upon the execution of the two
enclosed copies of this agreement and the return of one executed copy to
KELLER, accompanied by the specified retainer.

KELLER & COMPANY, INC.

By: /s/ Michael R. Keller
_________________________
Michael R. Keller
President

FOUNDATION SAVINGS BANK

By: /s/ Laird L. Lazelle
___________________________
Laird L. Lazelle
President

Date: April 10, 1996