GLB BANCORP INC, SB-2/A, 1998-05-01

GLB BANCORP INC
SB-2/A, 1998-05-01
STATE COMMERCIAL BANKS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1998

REGISTRATION NO. 333-48387

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

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

AMENDMENT NO. 1

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

GLB BANCORP, INC.
(Name of Small Business Issuer in Its Charter)

<TABLE>
<S> <C> <C>
OHIO 6710 31-1529973
(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer Identification No.)
of Incorporation or Organization) Classification Code Number)
</TABLE>

7001 CENTER STREET, MENTOR, OHIO 44060 (440) 974-0000
(Address and Telephone Number of Principal Executive Offices)

RICHARD T. FLENNER, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GLB BANCORP, INC.
7001 CENTER STREET
MENTOR, OHIO 44060
(440) 974-0000
(Name, Address and Telephone Number of Agent for Service)

COPIES TO:

<TABLE>
<S> <C>
JOSEPH DRAIN, ESQ. DOMINIC A. DIPUCCIO, ESQ.
GRADY & ASSOCIATES BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP
20800 CENTER RIDGE ROAD, SUITE 116 2300 BP AMERICA BUILDING
ROCKY RIVER, OHIO 44116-4306 200 PUBLIC SQUARE
(440) 356-7255 CLEVELAND, OHIO 44114-2378
(216) 363-4500
</TABLE>

Approximate Date of Proposed Sale to the public:
As soon as practicable after this Registration Statement becomes effective

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

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

If this form is a post-effective amendment filed pursuant to rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE OFFERING PRICE(1) REGISTRATION FEE(2)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value......... 1,495,000 Shares $13.00 $19,435,000 $5,733.33
=================================================================================================================================
</TABLE>

(1) Includes 195,000 shares of Common Stock which may be purchased by the
Underwriter to cover over-allotments.

(2) The registration fee of $5,733.33 is partially offset by the previous
payment by the Company of $4,851.28 in connection with the initial filing of
this Registration Statement on March 20, 1998. The balance of the filing fee
due hereunder of $882.05 is being paid with this filing.

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> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 1, 1998

PROSPECTUS

1,300,000 SHARES

[GLB BANCORP, INC. LOGO]

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

GLB Bancorp, Inc., an Ohio corporation (the "Company"), is offering for sale
(the "Offering") 1,300,000 shares of its common stock, without par value (the
"Common Stock"). The Company is a one-bank holding company that owns all of the
outstanding stock of Great Lakes Bank, an Ohio-chartered commercial bank (the
"Bank"). There has been no public trading market for the Common Stock prior to
the Offering. Roney & Co., L.L.C. (the "Underwriter") has advised the Company
that it anticipates making a market in the Common Stock following completion of
the Offering, although there can be no assurance that an active trading market
will develop. See "Underwriting" for a discussion of the factors considered in
determining the initial public offering price. The Company expects that
quotations for the Common Stock will be reported on the Nasdaq SmallCap Market
under the symbol "GLBK."

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

THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A SIGNIFICANT AMOUNT OF
RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE COMPANY'S COMMON STOCK.

THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND THEY ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNTS(1)(2) COMPANY(1)(3)
=======================================================================================================================
Per Share............................................... $13.00 $ $
- -----------------------------------------------------------------------------------------------------------------------
Total(1)................................................ $16,900,000 $ $
=======================================================================================================================
</TABLE>

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

(1) The Company has granted the Underwriter a 30-day option to purchase up to
195,000 additional shares of Common Stock solely to cover over-allotments,
if any. If the Underwriter exercises such option in full, the Price to
Public, Underwriting Discounts and Proceeds to Company will be $19,435,000,
$ and $ , respectively. The Underwriter has agreed to limit
the Underwriting Discounts to $ per share for up to shares
sold by the Underwriter to officers and directors of the Company and the
Bank. If the maximum number of such shares are so purchased, Underwriting
Discounts will be reduced by, and Proceeds to Company will be increased by,
$ . See "Underwriting."

(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."

(3) Before deducting estimated Offering expenses payable by the Company of
$ .
------------------

The shares of Common Stock are offered by the Underwriter subject to prior
sale, when, as and if delivered to and accepted by the Underwriter, and subject
to the right of the Underwriter to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares of
Common Stock will be made through the facilities of The Depository Trust Company
in New York, New York on or about , 1998 against payment therefor in
immediately available funds. ------------------

Roney & Co.

THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3

[GLB BANCORP, INC. LOGO]

GREAT LAKES MAP
------------------------

AVAILABLE INFORMATION

The Company is not currently a reporting company pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), but will be required to
file reports pursuant to the Exchange Act following the completion of the
Offering. The Company, which has a December 31 fiscal year end, intends to
furnish its shareholders with annual reports containing audited financial
information and, for the first three quarters of each year, quarterly reports
containing unaudited financial information.

Requests for such documents should be directed to Andrew L. Meinhold,
Executive Vice President and Secretary, 7001 Center Street, Mentor, Ohio 44060.
------------------------

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

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless the context clearly suggests otherwise, references in this Prospectus to
the Company include the Bank. Except as otherwise indicated, all information in
this Prospectus assumes no exercise of the Underwriter's over-allotment option.
All information in this Prospectus with respect to the Common Stock has been
adjusted to reflect the 2-for-1 stock split that occurred on March 17, 1998.

THE COMPANY

GLB Bancorp, Inc., an Ohio corporation (the "Company"), is a one-bank
holding company that owns all of the outstanding common stock of Great Lakes
Bank (the "Bank"). The Company was incorporated on March 5, 1997 for the purpose
of becoming the holding company for the Bank. The holding company reorganization
of the Bank was completed on September 12, 1997. With its main office in the
City of Mentor, the Bank is the only commercial bank headquartered in Lake
County, Ohio, the Company's primary service area. The Company provides a focused
core of banking services, primarily for individuals and small to medium-sized
businesses. The Company's lending activities focus primarily on secured lending
for residential and commercial real estate. The Company also offers a broad
array of deposit products, including checking and savings accounts and
certificates of deposit.

The Bank is the successor by merger (the "Merger") to Great Lakes Commerce
Bank, which was chartered as an Ohio banking corporation in April of 1957. On
July 18, 1994, the Bank was acquired by an investment group led by Jerome T.
Osborne, Sr. and his son, Richard M. Osborne. Jerome T. Osborne, Sr. is Chairman
of the Board and Richard M. Osborne is Vice Chairman of the Board of the Company
and the Bank. At the time of the Merger, Great Lakes Commerce Bank had total
assets of approximately $19 million and four offices. By the end of 1997, the
Bank had grown to approximately $67 million in total assets and had opened two
new offices and relocated three offices, including the main office. See
"Business -- General."

Together, Messrs. Jerome T. and Richard M. Osborne have more than forty
years of banking experience in Northeast Ohio. Jerome T. Osborne, Sr. was a
founder of Mentor Savings Bank, which was acquired by Chase Manhattan
Corporation in 1985. He had also been Chairman of the Board of State Bank &
Trust Company in Mentor, which was acquired by BancOhio National Bank (now part
of National City Corporation) in 1982. From 1977 to 1981, Richard M. Osborne
also served as a director of State Bank & Trust Company in Mentor. He thereafter
served as Consulting Director of BancOhio National Bank, until 1984. From 1985
to 1990, Richard M. Osborne was a principal shareholder of Peoples Savings Bank
in Northeast Ohio and served as Chairman at the time of its acquisition by First
Bancorporation of Ohio (now FirstMerit Corporation) in 1990. See "Management."

At December 31, 1997, the Company had total assets of $67 million, total
deposits of $52.0 million, shareholders' equity of $6.4 million, a Tier 1
capital ratio of 12.9%, non-performing assets to total asset ratio of .17% and
an allowance for loan losses to total loans ratio of .75%. For the year ended
December 31, 1997, the Company reported net income of $343,957 or $.58 per
share, compared to $211,943 or $.39 per share for the year ended December 31,
1996. At December 31, 1997, the Bank exceeded all regulatory capital
requirements.

MARKET AREA

The Company's primary service area is Lake County, Ohio, which is
contiguous to Cuyahoga County (which includes Cleveland). The Bank is the only
commercial bank headquartered in Lake County, Ohio. Lake County is comprised of
23 cities, villages or townships, ranking twelfth in population and fifth in
median household income in 1996 out of Ohio's 88 counties. According to
statistical data obtained by the Company, Lake County has approximately 6,246
business establishments, an unemployment rate of 3.6% as of November 1997
(compared to 4.2% for the State of Ohio as a whole) and per capita income that
is estimated to have grown approximately 26.7% from 1990 to 1996 (compared to
20.2% for the State of Ohio as a whole).

3
<PAGE> 5

Lake County is also a significant banking market. According to Federal
Deposit Insurance Corporation data, as of June 30, 1997, total deposits in Lake
County, including commercial banks, savings banks and savings associations, were
approximately $2.6 billion.

The Company operates through its headquarters located at 7001 Center
Street, Mentor, Ohio 44060. The Company's telephone number is (440) 974-0000.
The Bank operates through branch offices in the following Lake County
communities: Wickliffe, Painesville, Willoughby, Willoughby Hills and Mentor.

BUSINESS STRATEGY

The Company's business strategy is focused on the following elements:

Emphasis on Community Banking. The Company strives to maintain its strong
commitment to community banking. As the only commercial bank headquartered in
Lake County, the Company's goal is to attract individuals and small to
medium-sized businesses as customers, demonstrating an active interest in their
individual and business banking needs. Management believes that a locally
managed institution is better able to serve the particular needs of local
customers, respond to requests in a more timely fashion and establish a loyal
customer base through the personal attention of senior banking officers. As a
part of this strategy, each of the Bank's offices offers convenient hours,
drive-through teller facilities and an automated teller machine. See
"Business -- Properties."

Growth Through Internal Branch Expansion. Since the Merger, the Company's
growth has been accomplished through internal growth. Internal growth has been
driven by the relocation of three existing offices and the opening of two new
offices. The new offices include a second Mentor location (9365 Mentor Avenue),
which opened on July 20, 1994 and had $6.4 million in total deposits as of
December 31, 1997, and the Willoughby Hills, Ohio office, which opened on April
27, 1996 and had $2.0 million in total deposits as of December 31, 1997. The
Company has received regulatory approval for two new offices in Lake County,
which it intends to open in 1998.

Growth Through Selected Acquisitions. In addition to the Company's pursuit
of internal growth, management believes that external growth opportunities can
be found in acquisitions of other community banks or branch offices. The Company
intends to pursue community bank and branch acquisitions to enhance the
Company's current network and further penetrate the Company's market area. From
time to time, management reviews and evaluates potential acquisitions; however,
the Company has not acquired any banks or branches to date and currently has no
agreements or understandings to make any such acquisitions. There can be no
assurance that the Company will be successful in implementing its acquisition
strategy.

Secured Lending in the Company's Primary Market. The Company's lending
philosophy concentrates primarily on secured 1-4 family real estate and
commercial real estate lending, principally in Lake County. As of December 31,
1997, 1-4 family real estate loans and commercial real estate loans comprised
52.2% and 29.7% of the total net loan portfolio, respectively. As of December
31, 1997, 95.3% of the Company's loans were secured loans, and 89.0% of the
Company's loans were secured by real estate. Management intends to expand its
commercial real estate lending in an effort to enhance profitability and reduce
interest rate risk.

THE OFFERING

Securities Offered by the
Company.................. 1,300,000 shares of Common Stock. In addition, the
Company has granted the Underwriter an option to
purchase up to an additional 195,000 shares to
cover over-allotments. See "Description of Capital
Stock."

Common Stock Outstanding

Before the Offering...... 638,906 shares.

4
<PAGE> 6

Common Stock Outstanding
After the Offering....... 1,938,906 shares (2,133,906 shares if the
over-allotment option is exercised in full).

Use of Proceeds............ The Company intends to use the net proceeds from
the Offering, from time to time, to finance its
growth strategy, including (i) external growth
through selected acquisitions of other community
banks (or other financial institutions) and/or
branch offices and (ii) internal growth through the
expansion of its existing branch network by opening
new branches in selected communities. Prior to any
such uses, the net proceeds will be invested in
high quality, short-term, liquid investments. In
addition, the Company may contribute up to
$1,500,000 of the net proceeds to the Bank to
support the Bank's lending activities. All of the
foregoing uses are, however, subject to change, and
the Company's management will have discretion to
employ the net proceeds in any manner management
deems to be in the Company's best interests in
light of the Company's business strategy and
banking industry and economic conditions generally.

Nasdaq SmallCap Market

Symbol................... "GLBK."

5
<PAGE> 7

SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA

The following table summarizes selected consolidated financial information
concerning the Company and the Bank at the dates and for the periods indicated.
Incorporated in 1997, the Company became the holding company for the Bank in
September 1997. The selected financial information for each of the years ended
December 31, 1997, 1996, 1995 and 1994 is derived from audited consolidated
financial statements or the accounting records of the Company and the Bank. The
information should be read in conjunction with the consolidated financial
statements, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and other information included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AT OR FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------
1997 1996 1995 1994(1)
-------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
OPERATIONS
Interest income........................................ $ 4,382 $ 3,234 $ 2,498 $ 757
Interest expense....................................... 1,938 1,325 1,014 276
------- ------- ------- -------
Net interest income.................................... 2,444 1,909 1,484 481
Provision for loan losses.............................. 97 77 51 0
------- ------- ------- -------
Net interest income after provision for loan losses.... 2,347 1,832 1,433 481
Non-interest income.................................... 552 294 250 86
Non-interest expense................................... 2,345 1,904 1,642 896
------- ------- ------- -------
Income (loss) before federal income taxes.............. 554 222 41 (329)
Federal income tax expense (benefit)
Current.............................................. 214 16 4 (20)
Deferred............................................. (4) (6) 0 19
------- ------- ------- -------
Net income (loss)...................................... $ 344 $ 212 $ 37 $ (328)
======= ======= ======= =======
FINANCIAL CONDITION
Total assets........................................... $66,631 $54,037 $40,915 $32,550
Cash and cash equivalents.............................. 7,827 10,329 7,190 9,498
Investment securities.................................. 1,619 1,142 4,305 4,670
Loans receivable -- net................................ 53,097 38,634 26,045 14,818
Deposits............................................... 52,012 42,253 35,678 27,840
Federal Home Loan Bank advances........................ 7,500 5,000 -- --
Shareholders' equity................................... 6,428 6,039 4,809 4,222
SHARE INFORMATION (2)
Earnings (loss) per share -- basic and diluted......... $ .58 $ .39 $ .07 $ (.72)
Book value per share................................... $ 10.77 $ 10.18 $ 9.43 $ 9.28
Weighted average shares outstanding.................... 595,942 548,089 496,250 455,000
OTHER DATA (3)
Return on average assets............................... 0.58% 0.46% 0.10% --
Return on average equity............................... 5.52% 3.88% 0.79% --
Net interest margin.................................... 4.62% 4.72% 4.68% --
Net interest spread.................................... 3.92% 4.07% 4.02% --
Allowance for loan losses to total loans............... 0.75% 0.81% 0.91% --
Nonperforming assets to total assets................... 0.17% 0.13% 0.00% --
Shareholders' equity to total average assets........... 10.87% 13.12% 13.13% --
Total interest expense to gross interest income........ 44.23% 40.96% 40.59% --
Number of offices...................................... 6 6 5 5
</TABLE>

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

(1) From July 15, 1994 (inception) to December 31, 1994.

(2) Per share information gives effect for each period to the 2-for-1 stock
split that occurred on March 17, 1998.

(3) Other Data for the partial year ended December 31, 1994 are not meaningful.

6
<PAGE> 8

RECENT DEVELOPMENTS

The following table summarizes selected financial information for the three
months ended March 31, 1998 and 1997. The financial information in the table
below is unaudited and is derived from the internal consolidated financial
statements of the Company. In the opinion of management, the financial
information in the table below contains all adjustments, which consist only of
normal recurring adjustments, that are necessary for a fair presentation of
results for the periods indicated.

<TABLE>
<CAPTION>
AT OR FOR THE
THREE
MONTHS ENDED
MARCH 31,
-----------------
1998 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) ---- ----
<S> <C> <C>
OPERATIONS
Interest income............................................. $ 1,245 $ 964
Interest expense............................................ 578 412
------- -------
Net interest income......................................... 667 552
Provisions for loan losses.................................. 30 21
------- -------
Net interest income after provision for loan losses......... 637 531
Non-interest income......................................... 156 121
Non-interest expense........................................ 624 552
------- -------
Income before federal income taxes.......................... 169 100
Federal income tax expense.................................. 66 39
------- -------
Net income.................................................. $ 103 $ 61
======= =======
FINANCIAL CONDITION
Total assets................................................ $73,176 $51,545
Cash and cash equivalents................................... 13,243 4,648
Investment securities....................................... 1,018 1,143
Loans receivable -- net..................................... 54,654 41,735
Deposits.................................................... 58,337 40,030
Federal Home Loan Bank advances............................. 7,500 5,000
Shareholders' equity........................................ 6,938 6,140
SHARE INFORMATION (1)
Earnings per share -- basic and diluted..................... $ 0.17 $ 0.10
Book value per share........................................ $ 10.86 $ 10.30
Weighted average shares outstanding......................... 623,063 594,609

OTHER DATA
Return on average assets (2)................................ 0.60% 0.46%
Return on average equity (2)................................ 6.22% 3.99%
Net interest margin......................................... 4.33% 4.66%
Net interest spread......................................... 3.62% 3.95%
Allowance for loan losses to total loans.................... 0.77% 0.79%
Nonperforming assets to total assets........................ 0.21% 0.26%
Shareholders' equity to total average assets................ 10.17% 11.48%
Total interest expense to gross interest income............. 46.43% 42.74%
</TABLE>

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

(1) Per share information gives effect for each period to the 2-for-1 stock
split that occurred on March 17, 1998.

(2) Ratios are annualized.

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<PAGE> 9

Comparison of Results for the Three Months Ended March 31, 1998 and
1997. Net income for the quarter ended March 31, 1998 was $102,982, compared to
$60,921 for the like period in 1997, an increase of $42,061 or 69.0%. The
increase was caused primarily by an increase in average earning assets of $14.2
million at March 31, 1998 by comparison to March 31, 1997 and an increase in
non-interest income through gains on the sale of loans to the Federal Home Loan
Mortgage Corporation. These increases were offset by an increase in average
interest-bearing liabilities of $12.3 million and an increase in non-interest
expense. Non-interest expense increased as a result of additional office
occupancy and equipment expense related to the new branch facilities expected to
be opened in 1998 and normal first quarter merit raises and benefit increases.

8
<PAGE> 10

RISK FACTORS

Investment in the Common Stock offered hereby involves significant risk.
The following constitute some of the potential risks of an investment in the
Common Stock and should be carefully considered by prospective investors prior
to purchasing shares of Common Stock. The order of the following is not
necessarily indicative of the relative importance of any described risk nor is
the following intended to be inclusive of all risks of investment in the Common
Stock.

CONTROL BY SIGNIFICANT SHAREHOLDERS

Jerome T. Osborne, Sr. and his son, Richard M. Osborne, together own
approximately 48.82% of the issued and outstanding Common Stock. Jerome T.
Osborne, Sr. owns 135,750 shares (21.25%), and Richard M. Osborne owns 176,150
shares (27.57%). In addition, Richard M. Osborne and Jerome T. Osborne have
indicated nonbinding expressions of interest in acquiring approximately 153,846
and 30,769 shares of Common Stock in the Offering, respectively. Jerome T.
Osborne, Sr. is Chairman of the Board and Richard M. Osborne is Vice Chairman of
the Board of each of the Company and the Bank. In addition, Jerome T. and
Richard M. Osborne are, individually and with affiliated companies and immediate
family members, the Company's most substantial depositors, with total deposits
of approximately $4.8 million as of March 31, 1998. Messrs. Jerome T. and
Richard M. Osborne have numerous other business and investment interests in Lake
County and elsewhere. They have also held important positions in other local
financial institutions in the recent past, and have approximately 40 years of
combined experience with community-based financial institutions in Northeast
Ohio. See "Principal Shareholders" and "Certain Relationships and Related Party
Transactions."

Although the Company believes that it benefits from its association with
the Osbornes, whom the Company believes to be prominent members of the
communities in which the Company conducts business, this relationship presents a
number of scenarios that could have a material adverse effect on the Company.
The sale by Messrs. Jerome T. and Richard M. Osborne of a substantial amount of
their Common Stock could have an adverse effect on the price of the Common Stock
and an adverse effect on the Company. Within limits established under Securities
and Exchange Commission Rule 144 and after expiration of a 180-day period during
which they will be prevented from selling shares of Common Stock, Messrs. Jerome
T. and Richard M. Osborne may be able to resell freely shares of Common Stock on
the open market. Likewise, the Company would be adversely affected if the
Osbornes were to withdraw a substantial amount of the deposits that they have
maintained with the Company over the years. The Company is not aware of any
intention on the Osbornes' part to withdraw any substantial portion of their
deposits with the Company. See "Shares Eligible for Future Sale" and
"Underwriting."

RELIANCE ON ACQUISITIONS FOR GROWTH; RISKS ASSOCIATED WITH ACQUISITIONS;
FINANCING OF ACQUISITIONS

An element of the Company's business strategy is to pursue selective
acquisitions that expand and complement the Company's business, including
acquisitions of other community financial institutions or financial institution
branches. The Company currently has no agreements or understandings for any such
acquisitions, but discussions regarding such transactions have arisen and may
continue to arise from time to time. There can be no assurance that the Company
will be able to identify suitable acquisition opportunities, negotiate favorable
terms or consummate any such transactions. Moreover, as the financial
institutions industry continues the trend toward consolidation, the Company can
expect to have to compete with other financial institutions for suitable
acquisition opportunities, many of which have greater resources than the
Company. The Company believes that competition for acquisitions of financial
institutions has resulted and will continue to result in the payment of higher
prices. Accordingly, no assurance can be given that the Company's acquisition
strategy will be successfully implemented. The failure of or inability of the
Company to pursue its acquisition strategy could hinder growth.

Acquisitions involve a number of risks inherent in assessing the values,
strengths, weaknesses and profitability of acquisition candidates, including the
following: adverse short-term effects of acquisitions on the Company's operating
results; diversion of management's attention; dependence on retaining key
personnel; and risks associated with unanticipated problems and latent
liabilities and contingencies. In addition, the

9
<PAGE> 11

success of an acquisition will depend, in part, on the Company's ability to
integrate the operations of the acquired institution or assets, and its success
in capitalizing on synergies in order to achieve cost savings.

The Company may use its Common Stock or its authorized shares of Serial
Preferred Stock, cash, debt obligations, contingent payments based on future
performance or any combination of the foregoing to finance acquisitions. The
extent to which the Company will be able or willing to use Common Stock for this
purpose will be influenced by the market price and liquidity of its Common Stock
relative to that of its competitors. If the Company does not maintain sufficient
market value or maintain sufficient market value relative to its competitors, or
if potential acquisition candidates are unwilling to accept Common Stock as
consideration in an acquisition, it may be necessary for the Company to rely
principally on cash in order to pursue its growth strategy, which may put the
Company at a competitive disadvantage. Capital adequacy requirements applicable
to banks and bank holding companies could prevent reliance on cash and credit
resources for financing any substantial portion of an acquisition.

DISCRETION IN USE OF PROCEEDS

The purpose of the Offering is to strengthen further the Company's capital
position in order to support expansion of the Company's business. If suitable
acquisition opportunities are identified by the Company, expansion may also
include growth through selective acquisitions of other community banks or
branches. Management will have discretion to employ the proceeds of the Offering
in a manner management deems to be in the Company's best interests. In addition,
expansion of the Company's business may include internal growth through
increased lending. See "Use of Proceeds."

DILUTION TO EARNINGS PER SHARE, RETURN ON EQUITY AND BOOK VALUE

The Offering is expected to have a dilutive effect on earnings per share
and return on equity in the period immediately following the Offering. Dilution
in earnings per share and return on equity is expected in the short term because
the proceeds of the Offering may be invested at the outset in assets that are
both shorter term and lower yield than assets such as residential and commercial
loans. The Company's strategy is to use the additional equity raised through the
Offering in order to support asset growth, enhancing earnings per share and
return on equity over a longer term. Purchasers of shares of Common Stock
offered hereby will incur immediate dilution in the per share book value of
their investment. See "Dilution."

POTENTIAL IMPACT OF CHANGES IN INTEREST RATES

The Company's results of operations are dependent to a large degree upon
net interest income, which is the difference between interest earned from loans
and investments, on the one hand, and interest paid on deposits and borrowings,
on the other. In the early 1990s, many banking organizations experienced
historically high interest rate spreads, meaning the difference between the
interest rates earned on loans and investments and the interest rates paid on
deposits and borrowings. More recently, however, interest rate spreads have
generally narrowed due to changing market conditions and competitive pricing
pressures, and there can be no assurance that such interest rate spreads will
not narrow even further or that such higher interest rate spreads will return.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

ANTITAKEOVER PROVISIONS

Federal law requires approval of the Board of Governors of the Federal
Reserve System prior to any acquisition of control of a bank holding company. In
addition, the Company's Amended and Restated Articles of Incorporation, as
amended, and Code of Regulations contain provisions that could delay or make
more difficult and costly an acquisition of control of the Company. Because
these factors could prevent a shareholder from realizing the premium that is
commonly paid to shareholders in connection with a change in control, these
factors could adversely affect the price of the Common Stock after the Offering.

For example, the Company will be subject to the "control share acquisition"
and "merger moratorium" statutes under Ohio law, having declined the opportunity
to opt out of coverage under those statutes. Assuming that all directors and
executive officers as a group continue to retain a substantial percentage of the

10
<PAGE> 12

outstanding voting shares of the Company, that ownership position could be
expected to deter any prospective acquiror from seeking to acquire ownership or
control of the Company, potentially allowing the Company's Board of Directors
and management to defeat any acquisition proposal requiring approval of the
Company's shareholders. The Company also has 2,000,000 shares of authorized but
unissued Serial Preferred Stock that may be issued in the future with such
rights, privileges and preferences as are determined by the Board of Directors
of the Company. Issuance of the Serial Preferred Stock could have the effect of
making more difficult and costly or discouraging altogether any acquisition of
the Company that is not supported by the Company's Board of Directors. See
"Description of Capital Stock -- Certain Antitakeover Matters."

LENDING RISKS

The risk of nonpayment of loans is inherent in commercial banking.
Management attempts to minimize credit exposure by carefully monitoring the
concentration of loans within specific industries, in addition to managing risks
of individual credits through loan application and approval procedures. See
"Business -- Lending Activities."

ECONOMIC CONDITIONS AND MONETARY POLICIES

The Company's lending operations are concentrated in Lake County, Ohio, and
the vast majority of the Company's loans are secured by real estate. These
factors expose the Company to the risk of decline in the Lake County economy,
particularly the risk of declining real estate values. Although the Company
believes that economic conditions in the Company's market have been generally
favorable in recent years, significant deterioration in economic conditions
locally or on a wider scale could adversely affect the Company's business,
including loan demand, the ability of borrowers to repay outstanding loans and
the value of loan collateral. This in turn could result in increased levels of
nonperforming loans and charge-offs and increases in the provision for loan
losses.

Conditions beyond management's control could have a significant impact on
changes in net interest income from one period to the next. Examples of such
conditions include: (1) the extent of credit demand from customers; (2) fiscal
and debt management policies of the federal government, including changes in tax
laws; (3) monetary policies of the Board of Governors of the Federal Reserve
System; (4) introduction and growth of new investment instruments and
transaction accounts by non-bank competitors of financial institutions; and (5)
potential changes in rules and regulations governing payment of interest on
deposit accounts.

COMPETITION

Banking institutions operate in a highly competitive environment. The
Company competes with other commercial banks, credit unions, savings
institutions, finance companies, insurance companies, mortgage companies, mutual
funds and other financial service organizations. Consolidation of the financial
services industry in the Midwest in recent years has increased the level of
competition among financial institutions and other financial service
organizations. Additionally, recent and proposed legislative and regulatory
changes may have the effect of increasing competition. For example, Congress'
recent elimination of many restrictions on interstate branching may have the
effect of increasing competition from large banks headquartered outside of Ohio.
See "Supervision and Regulation -- Federal and State Bank Regulation
Generally -- Interstate Banking and Branching."

Many of the Company's competitors have substantially greater resources than
the Company, which offer those competitors advantages such as the ability to
price services at lower, more attractive levels and the ability to provide
larger credit facilities than the Company is able to provide. In addition, some
of the Company's competitors offer products and services that are not offered by
the Company. Likewise, some of the Company's competitors are not subject to the
same kind and amount of regulatory restrictions and supervision to which the
Company is subject. Because the Company is a community bank that is considerably
smaller than other commercial lenders in the Company's market, the Company's
legal lending limit does not allow the Company to make commercial loans in
amounts many competitors can offer. The Company may

11
<PAGE> 13

from time to time accommodate loan volumes in excess of its lending limit
through the sale of participations in loans to other banks.

ABSENCE OF WELL-ESTABLISHED MARKET FOR COMMON STOCK

Prior to this Offering, there has not been a well-established market for
the Common Stock. The Company believes that the trading that has occurred has
been the result of privately negotiated transactions, and price information has
not been generally publicly available. Although the Underwriter has advised the
Company that the Underwriter anticipates making a market in the Common Stock
following completion of the Offering, and the Company expects that the Common
Stock will be approved for quotation on the Nasdaq SmallCap Market, there can be
no assurance that an active and liquid trading market for the Common Stock will
develop.

DETERMINATION OF OFFERING PRICE

The initial public offering price will be determined by negotiations
between the Company and the Underwriter. The initial public offering price might
not be indicative of, and could be greater than, the market price for Common
Stock after the Offering. See "Underwriting" for a discussion of factors
considered in the determination of the initial public offering price. There can
be no assurance that shareholders will be able to sell their shares at or above
the price at which the shares are being offered to the public.

SHARES ELIGIBLE FOR FUTURE SALE

The market price of the Common Stock could be affected adversely by the
availability for sale of additional shares of Common Stock owned by the
Company's current shareholders. Except for 42,564 shares of Common Stock
recently sold by the Company in private transactions, all other shares of Common
Stock currently issued and outstanding will be eligible for resale following the
Offering, subject to (i) the volume limitations and other restrictions under
Securities and Exchange Commission Rule 144 and (ii) directors' and executive
officers' agreements with the Underwriter not to sell, transfer, assign or
otherwise dispose of any shares of Common Stock for a period of 180 days after
the closing of this Offering without the prior written consent of the
Underwriter. Rule 144 issued under the Securities Act allows Company affiliates
to sell shares without registration in limited amounts and on certain
conditions. See "Underwriting" and "Shares Eligible for Future Sale."

NO ASSURANCE OF DIVIDENDS

It is anticipated that no cash dividends will be paid to the Company's
shareholders for the foreseeable future. The Company will be dependent upon
dividends paid to it by the Bank for funds to pay dividends on the Common Stock.
There can be no assurance that future earnings of the Bank will be sufficient to
permit payment by the Bank of cash dividends to the Company. Under state and
federal law, the ability of the Bank or the Company to pay dividends may be
restricted under certain circumstances. Even if dividends may legally be paid,
the amount and timing of dividends will be at the discretion of the Board of
Directors. Rather than being paid in the form of cash dividends by the Bank to
the Company or thereafter by the Company to its shareholders, earnings may
instead be used to support growth or for other corporate purposes. See
"Supervision and Regulation -- Federal and State Bank Regulation
Generally -- Dividends" and "Dividend Policy."

NEED FOR TECHNOLOGICAL CHANGE

With frequent introductions of new technology-driven products and services,
the banking industry is undergoing rapid technological changes. In addition to
enhancing customer service, the effective use of technology increases efficiency
and enables financial institutions to reduce costs. Financial institutions'
success is becoming increasingly dependent upon use of technology (i) to provide
products and services that satisfy customer demands and (ii) to create
additional operating efficiencies. Many of the Company's competitors have
substantially greater resources to invest in technological improvements, which
may enable them to

12
<PAGE> 14

perform various banking functions at lower costs than the Company. There can be
no assurance that the Company will be able to develop and implement new
technology-driven products or services or that the Company will be successful in
marketing any such products or services to its customers.

The Company is aware of the current concerns throughout the business
community of reliance upon computer software programs that do not properly
recognize the year 2000 in date formats, commonly referred to as the "Year 2000
Problem." See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Year 2000 Problem." A failure by a business such as the
Company to identify properly and to correct a Year 2000 Problem in its
operations could result in system failures or miscalculations. In turn, this
could result in disruptions of operations, including among other things a
temporary inability to process transactions, send invoices or otherwise engage
in routine business transactions on a day-to-day basis. The Company currently
does not expect the Year 2000 Problem to materially affect the Company's results
of operations or financial condition, and the Company likewise does not expect
costs associated with prevention or remediation of the Year 2000 Problem to be
material. Nevertheless, there can be no assurance that the Year 2000 Problem
will not lead to temporary failures of critical systems and software programs on
which the Company depends.

REGULATORY RISK

The Company and the Bank are and will continue to be subject to extensive
state and federal government supervision and regulation. Affecting many aspects
of the banking business, including permissible activities, lending, investments,
payment of dividends and numerous other matters, state and federal supervision
and regulation is intended principally to protect depositors, the public and the
deposit insurance funds administered by the Federal Deposit Insurance
Corporation (the "FDIC"). Protection of shareholders is not a goal of banking
regulation.

Applicable statutes, regulations, agency and court interpretations and
agency enforcement policies have been subject to significant changes, sometimes
retroactively applied, and could be subject to significant changes in the
future. There can be no assurance that changes in applicable laws and regulatory
policies will not adversely affect the banking industry generally or the Company
and the Bank in particular. The burdens of federal and state banking regulation
may place banks in general at a competitive disadvantage compared to less
regulated competitors. See "Supervision and Regulation."

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Amended and Restated Articles of Incorporation, as amended,
the Company's Code of Regulations and the Ohio General Corporation Law provide
for indemnification of officers and directors, insulating officers and directors
somewhat from liability for breaches of the duty of care. If a director or
officer seeks indemnification under these provisions in the future, it is
possible that the Company's indemnification obligation could require a charge
against earnings, affecting the market value of the Common Stock and the
availability of funds for the payment of dividends to shareholders. See
"Description of Capital Stock -- Limitations on Liability and Indemnification."

FORWARD-LOOKING STATEMENTS

Certain statements throughout this Prospectus regarding the Company's
financial position, business strategy and plans and objectives of Company
management for future operations are forward-looking statements rather than
statements of historical or current fact. When used in this Prospectus, words
such as "anticipate," "believe," "estimate," "expect," "intend" and similar
expressions, as they relate to the Company or its management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. Such statements are
inherently uncertain, and there can be no assurance that the underlying
assumptions will prove to be valid. Actual results could differ materially from
those contemplated by the forward-looking statements as a result of certain
factors, such as those disclosed under "Risk Factors," including but not limited
to competitive factors and pricing pressures, changes in legal and

13
<PAGE> 15

regulatory requirements, technological change, product development risks and
general economic conditions. Such statements reflect the current views of the
Company with respect to future events and are subject to these and other risks,
uncertainties and assumptions relating to the operations, results of operations,
growth strategy and liquidity of the Company. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this paragraph.

USE OF PROCEEDS

After deducting the estimated underwriting discounts and Offering expenses
payable by the Company, the net proceeds to the Company from the Offering are
estimated to be $15.6 million (assuming an initial public offering price of
$13.00 per share, the reduced underwriting discount for 169,231 shares sold to
officers and directors and assuming that the Underwriter's over-allotment option
is not exercised). The Company intends to use the net proceeds from the
Offering, from time to time, to finance its business strategy, including (i)
external growth through selected acquisitions of other community banks (or other
financial institutions) and/or branch offices and (ii) internal growth through
the expansion of its existing branch network by opening new branches in selected
communities. The Company has no agreements or understandings with respect to any
acquisitions of other community banks (or other financial institutions) or
branch offices, and, except for two recently approved branches (see
"Business -- Properties"), the Company has no current plans to open additional
branch offices. The Company's management intends to use the net proceeds of the
Offering to consummate appropriate transactions as such opportunities arise.
Prior to using the net proceeds from the Offering for any of the foregoing
purposes, the Company expects that substantially all of such net proceeds will
be invested in high quality, short-term, liquid investments. In addition, the
Company may contribute up to $1,500,000 of the net proceeds to the Bank to
support the Bank's lending activities. All of the foregoing uses are, however,
subject to change, and the Company's management will have discretion to employ
the net proceeds in any manner management deems to be in the Company's best
interests in light of the Company's business strategy and banking industry and
economic conditions generally. See "Risk Factors -- Discretion in Use of
Proceeds" and "Business -- Business Strategy."

DIVIDEND POLICY

For the foreseeable future, the Company expects that earnings will be
retained to finance the growth of the Company and the Bank, rather than being
paid as dividends. The Board of Directors has considered and will continue to
consider the payment of cash dividends based upon such factors as the Company's
and the Bank's financial condition and results of operations, investment
opportunities, capital requirements and regulatory limitations.

The ability of the Company and the Bank to pay dividends is affected by
various regulatory requirements and policies, such as the requirement to
maintain capital in excess of certain levels established by regulation.
Regulatory requirements and policies may limit the Company's ability to obtain
dividends from the Bank for the Company's cash needs, including funds for
acquisitions, payment of dividends by the Company and payment of operating
expenses. See "Supervision and Regulation."

14
<PAGE> 16

CAPITALIZATION

The following table sets forth the capitalization of the Company at
December 31, 1997 and as adjusted to reflect the sale by the Company of the
Common Stock offered hereby.

<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
----------------------------
HISTORICAL AS ADJUSTED(1)
---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Borrowings:
FHLB Advances............................................. $ 7,500 $ 7,500
Shareholders' Equity:
Serial Preferred Stock -- without par value; authorized
2,000,000 shares; none issued or outstanding........... 0 0
Common Stock -- without par value; authorized 10,000,000
shares; 596,742 and 1,896,742 issued and outstanding,
respectively(2)........................................ 1,492 4,742
Additional paid-in capital................................ 4,671 17,011
Accumulated earnings...................................... 265 265
------- -------
Total Shareholders' Equity............................. 6,428 22,018
------- -------
Total capitalization.............................. $13,928 $29,518
======= =======
</TABLE>

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

(1) Adjusted for the sale of 1,300,000 shares of Common Stock at an assumed
initial public offering price of $13.00 per share and the anticipated
application of net proceeds therefrom. See "Use of Proceeds."

(2) As adjusted for the 2-for-1 stock split on March 17, 1998. Does not include
28,000 shares reserved for issuance upon the exercise of options granted or
that may be granted hereafter under the Company's 1998 Stock Option and
Incentive Plan. The Company sold 23,764 shares privately in 1998 in exchange
for property. See "Business -- Properties." In addition, the Company sold
18,800 shares for cash in a private offering concluded in 1998. Of these
18,800 shares, 400 shares were sold in late 1997 and therefore are included
in shares outstanding at December 31, 1997. The remaining 18,400 shares sold
in 1998 and the 23,764 shares sold in exchange for property are not included
in the table above.

15
<PAGE> 17

DILUTION

At December 31, 1997, the book value of the Common Stock was $6.4 million,
or $10.77 per share. After taking into consideration the changes in book value
resulting from the sale by the Company of Common Stock offered hereby (excluding
any shares sold to the Underwriter pursuant to exercise of the over-allotment
option and excluding 42,164 shares sold in early 1998 in private transactions
(see "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Capital")) at an assumed public offering price of $13.00 per
share, and after taking into consideration application of the net proceeds from
this Offering as well, the pro forma book value of the Company at December 31,
1997 would have been $22.0 million, or $11.61 per share. This represents an
immediate increase in net book value of $0.84 per share relative to December 31,
1997 book value and dilution of $1.39 per share to purchasers of Common Stock in
this Offering. Book value is determined by dividing shareholders' equity by the
number of shares deemed outstanding. Book value is not necessarily indicative of
the fair market value of shares outstanding. The following table illustrates the
dilution to purchasers of Common Stock in this Offering:

<TABLE>
<S> <C> <C>
Assumed public offering price per share..................... $13.00
Book value per share at December 31, 1997................... $10.77
Increase per share.......................................... $ 0.84
Pro Forma book value per share after the Offering(1)........ $11.61
Dilution of book value to investors(2)...................... $ 1.39
</TABLE>

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

(1) Pro forma book value equals the $6.4 million of adjusted shareholders'
equity, plus net proceeds of $15.6 from this Offering, divided by 1,896,742
pro forma shares outstanding. Net proceeds of $15.6 million assumes a
reduced underwriting discount for 169,231 shares of Common Stock sold to
officers and directors.

(2) Dilution is determined by subtracting the pro forma book value after this
Offering from the initial public offering price paid by investors in this
Offering. Assuming that the Underwriter's over-allotment option is exercised
in full, the pro forma book value per share would be $11.65 and the dilution
to investors would be $1.35 per share.

The average price paid by directors and executive officers of the Company
for shares of Common Stock (and, prior to the September 1997 holding company
reorganization of the Bank, for shares of Bank common stock) in connection with
and since the Bank's July 1994 acquisition of Great Lakes Commerce Bank was
$10.01 per share. Such persons have purchased a total of 435,100 shares of
Common Stock in connection with and after the July 1994 acquisition of Great
Lakes Commerce Bank.

The following table sets forth, as of April 24, 1998, the number of shares
of Common Stock purchased from the Company, the total consideration paid to the
Company and the average price per share paid to the Company by existing
shareholders and the new investors purchasing shares of Common Stock in the
Offering at an assumed initial public offering price of $13.00 per share (before
deducting underwriting discounts and estimated Offering expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders............. 638,906 32.95% $ 6,643,497 28.22% $10.40
New investors..................... 1,300,000 67.05% $16,900,000 71.78% $13.00
</TABLE>

16
<PAGE> 18

SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
AT OR FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995 1994(1)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) ------- ------- ------- -------
<S> <C> <C> <C> <C>
OPERATIONS
Interest income..................................... $ 4,382 $ 3,234 $ 2,498 $ 757
Interest expense.................................... 1,938 1,325 1,014 276
------- ------- ------- -------
Net interest income................................. 2,444 1,909 1,484 481
Provisions for loan losses.......................... 97 77 51 0
------- ------- ------- -------
Net interest income after provision for loan
losses............................................ 2,347 1,832 1,433 481
Non-interest income................................. 552 294 250 86
Non-interest expense................................ 2,345 1,904 1,642 896
------- ------- ------- -------
Income (loss) before federal income taxes........... 554 222 41 (329)
Federal income tax expense (benefit)
Current........................................... 214 16 4 (20)
Deferred.......................................... (4) (6) 0 19
------- ------- ------- -------
Net income (loss)................................... $ 344 $ 212 $ 37 $ (328)
======= ======= ======= =======
FINANCIAL CONDITION
Total assets........................................ $66,631 $54,037 $40,915 $32,550
Cash and cash equivalents........................... 7,827 10,329 7,190 9,498
Investment securities............................... 1,619 1,142 4,305 4,670
Loans receivable -- net............................. 53,097 38,634 26,045 14,818
Deposits............................................ 52,012 42,253 35,678 27,840
Federal Home Loan Bank advances..................... 7,500 5,000 -- --
Shareholders' equity................................ 6,428 6,039 4,809 4,222
SHARE INFORMATION(2)
Earnings (loss) per share -- basic and diluted...... $ .58 $ .39 $ .07 $ (.72)
Book value per share................................ $ 10.77 $ 10.18 $ 9.43 $ 9.28
Weighted average shares outstanding................. 595,942 548,089 496,250 455,000
OTHER DATA(3)
Return on average assets............................ 0.58% 0.46% 0.10% --
Return on average equity............................ 5.52% 3.88% 0.79% --
Net interest margin................................. 4.62% 4.72% 4.68% --
Net interest spread................................. 3.92% 4.07% 4.02% --
Allowance for loan losses to total loans............ 0.75% 0.81% 0.91% --
Nonperforming assets to total assets................ 0.17% 0.13% 0.00% --
Shareholders' equity to total average assets........ 10.87% 13.12% 13.13% --
Total interest expense to gross interest income..... 44.23% 40.96% 40.59% --
</TABLE>

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

(1) From July 15, 1994 (inception) to December 31, 1994.

(2) Per share information gives effect for each period to the 2-for-1 stock
split that occurred on March 17, 1998.

(3) Other Data for the partial year ended December 31, 1994 are not meaningful.

17
<PAGE> 19

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

GENERAL

The Company's principal asset is Bank common stock. Accordingly, the
Company's results of operations are primarily dependent upon the results of
operations of the Bank. The Bank conducts a general commercial banking business,
gathering deposits from the general public and applying those funds to the
origination of loans for commercial, consumer and residential purposes.

The Company's profitability depends primarily on net interest income, which
is the difference between (a) interest income generated by interest-earning
assets (i.e., loans and investments) and (b) interest expense incurred on
interest-bearing liabilities (i.e., customer deposits and borrowed funds). Net
interest income is affected by the difference ("interest rate spread") between
rates of interest earned on interest-earning assets and rates of interest paid
on interest-bearing liabilities, as well as the relative amounts of
interest-earning assets and interest-bearing liabilities. If the total of
interest-earning assets approximates or exceeds the total of interest-bearing
liabilities, any positive interest rate spread will generate net interest
income. Financial institutions have traditionally used interest rate spreads as
a measure of net interest income. Another indication of an institution's net
interest income is its "net yield on interest-earning assets" or "net interest
margin," which is net interest income divided by average interest-earning
assets.

To a lesser extent, the Company's profitability is also affected by such
factors as the level of non-interest income and expenses, the provision for loan
losses, and the effective tax rate. Non-interest income consists primarily of
service charges and other fees and income from the sale of loans and investment
securities. Non-interest expenses consist of compensation and benefits,
occupancy related expenses, deposit insurance premiums paid to the FDIC and
other operating expenses.

Management's discussion and analysis of earnings and related financial data
are presented herein to assist investors in understanding the consolidated
financial condition and results of operations of the Company and the Bank for
the fiscal years ended December 31, 1997 and 1996. This discussion should be
read in conjunction with the consolidated financial statements and related
footnotes presented elsewhere herein.

RESULTS OF OPERATIONS

At the time of the Merger in July 1994, Great Lakes Commerce Bank was not a
profitable institution, as measured by net income for the most recent annual
period. In the years since the Merger, management has laid the foundation for
continued growth in earnings and assets, doing so on a conservative basis
intended to improve the Company's financial performance over time. During the
process of building the Company into a profitable institution, the Company has
incurred considerable short-term expense. However, management believes that this
investment will benefit the Company in the future. As an example, all but one of
the Company's original four offices have been relocated and two new branch
offices have opened since the Merger. During 1998, the Company intends to open
two more branch offices, both of which have been approved by the Ohio Division
of Financial Institutions (the "Division") and the FDIC. Although the branch
relocation and expansion has promoted asset and earnings growth, it has also
represented substantial near-term costs, most notably facilities and equipment
expense and compensation expense. These near-term costs will, in management's
opinion, have a long-term benefit for the Company and its shareholders. Branch
reconfiguration and de novo branch expansion have been and will be part of the
Company's strategy to solidify its position as a leading community bank,
capitalizing upon the Company's status as the only commercial bank headquartered
in Lake County.

The Company believes that the benefits of this strategy are already
becoming apparent. For the period ended December 31, 1994 (from July 15, 1994
(inception) to December 31, 1994), the $328,244 net loss was largely
attributable to factors already in place when new management took control in
July 1994. Management's efforts have produced a positive earnings trend since
the Merger, with net income of $37,060 for 1995 ($.07 per share), $211,943 for
1996 ($.39 per share) and $343,957 for 1997 ($.58 per share). The improvement
each year was primarily the result of growth in the volume of loans, investments
and deposits

18
<PAGE> 20

and the corresponding net interest income associated with increased volumes.
Also affecting net income was an effective tax rate in 1997 of 37.9%, compared
to 4.51% in 1996.

NET INTEREST INCOME

1997 Compared to 1996. Net interest income for the year ended December 31,
1997 was $2.4 million, compared to $1.9 million for the year ended December 31,
1996, an increase of $534,461 million or 28.0%. This increase was caused
primarily by an increase in average earning assets of $12.4 million between the
years while average interest-bearing liabilities grew by $10.8 million. At the
same time, the Company's interest rate spread decreased to 3.92% in 1997 from
4.07% in 1996. The Company's net interest margin also decreased in 1997 to 4.62%
from 4.72% in 1996. However, the decrease in net interest spread and net
interest margin was offset by an increase in the volume of net earning assets.
The Company's decrease in interest rate spread and net interest margin was
primarily a result of an increase in long-term borrowings needed to support
increased loan volumes, which borrowings carry a higher interest cost than
deposits.

1996 Compared to 1995. Net interest income for the year ended December 31,
1996 was $1.9 million, compared to $1.5 million for the year ended December 31,
1995, an increase of $425,364 million or 28.7%. This increase was caused
primarily by an increase in average earning assets of $8.7 million between the
years while average interest-bearing liabilities grew by $7.4 million. At the
same time, the Company's interest rate spread increased to 4.07% in 1996 from
4.02% in 1995. The Company's net interest margin also increased in 1996 to 4.72%
from 4.68% in 1995. The change in interest rate spread and net interest margin
in 1996 compared to 1995 was principally the result of maturing investments that
were used to fund loan growth at a higher yield, with loan growth outpacing
savings growth.

Average Balances, Interest Rates and Yields. The following table sets forth
certain information relating to the Company's consolidated average
interest-earning assets and interest-bearing liabilities and reflects the
average yield on assets and average cost of liabilities for the years indicated.
Such yields and costs are derived by dividing income or expense by the average
daily balance of assets or liabilities, respectively, for the years presented.
During the years indicated, non-accruing loans, if any, are included in the net
loan category.

19
<PAGE> 21
<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1997 1996
-------------------------------------- --------------------------------------
AVERAGE INCOME/ EFFECTIVE AVERAGE INCOME/ EFFECTIVE
BALANCE EXPENSE YIELD/COST BALANCE EXPENSE YIELD/COST
----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Mortgage-backed securities................. $ 24,339 $ (619) -2.54% $ 41,225 $ 2,954 7.16%
Loans receivable:
Real estate mortgage(1).................. 27,004,160 2,087,781 7.73% 18,588,442 $ 1,420,956 7.64%
Commercial & other(1).................... 16,212,406 1,631,713 10.06% 11,169,811 1,069,009 9.57%
Consumer................................. 3,534,530 316,106 8.94% 2,982,556 266,723 8.94%
----------- ----------- ------- ----------- ----------- -------
Total Loans Receivable................. 46,751,096 4,035,600 8.63% 32,740,809 2,756,688 8.42%
Cash-Interest earning...................... 18,294 1,473 8.05% 9,778 512 5.23%
Securities:
FHLB Stock............................... 409,205 29,421 7.19% 106,701 8,738 8.19%
U.S. Treasuries.......................... 603,032 39,378 6.53% 1,495,531 103,195 6.90%
U.S. Government.......................... 509,032 29,709 5.84% 878,122 81,979 9.34%
----------- ----------- ------- ----------- ----------- -------
Total Securities....................... 1,521,269 98,508 6.48% 2,480,354 193,912 7.82%
Federal funds.............................. 4,576,840 247,079 5.40% 5,170,828 279,733 5.41%
----------- ----------- ------- ----------- ----------- -------
Total Earnings Assets...................... 52,891,838 4,382,041 8.28% 40,442,994 3,233,799 8.00%
----------- -----------
Non interest-earning assets................ 6,248,155 5,595,085
----------- -----------
Total Assets............................. $59,139,993 $46,038,079
=========== ===========
INTEREST-BEARING LIABILITIES:
Deposits:
DDA Interest Earning..................... $ 4,372,338 $ 90,704 2.07% $ 3,648,864 $ 80,312 2.20%
Savings accounts......................... 24,447,474 898,299 3.67% 21,587,952 771,858 3.58%
Certificates of deposit.................. 9,229,811 512,833 5.56% 7,085,051 387,788 5.47%
----------- ----------- ------- ----------- ----------- -------
Total Deposits......................... 38,049,623 1,501,836 3.95% 32,321,867 1,239,958 3.84%
Borrowings................................. 6,410,417 436,439 6.81% 1,363,636 84,536 6.20%
----------- ----------- ------- ----------- ----------- -------
Total interest-bearing liabilities....... 44,460,040 1,938,275 4.36% 33,685,503 1,324,494 3.93%
----------- -----------
Non interest-bearing liabilities........... 8,444,677 6,886,879
Shareholders' equity....................... 6,235,276 5,465,697
----------- -----------
Total liabilities and stockholders'
equity................................. $59,139,993 $46,038,079
=========== ===========
Net interest income and interest rate
spread................................... $ 2,443,766 3.92% $ 1,909,305 4.07%
=========== ===========
Net interest margin(2)..................... 4.62% 4.72%
Ratio of Average Interest-Earning
Assets to Interest-Bearing Liabilities... 118.96% 120.06%

<CAPTION>
AVERAGE BALANCES AND INTEREST RATES
YEAR ENDED DECEMBER 31,
--------------------------------------
1995
--------------------------------------
AVERAGE INCOME/ EFFECTIVE
BALANCE EXPENSE YIELD/COST
----------- ----------- ----------
<S> <C> <C> <C>
INTEREST-EARNING ASSETS:
Mortgage-backed securities................. $ 57,370 $ 3,749 6.53%
Loans receivable:
Real estate mortgage(1).................. 10,294,494 798,300 7.75%
Commercial & other(1).................... 7,105,441 733,206 10.32%
Consumer................................. 2,809,905 254,356 9.05%
----------- ----------- -------
Total Loans Receivable................. 20,209,840 1,785,862 8.84%
Cash-Interest earning...................... 0 0 0.00%
Securities:
FHLB Stock............................... 0 0 0.00%
U.S. Treasuries.......................... 2,997,696 198,416 6.62%
U.S. Government.......................... 2,740,425 171,399 6.25%
----------- ----------- -------
Total Securities....................... 5,738,121 369,815 6.44%
Federal funds.............................. 5,720,797 338,580 5.92%
----------- ----------- -------
Total Earnings Assets...................... 31,726,128 2,498,006 7.87%
-----------
Non interest-earning assets................ 4,912,388
-----------
Total Assets............................. $36,638,516
===========
INTEREST-BEARING LIABILITIES:
Deposits:
DDA Interest Earning..................... $ 2,471,172 $ 51,213 2.07%
Savings accounts......................... 18,694,003 687,463 3.68%
Certificates of deposit.................. 5,150,757 275,389 5.35%
----------- ----------- -------
Total Deposits......................... 26,315,932 1,014,065 3.85%
Borrowings................................. 0 0 0.00%
----------- ----------- -------
Total interest-bearing liabilities....... 26,315,932 1,014,065 3.85%
-----------
Non interest-bearing liabilities........... 5,606,730
Shareholders' equity....................... 4,715,854
-----------
Total liabilities and stockholders'
equity................................. $36,638,516
===========
Net interest income and interest rate
spread................................... $ 1,483,941 4.02%
===========
Net interest margin(2)..................... 4.68%
Ratio of Average Interest-Earning
Assets to Interest-Bearing Liabilities... 120.56%
</TABLE>

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

(1) Includes construction loans

(2) Net interest margin is net interest income divided by average interest
earning assets

20
<PAGE> 22

Rate/Volume Analysis. The following table analyzes net interest income in
terms of changes in the volume of interest-earning assets and interest-bearing
liabilities, and changes in net interest income that are attributable to changes
in yields earned on interest-earning assets and rates paid on interest-bearing
liabilities. The table reflects the extent to which changes in interest income
and changes in interest expense are attributable to changes in volume (changes
in volume multiplied by the prior year rate) and changes in rate (changes in
rate multiplied by prior year volume). Changes attributable to the combined
impact of volume and rate have been allocated proportionately to changes due to
volume and changes due to rate.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1997 VS. 1996 1996 VS. 1995
INCREASE (DECREASE) DUE TO INCREASE (DECREASE) DUE TO
---------------------------------- --------------------------------
VOLUME RATE TOTAL VOLUME RATE TOTAL
---------- -------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest income attributable to:
Loans receivable...................... $1,208,477 $ 70,435 $1,278,912 $1,051,390 $(80,564) $970,826
Investment securities................. (66,108) (29,296) (95,404) (282,546) 106,643 (175,903)
Mortgage-backed securities............ (829) (2,744) (3,573) (1,210) 415 (795)
Federal funds sold.................... (32,137) (517) (32,654) (31,035) (27,812) (58,847)
Interest earning deposits with
banks............................... 594 367 961 256 256 512
---------- -------- ---------- ---------- -------- --------
Total interest income............... 1,109,997 38,245 1,148,242 736,855 (1,062) 735,793
Interest expense attributable to:
Deposits.............................. 225,436 36,442 261,878 228,493 (2,600) 225,893
Borrowings............................ 342,790 9,113 351,903 42,268 42,268 84,536
---------- -------- ---------- ---------- -------- --------
Total interest expense.............. 568,226 45,555 613,781 270,761 39,668 310,429
Increase (decrease) in net interest
income................................ $ 541,771 $ (7,310) $ 534,461 $ 466,094 $(40,730) $425,364
========== ======== ========== ========== ======== ========
</TABLE>

PROVISION FOR LOAN LOSSES

1997 Compared to 1996. The provision for loan losses was $97,000 in 1997,
compared to $77,000 in 1996, a $20,000 increase, or 26.0%. The provision for
loan losses was based upon management's assessment of relevant factors,
including types and amounts of nonperforming loans, historical and anticipated
loss experience on such types of loans, and current and projected economic
conditions. The increase in the provision for loan losses was principally a
result of increased loan volume. Loans receivable-net increased from $38.6
million at December 31, 1996 to $53.1 million at December 31, 1997, an increase
of $14.5 million, or 37.4%. Refer to Notes 1(d) and 3 of Notes to Consolidated
Financial Statements for additional information.

1996 Compared to 1995. The provision for loan losses was $77,000 in 1996,
compared to $50,500 in 1995, an increase of $26,500 or 52.5%. The increase in
the provision for loan losses was principally a result of increased loan volume.
Loans receivable-net increased from $26.0 million at December 31, 1995 to $38.6
million at December 31, 1996, an increase of $12.6 million or 48.3%. Refer to
Notes 1(d) and 3 of Notes to Consolidated Financial Statements for additional
information.

NON-INTEREST INCOME

1997 Compared to 1996. Total non-interest income was $551,852 for the year
ended December 31, 1997, compared to non-interest income of $293,879 for the
year ended December 31, 1996, an increase of $257,973 or 87.8%. The $80,889
increase in loan fee income, an increase of 78.0% for the year, accounted for
the largest portion of the increase in other income. The increase in loan fee
income was largely attributable to interest points charged by the Company on an
increased volume of construction lending during 1997, which amortizes typically
within a six- to nine-month period. Other service charges and fees increased
$68,156 in the year ended December 31, 1997, an 87.6% increase, principally as a
result of new transaction fees imposed by the Company for use of Company ATMs by
customers of other financial institutions. Service charges on demand accounts
increased $33,959, or 30.7%, due to the growth in the Company's demand deposit
accounts ("DDA," or checking) during 1997 and the accompanying growth in
account-related fees, such as returned item fees.

During the periods discussed herein, as a general matter management priced
deposits at rates competitive with rates offered by the leading commercial banks
in the Company's market area, which rates tend to be

21
<PAGE> 23

somewhat lower than rates offered by thrift institutions in the Company's market
area. The Company generally does not impose service charges and fees to the same
extent as other local institutions. Although a wider range of service charges
and fees and higher service charges and fees would yield more income for each
dollar of deposits, the Company believes that imposing service charges and fees
on a basis equivalent to those imposed by many other area commercial banks would
adversely affect deposit growth. In order to promote deposit growth and to
provide cross-selling opportunities to Bank customers, the Company has not
adopted an aggressive fee structure. Deposit growth was generated by developing
strong customer relationships, cross-selling deposit relationships to loan
customers and obtaining increased growth from branch offices opened in recent
years. Non-interest bearing DDA deposits grew $1.9 million in 1997 to $8.3
million. Management intends to continue promoting the Company's non-interest
bearing deposit products in order to obtain additional interest-free, lendable
funds.

The Company realized a total gain on sale of assets during 1997 of $76,600,
representing sale of loans to the Federal Home Loan Mortgage Corporation (the
"FHLMC"). In the past, the Company selectively retained fixed-rate loans in
order to increase its loan-to-deposit ratio. Although the Company has retained
fixed-rate mortgage loans in its portfolio, the Company may sell fixed-rate
loans in the secondary market to the FHLMC, with .25% servicing retained, or on
a servicing-released basis to other financial institutions. The proceeds of such
sales can be reinvested in additional lending. Moreover, management believes
that the sale of fixed-rate loans should enhance asset/liability management.
That is, retention of long-term, fixed-rate mortgage loans in the Company's
portfolio during periods of rising interest rates would adversely affect the
Company's net interest margins, because the cost of the Company's liabilities
would increase while earnings on the Company's assets remained stable.

1996 Compared to 1995. Total non-interest income was $293,879 for the year
ended December 31, 1996, compared to non-interest income of $249,620 for the
year ended December 31, 1995, an increase of $44,259, or 17.7%. Substantially
all of the increase was attributable to increases in loan fee income and service
charges on demand accounts. Loan fee income increased $12,726 during 1996, or
14.0%, due to interest points charged by the Company on an increased volume of
construction lending, which amortizes typically within a six- to nine-month
period. Service charges on demand accounts increased $24,265 during 1996, or
28.1%, due to growth in demand deposit accounts and the accompanying growth in
account-related fees, such as returned item fees. The Company realized nominal
gains on sales of assets during 1996, a period when the Company was making the
transition from originating loans to be held in portfolio to originating loans
for resale into the secondary loan market.

NON-INTEREST EXPENSE

1997 Compared to 1996. Total non-interest expense was $2.3 million in
1997, compared to $1.9 million in 1996, an increase of $440,503 or 23.1%. The
larger components of non-interest expense included compensation and related
benefits, which increased $219,749, or 23.1%. The increase in compensation and
related benefits expense was due principally to increases in Company staff,
higher pension and insurance benefit costs and normal merit raises. The $69,743
increase during 1997 in office occupancy and equipment expense, an 18.7%
increase, was attributable in significant part to the remodeling of the
Willoughby branch office and relocation of the Wickliffe branch office in 1997.
Office occupancy and equipment expense is net of rental income earned by the
Company on space leased in its main office to OsAir, Inc., which is controlled
by a director of the Company. See "Business -- Properties," and "Certain
Relationships and Related Party Transactions."

The $56,046, or 93.5%, increase in data processing expense during 1997
reflects normal costs under the agreement entered into in 1995 with the
Company's new electronic data processing provider. The Company benefitted in
1996 from a one-time, new-customer credit from the Company's current electronic
data processing provider. The data processing contract has a term of five years,
renewing automatically thereafter for two year terms unless cancelled.

Franchise taxes payable to the State of Ohio are calculated by reference to
the amount of shareholders' equity and, accordingly, have increased each year as
shareholders' equity has grown. Professional fees

22
<PAGE> 24

increased with additional legal expenses incurred in connection with the
establishment of the Bank's holding company in 1997. Other operating expense
increases were due primarily to asset growth year-to-year. The "deposit base
intangible" asset that arose out of the Merger is being amortized over a period
of ten years, accounting for the decrease in the amortization of intangibles
expense category year-to-year. Refer to Note 5 of Notes to Consolidated
Financial Statements for additional information concerning the "deposit base
intangible" asset.

1996 Compared to 1995. Total non-interest expense was $1.9 million in
1996, compared to $1.6 million in 1995, an increase of $262,350 or 16.0%. The
increase resulted primarily from increases in employee compensation and benefits
of $108,358, or 12.8%, occupancy and equipment of $123,010, or 49.3%, and other
operating expense of $50,840, or 50.9%. The increase in compensation and
benefits expense resulted in part from normal merit increases. The relocation of
the Painesville branch office facility in mid-year 1995 and opening of the
Willoughby Hills office in 1996 contributed to increased compensation and
benefits expense and increased office occupancy and equipment expense in 1996,
due to relocation costs, costs related to establishing a new branch office and
costs associated with staffing of the new branch.

The Company benefitted in 1996 from a one-time, new-customer credit from
the Company's current electronic data processing provider, resulting in a
$18,895 decrease in data processing expense in 1996. State franchise taxes
increased as a result of the growth in shareholders' equity year-to-year. Other
operating expenses increased due primarily to asset growth year-to-year.

FEDERAL INCOME TAXES

1997 Compared to 1996. Federal income tax expense was approximately
$210,000 in 1997, compared to $10,000 in 1996. During 1996, the Company
recognized a $76,418 tax benefit from the elimination of a valuation allowance
against a deferred tax asset related to net operating loss carryforwards that
were used in the 1996 tax return. Refer to Note 11 of Notes to Consolidated
Financial Statements for additional information.

1996 Compared to 1995. Federal income tax expense was $10,000 in 1996,
compared to $4,110 in 1995. During 1995, the Bank recognized a $16,968 tax
benefit from the change in the valuation allowance against a deferred tax asset
related to net operating loss carryforwards that were used in the 1995 tax
return. The tax benefit recognized in 1995 reduced the valuation allowance to
$76,418. Refer to Note 11 of Notes to Consolidated Financial Statements for
additional information.

FINANCIAL CONDITION

Assets. Total assets amounted to $67 million at December 31, 1997,
compared to $54 million at December 31, 1996, an increase of $12.6 million or
23.3%. The growth in assets is attributable almost entirely to growth in the
Company's loan portfolio. Loan growth has been most dramatic in residential
loans, which account for approximately one half of the Company's total loan
portfolio, while commercial and construction loans also contributed to loan
growth. Total loans (net of allowance for loan losses) at December 31, 1997 were
$53.1 million, compared to $38.6 million at December 31, 1996, while total
deposits at December 31, 1997 were $52.0 million, compared to $42.3 million at
December 31, 1996. Total loan growth of $14.5 million, or 37.4%, outpaced
deposit growth of $9.8 million, or 23.1%. Accordingly, Federal Home Loan Bank of
Cincinnati ("FHLB") advances, federal funds and short-term lines of credit from
financial institutions were employed as additional funding sources.

Cash equivalents (cash and amounts due from banks and federal funds sold)
declined by $2.5 million, or 24.2%, during 1997, to a total of $7.8 million.
Increased lending activity accounted for the decrease in cash equivalents. In
the past, the Company selectively retained fixed-rate loans in order to increase
its loan-to-deposit ratio. Although the Company has retained fixed-rate mortgage
loans in its portfolio, the Company may sell fixed-rate loans in the secondary
market to the FHLMC, with .25% servicing retained, or on a servicing-released
basis to other financial institutions. Adjustable-rate mortgage loans ordinarily
are retained in the Company's loan portfolio. Approximately 36.5% of the
Company's portfolio of conventional mortgage loans secured by 1-4 family
residences are adjustable rate. See "Business -- Lending Activities."
23
<PAGE> 25

Allowance for Loan Losses. The provision for loan losses represents a
charge to earnings for maintaining the allowance at a level management believes
is adequate. Management reviews the allowance monthly in order to ensure that
the allowance remains adequate to absorb potential losses identified by the
portfolio review process. The review of the portfolio takes into account loan
growth and the level of delinquent and nonperforming loans in the portfolio,
considering also such external factors as current and anticipated economic
conditions in the primary market area.

The Company's allowance for loan losses totaled $402,534 and $314,893 at
December 31, 1997 and 1996, respectively, representing .75% and .81% of total
net loans as of the respective dates. At December 31, 1997 and 1996, the
Company's allowance represented 349.0% and 443.5% of nonperforming loans as of
the respective dates.

Although management believes that it uses the best information available in
providing for possible loan losses and believes that the allowance was adequate
at December 31, 1997, future adjustments to the allowance could be necessary and
net earnings could be affected if circumstances and/or economic conditions
differ substantially from the assumptions used in making the initial
determinations.

CAPITAL

Shareholders' equity of the Company was $6.4 million at December 31, 1997.
On January 26, 1998, the Company concluded sale of an additional 18,400 shares
of Common Stock pursuant to a private offering, at the price of $12.50 per
share. On March 16, 1998, the Company sold an additional 23,764 shares of Common
Stock, issuing such stock in payment of the purchase price for a building and
parcel of land on which the Bank is establishing a new branch. See
"Business -- Properties."

As of December 31, 1997, the Company was in compliance with applicable
regulatory capital requirements, as shown in the following table (see
"Supervision and Regulation -- Federal and State Bank Regulation
Generally -- Capital Adequacy and Prompt Corrective Action"):

<TABLE>
<CAPTION>
COMPANY MINIMUM NECESSARY TO BE MINIMUM NECESSARY TO BE
AT DECEMBER 31, 1997 WELL CAPITALIZED ADEQUATELY CAPITALIZED
-------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Total Risk-Based Capital Ratio.... 13.84% 10.00% 8.00%
Tier 1 Risk-Based Capital Ratio... 12.96% 6.00% 4.00%
Leverage Ratio.................... 10.12% 5.00% 3.00%
</TABLE>

As of December 31, 1997, the Company's ratio of total equity capital to
totals assets was 9.65%.

Based on its capital levels at December 31, 1997, the Company qualifies as
a "well-capitalized" institution, the highest of five tiers under applicable
regulatory definitions. It is management's intention to operate the Company as a
well-capitalized institution within the meaning of applicable regulatory
definitions; however, the Company could from time to time fall below the highest
level. See "Supervision and Regulation -- Federal and State Bank Regulation
Generally -- Capital Adequacy and Prompt Corrective Action."

LIQUIDITY

Like other financial institutions, the Company must ensure that sufficient
funds are available to meet deposit withdrawals, loan commitments and expenses.
Control of the Company's cash flow requires the anticipation of deposit flows
and loan payments. The primary sources of funds are deposits, principal and
interest payments on loans, proceeds of loan sales, federal funds and FHLB
borrowings. These funds are used principally to originate loans. The Bank has a
nonbinding agreement with the FHLMC to sell $5 million fixed-rate mortgage
loans, with $4.4 million sold as of the date hereof.

At December 31, 1997, certificates of deposit represented 21.1% of the
total deposits of the Company, while DDA (checking accounts) represented 25.2%
and savings accounts 53.7%. Of the total $11.0 million certificates of deposit
at December 31, 1997, certificates totaling $6.5 million mature in 1998, and
certificates

24
<PAGE> 26

totaling $591,343 mature in 1999. Together, these figures represent 64.9% of the
total certificates of deposit at December 31, 1997. Management believes that,
consistent with the Company's experience, the majority of maturing certificates
of deposit will be renewed at market rates of interest. Golden Passbook
accounts, which provide for a return that is 100 basis points higher than a
regular passbook account, accounted for $22.5 million, or approximately 43.2%,
of deposits at December 31, 1997. Many of the large Golden Passbook deposits,
which are short term and adjust to changes in market interest rates, and many
large certificate of deposit accounts are held by insiders of the Company.
Messrs. Jerome T. and Richard M. Osborne are, individually and with affiliated
companies and immediate family members, the Company's most substantial
depositors, with total deposits of approximately $4.8 million as of March 31,
1998, $5.1 million as of December 31, 1997 and $4.4 million as of December 31,
1996.

The Bank has used advances from the FHLB as a source of funds for its
lending activity. The amount that the Bank may obtain in the form of advances
from the FHLB is determined by a formula on a quarterly basis. The formula is
based upon the total amount of single-family mortgages in the Bank's portfolio,
as reported in the Bank's quarterly call report, the percentage of the Bank's
total loan portfolio represented by single-family mortgages and the amount of
FHLB stock held by the Bank. At December 31, 1997, the Bank had $7.5 million of
outstanding FHLB advances. As of April 24, 1998, the Bank could have obtained
additional advances from the FHLB of approximately $8.1 million. See
"Supervision and Regulation -- Federal and State Bank Regulation
Generally -- Federal Home Loan Banks."

FHLB advances are secured by a portion of the Bank's mortgage portfolio and
certain other assets. Likewise, most of the Bank's short-term investments are
subject to pledge and therefore provide limited liquidity. In addition to
advances, the Bank may obtain funds from the FHLB through a $1.5 million
overnight line of credit. The Bank also has an agreement with a major regional
bank for $400,000 of short-term funds and relationships with other institutions
for the purpose of obtaining short-term overnight funds, or "fed funds."

As of December 31, 1997, the Company had commitments to fund a total of
$1.8 million of fixed-rate loans, and $6.9 million of variable-rate and
adjustable-rate loans, compared to commitments to fund approximately $1 million
of fixed-rate loans and $6.9 million of variable-rate and adjustable-rate loans
at the end of 1996. Included within these commitments at year-end 1997 are
unused commercial lines of credit and standby letters of credit of $867,475 and
$621,124, respectively. Management believes the Company has adequate resources
to meet its normal funding requirements.

ASSET/LIABILITY MANAGEMENT

Like other financial institutions, the Company is subject to interest rate
risk to the degree that its interest-earning assets mature or reprice more
rapidly than, or on a different basis from, its interest-bearing liabilities,
primarily borrowings and deposits with short- and medium-term maturities, in a
period of declining interest rates. Although having assets that mature or
reprice more frequently on average than liabilities will be beneficial in times
of rising interest rates, such an asset/liability structure will result in lower
net interest income during periods of declining interest rates.

The Company monitors its interest rate sensitivity position and attempts to
limit the exposure to interest rate risk. The Company's policy is that the
one-year cumulative interest rate sensitivity gap should generally be within a
range of negative 13% to positive 8%. As the following table illustrates, the
Company's one-year gap is currently outside of this range, with a positive
one-year gap of 12.8%. This is due in part to higher than normal amounts of fed
funds (short-term loans by the Company to other financial institutions) as of
December 31, 1997, which is in turn a result of sales of loans to the secondary
market. The Company is in the process of reducing its one-year gap to a figure
within the range set forth in the Company's funds management policy.

The following table illustrates the maturities or repricing of the
Company's assets and liabilities at December 31, 1997, based upon the
contractual maturity or contractual repricing dates of loans and the contractual
maturities of time deposits. Prepayment assumptions have not been applied to
fixed-rate mortgage loans. Demand loans, loans having no stated schedule of
repayments and no stated maturity, and overdrafts are
25
<PAGE> 27

reported as due in one year or less. Allocation of deposits other than time
deposits to the various maturity and repricing periods is based upon
management's best estimate, taking into account, among other things, the
proposed policy statement issued by federal bank regulators on August 4, 1995.

<TABLE>
<CAPTION>
MATURING OR REPRICING PERIODS
-------------------------------------------------------------------
WITHIN 4-12 1-5 OVER 5
3 MONTHS MONTHS YEARS YEARS TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Adjustable-rate mortgage
loans.................. $ 1,407,992 $ 2,916,875 $ 6,234,576 $ 1,613,007 $12,172,450
Fixed-rate mortgage
loans.................. 0 0 640,196 16,863,230 17,503,426
Commercial loans.......... 7,833,991 1,744,852 8,798,083 1,451,284 19,828,210
Consumer loans............ 1,685,817 236,558 1,431,068 642,456 3,995,899
Investments and mortgage-
backed securities...... 600,000 0 1,000,000 432,700 2,032,700
Fed Funds................. 5,264,000 0 0 0 5,264,000
----------- ----------- ----------- ----------- -----------
Total............. $16,791,800 $ 4,898,285 $18,103,923 $21,002,677 $60,796,685
=========== =========== =========== =========== ===========
INTEREST-BEARING
LIABILITIES:
Certificates of deposit... $ 2,017,868 $ 4,527,028 $ 4,451,059 $ 0 $10,995,955
Money market.............. 72,079 72,079 144,158 0 288,316
NOW accounts.............. 451,185 451,185 1,804,738 1,804,738 4,511,846
Passbook accounts......... 2,792,697 2,792,697 11,170,786 11,170,787 27,926,967
FHLB Advances............. 0 0 7,500,000 0 7,500,000
----------- ----------- ----------- ----------- -----------
Total............. $ 5,333,829 $ 7,842,989 $25,070,741 $12,975,525 $51,223,084
=========== =========== =========== =========== ===========
Interest Rate Sensitivity
Gap....................... $11,457,971 $(2,944,704) $(6,966,818) $ 8,027,152 $ 9,573,601
Cumulative Interest Rate
Sensitivity Gap........... $11,457,971 $ 8,513,267 $ 1,546,449 $ 9,573,601 --
Cumulative Interest Rate
Sensitivity Gap as a
Percent Of Total Assets... 17.20% 12.78% 2.32% 14.37% --
</TABLE>

The method used to analyze interest-rate sensitivity has a number of
limitations. The "gap" analysis above is based upon assumptions concerning such
matters as when assets and liabilities will reprice in a changing interest rate
environment. Because these assumptions are no more than estimates, certain
assets and liabilities indicated as maturing or repricing within a stated period
might actually mature or reprice at different times and at different volumes
from those estimated. The actual prepayments and withdrawals experienced by the
Company in the event of a change in interest rates could possibly deviate
significantly from those assumed in calculating the data shown in the table.
Certain assets, adjustable rate loans for example, commonly have provisions that
limit changes in interest rates each time the interest rate changes and on a
cumulative basis over the life of the loan. Also, the renewal or repricing of
certain assets and liabilities can be discretionary and subject to competitive
and other pressures. The ability of many borrowers to service their debt could
diminish in the event of an interest rate increase. Therefore, the gap table
above does not and cannot necessarily indicate the actual future impact of
general interest movements on the Company's net interest income.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1997 the Financial Accounting Standards Board (the "FASB") issued
Statement No. 130, "Reporting of Comprehensive Income" ("SFAS 130"), which
establishes standards for reporting and display of comprehensive income and its
components (revenues, expenses, gains and losses) in a full set of financial
statements. SFAS 130 also requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. This new accounting standard is effective for fiscal
years beginning after December 15, 1997. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
The Company does not anticipate that the adoption of SFAS 130 will have a
material effect on its financial statements.

26
<PAGE> 28

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("SFAS 131"), which establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. SFAS 131 also establishes standards for related
disclosures about products and services, geographic areas and major customers.
This statement requires the reporting of financial and descriptive information
about an enterprise's reportable operating segments. SFAS 131 is effective for
financial statements for periods beginning after December 15, 1997. In the
initial year of adoption, comparative information for earlier years is to be
restated. The Company does not anticipate that the adoption of SFAS 131 will
have a material effect on its financial statements.

In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure
about Pensions and Other Postretirement Benefits" ("SFAS 132"), which
standardizes the disclosure requirements for pensions and other postretirement
benefits. SFAS 132 requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis. This statement does not change the measurement or recognition of
pension and other postretirement benefit plans. SFAS 132 is effective for
financial statements for periods beginning after December 15, 1997. In the
initial year of adoption, comparative information for earlier years is to be
restated. The Company does not anticipate that the adoption of SFAS 132 will
have a material effect on its financial statements.

IMPACT OF INFLATION AND CHANGING PRICES

The consolidated financial statements and related data herein have been
prepared in accordance with generally accepted accounting principles, which
require measurement of financial condition and results of operations in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.

Because the primary assets and liabilities of the Company are monetary in
nature, changes in the general level of prices for goods and service have a
relatively minor impact on the Company's total expenses. Increases in operating
expenses such as salaries and maintenance are in part attributable to inflation.
However, interest rates have a far more significant effect than inflation on the
performance of financial institutions, including the Company. See "--
Asset/Liability Management."

YEAR 2000 PROBLEM

The Company is aware of the current concerns throughout the business
community of reliance upon computer software programs that do not properly
recognize the year 2000 in date formats, commonly referred to as the "Year 2000
Problem." The Year 2000 Problem is the result of software code being written
using two digits rather than four digits to define the application year (e.g.,
"98" rather than "1998"). A failure by a business to identify properly and to
correct a Year 2000 Problem in its operations could result in system failures or
miscalculations. In turn, this could result in disruptions of operations,
including among other things a temporary inability to process transactions, send
invoices or otherwise engage in routine business transactions on a day-to-day
basis.

The Company's data processing function is undertaken pursuant to a contract
with an electronic data processing firm that services banking institutions
nationwide. Accordingly, the Company relies upon computer systems and software
maintained by the third-party vendor rather than internally generated software.
Operations of the Company depend upon the successful operation on a daily basis
of the third-party provider's computer systems and software. Based upon ongoing
discussions with the Company's electronic data processing provider, the Company
currently expects that its Year 2000 computer compliance will be achieved
principally pursuant to the terms of and consistent with the Company's existing
electronic data processing services contract. The Company does not expect the
Year 2000 Problem to materially affect the Company's financial condition or
results of operations, and the Company likewise does not expect costs associated
with prevention or remediation of the Year 2000 Problem to be material.

27
<PAGE> 29

BUSINESS

GENERAL

The Company is a one-bank holding company that owns all of the outstanding
common stock of the Bank. The Company was incorporated on March 5, 1997 for the
purpose of becoming the holding company for the Bank. The holding company
reorganization of the Bank was completed on September 12, 1997. With its main
office in the City of Mentor, the Bank is the only commercial bank headquartered
in Lake County, Ohio, the Company's primary service area. The Company provides a
focused core of banking services, primarily for individuals and small to
medium-sized businesses.

The Company's lending activities focus primarily on secured lending for
residential and commercial real estate. Most of the Company's loans are secured
by first mortgages or junior mortgages on various types of real estate,
including single-family residential, multi-family residential, mixed use,
commercial, developed and undeveloped real estate. The Company generally does
not offer commercial loans secured exclusively by accounts receivable and
inventory.

The Company offers a broad array of deposit products, including checking
and savings accounts and certificates of deposit. Although the Company attempts
to be competitive with other financial institutions in its market area, the
Company generally sets its interest rates on deposits based on those offered by
the leading commercial banks in the area, rather than those offered by the
leading thrift institutions.

The Company also maintains relationships with correspondent banks and other
independent financial institutions to provide other services as requested by
customers, including loan participations in circumstances in which the requested
loan amount exceeds the Company's legal lending limit.

The Bank is the successor to Great Lakes Commerce Bank, which was chartered
as an Ohio banking corporation in April of 1957. On July 18, 1994, the Bank was
acquired by an investment group led by Jerome T. Osborne, Sr. and his son,
Richard M. Osborne. At the time of the Merger, Great Lakes Commerce Bank had
total assets of approximately $19 million, with four offices. By the end of
1997, the Bank had grown to approximately $67 million in total assets, opened
two new offices and relocated three offices, including the main office.

At December 31, 1997, the Company had total assets of $67 million, total
deposits of $52.0 million, shareholders' equity of $6.4 million, a Tier 1
capital ratio of 12.9%, non-performing assets to total assets ratio of .17% and
an allowance for loan losses to total loans ratio of .75%. For the year ended
December 31, 1997, the Company reported net income of $343,957 or $.58 per
share, compared to $211,943 or $.39 per share for the year ended December 31,
1996. At December 31, 1997, the Bank exceeded all regulatory capital
requirements.

MARKET AREA

28
<PAGE> 30

November 1997 (compared to 4.2% for the State of Ohio as a whole) and per capita
income that is estimated to have grown approximately 26.7% from 1990 to 1996
(compared to 20.2% for the State of Ohio as a whole).

Lake County is also a significant banking market. According to FDIC data,
as of June 30, 1997, total deposits in Lake County, Ohio were approximately $2.6
billion, including commercial banks, savings banks and savings associations.

BUSINESS STRATEGY

The Company's business strategy is focused on the following elements:

Secured Lending in the Company's Primary Market. The Company's lending
philosophy concentrates primarily on 1-4 family real estate and commercial real
estate lending, principally in Lake County. As of December 31, 1997, 1-4 family
real estate loans and commercial real estate loans comprised 52.2% and 29.7% of
the total net loan portfolio, respectively. As of December 31, 1997, 95.3% of
the Company's loans were secured loans, and 89.0% of the Company's loans were
secured by real estate. Management intends to expand its commercial real estate
lending in an effort to enhance profitability and reduce interest rate risk.

COMPETITION

There are many bank, savings bank, savings association and credit union
offices located within the Company's primary market area. All of the competitor
bank, savings bank and savings association offices are branches of larger
institutions headquartered outside of Lake County. In addition to banks, savings
banks, savings associations and credit unions, the Company competes with finance
companies, insurance companies, mortgage companies, securities brokerage firms,
money market funds and other providers of financial services. Many of the
Company's competitors are larger and have substantially greater resources than
the Company, which offer those competitors advantages such as the ability to
price services at lower, more attractive levels and the ability to provide
larger credit facilities than the Company is able to provide. Some of the
Company's competitors offer products and services that are not offered by the
Company. Likewise, some of the Company's competitors are not subject to the same
kind and amount of regulatory restrictions and supervision

29
<PAGE> 31

to which the Company is subject. Because the Company is a community bank that is
considerably smaller than other commercial lenders in the Company's market, the
Company's legal lending limit does not allow the Company to make commercial
loans in amounts many competitors can offer. The Company may from time to time
accommodate loan volumes in excess of its lending limit through the sale of
participations in loans to other banks.

Being the only commercial bank headquartered in Lake County, the Company
seeks to take competitive advantage of its local orientation. The Company
competes for loans principally through its responsiveness to customers, its
ability to communicate effectively with them and its ability to understand and
address customers' needs. The Company competes for deposits principally by
offering customers personal attention, a variety of banking services, attractive
rates and strategically located banking facilities. The Company seeks to provide
high quality banking service to professionals and small and mid-sized
businesses, as well as individuals, emphasizing quick and flexible responses to
customer demands.

LENDING ACTIVITIES

General. The Company makes loans principally in the Lake County, Ohio
area. The Company's primary lending activities are the origination of (i)
conventional 1-4 family real estate loans and (ii) commercial loans, most of
which are secured by real estate located in the Company's primary market area.
These loan categories accounted for approximately 81.9%, in the aggregate, of
the Company's loan portfolio at December 31, 1997. To a lesser extent, the
Company also makes construction loans and consumer loans, including installment
loans and second mortgages, and offers credit cards.

Loan Portfolio Composition and Activity. The following table sets forth
the composition of the Company's loan portfolio in dollar amounts and in
percentages at December 31, 1997 and 1996, along with a reconciliation to loans
receivable, net.

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------
1997 1996
---------------------- ----------------------
AMOUNT PERCENT AMOUNT PERCENT
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Type of loan:
1-4 family real estate....................... $27,705,745 52.2% $20,260,138 52.4%
Commercial real estate and other............. 15,763,306 29.7 11,563,397 29.9
Construction................................. 9,837,670 18.5 7,141,588 18.5
Consumer..................................... 3,995,899 7.5 3,111,364 8.1
----------- ----- ----------- -----
Total loans.................................... 57,302,620 107.9 42,076,487 108.9
Less:
Undisbursed loans in progress................ (3,752,865) -7.1 (2,996,388) -7.8
Unamortized loan origination fees, net....... (49,770) -0.0 (131,535) -0.3
Allowance for loan losses.................... (402,534) -0.8 (314,893) -0.8
----------- ----- ----------- -----
Net loans...................................... $53,097,451 100% $38,633,671 100%
=========== ===== =========== =====
</TABLE>

30
<PAGE> 32

The following table presents maturity information for the loan portfolio at
December 31, 1997. The table does not include prepayments or scheduled principal
repayments. Adjustable-rate mortgage loans are shown as maturing based on
contractual maturities.

<TABLE>
<CAPTION>
1-4 COMMERCIAL
FAMILY REAL ESTATE
REAL ESTATE AND OTHER CONSTRUCTION CONSUMER TOTAL
----------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Amount Due:
Within 3 months................. $ 0 $ 468,747 $ 971,500 $ 242,835 $ 1,683,082
3 months to 1 year.............. 0 3,063,382 1,812,000 236,560 5,111,942
After 1 year:
1 to 3 years.................... 112,349 1,302,650 0 707,243 2,122,242
3 to 5 years.................... 1,088,194 1,323,935 0 725,183 3,137,312
5 to 10 years................... 2,441,907 2,385,532 0 534,656 5,362,095
10 to 20 years.................. 7,647,289 7,118,435 1,083,390 1,542,507 17,391,621
Over 20 years................... 16,416,006 100,625 5,970,780 6,915 22,494,326
----------- ----------- ---------- ---------- -----------
Total due after 1 year............ $27,705,745 $12,231,177 $7,054,170 $3,516,504 $50,507,596
----------- ----------- ---------- ---------- -----------
Total amount due.................. $27,705,745 $15,763,306 $9,837,670 $3,995,899 $57,302,620
=========== =========== ========== ========== ===========
</TABLE>

The following table shows the dollar amount of all loans due after December
31, 1997 that have pre-determined interest rates and the dollar amount of all
loans due after December 31, 1997 that have floating or adjustable interest
rates.

<TABLE>
<CAPTION>
FLOATING OR
FIXED RATES ADJUSTABLE RATES TOTAL
----------- ---------------- -----------
<S> <C> <C> <C>
1-4 family real estate............................ $17,580,368 $10,125,377 $27,705,745
Commercial real estate and other.................. 4,647,581 11,115,725 15,763,306
Construction...................................... 1,983,814 7,853,856 9,837,670
Consumer.......................................... 2,317,900 1,677,999 3,995,899
----------- ----------- -----------
Total................................... $26,529,663 $30,772,957 $57,302,620
=========== =========== ===========
</TABLE>

1-4 Family Real Estate Loans. A significant portion of the Company's
lending activity is the origination of conventional loans secured by 1-4 family
real estate located within the Company's primary market area. Residential real
estate loans are generally underwritten consistent with Federal National
Mortgage Association ("FNMA") and FHLMC secondary market standards. In the past,
the Company selectively retained fixed-rate loans in order to increase its
loan-to-deposit ratio. Although the Company has retained fixed-rate mortgage
loans in its portfolio, the Company may sell fixed-rate loans in the secondary
market to the FHLMC, with .25% servicing retained, or on a servicing-released
basis to other financial institutions. The Company's adjustable-rate mortgage
loans are ordinarily retained in the Company's loan portfolio. Approximately
36.5% of the Company's portfolio of conventional mortgage loans secured by 1-4
family real estate is adjustable rate.

The Company generally makes loans of up to 90% of the value of the real
estate and improvements securing such loans (the "loan-to-value" ratio) on 1-4
family real estate. The Company generally does not lend in excess of 80% of the
appraised value or sales price (whichever is less) of the property unless the
borrower obtains private mortgage insurance on the amount of the loan in excess
of 80% of the property's value. The Company's typical debt-to-income ratio
guideline for residential real estate mortgage loan approval is 28% housing
expense-to-income, and 36% total debt-to-income. Residential real estate loans
are offered by the Company for terms of up to 30 years.

At December 31, 1997, loans secured by residential real estate that had
outstanding balances more than 90 days delinquent or nonaccruing totaled $70,047
or .25% of the Company's 1-4 family real estate loan balance.

31
<PAGE> 33

Commercial Real Estate and Other Loans. The Company is also active in
commercial lending. In Lake County, the Company's primary service area, there
are numerous small and medium-sized business establishments, including light
industrial, manufacturing, retail and service businesses. The Company makes
commercial loans to these enterprises for general business purposes, most of
which loans are secured by real estate.

With loan-to-value ratios of up to 80%, the Company's commercial loans are
typically secured by commercial real estate and are priced in relation to the
prime rate. Such loans generally have note terms of five to ten years,
amortizing over a term of 15 years. Although commercial loans generally bear
somewhat more risk than single-family residential mortgage loans, commercial
loans tend to be higher yielding, tend to have shorter terms and generally
provide for interest-rate adjustments as prevailing rates change. Accordingly,
commercial loans enhance a lender's interest rate risk management and, in the
Company's opinion, promote more rapid asset and income growth than a loan
portfolio comprised strictly of residential real estate mortgage loans. As a
result, the Company has been placing more emphasis on its commercial loan
products and expects to continue doing so in the future. On rare occasions, the
Company has made unsecured commercial loans, which are also typically priced in
relation to the prime rate and have maturities of up to one year.

Although a risk of nonpayment exists for all loans, certain specific types
of risks are associated with various types of loans. One of the primary risks
associated with commercial loans has to do with the quality of the borrower's
management. A majority of the Company's commercial loans are secured by real
estate. Risks associated with real estate loans in general include fluctuating
land values, changes in tax policies, the impact of national and regional
economic factors and concentration of loans within the Company's market area.
The Company attempts to mitigate risks associated with commercial loans by
maintaining a close working relationship with its borrowers and by obtaining
cross-collateralization and personal guarantees. In the process of considering a
commercial loan application, the Company reviews the financial statements of the
commercial borrower, appraisals of the collateral and other documentation in
order to determine (i) whether there will be sufficient income to cover payments
on the proposed loan as well as other existing debt of the commercial loan
applicant, (ii) whether the collateral is of adequate liquidation value and
(iii) whether the applicant has a good payment history and is capable of
performing the requirements of the loan. Other reviews and analyses are
undertaken as appropriate, depending upon the complexity of the credit request.

At December 31, 1997, commercial loans that were more than 90 days
delinquent or nonaccruing totaled $43,881 in aggregate outstanding balances, or
.28% of the Company's commercial loan portfolio.

Construction Loans. The Company also originates several different types of
loans that it categorizes as construction loans, including (i) residential
construction loans to borrowers who will occupy the premises upon completion of
construction, (ii) residential construction loans to builders, (iii) commercial
construction loans and (iv) real estate acquisition and development loans.
Because of the complex nature of construction generally, these loans are
generally recognized as having a higher degree of risk than other forms of real
estate lending. The Company's fixed-rate and adjustable-rate construction loans
provide for the same interest rate terms on the construction loan and on the
permanent mortgage loan that follows completion of the construction phase,
provided that the borrower pays to the Company at origination of the loan an
additional one percentage point of the total loan amount in the case of
fixed-rate construction loans, and one-half percentage point in the case of
adjustable-rate construction loans.

The Company is active in lending on single-family residences to borrowers
who will occupy the home following completion of construction, or "owner-built"
construction. These loans are typically made with a six-to nine-month
construction term. Upon completion of construction, the loans convert to
permanent mortgage loans with regularly amortizing principal and interest
payments, usually over a fifteen- to thirty-year term. These owner-built
construction loans are made with both fixed and adjustable interest rates.

The Company also lends to builders for the construction of single-family
residences as models or under contract for sale. Builder construction loans are
typically six to nine months in duration, and are usually made with adjustable
interest rates from one to one and one-half percent above the Company's prime
rate.

32
<PAGE> 34

The Company makes construction loans to individuals and businesses for the
purpose of constructing commercial properties. These loans are ordinarily made
with a six- to twelve-month construction term. Upon completion of the project,
commercial construction loans convert to permanent commercial loans with
regularly amortizing principal and interest payments, generally over a ten- to
fifteen-year period. Adjustable-rate commercial construction loans generally are
made with interest rates that adjust every three to five years. Variable-rate
commercial construction loans generally are made with interest rates that vary
according to changes in the Company's prime rate, with interest rates ranging
generally from one-half to one point over prime.

The Company also makes loans for the acquisition and development of
residential and commercial acreage. Acquisition and development loans are made
with adjustable rates that are one to two percent above the Company's prime
rate. These acquisition and development loans typically have terms of one to two
years.

At December 31, 1997, there were no construction loans that had outstanding
balances more than 90 days delinquent or nonaccruing. At that date, the Bank's
construction loans consisted of the following types:

<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT AT PERCENT OF TOTAL
DECEMBER 31, 1997 CONSTRUCTION LOANS
---------------------- ------------------
<S> <C> <C>
TYPE OF CONSTRUCTION LOAN:
Residential Construction (owner-built)........ $6,384,980 64.9%
Builder Loans................................. 1,845,000 18.8%
Commercial Construction....................... 669,190 6.8%
Acquisition and Development................... 938,500 9.5%
---------- -----
Total Construction Loans.................... $9,837,670 100%
========== =====
</TABLE>

Consumer Loans. The Company offers several consumer loan products: home
equity loans, installment loans and credit cards. The Company does not currently
do any indirect lending.

The Company's home equity loan policy generally allows for a loan of up to
80% of a property's appraised value less the principal balance of the
outstanding first mortgage loan. The interest rate generally ranges from
one-half to one and one-half percentage points over the prime rate, depending on
the size of the loan. Home equity loans are repayable monthly, with the monthly
payment calculated as one and one-half percent of the outstanding balance. The
Company's home equity loans generally have terms of ten to fifteen years, with
borrowing permitted in the first five to ten years, respectively, and the last
five years being dedicated solely to repayment of the loan.

In addition to home equity loans, the Company offers installment loans for
the purchase of automobiles and other consumer purposes. The Company lends for
the purchase of both new and used automobiles, generally requiring a minimum
down payment of 15% from the borrower for a new car purchase and a minimum of
20% down payment for a used car purchase. Automobile loans are made with
interest rates for a term of two to five years. Installment loans are made for
other consumer purposes, generally on a secured basis, with fixed interest rates
and terms ranging from one to ten years.

As a result of consumer demand, the Company makes small unsecured loans to
VISA customers. The Company also provides overdraft protection to checking
account depositors, but only if the checking account is linked to another
account from which the Company may debit funds to pay the overdraft.

The Company underwrites consumer loans in a manner designed to assure
compliance with applicable regulations and the Company's underwriting standards.
Payment history on applicants is very important on these smaller loans, and is
checked through in-house records as well as credit bureaus. On automobile loans,
the value of the collateral is checked through the N.A.D.A. book (the "blue
book") or another valuation service. The borrower's income must be adequate to
cover all of his or her debt payments and other monthly payment obligations,
including the proposed loan.

At December 31, 1997, the Company had approximately $4.0 million in its
consumer loan portfolio, which was 7.5% of the Company's total net loans. A
consumer loan of $1,406 was over 90 days delinquent or

33
<PAGE> 35

nonaccruing on that date. As of December 31, 1997, the amount and percentage of
consumer loans by type was as follows:

<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT AT PERCENT OF TOTAL
DECEMBER 31, 1997 CONSUMER LOANS
---------------------- ----------------
<S> <C> <C>
TYPE OF CONSUMER LOAN:
Home Equity Loans............................... $ 647,928 16.2%
Home Equity Lines of Credit..................... 1,442,983 36.1%
Automobile Loans................................ 1,036,868 25.9%
Boat Loans...................................... 107,646 2.7%
Passbook Loans.................................. 151,402 3.8%
Other Secured Consumer Loans.................... 370,376 9.3%
Credit Cards and Other Unsecured Consumer
Loans......................................... 238,696 6.0%
---------- -----
Total......................................... $3,995,899 100%
========== =====
</TABLE>

Loan Solicitation and Processing. Loan originations are developed from a
number of sources, including continuing business with depositors, other
borrowers and real estate developers, solicitations by Company personnel and
walk-in customers.

When a loan request is made, the Company reviews the application, as well
as credit bureau reports, appraisals, financial information, verifications of
income, and other documentation concerning the creditworthiness of the borrower,
as applicable to each loan type. The Company's underwriting guidelines are set
by senior management at the home office. Residential real estate loans are
generally underwritten consistent with FNMA and FHLMC standards. Loan
applications are generally processed and underwritten at the home office.

At the time of an application for a residential mortgage loan, an appraisal
of the property and borrower credit report are ordered. In addition, the
borrower's employment, income and financial information are obtained and
verified. When all of the necessary information is received by the Company, the
information is reviewed and analyzed with reference to the Company's
underwriting worksheet, which includes pertinent data such as debt-to-income
ratios, the loan-to-value ratio, credit history highlights and details
concerning funds available for down payment and closing costs. Depending on the
size of the loan applied for, final approval is given by senior management, the
Loan Committee or the Executive Committee.

At the time of application for a commercial loan, the Company's commercial
loan officer will obtain financial information of the borrower, including
business financial statements and, as appropriate, personal financial statements
and income tax records. In those circumstances in which real estate will serve
as collateral for the commercial loan, an appraisal is ordered as well. Credit
reports are obtained for individual borrowers, and Dun and Bradstreet reports
are ordered for business borrowers. If the borrower has had previous borrowings
from or deposit accounts with the Company, payment and balance histories are
reviewed as well. The commercial loan officer analyzes the financial information
and assesses the borrower's ability to repay the proposed loan. The commercial
loan officer will also generally visit the business location or, in the case of
real estate, inspect the property. The results of the Commercial Loan Officer's
analysis and assessment are compiled into a standard written Loan Request
worksheet that is presented to the Loan Committee or Executive Committee for
approval. Individual officers have very limited authority to approve loans
without the approval of the Loan Committee or Executive Committee.

Income from Lending Activities. The Company earns interest and fee income
from its lending activities. The Company receives fees for originating loans,
which fees, net of origination costs, are amortized over the life of the
respective loan. The Company also receives loan fees related to existing loans,
which include late charges. Income from loan origination and commitment fees and
discounts varies with the volume and type of loans and commitments made and with
competitive and economic conditions. Note 1(c) to the Consolidated Financial
Statements included herein contains a discussion of the manner in which loan
fees and income are recognized for financial reporting purposes.

34
<PAGE> 36

NONPERFORMING LOANS

General. A loan is considered by the Company to be nonperforming when it
is 90 days or more delinquent or, if sooner, when the Company has determined
that repayment of the loan in full is unlikely. Late charges on residential
mortgages are assessed by the Company if a payment is not received by the 15th
day after the due date. Immediately thereafter, any borrower whose payment was
not received by this time is mailed a past due notice. The borrower will be
contacted by telephone if the delinquency continues to the 30th day. Late
charges generally do not apply to the Company's commercial loans. With payments
generally due on the first of each month, a commercial borrower will be
contacted if a loan payment has not been received by the tenth day of the month.

When an advanced stage of delinquency appears on a single-family loan
(generally about the 60th day of delinquency) and if repayment cannot be
expected within a reasonable amount of time or a repayment agreement has not
been entered into, the Company will contact an attorney and request that the
required notice of foreclosure or repossession proceedings be prepared and
delivered to the borrower in order that, if necessary, foreclosure proceedings
may be initiated promptly. Insofar as commercial loans are concerned, the
Company does not address advanced delinquencies and initiate foreclosure on its
collateral pursuant to a formula, to the same degree that it does in the case of
delinquent residential mortgage loans. Instead, the procedures for addressing
delinquencies in commercial loans can vary from one loan to the next, depending
on a variety of factors. As of December 31, 1997, only $115,334 or .22% of the
Company's total net loan portfolio was 90 days or more past due, of which
$70,047 related to one residential mortgage loan and $43,881 related to two
commercial loans. As of December 31, 1997, the Company's level of nonperforming
assets to total assets was .17%.

Late charges on installment loans are assessed by the Company if a payment
is not received by the 10th day following the due date. Immediately thereafter,
any borrower whose payment was not received by this time is mailed a past due
notice. Credit card statement processing is undertaken by a third party under
contract with the Bank. Past due notices are generated automatically, depending
on the stage of delinquency of the card holder, with charge-off occurring after
120 days. As of December 31, 1997, one credit card loan totaling $1,406 was
nonperforming, representing .59% of the credit card portfolio.

On December 31, 1997, the Company held no real estate and other repossessed
collateral acquired as a result of foreclosure, voluntary deed, or other means.
When the Company does obtain such real estate, it is classified as "other real
estate owned" until it is sold. When property is so acquired, it is recorded at
the lower of cost (the unpaid principal balance at the date of acquisition plus
foreclosure and other related costs) or fair value. Any subsequent write-down
resulting therefrom is charged to expense. Generally, unless the property is a
1-4 family residential dwelling and well collateralized, interest accrual ceases
in 90 days (but no later than the date of acquisition) and the loan is
classified as nonperforming. All costs incurred from that date in maintaining
the property are expensed. "Other real estate owned" is appraised during the
foreclosure process, prior to the time of acquisition. Losses are recognized for
the amount by which the book value of the related mortgage loan exceeds the
estimated net realizable value of the property.

Not categorized as nonperforming loans are certain potential problem loans
that management believes are adequately secured and for which no material loss
is expected, but as to which certain circumstances may cause the borrowers to be
unable to comply with the present loan repayment terms at some future date. At
December 31, 1997, potential problem loans totaled approximately $170,700.

At December 31, 1997 and 1996, the Company had nonaccrual loans totaling
$82,000 and $71,000, respectively. Interest income that would have been
recognized if such loans had performed in accordance with contractual terms
totaled $6,369 and $1,235 for the years ended December 31, 1997 and 1996,
respectively. No interest income was recognized on such loans during any of the
periods.

35
<PAGE> 37

The following table summarizes nonperforming assets by category.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
1-4 family real estate:
Nonaccrual.......................................... $ 70,047 $ 70,047
Past due 90 days or more(1)......................... 0 0
Commercial real estate and other:
Nonaccrual.......................................... 11,965 0
Past due 90 days or more(1)......................... 31,916 0
Construction:
Nonaccrual.......................................... 0 0
Past due 90 days or more(1)......................... 0 0
Consumer:
Nonaccrual.......................................... 0 1,299
Past due 90 days or more(1)......................... 1,406 0
----------- -----------
Total nonperforming loans........................ 115,334 71,346
Other real estate owned............................... 0 0
----------- -----------
Total nonperforming assets....................... $ 115,334 $ 71,346
=========== ===========
Loans outstanding, net................................ $53,097,451 $38,633,671
Allowance for possible loan losses to total loans..... .75% .81%
Nonperforming loans to total loans, net............... .22% .18%
Nonperforming assets to total assets.................. .17% .13%
Allowance for possible loan losses to nonperforming
loans............................................... 349.0% 443.5%
</TABLE>

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

(1) Represents accruing loans delinquent greater than 90 days which are
considered to be well secured by management and in the process of
collection.

Allowance for Loan Losses. The amount of the allowance for loan losses is
based on management's analysis of risks inherent in the various segments of the
loan portfolio, management's assessment of known or potential problem credits
that have come to management's attention during the ongoing analysis of credit
quality, historical loss experience, current and anticipated economic conditions
and other factors. If actual circumstances and losses differ substantially from
management's assumptions and estimates, such allowance for loan losses might not
be sufficient to absorb all future losses, and net earnings could be adversely
affected. Loan loss estimates are reviewed periodically, and adjustments, if
any, are reported in earnings in the period in which they become known. In
addition, the Company maintains a portion of the allowance to cover potential
losses due to contingencies that have not been specifically identified.

Although management believes that it uses the best information available to
make such determinations and that the allowance for loan losses is adequate at
December 31, 1997, future adjustments to the allowance may be necessary, and net
earnings could be affected, if circumstances or economic conditions differ
substantially from the assumptions used in making the initial determinations. A
downturn in the Northeast Ohio economy and employment could result in the
Company experiencing increased levels of nonperforming assets and charge-offs,
increased provisions for loan losses and reductions in income. Additionally, as
an integral part of the examination process bank regulatory agencies
periodically review the Company's allowance for loan losses. Such agencies may
require the recognition of additions to the allowance based on their judgment of
information available to them at the time of their examination.

36
<PAGE> 38

The following is a summary of the Company's loan loss experience and
selected ratios for the periods presented.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Allowance for loan losses (beginning of period)....... $ 314,893 $ 238,853

Loans charged off:
1-4 family real estate.............................. 1,636 0
Commercial real estate and other.................... 4,339 0
Construction........................................ 0 0
Consumer............................................ 6,023 12,318
----------- -----------
Total loans charged off.......................... 11,998 12,318

Recoveries of loans previously charged off:
1-4 family real estate.............................. 197 0
Commercial real estate and other.................... 0 0
Construction........................................ 0 0
Consumer............................................ 2,442 11,358
----------- -----------

Total recoveries................................. 2,639 11,358
----------- -----------
Net loans charged off................................. 9,359 960
----------- -----------
Provision for loan losses............................. 97,000 77,000
----------- -----------
Allowance for loan losses (end of period)............. $ 402,534 $ 314,893
=========== ===========

Loans outstanding:
Average net......................................... $46,751,096 $32,740,809
End of period, net.................................. $53,097,451 $38,633,671
Ratio of allowance for loan losses to loans
outstanding at end of period........................ .75% .81%
</TABLE>

The following table sets forth the allocation of the Company's allowance
for loan losses by loan category and the percent of loans in each category to
total loans receivable at the dates indicated. The portion of the loan allowance
allocated to each loan category does not represent the total available for
future losses that may occur within the loan category because the total loan
loss allowance is a valuation reserve applicable to the entire loan portfolio.

<TABLE>
<CAPTION>
AT DECEMBER 31, 1997 AT DECEMBER 31, 1996
---------------------- ----------------------
PERCENT OF PERCENT OF
LOANS TO LOANS TO
AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
AT THE END OF PERIOD ALLOCATED TO:
Type of loan:
1-4 family real estate........................... $107,617 26.7% $ 79,421 25.2%
Commercial real estate and other................. 204,804 50.9% 154,261 49.0%
Construction..................................... 20,877 5.2% 17,733 5.6%
Consumer......................................... 69,236 17.2% 63,478 20.2%
-------- ------ -------- ------
Total Loans........................................ $402,534 100.0% $314,893 100.0%
======== ====== ======== ======
</TABLE>

Classified Assets. FDIC regulations governing classification of assets
require nonmember commercial banks, including the Bank, to classify their own
assets and to establish appropriate general and specific allowances for losses,
subject to FDIC review. These regulations are designed to encourage management
to evaluate assets on a case-by-case basis and to discourage automatic
classifications. Assets classified as watch, substandard or doubtful must be
evaluated by management to determine a reasonable general loss reserve, which is
included in total capital for purposes of the bank's risk-based capital
requirement but which is not included in Tier 1 capital or in capital under
generally accepted accounting principles. Assets classified as loss must either
be written off or reserved for by a specific allowance, which is not counted
toward capital for

37
<PAGE> 39

purposes of any of the regulatory capital requirements. As of December 31, 1997,
assets classified as watch totaled $168,946, assets classified as substandard
totaled $115,492 and assets classified as doubtful totaled $1,598, for aggregate
classified assets of $286,036. There were no assets classified as loss as of
December 31, 1997.

INVESTMENTS

Investment securities provide a return on residual funds after lending
activities. Investments may be in interest-bearing deposits, U.S. Government and
agency obligations, state and local government obligations and
government-guaranteed, mortgage-backed securities. The Company does not make any
investments in securities that are rated less than investment grade by a
nationally recognized statistical rating organization. A goal of the Company's
investment policy is to limit interest-rate risk.

All securities-related activity is reported to the Board of Directors.
General changes in investment strategy are required to be reviewed and approved
by the Board. The Company's senior management can purchase and sell securities
on behalf of the Company in accordance with the Company's stated investment
policy.

The following table sets forth the carrying value of the Company's
investment portfolio at the dates indicated. The Company's entire investment
portfolio is designated as "held to maturity."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
U.S. Treasury and other U.S. Government agency
obligations........................................... $1,614,300 $1,137,485
Equity securities....................................... 5,000 5,000
---------- ----------
Total investment securities........................... $1,619,300 $1,142,485
========== ==========
</TABLE>

The following table reflects the maturities of the Company's investment
securities at December 31, 1997.

<TABLE>
<CAPTION>
DUE AFTER ONE
DUE IN ONE YEAR DUE AFTER FIVE
YEAR THROUGH FIVE YEARS THROUGH DUE AFTER TEN
OR LESS YEARS TEN YEARS YEARS
--------------- ----------------- -------------- --------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE AMOUNT RATE TOTAL
-------- ---- ---------- ---- ------- ---- ------- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT SECURITIES
U.S. Treasury and other U.S.
Government agency
obligations.................... $600,121 6.12% $1,014,179 6.72% $ 0 0 $ 0 0 $1,614,300
Equity securities................ 0 0 0 0 0 0 5,000 0 5,000
-------- ---- ---------- ---- ------- ---- ------- ---- ----------
Total........................ $600,121 6.12% $1,014,179 6.72% $ 0 0% $5,000 0% $1,619,300
======== ========== ======= ======= ==========
</TABLE>

SOURCE OF FUNDS

Deposit Accounts. Savings deposits are a major source of the Company's
funds. The Company offers a number of alternatives for depositors designed to
attract both commercial and regular consumer checking and savings customers,
including regular and money market savings accounts, NOW accounts, and a variety
of fixed-maturity, fixed-rate certificates with maturities ranging from seven
days to 60 months. The Company also provides travelers' checks, official checks,
money orders, ATM services and IRA accounts. The Company offers a large-balance
deposit account product known as the "Golden Passbook Account," which may be
opened with a minimum balance of $2,500. At December 31, 1997, Golden Passbook
Accounts represented approximately $22.5 million, or approximately 43.2% of
total deposit liabilities. The Company does not solicit or accept brokered
deposits.

Messrs. Jerome T. and Richard M. Osborne are, individually and with
affiliated companies and immediate family members, the Company's most
substantial depositors, with total deposits of approximately $4.8 million as of
March 31, 1998, $5.1 million as of December 31, 1997 and $4.4 million as of
December 31, 1996.

38
<PAGE> 40

The distribution of the Company's deposit accounts by type and rate is set
forth in the following table.

<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------------------
1997 1996
-------------------------------- ---------------------------------
AVERAGE AVERAGE
AMOUNT YIELD PERCENT AMOUNT YIELD PERCENT
----------- ------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Demand deposit accounts............. $13,088,994 2.07% 25.2% $10,979,586 2.20% 26.0%
Savings accounts.................... 27,926,967 3.67% 53.7% 23,371,968 3.58% 55.3%
----------- ---- ----------- ----
Total transaction accounts........ 41,015,961 78.9% 34,351,554 81.3%

Certificates:
4.00% and less.................... 93,493 0.2% 238,341 0.6%
4.01% -- 5.00%.................... 2,222,724 4.3% 3,192,395 7.5%
5.01% -- 6.00%.................... 5,403,988 10.3% 2,956,980 7.0%
6.01% -- 7.00%.................... 2,304,459 4.4% 515,360 1.2%
7.01% -- 8.00%.................... 971,291 1.9% 997,899 2.4%
----------- ---- ----------- ----
Total certificates of deposit... 10,995,955 5.56% 21.1% 7,900,975 5.47% 18.7%
----------- ---- ---- ----------- ---- ----
Total deposits...................... $52,011,916 3.95% 100% $42,252,529 3.84% 100%
=========== ==== ==== =========== ==== ====
</TABLE>

The following table sets forth the amount of the Company's time deposits
that are $100,000 or more, including certificates of deposit, by time remaining
until maturity.

<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
--------------------
<S> <C>
Maturity Period Three months or
less.............................. $ 581,082
Over three through six months....... 403,048
Over six through 12 months.......... 722,720
Over 12 months...................... 1,084,615
----------
Total............................. $2,791,465
==========
</TABLE>

Borrowings. Deposits and repayment of loan principal are the primary
source of funds for the Company's lending activities and other general business
purposes. However, during periods when the supply of lendable funds or funds
available for general business purposes cannot meet the demand for loans or such
general business purposes, the Bank can obtain funds through loans (advances)
from the FHLB. Advances from the FHLB are made on a secured basis, have terms of
five years and require payments of interest only until maturity. There is a
substantial penalty for prepayment of advances. As necessary, the Bank uses FHLB
advances to fund the Bank's lending activities. See "Supervision and
Regulation -- Federal and State Bank Regulation Generally -- Federal Home Loan
Banks." As of December 31, 1997 the Bank had outstanding FHLB advances totaling
$7.5 million. At December 31, 1997, approximately $11,250,000 of the Bank's
mortgage portfolio was pledged to secure FHLB advances. Refer to Note 7 of Notes
to Consolidated Financial Statements for additional information regarding FHLB
advances. The Bank also has an agreement with a major regional bank for $400,000
of short-term funds and relationships with other institutions for the purpose of
obtaining short-term overnight funds, or "fed funds."

The following table sets forth the maximum amount of the Bank's FHLB
advances and other borrowings outstanding at any month end during the periods
shown and the average aggregate balances of FHLB advances and other borrowings
for such periods:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Maximum amount outstanding:
FHLB advances......................................... $7,500,000 $5,000,000
Average amount of FHLB advances and other borrowings
outstanding........................................... $6,410,417 $1,363,636
Weighted average interest rate of total borrowings based
on quarter end balances............................... 6.79% 6.80%
</TABLE>

39
<PAGE> 41

The following table sets forth certain information as to FHLB advances and
other borrowings at the dates indicated:

<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------------
1997 1996
--------------------------- ---------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AMOUNT INTEREST RATE AMOUNT INTEREST RATE
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
FHLB advances............................. $7,500,000 6.78% $5,000,000 6.80%
---------- ----- ---------- -----
Total borrowings........................ $7,500,000 $5,000,000
========== ==========
</TABLE>

PROPERTIES

At the time of the Merger, the Bank's facilities consisted of its main
office and three of the branches identified in the table below. The main office
and two of the branches were subsequently relocated to more prominent locations,
and the third branch was completely remodeled. The Bank added a new branch in
1994 and another in 1996. In addition, regulatory approvals have recently been
obtained for the two additional de novo branches identified in the table, which
are expected to be open for business by the end of the third quarter of 1998.

The following table sets forth certain information regarding the Company's
offices. Each of the Bank's offices is equipped with drive-through teller
facilities as well as an automated teller machine ("ATM"). A number of the
Bank's branches offer night-drop facilities as well. Drive-through teller
facilities open at 7:30 a.m., Monday through Saturday, and lobby facilities open
at 9:00 a.m., Monday through Saturday. The Bank's office hours end at 5:00 p.m.,
Monday through Thursday, 6:00 p.m. on Friday and at noon on Saturday.

<TABLE>
<CAPTION>
OWNED APPROXIMATE
LOCATION /LEASED SQUARE FOOTAGE OTHER INFORMATION
- -------------------------------- ------- -------------- --------------------------------
<S> <C> <C> <C>
MAIN OFFICE: Owned 14,572 Opened by Great Lakes Commerce
7001 Center Street Bank in 1957, relocated in 1994
Mentor, Ohio 44060
BRANCHES:
9365 Mentor Avenue Owned 2,064 Opened in 1994
Mentor, Ohio 44060
1522 Mentor Avenue Leased(1) 2,706 Opened by Great Lakes Commerce
Painesville, Ohio 44077 Bank in 1968, relocated in 1995
29933 Euclid Avenue Leased(2) 2,700 Opened by Great Lakes Commerce
Wickliffe, Ohio 44092 Bank in 1969, relocated in 1997
38600 Lakeshore Boulevard Owned 2,100 Opened by Great Lakes Commerce
Willoughby, Ohio 40094 Bank in 1959, remodeled in 1997
28500 Chardon Road Owned 3,268 Opened in 1996
Willoughby Hills, Ohio 44094
RECENTLY APPROVED DE NOVO BRANCHES:
50 South Park Place Leased(3) 2,700 1998 (anticipated opening)
Painesville, Ohio 44077
(approved in 1997)
7742 Lakeshore Boulevard Owned(4) 1,650 1998 (anticipated opening)
Mentor, Ohio 44060
(approved in 1998)
</TABLE>

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

(1) This property had been leased by the Bank from a company controlled by
Richard M. Osborne, but the property was subsequently sold to an unrelated
third party. Mr. Osborne is a substantial shareholder, Vice Chairman and a
director of the Company. Dated October 1, 1994, the lease has a term of ten
years from the date of completion of construction (which was completed in
1995), with annual rent of $32,472 ($12 per square foot), payable in monthly
installments. The Bank is also responsible for real estate taxes,

40
<PAGE> 42

assessments and insurance on the facility. The lease is renewable for an
additional ten-year term, with annual rent increased by ten percent (10%)
from the original annual rate.

(2) This property is leased by the Bank from Richard M. Osborne, as Trustee of
the Richard M. Osborne Trust. Although the Bank has not obtained an
independent appraisal supporting the fairness of the lease terms, the Bank
believes that the terms and conditions of the lease are at least as
favorable to the Bank as those that would apply in the case of a lease with
an unrelated third party. Dated May 1, 1997, the lease has a term of ten
years, with annual rent of $31,200 ($11.56 per square foot), payable in
monthly installments. The Bank is also responsible for real estate taxes,
assessments and insurance on the facility. The lease is renewable for an
additional ten-year term, with an annual rent increase of ten percent (10%)
from the original annual rate. See "Certain Relationships and Related Party
Transactions."

(3) Construction on this property has not yet commenced. The lessor of the
property is Richard M. Osborne, as Trustee of the Richard M. Osborne Trust.
The Bank obtained an independent appraisal supporting the fairness of the
lease terms. Pursuant to a Lease Agreement dated March 1, 1998 by and
between Mr. Osborne, as trustee, and the Bank, the annual base rent will be
$32,400 ($12 per square foot), commencing as of the date that construction
of the premises is complete and ready for occupancy. The Bank will also be
responsible for real estate taxes, assessments and insurance on the
facility. The lease has a term of ten years, renewable for an additional
ten-year term with an annual rent increase of ten percent (10%) from the
original rental term. It is currently estimated that the property will be
ready for occupancy by the end of the third quarter of 1998. The Bank is not
responsible for the costs of construction, nor has the Bank provided
construction or any other financing for the project. See "Certain
Relationships and Related Party Transactions."

(4) The $297,050 purchase price (net of costs) of the property was paid by the
Company in the form of the issuance of 23,764 shares of Common Stock. This
facility is expected to be ready for occupancy by the end of the third
quarter of 1998. The property was acquired from a limited partnership
controlled by an individual who holds an equity interest in Turkey Vulture
Fund XIII, Ltd. and is an investor with Turkey Vulture Fund XIII, Ltd. in
certain publicly held real estate investment trusts. Turkey Vulture Fund
XIII, Ltd. is an investment fund managed by Director Richard M. Osborne (and
of which he is the majority owner). In connection with obtaining FDIC
approval for establishing the new Bank facility, the Company was required by
the FDIC to record the value of the property on the Company's financial
statements at $250,000, based upon an appraisal obtained by the Bank which
valued the property in the range of $250,000 (if not used as a bank
facility) to $330,000 (if used as an operating bank facility).

The Company owns and operates seven ATMs at various branch offices and is a
member of the following ATM networks: MAC (formerly "Green Machine" in Ohio),
Money Station and Plus System, all of which are ATM networks with members
nationwide.

At December 31, 1997 the net book value of the Company's investment in
premises and equipment totaled $2.6 million. Refer to Notes 1(g), 4 and 9 of the
Notes to Consolidated Financial Statements for additional information regarding
premises and equipment.

The Company's electronic data processing functions are performed under
contract with an electronic data processing services firm that performs such
services for financial institutions nationwide.

LEGAL PROCEEDINGS

From time to time the Company and the Bank are involved in various legal
proceedings that are incidental to the Company's business. In the opinion of
management, no current legal proceedings are material to the financial condition
of the Company and the Bank, either individually or in the aggregate.

PERSONNEL

As of December 31, 1997 the Company had 42 full-time equivalent employees.
None of the Company's employees is represented by a collective bargaining group.
Management considers its relations with its employees to be excellent.

41
<PAGE> 43

MANAGEMENT

GENERAL

All directors of the Company are elected annually and hold office until the
following annual meeting or until their successors are elected and qualified.
The Board of Directors of the Company and the Board of Directors of the Bank are
comprised of the same individuals, serving identical terms as directors of the
Company and the Bank.

Except as may be otherwise noted herein, there are no family relationships
among any of the directors or executive officers. No such person was selected or
serves as director pursuant to any arrangement or understanding with any other
person. Except as may be disclosed herein, none of the directors and executive
officers of the Company serves as a director of any company that has a class of
securities registered under, or which is subject to the periodic reporting
requirements of, the Exchange Act or any investment company registered under the
Investment Company Act of 1940. None of the directors or executive officers of
the Company has been involved in any bankruptcy proceedings, either individually
or in respect of any businesses with which they have been involved, nor have any
of such persons been convicted of any crime, excluding traffic violations and
similar minor offenses.

The following table sets forth certain information concerning directors and
executive officers of the Company and the Bank:

<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE POSITION WITH THE COMPANY AND THE BANK
- ----------------------------- --- -------------- -----------------------------------------------
<S> <C> <C> <C>
Richard T. Flenner, Jr....... 55 1994 Director, President and Chief Executive Officer
James V. Fryan............... 60 1995 Director
George C. Lott............... 64 1994 Director
George X. Mechir............. 80 1994 Director
Andrew L. Meinhold........... 47 -- Executive Vice President and Secretary
Cheryl Jean Mihitsch......... 49 -- Treasurer
Marian Rose Nathan........... 72 1994 Director
Jerome T. Osborne, Sr........ 75 1994 Chairman of the Board
Richard M. Osborne........... 52 1994 Vice Chairman of the Board
Edward R. Pike............... 39 1994 Director
Thomas J. Smith.............. 53 1994 Director
Joseph T. Svete.............. 60 1994 Director
Thomas E. Wheeler............ 51 1994 Director
</TABLE>

The principal occupation and other information for each director and
executive officer of the Company and the Bank is set forth below.

EXECUTIVE OFFICERS

RICHARD T. FLENNER, JR. -- Mr. Flenner has more than 35 years experience in
the banking industry in Northeast Ohio. Mr. Flenner joined the Bank in 1994
after the Merger. Prior to joining the Bank, Mr. Flenner was Vice President of
Retail Lending for Liberty State Bank of Twinsburg, Ohio (now known as Liberty
Bank, N.A.). From 1983 to 1991, Mr. Flenner was employed by Peoples Savings Bank
of Ashtabula, Ohio, serving as Vice President of Retail Lending at the time of
its acquisition by the predecessor to FirstMerit Corporation in 1990. Mr.
Flenner serves as a "Loaned Executive" to the Lake County United Way, and he is
a member of Leadership Lake County.

ANDREW L. MEINHOLD -- Mr. Meinhold has over 20 years of banking experience
in the Northeast Ohio banking market. Prior to joining the Bank in December of
1994, Mr. Meinhold operated his own training and consulting business, Highland
View Associates, from June of 1993 to December of 1994. From April of 1988 to
June of 1993, Mr. Meinhold was employed by First County Bank of Chardon, Ohio,
serving as President at the time of his departure. Mr. Meinhold was also
employed by Peoples Savings Bank of Ashtabula, Ohio from January 1986 to April
1988 as Executive Vice President and Chief Operating Officer, and prior to that
was

42
<PAGE> 44

employed by Mentor Savings Bank in various capacities for ten years. Mr.
Meinhold was promoted in March 1998 from Senior Vice President of the Bank to
Executive Vice President. Mr. Meinhold is a member of Leadership Lake County,
the Mentor Rotary Club and the Lake County and Geauga County Revolving Loan Fund
Committees. He also serves as a Junior Achievement volunteer and is a member of
the Geauga County Public Library Board.

CHERYL J. MIHITSCH -- Ms. Mihitsch joined the Bank in May 1995 as
Controller. Ms. Mihitsch has served in a variety of capacities with Northeast
Ohio banking institutions, ranging from teller in 1979 to her current position
as Treasurer. At the same time, Ms. Mihitsch earned an accounting degree from
Lake Erie College, graduating in 1986. Until May of 1995, Ms. Mihitsch served as
an Accounting Department Supervisor at Security Federal Savings & Loan
Association, Mayfield Heights, Ohio, an institution with total assets in excess
of $400 million in 1995. During her nearly twenty years in banking, Ms. Mihitsch
has had responsibility for back office checking system operations, IRA and
certificate processing, staff training for new online computer operations,
budgeting and strategic planning, regulatory reporting and financial accounting
and reporting. As Treasurer of the Company, she is the Company's principal
accounting and principal financial officer. Ms. Mihitsch was previously
President and Treasurer of Quota International of Lake County, a women's service
organization.

NONEMPLOYEE DIRECTORS

JAMES V. FRYAN -- A director since April 1995, Mr. Fryan is the owner and
operator of the "Goodtime III" dinner and special occasion cruise ship operating
out of Cleveland, Ohio. Begun by Mr. Fryan with family members in 1957, the
"Goodtime" cruise ship business has been solely owned by Mr. Fryan since 1984.
The "Goodtime III" cruise ship has been in operation since 1990.

GEORGE C. LOTT -- Following an approximately 35-year career in banking, Mr.
Lott retired in 1995 as Executive Vice President of the Bank. He had served as a
director, and since 1987 as Senior Executive Vice President, of Great Lakes
Commerce Bank, which the Bank acquired by Merger. Mr. Lott has been a director
since that time. Mr. Lott acts as internal auditor of the Bank on a consulting
basis.

GEORGE X. MECHIR -- Mr. Mechir is the retired President and Chief Executive
Officer of Great Lakes Commerce Bank. Mr. Mechir had also been a director of
Great Lakes Commerce Bank prior to the Merger. Mr. Mechir's career in banking
began in 1962 with Great Lakes Commerce Bank. Mr. Mechir is also an attorney.

MARIAN ROSE NATHAN -- Ms. Nathan is an attorney in private practice in
Mentor, Ohio. Along with certain other directors, Ms. Nathan is an investor in
Turkey Vulture Fund XIII, Ltd., an investment fund managed by Richard M.
Osborne.

JEROME T. OSBORNE, SR. -- Mr. Jerome T. Osborne, Sr. is the founder and
President of Osborne, Inc., a concrete company headquartered in Mentor, Ohio.
Richard M. Osborne, Vice Chairman, is Jerome T. Osborne's son. Mr. Jerome T.
Osborne, Sr. was a founder of Mentor Savings Bank, which was acquired by Chase
Manhattan Corporation in 1985. He had also been Chairman of the Board of State
Bank & Trust Company in Mentor, Ohio which was acquired by BancOhio National
Bank (now part of National City Corporation) in 1982. Although Jerome T.
Osborne, Sr. is Chairman of the Board and Richard M. Osborne is Vice Chairman of
the Board, neither of them participates in day-to-day management of the Company,
and neither of them serves as an officer of the Company or receives any
compensation therefor. See "Certain Relationships and Related Party
Transactions -- Acquisition of Great Lakes Commerce Bank."

RICHARD M. OSBORNE (Vice Chairman) -- Mr. Richard M. Osborne is President
and Chief Executive Officer of OsAir, Inc., Mentor, Ohio ("OsAir"), a company he
founded in 1963. OsAir is a manufacturer of industrial gases for pipeline
delivery and a real property developer. Jerome T. Osborne, Sr. is Richard M.
Osborne's father. Richard M. Osborne has been active in Ohio banking since 1977,
serving as a director of or having a substantial stake in other bank and thrift
institutions that have since been acquired by other institutions. From 1977 to
1981, Richard M. Osborne served as a director of State Bank & Trust Company in
Mentor, which was sold to BancOhio National Bank in 1982. He thereafter served
as Consulting Director of

43
<PAGE> 45

BancOhio National Bank, until 1984. From 1985 to 1990, Richard M. Osborne was a
principal shareholder of Peoples Savings Bank in Northeast Ohio, serving as
Chairman at the time of its acquisition by First Bancorporation of Ohio (now
FirstMerit Corporation) in 1990. At the time of its acquisition, Peoples Savings
Bank had total assets of approximately $300 million.

Richard M. Osborne has been active in community affairs in Lake County for
many years. In 1987, he constructed and donated the Thomas J. Osborne Library at
the Phillips-Osborne School in Painesville, Ohio. In 1991, his involvement was
instrumental in the addition of a sports facility at Lake Catholic High School.
Richard M. Osborne is a member of the Independent Oxygen Manufacturers
Association and the National Welders' Supply Association.

Through The Richard M. Osborne Trust, Liberty Self-Stor, Ltd., a
self-storage firm located in Mentor, Ohio and controlled by Richard M. Osborne,
and Turkey Vulture Fund XIII, Ltd., an affiliated investment fund managed by
Richard M. Osborne (and of which he is the majority owner), Richard M. Osborne
is an active investor in many other companies, including real estate investment
trusts, nursing home facilities, an insurance firm and, from time to time, small
and mid-sized bank and thrift institutions in Ohio and elsewhere, occasionally
acquiring substantial stakes in such companies. In connection with investments
undertaken by one or more of The Richard M. Osborne Trust, Liberty Self-Stor,
Ltd. and Turkey Vulture Fund XIII, Ltd., Mr. Osborne has become a trustee of
Meridian Point Realty Trust VIII Co. and a director of TIS Mortgage Investment
Company, real estate investment trusts located in San Francisco, California, and
a director and Chairman of the Board of Pacific Gateway Properties, Inc., a real
estate company also in San Francisco. Mr. Osborne is also a director nominee of
Central Reserve Life Corporation, an insurance firm located in Strongsville,
Ohio. Each of Meridian Point Realty Trust VIII Co., TIS Mortgage Investment
Company, Pacific Gateway Properties, Inc. and Central Reserve Life Corporation
has securities registered under the Securities Exchange Act of 1934. OsAir, The
Richard M. Osborne Trust, Liberty Self-Stor, Ltd., Turkey Vulture Fund XIII,
Ltd. and certain other business interests of Mr. Osborne conduct business from
space leased from the Bank adjacent to the Bank's main office. See "Certain
Relationships and Related Party Transactions."

Although Jerome T. Osborne, Sr. is Chairman of the Board and Richard M.
Osborne is Vice Chairman of the Board, neither of them participates in
day-to-day management of the Company, and neither of them serves as an officer
of the Company or receives any compensation therefor. See "Certain Relationships
and Related Party Transactions -Acquisition of Great Lakes Commerce Bank."

EDWARD R. PIKE -- Mr. Pike, Jr. has been in the automobile dealership
industry for 27 years, and for the last ten years he has been President of Ed
Pike Lincoln-Mercury, an automobile dealership located in Mentor, Ohio.

THOMAS J. SMITH -- Mr. Smith is Chief Operations Manager of Liberty
Self-Stor, Ltd. Mr. Smith has more than 20 years of direct banking experience.
From July of 1994 to May of 1995, Mr. Smith served as Treasurer of the Bank.
From 1988 to October of 1992 Mr. Smith was employed by Peoples Savings Bank of
Ashtabula, Ohio, most recently as Senior Vice President and Chief Financial
Officer. From 1972 to 1988 Mr. Smith was employed by AmeriTrust Company,
National Association (now part of Key Corp., Inc.) in various accounting and
corporate development positions. Mr. Smith is a Certified Public Accountant and
was employed by Peat Marwick (now KPMG Peat Marwick LLP) from 1968 to 1972.

JOSEPH T. SVETE -- Mr. Svete is an attorney in private practice and
principal of the law firm Svete, McGee and Carrabine Co., LPA in Chardon, Ohio.
Along with certain other directors, Mr. Svete is an investor in Turkey Vulture
Fund XIII, Ltd., an investment fund managed by Richard M. Osborne.

THOMAS E. WHEELER -- Thomas E. Wheeler has been President of Component
Repair Technologies, Inc., an aircraft engine company, since it was founded in
1985. Along with certain other directors, Mr. Wheeler is an investor in Turkey
Vulture Fund XIII, Ltd., an investment fund managed by Richard M. Osborne.

44
<PAGE> 46

REMUNERATION OF DIRECTORS

Directors are not separately compensated for their service as Company
directors in addition to compensation they receive for their service as Bank
directors. In 1997, directors other than Richard T. Flenner, Jr., Thomas J.
Smith and Richard M. Osborne, who received no compensation for their service as
directors, received the sum of $150 for each meeting of the Board of Directors
of the Bank attended. See "Certain Relationships and Related Party Transactions"
for further information concerning limits on compensation payable to Messrs.
Jerome T. and Richard M. Osborne. The Company recently adopted a stock option
plan pursuant to which an option to acquire 200 shares of Common Stock was
granted to each of the Company's ten non-employee directors. The exercise price
of such options is $13.00 per share. See "Stock Option Plan."

EXECUTIVE COMPENSATION

Since formation of the Company and completion of the holding company
reorganization of the Bank in September 1997, none of the Company's executive
officers has received any remuneration from the Company in addition to
compensation received for service to the Bank. Because the Company's business is
expected to consist for the foreseeable future of acting merely as the holding
company for the Bank, it is expected that no separate compensation will be paid
to officers of the Company in addition to compensation paid to them by the Bank.
However, the Company may determine that separate compensation is appropriate in
the future. At the present time, the Company does not intend to employ any
persons other than its present management. Should the Company acquire other
businesses in the future, the Company may have officers and employees who are
not also officers and employees of and who are not separately compensated by the
Bank.

The following tables show information with respect to the annual
compensation for services in all capacities to the Bank for the fiscal years
ended December 31, 1997, 1996, and 1995 for the President and Chief Executive
Officer of the Bank. No officer of the Bank received compensation in excess of
$100,000 during 1997. None of the executive officers serves pursuant to an
employment agreement.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS
ANNUAL COMPENSATION ----------------------- PAYOUTS
-------------------------------- ($) (#) -------
($) RESTRICTED SECURITIES ($) ($)
NAME AND ($) ($) OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
- -------------------------- ---- --------- ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard T. Flenner, Jr., 1997 $68,000 0 0 0 0 0 0
President and 1996 $60,000 0 0 0 0 0 0
Chief Executive 1995 $55,000 0 0 0 0 0 0
Officer
</TABLE>

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

(1) Includes amounts deferred at the election of the named executive officers
pursuant to the 401(k) Plan of the Bank.

PENSION AND RETIREMENT PLAN INFORMATION

The Bank's retirement plan for officers and employees provides defined
benefits based upon years of service, salary and other measures. The plan is a
noncontributory defined benefit pension plan covering all officers and
employees, who become eligible for entry in the plan upon the basis of age and
one year of service. Retirement benefits under the provisions of the Bank's
retirement plan are computed by a formula that takes into account such factors
as compensation, years of service and the Social Security taxable wage base.
Normal retirement is at 65 years of age. The Bank is in the process of
terminating the defined benefit retirement plan. Refer to Note 8 of Notes to
Consolidated Financial Statements for additional information concerning the
noncontributory defined benefit pension plan.

45
<PAGE> 47

In late 1997 the Bank adopted a retirement plan under Internal Revenue Code
of 1986 Section 401(k). The "GLB 401(k) Salary Reduction Plan and Trust"
provides that participants may elect to defer up to 15% of their salary for
investment in various accounts designated by the participant. Deferred salary is
invested for the account of plan participants by the administrator of the 401(k)
plan. All employees over age 21 who have at least one year of service (of 1,000
hours or more) are participants in the 401(k), although each participant elects
whether to defer salary under the 401(k) plan. The Company may make
discretionary matching contributions of up to 6% of a participant's salary to
the accounts of those participants who defer salary under the 401(k) plan. The
Company's matching contributions will vest ratably over a five-year period,
becoming fully vested upon death or disability of the participant.

STOCK OPTION PLAN

Shareholders of the Company adopted the 1998 Stock Option and Incentive
Plan (the "Plan" or the "Stock Option Plan") at the 1998 Annual Meeting of
Shareholders. 28,000 shares of Common Stock have been reserved for issuance
under the Stock Option Plan. In addition, the Stock Option Plan will include any
shares surrendered to the Company in payment of the exercise price of options or
stock appreciation rights issued under the Stock Option Plan.

The purpose of the Stock Option Plan is to enhance and encourage the
recruitment and retention of those individuals on whom the continued success of
the Company depends; to provide the opportunity for directors, officers and
employees to realize capital appreciation in exchange for their contributions to
the Company and the Bank; and to more thoroughly align the interests of
directors, officers and employees with the interests of shareholders generally.
Options granted under the Stock Option Plan will be granted only to persons
affiliated with the Company as directors, officers or employees.

The Stock Option Plan provides for awards in the form of stock options,
stock appreciation rights ("SARs"), other securities and property and restricted
stock. Each award will be made on such terms and conditions as the committee
administering the Stock Option Plan may determine. Generally, no award or any
right or interest therein is assignable or transferable except under certain
limited circumstances set forth in the Plan. The Stock Option Plan is
administered by the Stock Option Committee of the Board of Directors of the
Company. In granting awards under the Stock Option Plan, the Stock Option
Committee considers position and years of service, value of the participant's
services to the Company and its subsidiaries and the responsibilities of such
individuals as directors, officers and employees.

Options granted under the Stock Option Plan vest and become exercisable in
equal annual installments over a period of five years, beginning with the first
anniversary of the date of grant. The term of stock options will not exceed 10
years from the date of grant. The exercise price for the purchase of shares
subject to a stock option may not be less than 100% of the fair market value of
the shares covered by the option on the date of grant. No Incentive Stock Option
(meaning a stock option qualified under Section 422 of the Internal Revenue Code
of 1986) may be granted to any individual who, at the time such Incentive Stock
Option is granted, owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company unless (i) the
exercise price of the Incentive Stock Option is at least 110 percent of the
Common Stock's fair market value per share at the date of grant and (ii) the
Incentive Stock Option is not exercisable after the expiration of five years
from the date of grant. The aggregate fair market value (determined as of the
time any Incentive Stock Option is granted) of the shares of Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by a
recipient of an Incentive Stock Option award in any calendar year may not exceed
$100,000.

The Stock Option Plan provides for the grant of a stock option to acquire
200 shares of Common Stock to each of the Company's non-employee directors. The
grant of these options to the Company's ten non-employee and non-officer
directors became effective upon shareholder approval of the Plan on February 17,
1998. The options are exercisable at the fair value of the shares of Common
Stock as of such date, as determined by the Stock Option Committee. Persons who
are not employees of the Company who become directors hereafter would receive a
similar grant of an option to acquire 200 shares (as the number of shares may
hereafter be adjusted to take account of stock splits and similar transactions
that represent an increase in

46
<PAGE> 48

outstanding shares or conversion or exchange of shares), but no director will
receive more than one grant of stock options pursuant to this provision of the
Plan. Except for the grant of the foregoing stock options to non-employee
directors, no individuals have been granted awards pursuant to the Stock Option
Plan.

The Stock Option Committee may grant restricted stock, subject to such
restrictions as the Stock Option Committee may impose. Although no shares of
restricted stock have been awarded under the Stock Option Plan as of the date
hereof, the holder(s) of restricted stock may have all of the rights of a
shareholder, including the right to receive dividends and the right to vote the
shares. Unless otherwise determined by the Stock Option Committee, all unvested
shares of restricted stock are forfeited upon termination of service of the
recipient. The Stock Option Committee may, in its discretion, accelerate the
time at which any or all restrictions will lapse, or may remove any or all of
the restrictions. Restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise as the Stock Option Committee
may deem appropriate. The Stock Option Committee may also grant performance
awards consisting of cash, stock, other securities or property to participants
under the Stock Option Plan based on the achievement of certain performance
goals during specified periods of time.

In the case of any merger, consolidation or combination of the Company in
which the Company is not the continuing company or its outstanding shares are
converted into or exchanged for different securities, cash or property, or any
combination thereof, any participant to whom a stock option or SAR has been
granted will have the right upon exercise of the option or SAR to an amount
equal to the excess of the market value on the date of exercise of the
consideration receivable in the merger, consolidation or combination with
respect to the shares covered or represented by the stock option or SAR over the
exercise price of the option or SAR, multiplied by the number of shares with
respect to which the option or SAR has been exercised. The restricted period
with respect to an award of restricted stock will lapse, and the stock will
become fully vested, after a change in control of the Company. A change in
control will be deemed to occur when (i) a person or group becomes the
beneficial owner of shares of the Company representing 25% or more of the total
number of votes which may be cast for the election of the Board of Directors of
the Company (other than any person or group owning 25% or more of the Common
Stock as of the date of adoption of the Plan), (ii) in connection with any
tender or exchange offer (other than an offer by the Company), merger or other
business combination, sale of assets or contested election, or combination of
the foregoing, the persons who are Directors of the Company cease to be a
majority of the Board of Directors, or (iii) shareholders of the Company approve
a transaction pursuant to which the Company will cease to be an independent
company or pursuant to which substantially all of its assets will be sold. In
addition, unless the Stock Option Committee provides otherwise, in the event of
a tender or exchange offer (other than an offer made by the Company) or if the
event specified in clause (iii) above occurs, all outstanding stock options and
SARs not fully exercisable will become exercisable in full.

47
<PAGE> 49

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

ACQUISITION OF GREAT LAKES COMMERCE BANK

The acquisition of Great Lakes Commerce Bank by the Bank was approved by
the Division and by the FDIC. As is typically the case, the approvals were
conditioned on satisfaction of certain conditions by the Bank prior to the
acquisition. In addition, FDIC approval was conditioned on the satisfaction of
certain non-standard conditions that were applicable both prior to the
acquisition of Great Lakes Commerce Bank and following completion of the
acquisition.

The non-standard conditions contained in the FDIC's June 14, 1994 approval
provide that neither Mr. Jerome T. Osborne, Sr. nor Mr. Richard M. Osborne may
(i) act as an executive officer or operating officer of the Bank, (ii) assume a
title normally associated with executive or operating officer status, or (iii)
receive compensation from the Bank (other than fees for service on the board of
directors, to the same extent other directors receive such fees, and except that
the Bank may pay to the chairman of the board fees for board service of up to
$10,000 per year over that paid to other directors). In addition, the
non-standard conditions provide that the Bank may not extend to Richard M.
Osborne or Jerome T. Osborne, Sr., to all other Osborne family members, or to
any financial interest of an Osborne family member, direct or indirect credit
representing, in the aggregate, more than 25.0% of Tier 1 capital.

Mr. Richard M. Osborne receives no fees for his Board service, while Mr.
Jerome T. Osborne, Sr. receives fees for Board service on the same basis as
other directors. See "Remuneration of Directors." Neither Jerome T. Osborne, Sr.
nor Richard M. Osborne serves as an executive or operating officer or has a
title as such. Furthermore, as of February 28, 1998, aggregate loans to Richard
M. Osborne, Jerome T. Osborne, Sr., all other Osborne family members and
financial interests of Osborne family members were within the limits stated in
the non-standard conditions. The Company believes that it is in compliance with
the terms of the non-standard conditions.

DEPOSIT AND LENDING RELATIONSHIPS

The Company has deposit and lending relationships with certain of its
directors, officers and their affiliates. All loans to directors, officers and
their affiliates were made in the ordinary course of business, on substantially
the same terms (including interest rates and collateral) as those prevailing at
the time for comparable transactions with other persons, and did not involve
more than the normal risk of collectibility or present other unfavorable
features. Refer to Note 10 of Notes to Consolidated Financial Statements.

The following table provides information concerning extensions of credit by
the Company to Messrs. Jerome T. and Richard M. Osborne, members of their family
and their related interests. To the extent their indebtedness to the Company
exceeded $60,000 at any time during 1997, the following table also provides
information concerning indebtedness owed or owing to the Company by (i)
directors and executive officers, (ii) members of their immediate family
(meaning any of the following: spouse, parents, children, siblings, mothers and
fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law),
(iii) any corporation or organization of which a director or executive officer
directly or indirectly beneficially owns ten percent (10%) or more of the
outstanding equity securities and (iv) any trust or other estate in which any
director or executive officer has a substantial beneficial interest or as to
which such person serves as trustee or in a similar capacity.

48
<PAGE> 50

<TABLE>
<CAPTION>
LARGEST
AMOUNT AMOUNT
INTEREST BALANCE AT OUTSTANDING OUTSTANDING AS OF
NAME (BORROWER) TYPE OF LOAN RATE(1) DECEMBER 31, 1997 IN 1997 FEBRUARY 28, 1998
--------------- -------------------------- -------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Jerome T. Osborne, Sr. Letter of Credit(2) 8.50% $300,000 $300,000 $300,000
Director and Chairman of the Letter of Credit(3) 8.50% $ 0 $250,000 $ 0
Board
Richard M. Osborne Commercial Term Loan, 11.00% $ 17,017 $ 17,343 $ 17,017
Director and Vice Chairman Richard M. Osborne
of the Board Personal Guarantee
2020 Train Ave., Inc. Commercial Term Loan 9.50% $ 0 $ 99,787 $ 0
(affiliate of Richard M. Commercial Line of Credit
Osborne) (closed at 12/31/97) 9.50% $ 0 $ 30,000 $ 0
Royce Properties Commercial Mortgage 9.50% $ 0 $510,240 $ 0
(controlled by Michael
Osborne, brother of Richard
M. Osborne, Vice
Chairman)
Richard M. Osborne, Jr. Home Equity Line of Credit 9.00% $ 0 $ 29,688 $ 0
(son of Richard M. Osborne, Residential Mortgage 7.125% $247,078 $248,082 $246,668
Vice Chairman) Home Equity Line of Credit 9.00% $ 42,495 $ 42,500 $ 42,127
Beth Osborne Residential Mortgage 8.125% $ 99,550 $100,896 $ 99,321
(daughter of Richard M. Residential Mortgage 6.25% $115,134 $115,500 $ 0
Osborne, Vice Chairman) Residential Mortgage 7.625% $185,000 $185,000 $185,000
Cynthia Wollant Construction Loan-- 5.50% $305,000 $305,000 $294,449
(granddaughter of Jerome T. Residential Mortgage(4)
Osborne, Sr., Chairman)
Joseph T. Svete Residential Mortgage 7.75% --(5) $300,000 --(5)
</TABLE>

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

(1) The loans shown in the table bear interest at rates that may be fixed,
variable or adjustable. The rates shown in the table represent the rates
applicable at February 28, 1998, or, for loans with no amount outstanding as
of February 28, 1998, the most recent applicable interest rate.

(2) Letter of Credit outstanding with no funds drawn.

(3) Letter of Credit with no funds drawn. This Letter of Credit has expired.

(4) Interest rate reflects special promotion offered to all construction loan
customers. Interest rate adjusts to market rate at completion of
construction.

(5) Loan sold by the Bank to an unaffiliated institution in 1997.

None of the foregoing loans is or has been nonperforming, nor have any of
such loans been restructured or included among classified assets. All such loans
are current and all required payments thereon have been received by the Company
as and when due.

LEASES FOR BANK PROPERTY

The Bank leases its new branch property at 50 South Park Place,
Painesville, Ohio, from Richard M. Osborne, as Trustee of the Richard M. Osborne
Trust. Pursuant to an Indenture of Lease dated March 1, 1998 by and between Mr.
Osborne, as trustee, and the Bank, the annual base rent will be $32,400 ($12 per
square foot), commencing as of the date construction of premises is complete and
the property is ready for occupancy. The Bank will also be responsible for real
estate taxes, assessments and insurance on the facility. The lease has a term of
ten years. The lease is renewable for an additional ten-year term with annual
rent increased by ten percent (10%) from the original rental term. It is
currently estimated that the property will be ready for occupancy by the end of
the third quarter of 1998. The Bank is not responsible for the costs of
construction, nor has the Bank provided construction or any other financing for
the project. The Bank obtained an independent appraisal supporting the fairness
of the lease terms. See "Business -- Properties."

The Bank also leases its branch property at 29933 Euclid Avenue, Wickliffe,
Ohio, from Richard M. Osborne. Dated May 1, 1997, the Indenture of Lease has a
term of ten years, with rent at $12 per square foot, payable in monthly
installments. The Bank is also responsible for real estate taxes, assessments
and insurance

49
<PAGE> 51

on the facility. The lease is renewable for an additional ten-year term, with
annual rent increased by ten percent (10%) from the original annual rate. The
Bank has not obtained an independent appraisal supporting the fairness of the
lease terms. Nevertheless, in the opinion of management, the terms and
conditions of the lease are at least as favorable to the Bank as those that
would apply in a lease with an unrelated third party. See
"Business -- Properties."

The Bank received approval on April 21, 1995 from the FDIC for relocation
of a branch to 1522 Mentor Avenue in Painesville, Ohio. At the time of the
relocation, the Bank leased the new facility from Richard M. Osborne. Mr.
Osborne subsequently sold the property to an unrelated third party, from whom
the Bank now leases the facility. A condition of the FDIC's April 21, 1995
approval was that the Bank maintain a Tier 1 leverage capital ratio of at least
8% until calendar year overhead expenses are reduced to less than 4.5% of
average assets. For the year ended December 31, 1997, overhead expenses were
3.9% of average assets, and the Company's Tier 1 leverage capital ratio was
10.12%.

Pursuant to an Indenture of Lease dated March 1, 1998, the Bank leases
approximately 5,000 square feet of space at its main office facility to OsAir, a
company controlled by Richard M. Osborne, for $5,000 monthly. The Bank is
responsible for real estate taxes and assessments. The term of the lease is five
years. The Bank believes that the terms and conditions of the lease with OsAir
are consistent with and at least as favorable to the Bank as the rental terms
that would apply to a lease with an unaffiliated third party.

FUTURE TRANSACTIONS

Although there currently are no such other transactions pending or
contemplated, it is the policy of the Company that all transactions with
directors, officers or holders of 5% or more of the outstanding shares of Common
Stock be on terms at least as favorable to the Company as could otherwise be
obtained from third parties.

50
<PAGE> 52

PRINCIPAL SHAREHOLDERS

The following table indicates the beneficial ownership of Common Stock as
of April 24, 1998, prior to the Offering, and as adjusted to reflect the sale of
1,300,000 shares of Common Stock by the Company in the Offering, (i) by
directors and executive officers of the Company, (ii) by each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock (showing his address as well), and (iii) by all directors and
executive officers of the Company as a group:

<TABLE>
<CAPTION>
PRIOR TO OFFERING AFTER OFFERING
---------------------------- ---------------------------------
NUMBER OF SHARES OF NUMBER OF
SHARES OF COMMON SHARES OF
COMMON PERCENT STOCK BEING COMMON PERCENT OF
STOCK OWNED OF COMMON PURCHASED IN STOCK OWNED COMMON
NAME BENEFICIALLY(1) STOCK(2) THE OFFERING(3) BENEFICIALLY(1)(3) STOCK(2)(3)
---- ---------------- --------- --------------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Richard T. Flenner, Jr......... 600 (4) 300 900 (4)
James V. Fryan................. 30,000 4.70% 0 30,000 1.55%
George C. Lott................. 200 (4) 100 300 (4)
George X. Mechir............... 200 (4) 0 200 (4)
Andrew L. Meinhold............. 0 -- 200 200 (4)
Cheryl Jean Mihitsch........... 0 -- 300 300 (4)
Marian Rose Nathan............. 2,000 (4) 1,100 3,100 (4)
Jerome T. Osborne, Sr.......... 135,750 21.25% 30,769 166,519 8.59%
7954 Reynolds Road
Mentor, Ohio 44060
Richard M. Osborne............. 176,150(5) 27.57% 153,846 329,996 17.02%
7001 Center Street
Mentor, Ohio 44060
Edward R. Pike................. 45,000(6) 7.04% 0 45,000 2.32%
Thomas J. Smith................ 200 (4) 0 200 (4)
Joseph T. Svete................ 15,000(7) 2.35% 5,000(7) 20,000 1.03%
Thomas E. Wheeler.............. 30,000 4.70% 0 30,000 1.55%
All directors and executive
officers as a group (13
persons)..................... 435,100 68.10% 191,615 626,715 32.32%
</TABLE>

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

(1) For purposes of the above table, a person is considered to "beneficially
own" any shares with respect to which he or she exercises sole or shared
voting or investment power or of which he or she has the right to acquire
such beneficial ownership within 60 days. Unless otherwise indicated, voting
power and investment power are exercised solely by the person named above or
shared with members of his or her household.

(2) Shares deemed to be outstanding for purposes of computing "Percent of Common
Stock" are calculated on the basis of the total number of outstanding shares
plus the number of shares a person has the right to acquire within 60 days.

(3) Directors and officers have indicated nonbinding expressions of interest in
acquiring the number of shares set forth opposite their names in the table.
Such indications of interest represent their present intentions only, and do
not represent any obligation to purchase the indicated shares. In the event
that directors and officers do not acquire any additional shares through the
Offering, Percent of Common Stock for all directors and executive officers
as a group would be 22.44%.

(4) Less than one percent.

(5) Held by Mr. Richard M. Osborne through the Richard M. Osborne Trust.

(6) Includes 37,500 shares over which Mr. Pike has the right to exercise voting
and investment power pursuant to a Limited Durable Power of Attorney granted
to him on November 3, 1994 by each of his five brothers and sisters, each of
whom owns 7,500 shares. The grantors of the Limited Durable Powers of
Attorney retain the right to take any action Edward R. Pike as attorney in
fact is authorized to take under the Limited Durable Power of Attorney.

(7) Mr. Svete has sole voting and investment power with respect to 200 shares
and he shares voting and investment power with respect to 14,800 shares with
two other trustees of the Svete, McGee and Carrabine Co., LPA 401(k) Profit
Sharing Plan. The additional 5,000 shares are being purchased for Mr.
Svete's personal account.

51
<PAGE> 53

SUPERVISION AND REGULATION

To the extent that the following information describes statutory or
regulatory provisions, it is qualified in its entirety by reference to the
particular statutory and regulatory provisions. Any change in applicable law may
have a material effect on the business and prospects of the Company and the
Bank. The operations of the Bank may be affected by legislative changes and by
the policies of various regulatory authorities. See "Certain Relationships and
Related Party Transactions -- Acquisition of Great Lakes Commerce Bank" for a
discussion of certain non-standard conditions imposed on the Bank in connection
with regulatory approvals obtained in the past.

GENERAL

The Company is a bank holding company within the meaning of the Bank
Holding Company ("BHC") Act. As such, the Company is subject to regulation,
supervision and examination by the Board of Governors of the Federal Reserve
System (the "FRB"), acting primarily through officials of the Federal Reserve
Bank of Cleveland. The Company is required to file annual reports with the FRB
and to provide the FRB such additional information as the FRB may require.

The Bank is an Ohio-chartered commercial bank. The deposits of the Bank are
insured to a maximum of $100,000 per depositor through the Bank Insurance Fund
("BIF") administered by the FDIC. As a state-chartered, non-member bank, the
Bank is primarily regulated by the FDIC and the Division.

The Company and the Bank are extensively regulated under federal and state
law. These federal and state laws are intended to protect depositors, not
shareholders. Federal and state laws applicable to bank holding companies and
banks regulate, among other things, the range of permissible business
activities, investments, reserves against deposits, capital levels, lending
activities and practices, the nature and amount of collateral for loans,
establishment of branches, mergers, dividends and a variety of other important
matters.

The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") expanded significantly the authority of federal agencies to regulate
the activities of federal and state banks and their holding companies. The FRB
and the FDIC have extensive authority to prevent and to remedy unsafe and
unsound practices and violations of applicable laws by depository institutions
and their holding companies. The agencies may assess civil money penalties,
issue cease-and-desist or removal orders, seek injunctions, and publicly
disclose such actions. In addition, the Superintendent of the Division possesses
enforcement powers in order to address violations of Ohio banking law by
Ohio-chartered banks.

BANK HOLDING COMPANY REGULATION

The BHC Act requires every bank holding company to obtain the prior
approval of the FRB before (i) directly or indirectly acquiring ownership or
control of any voting shares of another bank or bank holding company if, after
such acquisition, it would own or control more than 5% of such shares (unless it
already owns or controls the majority of such shares); (ii) acquiring all or
substantially all of the assets of another bank or bank holding company; or
(iii) merging or consolidating with another bank holding company. The FRB will
not approve any acquisition, merger or consolidation that would have a
substantially anticompetitive result, unless the anticompetitive effects of the
proposed transaction are clearly outweighed by a greater public interest in
meeting the convenience and needs of the community to be served. The FRB also
considers capital adequacy and other financial and managerial factors in
reviewing acquisitions or mergers.

With certain exceptions, the BHC Act also prohibits a bank holding company
from acquiring or retaining direct or indirect ownership or control of more than
5% of the voting shares of any company that is not a bank or holding company, or
from engaging directly or indirectly in activities other than those of banking,
managing or controlling banks, or providing services for its subsidiaries. The
principal exceptions to these prohibitions involve certain non-bank activities
that, by statute or by FRB regulation or order, have been identified as
activities closely related to the business of banking or of managing or
controlling banks. In making this determination, the FRB considers whether the
performance of such activities by a bank holding company can be expected to
produce benefits to the public, such as greater convenience, increased
competition or gains in efficiency in resources, that can be expected to
outweigh the risks of possible adverse effects such as decreased or unfair
competition, conflicts of interest or unsound banking practices.

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Some of the activities determined by FRB regulation to be incidental to the
business of banking are: making or servicing loans or certain types of leases;
engaging in certain insurance and discount brokerage activities; performing
certain data processing services; acting in certain circumstances as a fiduciary
or investment or financial advisor; and making investments in certain
corporations or projects designed primarily to promote community welfare. The
Company currently has no plans to engage in these activities.

It is FRB policy that bank holding companies serve as a source of strength
for their subsidiary banking institutions. The FRB considers the adequacy of a
bank holding company's capital on essentially the same risk-adjusted basis as
capital adequacy is determined by the FDIC at the bank subsidiary level. In the
case of a bank holding company with less than $150 million in total consolidated
assets, the FRB's regulations provide that the capital adequacy requirements
will generally be applied on a bank-only (rather than consolidated) basis. In
general, bank holding companies are required to maintain a minimum ratio of
total capital to risk-weighted assets of 8% and Tier 1 capital (consisting
principally of shareholders' equity) of at least 4%. Bank holding companies are
also subject to a leverage ratio requirement. The minimum required leverage
ratio for the highest rated companies is 3%. The minimum required leverage ratio
for all other bank holding companies is 4% or higher. See "Capital Adequacy and
Prompt Corrective Action."

As a bank holding company subject to regulation by the FRB, the Company
must comply with policy statements issued by the FRB. The FRB's policy statement
governing payment of cash dividends provides that a bank holding company should
not pay cash dividends on common stock unless (i) the organization's net income
for the past year is sufficient to fully fund the dividends and (ii) the
prospective rate of earnings retention appears consistent with the
organization's capital needs, asset quality and overall financial condition. For
small bank holding companies (those with less than $150 million in assets), the
FRB's position is that such companies should not pay dividends so long as they
have a debt-to-equity ratio of 1:1 or greater.

Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on extensions of credit to the
bank holding company or its subsidiaries, on investments in their securities and
on the use of their securities as collateral for loans to any borrower. These
regulations and restrictions may limit the Company's ability to obtain funds
from the Bank for its cash needs, including funds for payment of dividends,
interest and operating expenses. Further, under the BHC Act and certain
regulations of the FRB, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit, lease or sale of property or furnishing of services. For
example, the Bank generally may not require a customer to obtain other services
from the Bank or the Company as a condition to an extension of credit to the
customer, and may not require that customer to promise not to obtain other
services from a competitor.

Prior approval of the Superintendent of the Division is required in order
to acquire control of an Ohio-chartered bank. Banks and bank holding companies
located in Ohio or any other state are authorized under Ohio law to acquire an
Ohio-chartered bank, provided that, after the acquisition, the acquiring bank or
bank holding company does not control (i) more than 10% of total bank, savings
bank and savings association deposits nationwide and (ii) more than 30% of total
bank, savings bank and savings association deposits in Ohio. The Superintendent
of the Division may nevertheless approve an acquisition resulting in the
acquiring bank or bank holding company controlling more than 30% of total bank,
savings bank and savings association deposits in Ohio if the Superintendent
determines that the anticompetitive effects of the acquisition are clearly
outweighed in the public interest by the probable effect of the transaction. As
of December 31, 1997, the Company's deposits represented less than 1% of total
bank, savings bank and savings association deposits in Ohio.

FEDERAL AND STATE BANK REGULATION GENERALLY

As a federally insured, state-chartered bank that is not a member of the
Federal Reserve System, the Bank is subject to the supervision and regulation of
the Division and the FDIC. These agencies may prohibit the Bank from engaging in
activities believed by the Division or the FDIC to constitute unsafe and unsound
banking practices.

In the Bank's routine banking operations, the Bank is subject to detailed,
complex and sometimes overlapping federal and state statutes and regulations.
These include but are not limited to state usury and

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consumer credit laws, the Federal Truth-in-Lending Act and Regulation Z, the
Federal Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting
Act, the Truth in Savings Act and the Community Reinvestment Act.

The Bank is subject to FRB regulations requiring depository institutions to
maintain non-interest-earning reserves against their transaction accounts
(principally NOW and regular checking accounts). Changed periodically by the FRB
as part of its monetary control function, the FRB's reserve regulations
currently require three percent(3%) reserves on the first $47.8 million of
transaction accounts and $1.434 million plus ten percent(10%) on the remainder.
The first $4.7 million of otherwise reservable balances are exempted from the
reserve requirements. The Bank is in compliance with the foregoing requirement.

Transactions with and Loans to Affiliates. Although the Bank is not a
member bank of the Federal Reserve System, under the Federal Deposit Insurance
Act the Bank is required to comply with Sections 23A and 23B of the Federal
Reserve Act (pertaining to transactions with affiliates) in the same manner and
to the same extent as member banks. An affiliate of a bank is any company or
entity that controls, is controlled by or is under common control with the bank.
Generally, Sections 23A and 23B of the Federal Reserve Act (i) limit the extent
to which a bank or its subsidiaries may engage in "covered transactions" with
any one affiliate to an amount equal to ten percent (10%) of such institution's
capital and surplus, limiting the aggregate of covered transactions with all
affiliates to twenty percent (20%) of capital and surplus, and (ii) require that
all such transactions be on terms substantially the same, or at least as
favorable to the institution or subsidiary, as those provided to a
non-affiliate. The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee and other similar types of
transactions.

The Bank's authority to extend credit to executive officers, directors and
greater than 10% shareholders, as well as entities such persons control, is
subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O
promulgated thereunder by the FRB. Among other things, these regulations require
such loans to be made on terms substantially similar to those offered to
unaffiliated individuals, place limits on the amount of loans a bank may make to
such persons based, in part, on the bank's capital position, and require certain
approval procedures to be followed. Under Section 22(h), loans to an executive
officer, director, or greater than 10% shareholder (a "principal shareholder")
of a bank, and certain affiliated entities of either, together with all other
outstanding loans to such persons and affiliated entities, may not exceed the
bank's loans-to-one-borrower limit, which in general terms is 15% of tangible
capital but can be higher in certain circumstances. Section 22(h) also prohibits
loans in excess of the greater of 5% of capital or $25,000 to directors,
executive officers and principal shareholders, and their respective affiliates,
unless the loans are approved in advance by a majority of the board of
directors, with any "interested" director not participating in the voting.
Further, pursuant to Section 22(h) the FRB requires that loans to directors,
executive officers and principal shareholders be made on terms substantially the
same as those offered in comparable transactions to other persons. A violation
of these restrictions may result in the assessment of substantial civil monetary
penalties on the Bank or any officer, director, employee, agent or other person
participating in the conduct of the affairs of the Bank, the imposition of a
cease-and-desist order, and other regulatory sanctions. The Bank adopted a
policy to ensure compliance with Regulation O and affiliate transactions
restrictions in January 1997.

Deposit Insurance. Bank customers' deposits are insured to a maximum of
$100,000 through the Bank Insurance Fund ("BIF") administered by the FDIC. The
Bank is required to pay semiannual deposit insurance premium assessments to the
FDIC. In general terms, each institution is assessed insurance premiums
according to how much risk to the BIF the institution represents.
Well-capitalized banks with few supervisory concerns are assessed lower premiums
than other banks. Currently, BIF assessments range from zero for
well-capitalized institutions to 0.27% of deposits for institutions that are not
(with a statutory minimum of $2,000 paid by all institutions). The Bank's
current assessment rate is the statutory minimum of $2,000 annually.

The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution has
engaged or is engaging in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, order or
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any condition imposed in writing by, or written agreement with, the FDIC. The
FDIC may also suspend deposit insurance temporarily during the hearing process
for a permanent termination of insurance if the institution has no tangible
capital.

The Economic Growth and Regulatory Paperwork Reduction Act of 1996 enacted
on September 30, 1996 provides that, beginning with semi-annual periods after
December 31, 1996, BIF deposits will also be assessed to pay interest on the
bonds issued in the late 1980s by the Financing Corporation ("FICO Bonds"). The
FICO Bonds were issued for the purpose of recapitalizing the now defunct Federal
Savings and Loan Insurance Corporation, which had been the principal insurer of
savings association deposits. For purposes of the assessments to pay interest on
the FICO Bonds, BIF deposits will be assessed at a rate of 20% of the assessment
rate applicable to Savings Association Insurance Fund deposits until December
31, 1999. After the earlier of December 31, 1999 or the date on which the last
savings association ceases to exist, full pro rata sharing of FICO assessments
will begin. The Bank expects that the assessment to pay interest on the FICO
Bonds will not have a material effect on the Bank.

Dividends. The ability of the Company to obtain funds for the payment of
dividends and for other cash requirements will be dependent on the amount of
dividends that may be declared by its subsidiary, the Bank. Ohio bank law
provides that dividends may be paid from undivided profits only, and an
Ohio-chartered bank may not declare a dividend without the approval of the
Division if the total of dividends and distributions declared in a calendar year
exceeds the total of the bank's net income for that year combined with its
retained net income for the preceding two years. State-chartered banks' ability
to pay dividends may be affected by capital adequacy guidelines of their primary
federal bank regulatory agency as well. See "Capital Adequacy and Prompt
Corrective Action." Moreover, regulatory authorities are authorized to prohibit
banks and bank holding companies from paying dividends if payment of dividends
would constitute an unsafe and unsound banking practice.

The FRB's policy statement governing payment of cash dividends provides
that a bank holding company should not pay cash dividends on common stock unless
(i) the organization's net income for the past year is sufficient to fully fund
the dividends and (ii) the prospective rate of earnings retention appears
consistent with the organization's capital needs, asset quality and overall
financial condition. For small bank holding companies (those with less than $150
million in assets), the FRB's position is that such companies should not pay
dividends so long as they have a debt-to-equity ratio of 1:1 or greater. The
Company intends to comply with this FRB policy.

Capital Adequacy and Prompt Corrective Action. The FRB and FDIC employ
similar risk-based capital guidelines in their examination and regulation of
bank holding companies and banks. If capital falls below the minimum levels
established by the guidelines, the bank holding company or bank may be denied
approval to acquire or establish additional banks or non-bank businesses or to
open new facilities. Under the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA"), failure to meet applicable capital
guidelines could subject a banking institution to a variety of enforcement
actions available to federal regulatory authorities, including the termination
of deposit insurance by the FDIC and a prohibition on the acceptance of
"brokered deposits."

In the calculation of risk-based capital, assets and off-balance sheet
items are assigned to broad risk categories, each with an assigned weighting
(0%, 20%, 50% and 100%). Most loans are assigned to the 100% risk category,
except for first mortgage loans fully secured by residential property, which
carry a 50% rating. Most investment securities are assigned to the 20% category,
except for municipal or state revenue bonds, which have a 50% risk-weight, and
direct obligations of or obligations guaranteed by the United States Treasury or
United States Government agencies, which have a 0% risk-weight. Off-balance
sheet items are also taken into account in the calculation of risk-based
capital, with each class of off-balance sheet item being converted to a balance
sheet equivalent according to established "conversion factors." From these
computations, the total of risk-weighted assets is derived. Risk-based capital
ratios therefore state capital as a percentage of total risk-weighted assets and
off-balance sheet items. The ratios established by guideline are minimums only.

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Current risk-based capital guidelines require all bank holding companies
and banks to maintain a minimum risk-based total capital ratio equal to 8% and a
Tier 1 capital ratio of 4%. Intangibles other than readily marketable mortgage
servicing rights are generally deducted from capital. Tier 1 capital includes
common shareholders' equity, qualifying perpetual preferred stock (within limits
and subject to certain conditions, particularly if the preferred stock is
cumulative preferred stock), and minority interests in equity accounts of
consolidated subsidiaries, less intangibles. Tier 2 capital includes: (i) the
allowance for loan losses up to 1.25% of risk-weighted assets; (ii) any
qualifying perpetual preferred stock exceeding the amount includable in Tier 1
capital; (iii) hybrid capital instruments; (iv) perpetual debt; (v) mandatory
convertible securities and (vi) subordinated debt and intermediate term
preferred stock of up to 50% of Tier 1 capital. Total capital is the sum of Tier
1 and Tier 2 capital, less reciprocal holdings of other banking organizations,
capital instruments and investments in unconsolidated subsidiaries.

The FRB and FDIC have also established a minimum leverage ratio of 3%.
However, for bank holding companies and banks seeking to expand and for all but
the most highly rated banks and bank holding companies, the FRB and FDIC expect
an additional cushion of at least 100 to 200 basis points. The leverage ratio
represents Tier 1 capital as a percentage of total assets, less intangibles. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Capital." At December 31, 1997, the Company and the Bank were in
compliance with all regulatory capital requirements.

In order to resolve the problems of undercapitalized institutions and
prevent a recurrence of the banking crisis of the 1980s and early 1990s, FDICIA
established a system of prompt corrective action. Under the prompt corrective
action provisions of FDICIA and implementing regulations, every institution is
classified into one of five categories, depending on (i) its total risk-based
capital ratio, Tier 1 risk-based capital ratio and leverage ratio and (ii)
certain subjective factors. The categories are: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized." Bank regulatory agencies are required to appoint
a receiver or conservator shortly after an institution enters the category of
weakest capitalization. FDICIA also authorizes the agencies to reclassify an
institution from one category into a lower category if the institution is in an
unsafe or unsound condition or engaging in an unsafe or unsound practice. FDICIA
requires undercapitalized institutions to take certain specified actions in
order to increase their capital or otherwise decrease the risks to the federal
deposit insurance funds.

The following table illustrates the capital adequacy and prompt corrective
action guidelines applicable to the Company and the Bank, as well as the total
risk-based capital ratio, Tier 1 capital ratio and leverage ratio of the Company
and the Bank, as of December 31, 1997.

<TABLE>
<CAPTION>
MINIMUM MINIMUM
COMPANY AT NECESSARY TO BE NECESSARY TO BE
DECEMBER 31, 1997 WELL CAPITALIZED ADEQUATELY CAPITALIZED
----------------- ---------------- ----------------------
<S> <C> <C> <C>
Total Risk-Based Capital Ratio........... 13.84% 10.00% 8.00%
Tier 1 Risk-Based Capital Ratio.......... 12.96% 6.00% 4.00%
Leverage Ratio........................... 10.12% 5.00% 3.00%
</TABLE>

Community Reinvestment Act. Under the Community Reinvestment Act of 1977
("CRA") and implementing regulations of the banking agencies, a financial
institution has a continuing and affirmative obligation (consistent with safe
and sound operation) to meet the credit needs of its entire community, including
low- and moderate-income neighborhoods. The CRA does not establish specific
lending requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community. The CRA requires that
financial institution regulators conduct regular CRA examinations and provide
written evaluations of institutions' CRA performance. The CRA also requires that
an institution's CRA performance rating be made public. CRA performance
evaluations are based on a four-tiered rating system: Outstanding, Satisfactory,
Needs to Improve and Substantial Noncompliance.

At the most recent CRA examination of the Bank, concluded in June 1996, the
Bank received a CRA performance rating of "Satisfactory." Although CRA
examinations occur on a regular basis, CRA performance evaluations are used
principally in the evaluation of regulatory applications submitted by an
institution.

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CRA performance evaluations are considered in evaluating applications for such
things as mergers, acquisitions and applications to open branches. Over the
twenty years that the CRA has existed, and particularly in the last few years,
institutions have faced increasingly difficult regulatory obstacles and public
interest group objections in connection with their regulatory applications,
including institutions that have received the highest possible CRA ratings.

Federal Home Loan Banks. The Federal Home Loan Banks are under the
jurisdiction of the Federal Housing Finance Board, an independent federal agency
created by FIRREA. The Federal Home Loan Banks serve as credit sources for their
members. As a member of the FHLB, the Bank is required to maintain an investment
in the capital stock of the FHLB in an amount equal to the greater of 1.0% 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, or 5.0% of its advances from the FHLB. The Bank is in compliance with this
requirement, with an investment in FHLB stock of $427,700 at December 31, 1997.
The Bank could, if management so chose, withdraw from membership in the FHLB.
The Bank obtains funds from the FHLB pursuant to a "Blanket Agreement for
Advances and Security Agreement." See "Business -- Source of
Funds -- Borrowings."

Interstate Banking and Branching. The Reigle-Neal Interstate Banking and
Branching Efficiency Act (the "Interstate Act") was enacted in 1994. The
Interstate Act effectively permits nationwide banking and greatly expands the
power of banks to branch across state lines. Adequately capitalized and
adequately managed bank holding companies may acquire banks in any state, even
in those jurisdictions that bar acquisitions by out-of-state institutions,
subject to deposit concentration limits. Subject to certain exceptions or
possible regulatory waiver, regulatory approval of acquisition of an Ohio bank
generally may not be granted if the acquiror would control more than 10% of
total bank, savings bank and savings association deposits nationwide or more
than 30% of total bank, saving bank and savings association deposits in Ohio.

Although the Interstate Act provided that states had a certain period of
time following enactment of the Interstate Act to "opt-out" of the interstate
branching provisions, Ohio did not exercise the right to opt out of the
interstate branching provisions of the Interstate Act. Branching between states
may be accomplished by merging commonly controlled banks located in different
states into one legal entity. Branching may also be accomplished by establishing
de novo branches or acquiring branches in another state.

A branch of an out-of-state bank operating in another state, or "host
state," is subject to the law of the host state regarding community
reinvestment, fair lending, consumer protection (including usury limits) and
establishment of branches.

Monetary Policy. The earnings of commercial banks are affected by the
policies of regulatory authorities, including monetary policy of the FRB. An
important function of the Federal Reserve System is regulation of aggregate
national credit and money supply through such means as open market dealings in
securities, establishment of the discount rate on member bank borrowings, and
changes in reserve requirements against member bank deposits. These methods are
used in varying combinations to influence overall growth and distribution of
bank loans, investments and deposits, and their use may also affect interest
rates charged on loans or paid on deposits. Monetary policies may be influenced
by many factors, including inflation, unemployment, short-term and long-term
changes in the international trade balance and fiscal policies of the United
States government. FRB monetary policy has had a significant effect on the
operating results of commercial banks in the past, and it can be expected to
influence operating results of commercial banks in the future.

BANK REGULATORY DEVELOPMENTS

The laws and regulations affecting banks and bank holding companies have
changed significantly over recent years. Additional changes can be expected in
the future. Like administrations before it, the current administration has
considered consolidation of bank regulatory responsibilities currently
administered by four separate banking agencies. Over the same time period,
Congress has proposed additional restrictions on

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activities conducted by bank holding companies and their affiliates, including
securities- and insurance-related activities.

FIRREA AND CROSS-GUARANTEES

Under FIRREA, a depository institution insured by the FDIC can be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC in connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) any assistance provided by the FDIC to a commonly
FDIC-insured depository institution in danger of default (the "Cross
Guarantee"). "Default" is defined generally as the appointment of a conservator
or receiver, and "in danger of default" is defined generally as the existence of
certain conditions indicating either that there is no reasonable prospect that
the institution will be able to meet the demands of its depositors or pay its
obligations in the absence of regulatory assistance, or that its capital has
been depleted and there is no reasonable prospect that it will be replenished in
the absence of regulatory assistance. The Cross Guarantee thus enables the FDIC
to assess a holding company's healthy BIF members for the losses of any of such
holding company's failed BIF members. Cross Guarantee liabilities are generally
superior in priority to obligations of the depository institution to its
shareholders due solely to their status as shareholders and obligations to other
affiliates. This law could apply if the Company acquires another financial
institution and thereafter maintains that institution as a separate subsidiary
from the Bank. There are currently no agreements, commitments, understandings or
arrangements for such an acquisition.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 10,000,000 shares
of Common Stock, without par value, and 2,000,000 shares of Serial Preferred
Stock, also without par value (the "Serial Preferred Stock"). The following
summary of the Company's capital stock is subject to, and qualified in its
entirety by, the provisions of applicable law and by the Company's Amended and
Restated Articles of Incorporation, as amended (the "Articles of
Incorporation"), and Code of Regulations (the "Regulations"). As of April 24,
1998, the Company had 127 shareholders of record.

COMMON STOCK

Upon completion of this Offering, there will be 1,938,906 shares of Common
Stock outstanding (not including any Common Stock purchased by the Underwriter
through exercise of its over-allotment option). In addition, 28,000 shares of
Common Stock are reserved for issuance upon exercise of stock options under the
Stock Option Plan. Holders of Common Stock are entitled to one vote per share on
any matter submitted to the vote of shareholders. Cumulative voting is
prohibited in the election or removal of directors. The holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of funds legally available therefor.
The Common Stock is not redeemable, does not have any conversion rights and is
not subject to call. Holders of shares of Common Stock have no preemptive rights
to maintain their respective percentage of ownership in future offerings or
sales of stock by the Company. The shares of Common Stock outstanding are, and
the shares of Common Stock offered hereby when issued will be, fully paid and
nonassessable.

SERIAL PREFERRED STOCK

There is no Serial Preferred Stock outstanding. Under the Articles of
Incorporation, the Board of Directors is authorized to establish the number of
shares of Serial Preferred Stock to be issued, and to fix the attributes of the
shares, including the dividend rate, the dividend payment dates, whether the
dividends will be cumulative, the redemption price, the sinking fund
requirements, liquidation preference and conversion rights.

CERTAIN ANTITAKEOVER MATTERS

The Articles of Incorporation and Regulations contain certain provisions
that may deter or render more difficult and costly attempts to gain control of
the Company or its assets, even in cases in which shareholders

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believe a change in control to be in their best interests. Management believes
these provisions are in the long term best interests of the Company and its
shareholders.

Articles of Incorporation Provisions. Authorized but unissued shares of
Common Stock may be issued hereafter by the Board of Directors without further
shareholder approval. Accordingly, in the event of a potential change in control
that is not supported by the Board of Directors, the authorized but unissued
Common Stock could be issued by the Board of Directors to one or more parties
who concur with the Board of Directors' opposition to the potential change in
control.

Without further shareholder approval, the Board of Directors may issue
shares of Serial Preferred Stock in one or more series with powers, preferences,
rights, restrictions, limitations, and other qualifications that could adversely
affect the voting and other rights of Common Stock. The Board of Directors'
authority to issue the Serial Preferred Stock could operate to render more
difficult the accomplishment of mergers or other business combinations. When in
the judgment of the Board of Directors the action will be in the best interest
of the shareholders and the Company, the Serial Preferred Stock could be used
for the purpose or with the effect of creating impediments to or frustrating the
attempts of persons seeking to gain control of the Company. As a means to oppose
a hostile takeover bid, shares of Serial Preferred Stock could, like the
authorized but unissued shares of Common Stock, be privately placed with
purchasers identified by the Board of Directors.

The existence of the authorized but unissued capital stock could have the
effect of discouraging unsolicited takeover attempts or delaying, deferring or
preventing a change in control of the Company. In the event of a potential
takeover or other change in control, this could have an adverse impact on
shareholders who wish to receive the premium for stock that is commonly paid in
connection with changes in control. The issuance of new shares could be used to
dilute the stock ownership of a person or entity seeking to obtain control of
the Company, should the Board of Directors consider the change in control not to
be in the best interests of the shareholders and the Company. The Board of
Directors is not aware of any attempt or effort by any person to accumulate the
Company's securities or obtain control of the Company.

Code of Regulations Provisions. The Regulations also contain provisions
that may have an antitakeover effect. The Regulations require that notice in
writing of proposed shareholder nominations for the election of directors be
timely given to the Secretary of the Company prior to the meeting. To be timely,
a shareholder's notice of nomination for election of a director must be received
by the Secretary at least 30 days prior to the meeting. The shareholder's notice
of nomination must contain certain information about the non-incumbent nominee,
including name, age, business and residence addresses, principal occupation, the
class and number of shares of the Company beneficially owned by the nominee and
such other information as would be required to be included in a proxy statement
soliciting proxies for election of the nominee, as well as certain information
about the nominating shareholder. The Company may require any nominee to furnish
other information reasonably required by the Company to determine the nominee's
eligibility to serve as a director. If the officer presiding at the meeting
determines that a person was not nominated in accordance with the foregoing
procedures, such nominee will not be eligible for election as a director.

In addition, the Regulations provide that special meetings of shareholders
may be called at any time by the Chairman of the Board, the President, a Vice
President or shareholders holding of record 25% or more of all outstanding
shares, but that special meetings relating to a change in control or amendment
of the articles of incorporation may only be called by a majority of the Board
of Directors or by holders of record of not less than one half of the
outstanding shares.

Ohio Control Share Acquisition Act. Contained in Section 1701.831 of the
Ohio General Corporation Law, the Control Share Acquisition Act requires prior
shareholder approval for transfers of corporate control. The Control Share
Acquisition Act provides generally that acquisitions of voting securities
resulting in the acquiring shareholder owning 20%, 33 1/3%, or 50% of the
outstanding voting securities of an issuing public corporation 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 by a majority
of the portion of the outstanding voting shares represented at such meeting that
excludes the voting shares owned by the acquiring shareholder.

59
<PAGE> 61

The Control Share Acquisition Act was intended to protect shareholders of Ohio
corporations from coercive tender offers. In general, an issuing public
corporation is any Ohio corporation that has 50 or more shareholders, provided
the corporation has its principal place of business, its principal offices,
assets with substantial value or a substantial percentage of its assets in Ohio.
The Company is an issuing public corporation.

Ohio Merger Moratorium Act. Chapter 1704 of the Ohio Revised Code, known
as the Merger Moratorium Act, generally prevents an issuing public corporation
from entering into a business combination transaction with an interested
shareholder for a period of three years after the date of the transaction in
which the person became an interested shareholder. If the directors have
approved the business combination or the interested shareholder's share
acquisition, the three-year moratorium would not apply. In general, an
interested shareholder is one who can vote, or direct the voting of, 10% or more
of the issuing public corporation's stock in the election of directors.

The Merger Moratorium Act generally does not apply to issuing public
corporations that (i) do not have a class of voting securities traded on a
national securities exchange, (ii) do not have a class of voting securities
registered under Section 12(g) of the Exchange Act or (iii) are not required to
file periodic reports and information pursuant to Section 15(d) of the Exchange
Act. At the time of completion of this Offering, the Company will be required to
file periodic reports pursuant to Section 15(d) of the Exchange Act. Moreover,
the Company intends to register the Common Stock under Section 12(g) of the
Exchange Act at the time of or promptly after completion of this Offering.

Each of the Control Share Acquisition Act and the Merger Moratorium Act
provides that an issuing public corporation may elect not to be subject to those
statutes by a specific statement to that effect in the corporation's Articles of
Incorporation or, in the case of the Control Share Acquisition Act, by a
statement to that effect in the corporation's code of regulations. The Company's
Articles of Incorporation and Code of Regulations make no such election.
Accordingly, the Control Share Acquisition Act and Merger Moratorium Act could
apply to changes in control and business combination transactions involving the
Company.

Ohio "Anti-Greenmail" Statute. Under Ohio Revised Code Section 1707.043, a
public corporation formed in Ohio may recover profits that a shareholder makes
from the sale of the corporation's securities within eighteen months after
making a proposal to acquire control or publicly disclosing the possibility of a
proposal to acquire control. The corporation may not, however, recover from a
person who proves either (i) that his sole purpose in making the proposal was to
succeed in acquiring control of the corporation and there were reasonable
grounds to believe that he would acquire control of the corporation or (ii) that
his purpose was not to increase any profit or decrease any loss in the stock.
Also, before the corporation may obtain any recovery, the aggregate amount of
the profit realized by such person must exceed $250,000. Any shareholder may
bring an action on behalf of the corporation if the corporation refuses to bring
an action to recover these profits. The party bringing such an action may
recover his attorneys' fees if the court having jurisdiction over such action
orders recovery of any profits. An Ohio corporation may elect not to be covered
by the "anti-greenmail" statute with an appropriate amendment to its articles of
incorporation. The Company has not taken any corporate action to opt out of the
"anti-greenmail" statute.

Regulatory Approval of Acquisitions. Approval of the FRB and the Division
would be necessary in order for any company to acquire control of an Ohio bank
or bank holding company. The requirement for regulatory approval could delay
efforts to obtain control of the Company.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION

Under Ohio law, a director's liability to the Company or its shareholders
for damages is limited to those situations in which it is proved by clear and
convincing evidence that the director's action or failure to act involved an act
or omission undertaken with deliberate intent to cause injury to the Company or
undertaken with reckless disregard for the best interests of the Company, as
well as in those situations involving unlawful loans, asset distributions,
dividend payments or share repurchases. As a result, shareholders may be unable
to recover monetary damages against directors for actions that constitute gross
negligence or that are in violation

60
<PAGE> 62

of directors' fiduciary duties, although it may be possible to obtain injunctive
or other equitable relief with respect to such actions. If equitable remedies
are not available to shareholders for any particular case, shareholders may not
have an effective remedy against the challenged conduct.

The Articles of Incorporation and Regulations provide that directors,
officers, employees and agents shall be indemnified to the extent permitted by
law. Under the Ohio General Corporation Law, a corporation is required to pay a
director's expenses as incurred in defending an action, suit or proceeding
against him or her, provided the director agrees to repay such expenses if he or
she is determined to have acted with reckless disregard for the corporation's
best interests or with deliberate intent to cause injury to the corporation and
provided the director cooperates with the corporation concerning the action,
suit or proceeding. Likewise, the Ohio General Corporation law allows a
corporation to indemnify directors, officers, employees and agents for actions
taken on behalf of the corporation, regardless of whether the corporation's
governing instruments specifically provide for indemnification. No
indemnification is allowed, however, if the person seeking indemnification is
held by a final judgment to have acted in a grossly negligent manner, knowingly
contrary to or with reckless disregard for the best interests of the Company.

The indemnification rights set forth in the Articles of Incorporation and
in the Ohio General Corporation Law are not exclusive of any other
indemnification rights to which a director may be entitled under any resolution
or agreement, either specifically or in general terms approved by the
affirmative vote of the holders of a majority of the shares entitled to vote
thereon. The Company may also provide for greater indemnification than that set
forth in the Articles of Incorporation if the Board of Directors chooses to do
so.

The Company may purchase and maintain insurance on behalf of any director
against any liability asserted against such person and incurred by him or her in
any such capacity, whether or not the Company would have had the power to
indemnify against such liability. The Company is not aware of any pending or
threatened action, suit or proceeding involving any of its directors or officers
for which indemnification from the Company may be sought. The Company has
purchased and maintains directors' and officers' liability insurance.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company,
or to an affiliate of the Company pursuant to the Company's Articles of
Incorporation or the Regulations or otherwise, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. Accordingly, it is possible that the
indemnification provisions may not apply to liabilities arising under the
Securities Act unless the person to be indemnified is successful on the merits
of the claim or proceeding.

Consistent with the Ohio General Corporation Law, the Articles of
Incorporation contain a special provision dealing with transactions in which an
officer or director is interested. If certain procedures set forth in the Ohio
General Corporation Law are followed or if the transaction is determined to be
fair, no contract, action or transaction between the Company and one or more of
its directors or officers will be void or voidable merely because it is between
or affects the Company and one or more of its directors or officers (or between
the Company and another person or entity in which a director or officer has a
personal or financial interest or in which he or she is an officer or director),
or merely because one or more interested directors or officers participate in or
vote at the meeting of directors (or committee thereof) that authorizes such
contract, action or transaction. The procedures to be followed are: (i) full
disclosure of the facts of the director's or officer's relationship or interest
must be made to the Board of Directors, and a majority of the disinterested
directors must approve the contract, action or transaction or (ii) the contract,
action or transaction must be approved at a meeting of shareholders held for
such purpose by a majority vote of shareholders not interested in the contract,
action or transaction.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is National City
Bank, Cleveland, Ohio.

61
<PAGE> 63

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this Offering, there has not been an established trading market
for the Common Stock of the Company. Future sales of substantial amounts of
Common Stock in the public market could adversely affect prevailing market
prices. See "Risk Factors -- Shares Eligible for Future Sale."

Upon completion of this Offering, there will be 1,938,906 shares of Common
Stock issued and outstanding (not including any shares of Common Stock that may
be purchased by the Underwriter through exercise of its over-allotment option).
The offer and sale of 1,300,000 shares pursuant to this Offering (and any shares
acquired by the Underwriter upon exercise of its over-allotment option) has been
registered with the Securities and Exchange Commission under the Securities Act.
Accordingly, the shares sold pursuant to this Offering generally may be resold
without registration under the Securities Act or other limitation, except for
shares acquired pursuant to this offering by an "affiliate" of the Company. The
term "affiliate" generally refers to directors, executive officers and
controlling shareholders or any other person who controls, is controlled by or
is under common control with a corporation. Securities that are "restricted
securities" (as defined in Rule 144 under the Securities Act) and securities
held by affiliates may be sold without registration under the Securities Act if
the offering and sale thereof qualifies for an exemption from registration,
including an exemption pursuant to Rule 144. In summary, shares purchased from
the Company otherwise than through a public offering are "restricted securities"
within the meaning of Rule 144.

In general, under Rule 144, an affiliate of the Company may sell shares of
Common Stock within any three-month period in an amount limited to the greater
of 1% of the outstanding shares of the Company's Common Stock or the average
weekly trading volume in the Company's Common Stock during the four calendar
weeks preceding such sale. Sales under Rule 144 are also subject to certain
manner-of-sale provisions, holding periods for restricted shares, notice
requirements and the availability of current public information concerning the
Company.

In general, a person who has beneficially owned restricted securities of
the Company for at least one year (the minimum holding period for restricted
securities under Rule 144) would, beginning 90 days after the date of this
Prospectus, be able to sell within any three-month period a number of shares
that does not exceed the greater of 1% of the then outstanding shares of Common
Stock or the average weekly trading volume of the Common Stock in the
over-the-counter market during the four calendar weeks preceding the date on
which notice of the sale is filed with the Securities and Exchange Commission.
One percent of the outstanding shares of Common Stock will, after the Offering
and without taking account of shares that may be acquired by exercise of the
Underwriter's over-allotment option, be 19,389 shares. Except for the 18,800
shares recently sold on a private offering basis by the Company and 23,764
shares sold in connection with the acquisition of the new Mentor branch property
(see "Business -- Properties"), substantially all of the Company's issued and
outstanding shares have been held for more than the one-year holding period
under Rule 144 and will therefore be eligible for sale under Rule 144. For this
purpose, the holding period of Company Common Stock generally includes the
holding period of Bank common stock that was converted into Company Common Stock
upon consummation of the Bank's holding company reorganization in September
1997.

Sales under Rule 144 are also subject to manner of sale provisions. A
person who is not deemed an affiliate of the Company at any time during the
three months preceding a sale, and who has beneficially owned restricted
securities for at least two years, is entitled to sell such shares under Rule
144(k) without regard to volume limitations, manner of sale provisions, notice
requirements or the availability of current public information concerning the
Company.

The Company and its directors and executive officers have agreed that they
will not, without the prior written consent of the Underwriter, sell, transfer,
assign or otherwise dispose of any shares of Common Stock owned by them prior to
the expiration of 180 days from the date of the Underwriting Agreement. Upon
expiration of the 180-day period, all of those shares will be eligible for sale
in the public market, subject to the limitations of Rule 144. It is expected
that approximately 626,715 shares of Common Stock will be subject to this
180-day restriction.

62
<PAGE> 64

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriter has agreed to purchase from the Company 1,300,000 shares of the
Company's Common Stock. The Underwriting Agreement provides that the obligations
of the Underwriter thereunder are subject to certain conditions. The
Underwriting Agreement provides for the Company's payment of certain expenses
incurred in connection with the review of the underwriting arrangements for the
Offering by the National Association of Securities Dealers, Inc. (the "NASD").
The Underwriter is obligated to purchase all 1,300,000 of the shares of Common
Stock offered hereby, excluding shares covered by the over-allotment option
granted to the Underwriter, if any are purchased.

If the Underwriting Agreement is terminated, except in certain limited
cases, the Underwriting Agreement provides that the Company will reimburse the
Underwriter for all accountable out-of-pocket expenses, including Underwriter's
counsel fees and Blue Sky costs, incurred by it in connection with the proposed
purchase and sale of the Common Stock, up to $50,000 (including $20,000 already
advanced by the Company to cover expenses). Such expenses and advances will be
credited by the Underwriter against the underwriting discount otherwise payable
to the Underwriter upon any purchase by it of Common Stock.

The Company and the Underwriter have agreed that the Underwriter will
purchase the 1,300,000 shares of Common Stock offered hereunder at a price to
the public of $ per share less underwriting discounts of $ per
share. The Underwriter has agreed to limit the underwriting discounts to $
per share for up to shares sold by the Underwriter to officers and
directors of the Company and the Bank. The Underwriter proposes to offer the
Common Stock to selected dealers who are members of the NASD, at a price of
$ per share less a commission not in excess of $ per share.
The Underwriter may allow, and such dealers may re-allow, concessions not in
excess of $ per share to certain brokers and dealers.

The Underwriter has informed the Company that the Underwriter does not
intend to make sales to any accounts over which it exercises discretionary
authority.

The Company has granted to the Underwriter an option, exercisable within 30
days after the date of this Offering, to purchase up to an additional 195,000
shares of Common Stock from the Company to cover over-allotments, if any, at the
same price per share as is to be paid by the Underwriter for the other shares
offered hereby. The Underwriter may purchase such shares only to cover
over-allotments, if any, in connection with this Offering.

The Underwriting Agreement contains indemnity provisions between the
Underwriter and the Company and the controlling persons thereof against
liabilities, including liabilities arising under the Securities Act. The Company
is generally obligated to indemnify the Underwriter and its controlling persons
in connection with losses or claims arising out of any untrue statement of
material fact contained in this Prospectus or in related documents filed with
the Securities and Exchange Commission or with any state securities
administrator, or any omission of certain material facts from such documents.

Prior to this Offering, there has not been an established trading market
for the Common Stock. The price at which the shares are being offered to the
public was determined by negotiations between the Company and the Underwriter.
This price is not necessarily indicative of the present or future value of the
Common Stock. Several factors were considered in determining the initial public
offering price of the Common Stock, among them the Company's business potential
and prospects, earnings history and book value; the current state of the
Company's and the Bank's development; an assessment of the Company's and the
Bank's management; consideration of the foregoing factors in relation to market
valuations of comparable banks and bank holding companies; the current condition
of the industry and the economy as a whole; the size of the Offering; the desire
that the security being offered be attractive to individuals; and the
Underwriter's experience in dealing with initial public offerings for financial
institutions and their holding companies.

LEGAL MATTERS

The validity of the Common Stock offered hereby is being passed upon for
the Company by Grady & Associates, Cleveland, Ohio. Certain legal matters will
be passed upon for the Underwriter by Benesch, Friedlander, Coplan & Aronoff
LLP, Cleveland, Ohio.

EXPERTS

The consolidated financial statements included in this Prospectus have been
audited by KPMG Peat Marwick LLP, independent public accountants, as indicated
in their report with respect thereto. Such financial statements and the report
of KPMG Peat Marwick LLP have been included herein in reliance upon the
authority of KPMG Peat Marwick LLP as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Securities
and Exchange Commission. For further information pertaining to the Company and
to the Common Stock offered hereby, reference is made to the Registration
Statement, including exhibits filed as a part thereof, copies of which can be
inspected and copied at the Public Reference Section of the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Securities and Exchange Commission's regional offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Room 1400, 75 Park Place, New York, New York 10007. Copies
of such materials can also be obtained at prescribed rates by writing to the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Company is required to file electronic
versions of these documents with the Securities and Exchange Commission through
the Securities and Exchange Commission's Electronic Data Gathering, Analysis and
Retrieval ("EDGAR") system. The Securities and Exchange Commission maintains a
World Wide Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission. Such reports,
registration statements, proxy statements and other information regarding the
Company also may be inspected at the offices of The Nasdaq Stock Market, Inc.,
Report Section, at 1735 K Street, N.W., Washington, D.C. 20006, for so long as
the Common Stock is authorized for trading on the Nasdaq SmallCap Market or the
Nasdaq National Market.

64
<PAGE> 66

GLB BANCORP, INC. AND SUBSIDIARY

FINANCIAL STATEMENTS

DECEMBER 31, 1997, 1996 AND 1995

(WITH INDEPENDENT AUDITORS' REPORT THEREON)

F-1
<PAGE> 67

GLB BANCORP, INC. AND SUBSIDIARY

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-3
Financial Statements:
Consolidated Statements of Financial Condition............ F-4
Consolidated Statements of Operations..................... F-5
Consolidated Statements of Changes in Shareholders'
Equity................................................. F-6
Consolidated Statements of Cash Flows..................... F-7
Notes to Consolidated Financial Statements.................. F-8
</TABLE>

F-2
<PAGE> 68

INDEPENDENT AUDITORS' REPORT

The Board of Directors
GLB Bancorp Inc.
Mentor, Ohio:

We have audited the accompanying consolidated statements of financial
condition of GLB Bancorp, Inc. and Subsidiary as of December 31, 1997 and 1996,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1997. These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GLB Bancorp,
Inc. and Subsidiary as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

As discussed in Note 17 to the consolidated financial statements, the
Corporation changed its method of accounting for goodwill.

KPMG Peat Marwick LLP

Indianapolis, Indiana

February 6, 1998, except note 18,
which is as of March 18, 1998

F-3
<PAGE> 69

GLB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 2,562,597 2,956,282
Federal funds sold.......................................... 5,264,000 7,373,000
----------- -----------
Total cash and cash equivalents................... 7,826,597 10,329,282
Investment securities held to maturity (market value of
$1,619,438 and $1,148,460)................................ 1,619,300 1,142,485
Loans, net of allowance for loan losses..................... 53,097,451 38,633,671
Stock in Federal Home Loan Bank of Cincinnati, at cost...... 427,700 398,500
Premises and equipment, net................................. 2,645,930 2,581,695
Intangibles, net............................................ 531,923 578,974
Other assets................................................ 482,106 372,733
----------- -----------
Total assets...................................... $66,631,007 54,037,340
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest bearing demand deposits.................... 8,288,832 6,396,864
Interest bearing demand deposits....................... 4,800,162 4,582,722
Savings accounts....................................... 27,926,967 23,371,968
Certificate accounts................................... 10,995,955 7,900,975
----------- -----------
Total deposits.................................... 52,011,916 42,252,529
Advances from the Federal Home Loan Bank.................. 7,500,000 5,000,000
Accrued expenses and other liabilities.................... 690,878 745,555
----------- -----------
Total liabilities................................. 60,202,794 47,998,084
Shareholders' equity:
Common stock, no par value; 10,000,000 shares authorized;
596,742 and 593,142 shares issued and outstanding...... 1,491,855 1,482,855
Additional paid-in capital................................ 4,671,642 4,635,642
Accumulated earnings (deficit)............................ 264,716 (79,241)
----------- -----------
Total shareholders' equity........................ 6,428,213 6,039,256
----------- -----------
Total liabilities and shareholders' equity........ $66,631,007 54,037,340
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 70

GLB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
Interest income:
Loans............................................... $ 4,035,600 2,756,688 1,785,862
Federal funds sold.................................. 247,079 279,733 338,580
Investment securities............................... 99,362 197,378 373,564
----------- ---------- ----------
Total interest income....................... 4,382,041 3,233,799 2,498,006
----------- ---------- ----------
Interest expense:
Deposits............................................ 1,501,836 1,239,958 1,014,065
FHLB advance........................................ 436,439 84,536 --
----------- ---------- ----------
Total interest expense...................... 1,938,275 1,324,494 1,014,065
----------- ---------- ----------
Net interest income................................... 2,443,766 1,909,305 1,483,941
Provision for loan losses............................. 97,000 77,000 50,500
----------- ---------- ----------
Net interest income after provision for loan losses... 2,346,766 1,832,305 1,433,441
----------- ---------- ----------
Other income:
Service charges on demand deposits.................. 144,691 110,732 86,467
Loan fees........................................... 184,605 103,716 90,990
Other service charges and fees...................... 145,956 77,800 75,216
Loss on sale of investment securities............... -- -- (3,053)
Gain on sale of assets.............................. 76,600 1,631 --
----------- ---------- ----------
Total other income.......................... 551,852 293,879 249,620
----------- ---------- ----------
Other expenses:
Compensation and related benefits................... 1,171,529 951,780 843,422
Office occupancy and equipment, net................. 442,478 372,735 249,725
Professional fees................................... 72,516 53,540 47,013
Advertising......................................... 65,438 49,833 39,134
Amortization of intangibles......................... 87,097 96,074 107,141
Ohio franchise tax.................................. 85,630 66,512 57,045
Data processing..................................... 116,003 59,957 78,852
Office supplies and printing........................ 71,036 70,907 58,275
FDIC deposit insurance.............................. 4,597 2,000 42,197
Credit card processing.............................. 55,311 30,267 19,291
Other operating expense............................. 173,109 150,636 99,796
----------- ---------- ----------
Total other expenses........................ 2,344,744 1,904,241 1,641,891
----------- ---------- ----------
Income before federal income taxes.................... 553,874 221,943 41,170
Federal income tax expense (benefit):
Current............................................. 214,305 15,619 4,110
Deferred............................................ (4,388) (5,619) --
----------- ---------- ----------
Net income............................................ $ 343,957 211,943 37,060
=========== ========== ==========
Earnings per share basic and diluted.................. $ 0.58 0.39 0.07
=========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 71

GLB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
ADDITIONAL ACCUMULATED
COMMON PAID-IN EARNINGS
STOCK CAPITAL (DEFICIT) TOTAL
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Balance at beginning of year as previously reported....... $1,137,500 3,412,500 (747,005) 3,802,995
Adjustment for change in the method of accounting for
goodwill................................................ -- -- 418,761 418,761
---------- ---------- --------- ----------
Balance at December 31, 1994 as adjusted.................. 1,137,500 3,412,500 (328,244) 4,221,756
Issuance of 55,000 shares of common stock................. 137,500 412,500 -- 550,000
Net income................................................ -- -- 37,060 37,060
---------- ---------- --------- ----------
Balance at December 31, 1995.............................. 1,275,000 3,825,000 (291,184) 4,808,816
Issuance of 83,142 shares of common stock................. 207,855 810,642 -- 1,018,497
Net income................................................ -- -- 211,943 211,943
---------- ---------- --------- ----------
Balance at December 31, 1996.............................. 1,482,855 4,635,642 (79,241) 6,039,256
Issuance of 3,600 shares of common stock.................. 9,000 36,000 -- 45,000
Net income................................................ -- -- 343,957 343,957
---------- ---------- --------- ----------
Balance at December 31, 1997.............................. $1,491,855 4,671,642 264,716 6,428,213
========== ========== ========= ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 72

GLB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 343,957 211,943 37,060
Adjustments required to reconcile net income to
net cash provided by operating activities
Amortization of intangibles................. 87,097 96,074 107,141
Depreciation................................ 170,350 139,010 81,186
Premium amortization and discount accretion,
net....................................... 986 (42,166) (65,327)
Net deferred loan origination fees.......... (81,765) (19,678) 27,557
Loss on sale of securities.................. -- -- 3,053
Gain on sale of loans....................... (76,600) -- --
Provision for loans losses.................. 97,000 77,000 50,500
Gain on disposal of premises and
equipment................................. -- -- (15,000)
Origination of mortgage servicing rights.... (40,046) -- --
(Increase) decrease in other assets......... (109,373) (36,460) 271,749
Increase (decrease) in accrued expenses and
other liabilities......................... (54,677) 317,981 (60,941)
------------ ------------ ------------
Net cash provided by operating activities........ 336,929 743,704 436,978
------------ ------------ ------------
Cash flows from investing activities:
Purchases of investment securities............. (1,515,234) (102,235) (2,076,551)
Maturities and payments of investment
securities.................................. 1,037,433 3,307,158 1,315,284
Proceeds from sales of investment securities... -- -- 1,188,376
Proceeds from sale of loans.................... 2,388,347 -- --
Purchase of FHLB stock......................... (29,200) (398,500) --
Origination of loans, net of principal
collected................................... (16,790,762) (12,645,598) (11,305,439)
Purchases of premises and equipment............ (241,255) (815,771) (270,010)
Disposals of premises and equipment............ 6,670 457,957 15,000
------------ ------------ ------------
Net cash used in investing activities............ (15,144,001) (10,196,989) (11,133,340)
------------ ------------ ------------
Cash flows from financing activities:
Cash proceeds from issuance of common stock.... 45,000 1,018,497 550,000
Net increase in deposits....................... 9,759,387 6,574,181 7,838,513
Cash proceeds from FHLB advance................ 2,500,000 5,000,000 --
------------ ------------ ------------
Net cash provided by financing activities........ 12,304,387 12,592,678 8,388,513
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents.................................... (2,502,685) 3,139,393 (2,307,849)
Cash and cash equivalents at beginning of year... 10,329,282 7,189,889 9,497,738
------------ ------------ ------------
Cash and cash equivalents at end of year......... $ 7,826,597 10,329,282 7,189,889
------------ ------------ ------------
Supplemental disclosure of cash flow
information -- Interest paid................... $ 1,913,732 1,310,396 990,783
Income taxes paid.............................. 25,000 -- --
Transfer of securities to available for sale... -- -- 1,191,429
============ ============ ============
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE> 73

GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1997 AND 1996

(1) NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements include the accounts of GLB Bancorp,
Inc. (the "Corporation") and its wholly-owned subsidiary, Great Lakes Bank, an
Ohio-chartered bank (the "Bank"). All significant intercompany transactions and
balances have been eliminated in consolidation.

On September 12, 1997, the Bank consummated its reorganization into the
holding company form of organization and thereby became a wholly-owned
subsidiary of the Corporation, which had previously been formed as a
wholly-owned subsidiary of the Bank. The reorganization was effected by means of
a merger of GLB Interim Bank ("Interim"), formerly an Ohio-chartered bank which
was wholly-owned by the Corporation, with and into the Bank pursuant to an
Agreement and Plan of Reorganization and Merger, dated March 18, 1997. The
accompanying consolidated financial statements present the financial position
and results of operations of the Corporation as if this transaction had occurred
at the beginning of the earliest period presented.

As a result of the merger, all of the previously issued and outstanding
shares of the Bank's common stock were automatically converted on a one-for-one
basis, into an equal number of issued and outstanding shares of Corporation
common stock. As a result of the foregoing, the stockholders of the Bank became
stockholders of the Corporation and the Bank became a wholly-owned subsidiary of
the Corporation.

The Bank is the successor by merger to Great Lakes Commerce Bank, which was
chartered as an Ohio banking corporation on April 27, 1957. Great Lakes Bank was
formed pursuant to an amended Agreement and Plan of Merger agreement executed on
January 11, 1994. Regulatory approval was obtained on July 15, 1994, and at such
time, the Bank commenced operations under new ownership. The acquisition was
accounted for by the purchase method. Accordingly, the cost of acquisition was
allocated to the assets acquired and liabilities assumed based upon their
respective fair values.

The Bank is engaged primarily in providing deposit and lending services to
individuals and small to medium-sized businesses within Lake County, Ohio. The
Bank offers its banking services through its main office and branches located in
Mentor, Painseville, Wickliffe, Willoughby and Willoughby Hills, Ohio. The
deposit products offered by the Bank include checking and savings accounts and
certificates of deposit. The Bank's lending services focus primarily on secured
lending both for commercial real estate and single-family lending. The Bank is
subject to competition from other financial institutions and is regulated by
certain federal agencies and undergoes periodic examinations by those regulatory
authorities.

(a) Basis of Presentation

The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and the reported amounts of revenues and expenses for the reporting period.
Actual results could differ from those estimates.

(b) Investment Securities

Investment securities are classified into one of three categories: held to
maturity, available for sale, or trading. All of the Corporation's investment
securities are held to maturity and are carried at amortized cost, as adjusted
for the amortization of premiums and accretion of discounts using a level yield
method. The Corporation has the ability and positive intent to hold these
securities to maturity.

In December 1995, the Corporation reclassified $1,191,429 of investment
securities held to maturity to investment securities available for sale. The
reclassification was in accordance with the Financial Accounting Standards Board
(FASB) issuing a special report, "A Guide to Implementation of Statement 115 on

F-8
<PAGE> 74
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Accounting for Certain Investments in Debt and Equity Securities," that
permitted this one-time reassessment. The aforementioned securities were
subsequently sold by the Corporation in December 1995. Gains or losses on
dispositions are based on net proceeds and the carrying value of securities
sold, using the specific identification method.

Loans receivable are carried at unpaid principal balances, less the
allowance for loan losses and net deferred loan origination fees. Interest on
loans is credited to income as earned. The accrual of interest on loans is
discontinued when, in the opinion of management, there is an indication that the
borrower may be unable to meet payments as they become due. Upon such
discontinuance, all unpaid accrued interest is reversed. Loans are returned to
an accrual status when both principal and interest are current and the loan is
determined to be performing in accordance with the applicable loan terms.

Impaired loans include all nonaccrual and restructured commercial real
estate and other commercial loans. Residential real estate and consumer loans
are excluded from the definition of an impaired loan. Loan impairment is
measured as the present value of expected future cash flows discounted at the
loan's initial interest rate, the fair value of the collateral of an impaired
collateral dependent loan or an observable market price. Interest income on
impaired loans is recognized on a cash-basis method.

Loan origination fees and certain direct loan origination costs are
deferred, and the net amounts are amortized as an adjustment of the related
loan's yield using the effective yield method over the contractual life of the
related loans.

(d) Allowance for Loan Losses

The allowance for loan losses is maintained at a level adequate to absorb
probable losses. Management determines the adequacy of the allowance based upon
the review of individual credits, recent loss experience, current economic
conditions, the risk characteristics of the various categories of loans, and
other pertinent factors. Loans deemed uncollectible are charged to the
allowance. Provisions for loan losses and recoveries on loans previously charged
off are added to the allowance.

(e) FHLB Stock

Federal law requires a member institution of the Federal Home Loan Bank
system to hold common stock of its district FHLB according to a predetermined
formula. This investment is stated at cost, which represents redemption value,
and may be pledged to secure FHLB advances.

(f) Interest on Savings

Interest on savings deposits is accrued and charged to expense monthly and
is paid or credited in accordance with the terms of the respective accounts.

(g) Premises and Equipment

Premises and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation and amortization are computed principally on the
straight-line method over the estimated useful lives of the assets.

(h) Federal Income Taxes

The Corporation and the Bank file consolidated tax returns.

F-9
<PAGE> 75
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Corporation accounts for income taxes under the asset and liability
method. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the year in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the period that includes the enactment
date.

(i) Cash and Cash Equivalents

The Corporation considers all highly liquid debt instruments with purchased
maturities of three months or less to be cash equivalents. For the purpose of
presentation in the statements of cash flows, cash and cash equivalents are
defined as those amounts included in the statements of financial condition
captions "Cash and due from banks" and "Federal funds sold."

(j) Earnings Per Share

In February 1997, the FASB issued Statement of Financial Accounting
Standard Nos. 128, Earnings Per Share ("FAS 128") and 129, Disclosure of
Information About Capital Structure ("FAS 129"). FAS 128 provides computation,
presentation, and disclosure requirements for earnings per share. Adoption of
the Standards did not have a material impact on the Corporation's financial
position or results of operations.

Basic and diluted earnings per share for 1997, 1996 and 1995 were computed
by dividing net earnings by the weighted average number of common shares
outstanding (595,942, 548,089 and 496,250 for 1997, 1996 and 1995,
respectively). There are no dilutive securities.

(k) Reclassifications

Certain amounts in the 1996 and 1995 financial statements have been
reclassified to conform with the 1997 presentation.

(2) INVESTMENT SECURITIES

A summary of investment securities held to maturity at December 31, 1997
and 1996, follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
1997:
United States government and agency
obligations...................... $1,614,300 138 -- 1,614,438
Equity securities................... 5,000 -- -- 5,000
---------- ----- --- ---------
$1,619,300 138 -- 1,619,438
========== ===== === =========
1996:
United States government and agency
obligations...................... 1,137,485 5,975 -- 1,143,460
Equity securities................... 5,000 -- -- 5,000
---------- ----- --- ---------
$1,142,485 5,975 -- 1,148,460
========== ===== === =========
</TABLE>

There were no sales of investment securities for the years ended December
31, 1997 and 1996. Gross realized losses from the sale of investment securities
totaled $3,053 for the year ended December 31, 1995.

F-10
<PAGE> 76
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The scheduled maturities of investment debt securities held to maturity at
December 31, 1997 are as follows:

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
---------- ---------
<S> <C> <C>
Due in one year or less..................................... $ 600,121 600,063
Due from one year to five years............................. 1,014,179 1,014,375
---------- ---------
$1,614,300 1,614,438
========== =========
</TABLE>

The carrying value of securities pledged to secure public deposits and for
other purposes required by law amounted to approximately $700,000 and $800,000
at December 31, 1997 and 1996, respectively.

(3) LOANS AND ALLOWANCE FOR LOAN LOSSES

The components of loans at December 31, 1997 and 1996, are as follows:

<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Residential real estate.................................... $27,705,745 20,260,138
Commercial real estate and other........................... 15,763,306 11,563,397
Consumer................................................... 3,995,899 3,111,364
Construction............................................... 9,837,670 7,141,588
----------- ----------
57,302,620 42,076,487
Undisbursed loans in progress.............................. (3,752,865) (2,996,388)
Unamortized loan origination fees, net..................... (49,770) (131,535)
Allowance for loan losses.................................. (402,534) (314,893)
----------- ----------
Net loans.................................................. $53,097,451 38,633,671
=========== ==========
</TABLE>

An analysis of the change in the allowance for loan losses for the years
ended December 31, 1997, 1996 and 1995, follows:

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year......................... $314,893 238,853 187,023
Provision for loan losses............................ 97,000 77,000 50,500
Charge-offs.......................................... (11,998) (12,318) (3,950)
Recoveries........................................... 2,639 11,358 5,280
-------- ------- -------
Balance at end of year............................... $402,534 314,893 238,853
======== ======= =======
</TABLE>

There were two loans totaling $82,000 on nonaccrual status at December 31,
1997 and two loans totaling $71,000 on nonaccrual status at December 31, 1996.

As of December 31, 1997, the investment in loans for which impairment has
been recognized totaled $43,881. The total allowance for credit losses related
to these impaired loans was $6,582 as of December 31, 1997. There were no
impaired loans as of December 31, 1996 and 1995.

The Bank had commitments to fund loans at fixed and variable rates totaling
approximately $1,786,352 and $6,917,693, respectively, at December 31, 1997 and
$919,413 and $6,927,744, respectively, at December 31, 1996. In management's
opinion, these commitments will be funded through normal operations.

F-11
<PAGE> 77
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) PREMISES AND EQUIPMENT

A summary of premises and equipment, less accumulated depreciation and
amortization, at December 31, 1997 and 1996, follows:

<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Land........................................................ $ 780,900 780,900
Buildings................................................... 1,344,391 1,278,835
Leasehold improvements...................................... 19,403 13,706
Furniture, fixtures, and equipment.......................... 878,771 718,721
---------- ---------
3,023,465 2,792,162
Less accumulated depreciation and amortization.............. (377,535) (210,467)
---------- ---------
$2,645,930 2,581,695
========== =========
</TABLE>

(5) INTANGIBLES

Intangible assets at December 31, 1997 and 1996, consist of the following:

<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
Goodwill.................................................... $ 440,801 440,801
Deposit base intangible..................................... 395,416 395,416
Mortgage servicing rights................................... 40,046 --
Less accumulated amortization............................... (344,340) (257,243)
--------- --------
$ 531,923 578,974
========= ========
</TABLE>

The excess of purchase price over the fair value of net assets of the
acquired Bank discussed in note 1 is classified as goodwill. Goodwill is
amortized using the straight-line method over ten years, the estimated period to
be benefited. Amortization expense amounted to $44,080 for each of the years
ended December 31, 1997, 1996 and 1995.

The deposit base intangible relates to the business combination discussed
in note 1. The deposit base intangible is being amortized over ten years, the
estimated period to be benefited, based on the present value of cash flows.
Amortization expense amounted to $42,888, $51,994 and $63,061 for the years
ended December 31, 1997, 1996 and 1995, respectively.

Amortization for mortgage servicing rights amounted to $129 for the year
ended December 31, 1997.

On a periodic basis, the Corporation reviews its intangible assets for
events or changes in circumstances that may indicate that the carrying amount of
the assets may not be recoverable.

(6) DEPOSITS

The aggregate amount of time deposits of $100,000 or more totaled
approximately $2,791,000 and $1,632,000 at December 31, 1997 and 1996,
respectively, and the related interest expense was approximately

F-12
<PAGE> 78
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$102,400, $60,000 and $42,000 for the years ended December 31, 1997, 1996 and
1995, respectively. Following is a summary of certificate accounts by remaining
maturities at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
1997..................................................... $ -- 5,562,739
1998..................................................... 6,544,896 886,164
1999..................................................... 591,343 59,781
2000..................................................... 3,426,860 1,115,489
2001..................................................... 420,453 276,802
2002 and thereafter...................................... 12,403 --
----------- ----------
Total certificate accounts............................... $10,995,955 7,900,975
=========== ==========
</TABLE>

(7) ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

A summary of FHLB advances at December 31, 1997 and 1996, follows:

<TABLE>
<CAPTION>
AMOUNT
------------------------
MATURITY INTEREST RATE 1997 1996
-------- ------------- ---------- ----------
<S> <C> <C> <C>
2001........................................ 6.8% $5,000,000 5,000,000
2002........................................ 6.75% 2,500,000 --
---------- ----------
$7,500,000 5,000,000
========== ==========
</TABLE>

FHLB advances are secured by a blanket lien on first mortgage loans with
balances totaling 150 percent of such advances. The FHLB stock also serves as
collateral for the advances.

(8) EMPLOYEE BENEFIT PLAN

The Corporation has a noncontributory defined benefit pension plan that
covers all employees who have reached age 21 and completed 1,000 hours of
service during their anniversary year. The Corporation's funding policy is to
make contributions to the plan equal to the minimum contribution required by the
Employee Retirement Income Security Act of 1974.

The actuarially determined net periodic pension cost for the years ended
December 31, 1997, 1996 and 1995, includes the following components:

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Service cost -- benefit earned during the period... $ 53,990 25,135 28,819
Interest cost on projected benefit obligation...... 22,444 15,175 17,807
Actual return on plan assets....................... 13,908 (15,595) (7,950)
Net deferral....................................... (24,442) 6,445 (3,026)
-------- -------- -------
Net periodic pension cost.......................... $ 65,900 31,160 35,650
======== ======== =======
</TABLE>

Assumptions used in determining the net periodic pension cost for 1997,
1996 and 1995 are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................... 6.75% 7.25% 6.25%
Weighted average rate of compensation increase.............. 4.00% 5.16% 4.96%
Long-term rate of return.................................... 7.75% 7.75% 7.75%
</TABLE>

F-13
<PAGE> 79
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table sets forth the plan's funded status and amounts
recognized in the financial statements as of December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested....................................... $ 246,826 168,202 150,649
Nonvested.................................... 55,244 30,640 15,044
--------- --------- ---------
Total accumulated benefit obligation........... $ 302,070 198,842 165,693
========= ========= =========
Projected benefit obligation................... 469,851 309,579 243,558
Fair value of plan assets...................... (184,414) (145,729) (116,875)
--------- --------- ---------
Unfunded projected benefit obligation.......... 285,437 163,850 126,683
Unrecognized net transition gain............... (160,663) (52,199) (27,255)
Additional minimum liability................... -- 5,150 21,987
--------- --------- ---------
Accrued pension cost........................... $ 124,774 116,801 121,415
========= ========= =========
</TABLE>

(9) COMMITMENTS AND CONTINGENT LIABILITIES

The Corporation has entered into two lease agreements which expire between
2005 and 2007, covering the rental of buildings and equipment. The following is
a schedule by years of approximate future minimum rental payments, exclusive of
any maintenance, utilities, or real estate taxes, required under operating
leases that have initial or remaining noncancelable lease terms in excess of one
year.

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1997...................................................... $ 63,672
1998...................................................... 63,672
1999...................................................... 63,672
2000...................................................... 63,672
2001...................................................... 63,672
--------
Total minimum lease payments................................ $318,360
========
</TABLE>

Rental expense for all operating leases was approximately $76,500, $76,300
and $32,300 for the years ended December 31, 1997, 1996 and 1995, respectively.

The Corporation is a party to litigation and claims arising in the normal
course of business. Management, after consultation with legal counsel, believes
that the liabilities, if any, arising from such litigation and claims will not
be material to the Corporation's financial position.

(10) RELATED PARTIES

The Bank has entered into transactions with its directors, significant
shareholders, and executive officers of the Corporation and their affiliates
(related parties). Such transactions were made in the ordinary course of
business on substantially the same terms and conditions, including interest
rates and collateral, as those which have been made or would be made for
comparable transactions with other customers and did not, in the

F-14
<PAGE> 80
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

opinion of management, involve more than normal credit risk or present other
unfavorable features. The following is a schedule of the aggregate amount of
loans to such related parties at December 31, 1997:

<TABLE>
<S> <C>
Aggregate amount of loans at beginning of year.............. $ 852,323
Loans originated during the year............................ 1,314,019
Repayments made during the year............................. (749,344)
----------
Aggregate amount of loans at end of year.................... $1,416,998
==========
</TABLE>

The Bank had $6,217,020 and $4,764,502 in deposits of such related parties
at December 31, 1997 and 1996, respectively.

(11) FEDERAL INCOME TAXES

The accompanying financial statements reflect federal income taxes at amounts
different from those computed by applying the U.S. federal income tax statutory
rates to income before federal income taxes. The reasons for these differences
are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
--------------------- -------------------- -------------------
PERCENT PERCENT PERCENT
OF PRETAX OF PRETAX OF PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
-------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Computed expected tax
expense...................... $193,856 35.00% $77,680 35.00% $14,407 35.00%
Increase (decrease) in taxes
resulting from:
Benefit of lower tax bracket
rate...................... (5,538) (1.00) (8,402) (3.78) (853) (2.07)
Goodwill amortization........ 14,987 2.71 14,987 6.75 14,987 36.41
Change in valuation
allowance................. -- -- (76,418) (34.43) (16,968) (41.22)
Other........................ 6,612 1.19 2,153 .97 (7,463) (18.14)
-------- ------ ------- ------ ------- ------
Actual tax expense............. $209,917 37.90% $10,000 4.51% $ 4,110 9.98%
======== ====== ======= ====== ======= ======
</TABLE>

The net tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1996, are:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Deferred tax assets
Deferred loan fees........................................ $ 17,444 25,133
Pension expense........................................... 46,337 39,712
Noncompete agreement...................................... 26,067 28,333
Excess book over tax bad debt reserve..................... 117,925 84,945
Other..................................................... 2,237 7,998
-------- --------
Total gross deferred tax assets............................. 210,010 186,121
Deferred tax liabilities
Deposit base intangible................................... 69,865 84,447
Depreciation.............................................. 80,923 52,872
Securities gains, net of accretion........................ -- 4,267
Deferred loan costs....................................... 22,792 35,992
FHLB stock dividend....................................... 12,852 2,924
Mortgage servicing rights................................. 13,571 --
-------- --------
Total gross deferred tax liabilities........................ 200,003 180,502
-------- --------
Net deferred tax asset...................................... $ 10,007 5,619
======== ========
</TABLE>

F-15
<PAGE> 81
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Under Statement 109, a valuation allowance is established to reduce the
deferred tax asset if it is more likely than not that the related tax benefit
will not be realized. In management's opinion, it is more likely than not that
the tax benefits will be realized; consequently, no valuation allowance has been
established as of December 31, 1997 or 1996.

As of December 31, 1995, the Corporation had net operating loss
carryforwards of approximately $408,000 for income tax purposes, all of which
were utilized in the 1996 tax year. For financial reporting purposes, the
Corporation had a valuation allowance of $76,418 as of December 31, 1995 which
was eliminated during 1996. The valuation allowance decreased $16,968 from
$93,386 during 1995.

(12) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These instruments are currently limited to commitments to extend credit and
standby letters of credit. These instruments possess credit risk characteristics
which are essentially the same as that involved in extending loans to customers
and are subject to the Bank's normal credit policies.

The Bank's maximum potential obligation to extend credit for financial
instruments with off-balance sheet risk at December 31, 1997 and 1996, was:

<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Commitments to extend credit............................... $8,082,921 7,778,633
Standby letters of credit.................................. 621,124 68,524
---------- ---------
$8,704,045 7,847,157
========== =========
</TABLE>

(13) CONCENTRATIONS OF CREDIT

Most of the Bank's business activity is with customers located within the
Northeast Ohio market area and, as such, is impacted by economic conditions in
the region. As a result of its loan underwriting and collateral requirements,
the Bank believes it has no significant concentrations of credit risk in its
loan portfolio as of December 31, 1997 and 1996. The Bank also has no exposure
to highly leveraged transactions and no foreign credits in its loan portfolio.

(14) REGULATORY CAPITAL

The Bank, as a state chartered bank, is subject to the dividend
restrictions set forth by the State Division of Banks. Under such restrictions,
the Bank may not, without the prior approval of the State Division of Banks,
declare dividends in excess of the sum of the current year's earnings (as
defined) plus the retained earnings (as defined) from the prior two years; as of
December 31, 1997, the Bank could declare dividends without the approval of the
State Division of Banks.

The Bank is subject to risk-based capital and leverage guidelines issued by
the Board of Governors of the Federal Reserve Systems ("FRB"). These guidelines
are used to evaluate capital adequacy and include the required minimums shown
below.

F-16
<PAGE> 82
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
MINIMUM
REQUIRED 1997 1996
-------- -------- -------
(DOLLARS IN THOUSANDS AT YEAR-END)
<S> <C> <C> <C>
Tier I capital (1)................................... $5,937 5,460
Total capital (2).................................... 6,340 5,775
Tier 1 capital ratio................................. 4.00% 12.96 15.55
Total capital ratio (2).............................. 8.00 13.84 16.45
Leverage ratio (3)................................... 3.00+ 10.12 12.01
</TABLE>

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

(1) As set forth in guidelines issued by the U.S. federal bank regulators.

(2) Total capital includes Tier 1 and Tier 2.

(3) Tier 1 capital divided by adjusted average assets.

To be "well capitalized" under federal bank regulatory agency definitions,
a depository institution must have a Tier 1 ratio of at least 6%, a combined
Tier 1 and Tier 2 ratio of at least 10%, and a leverage ratio of at least 5% and
not be subject to a directive, order, or written agreement to meet and maintain
specific capital levels. The regulatory agencies are required by law to take
specific prompt actions with respect to institutions that do not meet minimum
capital standards. As of December 31, 1997 and 1996, the Bank was "well
capitalized."

Under the framework, the Bank's capital levels do not allow the Bank to
accept brokered deposits without prior approval from regulators.

(15) FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, Disclosures About Fair
Value of Financial Instruments, requires the Corporation to disclose the
estimated fair value of its on- and off-balance sheet financial instruments. The
estimated fair value amounts have been determined by the Bank using available
market information and appropriate valuation methodologies; however,
considerable judgment is necessarily required to interpret market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts the Bank could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.

Certain financial instruments and all nonfinancial instruments are excluded
from the fair value disclosure requirements of Statement 107. Therefore, the
fair values presented below should not be construed as the underlying value of
the Corporation.

F-17
<PAGE> 83
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, 1997 and 1996, the carrying amount and estimated fair
values of the Corporation's financial instruments were as follows:

<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks..................... $2,562,597 2,562,597 2,956,282 2,956,282
Federal funds sold.......................... 5,264,000 5,264,000 7,373,000 7,373,000
Investment securities....................... 1,619,300 1,619,438 1,142,485 1,148,460
Loans....................................... 53,097,451 53,183,294 38,633,671 39,062,000
Financial liabilities:
Noninterest bearing deposits................ 8,288,832 8,288,832 6,396,864 6,396,864
Interest bearing deposits................... 43,723,084 43,809,117 35,855,665 35,892,469
Advances from the Federal Home Loan Bank.... 7,500,000 7,500,000 5,000,000 5,000,000
</TABLE>

Cash and due from banks; Federal funds sold. The carrying amount is a
reasonable approximation of fair value because of the short maturity of these
instruments.

Investment securities. Estimated fair value for investment securities is
based on quoted market prices.

Loans. For variable rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on carrying values. The
fair value of fixed rate loans is estimated by discounting the future cash flows
using the current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.

Noninterest bearing and interest bearing deposits. The fair values
disclosed for demand deposits and savings accounts is the amount payable on
demand at the reporting date (i.e., their carrying amounts). The fair values for
fixed-maturity certificates of deposit is estimated using a discounted cash flow
calculation that applies interest rates currently offered on certificates of
similar remaining maturities.

Advances from the Federal Home Loan Bank. The carrying amount is a
reasonable approximation of fair value.

As of December 31, 1997 and 1996, the estimated fair values of the
Corporation's off-balance sheet instruments approximated the committed amount of
$8,082,921 and $7,778,633, respectively, for commitments to extend credit and
$621,124 and $68,524, respectively, for letters of credit. The committed amount
is a reasonable approximation of fair value because of the short remaining terms
of the agreements which primarily comprise variable rate loan commitments and
letters of credit.

F-18
<PAGE> 84
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(16) PARENT COMPANY FINANCIAL INFORMATION

Following is condensed parent company financial information of the
Corporation as of and for the four months ended December 31, 1997:

CONDENSED STATEMENT OF FINANCIAL CONDITION

<TABLE>
<S> <C>
Assets
Cash...................................................... $ 20,401
Investment in Bank........................................ 6,403,971
Other assets.............................................. 3,841
----------
$6,428,213
==========
Shareholders' Equity
Common stock.............................................. 1,491,855
Paid-in capital........................................... 4,671,642
Accumulated earnings...................................... 264,716
----------
$6,428,213
==========
</TABLE>

CONDENSED STATEMENT OF EARNINGS

<TABLE>
<S> <C>
Dividend from Bank.......................................... $ 50,000
Interest expense............................................ (2,124)
Operating expenses.......................................... (32,475)
--------
15,401
Income tax benefit.......................................... 3,841
--------
Income before equity in undistributed earnings of Savings
Bank...................................................... 19,242
Equity in undistributed earnings of Bank.................... 324,715
--------
Net earnings................................................ $343,957
========
</TABLE>

CONDENSED STATEMENT OF CASH FLOWS

<TABLE>
<S> <C>
Net cash flows from operating activities:
Net earnings.............................................. $ 343,957
Adjustments to reconcile net cash provided by operating
activities:
Equity in undistributed earnings of Bank............... (324,715)
Increase in other assets............................... (3,841)
---------
Net cash used by operating activities....................... (328,556)
---------
Cash flows from financing activities --
Net proceeds from issuance of common stock................ 5,000
---------
Net increase in cash........................................ 20,401
Cash and cash equivalents at beginning of period............ --
---------
Cash and cash equivalents at end of period.................. $ 20,401
=========
</TABLE>

(17) ACCOUNTING CHANGE

In 1997, the Corporation changed its method of accounting for goodwill from
an unacceptable method to an acceptable method under Accounting Principles Board
Opinion No. 16. The Corporation previously expensed goodwill in 1994 during the
year of acquisition of the Bank. The Corporation retroactively restated

F-19
<PAGE> 85
GLB BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

its consolidated financial statements to appropriately record and amortize
goodwill. The accumulated deficit as of December 31, 1994 was decreased by
$418,761 and net income was decreased $44,080 each year in the three year period
ended December 31, 1997 related to the restatement.

(18) SUBSEQUENT EVENT

On February 17, 1998, the shareholders authorized the issuance of 2,000,000
shares of Serial Preferred Stock, without par value. The shareholders also
increased the number of authorized shares of Common Stock, without par value,
from 500,000 to 10,000,000 shares, which has been disclosed within the
consolidated statements of financial condition.

On February 17, 1998, the shareholders adopted a Stock Option and Incentive
Plan (the "Plan") for officers, employees and non-employee directors. 28,000
shares of Common Stock have been reserved for issuance under the Plan. In
addition, the Plan will include any shares surrendered to the Company in payment
of the exercise price of options or stock appreciation rights issued under the
Plan.

On March 17, 1998, the Board of Directors authorized a 2 for 1 common stock
split whereby one additional share of common stock was issued on March 18, 1998
for every share owned of record as of March 17, 1998. In the accompanying
financial statements all share and per share amounts have been retroactively
restated to reflect the stock split.

F-20
<PAGE> 86

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE 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
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Prospectus Summary.................... 3
Recent Developments................... 7
Risk Factors.......................... 9
Use of Proceeds....................... 14
Dividend Policy....................... 14
Capitalization........................ 15
Dilution.............................. 16
Selected Consolidated Financial
Data................................ 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 18
Business.............................. 28
Management............................ 42
Certain Relationships and Related
Party Transactions.................. 48
Principal Shareholders................ 51
Supervision and Regulation............ 52
Description of Capital Stock.......... 58
Shares Eligible for Future Sale....... 62
Underwriting.......................... 63
Legal Matters......................... 64
Experts............................... 64
Available Information................. 64
Index to Financial Statements......... F-2
</TABLE>

---------------------
UNTIL , 1998 (25 DAYS AFTER THE EFFECTIVE DATE OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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

1,300,000 SHARES

[GLB BANCORP, INC. LOGO]

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

PROSPECTUS

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

Roney & Co.
, 1998

======================================================
<PAGE> 87

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Ohio General Corporation Law ("OGCL") provides that Ohio corporations may
indemnify an individual made a party to any threatened, pending, or completed
action, suit or proceeding whether civil, criminal, administrative or
investigative, because the individual is or was a director, officer, employee or
agent of the corporation, against liability incurred in the proceeding if the
person: (i) acted in good faith and (ii) the individual believes his conduct was
in the corporation's best interest or was not opposed to the corporation's best
interest.

The OGCL further provides that a corporation shall indemnify an individual
who was fully successful on the merits or otherwise in any proceeding to which
the director, officer, employee or agent was a party because the individual was
or is a director, officer, employee or agent of the corporation, for reasonable
expenses incurred by the director in connection with the proceeding. The OGCL
also provides that a corporation may purchase and maintain insurance on behalf
of the individual who is or was a director, officer, employee or agent of the
corporation or who, while a director, officer, employee or agent of the
corporation is or was serving at the request of the corporation as a director,
officer, partner, trustee, employer or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprises, against liability asserted against or incurred by the individual in
that capacity or arising from the individual status as a director, officer,
employee, or agent.

The Registrant will maintain a directors' and officers' liability insurance
policy, including bank reimbursement, for the purpose of providing
indemnification to its directors and officers in the event of such a threatened,
pending or completed action.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the Common Stock being registered. All amounts shown
are estimates except the SEC registration fee, and assume the sale of 1,300,000
Shares.

<TABLE>
<S> <C>
SEC registration fee........................................ $ 5,733
NASD fee.................................................... 2,145
Nasdaq SmallCap listing fee................................. 6,000
Printing and engraving costs................................ 45,000
Fees and expenses of counsel................................ 62,500
Accounting and related expenses............................. 60,000
Blue Sky fees and expenses.................................. 15,000
Registrar and Transfer Agent................................ 10,000
Miscellaneous............................................... 8,622
----------
Total.................................................. $ 215,000
==========
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

On or about March 12, 1997 Great Lakes Bank concluded the sale on a private
offering basis of 86,342 shares of Common Stock, par value $5.00 per share, out
of a total of 200,000 such shares offered for sale. The private offering
commenced in March 1996. Great Lakes Bank, which subsequently became a wholly
owned subsidiary of the Registrant, is an Ohio-chartered commercial bank. Under
Securities Act of 1933 Section 3(a)(2), offers and sales by Great Lakes Bank of
its securities are not and were not required to be registered under the
Securities Act of 1933. The shares were offered and sold on a best efforts
basis, without the assistance of any underwriter. The securities were sold
entirely for cash, at the price of $12.50 per share.

II-1
<PAGE> 88

On September 12, 1997 Great Lakes Bank concluded a holding company
reorganization transaction under Section 3(a) of the Bank Holding Company Act of
1956 whereby Great Lakes Bank became a wholly owned subsidiary of the Registrant
and holders of shares of Common Stock, par value $5.00 per share, of Great Lakes
Bank became holders of a like number of shares of Common Stock, without par
value, of the Registrant. The holding company reorganization transaction was
exempt under Securities Act of 1933 Section 3(a)(12) from registration under the
Securities Act of 1933. The holding company reorganization transaction was
undertaken without the assistance of any underwriter. In connection with the
holding company reorganization, the shares of Great Lakes Bank Common Stock were
converted by operation of law into a like number of shares of Registrant Common
Stock, without the payment of any additional consideration. The group comprising
shareholders of Great Lakes Bank prior to the holding company reorganization was
identical to the group comprising shareholders of the Registrant immediately
after the holding company reorganization, with each shareholder owning shares of
the Registrant Common Stock in exactly the same proportion he or she had held
Great Lakes Bank Common Stock, none of the shareholders having exercised
dissenters' rights. Prior to the holding company reorganization of Great Lakes
Bank, the Registrant had no significant assets. Other than changes arising out
of Ohio banking law and Ohio corporate law, the rights and interests of holders
of Great Lakes Bank Common Stock prior to the holding company reorganization
were substantially the same as their rights and interest as shareholders of the
Registrant immediately after the holding company reorganization. Immediately
after the holding company reorganization of Great Lakes Bank, the Registrant had
substantially the same assets and liabilities on a consolidated basis as Great
Lakes Bank had immediately prior to the holding company reorganization.

On or about January 26, 1998 the Company concluded the sale on a private
offering basis of 18,800 shares of Common Stock, without par value. The private
offering and sale commenced in late 1997, following receipt by the Company of
numerous unsolicited inquiries from individuals seeking to acquire Common Stock.
The shares were offered and sold to such persons on a best efforts basis,
without the assistance of an underwriter. The securities were sold entirely for
cash, at the price of $12.50 per share, to a total of ten purchasers (treating
joint purchasers as one). All of the purchasers were residents of the State of
Ohio. The Common Stock was offered and sold without registration under the
Securities Act of 1933 in reliance upon the small offering and private offering
exemptions under the Securities Act of 1933, including Section 3(b) and 4(2)
thereof, and Regulation D Rules 504 and 506 thereunder, as well as the
intrastate exemption under Section 3(a)(11).

Pursuant to an agreement dated November 25, 1997, on March 16, 1998 the
Company purchased a parcel of real estate for the construction of a new branch
facility. At the request of the seller of the property, the Company agreed to
pay the purchase price in the form of Common Stock, and the Company and the
seller agreed to a price of $297,050, payable in the form of 23,764 shares of
Common Stock. Without excluding other bases of exemption, the Common Stock was
offered and sold without registration under the Securities Act of 1933 in
reliance upon the private offering exemption in Section 4(2) of the Securities
Act of 1933.

ITEM 27. EXHIBITS

The exhibits filed pursuant to this Item 27 immediately follow the Exhibit
Index. The following is a description of the applicable exhibits required for
Form SB-2 provided by Item 601 of Regulation S-B.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
(1) Underwriting Agreement
(2) Not Applicable.
**(3) Articles of Incorporation and Code of Regulations.
(4) Not Applicable.
*(5) Opinion of Grady & Associates
(8) Not Applicable.
(9) Not Applicable.
(10) Material Contracts
</TABLE>

II-2
<PAGE> 89

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
** A. 1998 Stock Option and Incentive Plan
** B. Indenture of Lease dated March 1, 1998 between Richard
M. Osborne, Trustee, and Great Lakes Bank, for the new
branch facility at 50 South Park Place, Painesville,
Ohio
** C. Indenture of Lease dated May 1, 1997 between Richard M.
Osborne, Trustee, and Great Lakes Bank, for the branch
facility at 29933 Euclid Avenue, Wickliffe, Ohio
D. Indenture of Lease dated March 1, 1998 between Great
Lakes Bank and OsAir for the lease of certain space in the
Bank's main office facility at 7001 Center Street,
Mentor, Ohio
** E. Federal Home Loan Bank of Cincinnati Blanket Agreement
for Advances and Security Agreement, dated July 22, 1996
(11) Not Applicable.
(13) Not Applicable
(15) Not Applicable
(16) Not Applicable.
(17) Not Applicable.
(18) Not Applicable.
(19) Not Applicable.
(20) Not Applicable.
**(21) Subsidiaries
(22) Not Applicable.
(23) Consents of Experts and Counsel.
A. Consent of KPMG Peat Marwick LLP
B. Consent of Grady & Associates (contained in that firm's
opinion filed as Exhibit (5)).
**(24) Power of Attorney.
(25) Not Applicable.
(26) Not Applicable.
**(27) Financial Data Schedule
</TABLE>

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

* To be filed by amendment.

** Previously filed.

ITEM 28. UNDERTAKINGS

(d) The small business issuer will provide to the underwriter at the
closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.

(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to officers, directors, and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer, or controlling person of the small business issuer
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, the small business issuer will, unless in the opinion of its
counsel that matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of 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-3
<PAGE> 90

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement Amendment No. 1 to be signed on its behalf by the undersigned, in the
City of Mentor, State of Ohio, this 1st day of May, 1998.

GLB BANCORP, INC.

By: /s/ Richard T. Flenner, Jr.

----------------------------------
Richard T. Flenner, Jr.
President and Chief Executive
Officer

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<S> <C>
/s/ Richard T. Flenner, Jr. May 1, 1998
- -----------------------------------------------------
Richard T. Flenner, Jr., President,
Chief Executive Officer and Director

/s/ Cheryl J. Mihitsch May 1, 1998
- -----------------------------------------------------
Cheryl J. Mihitsch, Treasurer
(Principal Financial and Accounting Officer)

/s/ James V. Fryan* May 1, 1998
- -----------------------------------------------------
James V. Fryan, Director

May 1, 1998
- -----------------------------------------------------
George C. Lott, Director

/s/ George X. Mechir* May 1, 1998
- -----------------------------------------------------
George X. Mechir, Director

/s/ Marian Rose Nathan* May 1, 1998
- -----------------------------------------------------
Marian Rose Nathan, Director

/s/ Jerome T. Osborne, Sr.* May 1, 1998
- -----------------------------------------------------
Jerome T. Osborne, Director and
Chairman of the Board

/s/ Richard M. Osborne* May 1, 1998
- -----------------------------------------------------
Richard M. Osborne, Director and
Vice Chairman of the Board

/s/ Edward R. Pike* May 1, 1998
- -----------------------------------------------------
Edward R. Pike, Director

/s/ Thomas J. Smith* May 1, 1998
- -----------------------------------------------------
Thomas J. Smith, Director

/s/ Joseph T. Svete* May 1, 1998
- -----------------------------------------------------
Joseph T. Svete, Director

/s/ Thomas E. Wheeler* May 1, 1998
- -----------------------------------------------------
Thomas E. Wheeler, Director

By: * /s/ Richard T. Flenner, Jr. May 1, 1998
- -----------------------------------------------------
Richard T. Flenner, Jr., Attorney-in-fact
</TABLE>

II-4
<PAGE> 91

EXHIBIT INDEX

<TABLE>
<S> <C>
Exhibit 1 Form of Underwriting Agreement
** Exhibit 3.a Amended and Restated Articles of Incorporation, as amended,
of GLB Bancorp, Inc.
** Exhibit 3.b Code of Regulations of GLB Bancorp, Inc.
* Exhibit 5 Legal Opinion of Grady & Associates
** Exhibit 10.a 1998 Stock Option and Incentive Plan
** Exhibit 10.b Indenture of Lease dated March 1, 1998 between Richard M.
Osborne, Trustee, and Great Lakes Bank, for the 50 South
Park Place branch (Painesville, Ohio)
** Exhibit 10.c Indenture of Lease dated May 1, 1997 between Richard M.
Osborne, Trustee, and Great Lakes Bank, for the 29933 Euclid
Avenue branch (Wickliffe, Ohio)
Exhibit 10.d Indenture of Lease dated March 1, 1998 between Great Lakes
Bank and OsAir for the lease of certain space in the Bank's
main office facility at 7001 Center Street (Mentor, Ohio)
** Exhibit 10.e Federal Home Loan Bank of Cincinnati Blanket Agreement for
Advances and Security Agreement, dated July 22, 1996
** Exhibit 21 Subsidiaries
Exhibit 23 Consent of KPMG Peat Marwick LLP
** Exhibit 24 Power of Attorney
** Exhibit 27 Financial Data Schedule
</TABLE>

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

* To be filed by amendment.

** Previously filed.

II-5

<PAGE> 1
Exhibit 1

1,300,000 SHARES

GLB BANCORP, INC.

COMMON STOCK

UNDERWRITING AGREEMENT
----------------------

May ___, 1998

Roney & Co., L.L.C.
One Griswold
Detroit, Michigan 48226

Dear Sirs:

GLB Bancorp, Inc., an Ohio corporation (the "Company"), proposes to
issue and sell 1,300,000 shares (the "Firm Shares") of its authorized but
unissued Common Stock (the "Common Stock") to Roney & Co., L.L.C., a Delaware
limited liability company ("Roney & Co." or the "Underwriter"). In addition, the
Company proposes to grant to the Underwriter an option to purchase up to an
additional 195,000 shares (the "Optional Shares") to cover over-allotments. The
Firm Shares and the Optional Shares are called, collectively, the "Shares."

1. SALE AND PURCHASE OF THE SHARES.

(a) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to issue and sell to
the Underwriter, and the Underwriter agrees to purchase, the Firm
Shares at a purchase price of $[______] per Share, except as set forth
in Section 1(b) below.

(b) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to the terms and
conditions of, this Agreement, the policies of the National Association
of Securities Dealers, Inc. (the "NASD"), and pursuant to directions
from the Company, the Underwriter will offer to sell to each of the
persons listed on EXHIBIT A (who may purchase alone or with family
members to the extent permitted by the Free-Riding and Withholding
Interpretation (the "Interpretation") under the Rules of Fair Practice
of the NASD) the number of Shares set forth opposite their respective
names on EXHIBIT A. To the extent such persons (alone or with such
family members) offer to buy such Shares, the Underwriter

<PAGE> 2

agrees to purchase up to [__________] of such Shares at a purchase
price of $[______] per Share. The parties agree that the securities
purchased and sold under this subparagraph shall constitute "issuer
directed securities" sold to the issuer's employees or directors or
other persons under the Interpretation.

(c) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to the terms and
conditions of, this Agreement, the Company grants to the Underwriter an
option to purchase all or any part of the Optional Shares at a price
per Share of $[______]. The over-allotment option may be exercised only
to cover over-allotments in the sale of the Firm Shares by the
Underwriter and may be exercised in whole or in part at any time or
times on or before 12:00 noon, Detroit time, on the day before the Firm
Shares Closing Date (as defined in Section 2 below), and only once at
any time after that date and within 30 days after the Effective Date
(as defined in Section 4 below), in each case upon written or
transmitted facsimile notice, or verbal notice confirmed by transmitted
facsimile, written or telegraphic notice, by Roney & Co. to the Company
no later than 12:00 noon, Detroit time, on the day before the Firm
Shares Closing Date or at least three but not more than five full
business days before the Optional Shares Closing Date (as defined in
Section 2 below), as the case may be, setting forth the number of
Optional Shares to be purchased and the time and date (if other than
the Firm Shares Closing Date) of such purchase.

2. DELIVERY AND PAYMENT. Delivery by the Company of the Firm
Shares to Roney & Co. and payment of the purchase price by certified or official
bank check payable in Detroit Clearing House (next day) funds to the Company,
shall take place at the offices of Benesch, Friedlander, Coplan & Aronoff LLP,
2300 BP Tower, 200 Public Square, Cleveland, Ohio 44114, at such time and date,
not later than the third (or, if the Firm Shares are priced, as contemplated by
Rule 15c6-1(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after 4:30 p.m., Washington, D.C. time, the fourth) full
business day following the first date that any of the Shares are released by the
Underwriter for sale to the public, as Roney & Co. shall designate by at least
48 hours prior notice to the Company (the "Firm Shares Closing Date"); provided,
however, that if the Prospectus (as defined in Section 4 below) is at any time
prior to the Firm Shares Closing Date recirculated to the public, the Firm
Shares Closing Date shall occur upon the later of the third or fourth, as the
case the may be, full business day following the first date that any of the
Shares are released by the Underwriter for sale to the public or the date that
is 48 hours after the date that the Prospectus has been so recirculated.

To the extent the option with respect to the Optional Shares
is exercised, delivery by the Company of the Optional Shares, and payment of the
purchase price by certified or official bank check payable in Detroit Clearing
House (next day) funds to the Company, shall take place at the offices of
Benesch, Friedlander, Coplan & Aronoff LLP specified above at the time and on
the date (which may be the Firm Shares Closing Date) specified in the notice
referred to in Section 1(c) (such time and date of delivery and payment are
called the "Optional Shares Closing Date"). The Firm Shares Closing Date and the
Optional Shares Closing Date are called, individually, a "Closing Date" and,
collectively, the "Closing Dates."

2
<PAGE> 3

Certificates representing the Firm Shares shall be registered
in such names and shall be in such denominations as Roney & Co. shall request at
least two full business days before the Firm Shares Closing Date or, in the case
of the Optional Shares, on the day of notice of exercise of the option as
described in Section 1(c), and shall be made available to Roney & Co. for
checking and packaging, at such place as is designated by Roney & Co., at least
one full business day before the Closing Date.

3. PUBLIC OFFERING. Subject to the terms and conditions hereof,
the Underwriter agrees that (i) it will offer the Shares to the public as set
forth in the Prospectus as soon after the Registration Statement becomes
effective as may be advisable, and (ii) it will offer and sell the Shares to the
public only in those jurisdictions, and in such amounts, where due qualification
and/or registration has been effected or an exemption from such qualification
and/or registration is available under the applicable securities or Blue Sky
laws of such jurisdiction; it being understood, however, that such agreement
only covers the initial sale of the Shares by the Underwriter and not any
subsequent sale of such Shares in any trading market that may develop after the
public offering. The Company hereby confirms that the Underwriter and dealers
have been authorized to distribute each preliminary prospectus and are
authorized to distribute the Prospectus (as from time to time amended or
supplemented).

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to the Underwriter and
agrees with the Underwriter as follows:

(a) The Company has prepared in conformity with the

requirements of the Securities Act of 1933, as amended (the "Securities
Act") and the rules and regulations adopted by the Securities and
Exchange Commission (the "Commission") thereunder (the "Rules"), a
registration statement on Form SB-2 (No. 333-48387), including a
preliminary prospectus, and has filed with the Commission the
registration statement and such amendments thereof as may have been
required to the date of this Agreement. Copies of such registration
statement (including all amendments thereof) and of the related
preliminary prospectus have heretofore been delivered by the Company to
you. The term "preliminary prospectus" means any preliminary prospectus
(as defined in Rule 430 of the Rules) included at any time as a part of
the registration statement. The registration statement as amended
(including any supplemental registration statement under Rule 462(b) or
any amendment under Rule 462(c) of the Rules) at the time and on the
date it becomes effective (the "Effective Date"), including the
prospectus, financial statements, schedules, exhibits, and all other
documents incorporated by reference therein or filed as a part thereof,
is called the "Registration Statement;" provided, however, that
"Registration Statement" shall also include all Rule 430A Information
(as defined below) deemed to be included in such Registration Statement
at the time such Registration Statement becomes effective as provided
by Rule 430A of the Rules. The term "Prospectus" means the Prospectus
as filed with the Commission pursuant to Rule 424(b) of the Rules or,
if no filing pursuant to Rule 424(b) of the Rules is required, means
the form

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<PAGE> 4

of final prospectus included in the Registration Statement at the time
such Registration Statement becomes effective. The term "Rule 430A
Information" means information with respect to the Shares and the
offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A of the Rules.
Reference made herein to any preliminary prospectus or to the
Prospectus shall be deemed to refer to and include any document
attached as an exhibit thereto or incorporated by reference therein, as
of the date of such preliminary prospectus or the Prospectus, as the
case may be. The Company will not file any amendment of the
Registration Statement or supplement to the Prospectus to which Roney &
Co. shall reasonably object in writing after being furnished with a
copy thereof.

(b) Each preliminary prospectus, at the time of filing
thereof, contained all material statements which were required to be
stated therein in accordance with the Securities Act and the Rules, and
conformed in all material respects with the requirements of the
Securities Act and the Rules, and did not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
Commission has not issued any order suspending or preventing the use of
any preliminary prospectus. When the Registration Statement shall
become effective, when the Prospectus is first filed pursuant to Rule
424(b) of the Rules, when any post-effective amendment of the
Registration Statement shall become effective, when any supplement to
or pre-effective amendment of the Prospectus is filed with the
Commission and at each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will
comply with the applicable provisions of the Securities Act and the
Exchange Act and the respective rules and regulations of the Commission
thereunder, and neither the Registration Statement nor the Prospectus,
nor any amendment thereof or supplement thereto, will contain any
untrue statement of a material fact or will omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representation or warranty as to the information contained in the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information
furnished in writing to the Company by the Underwriter, specifically
for use in connection with the preparation thereof. The Company hereby
acknowledges for all purposes under this Agreement that the statements
set forth under the caption "Underwriting" and the stabilization legend
on page 2 of the Prospectus constitute the only written information
furnished to the Company by or on behalf of the Underwriters for use in
the preparation of the Registration Statement or the Prospectus or any
amendment or supplement thereto.

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<PAGE> 5

(c) All contracts and other documents required to be filed as
exhibits to the Registration Statement have been filed with the
Commission as exhibits to the Registration Statement.

(d) KPMG Peat Marwick LLP, whose report is filed with the
Commission as part of the Registration Statement, are, and during the
periods covered by their report were, independent public accountants as
required by the Securities Act and the Rules.

(e) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Ohio. The Company's sole subsidiary, Great Lakes Bank (the "Bank"),
is an Ohio-chartered bank. Neither the Company nor the Bank has any
properties or conducts any business outside of the State of Ohio which
would require either of them to be qualified as a foreign corporation
or bank, as the case may be, in any jurisdiction outside of Ohio. The
Bank does not have any directly or indirectly held subsidiary. The
Company has all power, authority, authorizations, approvals, consents,
orders, licenses, certificates and permits needed to enter into,
deliver and perform this Agreement and to issue and sell the Shares.

(f) The Company is a bank holding company duly registered with
the Board of Governors of the Federal Reserve System ("Federal Reserve
Board") under the Bank Holding Company Act of 1956, as amended. The
conduct of the business of the Company and each of its subsidiaries is
in compliance in all respects with applicable federal, state, local and
foreign laws and regulations, except where the failure to be in
compliance would not have a material adverse effect upon the condition
(financial or otherwise), business, properties or prospects of the
Company and the Bank taken as a whole. The Company and the Bank own or
possess or have obtained all governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to lease or own,
as the case may be, and to operate their properties and to carry on
their business as presently conducted, except where the failure to have
obtained such licenses, permits, consents, orders, approvals and other
authorization would not have a material adverse effect upon the
condition (financial or otherwise), business, properties or prospects
of the Company and the Bank taken as a whole, and neither the Company
nor the Bank has received any notice of proceedings related to
revocation or modification of any such licenses, permits, consents,
orders, approvals or authorizations that singly or in the aggregate, if
the subject of an unfavorable ruling or finding, would result in a
material adverse effect upon the condition (financial or otherwise),
business, properties or prospects of the Company and the Bank taken as
a whole. Neither the Company nor the Bank is a party or subject to any
agreement or memorandum with, or directive or order issued
by, the Federal Reserve Board, the Federal Deposit Insurance
Corporation (the "FDIC"), the Ohio Division of Financial Institutions
(the "Division") or any other bank regulatory authority, which imposes
any restrictions or requirements not generally applicable to bank
holding companies or commercial banks.

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<PAGE> 6

(g) The financial statements of the Company and any related
notes thereto, included in the Registration Statement and the
Prospectus, present fairly the financial position of the Company as of
the date of such financial statements and for the period covered
thereby. Such statements and any related notes have been prepared in
accordance with generally accepted accounting principals ("GAAP")
applied on a consistent basis and certified by the independent
accountants named in subsection 4(d) above. The supporting schedules,
if any, included in the Registration Statement present fairly, in
accordance with GAAP, the information required to be stated therein.
The selected financial data and the summary financial information
included in the Prospectus present fairly the information shown therein
and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement.

(h) The Company owns adequate and enforceable rights to use
any patents, patent applications, trademarks, trademark applications,
service marks, copyrights, copyright applications and other similar
rights (collectively, "Intangibles") necessary for the conduct of the
material aspects of its business as described in the Prospectus and the
Company has not infringed, is infringing, or has received any notice of
infringement of, any Intangible of any other person.

(i) The Bank owns the following properties, which are as
described in the Prospectus, free and clear of all liens, encumbrances,
claims, security interests and defects, and all such locations have
been duly approved as Bank locations by the Division and the FDIC:

1. 7001 Center Street, Mentor, Ohio;

2. 9365 Mentor Avenue, Mentor, Ohio;

3. 38600 Lakeshore Boulevard, Willoughby, Ohio;

4. 28500 Chardon Road, Willoughby Hills, Ohio; and

5. 7742 Lakeshore Boulevard, Mentor, Ohio.

(j) The Bank has valid and enforceable leasehold interests in
the real property listed below, which properties are as described in
the Prospectus, and all such locations have been duly approved as Bank
locations by the Division and the FDIC:

1. 1522 Mentor Avenue, Painesville, Ohio;

2. 29933 Euclid Avenue, Wickliffe, Ohio; and

3. 50 South Park Place, Painesville, Ohio.

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<PAGE> 7

(k) There are no litigation or governmental or other
proceedings or investigations pending before any court or before or by
any public body or board or threatened against the Company or the Bank
and to the best of the Company's knowledge, there is no reasonable
basis for any such litigation, proceedings or investigations, which are
required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might reasonably be expected to have a
material adverse effect on commencement or conduct of the respective
businesses of the Company or the Bank, the ownership of their
respective properties, the consummation of the transactions
contemplated in this Agreement, or the performance by the Company of
its obligations hereunder.

(l) The Company and the Bank have filed all federal, state,
and local tax returns required to be filed by them and paid all taxes
shown due on such returns as well as all other material taxes,
assessments and governmental charges which have become due; no material
deficiency with respect to any such return has been assessed or
proposed.

(m) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
otherwise stated or contemplated herein, there has not been any
material adverse change in the condition (financial or other),
business, properties or prospects of the Company.

(n) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default, in the
due performance and observance of any material term, covenant or
condition, by the Company, the Bank or, to the best of the Company's
knowledge, any other party, of any lease, indenture, mortgage, note or
any other agreement or instrument to which the Company or the Bank is a
party or by which either of them or either of their businesses may be
bound or affected, except such defaults or events as are not material
to the conduct of their respective businesses or ownership of their
respective properties.

(o) Neither the Company nor the Bank is in violation of any
term or provision of the articles of incorporation or code of
regulations of the Company or the Bank, except for such violations
which would not have a material adverse effect on the condition
(financial or otherwise), business, properties, prospects or results of
operation of the Company and the Bank, taken as a whole. Neither the
Company nor the Bank is in material violation of, nor is either of them
required to take any action to avoid any material violation of, any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation.

(p) Neither the execution, delivery or performance of this
Agreement by the Company nor the consummation of the transactions
contemplated hereby (including, without limitation, the issuance and
sale by the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or provision of, or

7
<PAGE> 8

constitute a default (or an event which with notice or lapse of time,
or both, would constitute a default) under, or require any consent
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or the Bank
pursuant to the terms of, any lease, indenture, mortgage, note or other
agreement or instrument to which the Company or the Bank is a party or
by which either of them or either of their businesses may be bound or
affected, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation or violate any provision of the articles of
incorporation or code of regulations of the Company or the Bank, except
those which are immaterial in amount or effect.

(q) The Company has authorized, issued and outstanding capital
stock as set forth in the Prospectus, and all such outstanding capital
stock was duly and validly authorized and issued, and is fully paid and
nonassessable. The issuance, sale and delivery of the Shares have been
duly authorized by all necessary corporate action by the Company and,
when issued, sold and delivered against payment therefor pursuant to
this Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will have been issued in violation of
any preemptive or other right. All of the outstanding capital stock of
the Bank has been duly authorized and validly issued, and is fully paid
and owned by the Company, free and clear of all liens, encumbrances and
security interests. There is no outstanding option, warrant or other
right calling for the issuance of, and no binding commitment to issue,
any share of stock of the Company or the Bank or any security
convertible into or exchangeable for stock of the Company or the Bank,
except for stock options described in the Registration Statement (the
"Stock Options") under the GLB Bancorp, Inc. 1998 Stock Option and
Incentive Plan (the "Stock Option Plan"). There are no holders of
securities of the Company who, by reason of the filing of the
Registration Statement under the Securities Act, have the right to
request the Company to register such securities under the Securities
Act. The Common Stock, the Company's serial preferred stock (the
"Preferred Stock"), the Shares and the Stock Options conform in all
material respects to all statements in relation thereto contained in
the Registration Statement and the Prospectus.

(r) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, neither the
Company nor the Bank has (1) issued any securities or incurred any
material liability or obligation, direct or contingent, (2) entered
into any material transaction, or (3) declared or paid any dividend or
made any distribution on any of their stock, except liabilities,
obligations, and transactions reasonably expected based on the
disclosures in the Prospectus.

(s) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legal, valid and
binding agreement and obligation of the Company.

(t) The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus.

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<PAGE> 9

(u) Neither the Company, nor the Bank, nor, to the Company's
knowledge any director, officer, agent, employee or other person
associated with the Company or the Bank, acting on behalf of the
Company or the Bank, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.

(v) Neither the Company nor the Bank nor any affiliate of
either of them has taken, and they will not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of the Common
Stock in order to facilitate the sale or resale of any of the Shares.

(w) No transaction has occurred between or among the Company
or the Bank and any of their officers, directors, organizers or the
Company's shareholders or any affiliate or affiliates of any such
officer, director, organizer, or shareholder, that is required to be
described in and is not described in the Prospectus.

(x) The Company is not and will not after the offering be an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.

(y) The Company has obtained from all of its executive
officers and directors their written agreement that, for a period of
180 days from the date of this Agreement, they will not sell, offer to
sell, transfer, contract to sell, or grant any option for the sale of
or otherwise dispose of, directly or indirectly, any shares of Common
Stock of the Company (or any securities convertible into or exercisable
for such shares of Common Stock) owned by them.

(z) The Company and the Bank maintain a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management's general
or specific authorization, (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets, (C) access to assets is
permitted only in accordance with management's general or specific
authorization, (D) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences, and (E) the tax accounting
method used by the Company and the Bank to report income is the proper
method of accounting for United States federal income tax purposes.

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<PAGE> 10

5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligation of
the Underwriter to purchase the Shares shall be subject to the accuracy of the
representations and warranties of the Company in this Agreement as of the date
of this Agreement and as of the Firm Shares Closing Date or Optional Shares
Closing Date, as the case may be, to the accuracy of the written statements of
Company officers made pursuant to the provisions of this Agreement, to the
performance by the Company of its obligations under this Agreement, and to the
following additional terms and conditions:

(a) The Registration Statement shall have become effective not
later than 5:00 P.M., Detroit time, on the date of this Agreement or on
such later date and time as shall be consented to in writing by Roney &
Co.; if the filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b) of the Rules, the Prospectus shall
have been filed in the manner and within the time period required by
Rule 424(b) of the Rules; at each Closing Date, if any, no stop order
shall have been issued or proceedings therefor initiated or threatened
by the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement, or otherwise,
shall have been complied with to the reasonable satisfaction of Roney &
Co.

(b) At each Closing Date, Roney & Co. shall have received the
favorable opinion of Grady & Associates, counsel for the Company, dated
the Firm Shares Closing Date or the Optional Shares Closing Date, as
the case may be, addressed to the Underwriter and in form and scope
reasonably satisfactory to counsel for Roney & Co. to the effect that:

(i) The Company (A) is a corporation existing and in
good standing under the laws of the State of Ohio, and (B) to
the best of such counsel's knowledge, is duly qualified to do
business as a foreign corporation under the corporation law
of, and is in good standing as such in, every jurisdiction
where such qualification is required, except where the failure
so to qualify would not have a material adverse effect upon
the condition (financial or otherwise) or results of
operations of the Company. The Bank (X) is duly organized and
in good standing as an Ohio-chartered bank, and (Y) to the
best of such counsel's knowledge, is duly qualified to do
business as a foreign corporation under the corporation law
and banking law of, and is in good standing as such in, every
jurisdiction where such qualification is required, except
where the failure so to qualify would not have a material
adverse effect upon the condition (financial or otherwise) or
results of operations of the Bank.

(ii) Each of the Company and the Bank has full
corporate power and authority and all material authorizations,
approvals, orders, licenses, certificates and permits of and
from all governmental bank regulatory officials and bodies
necessary to own its properties and to commence and conduct
its business as described in the Registration Statement and

10
<PAGE> 11

Prospectus, except for such authorizations, approvals, orders,
licenses, certificates and permits as are not material to the
ownership of their properties or commencement or conduct of
their businesses;

(iii) The Company has authorized, issued and
outstanding capital stock as set forth in the Prospectus, and
all such outstanding capital stock was duly and validly
authorized and issued; the Shares have been duly and validly
authorized and issued and, upon receipt by the Company of
payment therefor in accordance with the terms of this
Agreement, will be fully paid and nonassessable and are not
and will not be subject to, preemptive rights; the Shares and
the other capital stock and Stock Options of the Company
conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus;

(iv) To the knowledge of such counsel, there are no
holders of securities of the Company who, by reason of the
filing of the Registration Statement under the Securities Act,
have the right to request the Company to register such
securities under the Securities Act;

(v) The Company owns all the outstanding capital
stock of the Bank;

(vi) The certificates evidencing the Shares are in
the form approved by the Board of Directors of the Company,
comply with the code of regulations and the articles of
incorporation of the Company, comply as to form and in all
other material respects with applicable legal requirements;

(vii) This Agreement has been duly authorized,
executed and delivered by the Company, and is the legal, valid
and binding agreement and obligation of the Company
enforceable in accordance with its terms, except (a) as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or
affecting enforcement of creditors' rights or by general
equity principles (including requirements of reasonableness
and good faith in the exercise of rights and remedies),
whether applied by a court of equity or a court of law in an
action at law or in equity, or by the discretionary nature of
specific performance, injunctive relief, and other equitable
remedies, including the appointment of a receiver, and (b),
with respect to provisions relating to indemnification and
contribution, to the extent they are held by a court of
competent jurisdiction to be void or unenforceable as against
public policy or limited by applicable laws or the policies
embodied in them;

(viii) To the best of such counsel's knowledge, there
are (A) no contracts or other documents which are required to
be filed as exhibits to the Registration Statement other than
those filed as exhibits thereto, (B) no legal

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<PAGE> 12

or governmental proceedings pending or threatened against the
Company or the Bank other than those described in the
Prospectus, and (C) no statutes or regulations applicable to
the Company or the Bank, or certificates, permits, grants or
other consents, approvals, orders, licenses or authorizations
from regulatory officials or bodies, which are required to be
obtained or maintained by the Company or the Bank and which
are of a character required to be disclosed in the
Registration Statement and Prospectus which have not been so
disclosed;

(ix) The statements in the Registration Statement and
the Prospectus under the caption "Description of Capital
Stock," insofar as they are descriptions of corporate
documents or agreements, or descriptions of laws, regulations,
or regulatory requirements, or refer to compliance with law or
to statements of law or legal conclusions, are correct in all
material respects;

(x) To the best of such counsel's knowledge, the
execution, delivery and performance of this Agreement, the
consummation of the transactions herein contemplated and the
compliance with the terms and provisions hereof by the Company
will not give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result
in a breach of any of the terms or provisions of, or
constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or
require any consent under, or result in the execution or
imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or the Bank pursuant to
the terms of, any lease, indenture, mortgage, note or other
agreement or instrument to which the Company or the Bank is a
party or by which either of them or either of their properties
or businesses is or may be bound or affected, nor will such
action result in any violation of the provisions of the
articles of incorporation or code of regulations of the
Company or the Bank or any statute or any order, rule, or
regulation applicable to the Company or the Bank of any court
or any federal, state, local or other regulatory authority or
other governmental body, the effect of which, in any such
case, would be expected to be materially adverse to the
Company or the Bank;

(xi) To the best of such counsel's knowledge, no
consent, approval, authorization or order of any court or
governmental agency or body, domestic or foreign, is required
to be obtained by the Company in connection with the execution
and delivery of this Agreement or the sale of the Shares to
the Underwriter as contemplated by this Agreement (other than
as may be required by the NASD or as required by state
securities or Blue Sky laws, as to which such counsel need
express no opinion), except those which have been obtained;

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<PAGE> 13

(xii) To the best of such counsel's knowledge, (A)
neither the Company nor the Bank is in breach of, or in
default (and no event has occurred which, with notice or lapse
of time, or both, would constitute a default) under, any
lease, indenture, mortgage, note, or other agreement or
instrument to which the Company or the Bank, as the case may
be, is a party; (B) neither the Company nor the Bank is in
violation of any term or provision of either of their articles
of incorporation or code of regulations, or of any franchise,
license, grant, permit, judgment, decree, order, statute, rule
or regulation; and (C) neither the Company nor the Bank has
received any notice of conflict with the asserted rights of
others in respect of Intangibles necessary for the
commencement or conduct of its business, the effect of which,
in any such case, would be expected to be materially adverse
to the Company or the Bank;

(xiii) The Registration Statement and the Prospectus
and any amendments or supplements thereto (other than the
financial statements and other statistical or financial data
included therein, as to which such counsel need express no
opinion) comply as to form with the requirements of the
Securities Act and the Rules in all material respects; and

(xiv) The Registration Statement is effective under
the Securities Act, and, to the best of such counsel's
knowledge, no proceedings for a stop order are pending or
threatened under the Securities Act.

In rendering the foregoing opinion, such counsel may rely upon
certificates of public officials (as to matters of fact and law) and
officers of the Company (as to matters of fact), and include
qualifications in its opinion as are reasonably acceptable to Roney &
Co. Copies of all such certificates shall be furnished to counsel to
Roney & Co. on the Closing Date.

In addition, such counsel shall state that they have
participated in conferences with officers of the Company and
representatives of the Underwriter at which the contents of the
Registration Statement and Prospectus and related matters were
discussed and although such counsel did not independently verify the
accuracy or completeness of the statements made in the Registration
Statement and Prospectus and does not assume any responsibility for the
accuracy or completeness of the statements in the Registration
Statement and Prospectus, on the basis of the foregoing, nothing has
come to the attention of such counsel that would lead them to believe
that the Registration Statement or Prospectus, as amended or
supplemented, if amended or supplemented, contains any untrue statement
of a material fact or omits a material fact required to be stated
therein or necessary to make the statements therein not misleading;
except that such statement may exclude financial statements, financial
data, statistical information and all statements under the caption
"Underwriting" included in the Registration Statement and Prospectus.

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<PAGE> 14

(c) On or prior to each Closing Date, Roney & Co. shall have
been furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review the
matters referred to in subsection (b) of this Section 5, and in order
to evidence the accuracy, completeness or satisfaction of the
representations, warranties or conditions herein contained.

(d) Prior to each Closing Date, (i) there shall have been no
material adverse change in the condition or prospects, financial or
otherwise, of the Company or the Bank; (ii) there shall have been no
material transaction, not in the ordinary course of business, entered
into by the Company or the Bank except as set forth in the Registration
Statement and Prospectus, other than transactions referred to or
contemplated therein or to which Roney & Co. has given its written
consent; (iii) neither the Company nor the Bank shall be in default
(nor shall an event have occurred which, with notice or lapse of time,
or both, would constitute a default) under any provision of any
material agreement, understanding or instrument relating to any
outstanding indebtedness that is material in amount; (iv) no action,
suit or proceeding, at law or in equity, shall be pending or threatened
against the Company or the Bank before or by any court or federal,
state or other commission, board or other administrative agency having
jurisdiction over the Company or the Bank, as the case may be, which is
expected to have a material adverse effect on the Company or the Bank;
and (v) no stop order shall have been issued under the Securities Act
and no proceedings therefor shall have been initiated or be threatened
by the Commission.

(e) At each Closing Date, Roney & Co. shall have received a
certificate signed by the Chairman of the Board, and the President or
Secretary of the Company dated the Firm Shares Closing Date or Optional
Shares Closing Date, as the case may be, to the effect that the
conditions set forth in subsection (d) above have been satisfied and as
to the accuracy, as of the Firm Shares Closing Date or the Optional
Shares Closing Date, as the case may be, of the representations and
warranties of the Company set forth in Section 4 hereof.

(f) At or prior to each Closing Date, Roney & Co. shall have
received a "blue sky" memorandum of Benesch, Friedlander, Coplan &
Aronoff LLP, addressed to Roney & Co. and in form and scope reasonably
satisfactory to Roney & Co., concerning compliance with the blue sky or
securities laws of the states listed in EXHIBIT B attached to this
Agreement.

(g) All proceedings taken in connection with the sale of the
Shares as herein contemplated shall be reasonably satisfactory in form
and substance to Roney & Co. and to counsel for Roney & Co., and Roney
& Co. shall have received from counsel for Roney & Co. a favorable
opinion, dated as of each Closing Date, with respect to such of the
matters set forth under subsections (b) (i), (iii), (vi), (vii), and
(xiii) of this Section 5, and with respect to such other related
matters as Roney & Co. may reasonably require, if the failure to
receive a favorable opinion with respect to

14
<PAGE> 15

such other related matters would cause Roney & Co. to deem it
inadvisable to proceed with the sale of the Shares.

(h) There shall have been duly tendered to Roney & Co.
certificates representing all the Shares agreed to be sold by the
Company on the Firm Shares Closing Date or the Optional Shares Closing
Date, as the case may be.

(i) No order suspending the sale of the Shares prior to each
Closing Date, in any jurisdiction listed in EXHIBIT B, shall have been
issued on the Firm Shares Closing Date or the Optional Shares Closing
Date, as the case may be, and no proceedings for that purpose shall
have been instituted or, to Roney & Co.'s knowledge or that of the
Company, shall be contemplated.

(j) The NASD, upon review of the terms of the public offering
of the Shares, shall not have objected to the Underwriter's
participation in the same.

(k) At the time of the execution of this Agreement, the
Underwriter shall have received from KPMG Peat Marwick LLP a letter
dated such date, in form and substance satisfactory to the Underwriter,
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.

(l) On each Closing Date, the Underwriter shall have received
from KPMG Peat Marwick LLP a letter, dated as of such date, to the
effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (k) of this Section.

(m) On the Firm Shares Closing Date, the Common Stock shall
have been approved for inclusion in the Nasdaq SmallCap Market, subject
only to official notice of issuance.

(n) At the time of the execution of this Agreement, the
Underwriter shall have received written certification from Richard M.
Osborne that all shares of Common Stock owned by him are owned free and
clear of any lien or encumbrance, and that no such shares are pledged
or hypothecated to any other party.

If any condition to the Underwriter's obligations hereunder to
be fulfilled prior to or at the Firm Shares Closing Date or the Optional Shares
Closing Date, as the case may be, is not so fulfilled, Roney & Co. may terminate
this Agreement pursuant to Section 9(c) hereof or, if Roney & Co. so elects,
waive any such conditions which have not been fulfilled or extend the time of
their fulfillment.

6. COVENANTS.

15
<PAGE> 16

The Company covenants and agrees that it will:

(a) Use its best efforts to cause the Registration Statement
to become effective and will notify Roney & Co. immediately, and
confirm the notice in writing, (i) when the Registration Statement and
any post-effective amendment thereto becomes effective, (ii) of the
issuance by the Commission of any stop order or of the initiation, or
the threatening, of any proceedings for that purpose and (iii) of the
receipt of any comments from the Commission. The Company will make
every reasonable effort to prevent the issuance of a stop order, and,
if the Commission shall enter a stop order at any time, the Company
will make every reasonable effort to obtain the lifting of such order
at the earliest possible moment.

(b) During the time when a prospectus is required to be
delivered under the Securities Act, comply so far as it is able with
all requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules, as from time to time in force, so
far as necessary to permit the continuance of sales of or dealings in
the Shares. If at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act any event shall have
occurred as a result of which, in the reasonable opinion of counsel for
the Company or counsel for Roney & Co., the Registration Statement or
Prospectus as then amended or supplemented includes an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or if it is necessary at any time to amend or supplement the
Registration Statement or Prospectus to comply with the Securities Act,
the Company will notify Roney & Co. promptly and prepare and file with
the Commission an appropriate amendment or supplement in form
satisfactory to Roney & Co. The cost of preparing, filing and
delivering copies of such amendment or supplement shall be paid by the
Company.

(c) Deliver to the Underwriter such number of copies of each
preliminary prospectus as may reasonably be requested by Roney & Co.
and, as soon as the Registration Statement, or any amendment or
supplement thereto, becomes effective, deliver to the Underwriter three
signed copies of the Registration Statement, including exhibits, and
all post-effective amendments thereto and deliver to the Underwriter
such number of copies of the Prospectus, the Registration Statement and
supplements and amendments thereto, if any, without exhibits, as Roney
& Co. may reasonably request.

(d) Endeavor in good faith, in cooperation with Roney & Co.
and its counsel, at or prior to the time the Registration Statement
becomes effective, to qualify the Shares for offering and sale under
the securities laws relating to the offering or sale of the Shares of
the states listed in EXHIBIT B. In each jurisdiction where such
qualification shall be effected, the Company will, unless Roney & Co.
agrees that such action is not at the time necessary or advisable, file
and make such statements or reports at such times as are or may
reasonably be required by the laws

16
<PAGE> 17

of such jurisdiction. The Company will advise Roney & Co. promptly of
the suspension of the qualification of the Shares for offering, sale or
trading in any jurisdiction, or any initiation or threat of any
proceeding for such purpose, and in the event of the issuance of any
order suspending such qualification, the Company, with the cooperation
of Roney & Co., will use all reasonable efforts to obtain the
withdrawal thereof. Anything herein to the contrary notwithstanding,
the Company shall not be required to register or qualify as a foreign
corporation or as a dealer in securities nor, except as to matters and
transactions relating to the offer and sale of the Shares, consent to
service of process in any jurisdiction.

(e) Furnish its security holders as soon as practicable an
earnings statement (which need not be certified by independent
certified public accountants unless required by the Securities Act or
the Rules) covering a period of at least twelve months beginning after
the effective date of the Registration Statement, which shall satisfy
the provisions of Section 11(a) of the Securities Act and the Rules
thereunder.

(f) For a period of five years from the Effective Date,
furnish to Roney & Co. the following:

(i) at the time they have been sent to shareholders
of the Company or filed with the Commission three copies of
each annual, quarterly, interim, or current financial and
other report or communication sent by the Company to its
shareholders or filed with the Commission;

(ii) as soon as practicable, three copies of every
press release and every material news item and article in
respect of the Company or the affairs of the Company which was
released by the Company;

(iii) all other information reasonably requested by
Roney & Co. with respect to the Company to comply with Rule
15c2-11 of the Rules (if applicable) and Section 4 of Schedule
H of the NASD By-Laws; and

(iv) such additional documents and information with
respect to the Company and its affairs as Roney & Co. may from
time to time reasonably request and that may properly be
disclosed to Roney & Co.

(g) Not file any amendment or supplement to the Registration
Statement or Prospectus after the effective date of the Registration
Statement to which Roney & Co. shall reasonably object in writing after
being furnished a copy thereof.

(h) Use the net proceeds received from the sale of the Shares
being sold in the manner specified in the Prospectus, and it will
report the application of the proceeds therefrom as may be required in
accordance with Rule 463 under the Securities Act.

17
<PAGE> 18

(i) Comply with all registration, filing and reporting
requirements of the Securities Act or the Exchange Act, which may from
time to time be applicable to the Company.

(j) Pay, or reimburse if paid by the Underwriter, whether or
not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the
performance of the obligations of the Company under this Agreement,
including those relating to (1) the preparation, printing, filing and
delivery of the Registration Statement, including all exhibits thereto,
each preliminary prospectus, the Prospectus, all amendments of and
supplements to the Registration Statement and the Prospectus, and the
photocopying of the Underwriting Agreement and related agreements
including, without limitation, the Dealer Agreement; (2) the issuance
of the Shares and the preparation and delivery of certificates for the
Shares to the Underwriter; (3) the registration or qualification of the
Shares for offer and sale under the securities or "blue sky" laws of
the various jurisdictions referred to in EXHIBIT B, including the fees
and disbursements of counsel in connection with such registration and
qualification and the preparation and printing of preliminary,
supplemental, and final blue sky memoranda; (4) the furnishing
(including costs of shipping and mailing) to the Underwriter of copies
of each preliminary prospectus, the Prospectus and all amendments of or
supplements to the Prospectus, and of the several documents required by
this Section to be so furnished; (5) the filing requirements and fees
of the NASD in connection with its review of the terms of the public
offering and the underwriting; (6) the furnishing (including costs of
shipping and mailing) of copies of all reports and information required
by Section 6(g); (7) all transfer taxes, if any, with respect to the
sale and delivery of the Shares by the Company to the Underwriter; (8)
the inclusion of the Shares on the Nasdaq Small Cap Market; and (9) the
Underwriter's out-of-pocket expenses, including without limitation,
road show expenses and legal fees of counsel to Roney & Co. (such
out-of-pocket expenses and legal fees payable by the Company shall not
exceed $50,000). Upon a successful completion of the offering, the
Underwriter will credit the out-of-pocket and legal fee reimbursement
described in Section 6(j)(9) against the underwriting discount.

(k) Not, without the prior written consent of Roney & Co.,
sell, offer to sell, transfer, contract to sell or grant any option for
the sale of or otherwise dispose of, directly or indirectly, or
register with the Commission, any shares of Common Stock of the Company
(or any securities convertible into or exercisable for such shares of
Common Stock) within 180 days after the date of the Prospectus, except
as provided in this Agreement and except for grants and exercises of
Stock Options under the Stock Option Plan as described in the
Prospectus.

(l) For not less than 3 fiscal years after the Effective Date,
unless Roney & Co. shall otherwise consent in writing, (i) timely file
with the Commission all reports required by Section 15(d) of the
Exchange Act and not seek suspension of the duty to file such reports,
and (ii) not less frequently than annually prepare a proxy

18
<PAGE> 19

statement and annual report which conform substantially to the
requirements of Commission Regulation 14A and distribute such proxy
statement and annual report to record and beneficial owners
substantially in the manner which would be required by Commission
Regulation 14A if applicable.

7. INDEMNIFICATION.

(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they may become subject under the Securities Act,
the Exchange Act or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or
any amendment thereof or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that such indemnity shall
not inure to the benefit of the Underwriter (or any person controlling
the Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares in the public offering
to any person by the Underwriter if such untrue statement or omission
or alleged untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Underwriter specifically for use therein; and provided, further,
however, that the indemnification contained in this Section 7(a) with
respect to any preliminary prospectus shall not inure to the benefit of
the Underwriter (or to the benefit of any person controlling the
Underwriter) on account of any such loss, claim, damage, liability or
judgment arising from the sale of the Shares by the Underwriter to any
person if a copy of the Prospectus shall not have been delivered or
sent to such person within the time required by the Act, and the untrue
statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such preliminary prospectus was
corrected in the Prospectus, provided that the Company has delivered
the Prospectus to the Underwriter in requisite quantity on a timely
basis to permit such delivery or sending. The Company shall not be
liable hereunder to the Underwriter (or any controlling person thereof)
to the extent that any loss, claim, damage or other liability incurred
by the Underwriter arises from the Underwriter's fraudulent act or
omission.

(b) The Underwriter agrees to indemnify and hold harmless the
Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company

19
<PAGE> 20

and each officer of the Company who signs the Registration Statement,
to the same extent as the foregoing indemnity from the Company to the
Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus,
or any amendment thereof or supplement thereto, in reliance upon and in
conformity with information furnished in writing to the Company by the
Underwriter specifically for use therein; provided, however, that the
obligation of the Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) hereunder shall be
limited to the total price at which the Shares purchased by the
Underwriter hereunder were offered to the public. The Underwriter shall
not be liable hereunder to the Company (including any controlling
person, director or officer thereof) to the extent that any loss,
claim, damage or other liability incurred by the Company arises from a
fraudulent act or omission by the Company.

(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of
all papers served, but the omission so to notify such indemnifying
party of any such action, suit or proceeding shall not relieve it from
any liability that it may have to any indemnified party otherwise than
under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses, except as provided below and except for
the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (1) the employment of counsel
by such indemnified party has been authorized in writing by the
indemnifying parties, (2) the indemnified party shall have reasonably
concluded that, because of the existence of different or additional
defenses available to the indemnified party or of other reasons, there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to direct
the defense of such action on behalf of the indemnified party) or that,
under the circumstances, it is otherwise appropriate, it being
understood, however, that the indemnifying party shall not be liable
for the expense of more than one separate counsel, or (3) the
indemnifying parties shall not

20
<PAGE> 21

have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of
which cases the fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be liable for
any settlement of any action, suit, proceeding or claims effected
without its written consent.

In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7(a) or 7(b)
is due in accordance with its terms but for any reason is held to be unavailable
or is insufficient to hold harmless a party indemnified hereunder, the Company
and the Underwriter shall contribute to the aggregate losses, claims, damages
and liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting any
contribution received from other persons), (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Underwriter from the offering of the Shares or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Underwriter in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The respective relative benefits received by the Company and the
Underwriter shall be deemed to be in the same proportion in the case of the
Company as the total price paid to the Company for the Shares by the Underwriter
(net of underwriting discount but before deducting expenses), and in the case of
the Underwriter as the underwriting discount received by it bears to the total
of such amounts paid to the Company and received by the Underwriter as
underwriting discount, in each case as contemplated by the Prospectus. The
relative fault of the Company and the Underwriter shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.

The Company and the Underwriter agrees that it would not be
just and equitable if contribution pursuant to this Section were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section, the Underwriter shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act of
1933) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The provisions of Section 7 and 8 shall
survive any termination of this Agreement.

21
<PAGE> 22

In any proceeding relating to the Registration Statement, any
preliminary prospectus, the Prospectus or any supplement thereto or amendment
thereof, each party against whom contribution may be sought under this Section 8
hereby consents to the jurisdiction of the courts specified in Section 11
hereof, agrees that process issuing from such court may be served upon him or it
by any other contributing party and consents to the service of such process and
agrees that any other contributing party may join him or it as an additional
defendant in any such proceeding in which such other contributing party is a
party.

9. TERMINATION. This Agreement may be terminated by Roney & Co.
by notifying the Company at any time:

(a) before the earliest of (1) 11:00 a.m., Detroit time, on
the business day following the Effective Date, (2) the time of release
by Roney & Co. for publication of the first newspaper advertisement
with respect to the Shares and (3) the time when the Shares are first
generally offered by the Underwriter to dealers by letter or telegram;

(b) at or before any Closing Date if, in the judgment of Roney
& Co., payment for and delivery of the Shares is rendered impracticable
or inadvisable because (1) additional material governmental
restrictions, not known to be in force and effect when this Agreement
is signed, shall have been imposed upon trading in securities generally
or minimum or maximum prices shall have been generally established on
the New York Stock Exchange, on the American Stock Exchange or on the
over-the-counter market, or trading in securities generally shall have
been suspended on either such Exchange or on the over-the-counter
market or a general banking moratorium shall have been established by
federal, New York or Ohio authorities, (2) a war or other calamity
shall have occurred or shall have accelerated to such an extent as to
affect adversely the marketability of the Shares, (3) the Company or
the Bank shall have sustained a material loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious
act, which, whether or not said loss shall have been insured, will in
Roney & Co.'s opinion, make it inadvisable to proceed with the offering
of the Shares, (4) any of the State Orders, the FDIC Order, or the FRB
Approval shall have been withdrawn or materially altered, or (5) since
the respective dates as of which information is given in the
Registration Statement, there shall have been such material adverse
change in the condition (financial or otherwise), business, properties,
prospects or results of operations of the Company and the Bank, taken
as a whole, or the market for the Shares or similar securities as in
Roney & Co.'s judgment would make it impracticable to proceed with the
offering of the Shares; or

(c) at or before any Closing Date, if any of the conditions
specified in Section 5 or any other agreements, representations or
warranties of the Company in this Agreement shall not have been
fulfilled when and as required by this Agreement.

22
<PAGE> 23

If this Agreement is terminated pursuant to any of its provisions, except as
otherwise provided in this Agreement, the Company shall not be under any
liability to the Underwriter (other than for obligations assumed in Section 6
hereof), and the Underwriter shall not be under any liability to the Company;
provided, however, that if this Agreement is terminated by Roney & Co. because
of any failure, refusal or inability on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, or for any
reasons provided in subparagraphs (b) and (c) above, the Company will reimburse
the Underwriter for all accountable out-of-pocket expenses (including, without
limitation, road show expenses and fees and disbursements of counsel to Roney &
Co.) up to a maximum of $50,000 (including the $20,000 advance below) incurred
by it in connection with the proposed purchase and sale of the Shares or in
contemplation of performing its obligations hereunder. The Underwriter
acknowledges receipt of a $20,000 advance from the Company. If this Agreement is
terminated for any reason, the Underwriter shall be entitled to retain such
advance as reimbursement for its accountable out-of-pocket expenses; provided,
however, in the event that the accountable out-of-pocket expenses to be
reimbursed under this paragraph are less than $20,000, the Underwriter shall pay
such difference to the Company. If this Agreement is not terminated, the $20,000
shall be credited at closing against the underwriting discount.

10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement shall be
deemed to be representations, warranties and agreements at the Closing Dates,
and such representations, warranties and agreements of the Company, including,
without limitation, the payment and reimbursement agreements contained in
Section 6 hereof and the indemnity and contribution agreements contained in
Sections 7 and 8 hereof, shall survive termination of this Agreement and/or
delivery of the Shares to and payment for the Shares by the Underwriter pursuant
to this Agreement regardless of any investigation made by or on behalf of the
Underwriter or any controlling person. In addition, the covenants contained in
Section 6(j) hereof, the agreements contained in this Section 10 and in Sections
7, 8 and 9 shall survive termination of this Agreement and/or delivery of the
Shares to and payment for the Shares by the Underwriter pursuant to this
Agreement.

11. MISCELLANEOUS. This Agreement has been and is made for the
benefit of the Underwriter, the Company and their respective successors and
assigns, and, to the extent expressed herein, for the benefit of persons
controlling the Underwriter or the Company, and directors and certain officers
of the Company, and their respective successors and assigns, and no other
person, partnership, association or corporation shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser of Shares from the Underwriter merely because of such
purchase.

All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telecopy, if subsequently confirmed in
writing, to the Underwriter, Roney & Co., at One Griswold, Detroit, Michigan
48226, Attention: John C. Donnelly (facsimile no. (313) 963- 2303) (with a copy
to Dominic A. DiPuccio, Benesch, Friedlander, Coplan & Aronoff LLP, 2300 BP
Tower, Cleveland, Ohio 44114 (facsimile no. (216) 363-4588)); and to the Company
at 7001 Center Street, Mentor, Ohio 44060, Attention: Richard T. Flenner, Jr.,
President (facsimile no. (440) 974-3012) (with a copy to Francis X. Grady, Grady
& Associates, 20800 Center Ridge Road, Suite 116, Rocky River, Ohio 44116
(facsimile no. (440) 356-7254)).

23
<PAGE> 24

The laws of the State of Ohio shall govern this Agreement, its
construction, and the determination of any rights, duties or remedies of the
parties arising out of or relating to this Agreement. The parties acknowledge
that the United States District Court for the Northern District of Ohio or the
Court of Common Pleas of Lake County, Ohio shall have exclusive jurisdiction
over any case or controversy arising out of or relating to this Agreement and
that all litigation arising out of or relating to this Agreement shall be
commenced in the United States District Court for the Northern District of Ohio
or in the Court of Common Pleas of Lake County, Ohio. If any action or
proceeding shall be brought by the Underwriter or the Company in order to
enforce any right or remedy under this Agreement, the Underwriter and the
Company hereby consent to, and agree that they will submit to, the jurisdiction
of such courts.

24
<PAGE> 25

Please confirm that the foregoing correctly sets forth the agreement
between us.

Very truly yours,

GLB BANCORP, INC.

By:
-------------------------------------
Richard T. Flenner, Jr.
President

Confirmed by Roney & Co.,

RONEY & CO., L.L.C.

By:
--------------------------------
John C. Donnelly
Director of Corporate Finance

25
<PAGE> 26

EXHIBIT A
---------

Number Relationship
of of Person to
Name Shares To The Company
---- ------ --------------

<PAGE> 27

EXHIBIT B
---------

STATES
------

California
Florida
Illinois
Indiana
Kentucky
Michigan
Minnesota
Missouri
New Jersey
New York
Ohio
Pennsylvania
Wisconsin

<PAGE> 1
Exhibit 10.D

LEASE
-----

THIS INDENTURE OF LEASE dated as of the 1st day of March, 1998, by and
between GREAT LAKES BANK, an Ohio corporation, hereinafter called "Landlord",
and OSAIR Inc., an Ohio Corporation, hereinafter called "Tenant".

EXHIBIT TO LEASE AND DEFINITIONS:
- ---------------------------------

Section 1.
----------

(a) The following listed exhibit is attached to and made a
part of this Lease:

EXHIBIT "A". The floor plan showing the Building of which
the Premises are a part. The Premises consist of that area
shown on EXHIBIT "A" which is outlined in red.

(b) The term "Common Areas" means the parking areas, access
roads and facilities which may be furnished by Landlord and which are located
adjacent to the Building. The truck ways, driveways, loading docks and areas,
pedestrian sidewalks, ramps, landscaped and planting areas, retaining walls,
stairways, and all other areas and improvements which may be provided and/or
changed from time to time by the Landlord for the general use in common of the
tenants and their officers, agents, employees, and customers, and all lighting
facilities incident thereto, as such areas and facilities may be changed from
time to time by Landlord.

(c) The word "Premises" shall mean the area of the Building
leased to the Tenant by the Landlord, as indicated in red on EXHIBIT "A", known
as 7001 Center Street, Mentor, Ohio including approximately five thousand
(5,000) square feet of office space.

(d) The word "Building" means the building of which the
Premises are a part. Exhibit "A" is a floor plan of the Building.

(e) The term "Building Site" means the location of the
Building, parking areas, driveways and common areas.

(f) The term "Date of Delivery of Possession" shall be and
mean March 1, 1998, notwithstanding that the term of this Lease shall not have
commenced as of such date.

PREMISES
- --------

Section 2.
----------

(a) For the rent and upon the agreements contained in this
Lease, Landlord leases to Tenant and Tenant rents from Landlord the Premises
described as follows:

(b) The premises are indicated in red on EXHIBIT "A" attached
hereto for the purpose of more specifically locating the space leased to Tenant.

(c) The Landlord expressly reserves the use of the rear and
side wall and of the roof of the Premises and the right to install, maintain,
use, repair, and replace the pipes, ducts, conduits, and wires leading through
the Premises in locations which will not materially interfere with Tenant's use
thereof and serving other parts of the Building.

TERM
- ----

Section 3.
----------

(a) The primary term of this Lease (the "Initial Term") shall
commence on the 1st day of March, 1998, and shall terminate on the 28th day of
February, 2003.

1
<PAGE> 2
FIXED RENT
- ----------

Section 4.
----------

(a) Tenant agrees without demand and without any deduction or
setoff to pay to Landlord at Landlord's office, or such other place as Landlord
may from time to time designate, as a fixed rent for the Premises ("Fixed Rent")
commencing March 1, 1998 and thereafter throughout the Initial Term, the sum of
five thousand ($5,000) per calendar month. Each installment of Fixed Rent shall
be due and payable in advance on the first day of the calendar month for which
Fixed Rent is being paid.

REAL ESTATE TAXES
- -----------------

Section 5.
----------

(a) During the term of this Lease, Landlord shall pay any and
all real estate taxes attributable to the Premises, the Building and the
Building Site.

COMMON AREAS
- ------------

Section 6.
----------

(a) Landlord hereby grants to Tenant and Tenant's employees,
agents, customers and invitees the right, during the term hereof, to use, in
common with Landlord and other tenants, employees and invitees entitled to the
use thereof, the appropriate Common Areas within the limits of the Building
Site. Landlord shall operate, manage, and maintain in good condition and repair
during the term of this Lease all Common Areas within the Building and
expenditures made therefor shall be at the sole discretion of the Landlord, and
the use of such areas and facilities shall be subject to such reasonable
regulations as Landlord shall make from time to time.

CONDITION OF PREMISES
- ---------------------

Section 7.
----------

(a) On the Date of Delivery of Possession, Tenant shall accept
the Premises in their present, as is condition. Tenant has thoroughly inspected
the Premises and is satisfied that the Premises are suitable for Tenant's
intended use.

USE
- ---

Section 8.
----------

(a) The Premises shall be occupied and used by Tenant for the
operation of its business and for any other purpose reasonably incidental
thereto, subject to the provisions of the following Sub-Section.

(b) Tenant shall use and occupy the Premises in accordance
with all governmental laws, ordinances, rules and regulations. Tenant shall not
use, or allow the Premises to be used, for any purpose other than as specified
herein and shall not use or permit the Premises to be used for any unlawful,
disreputable or immoral purpose or in any way that will injure the reputation of
the Building, or permit the Premises to be occupied in whole or in part by any
other person, except as otherwise provided herein.

UTILITIES
- ---------

2
<PAGE> 3
Section 9.
----------

(a) Tenant shall reimburse Landlord for natural gas
and electric charges incurred by Landlord in connection with its operation of
the Building, by reimbursing to Landlord promptly upon request accompanied by a
copy of billings for same by the applicable utility companies an amount equal to
that percentage thereof which is represented by a fraction, the numerator of
which is $5,000 and the denominator of which is $14,500. (34.5%) Except as to
the foregoing, Landlord shall pay for all utilities attributable to the Premises
during the Term hereof.

ALTERATION, INSTALLATIONS AND REMOVAL OF IMPROVEMENTS BY TENANT
- ---------------------------------------------------------------

Section 10.
-----------

(a) Tenant shall have the right during the continuance of this
Lease to make such interior alterations, changes and improvements to the
Premises, except structural alterations, changes or improvements, as may be
proper and necessary for the conduct of Tenant's business and for the full
beneficial use of the Premises. Tenant shall pay all costs and expenses of such
alterations, changes, and improvements, shall make the same in good and
workmanlike manner, and in accordance with all applicable laws and building
regulations, and shall prior to the making of such alterations, changes, and
improvements, assure Landlord that payment for the same will be made by Tenant.
Tenant hereby completely and fully indemnifies Landlord against any Mechanic's
Liens or other liens or claims in connection with the making of such
alterations, changes, and improvements. Any liens arising out of such
alterations, changes, and improvements shall be removed by Tenant within ten
(10) days after the same has been filed.

(b) Except as otherwise provided, all signs, furnishings,
trade fixtures and other removable equipment installed in the Premises by Tenant
and paid for by Tenant shall remain the property of Tenant and shall be removed
by Tenant upon the termination of this Lease provided that any of such as are
affixed to the Premises and require severance shall be removed at Tenant's cost,
and Tenant shall repair any damage caused by such removal.

REPAIRS AND MAINTENANCE
- -----------------------

Section 11.
-----------

(a) Landlord shall keep the foundation, the four outer walls
and roof of the Premises in good repair, except that Landlord shall not be
responsible to make any such repairs, occasioned by the act or negligence of
Tenant or its agents, employees, invitees, or licensees. Landlord shall not be
required to make any other improvements or repairs of any kind upon the Premises
and appurtenances, and the Premises and appurtenances shall at all times be kept
in good order, condition, replacement and repair by Tenant. Tenant shall keep
the Premises in a clean, sanitary, and safe condition in accordance with the
laws of the State of Ohio, and in accordance with all directions, rules, and
regulations of the health officer, fire marshal, building inspector, or other
proper officers of the governmental agencies governing the Premises, at the sole
cost and expense of Tenant, and Tenant shall comply with and shall keep the
Premises in the condition required by all requirements of law, ordinance and
otherwise involving the Premises, as the same may be in effect from time to
time. Tenant shall permit no waste, damage or injury to the Premises, and Tenant
shall, at its own cost and expense, replace any glass windows and doors in the
Premises which may be broken. At the expiration of the tenancy created
hereunder, Tenant shall surrender the Premises to Landlord in good condition,
reasonable wear and tear, loss by fire and other unavoidable casualty excepted.
It is expressly agreed that Tenant shall not be required to make any permanent
capital improvements to the Premises, unless the same shall result from Tenant's
use of the Premises.

INDEMNIFICATION AND INSURANCE AND WAIVER OF SUBROGATION
- -------------------------------------------------------

Section 12.
-----------

3
<PAGE> 4

(a) Tenant will indemnify Landlord and save Landlord harmless
from and against any and all claims, actions, damages, liability and expense in
connection with loss, damage or injury to persons or property occurring in, on
or about, or arising out of the Premises, or occasioned wholly or in part by any
act or omission of Tenant, Tenant's agents, contractors, customers or employees.

(b) Tenant, at all times during the term of the Lease, shall,
at its own expense, keep in full force and effect public liability insurance
with minimum limits of One Million Dollars ($1,000,000.00) on account of bodily
injuries to or death of one (1) person, and One Million Dollars ($1,000,000.00)
on account of bodily injuries to or death of more than one (1) person as a
result of any one (1) accident or disaster, and Two Hundred Thousand Dollars
($200,000.00) on account of damages to property, naming Landlord as an
additional insured, and shall deposit the policy or policies of such insurance,
or certificates thereof with Landlord.

(c) Tenant shall not carry any stock or goods or do anything
in or about the Premises which will in any way tend to increase the insurance
rates on said Premises and/or the Building. Tenant shall pay as additional
rental any increases in the insurance as a result of its use of the Premises.

(d) Landlord and Tenant do hereby waive all rights of recovery
and causes of action which either has or may have or which may arise hereafter
against the other, whether caused by negligence or otherwise for any damage to
the Premises or any property or business of Landlord or Tenant caused by any of
the property or business of Landlord or Tenant caused by any of the perils
covered by fire and extended coverage, building and contents and business
interruption insurance, or for which either party may be reimbursed as a result
of insurance coverage affecting any loss suffered by it; provided however, that
the foregoing waiver shall apply only to the extent of any recovery made by the
parties hereto under any policy of insurance now or hereafter issued, it being
stipulated by the parties hereto that the foregoing waiver shall not apply in
any case in which the application thereof would result in the invalidation of
any such policy of insurance. In the event any additional premium shall be
charged for such waiver provision, the party benefitted by such waiver shall pay
the cost of such endorsement.

SIGNS
- -----

Section 13.
-----------

(a) Tenant shall not display any "For Rent", "For Lease", or
"for Sub-Lease", or similar signs. Except for the foregoing, Tenant shall have
the right to install any ground, building, or roof signs provided that Tenant
shall secure in advance the written consent of Landlord thereto, which consent
shall not unreasonably be withheld, and further provided that all signs
installed by Tenant shall comply with all requirements of appropriate
governmental authority, and all necessary permits or licenses shall be obtained
by Tenant. Tenant shall maintain all signs in good condition and repair at all
times, and shall save Landlord harmless from injury to person or property,
arising from the erection, installation, and maintenance of said signs. Upon
vacating the Premises, Tenant shall remove all signs and repair all damage
caused by such removal.

ASSIGNMENT AND SUBLETTING
- -------------------------

Section 14.
-----------

(a) This Lease shall not be mortgaged, pledged, encumbered,
assigned or otherwise transferred by Tenant, voluntarily or involuntarily, by
operation of law or otherwise, or the Premises or any part thereof sublet, used
or occupied for the conduct of any business by any third person or corporation
or for any purpose other than herein authorized, without the prior consent of
the Landlord. Any consent of Landlord to any assignment or subletting shall not
constitute a waiver of the necessity for such consent under any subsequent
assignment or subletting. If Tenant is a corporation, the sale or sales, during
the term hereof, aggregating fifty percent (50%) or more of the outstanding
shares of stock of Tenant shall be deemed to be an assignment of this Lease
within the meaning of this Section.

4
<PAGE> 5
(b) In the event of any permitted assignment or other transfer
of this Lease by Tenant, (i) Tenant shall remain liable for performance of all
obligations of the assignee or transferee of Tenant hereunder, and Tenant hereby
agrees to absolutely and unconditionally guarantee the performance hereunder of
such assignee or transferee; and (ii) any rent which Tenant receives pursuant to
any sublease in excess of the Fixed Rent shall be paid by Tenant to Landlord.

REPAIR AFTER CASUALTY
- ---------------------

Section 15.
-----------

(a) If the Premises shall be destroyed or so injured by any
cause as to be unfit, in whole or in part, for occupancy and such destruction or
injury could reasonably be repaired within six (6) months from the date of such
damage or destruction, then Tenant shall not be entitled to surrender possession
of the Premises nor shall Tenant's liability to pay rent under this Lease cease
without the mutual consent of the parties hereto; but in case of any such
destruction or injury Landlord shall repair the same with all reasonable speed
and shall complete such repairs within six (6) months from the date of such
damage or destruction. If during such period Tenant shall be deprived of the use
of all or any portion of the Premises, a proportionate allowance shall be made
to Tenant from the rent corresponding to the time during which and to the
portion of the Premises of which Tenant shall be so deprived.

(b) If such destruction or injury cannot reasonably be
repaired within six (6) months from the date of such damage or destruction,
Landlord shall notify Tenant within thirty (30) days after the happening of such
destruction or injury whether or not Landlord will repair or rebuild. If
Landlord elects not to repair or rebuild, this Lease shall be terminated. If
Landlord shall elect to repair or rebuild Landlord shall specify the time
within which such repairs or reconstruction will be completed, and Tenant shall
have the option within thirty (30) days after the receipt of such notice to
elect either to terminate this Lease and any further liability hereunder or to
extend the term of the Lease by a period of time equivalent to the time from the
happening of such destruction or injury until the Premises are restored to their
former condition. In the event Tenant elects to extend the term of the Lease,
Landlord shall restore the Premises to their former condition within the time
specified in such notice, and Tenant shall not be liable to pay rent for the
period from the time of such destruction or injury until the Premises are so
restored to their former condition.

CONDEMNATION
- ------------

Section 16.
-----------

(a) In the event the entire Premises shall be taken by
condemnation or right of eminent domain, this Lease shall terminate as of the
day possession shall be taken by the taking authority, and Landlord and Tenant
shall be released from any further liability hereunder thereafter accruing. In
the event only a portion of the Premises shall be taken by condemnation or right
of eminent domain and the portion so taken renders the balance unsuitable for
the use of this Lease, either the Landlord or the Tenant shall be entitled to
terminate this lease, such termination to become effective as the of the day
possession shall be taken, provided thirty (30) days notice in writing of such
termination is given. If, in such event, this Lease is not terminated, Landlord
agrees to restore the Premises with reasonable speed to an architectural unit as
nearly like its condition prior to such taking as shall be practicable, and if
during and/or after the work of restoration, Tenant is deprived of the use of
all or a part of the Premises, an appropriate reduction of rent, depending upon
the time during which and the portion of said Premises of which Tenant is
deprived, shall be granted.

(b) All damages awarded in connection with the taking of the
Premises, whether allowed as compensation for diminution in value to the
leasehold or to the fee of the Premises, shall belong to the Landlord.
Notwithstanding the foregoing, Tenant shall be entitled to make a separate claim
for damage to merchandise and fixtures, and removal, reinstallation, and moving
expense.

LANDLORD'S REMEDIES UPON DEFAULT
- --------------------------------

5
<PAGE> 6

Section 17.
-----------

(a) If Tenant or any guarantor of Tenant shall at any time (i)
be in default in the payment of rent or other sums of money required to be paid
by Tenant, or in the performance of any of the covenants, terms, conditions,
provisions, rules and regulations of this Lease, the Tenant shall fail to remedy
such default within ten (10) days in the event of default is as to payment of
rent or other sums of money, or within twenty (20) days after receipt of written
notice thereof, if the default relates to matters other than the payment of rent
and other sums of money (but Tenant shall not be deemed to be in default if
Tenant commences to remedy said defaults other than relate to payment of rent
and other sums of money within said twenty (20) day period, and proceeds
therewith with due diligence); (ii) commit waste upon the Premises, vacate the
Premises, or fail to continuously occupy and conduct Tenant's business in the
Premises; (iii) become insolvent or make an assignment for the benefit of
creditors, or if a receiver or trustee of Tenant's property shall be appointed,
or if proceedings under any chapter of the Bankruptcy Code shall be instituted
by or against Tenant or any guarantor of this Lease and shall not be dismissed
by the Court within sixty (60) days after being filed, or if any event shall
happen which, aside from this provision, would cause any assignment or
devolution of Tenant's interest or occupancy hereunder by operation of law, then
Landlord in addition to all other remedies given to Landlord in law or in
equity, may by written notice to Tenant, terminate this Lease, or without
terminating this Lease, re-enter the Premises by summary proceedings or
otherwise. In any event Landlord may dispossess the Tenant, it being the
understanding that under no circumstances is this Lease to be an asset for
Tenant's creditors by operation of law or otherwise. In the event of such
re-entry Landlord may relet the Premises without being obligated so to do, and
in the event of a reletting may apply the rent therefrom first to the payment of
Landlord's expenses, including attorneys' fees incurred by reason of Tenant's
default, and the expense of reletting including, but not limited to, repairs,
renovation or alteration of the Premises and then to the amount of rent and all
other sums due from Tenant hereunder, Tenant remaining liable for all other sums
due from Tenant hereunder and for any deficiency. Any and all such deficiencies
shall be payable by the Tenant monthly on the date herein provided for the
payment of rent.

(b) In the event of default by Tenant of any of the terms,
provisions, covenants, conditions, rules and regulations of this Lease, Landlord
shall have the right to invoke any remedy permitted to Landlord in law or in
equity. All remedies available to Landlord are declared to be cumulative and
concurrent. No termination of this Lease and no taking recovering of possession
of the Premises shall deprive Landlord of any of its remedies or actions against
Tenant and Tenant shall remain liable for all past or future rent, including all
additional rent, taxes, insurance premiums and all other charges and rent
payable by Tenant under this Lease, during and for the balance of the term
hereof. The bringing of any action for rent or other default shall not be
construed as a waiver of the right to obtain possession of the Premises.

(c) If suit shall be brought for recovery of possession of the
Premises, for the recovery of rent, or any other amount due under the provisions
of this Lease, or because of the breach of any other covenant herein contained
on the part of Tenant to be kept or performed, and breach shall be established,
Tenant shall pay to Landlord all expenses incurred therefor, including a
reasonable attorney's fee.

(d) All rights and remedies provided herein or otherwise
existing at law or in equity are cumulative, and the exercise of one or more
rights or remedies by either party shall not preclude or waive its right to the
exercise of any or all of the others.

RIGHT OF LANDLORD
- -----------------

Section 18.
-----------

(a) Landlord reserves the right at all reasonable times, by
itself, or its duly authorized agents, to go upon and inspect the Premises and
every part thereof, and at its option to make repairs, alterations and additions
to the Premises or the Building.

(b) If Landlord shall make any payments on behalf of Tenant
which are Tenant's obligation in order to fulfill Tenant's covenants, then any
amounts paid by Landlord are agreed and declared to be "additional

6
<PAGE> 7

rent" and shall be due and payable to Landlord from Tenant with the next
installment of Fixed Rent due thereafter under this Lease. Any such amounts
which shall be paid by Landlord on behalf of Tenant shall bear interest at the
rate of ten percent (10%) per annum or at the prime rate of interest then being
charged by AmeriTrust Company, Cleveland, Ohio, whichever is higher, provided in
no event shall such rate be charged to Tenant be in excess of that otherwise
permitted by law.

MORTGAGE SUBORDINATION
- ----------------------

Section 19.
-----------

(a) Landlord reserves the right to demand and obtain from
Tenant a Waiver of Priority of Tenant's lien arising by virtue of the within
Leasehold estate, thereby subordinating Tenant's lien in favor of any first or
second mortgage loan, any first or second mortgage lien, or any refinancing or
replacing of such first mortgage or second mortgage loans that Landlord may
determine necessary or desirable from time to time in the future. Tenant, upon
demand by the Landlord for same, agrees to execute at any and all times such
instruments as may be required by any lending institution or prospective
mortgagee in order to effectuate such Waiver of Priority and subordination of
Tenant's lien. If Tenant, within five (5) days after submission of such
instrument, fails to execute the same, Landlord is hereby authorized to execute
the same as attorney-in-fact for Tenant. In the event any proceedings are
brought for foreclosure, or in the event of the exercise of the power of sale
under any mortgage or deed of trust, Tenant shall attorn to the purchaser in any
such foreclosure or sale and recognize such purchaser as landlord under this
Lease.

(b) Upon the written request of Tenant, Landlord shall procure
from any such lending institution or mortgagee an agreement in writing, which
shall be delivered to Tenant, providing in substance that so long as Tenant
shall faithfully discharge the obligations on its part to be kept and performed
under the terms of this Lease, Tenant's tenancy will not be disturbed nor this
Lease affected by any default under such mortgage, and Tenant agrees that this
Lease shall remain in full force and effect even though default in the mortgage
may occur.

NO WAIVER OF LANDLORD
- ---------------------

Section 20.
-----------

(a) No waiver of any of the terms, covenants, provisions,
conditions, rules and regulations imposed or required by this Lease, and no
waiver of any legal or equitable relief or remedy shall be implied by the
failure of the Landlord to assert any rights, to declare any forfeiture, or for
any other reason. No wavier of any of said terms, provisions, covenants, rules
and regulations shall be valid unless it shall be in writing signed by the
Landlord in respect to one or more tenants of the Building shall constitute a
waiver or forgiveness of performance in favor of Tenant herein, or any other
tenant. No waiver of any pledge of this Lease or the forgiveness of any one or
more of the terms, provisions, conditions, rules and regulations of this Lease
may be claimed or pleaded by Tenant to excuse a subsequent pledge or failure of
performance of any of the terms, provisions, conditions, covenants, rules, and
regulations of this Lease.

VACATION OF PREMISES
- --------------------

Section 21.
-----------

(a) Tenant shall deliver up and surrender to Landlord
possession of the Premises, including all Tenant's work (and all replacements
thereof) and all fixtures permanently attached to the Premises during the term,
upon the expiration of this Lease or its termination in any way in as good
condition and repair as the same shall be at the commencement of said term,
ordinary wear and tear and unavoidable casualty only excepted, and deliver the
keys at the office of Landlord or Landlord's agent.

NOTICES
- -------

7
<PAGE> 8
Section 22.
-----------

Any notices or consent required to be given by or on behalf of
either party upon the other shall be in writing and shall be given by mailing
such notices or consent by Registered or Certified Mail, return receipt
requested, addressed to the Landlord at:

Great Lakes Bank
7001 Center Street
Mentor, Ohio 44060

and to the Tenant at:

OsAir, Inc.
7001 Center Street
Mentor, Ohio 44060

or at such other address as may be specified from time to time, in writing,
delivered to the other party, and the time of the rendition of such notice shall
be when it is deposited in an official United States Post Office, postage
prepaid.

APPLICABLE LAW AND CONSTRUCTION
- -------------------------------

Section 23.
-----------

(a) The laws of the State of Ohio shall govern the validity,
performance, enforcement, and interpretation of this Lease. The invalidity or
unenforceability of any provision of this Lease shall not affect or impair any
other provision. The submission of this document for examination does not
constitute an offer to lease, or a reservation of or option for the Premises and
becomes effective only upon execution and delivery thereof by Landlord and
Tenant. All negotiations, considerations, representations and understandings
between the parties are incorporated herein and may be modified or altered only
by agreement in writing by the parties. Tenant shall have no right to quit the
Premises or cancel or rescind this Lease except as expressly granted herein.
This Lease has been negotiated by Landlord and Tenant and the Lease together
with all of the terms and provisions thereof, shall not be deemed to have been
prepared by either Landlord or Tenant, but by both equally.

QUIET ENJOYMENT
- ---------------

Section 24.
-----------

(a) Landlord hereby covenants and agrees that if Tenant shall
perform all of the covenants and agreements herein stipulated to be performed on
Tenant's part, Tenant shall at all times during the continuance hereof have
peaceable and quiet enjoyment and possession of the Premises without any manner
of let or hinderance from Landlord or any other person.

HOLDING OVER
- ------------

Section 25.
-----------

(a) If at the expiration of the term of this Lease, or any
renewal thereof, Tenant continues to occupy the Premises, such holding over
shall not constitute a renewal of this Lease, but Tenant shall be a tenant from
month to month.

IN WITNESS WHEREOF, the parties hereto have set their hands this 1st
day of June, 1995, as to the Landlord, and this 1st day of March, 1998, as to
the Tenant.

LANDLORD:

8
<PAGE> 9

GREAT LAKES BANK

BY: /s/ Richard T. Flenner, Jr.
---------------------------------
Richard T. Flenner, Jr., President

TENANT:
OSAIR, Inc.
an Ohio Corporation

BY: /s/ Richard M. Osborne
---------------------------------
Richard M. Osborne, President

<PAGE> 1

Exhibit 23

The Board of Directors
GLB Bancorp, Inc.
Mentor, Ohio:

We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus. Our report refers to a
change in the method of accounting for goodwill.

/s/ KPMG Peat Marwick LLP

Indianapolis, Indiana
April 30, 1998