PEOPLES BANCORP INC
10-K, 1997-03-31
STATE COMMERCIAL BANKS
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                		    SECURITIES AND EXCHANGE COMMISSION
                        			WASHINGTON, D. C.  20549

                             				 FORM 10-K

(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934
      For the fiscal year ended December 31, 1996

           			    OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934
     For the transition period from ____ to ____


                 		     Commission file number 0-16772          

                      			  PEOPLES BANCORP INC.            
          	 ------------------------------------------------------
          	 (Exact name of Registrant as specified in its charter)          


       	  Ohio                                         31-0987416 
- -------------------------------                   -------------------
(State or other jurisdiction of                    (I.R.S. Employer   
incorporation or organization)                    Identification No.)
	
138 Putnam Street, P. O. Box 738, Marietta, Ohio          45750 
- ------------------------------------------------       ----------
   (Address of principal executive offices)            (Zip Code) 

Registrant's telephone number, 
 including area code:                           (614) 373-3155 
                             				     --------------------------------------

Securities registered pursuant to 
 Section 12(b) of the Act:                           None 
                             				     --------------------------------------

Securities registered pursuant to 
 Section 12(g) of the Act:           Common Shares, No Par Value (3,445,675 
				                                 outstanding at February 28, 1997) 
                            				     --------------------------------------

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

          Yes    X         No             
	              -----           -----

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

Based upon the closing price of the Common Shares of the
Registrant on the The NASDAQ National Market as of February 28,
1997, the aggregate market value of the Common Shares of the
Registrant held by nonaffiliates on that date was $91,241,518. 
For this purpose, certain executive officers and directors are
considered affiliates.

Documents Incorporated by Reference:
    1)  Portions of Registrant's Annual Report to Stockholders
       	for the fiscal year ended December 31, 1996, are                
       	incorporated by reference into Parts I and II of this
       	Annual Report on Form 10-K.

    2)  Portions of Registrant's Definitive Proxy Statement
       	relating to the annual meeting to be held April 10, 1997,       
       	are incorporated by reference into Part III of this
	       Annual Report on Form 10-K.


          	       Exhibit Index Appears on Pages 17 through 19
                       			   Page 1 of 130 Pages


                             				PART I

ITEM 1.  BUSINESS.
- ------------------

Introduction
- ------------
  Peoples Bancorp Inc. ("Peoples Delaware") was incorporated under
the laws of the State of Delaware on April 1, 1980.  Peoples
Delaware was merged, following shareholder approval, into
Peoples Bancorp Inc., an Ohio corporation (the "Company"),
effective April 6, 1993, pursuant to a reincorporation
proceeding.  The Company's principal business is to act as a
multi-bank holding company.  Its wholly-owned subsidiaries are
The Peoples Banking and Trust Company, Marietta, Ohio ("Peoples
Bank"),  The First National Bank of Southeastern Ohio ("First
National Bank"), Russell Federal Savings Bank ("Russell
Federal"), and The Northwest Territory Life Insurance Company,
an Arizona corporation ("Northwest Territory").

  At December 31, 1996, Peoples Bancorp Inc. (parent company only)
had 27 full-time equivalent employees.


The Peoples Banking and Trust Company
- -------------------------------------
  Peoples Bank was chartered as an Ohio banking corporation under
its present name in Marietta, Ohio, in 1902.  At December 31,
1996, it had assets of $534.8 million, deposits of $446.5
million, and net loans of $364.7 million.

  Peoples Bank is a full-service commercial bank.  It provides the
following products to its customers:  checking accounts, NOW
accounts, Super NOW accounts, money market deposit accounts,
savings accounts, time certificates of deposit, commercial
loans, installment loans, commercial and residential real estate
mortgage loans, credit cards, lease financing, corporate and
personal trust services and safe deposit rental facilities. 
Peoples Bank also sells travelers checks, money orders and
cashier's checks.  Services are provided through ordinary
walk-in offices, automated teller machines ("ATMs"), automobile
drive-in facilities called "Motor Banks", and banking by phone. 
At December 31, 1996, the Trust Department of Peoples Bank held
approximately $430 million of assets (market value) in trust and
custodial accounts apart from the assets of the Bank.

  With all of its offices located in Ohio, Peoples Bank serves
principally Washington, Athens, Meigs, and Gallia Counties,
together with portions of Hocking, Perry, and Vinton Counties in
Ohio and adjacent parts of Northern West Virginia.  On April 26,
1996, Peoples Bank acquired three full-service banking centers
with approximately $75 million in associated deposits from Bank
One, Athens, N.A.  These three banking branches are located in
the cities of Pomeroy, Gallipolis, and Rutland, Ohio, serving
Meigs and Gallia counties and portions of Lawrence County.  The
Gallipolis office is located in downtown Gallipolis and operates
a full-service office, Motor Bank, and an ATM.  A full-service
office and separate Motor Bank are located in downtown Pomeroy. 
An ATM is also located in Pomeroy outside a local convenience
store.  The Rutland office is a full-service office and Motor
Bank facility.

  In addition to the offices acquired in 1996, Peoples Bank
provides services to its customers at its principal banking
office in downtown Marietta and through ATMs and other banking
facilities.  A full-service office, Motor Bank and ATM are
located at the Frontier Shopping Center in Marietta.  Also, a
full-service office and ATM are located inside a grocery store
at Pike and Acme Streets in  Marietta.  A full-service office,
two Motor Banks and a ATM are operated in Belpre, Ohio. 
Full-service offices with Motor Banks are located in Lowell,
Reno and Nelsonville, Ohio.  A full-service branch and ATM are
located at One North Court Street in downtown Athens, Ohio.  A
full-service office, Motor Bank and ATM are located at the
Athens Mall.  Also, three ATMs are located on the campus of Ohio
University in Athens, Ohio.  A full-service bank is located at
Middleport, Ohio.  A loan production office in Newark-Granville,
Ohio, serves that immediate area in Licking County.  At December
31, 1996, Peoples Bank had 226 full-time equivalent employees.

  Effective at the close of business on February 28, 1997, Peoples
Bank completed the purchase of one full-service banking office
located in Baltimore, Ohio, from National City Bank of Columbus.
In the transaction, Peoples Bank assumed approximately $12.5
million in deposits.  This office is located in Fairfield
County, complementing the aforementioned loan production office
located in Newark-Granville, Ohio.  The Baltimore office
currently operates a full-service banking office and an ATM.  


The First National Bank of Southeastern Ohio
- --------------------------------------------
  First National Bank is a national banking association chartered
in 1900.  It provides banking services and products that are
substantially the same as those of Peoples Bank.  First National
Bank operates a commercial bank and Motor Bank at one location
at 415 Main Street, Caldwell, Ohio.  It also has a full-service
office and Motor Bank on Marion Street in Chesterhill, Ohio.  It
also operates a full-service office on Kennebec Street,
McConnelsville, Ohio.  First National Bank's market area is
comprised of Caldwell, Chesterhill, McConnelsville and the
surrounding area in Noble and Morgan Counties, Ohio.  At
December 31, 1996, it had assets of $77.0 million, deposits of
$58.6 million, and net loans of $50.8 million.  At December 31,
1996, First National Bank had 29 full-time equivalent employees.

  First National Bank also operates two insurance agency
subsidiaries, Northwest Territory Life Insurance Agency, Inc.
and Northwest Territory Property & Casualty Insurance Agency,
Inc. (the "Agencies").  The Agencies were created in compliance
with federal regulations allowing insurance powers to national
banks in communities with populations of 5,000 people or less. 
On December 22, 1995, each Agency received a Certificate of
Qualification (license) to operate the Agency from the Ohio
Department of Insurance, thereby allowing the Agencies to engage
in the insurance agency business, subject to the regulations of
the Ohio Department of Insurance and the Comptroller of the
Currency.  These were the first insurance agencies in Ohio
associated with a financial institution to receive licenses to
conduct a broad-based insurance business.  At December 31, 1996,
the Agencies had 5 full-time equivalent employees.


Russell Federal Savings Bank
- ----------------------------
  Effective January 1, 1997, the Company completed the purchase of
Russell Federal Savings Bank ("Russell Federal") in Russell,
Kentucky, for approximately $9.25 million in cash.  The Company
has continued Russell Federal's operations as a federal savings
bank subsidiary with continuity of management, officers, and
directors.  At December 31, 1996, Russell Federal had total
assets of $28.0 million, deposits of $19.5 million, and
shareholders' equity of $8.0 million. 

  Russell Federal was originally chartered as a mutual association
in 1914.  On October 6, 1994, Russell Federal converted from a
mutual association to a stock corporation.  Russell Federal
serves the financial needs of customers in Greenup and Boyd
Counties, its primary market area.  Its principal products
include savings accounts, time certificates of deposit and
commercial and residential real estate loans.  Russell Federal
has one full-service office located on Ferry Street in the city
of Russell and serves its customers by this walk-in office and
attached Motor Bank.  At December 31, 1996, Russell Federal had
6 full-time equivalent employees.


The Northwest Territory Life Insurance Company
- ----------------------------------------------
  Northwest Territory was organized under Arizona law in 1983 and
was issued a Certificate of Authority to act as a reinsurance
company by the State of Arizona on February 8, 1984.  Northwest
Territory reinsures credit life and disability insurance issued
to customers of banking subsidiaries of the Company by the
issuing insurance company.  At November 30, 1996, Northwest
Territory had total assets of $1.4 million and had gross premium
income of $201,000 in 1996, $244,000 in 1995 and $238,000 in
1994.  Northwest Territory reinsures risks (currently not
exceeding $15,000 per insured on a present value basis) within
limits established by governmental regulations and management
policy.  Northwest Territory has no employees.


Customers and Markets
- ---------------------
  The Company's service area has a diverse economic structure. 
Principal industries in the area include metals, plastics and
petrochemical manufacturing; oil, gas and coal production and
related support industries.  In addition, tourism, education and
other service-related industries are important and growing
industries.  Consequently, the Company is not dependent upon any
one industry segment for its business opportunities.

  Each of the Company's subsidiaries originates various types of
loans, including commercial and commercial real estate loans,
residential real estate loans, home equity lines of credit, real
estate construction loans, and consumer loans (including loans
to individuals, credit card loans, and indirect loans).  In
general, the Company retains most of its originated loans and,
therefore, secondary market activity has been minimal.  The
loans of each of the Company's subsidiaries are spread over a
broad range of industrial classifications.  The Company believes
that its subsidiaries have no significant concentrations of
loans to borrowers engaged in the same or similar industries and
such subsidiaries do not have any loans to foreign entities. 
The lending market areas served by the Company's subsidiaries
are primarily concentrated in southeastern Ohio and neighboring
areas of Kentucky and West Virginia.  In addition, a loan
production office in central Ohio provides opportunities to
serve customers in that economic region.

  Commercial lending entails significant additional risks as
compared with consumer lending, i.e. single-family residential
mortgage lending, installment lending, credit card loans and
indirect lending.  In addition, the payment experience on
commercial loans is typically dependent on adequate cash flow of
a business and thus may be subject, to a greater extent, to
adverse conditions in the economy generally or adverse
conditions in a specific  industry.

  At December 31, 1996, the Company had outstanding approximately
$127.9 million in commercial loans (including commercial,
financial and agricultural loans), representing approximately
30.3% of the total aggregate loan portfolio as of that date.  At
December 31, 1996, the Company's subsidiaries had not extended
credit to any one borrower in excess of its respective legal
lending limits (approximately $7.2 million, $1.5 million, and
$717,000, for Peoples Bank, First National, and Russell Federal
respectively).  Loan terms include amortization schedules
commensurate with the purpose of each loan, the source of
repayment and the risk involved.  Board of Director approval is
required for loans whose aggregate total debt, including the
principal amount of the proposed loan, exceeds $1 million,
$300,000, and $275,000, for Peoples Bank, Russell Federal, and
First National, respectively.  The primary analysis technique
used in determining whether to grant a commercial loan is the
review of a schedule of cash flows in order to evaluate whether
anticipated future cash flows will be adequate to service both
interest and principal due.  In addition, collateral is reviewed
to determine its value in relation to the loan.

  Each of the Company's subsidiaries regularly evaluates all
commercial loans greater in amount than $100,000 so that
effective and prompt action can be taken where deterioration
occurs.  Upon detection of a reduced ability of a borrower to
meet cash flow obligations, the loan is considered an impaired
loan and reviewed for possible downgrading or placement on
non-accrual status.

  At December 31, 1996, the Company's had outstanding consumer
loans (including indirect loans and credit cards) in an
aggregate amount of approximately $109 million (approximately
25.8% of the aggregate total loan portfolio).  Credit approval
for consumer loans requires demonstration of sufficiency of
income to repay principal and interest due, stability of
employment, a positive credit record and sufficient collateral
for secured loans.  It is the Company's policy to adhere
strictly to all laws and regulations governing consumer lending.
A qualified compliance officer is responsible for monitoring
the Company's performance in this area and for advising and
updating loan personnel.  The Company's subsidiaries make credit
life insurance and health and accident insurance available to
all qualified buyers, thus reducing their risk of loss when a
borrower's income is terminated or interrupted.  It is the
policy of each of the Company's subsidiaries to review its
consumer loan portfolio monthly and to charge off loans that do
not meet that subsidiary's standards.  Each subsidiary also
offers its customers credit card access through the consumer
lending department of Peoples Bank.

  Consumer loans generally involve more risk as to collectibility
than mortgage loans because of the type and nature of the
collateral and, in certain instances, the absence of collateral.
As a result, consumer lending collections are dependent upon
the borrower's continued financial stability, and thus are more
likely to be adversely affected by employment loss, personal
bankruptcy, or by adverse economic conditions.

  At December 31, 1996, there were approximately $185.4 million in
residential real estate, home equity lines of credit and
construction mortgages outstanding, representing 43.9% of total
loans outstanding.  The Company's subsidiaries require that the
loan amount with respect to residential real estate loans be no
more than 90% of the purchase price or the appraisal value of
the real estate securing the loan, unless private mortgage
insurance is obtained by the borrower with respect to the
percentage exceeding such 90%.  Loans made for each subsidiary's
portfolio in this lending category are generally one year
adjustable rate, fully amortized mortgages.  The Company's
subsidiaries also generate fixed rate real estate loans and
generally retains these loans.  All real estate loans are
secured by first mortgages with evidence of title in favor of
the subsidiary in the form of an attorney's opinion of the title
or a title insurance policy.  The Company's subsidiaries also
require proof of hazard insurance with the appropriate 
subsidiary named as the mortgagee and as the loss payee. 
Licensed appraisals are required in the case of loans in excess
of $150,000.

  Home equity lines of credit are generally made as second
mortgages by the Company's subsidiaries.  The maximum amount of
a home equity line of credit is generally limited to 80% of the
appraised value of the property less the balance of the first
mortgage.  The home equity lines of credit are written with ten
year terms but are subject to review.  A variable interest rate
is generally charged on the home equity lines of credit.

  Construction financing is generally considered to involve a
higher degree of risk of loss than long-term financing on
improved, occupied real estate.  Risk of loss on a construction
loan is dependent largely upon the accuracy of the initial
estimate of the property's value at completion of construction
and the estimated cost (including interest) of construction.  If
the estimate of construction cost proves to be inaccurate, the
Company's subsidiary making the loan may be required to advance
funds beyond the amount originally committed to permit
completion of the project.  At December 31, 1996, the Company
had approximately $9.9 million in real estate construction
loans, representing approximately 2.3% of the Company's total
loan portfolio. 


Competition
- -----------
  The banking subsidiaries of the Company experience significant
competition in attracting depositors and borrowers.  Competition
in lending activities comes principally from other commercial
banks in the lending areas of the banks and, to a lesser extent,
from savings associations, insurance companies, governmental
agencies, credit unions, brokerage firms and pension funds.  The
primary factors in competing for loans are interest rate and
overall lending services.  Competition for deposits comes from
other commercial banks, savings associations, money market funds
and credit unions as well as from insurance companies and
brokerage firms.  The primary factors in competing for deposits
are interest rates paid on deposits, account liquidity,
convenience of office location and overall financial condition. 
The Company believes that its size, overall banking services and
financial condition place it in a favorable competitive position.

  Northwest Territory operates in the highly competitive industry
of credit life and disability insurance.  The principal methods
of competition in the credit life and disability insurance
industry are the availability of coverages and premium rates. 
The Company believes Northwest Territory has a competitive
advantage due to the fact that the business of Northwest
Territory is limited to the accepting of life and disability
reinsurance ceded in part to Northwest Territory from the credit
life and disability insurance purchased by loan customers of
Peoples Bank and First National Bank.

  The Agencies operate in the extremely competitive life insurance
and property and casualty insurance industries, due mostly to
the large number of companies and agents located within the
southeastern Ohio market.  The Agencies provide several
insurance product options to consumers, including traditional
life insurance, as well as investments in mutual funds, variable
and fixed annuities and securities.  The Company intends to
provide property and casualty insurance products through
Northwest Territory Property & Casualty Insurance Agency, Inc. 
The Agencies' future competitive advantage will be based on
their ability to provide products to consumers efficiently with
sensitivity to customer service and cost price issues.


Supervision and Regulation
- --------------------------
  The following is a summary of certain statutes and regulations
affecting the Company and its subsidiaries.  The summary is
qualified in its entirety by reference to such statutes and
regulations.

  The Company is a bank holding company under the Bank Holding
Company Act of 1956, as amended, which restricts the activities
of the Company and the acquisition by the Company of voting
stock or assets of any bank, savings association or other
company.  The Company is also subject to the reporting
requirements of, and examination and regulation by, the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board").  Subsidiary banks of a bank holding company are subject
to certain restrictions imposed by the Federal Reserve Act on
transactions with affiliates, including any loans or extensions
of credit to the bank holding company or any of its
subsidiaries, investments in the stock or other securities
thereof and the taking of such stock or securities as collateral
for loans to any borrower; the issuance of guarantees,
acceptances or letters of credit on behalf of the bank holding
company and its subsidiaries; purchases or sales of securities
or other assets; and the payment of money or furnishing of
services to the bank holding company and other subsidiaries. 
Bank holding companies are prohibited from acquiring direct or
indirect control of more than 5% of any class of voting stock or
substantially all of the assets of any bank holding company
without the prior approval of the Federal Reserve Board.  A bank
holding company and its subsidiaries are prohibited from
engaging in certain tying arrangements in connection with
extensions of credit and/or the provision of other property or
services to a customer by the bank holding company or its
subsidiaries.  In addition, any savings association acquired by
a bank holding company must conform its activities to those
permissible for a bank holding company under the Bank Holding
Company Act.

  The Company is also a savings and loan holding company due to
its ownership of Russell Federal.  However, since the Company is
a bank holding company regulated by the Federal Reserve Board,
it is not subject to any separate regulation as a savings and
loan holding company.  Transactions between a savings
association subsidiary of a savings and loan holding company and
an affiliate thereof are subject to the same restrictions
imposed by the Federal Reserve Act on subsidiary banks of a bank
holding company.

  As a national bank, First National Bank is supervised and
regulated by the Comptroller of the Currency.  As an Ohio
state-chartered bank, Peoples Bank is supervised and regulated
by the Ohio Division of Banks and the Federal Deposit Insurance
Corporation ("FDIC").  The deposits of First National Bank and
Peoples Bank are insured by the FDIC and those entities are
subject to the applicable provisions of the Federal Deposit
Insurance Act.  A subsidiary of a bank holding company or
savings and loan holding company can be liable to reimburse the
FDIC if the FDIC incurs or anticipates a loss because of a
default of another FDIC-insured subsidiary of the bank holding
company or savings and loan holding company or in connection
with FDIC assistance provided to such subsidiary in danger of
default.  In addition, the holding company of any insured
financial institution that submits a capital plan under the
federal banking agencies' regulations on prompt corrective
action, guarantees a portion of the institution's capital
shortfall, as discussed below.

  As a federally chartered savings bank, Russell Federal is
subject to broad federal regulation and oversight extending to
all its operations.  As member of the FHLB of Cincinnati, it is
subject to certain limited regulation by the Federal Reserve
Board.  Russell Federal's deposits are insured by the FDIC,
which exercises regulatory and examination authority.  Russell
Federal is also subject to regulation, supervision, and
examination by the Office of Thrift Supervision ("OTS").  The
enforcement authority of the OTS includes, among other things,
the ability to assess civil money penalties, to issue
cease-and-desist of removal orders and to initiate injunctive
actions.  In general, these enforcement actions may be initiated
for violations of laws and regulations and unsafe or unsound
practices.  Other actions or inactions may provide the basis for
enforcement action, including misleading of untimely reports
filed with the OTS.  Except under certain circumstances, public
disclosure of final enforcement actions by the OTS is required. 

  Various requirements and restrictions under the laws of the
United States and the State of Ohio affect the operations of
Peoples Bank, First National Bank, and Russell Federal,
including requirements to maintain reserves against deposits,
restrictions on the nature and amount of loans which may be made
and the interest that may be charged thereon, restrictions
relating to investments and other activities, limitations on
credit exposure to correspondent banks, limitations on
activities based on capital and surplus, limitations on payment
of dividends, and limitations on branching.  Pursuant to recent
federal legislation, First National Bank may branch across state
lines, if permitted by the law of the other state.  In addition,
effective June 1997, such interstate branching by First National
Bank will be authorized, unless the law of the other state
specifically prohibits the interstate branching authority
granted by federal law.

  The Federal Reserve Board has adopted risk-based capital
guidelines for bank holding companies and for state member
banks, such as Peoples Bank and First National Bank.  The
risk-based capital guidelines include both a definition of
capital and a framework for calculating weighted-risk assets by
assigning assets and off-balance sheet items to broad risk
categories.  The minimum ratio of total capital to weighted-risk
assets (including certain off-balance sheet items, such as
standby letters of credit) is 8%.  At least 4.0 percentage
points is to be comprised of common stockholder's equity
(including retained earnings but excluding treasury stock),
noncumulative perpetual preferred stock, a limited amount of
cumulative perpetual preferred stock, and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and
certain other intangible assets ("Tier 1 capital").  The
remainder ("Tier 2 capital") may consist, among other things, of
mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock and a limited amount of
allowance for loan and lease losses.  The Federal Reserve Board
also imposes a minimum leverage ratio (Tier 1 capital to total
assets) of 4% for bank holding companies and state member banks
that meet certain specified conditions, including no
operational, financial or supervisory deficiencies and including
having the highest regulatory rating.  The minimum leverage
ratio is 1.0 - 2.0% higher for other bank holding companies and
state member banks based on their particular circumstances and
risk profiles and those experiencing or anticipating significant
growth.  National bank subsidiaries, such as First National
Bank, are subject to similar capital requirements adopted by the
Comptroller of the Currency, and state non-member bank
subsidiaries, such as Peoples Bank, are subject to similar
capital requirements adopted by the FDIC.  Under an outstanding
proposal of the Comptroller and the FDIC to establish an
interest rate risk component, First National Bank and Peoples
Bank may be required to have additional capital if their
interest rate risk exposure exceeds acceptable levels provided
for in the regulation as when adopted.

  The OTS has established capital standards, including a tangible
capital requirement, a leverage ratio (or core capital)
requirement and risk-based capital requirement applicable to
savings associations such as Russell Federal.  The framework
provided by the OTS to define capital and calculate
risk-weighted assets is much the same as the framework provided
by the Federal Reserve Board for bank holding companies and for
state member banks, such as Peoples Bank and First National
Bank.  These capital requirements must be generally as stringent
as the comparable capital requirements for national banks.  The
capital regulations require tangible capital of at least 1.5% of
adjusted total assets (as defined by regulation).  Tangible
capital generally includes common stockholders' equity and
retained income and certain noncumulative perpetual preferred
stock and related income.  The capital standards also require
core capital equal at least 3% of adjusted total assets.  Core
capital generally consists of  tangible capital plus certain
intangible assets, including a limited amount of purchased
credit card relationships.  The OTS risk-based requirement
requires saving associations to have total capital of at least
8% of risk-weighted assets.  Total capital consists of core
capital and supplementary capital.  Supplementary capital
consists of certain permanent and maturing capital instruments
that do not qualify as core capital  and general valuation loan
and lease loss allowances up to a maximum of 1.25% of
risk-weighted assets.  Supplementary capital may be used to
satisfy the risk-based requirement only to the extent of core
capital.  The OTS is also authorized to require a savings
association to maintain an additional amount of total capital to
account for concentration of credit risk and the risk of
non-traditional activities.    

  The Company and its subsidiaries currently satisfy all capital
requirements.  Failure to meet applicable capital guidelines
could subject a banking institution to a variety of enforcement
remedies available to federal and state regulatory authorities,
including the termination of deposit insurance by the FDIC.

  The federal banking regulators have established regulations
governing prompt corrective action to resolve capital deficient
banks and savings associations.  Under these regulations,
institutions which become undercapitalized become subject to
mandatory regulatory scrutiny and limitations, which increase as
capital continues to decrease.  Such institutions are also
required to file capital plans with their primary federal
regulator, and their holding companies must guarantee the
capital shortfall up to 5% of the assets of the capital
deficient institution at the time it becomes undercapitalized.

  The ability of a bank holding company to obtain funds for the
payment of dividends and for other cash requirements is largely
dependent on the amount of dividends which may be declared by
its subsidiary banks and other subsidiaries.  However, the
Federal Reserve Board expects the Company to serve as a source
of strength to its subsidiary banks, which may require it to
retain capital for further investment in subsidiaries, rather
than for dividends for shareholders of the Company.  Peoples
Bank, First National Bank and Russell Federal may not pay
dividends to the Company if, after paying such dividends, they
would fail to meet the required minimum levels under the
risk-based capital guidelines and the minimum leverage ratio
requirements.  Peoples Bank and First National Bank must have
the approval of their respective regulative authorities if a
dividend in any year would cause the total dividends for that
year to exceed the sum of the current year's net profits and the
retained net profits for the preceding two years, less required
transfers to surplus.  Russell Federal may make capital
distributions during any calendar year equal to the greater of
100% of net income for the year-to-date plus 50% of the amount
by which the lesser of the bank's tangible, core of risk-based
capital exceeds its capital requirement for such capital
component, as measured at the beginning of the calendar year, or
75% of its net income for the most recent four quarter period.  
If the current minimum capital requirements following a proposed
capital distribution are not met, Russell Federal must obtain
prior approval from the OTS.  Payment of dividends by the bank
subsidiaries may be restricted at any time at the discretion of
the regulatory authorities, if they deem such dividends to
constitute an unsafe and/or unsound banking practice.  These
provisions could have the effect of limiting the Company's
ability to pay dividends on its outstanding common shares.

  Prior to the enactment of the Small Business Jobs Protection Act
(the "1996 Act") which was signed into law on August 21, 1996,
earnings appropriated to bad debt reserves and deducted for
federal income tax purposes could not be used by Russell Federal
to pay cash dividends to the Company without the payment of
federal income taxes by the Company at the then current income
tax rate on the amount deemed distributed, which would include
the amount of any federal income taxes attributable to the
distribution.  As a result of modifications enacted in the 1996
Act, pre-1988 bad debt reserves which are not otherwise
recaptured as discussed below, may be recaptured if they are
used for payment of cash dividends or other distributions to a
shareholder.  Thus, any dividends to the Company that would
reduce amounts appropriated to Russell Federal's pre-1988 bad
debt reserves and deducted for federal income tax purposes could
create a significant tax liability for Russell Federal.  The
impact of this regulation is insignificant to the Company. 
However, the Company intends to make full use of the favorable
tax treatment afforded to Russell Federal and the Company does
not contemplate any distribution by Russell Federal in a manner
which would create the above-mentioned federal tax liabilities.

  The FDIC is authorized to establish separate annual assessment
rates for deposit insurance for members of the Bank Insurance
Fund ("BIF") and of the Savings Association Insurance Fund
("SAIF").  Peoples Bank and First National Bank are members of
the BIF.  Russell Federal is a member of the SAIF.  The FDIC may
increase assessment rates for either fund if necessary to
restore the fund's ratio of reserves to insured deposits to its
target level within a reasonable time and may decrease such
rates if such target level has been met.  The FDIC has
established a risk-based assessment system for both BIF and SAIF
members.  Under this system, assessments may vary based on the
risk the institution poses to its deposit insurance fund.  The
risk level is determined based on the institution's capital
level and the FDIC's level of supervisory concern about the
institution.

  Because BIF has become fully funded, BIF assessments for
well-capitalized commercial banks were reduced to, in effect,
$2,000 per year, during 1996.  Federal legislation, which became
effective September 30, 1996, provides, among other things, for
the costs of prior thrift failures to be shared by both the BIF
and the SAIF.  As a result of such cost sharing, BIF assessments
for well-capitalized banks during 1997 will be $.013 per $100 in
deposits.  SAIF assessments for well-capitalized institutions in
1997 will be $.064 per $100 in deposits.  Based upon their
respective level of deposits at December 31, 1996, the projected
BIF assessment for the Company's banking subsidiaries would
aggregate approximately $67,000 in 1997.  The projected SAIF
assessment for Russell Federal would total approximately $12,000
in 1997.

  Northwest Territory is chartered by the State of Arizona and is
subject to regulation, supervision and examination by the
Arizona Department of Insurance.  The powers of regulation and
supervision of the Arizona Department of Insurance relate
generally to such matters as minimum capitalization, the grant
and revocation of certificates of authority to transact
business, the nature of and limitations on investments, the
maintenance of reserves, the form and content of required
financial statements, reporting requirements and other matters
pertaining to life and disability insurance companies.

  The Agencies are incorporated in the State of Ohio and licensed
by the Ohio Department of Insurance, which regulates, supervises
and has authority to examine the Agencies.  


Monetary Policy and Economic Conditions
- ---------------------------------------
  The business of commercial banks and savings associations is
affected not only by general economic conditions, but also by
the policies of various governmental regulatory agencies,
including the Federal Reserve Board.  The Federal Reserve Board
regulates money and credit conditions and interest rates in
order to influence general economic conditions primarily through
open market operations in U.S. Government securities, changes in
the discount rate on bank borrowings, and changes in the reserve
requirements against bank and savings association deposits. 
These policies and regulations significantly affect the overall
growth and distribution of bank and savings association loans,
investments and deposits, and the interest rates charged on
loans, as well as the interest rates paid on deposits and
accounts.

  The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of commercial banks
and savings associations in the past and are expected to
continue to have significant effects in the future.  In view of
the changing conditions in the economy and the money markets and
the activities of monetary and fiscal authorities, no definitive
predictions can be made as to future changes in interest rates,
credit availability or deposit levels.


Statistical Financial Information Regarding the Company
- -------------------------------------------------------
  The following listing of statistical financial information,
which is included in the Company's Annual Report to Shareholders
for the fiscal year ended December 31, 1996 (the "Company's 1996
Annual Report") and incorporated herein by reference, provides
comparative data for the Company over the past three and five
years, as appropriate.  These tables should be read in
conjunction with "Management's Discussion and Analysis" and the
Consolidated Financial Statements of the Company and its
subsidiaries found at pages 39 through 51 and 16 through 33,
respectively, of the Company's 1996 Annual Report.

Average Balances and Analysis of Net Interest Income:
    Please refer to page 35 of the Company's 1996 Annual Report.

Rate Volume Analysis:
    Please refer to page 36 of the Company's 1996 Annual Report.

Loan Maturities:
    Please refer to page 36 of the Company's 1996 Annual Report.

Average Deposits:
    Please refer to page 35 of the Company's 1996 Annual Report.

Maturities Schedule of Large Certificates of Deposit:
    Please refer to page 36 of the Company's 1996 Annual Report.

Loan Portfolio Analysis:
    Please refer to pages 37 and 38 of the Company's 1996 Annual Report.

Securities Analysis:
    Please refer to pages 22 through 24 and page 48 of the 
    Company's 1996 Annual Report.

Return Ratios:
    Please refer to page 13 of the Company's 1996 Annual Report.


Effect of Environmental Regulation
- ----------------------------------
  Compliance with federal, state and local provisions regulating
the discharge of materials into the environment, or otherwise
relating to the protection of the environment, has not had a
material effect upon the capital expenditures, earnings or
competitive position of the Company and its subsidiaries.  The
Company believes that the nature of the operations of its
subsidiaries has little, if any, environmental impact.  The
Company, therefore, anticipates no material capital expenditures
for environmental control facilities for its current fiscal year
or for the foreseeable future.  The Company's subsidiaries may
be required to make capital expenditures for environmental
control facilities related to properties which they may acquire
through foreclosure proceedings in the future; however, the
amount of such capital expenditures, if any, is not currently
determinable.


ITEM 2.  PROPERTIES      
- -------------------
  
  The principal office of the Company and Peoples Bank is located
at 138 Putnam Street, Marietta, Ohio.  This location consists of
a five-story, stone-block building and one other smaller
building attached by interior corridors.  In 1993, Peoples Bank
completed construction of a five-story addition to its primary
facility in downtown Marietta.  Peoples Bank also owns several
nearby vacant lots for parking and a nearby Motor Bank.

  Other Washington County offices for Peoples Bank include
property owned at Second and Scammel Streets in downtown
Marietta on which an additional Motor Bank exists.  Peoples Bank
also leases land in the Frontier Shopping Center near downtown
Marietta on which a full-service branch is located.  In
addition, Peoples Bank leases its other full-service branch
located inside a supermarket in Washington Center near downtown
Marietta.  In Belpre, Peoples Bank owns a full-service branch at
1902 Washington Boulevard and a nearby Motor Bank.  Peoples Bank
also owns a full-service branch in Lowell, Ohio, and a Motor
Bank in Reno, Ohio.

  In Athens County, Peoples Bank also owns a two-story, block
building on the Public Square in Nelsonville, Ohio, and an
additional Motor Bank in Nelsonville.  In addition, Peoples Bank
owns an office consisting of a two-story concrete structure at
One North Court Street, Athens, Ohio, and a brick full-service
office in the Athens Mall.  The building in the Mall is owned by
Peoples Bank on leased real property.  The branch office located
in The Plains is operated under a lease which expires in June,
2001.

  In Meigs County, Peoples Bank owns full-service offices in
Middleport and Rutland, Ohio.  Peoples Bank also owns
full-service and nearby Motor Banks in Gallipolis and Pomeroy,
Ohio.

  Peoples Bank's loan production office in Newark-Granville is
also leased.  The Company owns the land and building on which
the newly acquired Baltimore branch (as of March 1, 1997) is
located.  

  First National Bank owns a three-story office building 
of brick and stone at 415 Main Street in Caldwell, Ohio, 
and a one-story masonry and brick building located on 
Marion Street in Chesterhill, Morgan County, Ohio, together 
with a two-story brick structure in McConnelsville,
Morgan County, Ohio, located on Kennebec Street.  The Agencies
headquarters are also located in the Caldwell office of First
National Bank.

  Russell Federal owns a two-story brick office building with
adjoining land and parking lot at 404 Ferry Street in Russell,
Kentucky, as well as adjacent property located at 408 Ferry
Street.

  All other properties occupied by the Company and its
subsidiaries are owned by the Company or its subsidiaries.  The
Company and its subsidiaries own other real property which, when
considered in the aggregate, is not material to their operations.

  Management believes all of the properties described above are in
satisfactory condition for their intended use.


ITEM 3.  LEGAL PROCEEDINGS.
- ---------------------------

  There are no pending legal proceedings to which the Company or
its subsidiaries are a party or to which any of their property
is subject other than ordinary routine litigation incidental to
their business, none of which is material.


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

  Not applicable.     



                          				 PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
       	 STOCKHOLDER MATTERS.
- ----------------------------------------------------------

  Please refer to pages 14 and 15 of the Company's 1996 Annual
Report, which are incorporated herein by reference.


ITEM 6.  SELECTED FINANCIAL DATA.
- ---------------------------------
  
  The table of Selected Financial Data on page 13 of the Company's
1996 Annual Report is incorporated herein by reference.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
       	 CONDITION AND RESULTS OF OPERATION.
- ----------------------------------------------------------
  
  Please refer to pages 39 through 51 of the Company's 1996 Annual
Report, which are incorporated herein by reference.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- -----------------------------------------------------

  The Consolidated Financial Statements of Peoples Bancorp Inc.
and it subsidiaries, included on pages 16 through 33 of the
Company's 1996 Annual Report, and the Report of Ernst & Young
LLP included therein at page 34 are incorporated herein by
reference.  Following is an index to the financial statements
included in the Company's 1996 Annual Report:   

                                                        								 1996
                                                        								Annual
                                                        								Report
Financial Statements:                                           Pages 
- ---------------------                                           ------
Peoples Bancorp Inc. and Subsidiaries:                  
  Report of Independent Auditors (Ernst & Young L.L.P.)           34 
  Consolidated Balance Sheets as of December 31, 1996 and 1995    16 
  Consolidated Statements of Income for each of the 
   Three Years Ended December 31, 1996                            17 
  Consolidated Statements of Stockholders' Equity for each 
   of the Three Years Ended December 31, 1996                     18 
  Consolidated Statements of Cash Flows for each of the 
   Three Years Ended December 31, 1996                            19 
  Notes to the Consolidated Financial Statements                20-33 
  Peoples Bancorp Inc.:  (Parent Company Only Financial
   Statements are included in Note 16 of the Notes to the 
   Consolidated Financial Statements)                           32-33 

  

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.
- ---------------------------------------------------------
  
  No response required.



                             				PART  III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
- -------------------------------------------------------------

  Directors and Executive Officers of the Company include those
persons enumerated under "Election of Directors" on pages 5 and
6 of the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 10,
1997, which section is expressly incorporated by reference. 
Other Executive Officers are Carol A. Schneeberger (40), Vice
President/Operations; Rolland B. Swart (58), Vice
President/Business Development; John (Jack) W. Conlon (51),
Chief Financial Officer; Jeffrey D. Welch (42), Treasurer; and
RobRoy Walters (38), Controller.

  Ms. Schneeberger became Vice President/Operations of the Company
in October, 1988.  Prior thereto, she was Auditor of the Company
from August, 1987 to October, 1988, and Auditor of Peoples Bank
from January, 1986 to October, 1988.  She was Assistant Auditor
of Peoples Bank from January, 1979 to January, 1986.

  Mr. Swart joined the Company in October, 1990 at his current
position, left this position in August, 1993, to become an
executive vice president with Peoples Bank, and then rejoined
the Company at his current position in September, 1994.

  Mr. Conlon has been Chief Financial Officer of the Company since
April, 1991.  He has also been Chief Financial Officer and
Treasurer of Peoples Bank for more than five years.

  Mr. Welch has been Treasurer of the Company since 1985.

  Mr. Walters joined the Company as Controller in July, 1995.  In
January, 1997, Mr. Walters was named President and Chief
Executive Officer of Russell Federal and effective March 31,
1997, resigned as Controller for Peoples Bank, a position he had
held since January, 1993.  Prior thereto, Mr. Walters was
Assistant Controller for Peoples Bank from April, 1991 to
December, 1992, and Accounting Manager from February, 1989 to
March, 1991.

  No disclosure is required to be made by the Company under Item
405 of Regulation S-K.


ITEM 11.  EXECUTIVE COMPENSATION.
- ---------------------------------

  See "Compensation Committee Interlocks and Insider
Participation" and "Compensation of Executive Officers and
Directors" on page 10, and pages 10 through 14, respectively, of
the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 10,
1997, which are expressly incorporated herein by reference.

  Neither the report on executive compensation nor the performance
graph included in the Company's definitive Proxy Statement
relating to the Company's Annual Meeting of Shareholders to be
held on April 10, 1997, shall be deemed to be incorporated
herein by reference.


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

  See "Security Ownership of Certain Beneficial Owners and
Management" on pages 2 through 4 of the Company's definitive
Proxy Statement relating to the Company's Annual Meeting of
Shareholders to be held April 10, 1997, which section is
expressly incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ---------------------------------------------------------
  See "Transactions Involving Management" on pages 7 and
8 of the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 10,
1997, which section is expressly incorporated herein by
reference.


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

(a)  (1)  Financial Statements                                    
       	  --------------------
	  For a list of all financial statements included in this Annual
	  Report on Form 10-K, see "Index to Financial Statements" at Page
	  17.                                    

(a)  (2)  Financial Statement Schedules                                   
          -----------------------------
	  All schedules for which provision is made in the applicable
	  accounting regulations of the Securities and Exchange Commission
	  are not required under the related instructions or are
	  inapplicable and, therefore, have been omitted.                     

(a)  (3)  Exhibits                                        
       	  --------
	  Exhibits filed with this Annual Report on Form 10-K are
	  attached hereto.  For a list of such exhibits, see "Exhibit
	  Index" beginning at page 17.  The following table provides
	  certain information concerning executive compensation plans and
	  arrangements required to be filed as exhibits to this Annual
	  Report on Form 10-K.                                    

	  Executive Compensation Plans and Arrangements                           
	  ---------------------------------------------
	  Exhibit No.  Description                   Location 
	  -----------  ----------------------------  ----------------------
	  10(a)        Deferred Compensation         Incorporated herein by
       		       Agreement dated November 16,  reference to Exhibit
		              1976 between Robert E. Evans  6(g) to Registration
        	       and The Peoples Banking and   Statement No. 2-68524
       		       Trust Company, as amended     on Form S-14 of 
        	       March 13, 1979.               of Peoples Delaware, 
						                                        the Company's 
                                    					     predecessor.   

	  10(b)        Peoples Bancorp Inc.          Incorporated herein by
       		       Retirement Savings Plan.      reference to Exhibit
		              (Amended and Restated         10(b) of the Company's
       		       Effective January 1, 1996.)   Annual Report on Form            
                                   						     10-K for fiscal year 
                                   						     ended December 31, 1995
                                   						     (File No. 0-16772) 
	 
	  10(d)        Peoples Bancorp Inc.          Incorporated herein by
		              Retirement Plan and Trust.    reference to Exhibit
		              (Amended and Restated         10(d) of the Company's
       		       Effective January 1, 1989.)   Annual Report on Form 
                              						          10-K for fiscal year 
                                   						     ended December 31, 1995  
                              					     	     (File No. 0-16772) 
 
	  10(e)        Summary of the Incentive      Incorporated herein by
        	       Bonus Plan of Peoples         reference to Exhibit
		              Bancorp Inc. effective for    10(f) of Peoples
       		       calendar year ended           Delaware's Annual Report 
		              December 31, 1996.            on Form 10-K for fiscal 
                                   						     year ended December 31, 
                                   						     1992 (File No. 0-16772). 

	  10(f)        Summary of the Performance    Page 64.
       		       Compensation Plan of
       		       Peoples Bancorp Inc. 
        	       effective for calendar 
		              year beginning 
       		       January 1, 1997.                 

	  10(g)        Peoples Bancorp Inc.          Incorporated herein by 
       		       Amended and Restated          reference to Exhibit 4 
		              1993 Stock Option Plan.       of the Company's 
                                   						     Registration Statement 
                                   						     on Form S-8 filed 
                                    					     August 25, 1993 
                                   						     (Registration Statement 
                               	    					     No. 33-67878). 

	  10(h)        Form of Stock Option          Incorporated herein by
       		       Agreement used in             reference to Exhibit
       		       connection with grant of      10(g) of the Company's
       		       non-qualified stock options   Annual Report on Form
		              under Peoples Bancorp Inc.    10-K for fiscal year
       		       Amended and Restated 1993     ended December 31, 1995.
		              Stock Option Plan.            (File No. 0-16772)    
						     
 	 10(i)        Form of Stock Option          Incorporated herein by
       		       Agreement dated May 20,       reference to Exhibit
		              1993, used in connection      10(h) of the Company's
        	       with grant of incentive       Annual Report on Form
        	       stock options under           10-K for fiscal year
		              Peoples Bancorp Inc.          ended December 31, 1995.
       		       Amended and Restated          (File No. 0-16772)
		              1993 Stock Option Plan.           

	  10(j)        Form of Stock Option          Incorporated herein by
       		       Agreement dated November      reference to Exhibit
		              10, 1994, used in             10(i) of the Company's
       		       connection with grant of      Annual Report on Form
       		       incentive stock options       10-K for fiscal year
		              under Peoples Bancorp         ended December 31, 1995.
       		       Inc. Amended and Restated     (File No. 0-16772)
		              1993 Stock Option Plan.            

	  10(k)        Peoples Bancorp Inc.          Incorporated herein by 
       		       1995 Stock Option Plan.       reference to Exhibit 4 
						                                        of the Company's Form 
			                                   			     S-8 filed May 24, 1995 
                                   						     (Registration 
                                   						     Statement No. 33-59569). 
	  
	  10(l)        Form of Stock Option          Incorporated herein by
       		       agreement used in             reference to Exhibit
		              connection with grant of      10(k) of the Company's
       		       non-qualified stock           Annual Report on Form
       		       options to non-employee       10-K for fiscal year
       		       directors of the Company      ended December 31, 1995.
        	       under Peoples Bancorp Inc.    (File No. 0-16772)
		              1995 Stock Option Plan.             

	  10(m)        Form of Stock Option          Incorporated herein by
       		       agreement used in             reference to Exhibit
		              connection with grant of      10(l) of the Company's
       		       non-qualified stock           Annual Report on Form
		              options to non-employee       10-K for fiscal year
       		       directors of the Company's    ended December 31, 1995.
       		       subsidiaries under            (File No. 0-16772)
		              Peoples Bancorp Inc. 
       		       1995 Stock Option Plan.            

(b)       Reports on Form 8-K                                     
       	  -------------------
	  There were no current reports on Form 8-K filed during the
	  quarter ended December 31, 1996.                                        

(c)       Exhibits                                        
       	  --------
	  Exhibits filed with Annual Report on Form 10-K are attached
	  hereto.  For a list of such exhibits, see "Exhibit Index"
	  beginning at page 17.                                   

(d)       Financial Statement Schedules                                   
          -----------------------------
	  None.                                   

							

                             				SIGNATURES
                             				----------

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

                            				PEOPLES BANCORP INC.

Date:  March 27, 1997           By:  /s/ ROBERT E. EVANS   
                            				     Robert E. Evans, President

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

Signatures                  Title                          Date 
- --------------------------  -----------------------------  ----------------
/s/ ROBERT E. EVANS         President and Chief Executive  March 27, 1997 
Robert E. Evans             Officer and Director            

                            Director                       March 27, 1997 
Dennis D. Blauser                               

/s/ GEORGE W. BROUGHTON     Director                       March 27, 1997 
George W. Broughton                             

/s/ WILFORD D. DIMIT        Director                       March 27, 1997 
Wilford D. Dimit                                

/s/ BARTON S. HOLL          Director                       March 27, 1997 
Barton S. Holl                          

                            Director                       March 27, 1997 
Rex E. Maiden                            

/s/ NORMAN J. MURRAY        Director                       March 27, 1997 
Norman J. Murray                                

/s/ JAMES B. STOWE          Director                       March 27, 1997 
James B. Stowe                          

/s/ PAUL T. THEISEN         Director                       March 27, 1997 
Paul T. Theisen                                 

/S/ THOMAS C. VADAKIN       Director                       March 27, 1997 
Thomas C. Vadakin                               

/S/ JOSEPH H. WESEL         Chairman of the Board          March 27, 1997 
Joseph H. Wesel             and Director

/s/ JEFFREY D. WELCH        Treasurer (Principal           March 27, 1997
Jeffrey D. Welch            Accounting Officer)

/s/ JOHN W. CONLON          Chief Financial Officer        March 27, 1997 
John W. Conlon                          



                    			     PEOPLES BANCORP INC.
 
                   			INDEX TO FINANCIAL STATEMENTS

                                                        								 1996
                                                        								Annual
                                                        								Report
Financial Statements:                                           Pages 
- ---------------------                                           ------
Peoples Bancorp Inc. and Subsidiaries:                  
  Report of Independent Auditors (Ernst & Young L.L.P.)           34 
  Consolidated Balance Sheets as of December 31, 1996 and 1995    16 
  Consolidated Statements of Income for each of the 
   Three Years Ended December 31, 1996                            17 
  Consolidated Statements of Stockholders' Equity for each 
   of the Three Years Ended December 31, 1996                     18 
  Consolidated Statements of Cash Flows for each of the 
   Three Years Ended December 31, 1996                            19 
  Notes to the Consolidated Financial Statements                20-33 
  Peoples Bancorp Inc.:  (Parent Company Only Financial
   Statements are included in Note 16 of the Notes to the 
   Consolidated Financial Statements)                           32-33 


  The report of Coopers & Lybrand L.L.P. is included at Exhibit 99 
and is incorporated herein by reference.                     


                          				 EXHIBIT INDEX                           

          		 PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K      
          		     FOR FISCAL YEAR ENDED DECEMBER 31, 1996             

				 
Exhibit No.  Description                   Exhibit Location 
- -----------  ----------------------------  -------------------------------
2 (a)        Office Purchase and           Incorporated herein by
       	     Assumption Agreement between  reference to Exhibit 2
             Peoples Bank and Bank One,    of the Company's Annual
             Athens, N.A., dated           Report on Form 10-K for 
       	     December 14, 1995.            fiscal year ended December 
                                   					   31, 1995 (File No. 0-16772). 

2 (b)        Agreement and Plan of Merger  Pages 20 to 55. 
       	     and Reorganization by 
	            Peoples Bancorp Inc. and 
       	     Russell Federal Savings Bank, 
       	     dated August 19, 1996.                

3 (a)        Amended Articles of           Incorporated herein by 
       	     Incorporation of Peoples      reference to Exhibit 3(a) 
	            Bancorp Inc.                  to the Company's 
                                   					   Registration Statement on 
                                   					   Form 8-B filed July 20, 1993
                                   					   (File No. 0-16772). 

3 (b)        Regulations of Peoples        Incorporated herein by 
             Bancorp Inc.                  reference to Exhibit 3(b) 
					                                      to the Company's 
                                   					   Registration Statement on 
                                   					   Form 8-B filed July 20, 1993 
                                   					   (File No. 0-16772). 

10(a)        Deferred Compensation         Incorporated herein by
       	     Agreement dated November 16,  reference to Exhibit
	            1976 between Robert E. Evans  6(g) to Registration
       	     and The Peoples Banking and   Statement No. 2-68524
	            Trust Company, as amended     on Form S-14 of 
             March 13, 1979.               of Peoples Delaware, 
					                                      the Company's 
                                   					   predecessor.   

10(b)        Peoples Bancorp Inc.          Incorporated herein by
	            Retirement Savings Plan.      reference to Exhibit
 	           (Amended and Restated         10(b) of the Company's
       	     Effective January 1, 1996.)   Annual Report on Form            
                                    				   10-K for fiscal year 
                                   					   ended December 31, 1995
                                   					   (File No. 0-16772) 
	 
10 (c)       Original Term Note dated      Pages 56 to 63.
       	     January 2, 1997, Addendum to
	            Term Note dated January 7, 
       	     1997, and revised Addendum 
       	     to Term Note dated February 
             7, 1997, between the Company 
       	     and Fifth Third Bank.            

10(d)        Peoples Bancorp Inc.          Incorporated herein by
       	     Retirement Plan and Trust.    reference to Exhibit
	            (Amended and Restated         10(d) of the Company's
       	     Effective January 1, 1989.)   Annual Report on Form 
                              					        10-K for fiscal year 
                                    				   ended December 31, 1995
                              					        (File No. 0-16772) 

10(e)        Summary of the Incentive      Incorporated herein by
       	     Bonus Plan of Peoples         reference to Exhibit
       	     Bancorp Inc. effective for    10(f) of Peoples
       	     calendar year ended           Delaware's Annual Report 
       	     December 31, 1996.            on Form 10-K for fiscal 
                                   					   year ended December 31, 
                                   					   1992 (File No. 0-16772). 

10(f)        Summary of the Performance    Page 64.
       	     Compensation Plan of
	            Peoples Bancorp Inc. 
       	     effective for calendar 
       	     year beginning 
       	     January 1, 1997.                 

10(g)        Peoples Bancorp Inc.          Incorporated herein by 
       	     Amended and Restated          reference to Exhibit 4 
       	     1993 Stock Option Plan.       of the Company's 
                                   					   Registration Statement 
                                   					   on Form S-8 filed 
                                   					   August 25, 1993 
                                   					   (Registration Statement 
                                   					   No. 33-67878). 

10(h)        Form of Stock Option          Incorporated herein by
       	     Agreement used in             reference to Exhibit
       	     connection with grant of      10(g) of the Company's
             non-qualified stock options   Annual Report on Form
       	     under Peoples Bancorp Inc.    10-K for fiscal year
	            Amended and Restated 1993     ended December 31, 1995.
       	     Stock Option Plan.            (File No. 0-16772)    
		      
10(i)        Form of Stock Option          Incorporated herein by
	            Agreement dated May 20,       reference to Exhibit
       	     1993, used in connection      10(h) of the Company's
             with grant of incentive       Annual Report on Form
       	     stock options under           10-K for fiscal year
       	     Peoples Bancorp Inc.          ended December 31, 1995.
       	     Amended and Restated          (File No. 0-16772)
       	     1993 Stock Option Plan.           

10(j)        Form of Stock Option          Incorporated herein by
       	     Agreement dated November      reference to Exhibit
       	     10, 1994, used in             10(i) of the Company's
       	     connection with grant of      Annual Report on Form
       	     incentive stock options       10-K for fiscal year
       	     under Peoples Bancorp         ended December 31, 1995.
       	     Inc. Amended and Restated     (File No. 0-16772)
       	     1993 Stock Option Plan.            

10(k)        Peoples Bancorp Inc.          Incorporated herein by 
       	     1995 Stock Option Plan.       reference to Exhibit 4 
                                     			   of the Company's Form 
                                   					   S-8 filed May 24, 1995 
                                   					   (Registration 
                                   					   Statement No. 33-59569). 
					   
10(l)        Form of Stock Option          Incorporated herein by
             agreement used in             reference to Exhibit
       	     connection with grant of      10(k) of the Company's
       	     non-qualified stock           Annual Report on Form
       	     options to non-employee       10-K for fiscal year
       	     directors of the Company      ended December 31, 1995.
       	     under Peoples Bancorp Inc.    (File No. 0-16772)
       	     1995 Stock Option Plan.            

10(m)        Form of Stock Option          Incorporated herein by
       	     agreement used in             reference to Exhibit
       	     connection with grant of      10(l) of the Company's
       	     non-qualified stock           Annual Report on Form
       	     options to non-employee       10-K for fiscal year
             directors of the Company's    ended December 31, 1995.
       	     subsidiaries under            (File No. 0-16772)
       	     Peoples Bancorp Inc. 
	            1995 Stock Option Plan.            

11           Computation of Earnings       Page 65. 
       	     Per Share.
				
12           Statements of Computation     Page 66. 
	            of Ratios.

13           Peoples Bancorp Inc. Annual   Page 67 through 125
       	     Report to Shareholders for
	            the fiscal year ended 
       	     December 31, 1996 (not 
       	     deemed filed except for 
       	     portions thereof which are 
       	     specifically incorporated by
       	     reference into this Annual 
       	     Report on Form 10-K).                

21           Subsidiaries of Peoples       Page 126.
       	     Bancorp Inc.          

23 (a)       Consent of Independent        Page 127.
       	     Auditors - Ernst & Young LLP.    

23 (b)       Consent of Independent        Page 128.
       	     Accountants - Coopers & 
	            Lybrand L.L.P.         
				 
27           Financial Data Schedule.      Page 129. 

99           Report of Independent         Page 130.
       	     Accountants - Coopers & 
	            Lybrand L.L.P.          





                           				EXHIBIT 2 (b)        

      	      PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
             		  FOR FISCAL YEAR ENDED DECEMBER 31, 1996

    	      AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

                           				    by

                    			   PEOPLES BANCORP INC.

                           				   and

           		       RUSSELL FEDERAL SAVINGS BANK



                  			     August 19, 1996




  	       AGREEMENT AND PLAN OF MERGER AND REORGANIZATION


  THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this
"Agreement"), dated August 19, 1996, is by Peoples Bancorp Inc.,
an Ohio corporation ("Acquiror") and Russell Federal Savings
Bank, a federally chartered savings bank ("Target Bank").

A. Acquiror and Target Bank wish to provide for the terms and
conditions of the following described business transaction in
which an inactive transitory subsidiary to be formed by Acquiror
and incorporated under the laws of the United States
("Acquisition Subsidiary") will be merged with and into Target
Bank.  The separate existence of Acquisition Subsidiary shall
cease ("Merger") and as a result of the Merger, Target Bank will
become a wholly-owned subsidiary of the Acquiror. 

B. For federal income tax purposes, it is intended that the
Merger be deemed a purchase of all of the outstanding capital
stock of Target Bank by Acquiror.

C. For accounting purposes, it is intended that the Merger shall
be accounted for as a purchase.

D. The parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.

E. Concurrently with the execution and delivery of this
Agreement, and as a condition and material inducement to
Acquiror's willingness to enter into this Agreement, each of the
directors of Target Bank has entered into a shareholder
agreement (each a "Shareholder Agreement") in the form attached
hereto as Exhibit A.

  Accordingly, and in consideration of the representations,
warranties, covenants, agreements and conditions herein
contained, the parties hereto agree as follows:


ARTICLE ONE

    TERMS OF THE MERGER AND CLOSING
		  -------------------------------

Section 1.01.  Formation of Acquisition Subsidiary. 
- ---------------------------------------------------

  Acquiror shall organize Acquisition Subsidiary, a federally
chartered stock form savings bank as a wholly-owned subsidiary
of Acquiror and shall cause the interim Acquisition Subsidiary
to fulfill the obligations of the Acquisition Subsidiary under
this Agreement.


Section 1.02.  Merger Surviving Corporation and Resulting Institution.
- ----------------------------------------------------------------------

  Subject to the terms and conditions of this Agreement, and
pursuant to the provisions of the Home Owners' Loan Act ("HOLA")
and the rules and regulations promulgated thereunder (the
"Thrift Regulations"), at the Effective Time (as hereinafter
defined), Acquisition Subsidiary shall be merged with and into
Target Bank pursuant to the terms and conditions set forth
herein and pursuant to a Plan of Merger attached hereto as
Exhibit B ("Plan of Merger") which shall be executed by
Acquiror, Acquisition Subsidiary, and Target Bank prior to or at
the Closing (as defined in Section 1.05 below).  Upon
consummation of the Merger, the separate existence of
Acquisition Subsidiary shall cease and Target Bank shall
continue as the surviving corporation.  The name of Target Bank,
as the surviving corporation, shall by virtue of the Merger
remain "Russell Federal Savings Bank."  From and after the
consummation of the Merger, Target Bank, as the surviving
corporation, shall possess all assets and property of every
description, and every interest in the assets and property,
wherever located, and the rights, privileges, immunities,
powers, franchises and authority, of a public as well as a
private nature, of Target Bank and Acquisition Subsidiary, and
all obligations belonging or due to each of them.


Section 1.03.  Effective Time of the Merger.
- --------------------------------------------

  As soon as practicable after each of the conditions set forth in
Article Six hereof have been satisfied or waived, Target Bank
and Acquisition Subsidiary shall file or cause to be filed
Articles of Combination with the Office of Thrift Supervision
(the "OTS"), which shall be in the form required by and executed
in accordance with the applicable provisions of the HOLA and the
Thrift Regulations.  The Merger shall become effective at the
time the Articles of Combination for the Merger are endorsed by
the Secretary of the OTS pursuant to the Thrift Regulations (the
"Effective Time"). 


Section 1.04.  Merger.
- ----------------------

(a)  (i)     Each common share of Target Bank, $.01 par value per
share (the "Target Bank Common"), issued and outstanding
immediately prior to the Effective Time (except for Dissenting
Shares, as defined in Section 1.04(b) below) shall, by virtue of
the Merger (but subject to the provisions of Section 8.06
hereof) and without any action on the part of the holder thereof
be converted to a right to receive $19.41 per share in cash (the
"Per Share Merger Consideration") from Acquiror, without any
interest thereon from the Effective Time until the time of payment.

  The holders of certificates representing shares of Target Bank
Common shall cease to have any rights as stockholders of Target
Bank, except such rights, if any, as they may have pursuant to
the HOLA.  Except as provided below with respect to Dissenting
Shares (as defined below), until certificates representing
shares of Target Bank Common are surrendered for exchange, each
such certificate shall, after the Effective Time, represent for
all purposes only the right to receive the Per Share Merger
Consideration for the number of shares represented by such
certificate.

     (ii)    Each share of Acquisition Subsidiary capital stock issued
and outstanding or held in treasury immediately prior to the
Effective Time shall be converted into a share of Target Bank
Common at the Effective Time.

(b)  Dissenting Shares.  Any shares of Target Bank Common held by
a stockholder who demands payment of the fair value of his or
her Target Bank Common pursuant to, and in compliance with,
title 12 of the Code of Federal Regulations, Section 552.15,
shall thereafter neither be entitled to vote such stock for any
purpose nor be entitled to the payment of dividends or other
distributions thereon (except dividends or other distributions
payable to, or a vote to be taken by stockholders of record at a
date which is on, or prior to, the effective date of the
Merger); provided, however, that if any stockholder becomes
unentitled to appraisal and payment of the appraised value with
respect to his or her Target Bank Common and accepts or is
deemed to have accepted the terms offered by this Agreement,
such stockholder shall thereupon be entitled to vote and receive
the Per Share Merger Consideration.   

(c)  Exchange of Target Bank Common.

     (i)     As soon as practicable after the Effective Time, holders
of record of certificates formerly representing shares of Target
Bank Common (the "Certificates") shall be instructed to tender
such Certificates to Acquiror, or, at the election of the
Acquiror, to an exchange agent designated by Acquiror (the
"Exchange Agent"), pursuant to a letter of transmittal that
Acquiror shall deliver or cause to be delivered to such holders.
Such letter of transmittal shall specify that risk of loss and
title to Certificates shall pass only upon delivery of such
Certificates as specified in the letter of transmittal.  

     (ii)    After the Effective Time, each holder of a
Certificate that surrenders such Certificate to Acquiror or, at
the election of Acquiror, to the Exchange Agent, will, upon
acceptance thereof by Acquiror or the Exchange Agent, be
entitled to receive in exchange therefor the Per Share Merger
Consideration for the number of shares represented by such
Certificate, which shall be paid promptly (but in no event later
than five business days) after acceptance of such Certificate.  

     (iii)   Acquiror or, at the election of Acquiror, the Exchange
Agent shall accept Certificates upon compliance with such
reasonable terms and conditions as Acquiror or the Exchange
Agent may impose to effect an orderly exchange thereof in
accordance with customary exchange practices.  Certificates
shall be appropriately endorsed or accompanied by such
instruments of transfer as Acquiror or the Exchange Agent may
require.

     (iv)    Each outstanding Certificate shall, until duly
surrendered to Acquiror or the Exchange Agent, be deemed to
evidence the right to receive the Per Share Merger Consideration
for the number of shares represented by such Certificate.

     (v)     After the Effective Time, holders of Certificates shall
cease to have rights with respect to the Target Bank Common
previously represented by such Certificates, and their sole
rights shall be to exchange such Certificates for the Per Share
Merger Consideration for the number of shares represented by
such Certificate.  After the Effective Time, there shall be no
further transfer on the records of Target Bank of Certificates,
and if any Certificates are presented to Target Bank for
transfer, they shall be canceled in exchange for the Per Share
Merger Consideration for the number of shares represented by
such Certificates.  Acquiror shall not be obligated to deliver
the Per Share Merger Consideration to any former holder of
Target Bank Common until such holder surrenders the Certificates
as provided herein.  Neither the Exchange Agent nor any party to
this Agreement nor any affiliate thereof shall be liable to any
holder of Target Bank Common represented by any Certificate for
any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws.  Target
Bank and the Exchange Agent shall be entitled to rely upon the
stock transfer books of Target Bank to establish the identity of
those persons entitled to receive the Per Share Merger
Consideration, which books shall be conclusive with respect
thereto.  In the event of a dispute with respect to ownership of
stock represented by any Certificate, Acquiror and the Exchange
Agent shall be entitled to deposit any consideration in respect
thereof in escrow with an independent third party and thereafter
be relieved with respect to any claims thereto.  

     (vi)    If the Per Share Merger Consideration is to be issued to a
person other than a person in whose name a surrendered
Certificate is registered, it shall be a condition of issuance
that the surrendered Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person
requesting such issuance shall pay to Acquiror or the Exchange
Agent any required transfer or other taxes or establish to the
satisfaction of the Acquiror or the Exchange Agent that such tax
has been paid or is not applicable.  

     (vii)   In the event any Certificate shall have been lost, stolen
or destroyed, the owner of such lost, stolen or destroyed
Certificate shall deliver to Acquiror or the Exchange Agent an
affidavit stating such fact, in form reasonably satisfactory to
Acquiror, and, at Acquiror's discretion, a bond in such
reasonable sum as Acquiror or the Exchange Agent may direct as
indemnity against any claim that may be made against Acquiror or
Target Bank or its successor or any other party with respect to
the Certificate alleged to have been lost, stolen or destroyed. 
Upon such delivery, the owner shall have the right to receive
the Per Share Merger Consideration with respect to the shares
represented by the lost, stolen or destroyed Certificate.

(d)  Stock Options.  Acquiror shall assume the obligations of
Target Bank under the Target Bank Stock Option Plan in the
following manner:  

     (i)     At the Effective Time, by virtue of the Merger and without
any action on the part of any holder of any option, each option
granted by Target Bank to purchase shares of Target Bank Common
which is outstanding prior to the date of this Agreement and
unexercised immediately prior to the Effective Time (each a
"Target Bank Option") shall continue outstanding as an option (a
"Substitute Option") to purchase common shares of Acquiror, no
par value, ("Acquiror Common") in an amount and at an exercise
price determined as provided below and otherwise subject to the
terms of the Target Bank Stock Option Plan under which they were
issued and the agreements evidencing grants thereunder:

	            (A) The number of shares of Acquiror Common to be subject
to a Substitute Option shall be equal to the product of the number of
shares of Target Bank Common subject to the original option and
the Exchange Ratio (as defined below), provided that any
fractional shares of Acquiror Common resulting from such
multiplication shall be rounded to the nearest whole share; 

       	     (B) The exercise price per share of Acquiror Common under
the Substitute Option shall be equal to the exercise price per share
of Target Bank Common under the original option divided by the
Exchange Ratio, provided that such exercise prices shall be
rounded down to the nearest whole cent; and 

	            (C) The terms of each Target Bank Option shall, in accordance
with its terms, be subject to further adjustment as appropriate
to reflect any stock split, stock dividend, recapitalization or
other similar transaction subsequent to the Effective Time.  

     (ii)    The term "Exchange Ratio" shall mean the Per Share Merger
Consideration divided by the Average Price (as defined below)
for Acquiror Common.  

     (iii)   The term "Average Price" shall mean the average closing
prices for a share of Acquiror Common on the NASDAQ National
Market System reported for the ten (10) consecutive trading days
ending on the fifth trading day immediately prior to the date of
the Effective Time.  

(e)  Charter and Bylaws of the Resulting Institution.  The
Charter and Bylaws of the Acquisition Subsidiary, as in effect
immediately prior to the Effective Time, shall, without any
change, be the charter and bylaws of Target Bank, as the
resulting institution of the Merger, until either is thereafter
amended in accordance with applicable law.  

(f)  Directors and Officers of the Resulting Institution.  The
directors and officers of the Target Bank, as the resulting
institution of the Merger, shall be those persons listed in
Exhibit D to this Agreement.  Such directors shall continue in
office until their successors are duly elected and qualified or
otherwise duly selected.  

(g)  Offices of the Resulting Institution.  The offices of Target
Bank, as the resulting institution of the Merger, shall be the
offices of Target Bank as listed in Exhibit C to this Agreement.


Section 1.05.  Closing.
- -----------------------
  
  Subject to the provisions of this Agreement, the closing of the
Merger (the "Closing") shall take place as soon as practicable,
but not later than ten (10) days after satisfaction of the
conditions to Closing as set forth in Sections 6.01(d) and
6.02(d) hereof; provided, if such conditions to Closing are not
satisfied prior to December 1, 1996, then the Closing shall not
occur prior to January 2, 1997, effective January 1, 1997, and
if such conditions are not satisfied prior to June 1, 1997, then
the Closing shall not occur prior to July 1, 1997.  Subject to
the foregoing, the date, time and location of the Closing shall
be as designated in writing by Acquiror to Target Bank.  The
date on which the Closing actually occurs is herein referred to
as the "Closing Date."  Time is of the essence for Closing.


Section 1.06.  Actions At Closing.
- ----------------------------------

(a)  At the Closing, Target Bank shall deliver to Acquiror:  

     (i)     a certificate signed by an appropriate officer of
Target Bank stating to the best of his knowledge that all of the
conditions set forth in Sections 6.01(a), (b), (c), (d), (f),
(g) and (h) of this Agreement (but, as to Section 6.01(d),
relating only to approvals which Target Bank is required by law
to obtain) have been satisfied or waived as provided therein;  

     (ii)    a certified copy of the resolutions of Target Bank's
Board of Directors and stockholders, as required for valid
approval of the execution of this Agreement and the Plan of
Merger; the Plan of Merger, executed by Target Bank; and
Articles of Combination for the Merger, executed by Target Bank
and in proper form for filing with the OTS;  

     (iii)   a certificate of the OTS with a recent date, as to the
corporate existence of Target Bank, and a certificate of the
Federal Deposit Insurance Corporation ("FDIC"), dated a recent
date, as to the existence of deposit insurance of Target Bank;  

     (iv)    a legal opinion from counsel for Target Bank, in form
reasonably acceptable to Acquiror's counsel, opining with
respect to the matters listed on Exhibit E hereto.  

(b)  At the Closing, Acquiror shall deliver to Target Bank:

     (i)     a certificate signed by an appropriate officer of 
Acquiror stating, to the best of his knowledge, that all of the
conditions set forth in Sections 6.02(a), (b), (c) and (d) of
this Agreement (but, as to Section 6.02(d), excluding the
approval of Target Bank's Board of Directors and stockholders)
have been satisfied;

     (ii)    a certified copy of the resolutions of Acquiror's Board of
Directors authorizing the execution of this Agreement and the
consummation of the transactions contemplated hereby;  

     (iii)   a certified copy of the resolutions of Acquisition
Subsidiary's Board of Directors and sole stockholder,
authorizing the execution of the Plan of Merger and the
consummation of the transactions contemplated hereby and
thereby; the Plan of Merger, executed by Acquisition Subsidiary;
and Articles of Combination for the Merger, executed by
Acquisition Subsidiary and in proper form for filing with the
OTS; and 

     (iv)    a legal opinion from counsel for Acquiror, in form
reasonably acceptable to Target Bank's counsel, opining with
respect to the matters listed on Exhibit F hereto.  


Section 1.07.  Russell Federal Savings Bank. 
- --------------------------------------------

(a)  Acquiror intends to maintains the Target Bank as a wholly
owned subsidiary for a period of at least three (3) years after
the Effective Time; provided, however, it may cause the
immediate merger of Target Bank with another of its operating
financial institutions or otherwise alter the organizational
status of the Target Bank.

(b)  During the period in which Acquiror maintains Target Bank as
a wholly owned federal savings bank subsidiary, it shall operate
Target Bank under the name "Russell Federal Savings Bank" with
such name being the most prominent name on any sign, advertising
or letterhead used by Target Bank.



ARTICLE TWO

    REPRESENTATIONS AND WARRANTIES OF TARGET BANK

  Target Bank hereby makes the following representations and warranties:


Section 2.01.  Organization and Capital Stock.
- ----------------------------------------------

(a)  Target Bank is a federal stock savings bank organized under
Section 5 of the Home Owners' Loan Act and is duly organized and
validly existing under the laws of the United States, with full
corporate power and all necessary governmental authorizations to
own all of its properties and assets, to incur all of its
liabilities and to carry on its business as presently conducted.
The minute books contain complete and accurate records of all
meetings and other corporate actions of its Board of Directors
and stockholders, including committees of Board of Directors. 
Attached as Section 2.01(a) of that certain confidential writing
delivered by Target Bank to Acquiror concurrently with the
delivery and execution of this Agreement (the "Disclosure
Schedule") are copies of the federal stock charter certified by
the OTS and bylaws of Target Bank, including all amendments.  

(b)  The authorized capital stock of Target Bank consists of
5,500,000 shares of Target Bank Common, par value $ .01 per
share, of which, as of the date hereof, 476,493 shares are
issued and outstanding, and 500,000 serial preferred shares,
none of which are issued and outstanding.  Additionally, Target
Bank has reserved 47,649 shares of Target Bank Common for
issuance under a Stock Option Plan, of which 19,056 shares have
been awarded pursuant to Target Bank Stock Options.  All of the
issued and outstanding shares of Target Bank Common are duly and
validly issued and outstanding and are fully paid and
non-assessable.  None of the outstanding shares of Target Bank
Common have been issued in violation of any preemptive rights of
the current or past stockholders of Target Bank.  Each
Certificate representing shares of Target Bank Common issued by
Target Bank in replacement of any certificate therefore issued
by it which was claimed by the record holder thereof to have
been lost, stolen or destroyed, if any, was issued by Target
Bank only upon receipt of an affidavit of lost stock certificate
and a bond sufficient to indemnify Target Bank against any claim
that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of
such replacement Certificate.

(c)  The deposits of Target Bank are insured up to maximum 
limits by the Savings Association Insurance Fund ("SAIF") of the
FDIC.  Target Bank is a member of the Federal Home Loan Bank of
Cincinnati ("FHLB Cincinnati").  Target Bank is a "domestic
building and loan association" as defined in Section 7701(a)(19)
of the Internal Revenue Code of 1986, as amended (the "Code")
and a "qualified thrift lender" as defined in 12 U.S.C. Section 
1467a(m) and the Thrift Regulations.

(d)  Except  as  set  forth in Section 2.01(b) of this
Agreement or as otherwise described in this Agreement, there are
no shares of capital stock or other equity securities of Target
Bank outstanding and no outstanding options, warrants, rights to
subscribe for, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible in or
exchangeable for, shares of the capital stock of Target Bank, or
contracts, commitments, understandings or arrangements by which
Target Bank is or may be obligated to issue additional shares of
its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. 


Section 2.02.  Authorization; No Defaults.
- ------------------------------------------

(a)  The Board of Directors of Target Bank has, by all
appropriate action, approved this Agreement and authorized the
execution and delivery hereof on its behalf by its duly
authorized officers and the performance by Target Bank of its
respective obligations hereunder.

(b)  This Agreement has been duly and validly executed and
delivered by Target Bank and constitutes a legal, valid and
binding obligation of Target Bank, enforceable in accordance
with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or other laws affecting creditors
rights generally or the rights of creditors of savings
institutions the accounts of which are insured by the FDIC or
laws relating to the safety and soundness of insured financial
institutions and by judicial discretion in applying principles
of equity.  Target Bank is not in default under or in violation
of any provision of its federal stock charter or bylaws, or any
promissory note, indenture or any evidence of indebtedness or
security therefor, lease, contract, purchase or other commitment
or any other agreement of Target Bank, except for defaults and
violations which have not resulted in a Material Adverse Change
(as defined in Section 2.05(a) hereof) with respect to Target
Bank.  No other corporate proceeding of Target Bank is required
for approval of this Agreement and the Merger or the performance
of Target Bank's obligations under this Agreement other than
adoption of this Agreement, the Amendment (as defined in Section
4.03(i) hereof) and the Plan of Merger by the holders of at
least the Minimum Portion of the outstanding shares of Target
Bank Common required under the laws of the United States for
approval of the Merger (the "Minimum Portion").  Except for the
requisite approvals of the OTS ("Regulatory Approvals"), and
filings with the OTS, including a request for a waiver of the
provisions of 12 C.F.R. Section 563b.3(i) and registration as savings
and loan holding company on OTS Form H-(b) 10, or as discussed
in Section 2.02(b) of the Disclosure Schedule, no notice to,
filing with, authorization by, or consent or approval of, any
federal or state regulatory authority or other third party is
necessary for the execution and delivery of this Agreement or
consummation of the Merger by Target Bank.

(c)  Neither the execution and delivery of this Agreement nor the
consummation of the Merger, nor compliance by Target Bank with
the provisions of this Agreement will:  

     (i)     subject to the approval of the Amendment by the
shareholders of Target Bank as defined in Section 4.03 herein,
conflict with or result in a breach of the federal stock charter
or bylaws of Target Bank; 

     (ii)    result in a breach or termination of, or accelerate the
performance required by, any material note, bond, mortgage,
lease, agreement or other material instrument to which Target
Bank is a party or may be bound; or 

     (iii)   subject to Regulatory Approval, violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Target Bank.


Section 2.03.  Subsidiaries; Equity Interests.
- ----------------------------------------------

  The term "subsidiary" means an organization or entity which is
consolidated with a party to this Agreement for financial
reporting purposes.  Target Bank has one subsidiary, the
Articles of Incorporation of which are attached to Section 2.03
of the Disclosure Schedule.  Except as set forth in Section 2.03
of the Disclosure Schedule, and except for shares of stock of
the FHLB Cincinnati owned by Target Bank, neither Target Bank
nor its subsidiary owns, beneficially or otherwise, any shares
of Equity Securities (as defined below) or similar interests of
any corporation, bank, business trust association or similar
organization.  "Equity Securities" of an issuer means capital
stock or other equity securities of such issuer, options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, shares of any capital stock or other equity
securities of such issuer, or contracts, commitments,
understandings or arrangements by which such issuer is or may
become bound to issue additional shares of its capital stock or
other equity securities of such issuer, or options, warrants,
scrip or rights to purchase, acquire, subscribe to, calls on or
commitments for any shares of its capital stock or other equity
securities.  Neither Target Bank nor its subsidiary is a party
to any partnership or joint venture.


Section 2.04.  Financial Information.
- -------------------------------------

  The consolidated balance sheets of Target Bank as of June 30,
1995, 1994, and 1993, and related statements of income, changes
in stockholders' equity and cash flows for each of the three
fiscal years then ended, together with the notes thereto, and
the unaudited consolidated balance sheet of Target Bank as of
March 31, 1996, and the related unaudited income statement and
statement of changes in stockholders' equity and cash flows for
the nine (9) months then ended, all of which are included in
Section 2.04 of the Disclosure Schedule (together, the "Target
Bank Financial Statements"), have been prepared in accordance
with generally accepted accounting principles applied on a
consistent basis ("GAAP") except as disclosed therein and fairly
present in all material respects the financial position and the
results of operations, changes in stockholders' equity and cash
flows of Target Bank as of the dates and for the periods
indicated (subject, in the case of interim financial statements,
to normal recurring year-end adjustments, none of which are
material, and the absence of footnotes). The books and records
of Target Bank have been and are being maintained in accordance
with applicable legal and accounting requirements.  Target Bank
is not aware of any event or circumstances, or series of events
or circumstances, which is reasonably likely to result in a
Material Adverse Change (as defined in Section 2.05(a)).


Section 2.05.  Absence of Changes.
- ----------------------------------

(a)  The term "Material Adverse Change" shall mean a material
adverse change in the consolidated financial condition, results
of operations, assets or business of an entity; provided that
the term "Material Adverse Change" shall exclude the effects
resulting from or attributable to:

     (i)     a change with respect to, or effect on, resulting from a
change in law, rule, regulation, generally accepted accounting
principles or regulatory accounting principles, including, but
not limited to, a change that would require the bad debt reserve
of a thrift institution to be restored to income; 

     (ii)    changes affecting depository institutions generally
including, without limitation, changes in general economic
conditions and changes in prevailing interest and deposit rates; 

     (iii)   any special assessment levied as part of an assessment
against financial institutions which are insured by the SAIF; or 

     (iv)    in the case of Target Bank only, any adjustments
implemented pursuant to Section 4.05 hereof; 

     (v)     changes resulting from or attributable to expenses
incurred in connection with the transactions contemplated by
this Agreement and the Merger.  Since March 31, 1996, to the
date hereof, Target Bank has not experienced or suffered a
Material Adverse Change.

(b)  Since June 30, 1995, Target Bank has not, except as set
forth in Section 2.05 of the Disclosure Schedule, 

     (i)     issued or sold any corporate debt securities; 

     (ii)    declared or set aside or paid any dividend or other
distribution in respect of its capital stock (or other ownership
interests) other than its regular semi-annual dividend of $0.25
per share; 

     (iii)   incurred any material obligation or liability (absolute
or contingent), except obligations or liabilities incurred in
the ordinary course of business; 

     (iv)    mortgaged, pledged or subjected to lien or encumbrance
(other than statutory liens for taxes not yet delinquent and
landlord liens) any of its assets or properties except pledges
to secure government deposits, FHLB Cincinnati advances and in
connection with repurchase or reverse repurchase agreements; 

     (v)     discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than
current liabilities included in Target Bank's balance sheet as
of June 30, 1995, and liabilities incurred since the date
thereof in the ordinary course of business; 

     (vi)    sold, exchanged or otherwise disposed of any of its assets
other than in the ordinary course of business; 

     (vii)   made or modified any general wage or salary increase
other than in the ordinary course of business consistent with
past practices, entered into or modified any employment contract
with any officer or salaried employee or instituted, modified or
changed the contribution level to, any employee welfare, bonus,
stock option, profit sharing, retirement or similar plan or
arrangement; 

     (viii)  suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting its
business, property or assets or waived any rights of value that
are material in the aggregate, considering its business taken as
a whole; 

     (ix)    entered, or agreed to enter, into any agreement or
arrangement granting any preferential right to purchase any of
its assets, properties or rights or requiring the consent of any
party to the transfer and assignment of any such assets,
properties or rights; or 

     (x)     entered into any transaction outside the ordinary course of
business, or sold or otherwise disposed of any of its securities.


Section 2.06.  Regulatory Enforcement Matters.
- ----------------------------------------------

  Target Bank is not subject to, or has received any notice or
advice that it is not in substantial compliance with any statute
or regulation, or that it is or may become subject to any order,
agreement or memorandum of understanding with any federal or
state agency charged with the supervision or regulation of
savings banks or savings associations or engaged in the
insurance of deposits or any other governmental agency having
supervisory or regulatory authority with respect to Target Bank,
and Target Bank has received no notice from any governmental
authority threatening to revoke any license, franchise, permit
or governmental authorization.


Section 2.07.  Tax Matters.
- ---------------------------

(a)  Target Bank has filed all federal, state and local tax
returns and reports due with respect to any of its employees,
depositors, borrowers, operations, business and properties in a
timely fashion, including applicable extensions, and has paid or
made provision for all amounts due or claimed to be due.  All
such returns and reports fairly reflect the information required
to be presented therein.  All provisions for accrued but unpaid
taxes contained in the Target Bank Financial Statements were
made in accordance with GAAP and provide for anticipated tax
liabilities including interest and penalties.  Except as set
forth in section 2.07(a) of the Disclosure Schedule, there are
no federal, state or local tax returns or reports not filed
which would be due but for an extension of time for filing
having been granted.

(b)  Target Bank has not executed or filed with the Internal
Revenue Service ("IRS") or any state or local tax authority any
agreement extending the period for assessment and collection of
any tax, nor is Target Bank a party to any action or proceeding
by any governmental authority for assessment or collection of
taxes, except tax liens or levies against customers of Target
Bank.  There is no outstanding assessment or claim for
collection of taxes against Target Bank.  Target Bank has not,
except as disclosed in Section 2.07(b) of the Disclosure
Schedule, received any notice of deficiency, proposed deficiency
or assessment from the IRS or any other governmental agency,
with respect to any federal, state or local taxes.  No tax
return of  Target Bank is currently the subject of any audit by
the IRS or any other governmental agency.  No material
deficiencies have been asserted in connection with the tax
returns of Target Bank and Target Bank has no reason to believe
that any deficiency would be asserted relating thereto.  Target
Bank has never been a member of an "affiliated group of
corporations" (within the meaning of the Code) filing
consolidated returns, and Target Bank is not a party to any
tax-sharing agreement.


Section 2.08.  Litigation.
- --------------------------
  
  Except as disclosed in Section 2.08 of the Disclosure Schedule,
there is no material litigation, claim or other proceeding
pending or, to the knowledge of Target Bank, threatened, against
Target Bank, or any of its respective directors or officers, or
to which the property of Target Bank is or would be subject. 
Target Bank has taken all requisite action (including without
limitation the making of claims and the giving of notices)
pursuant to its directors and officers liability insurance
policy or policies in order to preserve all rights thereunder
with respect to all matters (other than matters arising in
connection with this Agreement and the transactions contemplated
hereby) occurring prior to the Effective Time that are known to
Target Bank.  Each matter as to which Target Bank has given
notice to the insurer under a directors and officers liability
policy is described in Section 2.08 of the Disclosure Schedule.


Section 2.09.  Employment and Severance Agreements.
- ---------------------------------------------------
	
  Except as disclosed in Section 2.09 of the Disclosure Schedule,
Target Bank is not a party to or bound by any agreement or
policy for the employment, retention or engagement of any
officer, employee, agent, consultant or other person or entity,
any employment or severance agreement or policy, or agreement,
policy or arrangement to provide post-retirement,
post-termination or change-of-control benefits, by acceleration
or otherwise, to any current or former officer, employee or
director.  A true, accurate and complete copy of each such
agreement, policy and arrangement is included in Section 2.09 of
the Disclosure Schedule.


Section 2.10.  Reports.
- -----------------------

  Target Bank has filed all reports and statements, together with
any amendments required to be made with respect thereto, that it
was required to file with:  

     (i)     the OTS, 

     (ii)    the FDIC, 

     (iii)   any applicable state securities or banking or savings and
loan authorities, and 

     (iv)    any other governmental authority with jurisdiction over
Target Bank, except as may be disclosed in Section 2.10 of the
Disclosure Schedule or, to the extent that any report or
statement has not been filed, such failure will not have a
material adverse effect on Target Bank's regulatory compliance
status.  

  As of their respective dates, each of such reports and
documents, as amended, if applicable, including the financial
statements, exhibits and schedules thereto, complied in all
material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority
with which they were filed, and did not contain any untrue
statement of a material fact or 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.


Section 2.11.  Investment Portfolio.
- ------------------------------------

  All United States Treasury securities, obligations of other
United States Government agencies and corporations, obligations
of states and political subdivisions of the United States and
other investment securities held by Target Bank are carried in
the aggregate at no more than cost adjusted for amortization of
premiums and accretion of discounts, except as otherwise
required by FAS No. 115 and which adjustments are disclosed in
Section 2.11 of the Disclosure Schedule.


Section 2.12.  Loan Portfolio
- -----------------------------

  Except as may be disclosed in Section 2.12 of the Disclosure
Schedule:  
  
     (i)     all loans shown on the Target Bank Financial Statements
at June 30, 1995, or which were entered into after June 30, 1995,
but before the Effective Time, were and will be made for good,
valuable and adequate consideration in the ordinary course of
the business of Target Bank, in accordance with sound banking
practices, and are not subject to any known defenses, set-offs
or counterclaims, including without limitation any such as are
afforded by usury or truth in lending laws, except as may be
provided by bankruptcy, insolvency or similar laws or by general
principles of equity; 

     (ii)    to the knowledge of Target Bank, the notes or other
evidences of indebtedness evidencing such loans and all forms of
pledges, mortgages and other collateral documents and security
agreements are and will be what they purport to be and
enforceable in all material respects in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or affecting
creditors, rights and to general equity principles; and 

     (iii)   Target Bank has complied with all laws and regulations
relating to such loans, or to the extent there has not been such
compliance, such failure to comply will not materially interfere
with the collection of such loans in the aggregate or impair any
such loan with a dollar amount as would represent a Material
Adverse Change as defined in Section 2.05 herein.  


Section 2.13.  Employee Matters and ERISA.
- ------------------------------------------

(a)  Target Bank has not entered into any collective bargaining
agreement with any labor organization with respect to any group
of employees of Target Bank and to the knowledge of Target Bank
there is no present effort nor existing proposal to attempt to
unionize any group of employees of Target Bank.  

(b)  Except as may be disclosed in Section 2.13(b) of the
Disclosure Schedule: 

     (i)     Target Bank is and has been in material compliance with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting
employment discrimination and occupational safety and health
requirements, and Target Bank is not engaged in any unfair labor
practice; 

     (ii)    There are no unfair labor practice charges or other
complaints by any employee or former employee of Target Bank
pending before any governmental agency and there are no
administrative charges or court complaints against Target Bank
concerning alleged employment discrimination or other employment
related matters pending or threatened before the U.S. Equal
Employment Opportunity Commission or any state or federal court
or agency; 

     (iii)   There is no labor dispute, strike, slowdown or stoppage
actually pending or, to the knowledge of Target Bank, threatened
against or directly affecting Target Bank; and 

     (iv)    Target Bank has not experienced any work stoppage or other
labor difficulty.  

(c)  Except as may be disclosed in Section 2.13(c) of the
Disclosure Schedule, Target Bank does not maintain, contribute
to or participate in or has any liability under any employee
benefit plans, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or
any nonqualified employee benefit plans or deferred
compensation, bonus, stock or incentive plans, or other employee
benefit or fringe benefit programs for the benefit of former or
current directors or employees of Target Bank (the "Employee
Plans").  No present or former director, employee or fiduciary
of Target Bank has been charged with breaching or, to the
knowledge of Target Bank, has breached a fiduciary duty under
any of the Employee Plans.  Except as may be disclosed in
Section 2.13(c) of the Disclosure Schedule, Target Bank does not
participate in, nor has it participated in, nor has it any
present or future obligation or liability under, any
multi-employer plan (as defined at Section 3(37) of ERISA). 
Except as may be disclosed in Section 2.13(c) of the Disclosure
Schedule, Target Bank does not maintain, contribute to, or
participate in, any plan that provides health, major medical,
disability or life insurance benefits to former employees of
Target Bank except as provided in Section 4980B of the Code. 

(d)  Except as set forth in Section 2.13(d) of the Disclosure
Schedule, Target Bank does not maintain, and has not maintained
during the past ten (10) years, any Employee Plans subject to
Title IV of ERISA or Section 412 of the Code.  No reportable
event (as defined in Section 4043 of ERISA) has occurred with
respect to any Employee Plans as to which a notice would be
required to be filed with the Pension Benefit Guaranty
Corporation.  No claim is pending, and Target Bank has not
received notice of any threatened or imminent claim with respect
to any Employee Plan (other than a routine claim for benefits
for which plan administrative review procedures have not been
exhausted) for which Target Bank would be liable after June 30,
1995, except as set forth in Section 2.13(d) of the Disclosure
Schedule.  Target Bank does not have any liabilities for excise
taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of
the Code or for a fine under Section 502 of ERISA with respect
to any Employee Plan.  All Employee Plans have been operated,
administered and maintained in all material respects in
accordance with the terms thereof and in material compliance
with the requirements of all applicable laws, including, without
limitation, ERISA and the Code to the extent applicable.


Section 2.14.  Title to Properties; Insurance; Personal Property.
- -----------------------------------------------------------------

(a)  Target Bank has marketable title, insurable at standard
rates, free and clear of all liens, charges and encumbrances
(except taxes which are a lien but not yet payable, liens,
charges or encumbrances explicitly reflected in the Target Bank
Financial Statements and easements, rights-of-way, and other
restrictions which are not material to the current use, value or
marketability of the property and further excepting in the case
of Real Estate Owned ("REO"), as such real estate is internally
classified on the books of Target Bank, rights of redemption
under applicable law) to all real properties reflected on the
Target Bank Financial Statements and acquired subsequent to the
date hereof other than real properties sold for fair value since
the date thereof.  All leasehold interests held by Target Bank
in real estate are held pursuant to lease agreements which are
valid and enforceable in accordance with their terms subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of
general applicability relating to or affecting creditors rights
and to general equity principles.  All such owned real
properties comply in all material respects with all known
applicable private agreements, and, to the knowledge of Target
Bank, all zoning requirements and other governmental laws and
regulations relating thereto and there are no condemnation
proceedings pending or, to the knowledge of Target Bank,
threatened with respect to such properties.  Target Bank has
valid title or other rights under licenses to all material
intangible personal or intellectual property used in its
business, free and clear of any claim, defense or right of any
other person or entity which is material to such property,
subject only to rights of the licensors pursuant to applicable
license agreements, which rights do not materially adversely
interfere with the current use of such property.

(b)  All material insurable properties owned or held by Target
Bank are insured in amounts deemed adequate by the senior
management of Target Bank and against fire and other risks
insured against by extended coverage and public liability
insurance.  Target Bank has delivered to Acquiror as part of
Section 2.14(b) of the Disclosure Schedule true, accurate and
complete copies of all insurance policies and fidelity bonds of
Target Bank.  There are no outstanding claims alone or in the
aggregate in excess of Ten Thousand Dollars ($10,000) with
respect to Target Bank under such bonds and insurance policies,
and Target Bank is not aware of any acts of dishonesty or losses
which would form the basis of a material claim under such bonds
or insurance coverage.  Each such policy is in full force and
effect, with all premiums due thereon having been paid as and
when due. Target Bank has not been notified that its fidelity or
insurance coverage will not be renewed by the carrier on
substantially the same terms as the existing coverage.  

(c)  All of the personal property reflected in the Target Bank
Financial Statements as being owned by Target Bank (other than
items disposed of since such date) is owned free and clear of
any lien, encumbrance, right of first refusal, options or other
restrictions, and all such personal property, other than items
with nominal book value, is in good condition and repair
(ordinary wear and tear excepted) and is sufficient to carry on
the business of Target Bank as it is presently conducted.


Section 2.15.  Environmental Matters.
- -------------------------------------

(a)  As used in this Agreement, "Environmental Laws" means all
local, state and federal environmental, health and safety laws
and regulations as in effect from time to time in all
jurisdictions in which Target Bank has done business or owned or
leased property, including, without limitation, the Federal
Resource Conservation and Recovery Act, the Federal
Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), the Federal Clean Water Act, the Federal Clean
Air Act, and the Federal Occupational Safety and Health Act.

  For purposes of this Agreement, "Hazardous Substances" means:  

     (i)     any "hazardous substance" as defined in Section 101(14) of
CERCLA or regulations promulgated thereunder; 

     (ii)    any "solid waste," "hazardous waste," or "infectious
waste," as such terms are defined in any Environmental Law; 

     (iii)   asbestos, urea formaldehyde, polychlorinated biphenyls
("PCBs"), nuclear fuel or material, chemical waste, radioactive
material, explosives, known carcinogens, petroleum products and
by-products, and other dangerous, toxic or hazardous pollutants,
contaminants, chemicals, materials or substances listed or
identified in, or regulated by, any Environmental Law; and 

     (iv)    any additional substances or materials which are
classified or considered to be hazardous or toxic under any
Environmental Law.

  For purposes of this Section 2.15, "knowledge" means the actual
knowledge of the current senior executive officers of Target
Bank, without any duty to make inquiry into the books and
records of Target Bank. 

(b)  To the knowledge of Target Bank neither the conduct nor
operation of Target Bank nor any condition of any property ever
owned (including, without limitation, REO), leased or operated
by it ("Real Property") during the time of such ownership, lease
or operation materially violates or materially violated any
Environmental Laws and no condition or event has occurred during
the time of such ownership, lease or operation with respect to
any of them or any such property that, with notice or the
passage of time, or both, would constitute a material violation
of Environmental Laws or obligate (or potentially obligate)
Target Bank to remedy, stabilize, neutralize or otherwise alter
the environmental condition of any such property.  Target Bank
has not received during the last five (5) years any notice from
any person or entity that Target Bank or the operation of any
facilities or any property ever owned (including, without
limitation, REO), leased or operated by Target Bank are or were
in violation of any Environmental Laws or that Target Bank is
responsible (or potentially responsible) for the cleanup of any
pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any such property. 

(c)  Target Bank has not received notice or has no knowledge that
any property in which Target Bank has a current security
interest, lien or other encumbrance violates or violated
Environmental Laws in any material respect.

(d)  To the knowledge of Target Bank, Target Bank has not caused
any Hazardous Substances to be integrated into the Real
Properties or any component thereof in such manner or quantity
as may reasonably be expected to or in fact would pose an
unlawful threat to human health or materially and adversely
affect the value of any such Real Properties.  To the knowledge
of Target Bank, none of the Real Properties has been used by
Target Bank for the storage or disposal of Hazardous Substances,
except as permitted under Environmental Laws.  To the knowledge
of Target Bank, Target Bank has no interest, direct or indirect,
in property owned by a third party which is or has been
contaminated by Hazardous Substances, except as permitted under
Environmental Laws.  To the knowledge of Target Bank, no
property which is subject to such a security interest is or has
been so contaminated except as permitted under Environmental
Laws, except as set forth in Section 2.15(d) of the Disclosure
Schedule.  To the knowledge of Target Bank, no Real Property
contains or formerly contained underground storage tanks.  

(e)  With respect to each of the Real Properties in which Target
Bank has held or currently holds indicia of ownership to protect
a security interest in the facility (as such terms are defined
in 42 U.S.C. Section 9601 et seq.), Target Bank has not, to its
knowledge, "participated in the management of the facility" or
otherwise acted in a manner such that Target Bank would lose its
statutory exemption from liability under Section 101(20)(A) of
CERCLA and as further defined in the currently vacated
Environmental Protection Agency's Final Rule on Lender
Liability, 40 C.P.R. Part 300 Subpart L, S 300.1100, 57 FR
18343, April 29, 1992.


Section 2.16.  Compliance with Laws.
- ------------------------------------

  Target Bank has all licenses, franchises, permits and other
governmental authorizations that are legally required to enable
it to conduct its business in all material respects and such
business has been and is being conducted in compliance in all
material respects with all applicable laws and regulations.


Section 2.17.  Brokerage.
- -------------------------
  
  Except for the amounts payable to Capital Resources Group, Inc.,
as disclosed in Section 2.17 of the Disclosure Schedule, there
are no claims or agreements for brokerage commissions, finders,
fees, or similar compensation in connection with the
transactions contemplated by this Agreement payable by Target
Bank.


Section 2.18.  Undisclosed Liabilities.
- ---------------------------------------

  Except for:  

     (i)     liabilities and obligations fully reflected, disclosed or
provided for in the Target Bank Financial Statements as of March
31, 1996 (including related notes), 

     (ii)    liabilities and obligations incurred since March 31, 1996,
in the ordinary course of business or related to the transaction
contemplated by this Agreement, and 

     (iii)   as set forth in Section 2.18 of the Disclosure Schedule,
Target Bank has no liabilities or obligations, whether absolute,
known or unknown, accrued or unaccrued, contingent or otherwise,
(and there is no asserted or unasserted claim against Target
Bank giving rise to any such liabilities or obligations)
material to the financial condition of Target Bank.  For
purposes of this Section 2.18, the term "liabilities" includes
without limitation liabilities as a guarantor and liabilities
for taxes in each case material to the condition of Target Bank.
 

Section 2.19.  Statements True and Correct.
- -------------------------------------------

  None of the information supplied or to be supplied by Target
Bank for inclusion in:

     (i)     the Proxy Statement (as defined in Section 4.03 hereof), and 

     (ii)    any document to be filed with any regulatory authority in
connection with the transactions contemplated hereby, 
will, at the respective times such documents are filed, and,
with respect to the Proxy Statement, when first mailed to the
stockholders of Target Bank, be false or misleading with respect
to any material fact, or omit to state any material fact
necessary in order to make the statements therein not
misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the
Stockholders' Meeting (as defined in Section 4.03 hereof), be
false or misleading with respect to any material fact, or omit
to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of
any proxy for the Stockholders' Meeting.  All documents that
Target Bank is responsible for filing with any regulatory
authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the
provisions of applicable law and the applicable rules and
regulations thereunder.


Section 2.20.  Material Contracts.
- ----------------------------------

(a)  Section 2.20 of the Disclosure Schedule contains a complete
and correct list of all written or oral agreements, leases, and
other obligations and commitments of the following types, to
which Target Bank is a party, or by which any of its property is
bound, or which has been authorized by Target Bank, except for
those which are listed or described in other Sections of the
Disclosure Schedule.

     (i)     Promissory note, guaranty, mortgage, security agreement or
other evidence of indebtedness owed by Target Bank for borrowed
funds in an amount in excess of Twenty Five Thousand Dollars
($25,000);  

     (ii)    Partnership or joint venture agreements;

     (iii)   Employee Plans; 

     (iv)    Insurance contracts or policies;  

     (v)     Agreement or commitment for sale or purchase (otherwise
than in the ordinary course of business) of any asset or assets
of more than Twenty Five Thousand Dollars ($25,000);  

     (vi)    Agreements or commitments for any single capital
expenditure in excess of Five Thousand Dollars ($5,000) or
capital expenditures in excess of Ten Thousand Dollars ($10,000)
in the aggregate;  

     (vii)   Agreement or other document creating a monetary lien or
security interest in excess of Twenty Five Thousand Dollars
($25,000) or other encumbrance relating to any real or personal
property owned, rented, or leased by Target Bank; 

     (viii)  Lease of, commitment to lease and any other agreements
relating to the lease or rental of, real or personal property by
the Target Bank involving an annual payment in excess of Ten
Thousand Dollars ($10,000);  

     (ix)    Any direct or indirect loan or guaranty of a loan to any
director, officer, or 5% stockholder of Target Bank or a spouse
or child of such person, or any partnership, corporation, or
other entity in which any such director, officer, or stockholder
or a spouse or child of such person holds (directly or
indirectly) an interest of ten percent (10%) or more; and 

     (x)     All other material contracts and commitments not made in
the ordinary course of business;  

(b)  Concurrently with its delivery of the Disclosure Schedule,
Target Bank will deliver complete and correct copies of all
written agreements, leases, policies and commitments listed in
the Disclosure Schedule, together with all amendments thereto,
and a complete and correct written description of all oral
agreements listed in Section 2.20 of the Disclosure Schedule.


Section 2.21.  No Sensitive Transactions.
- -----------------------------------------
  Neither Target Bank nor any employee or agent of Target Bank or
any stockholder (beneficial or otherwise) of Target Bank has
used funds or other assets of Target Bank directly or indirectly
for:  

(a)  illegal contributions, gifts, entertainment or other
expenses related to political activities, 

(b)  payments to or for the benefit of any governmental official
or employee, other than payments required or permitted by law, 

(c)  illegal payments to or for the benefit of any person, firm,
corporation or other entity, or any officer, employee, agent or
representative thereof, or 

(d)  the establishment or maintenance of a secret or unrecorded
fund.  In addition, no employee or agent of Target Bank has
taken any act or omitted to take any act that, to the knowledge
of Target Bank, would cause a violation of federal currency
reporting laws (except as set forth in Section 2.21 of the
Disclosure Schedule).



ARTICLE THREE

  		REPRESENTATIONS AND WARRANTIES OF ACQUIROR
		  ------------------------------------------

  Acquiror hereby makes the following representations and warranties:


Section 3.01.  Organization and Capital Stock.
- ----------------------------------------------

(a)  Acquiror is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of
Ohio with full corporate power and authority to carry on its
business as it is now being conducted.  

(b)  At the Effective Time, Acquisition Subsidiary shall be a
stock savings bank duly organized and validly existing under the
laws of the United States with full corporate power and
authority to carry on its business and perform its obligations
under this Agreement and the Plan of Merger.  


Section 3.02.  Authorization.
- -----------------------------

(a)  The Board of Directors of Acquiror has, by all appropriate
action, approved this Agreement and the Merger and authorized
the execution and delivery hereof on its behalf by its duly
authorized officers and the performance of its obligations
hereunder.  Except for approval of the Merger and the Plan of
Merger by the Board of Directors and the sole stockholder of
Acquisition Subsidiary (which shall be obtained upon the
formation of Acquisition Subsidiary  as provided herein), no
other corporate proceeding is required for the approval by
Acquiror of this Agreement or the Merger or the performance by
Acquiror or Acquisition Subsidiary of their obligations under
this Agreement or the Plan of Merger.  

(b)  This Agreement has been duly and validly executed and
delivered by Acquiror and constitutes a legal, valid and binding
obligation of Acquiror, enforceable against Acquiror in
accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or other laws affecting creditors
rights generally and by judicial discretion in applying
principles of equity.  Acquiror and each of its significant
subsidiaries (as defined in Section 3.03 of this Agreement) are
not in default under or in violation of any provision of its
respective certificate or articles of incorporation, charter,
bylaws, or any promissory note, indenture or any evidence of
indebtedness or security therefor, lease, contract, purchase or
other commitment or any other agreement of any of them which is
material to Acquiror, except for defaults and violations which
will not have a material adverse effect on the ability of
Acquiror to consummate the transaction contemplated by this
Agreement.  Except for the Regulatory Approvals and related
filings, no notice to, filing with, authorization by, or consent
or approval of, any federal or state regulatory authority or
third party is necessary for the execution and delivery of this
Agreement by Acquiror or consummation of the Merger by Acquiror
or Acquisition Subsidiary. 

(c)  Neither the execution and delivery of this Agreement or the
Plan of Merger nor the consummation of the Merger, nor
compliance by Acquiror with the provisions of this Agreement and
the Plan of Merger, will: 

     (i)     conflict with or result in a breach of Acquiror's Articles
of Incorporation or code of regulations; or 

     (ii)    violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Acquiror.

(d)  Prior to the Effective Time, 

     (i)     the Board of Directors of Acquisition Subsidiary shall
have, by all appropriate action, approved the Plan of Merger and
the Merger and authorized the execution and delivery thereof on
its behalf by its duly authorized officers and the performance
of its obligations thereunder; 

     (ii)    Acquiror, as the sole shareholder of Acquisition
Subsidiary, shall have adopted the Plan of Merger; and 

     (iii)   the Plan of Merger shall have been duly and validly
executed and delivered by Acquisition Subsidiary and shall
constitute a legal, valid and binding obligation of Acquisition
Subsidiary, enforceable against Acquisition Subsidiary in
accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or other laws affecting creditors
rights generally and by judicial discretion in applying
principles of equity.  

(e)  Neither the execution and delivery of the Plan of Merger nor
the consummation of the Merger, nor compliance by Acquisition
Subsidiary with the provisions of this Agreement and the Plan of
Merger, will:  

     (i)     conflict with or result in a breach of the Acquisition
Subsidiary's charter or by-laws or; 

     (ii)    violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Acquisition
Subsidiary.


Section 3.03.  Subsidiaries.
- ----------------------------

  Each of Acquiror's significant subsidiaries (as such term is
defined under regulations promulgated by the Securities and
Exchange Commission ("SEC")) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power to own its respective
properties and assets, to incur its respective liabilities and
to carry on its business as now being conducted.  All of the
outstanding shares of capital stock of each significant
subsidiary of Acquiror are owned by Acquiror, directly or
indirectly, free and clear of any material liens, encumbrances,
or security interests of third parties.  All of the issued and
outstanding shares of each significant subsidiary are duly and
validly  issued  and  outstanding and are fully paid and
nonassessable.


Section 3.04.  Financial Information.
- -------------------------------------

  The consolidated balance sheets of Acquiror and its subsidiaries
as of December 31, 1995, and the related unaudited consolidated
income statement and statement of changes in stockholders'
equity and cash flows for each of the three (3) years then
ended, together with the notes thereto, and the unaudited
balance sheet of Acquiror as of March 31, 1996, and the related
unaudited consolidated income statement and statements of change
in stockholders' equity and cash flows for the three (3) months
then ended included in Acquiror's Quarterly Report on Form 10-Q
for the quarter then ended, as currently on file with the SEC
(together, the "Acquiror Financial Statements"), have been
prepared in accordance with GAAP except as disclosed therein and
fairly present in all material respects the consolidated
financial position and the consolidated results of operations,
changes in stockholders, equity and cash flows of Acquiror and
its consolidated subsidiaries as of the dates and for the
periods indicated (subject to normal, recurring year-end
adjustments, none of which is material, and the absence of
footnotes). 


Section 3.05.  Absence of Changes.
- ----------------------------------

  Since December 31, 1995, to the date hereof, Acquiror, on a
consolidated basis, has not experienced or suffered a Material
Adverse Change or entered into any contract, agreement or
understanding which would adversely affect its ability to
perform its obligations under this Agreement.


Section 3.06.  Litigation.
- --------------------------

  There is no litigation, claim or other proceeding pending or, to
the knowledge of Acquiror, threatened, against Acquiror or any
of its significant subsidiaries, or to which the property of
Acquiror or any of its significant subsidiaries is or would be
subject which, if adversely determined, would have a material
adverse effect on the business of Acquiror and its subsidiaries
taken as a whole or adversely affect Acquiror's ability to
perform its obligations under this Agreement.


Section 3.07.  Compliance With Laws.
- ------------------------------------

  Acquiror and its significant subsidiaries have all licenses,
franchises, permits and other government authorizations that are
legally required to enable them to conduct their respective
businesses in all material respects and are in compliance in all
material respects with all applicable laws and regulations.


Section 3.08.  Statements True and Correct.
- -------------------------------------------

  None of the information supplied or to be supplied by Acquiror
for inclusion in:

     (i)     the Proxy Statement and 

     (ii)    any document to be filed with any regulatory authority in
connection with the transactions contemplated hereby, 
will, at the respective times such documents are filed, and,
with respect to the Proxy Statement, when first mailed to the
stockholders of Target Bank, be false or misleading with respect
to any material fact, or omit to state any material fact
necessary in order to make the statements therein not
misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the
Stockholders' Meeting, be false or misleading with respect to
any material fact, or omit to state any material fact necessary
to correct any statement in any earlier communication with
respect to the solicitation of any proxy for the Stockholders'
Meeting.  All documents that Acquiror is responsible for filing
with the OTS or any other regulatory authority in connection
with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable law
and any rules and regulations thereunder.


Section 3.09.  Undisclosed Liabilities.
- ---------------------------------------

  Acquiror has no liabilities or obligations, whether absolute,
known or unknown, accrued or unaccrued, contingent or otherwise
(and there is no asserted or unasserted claim against Acquiror
giving rise to any such liabilities or obligations) that could
adversely affect its ability to consummate the transactions
contemplated by this Agreement.  For purposes of this Section
3.09, the term "liabilities" includes without limitation
liabilities as guarantor and liabilities for taxes in each case
material to the condition of Acquiror.


Section 3.10.  Regulatory Enforcement Matters.
- ----------------------------------------------

  Neither Acquiror nor any of its significant subsidiaries is
subject to or has received any notice or advice that it is not
in substantial compliance with any statute or regulation, or
that it is or may become subject to any order, agreement or
memorandum of understanding with any federal or state agency
charged with the supervision or regulation of savings banks,
savings associations or holding companies of savings banks or
savings associations or engaged in the insurance of deposits or
any other governmental agency having supervisory or regulatory
authority with respect to Acquiror or any of its significant
subsidiaries, and neither Acquiror nor any of its significant
subsidiaries has received any notice from any governmental
authority threatening to revoke any license, franchise, permit
or governmental authorization.  

  
Section 3.11.  Tax Matters.
- ---------------------------

(a)  Each of Acquiror and its significant subsidiaries has filed
all federal, state and local tax returns and reports due with
respect to any of its employees, depositors, borrowers,
operations, businesses or properties in a timely fashion and has
paid or made provision for all amounts due or claimed to be due.
All such returns and reports fairly reflect the information
required to be presented therein.  All provisions for accrued
but unpaid taxes contained in Acquiror's Financial Statements
were made in accordance with GAAP and do not fail to provide for
anticipated tax liabilities including interest and penalties. 
There are no federal, state or local tax returns or reports not
filed which would be due but for an extension of time for filing
having been granted.

(b)  Neither Acquiror nor any of its significant subsidiaries has
executed or filed with the IRS or any state or local tax
authority any agreement extending the period for assessment and
collection of any tax, nor is Acquiror or any of its significant
subsidiaries a party to any action or proceeding by any
governmental authority for assessment or collection of taxes,
except tax liens or levies against it customers.  There is no
outstanding assessment or claim for collection of taxes against
Acquiror or any of its significant subsidiaries.  Neither
Acquiror nor any of its significant subsidiaries has received
any notice of deficiency, proposed deficiency or assessment from
the IRS or any other governmental agency, with respect to any
federal, state or local taxes.  No tax return of Acquiror or any
of its significant subsidiaries is currently the subject of any
audit by the IRS or any other governmental agency.  No material
deficiencies have been asserted in connection with the tax
return of Acquiror or any of its significant subsidiaries and
Acquiror has no reason to believe that any deficiency would be
asserted relating thereto.


Section 3.12.  Reports.
- -----------------------

  Since January 1, 1993, each of Acquiror and its significant
subsidiaries has filed all reports and statement, together with
any amendments required to be made with respect thereto, that it
was required to file with: 

     (i)     the Federal Reserve Board, 

     (ii)    the FDIC, 

     (iii)   any applicable state or federal securities or banking or
savings and loan authorities and 
     
     (iv)    any other government authority with jurisdiction over
Acquiror.  

  As of their respective dates, each of such reports and
documents, including the financial statement, exhibits and
schedules thereto, complied in all material respects with the
relevant statutes, rules and regulations enforced or promulgated
by the regulatory authority with which they were filed, and did
not contain any untrue statement of a material fact or 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.


Section 3.13.  Availability of funds.
- -------------------------------------

  Acquiror has on the date hereof, and will have at the Effective
Time, the financial capacity to consummate the transactions
contemplated hereby.  



ARTICLE FOUR

			AGREEMENTS OF TARGET BANK
			-------------------------

Section 4.01.  Business in Ordinary Course.
- -------------------------------------------

(a)  Target Bank shall not declare or pay any dividend or make
any other distribution with respect to their capital stock or
ownership interests whether in cash, stock or other property,
after the date of this Agreement except:  

     (i)     payment by Target Bank of its regular semi-annual cash
dividend on or about June 30, 1996 in the amount of $.25 per
share of Target Bank Common and 

     (ii)    if closing does not occur by December 31, 1996, then
Target Bank may declare and pay an additional regular
semi-annual dividend in the amount of $.25 per share of Target
Bank Common and 

     (iii)   if closing does not occur by June 30, 1997, then Target
Bank may pay an additional regular semi-annual dividend in the
amount of $.25 per share of Target Bank Common.  

(b)  Target Bank shall continue to carry on, after the date
hereof, its business and the discharge or incurrence of
obligations and liabilities, only in the usual, regular and
ordinary course of business, as heretofore conducted, and by way
of amplification and not limitation, Target Bank will not,
without the prior written consent of Acquiror acting through its
Chief Executive Officer or such other officer as Acquiror may
specify in a written notice to Target Bank; provided in the case
of subsections (vi), (vii), (viii), (ix), (xiii) and (xviii)
below, such consent shall not be unreasonably withheld or
delayed. 

     (i)     issue any Target Bank Common except pursuant to Target Bank
Stock Options issued prior to June 30, 1995, or other capital
stock or any options, warrants, or other rights to subscribe for
or purchase Target Bank Common or any other capital stock or any
securities convertible into or exchangeable for any capital
stock;

     (ii)    directly or indirectly redeem, purchase or otherwise
acquire any Target Bank Common or any other capital stock or
ownership interests of Target Bank;

     (iii)   effect a reclassification, recapitalization, split-up,
exchange of shares, readjustment or other similar change in or
to any capital stock or otherwise reorganize or recapitalize;

     (iv)    except as provided in Section 4.03 hereof, change its
charter or bylaws;

     (v)     except as otherwise provided in this Agreement, enter into
or modify any employment agreement, or severance agreement or
plan; or grant any increase in the compensation payable or to
become payable to any director, officer or employee, except for
increases in salaries consistent with Target Bank's past
practices; grant any stock options; or, except as required by
law, pay or agree to pay any bonus, adopt or make any change in
any bonus, insurance, pension, or other Employee Plan, other
than the Target Bank ESOP, as defined in Section 5.06, as
hereinafter provided in the Agreement, payment or arrangement
made to, for or with any director, officer or employee, except
for payments of and changes in salaries and bonuses consistent
with Target Bank's past practices, or promote any persons
employed as of the date hereof or hire any new employees;

     (vi)    except for FHLB Cincinnati advances, the aggregate amount
of which at any time shall not exceed One Million Dollars
($1,000,000.00) and deposit-taking in the ordinary course of its
business, borrow or agree to borrow any funds, including but not
limited to repurchase transactions, or indirectly guarantee or
agree to guarantee any obligations of others;  

     (vii)   make or commit to make any new loan or letter of credit or
any new or additional discretionary advance under any existing
line of credit, in a principal amount in excess of one Hundred
Thousand Dollars ($100,000) or that would increase the aggregate
credit outstanding to any one borrower (or group of affiliated
borrowers) to more than One Hundred Thousand Dollars ($100,000)
(excluding for this purpose any accrued interest or overdrafts);
provided, however, that Target Bank may make one-to-four family
residential mortgage loans that conform to Target Bank's
mortgage lending policies as of the date hereof in principal
amounts of up to Two Hundred Fifty Thousand Dollars ($250,000);

     (viii)  establish any new lending programs or make any changes
in its policies concerning which persons may approve loans;

     (ix)    enter into any securities transaction for its own account
or purchase or otherwise acquire any investment security for its
own account other than U.S. Treasury obligations and deposits in
an overnight account at the FHLB Cincinnati or securities issued
or guaranteed by the Government National Mortgage Association,
the Federal National Mortgage Association or the Federal Home
Loan Mortgage Corporation;

     (x)     increase or decrease the rate of interest paid on time
deposits or on certificates of deposit, except in a manner and
pursuant to policies consistent with past practices in relation
to rates prevailing in Target Bank's market;

     (xi)    enter into any agreement, contract or commitment out of
the ordinary course of business or having a term in excess of
three (3) months and involving an expenditure in excess of Five
Thousand Dollars ($5,000) other than letters of credit, loan
agreements, deposit agreements, other lending, credit and
deposit agreements and documents made in the ordinary course of
business and as otherwise contemplated by this Agreement;  

     (xii)   except in the ordinary course of business, place on any
of its assets or properties any mortgage, pledge, lien, charge,
or other encumbrance;

     (xiii)  cancel or accelerate any material indebtedness owing to
Target Bank or any claims which Target Bank may possess or waive
any rights of material value;

     (xiv)   sell or otherwise dispose of any real property or any
material amount of any tangible or intangible personal property
other than: 

	            (A) properties acquired in foreclosure or otherwise
in the ordinary collection of indebtedness owed to Target Bank, 

       	     (B)     student loans, or 

       	     (C)     fixed rate loans which are held for sale upon 
origination and sold within sixty (60) days thereafter;

     (xv)    foreclose upon or otherwise take title to or possession or
control of any real property without first obtaining a Phase One
environmental report thereon which indicates that the property
is free of pollutants, contaminants or hazardous or toxic waste
materials; provided, however, that Target Bank shall not be
required to obtain such a report with respect to single family,
non-agricultural residential property of one acre or less to be
foreclosed upon unless it has reason to believe that such
property might contain any such pollutants, contamination, or
waste materials;

     (xvi)   voluntarily commit any act or omission which will cause a
breach of any material agreement, contract or commitment;

     (xvii)  violate any law, statute, rule, governmental regulation,
or order, which violation might have a material adverse effect
on Target Bank's business, financial condition, or earnings, or 

     (xviii) purchase any real or personal property or make any
other capital expenditure where the amount paid or committed
therefor is in excess of Five Thousand Dollars ($5,000).

(c)  Target Bank shall promptly notify Acquiror in writing of the
occurrence of any matter or event known to and directly
involving Target Bank (except matters or events including but
not limited to any changes in conditions that affect the thrift
industry generally) that is materially adverse to the business,
operation, properties, assets, or condition (financial or
otherwise) of Target Bank.  

(d)  Unless and until this Agreement shall have been properly
terminated by a party pursuant to Article Seven hereof and
except as provided below in this Section 4.01(d), Target Bank
shall:

     (i)     not, directly or indirectly, through any of its officers,
directors, agents, stockholders or affiliates, solicit,
encourage or initiate any negotiations or discussions with
respect to inquiries, offers, or proposals relating to the
possible sale or other disposition of shares of its capital
stock by its stockholders or the possible sale or other
disposition (except in the ordinary course of business) of a
substantial portion of its assets to, or merger or consolidation
with, any other person,  

     (ii)    not disclose to any person (other than regulatory
officials) any information not customarily disclosed publicly or
provide access to its properties, books, or records or otherwise
assist or encourage any person in connection with any of the
foregoing, and 

     (iii)   give Acquiror prompt notice of any such inquiries,
offers, or proposals.  

  The foregoing shall not apply, however, to the consideration and
facilitation of any inquiry, offer, or proposal not solicited
after the date hereof by Target Bank or any of its officers,
directors, stockholders, agents or affiliates which relates to
the possible sale or other disposition of Target Bank Common by
stockholders or the possible sale or other disposition of all or
substantially all of Target Bank's assets to, or merger or
consolidation with, another corporation or association (an
"Unsolicited Acquisition Proposal") if and to the extent that
the Board of Directors of Target Bank reasonably determines in
good faith after consultation with its financial advisor and
counsel to Target Bank that failure to consider such Unsolicited
Acquisition Proposal could reasonably be expected to constitute
a breach of its fiduciary duties to the stockholders of Target
Bank, provided, however, that Target Bank shall give Acquiror
prompt notice of such Unsolicited Acquisition Proposal and keep
Acquiror promptly informed regarding the substance thereof and
the response of the Board of Directors of Target Bank thereto.

(e)  Target Bank shall permit representatives of Acquiror to
attend each meeting of its respective board of directors and
executive committee, and shall give reasonable prior notice of
all such meetings to Acquiror; provided, however, the
representatives of Acquiror may be excluded from portions of
such meetings where sensitive matters (including but not limited
to an Unsolicited Acquisition Proposal and discussions with
legal counsel with respect to transactions contemplated by this
Agreement) are being discussed or voted upon.

(f)  Target Bank shall provide to Acquiror such reports on
litigation involving Target Bank as Acquiror shall reasonably
request, provided that Target Bank shall not be required to
divulge information to the extent that, in the good faith
opinion of its counsel, by doing so, it would waive the
attorney-client privilege.

(g)  Target Bank will use reasonable efforts to prevent the
decline in its level of deposits and in its mortgage loan
portfolio in a manner consistent with the safe and sound
operations the Target Bank and the terms of this Agreement.

(h)  Target Bank shall provide at its expense to Acquiror a Phase
One environmental report on each parcel of real estate it owns,
including REO.  In the event this Agreement is terminated for
any reason, Acquiror shall reimburse Target Bank for its
out-of-pocket expenses incurred with respect to such
environmental reports.

(i)  Target Bank shall, on the business day immediately prior to
the Effective Time, renew the severance agreements listed on
Disclosure Schedule 2.09 for a period of two (2) years from the
Effective Time, substantially in the form attached hereto as
Exhibit G, and shall give notice under said severance agreement
that the agreements shall not renew beyond the current term.


Section 4.02.  Breaches.
- ------------------------

  In the event that Target Bank has knowledge of the occurrence,
or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach by it (or would have
caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any representations or
agreements contained or referred to herein, it shall give prompt
written notice thereof to Acquiror and use its best efforts to
prevent or promptly remedy the same.


Section 4.03.  Submission to Stockholders.
- ------------------------------------------
  
  Target Bank shall cause to be duly called and held, on a timely
basis, a special meeting of its stockholders for submission of: 

     (i)     the amendment of the federal stock charter of Target Bank
to remove Section 8 thereof (the "Amendment"),

     (ii)    this Agreement, and

     (iii)   the Plan of Merger for adoption by such stockholders as
required by applicable law (the "Stockholders' Meeting").  

  Subject to receipt by Target Bank of all information concerning
Acquiror and its significant subsidiaries as Target Bank may
reasonably request, Target Bank shall prepare a Proxy Statement
(the "Proxy Statement"), and after providing Acquiror and
Acquiror's counsel reasonable opportunity to comment on the
Proxy Statement, Target Bank shall file it with the OTS and,
upon clearance by the OTS, deliver it to its stockholders.  The
Board of Directors of Target Bank shall recommend to its
stockholders the adoption of this Agreement and Plan of Merger
and use its best efforts to obtain such stockholder approval;
provided, however, that if the Board of Directors of Target Bank
shall have reasonably determined in good faith (after
consultation with its counsel) that such recommendation is
reasonably likely to constitute a breach of its fiduciary duties
to the stockholders of Target Bank, then the Board of Directors
of Target Bank shall not be obligated to recommend to its
stockholders adoption of this Agreement, the Amendment, and the
Plan of Merger.


Section 4.04.  Consents to Contracts and Leases.
- ------------------------------------------------

  Target Bank shall use reasonable efforts to obtain all necessary
consents with respect to all interests of Target Bank in any
material leases, licenses, contracts, instruments and rights
which require the consent of another person for their transfer
or assumption pursuant to the Merger, if any.


Section 4.05.  Conformance Accounting and Reserve Policies;
Restructuring Expenses.
- -----------------------------------------------------------

  After the receipt of all approvals set forth in Section 6.01(d)
of this Agreement, and provided that at such time all of the
conditions to closing set forth in Sections 6.01(a), (b), (c),
(f), (g) and (h) of this Agreement have been satisfied, to the
extent they are capable of being satisfied as of such time, and
further provided that no basis for termination of this Agreement
by either party pursuant to Article Seven of this Agreement is
then extant, and in no event earlier than thirty (30) days prior
to the Effective Time, at the request of Acquiror, Target Bank
shall, on or before or effective as of the date specified by
Acquiror, establish and take such reserves and accruals as
Acquiror reasonably shall request to conform Target Bank's
accrual, reserve and other accounting policies to Acquiror's
policies.  Notwithstanding the foregoing, Target Bank shall not
be required to take any action under this Section 4.05 which it
believes, based on a written opinion of independent counsel,
will constitute a breach of its fiduciary duties, or, based on a
written opinion of its independent public accountant, will
constitute a violation of GAAP. 


Section 4.06.  Consummation of Agreement.
- -----------------------------------------

  Target Bank shall use its best efforts to perform and fulfill
all conditions and obligations to be performed or fulfilled
under this Agreement by it and each of its subsidiaries and to
effect the Merger in accordance with the terms and provisions
hereof.  Target Bank shall furnish to Acquiror in a timely
manner all information, data and documents in the possession of
Target Bank requested by Acquiror as may be required to obtain
the Regulatory Approvals or other necessary approvals of the
Merger and shall otherwise cooperate fully with Acquiror to
carry out the purpose and intent of this Agreement.


Section 4.07.  Access to Information.
- -------------------------------------

  Target Bank shall permit Acquiror reasonable access to its
properties in a manner which will avoid undue disruption or
interference with normal operations and shall disclose and make
available to Acquiror all books, documents, papers and records
relating to assets, stock, ownership, properties, operations,
obligations and liabilities, including but not limited to all
books of account (including the general ledger), tax records,
minute books of directors, and stockholders' meetings,
organizational documents, material contracts and agreements,
loan files, filings with any regulatory authority, accountants'
work papers, litigation files, plans affecting employees, and
any other business activities or prospects in which Acquiror may
have a reasonable and legitimate interest in furtherance of the
transactions contemplated by this Agreement; provided, however,
that nothing in this Section 4.02 shall entitle Acquiror to
access to minutes and other documents or instruments relating to
Unsolicited Acquisition Proposals.  Acquiror will hold any such
information which is nonpublic in confidence in accordance with
the provisions of Section 8.01 hereof.


Section 4.08.  Subsequent Disclosure Schedule.
- ----------------------------------------------

  If subsequent to the date of this Agreement and prior to the
Effective Time, an event occurs which renders untrue any
representation or warranty of Target Bank made at the date of
this Agreement (a "Trigger Event"), Target Bank shall promptly
deliver to Acquiror a supplement to the Disclosure Schedule (a
"Subsequent Disclosure Schedule"), which shall contain a
detailed description of any and all such matters.  A Subsequent
Disclosure Schedule shall be delivered by Target Bank to
Acquiror within two (2) business days after Target Bank learns
of the Trigger Event but in no event later than before the
Closing.  The submission of a Subsequent Disclosure Schedule and
the matters therein contained shall not constitute a default or
breach by Target Bank of any of its representations and
warranties under this Agreement; provided, however, that all
matters therein disclosed together with all other events,
circumstances and occurrences may be taken into account by
Acquiror in determining whether Target Bank has experienced a
Material Adverse Change; provided, further, however, that this
Section 4.08 is not intended to permit Target Bank to alter or
amend its representations and warranties as made herein
(including the Disclosure Schedule) as of the date of this
Agreement, and any Subsequent Disclosure Schedule shall not cure
the inaccuracy thereof as of the date of this Agreement for any
purpose under this Agreement.


Section 4.09.  Target Bank's Merger Expenses.
- ---------------------------------------------

  The costs incurred by Target Bank for fees and expenses of third
parties in connection with this Agreement and the Merger,
including without limitation fees and expenses of investment
bankers, accountants and attorneys, shall not exceed Two Hundred
Seventy-Five Thousand Dollars ($275,000.00), except in the event
of unforeseen regulatory requirements solely relating to
regulatory approvals required for consummation.  



ARTICLE FIVE

			 AGREEMENTS OF ACQUIROR
			 ----------------------

Section 5.01.  Regulatory Approvals and Proxy Statement.
- --------------------------------------------------------

  Acquiror shall use its best efforts to file within sixty (60)
days after the date hereof all applications for the Regulatory
Approvals required in order to consummate the Merger.  Acquiror
shall keep Target Bank reasonably informed as to the status of
such applications and make available to Target Bank copies of
such applications as filed and any supplementary filed
materials.  Acquiror shall timely provide all information
reasonably requested by Target Bank for inclusion in the Proxy
Statement and shall fully cooperate with Target Bank in the
preparation of the Proxy Statement.


Section 5.02.  Breach.
- ----------------------

  In the event that Acquiror has knowledge of the occurrence, or
impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused
or constituted a breach had such event occurred or been known
prior to the date hereof) of any of its representations or
agreements contained or referred to herein, it shall give prompt
written notice thereof to Target Bank and use its best efforts
to prevent or promptly remedy the same.

  
Section 5.03.  Consummation of Agreement.
- -----------------------------------------

  Acquiror shall use its best efforts to perform and fulfill all
conditions and obligations to be performed or fulfilled by it
under this Agreement and to effect the Merger in accordance with
the terms and conditions of this Agreement.


Section 5.04.  Directors' and Officers' Liability Insurance and
               Indemnification.
- ---------------------------------------------------------------

  From the Effective Time and continuing thereafter, the current
officers and directors of Target Bank shall be indemnified and
provided directors' and officers' liability insurance by the
Acquiror, expense thereof may be allocated to Target Bank, for
their acts and omissions occurring prior to the Effective Time
exactly as is provided on the date of this Agreement in the Code
of Regulations, Article Five, of the Acquiror and with the
Acquiror's existing directors' and officers' liability insurance
policy as of the date of this Agreement, each of which may be
changed, altered, modified or discontinued in good faith without
discrimination to the officers and directors of Target Bank.


Section 5.05.  Employee Benefit and Related Matters.
- ----------------------------------------------------

  All employees of Target Bank immediately prior to the Effective
Time shall remain employees of Target Bank at the Effective Time
and, with respect to employees who are not currently covered by
a written employment agreement with the Target Bank, shall be
employed by Target Bank as at-will employees at the same salary
they are receiving from Target Bank.   Any employee who is
currently covered by a written employment agreement will
continue his or her employment as an at-will employee in
accordance with the terms of such written agreement. Acquiror
does not intend to impose job eliminations at Target Bank as a
result of the Merger.  The medical plans maintained by Target
Bank prior to the Effective Time shall remain in effect until
such time as the plans are terminated and substitution therefore
is made of substantially equivalent or superior plans, if any,
maintained by the Acquiror for the benefit of employees of the
Acquiror and its subsidiaries.  At such time of substitution,
employees of Target Bank shall be given the opportunity to
participate in Acquiror's health insurance plan, with no waiting
period, with no pre-existing condition exclusion and shall
receive credit for deductible co-payment requirements already
satisfied during Target Bank's current medical plan year. 
Included in Acquiror's health plan is coverage for the treatment
of cancer.  Employees of Target Bank shall be given credit for
years of service with Target Bank for the calculation of
vacation and sick time.  Target Bank shall become a plan sponsor
of a 401(k) Plan and a defined benefit pension plan maintained
by the Acquiror for the benefit of its and its subsidiary
employees within ninety (90) days after the Effective Time and
the employees of Target Bank immediately prior to Effective Time
who continue as employees of Target Bank shall be given credit
for years of service to Target Bank for purposes of vesting and
participation (but not accrual of benefits under the defined
benefit pension plan); provided, however, no such participation
in any Acquiror qualified plan shall occur until such time as
participation in the Target Bank's employee stock ownership plan
ceases.  In all other respects, employees of the Target Bank
subsequent to the Effective Time shall be subject to all the
rules, regulations and policies of the Acquiror's personnel
policies as promulgated from time to time.  


Section 5.06.  Target Bank's Employee Stock Ownership Plan.
- -----------------------------------------------------------

(a)  Prior to the Effective Time and without any requirement to
make application to the Key District Office of the IRS in
Cincinnati (the "Key District Office"), Target Bank may amend
Target Bank's employee stock ownership plan (the "Target Bank
ESOP") to provide for: 

     (i)     full vesting of benefits by participants, 

     (ii)    elimination of any requirement for a participant to be
employed as of the last day of the year to receive an employer
contribution, other annual additions or allocations, and 

     (iii)   to provide for monthly contributions, in the case of
clauses (i) and (ii), effective as of the Effective Time, and in
the case of clause (iii), at any time prior to the Effective
Time.  

(b)  From and after the date of this Agreement, Target Bank shall
make no further contributions to the Target Bank ESOP, except in
an amount to pay any permitted required installment payment on
Target Bank ESOP loan.  From and after the date of this
Agreement and prior to the Effective Time, Target Bank and its
representatives, with the full cooperation of Acquiror, shall
use their best efforts to: 

     (i)     submit to the Key District Office an Application of
Determination upon Termination relating to Target Bank ESOP
which discloses the proposed allocation of the cash remaining in
the suspense account (after the repayment of Target Bank ESOP
loan) without regard to Section 415 of the Code; and 

     (ii)    maintain the status of Target Bank ESOP as a plan
qualified under Section 401(a) and 4975 of the Code.  At the
Effective Time or as soon thereafter as is practicable and
permissible under the Code, Target Bank and Acquiror shall cause
Target Bank ESOP loan to be repaid with cash proceeds from the
sale of Target Bank Common received by Target Bank ESOP with
respect to unallocated shares of Target Bank Common.  If the Key
District Office issues a favorable determination letter with
respect to the repayment of Target Bank ESOP loan and proposed
allocation of the remaining suspense account to participants,
Acquiror and Target Bank shall, as soon thereafter as
practicable, 

	            (A) cause the Target Bank ESOP to repay the Target 
Bank ESOP loan and make the proposed allocation to participants in
accordance with such favorable determination letter, 

       	     (B) terminate the Target Bank ESOP and the associated 
trust (the "ESOP Trust") and 

       	     (C) distribute Target Bank ESOP benefits to the Target Bank
ESOP participants pursuant to the terms of the Target Bank ESOP.
 
(c)  In the event that, following the Effective Time, the
employment of any Target Bank ESOP participant who was employed
by Target Bank is involuntarily terminated without cause by
Target Bank, such participant (or his or her beneficiary or
beneficiaries) shall receive a cash bonus from Target Bank as
soon as practicable after the date on which the final allocation
of earnings from the suspense account is made, equal to the
amount such participant would have received if he or she had
continued to be a participant in the Target Bank ESOP, at his or
her then-current annualized compensation as such term is defined
in the Target Bank ESOP, through the date of the termination of
the ESOP Trust; provided, however, that neither Acquiror nor
Target Bank shall be obligated to make any such cash payment
under any circumstances in which such payments are not or will
not be deductible because of Section 280G of the Code.

  If the Key District Office determines that it will not issue a
favorable determination letter with respect to the proposed
allocation, then the Target Bank ESOP loan shall nevertheless be
repaid.  The maximum allocation of earnings shall then be made
to participant accounts on a plan termination basis consistent
with the limitations under Section 415 of the Code, any
remaining cash received by Target Bank ESOP attributable to
unallocated shares of Target Bank Common shall remain in the
suspense account, and, to the extent that such cash can be
allocated to the accounts of participants without violation the
limitations of Section 415 of the Code, the cash shall be
allocated in the current Plan Year in which the Effective Time
occurs and during the next ensuing Plan Year to those
participants in Target Bank ESOP as of the Effective Time to the
maximum extent permitted by Section 415 of the Code and provided
that the continued maintenance of the Target Bank ESOP shall not
adversely affect the tax-qualified status of the Target Bank
ESOP.  At the expiration of said subsequent Plan Year, the
Target Bank ESOP Trust shall be terminated with any amounts then
remaining in the suspense account, if any, being transferred to
another qualified plan of Acquiror.


Section 5.07.   Recognition and Retention Plan.
- -----------------------------------------------

(a)  The existing Target Bank Recognition and Retention Plan (the
"RRP") and grants of awards made on or prior to June 30, 1996,
as listed in the Disclosure Schedule in an amount not to exceed
8,568 shares of Target Bank Common will be honored by Acquiror
in accordance with the terms of said plan and grants of awards
and Thrift Regulations.  No awards granted subsequent to June
30, 1996, shall be valid in any respect.  

  To the extent such awards have not vested prior to the Effective
Time, the Per Share Merger Consideration of each RRP award shall
be deposited by Acquiror in an account at The Peoples Banking
and Trust Company, Marietta, Ohio, an Ohio banking corporation,
bearing interest at market rates.  The cash and a pro rata
portion of the interest earned on such cash shall be distributed
to grantees in a manner consistent with the vesting of each RRP
award.

(b)  Immediately after the Effective Time, the RRP shall be
amended by Acquiror to provide that, in the event that, the
employment of any recipient of an RRP award who was employed by
Target Bank is involuntarily terminated without cause by Target
Bank, such recipient's unvested RRP award shall become fully
vested; provided, however, that neither Acquiror nor Target Bank
shall be obligated to make any such cash payment under any
circumstances in which such payments are not or will not be
deductible because of Section 280G of the Code or are prohibited
under any other applicable law or regulation.  


Section 5.08.  Board of Directors of Target Bank; Advisory Directors.
- ---------------------------------------------------------------------

(a)  The Acquiror shall elect the persons listed on Exhibit D
hereto to be Directors of Target Bank for the terms set forth
therein.  The Directors listed on Exhibit D, which shall include
all of the Directors of Target Bank immediately prior to the
Effective Time, shall hold such positions for at least three (3)
years and shall receive board fees equal to the greater of the
fees received by them during the year prior to the Effective
Time or the fees received by Directors of Target Bank who were
not directors of Target Bank prior to the Effective Time.

(b)  At the Effective Time, Acquiror will form a Russell,
Kentucky Advisory Board which will be maintained, subject to
Thrift Regulations and OTS directives, by Acquiror at least
through December 31, 2005.  Each person who is a director of
Target Bank of the date of this Agreement who does not retain
such position through December 31, 2005, shall, at the time he
or she no longer is a director of Target Bank, be entitled to
immediately become a member of the Russell, Kentucky Advisory
Board for a term extending through December 31, 2005.  In
addition, each person named in Section 5.08 of the Disclosure
Schedule whose employment is involuntarily terminated by Target
Bank or the Acquiror after the Effective Time without cause
shall be entitled on the date of such termination to become a
member of the Russell, Kentucky Advisory Board for a term
extending through December 31, 2005.  The Russell, Kentucky
Advisory Board shall meet at least once every six months at such
time selected and designated by the Acquiror and each member of
the Russell, Kentucky Advisory Board shall receive compensation
of $100.00 per meeting attended.


Section 5.09.  Registration.
- ----------------------------

  Within ten (10) business days after the Effective Time,
Acquiror shall file with the SEC and any required state agency
an appropriate registration statement with respect to the shares
of Acquiror common to be subject to the Target Bank Stock Option
Plan and shall use reasonable efforts to maintain the
effectiveness of such registration statement or statements for
so long as such options remain outstanding.



ARTICLE SIX

    CONDITIONS PRECEDENT TO THE MERGER
		  ----------------------------------

Section 6.01.  Conditions to Acquiror's Obligations.
- ----------------------------------------------------

  Acquiror's obligations under this Agreement are conditioned upon
Acquiror's receiving, concurrently with the execution and
delivery of this Agreement by Target Bank, a Shareholder
Agreement in the form attached as Exhibit A executed by each of
the directors of Target Bank who is a shareholder of Target
Bank.  Each such agreement shall be dated as of the date of this
Agreement.  Failure of Target Bank to deliver any of such
agreements shall be a material breach of this Agreement. 
Acquiror's obligations to effect the Merger shall be subject to
the satisfaction (or waiver by Acquiror) prior to or on the
Closing Date of the following conditions:

(a)  The representations and warranties made by Target Bank in
this Agreement shall be true in all material respects on and as
of the Closing Date but as updated by any Subsequent Disclosure
Schedule with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date,
and for purposes of satisfying this closing condition relative
to the truth as of the date of this Agreement of any
representations of Target Bank that contains a knowledge
qualification, such knowledge qualification may be disregarded
by Acquiror;

(b)  Target Bank shall have performed and complied in all
material respects with all obligations and agreements required
to be performed by them prior to the Closing Date under this
Agreement;

(c)  No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be
in effect, nor shall there be pending any proceeding by any
governmental agency or other person seeking any of the
foregoing; and there shall not be any action taken, or any
statute, rule, regulation or order enacted, promulgated,
entered, enforced or deemed applicable to the Merger which makes
the consummation of the Merger illegal;

(d)  All Regulatory Approvals and other necessary consents,
authorizations and other approvals required by law for
consummation of the Merger shall have been obtained without the
imposition of any conditions that Acquiror determines to be
unduly burdensome, and all waiting periods required by law shall
have expired;

(e)  Acquiror shall have received all documents required to be
received from Target Bank on or prior to the Closing Date, all
in form and substance reasonably satisfactory to Acquiror;

(f)  Target Bank shall not have experienced a Material Adverse
Change, including but not limited to items contained in any
Subsequent Disclosure Schedule;

(g)  Immediately prior to the Effective Time, the holders of no
more than ten percent (10%) of the outstanding Target Bank
Common shall qualify as Dissenting Shareholders; and

(h)  Immediately prior to the Effective Time, the amount of the
total equity capital of Target Bank shall not be less than the
total equity capital of Target Bank as reported in its Quarterly
Report on Form 10-Q for the quarter ended  March 31, 1996;
provided, however, that for purposes of such calculations, any
special exclusions contemplated by the definition of Material
Adverse Change, conforming reserves and accruals contemplated by
Section 4.05 shall not be taken into account in the costs of the
Phase One audits in Section 4.01(h) and the merger expenses in
Section 4.09. 


Section 6.02.  Conditions to Target Bank's Obligations.
- -------------------------------------------------------

  Target Bank's obligations under this Agreement are conditioned
upon its receipt, concurrently with the execution and delivery
of this Agreement by Target Bank, of a written opinion from
Capital Resources Group, Inc. that the Per Share Merger
Consideration to be received by the holders of Target Bank
Common in the Merger is fair from a financial point of view. 
Target Bank's obligation to effect the Merger shall be subject
to the satisfaction (or waiver by Target Bank) prior to or on
the Closing Date of the following conditions:

(a)  The representations and warranties made by Acquiror in this
Agreement shall be true in all material respects on and as of
the Closing Date with the same effect as though such
representations and warranties had been made or given on the
Closing Date and for purposes of satisfying this closing
condition relative to the truth as of the date of this Agreement
of any representations of Acquiror that contains a knowledge
qualification, such knowledge qualification may be disregarded
by Target Bank;  

(b)  Acquiror shall have performed and complied in all material
respects with all of its obligations and agreements hereunder
required to be performed prior to the Closing Date under this
Agreement;

(c)  No Injunction preventing the consummation of the Merger
shall be in effect, nor shall there be pending any proceeding by
any thrift regulatory authority or other governmental agency
seeking to prevent or delay the Merger; and there shall not be
any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger
which makes the consummation of the Merger illegal;

(d)  All Regulatory Approvals and other necessary consents,
authorizations and other approvals, including the requisite
approval of this Agreement, the Amendment and the Plan of Merger
by the stockholders of Target Bank, required by law for
consummation of the Merger shall have been obtained and all
waiting periods required by law shall have expired;

(e)  Target Bank shall have received all documents required to be
received from Acquiror on or prior to the Closing Date, all in
form and substance reasonably satisfactory to Target Bank.



ARTICLE SEVEN

			TERMINATION OR ABANDONMENT
			--------------------------

Section 7.01.  Mutual Agreement.
- --------------------------------

  This Agreement may be terminated by the mutual written agreement
of the parties at any time prior to the Closing Date, regardless
of whether approval of this Agreement, the Amendment and the
Plan of Merger by the stockholders of Target Bank shall have
been previously obtained.


Section 7.02.  Breach of Agreement.
- -----------------------------------

  In the event that there is a material breach of any of the
representations and warranties or agreements of Acquiror or
Target Bank, and such breach is not cured within ten (10) days
after notice to cure such breach is given by the non-breaching
party or, if such breach is not capable of being cured within
ten (10) days, steps are not initiated within ten (10) days to
effect a cure, then the nonbreaching party, regardless of
whether stockholder approval of this Agreement, the Amendment
and the Plan of Merger shall have been previously obtained by
Target Bank, may terminate and cancel this Agreement by
providing written notice of such action to the other party
hereto.


Section 7.03.  Failure of Conditions.
- -------------------------------------

  In the event any of the conditions to the obligations of:

     (i)     Acquiror set forth in Sections 6.01 or 

     (ii)    Target Bank set forth in Section 6.02 

are not satisfied or waived on or prior to the Closing Date, and
if any applicable cure period provided in Section 7.02 has
lapsed, then Acquiror (in the case of conditions to its
obligations) or Target Bank (in the case of conditions to its
obligations) may, regardless of whether approval of this
Agreement and the Plan of Merger by the stockholders of Target
Bank shall have been previously obtained, terminate and cancel
this Agreement by delivery of written notice of such action to
the other party on such date.


Section 7.04.  Denial of Regulatory Approval.
- ---------------------------------------------

  If any regulatory application filed pursuant to Section 5.01
should be finally denied or disapproved by the respective
regulatory authority, then this Agreement may be terminated by
any party to this Agreement.  It is understood, however, that a
reasonable request for additional information from or
undertaking by Acquiror, as a condition for approval, shall not
be deemed to be a denial or disapproval so long as Acquiror
diligently provides the requested information or undertaking.  


Section 7.05.  Failure of Stockholders to Adopt.
- ------------------------------------------------

(a)  If Target Bank's Board of Directors is excused, pursuant to
Section 4.03 of this Agreement, from its obligation to recommend
that Target Bank's stockholders adopt this Agreement, the
Amendment and the Plan of Merger, to present this Agreement, the
Amendment and the Plan of Merger to them for adoption or to hold
the Stockholders Meeting for such purpose, Acquiror or Target
Bank may terminate this Agreement.

(b)  In the event that at the Stockholders' Meeting, Target
Bank's Board of Directors fails to recommend that Target Bank's
shareholders adopt, and the holders of at least the Minimum
Portion of the outstanding shares of Target Bank Common do not
adopt, this Agreement, the Amendment and the Plan of Merger,
Acquiror may terminate this Agreement.

(c)  In the event that at the Stockholders' Meeting, the holders
of at least the Minimum Portion of the outstanding shares of
Target Bank Common do not adopt this Agreement, the Amendment
and the Plan of Merger and Target Bank's Board of Directors have
recommended that Target Bank's stockholders adopt this Agreement
and the Plan of Merger, Acquiror or Target Bank may terminate
this Agreement.


Section 7.06.  Regulatory Enforcement Matters.
- ----------------------------------------------

  In the event that Target Bank shall become a party or subject to
any written agreement, memorandum of understanding, cease and
desist order, imposition of civil money penalties or other
regulatory enforcement action or proceeding with or by any
federal or state agency charged with the supervision or
regulation of savings banks or savings associations after the
date of this Agreement, which is reasonably determined by
Acquiror to be significant to Target Bank's business, operations
or financial condition, then Acquiror may terminate this
Agreement.


Section 7.07.  Automatic Termination.
- -------------------------------------

  If the Closing Date does not occur on or prior to the expiration
of twelve (12) months from the date of execution of this
Agreement, then this Agreement may be terminated by either party
by giving written notice to the other; provided, however, that a
party who is then in breach of any of its representations,
warranties, covenants or agreements under this Agreement in any
material respect may not exercise such right of termination;
provided further that if the non-breaching party has not
notified the breaching party that it is seeking specific
performance, either party terminate this Agreement.


Section 7.08.  Termination Fee.
- -------------------------------

  In the event of termination of this Agreement pursuant to
Section 7.05(a) or (b) in consideration of Acquiror's costs and
expenses in connection with this Agreement and the transactions
contemplated hereby, its agreements hereunder, its expenditure
of significant management time and staff resources, its
forbearance from consideration and pursuit of other business
alternatives, its loss of a unique and valuable business
opportunity, and the added value to any person acquiring assets
or securities of Target Bank or combining with Target Bank
resulting from Target Bank's dealings with Acquiror and
Acquiror's agreement to proceed with the Merger on the terms and
conditions set forth herein, Target Bank shall pay Three Hundred
Thousand Dollars ($300,000) to Acquiror as an agreed-upon
termination fee, in immediately available funds within two (2)
business days after the occurrence of such event.  If Target
Bank timely satisfies its obligations under this Section 7.08,
it shall have no liability under Sections 8.05 and 8.06 of this
Agreement, nor shall it be liable for specific performance or
injunctive relief under Section 8.15 of this Agreement.



ARTICLE EIGHT

    GENERAL
				-------

Section 8.01.  Confidential Information.
- ----------------------------------------

  The parties acknowledge the confidential and proprietary nature
of the information as hereinafter described which has heretofore
been exchanged and which will be received from each other
hereunder ("Information") and agree to hold and keep the same
confidential.  Such Information will include any and all
financial, technical, commercial, marketing, customer or other
information concerning the business, operations and affairs of a
party that may be provided to the other, irrespective of the
form of the communications, by such party's employees or agents.
Such Information shall not include information which is or
becomes generally available to the public other than as a result
of a disclosure by a party or its representatives in violation
of this Agreement.  The parties agree that the Information will
be used solely for the purposes contemplated by this Agreement
and that such Information will not be disclosed to any person
other than employees and agents of a party who are directly
involved in evaluating the transaction.  The Information shall
not be used in any way detrimental to a party, including use
directly or indirectly in the conduct of the other party's
business or any business or enterprise in which such party may
have an interest, now or in the future, and whether or not now
in competition with such other party.


Section 8.02.  Publicity.
- -------------------------

  Acquiror and Target Bank shall cooperate with each other in the
development and distribution of all news releases and other
public disclosures concerning this Agreement and the Merger and
shall not issue any news release or make any other public
disclosure without prior review by the other, unless such may be
required by law or upon the written advice of counsel.


Section 8.03.  Return of Documents.
- -----------------------------------

  Upon termination of this Agreement prior to the Effective Time,
each party shall deliver to the other originals and all copies
of all Information made available to such party and will not
retain any copies, extracts or other reproductions in whole or
in part of such Information.


Section 8.04.  Notice.
- ----------------------

  Any notice or other communication shall be in writing and shall
be deemed to have been given or made on the date of delivery, in
the case of hand delivery, or three (3) business days after
deposit in the United States Registered Mail, postage prepaid,
or upon receipt if transmitted by facsimile telecopy or any
other means, addressed (in any case) as follows:

(a)  if to Acquiror:

	     Robert E. Evans, President and Chief Executive Officer
	     PEOPLES BANCORP INC.
	     138 Putnam Street
	     Marietta, Ohio 45750

with a copy to:

	     Charles R. Hunsaker
	     General Counsel
	     PEOPLES BANCORP INC.
	     138 Putnam Street
	     Marietta, Ohio 45750

and

(b)  if to Target Bank:


with a copy to:

	     Kip A. Weisman, P.C.
	     SILVER, FREEDMAN & TAFF, L.L.P.
	     110 New York Avenue, N.W. Suite 700
	     Washington, DC  20005

or to such other address as any party may from time to time
designate by notice to the others.


Section 8.05.  Liabilities
- --------------------------

  In the event that this Agreement is terminated pursuant to the
provisions of Article Seven hereof, no party hereto shall have
any liability to any other party for costs, expenses, damages or
otherwise, except as provided in Section 7.08 and as hereinafter
set forth in this Section 8.05 and Section 8.06 below.  In the
event that this Agreement is terminated pursuant to Section 7.02
on account of an intentional breach of any of the
representations and warranties or of any of the covenants or
agreements set forth herein, then Target Bank,  shall pay to
Acquiror, or Acquiror, in the case of a breach by Acquiror,
shall pay to Target Bank in immediately available funds, the sum
of Six Hundred Thousand Dollars ($600,000) as agreed-upon
liquidated damages, within two (2) business days after receipt
of a demand therefor from the party entitled to such damages. 
For purposes of the foregoing, in no event shall a breach of a
representation and warranty be deemed "intentional" if no member
of the board of directors and no senior officer of Target Bank,
or Acquiror, as the case may be, knew or should have known that
such representation and warranty was not true and correct.  


Section 8.06.  Expenses.
- ------------------------

  Each of the parties shall bear its own costs, fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby provided that, in the event that the costs
incurred by Target Bank for fees and expenses of third parties
as provided in Section 4.09 of this Agreement exceed the amount
set forth in Section 4.09, the excess amount divided by the
number of outstanding shares of Target Bank Common shall reduce
the Per Share Merger Consideration.  Nothing herein shall limit
the right of the non-breaching party to seek and receive all
relief and damages to which it may be entitled on account of a
non-intentional breach, including without limitation reasonable
expenses incurred to obtain such relief or damages.


Section 8.07.  Nonsurvival of Representations and Warranties.
- -------------------------------------------------------------

  Except as provided in this Section 8.07, no representation,
warranty, covenant or agreement contained in this Agreement
shall survive the Effective Time or the earlier termination of
this Agreement.  The agreements set forth in Sections 1.04(c)
and (f) and 5.04, 5.05, 5.06, 5.07 and 5.09 shall survive the
Effective Time and the agreements set forth in Sections 7.08,
8.01, 8.03, 8.05 and 8.06 hereof shall survive the earlier
termination of this Agreement.


Section 8.08.  Entire Agreement.
- --------------------------------

  This Agreement constitutes the entire agreement among the
parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings and agreement between
the parties relating to the subject matter hereof.


Section 8.09.  Headings and Captions.
- -------------------------------------

  The captions of Articles and Sections hereof are for convenience
only and shall not control or affect the meaning or construction
of any of the provisions of this Agreement.


Section 8.10.  Waiver, Amendment or Modification.
- -------------------------------------------------

  The conditions of this Agreement which may be waived may be
waived only by written notice by the party waiving such
condition to the other party or parties.  The failure of any
party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later
time to enforce the same. This Agreement may be amended or
modified by a written document duly approved by the boards of
directors of the parties, whether before or after approval of
this Agreement by the stockholders of Target Bank, provided that
any amendment or modification after such stockholder approval
shall not decrease the Per Share Merger Consideration without
the approval thereof of the stockholders of Target Bank by at
least the Minimum Portion.


Section 8.11.  Rules of Construction.
- -------------------------------------

  Unless the context otherwise requires: 

(a)  a term has the meaning assigned to it; 

(b)  an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP; 

(c)  "or" is not exclusive; and 

(d)  words in the singular may include the plural and in the
plural include the singular.


Section 8.12.  Counterparts.
- ----------------------------

  This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original and all of which shall be
deemed one and the same instrument.


Section 8.13.  Successors and Assigns.
- --------------------------------------

  This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. 
Except as provided in Sections 1.04(b), (c) and (f), 5.04 and
5.05, there shall be no-third party beneficiaries hereof.


Section 8.14.  Governing Law; Assignment.
- -----------------------------------------

  This Agreement shall be governed by the laws of the State of
Ohio and applicable federal laws and regulations.  This
Agreement may not be assigned by either of the parties hereto.


Section 8.15.  Specific Performance and Injunctive Relief.
- ----------------------------------------------------------

  Each party to this Agreement recognizes that, if it fails to
perform, observe or discharge any of its obligations under this
Agreement, remedies at law may not provide adequate relief to
the other party or parties.  Therefore, each party is hereby
authorized to demand specific performance of this Agreement, and
is entitled to temporary and permanent injunctive relief, in a
court of competent jurisdiction at any time when any other party
fails to comply with any of the provisions of this Agreement
applicable to it, in addition to any other remedy which may be
available in law or equity, except that a party that is paid a
termination fee pursuant to Section 7.08 or liquidated damages
pursuant to Section 8.05 hereof shall not be entitled to demand
specific performance.  To the extent permitted by applicable
law, each party hereby irrevocably waives any defense that it
might have based on the adequacy of a remedy at law which might
be asserted as a bar to such remedy of specific performance or
injunctive relief.

  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.


 
	                            			     PEOPLES BANCORP INC.
Attest:

/s/ CHARLES R. HUNSAKER              BY  /s/ ROBERT E. EVANS
Charles R. Hunsaker                      Robert E. Evans




                            				     RUSSELL FEDERAL SAVINGS BANK


/s/ SHIRLEY A. MENSHOUSE             BY /s/ CHARLES M. DANIELS
Shirley A. Menshouse                    Charles M. Daniels




                      
                          				EXHIBIT 10(c)
                          				-------------

     	      PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
            		  FOR FISCAL YEAR ENDED DECEMBER 31, 1996

  ORIGINAL TERM NOTE BETWEEN PEOPLES BANCORP INC. AND FIFTH THIRD BANK


Officer No.  90-New
$3,000,000.00                                          January 2, 1997
City- Cincinnati   State - Ohio                                 
- -------------------------------                      

  On or before the Due Date below, the undersigned, a corporation,
for value received, and if more than one, jointly and severally,
promise to pay to the order of The Fifth Third Bank, 38 Fountain
Square Plaza, Cincinnati, Ohio (hereinafter referred to as
"Bank") the sum of Three million and 00/100 Dollars (hereinafter
referred to as the "Borrowing") plus interest per annum at a
rate of: 0% greater than the "Prime Rate" (the rate announced by
Bank from time to time).  In the event of a change in said Prime
Rate, the rate on this note shall be changed immediately to a
rate which shall be greater than the new Prime Rate by the
amount stated herein.  Interest shall be computed on a year of
360 days and charged for the actual number of days elapsed.

This note is payable as follows:
  Principal shall be due and payable: In installments:
Installments in the amount of $150,000 shall be due on the 1st
day of each six months beginning January 2, 2003 of the
principal amount then owing plus all interest due thereon. 
Interest shall be due and payable: On the 1st day of each six
months beginning July 1, 1997.  Principal and interest payments
shall be made at the Bank's address above unless otherwise
designated by Bank in writing.

  To secure repayment of this note and all modifications,
extensions and renewals thereof, and all other Obligations (as
herein defined) of the undersigned to Bank, the undersigned
grants Bank a security interest in all of the undersigned's now
owned or hereafter acquired interests in all property in which
Bank is, at any time, granted a lien for any Obligation, and all
property in possession of Bank including, without limitation,
money, securities, instruments, documents, letters of credit,
chattel paper, or other property delivered to Bank in transit,
for safekeeping, or for collection or exchange for other
property, all distributions, dividends, warrants, securities and
other rights in addition to such property, all rights to payment
from and claims against Bank and all proceeds thereof, and all
real and personal property described below ("Collateral").  The
undersigned agrees to immediately deliver such additional
dividends warrants, securities or other property or rights
thereto to Bank immediately upon receipt as additional
Collateral and until delivery to hold same in trust for Bank. 
The undersigned agrees that the Bank may, at any time, call for
additional Collateral satisfactory to it.  All documents
executed in connection with this note and all Collateral,
including without limitation the following, further secure the
Obligations:


16,000 shares of Common Stock of The First National Bank of
Southeastern Ohio.   
- -----------------------------------------------------------

  The Obligations secured by the Collateral (herein, the
"Obligations") shall include this note and each and every
liability of the undersigned jointly or severally to Bank and
all affiliates of Fifth Third Bancorp however created, direct or
contingent, due or to become due, whether now existing or
hereafter arising, participated in whole or in part, created by
trust agreement, lease, overdraft, agreement, or otherwise, in
any manner by the undersigned.  The undersigned also grants Bank
a security interest in all of the Collateral as agent for all
affiliates of Fifth Third Bancorp for all Obligations of the
undersigned to such affiliates.  Said security interest shall
not be enforced to the extent prohibited by the Truth in Lending
Act as implemented by Federal Reserve Regulation Z.

  The undersigned certifies that the proceeds of this loan are to
be used for business purposes.  If this note is a renewal, in
whole or in part, of a previous Obligation, the acceptance by
Bank of this note shall not effectuate a payment but rather a
continuation of the previous Obligation.

  Bank may charge, and the undersigned agrees to pay, on the above
Effective Date, a note processing fee in the amount determined
by Bank.

EVENTS OF DEFAULT:
  This note, and all other Obligations of the undersigned to Bank,
shall be and become immediately due and payable at the option of
the Bank, without any demand or notice whatsoever, upon the
occurrence of any of the following described events, each of
which shall constitute an Event of Default:

1)  Any failure to make any payment when due of the principal or
    interest on this note, the occurrence of any event of
    default as therein defined on any other Obligation of the
    undersigned, or a default in the Obligations under any
    security documents.

2)  The death or dissolution of the undersigned, of any endorser
    or guarantor, or if the undersigned is a partnership, the 
    death or dissolution of a general partner.

3)  Any failure to submit to Bank current financial information
    upon request.

4)  The creation of any lien (except a lien to Bank) or the
    issuance of an attachment against or seizure of any of         
    the property of, or the entry of a judgment against, the
    undersigned.

5)  In the Judgment of Bank, any adverse change occurs in the
    ability of the undersigned to repay the Obligations, or
    the Bank deems itself insecure.

6)  An assignment for the benefit of the creditors of, or the
    commencement of any bankruptcy, receivership, insolvency, 
    reorganization, or liquidation proceedings by or against 
    the undersigned or any endorser or guarantor hereof.

7)  The institution of any garnishment proceedings by
    attachment, levy or otherwise, against any Collateral, any      
    deposit balance maintained or any property deposited with the
    Bank by the undersigned or any endorser or guarantor hereof.

8)  Bank has called for additional security and the undersigned
    has not furnished satisfactory additional security on demand.

  Upon the occurrence of an Event of Default herein described,
Bank may, as its option, declare this note and all other
Obligations of the undersigned to be fully due and payable in
their aggregate amount together with accrued interest plus any
applicable prepayment premiums, fees, and charges.

  In addition to any other remedy permitted by law, the Bank may
at any time, without notice, apply the Collateral to this note
or such other Obligations, whether due or not, and Bank may, at
its option, proceed to enforce and protect its rights by an
action at law or in equity or by any other appropriate
proceedings.  Notwithstanding any other legal or equitable
rights of Bank, Bank, in the Event of Default, is (a) hereby
irrevocably appointed and constituted attorney-in-fact, with
full power of substitution, to exercise all rights of ownership
with respect to Collateral including, but not limited to, the
right to collect all income of other distributions arising
therefrom and to exercise all voting rights connected with
Collateral: and (b) is hereby given full power to collect, sell,
assign, transfer and deliver all of said Collateral or any part
thereof, or any substitutes therefor, or any additions thereto,
through any private or public sale without either demand or
notice to the undersigned, or any advertisement, the same being
hereby expressly waived, at which sale Bank is authorized to
purchase said property or any part thereof, free from any right
of redemption on the part of the undersigned which is hereby
expressly waived and released.  In case of sale for any cause,
after deducting all costs and expenses of every kind, Bank may
apply, as it shall deem proper, the residue of the proceeds of
such sale toward the payment of any one or more or all of the
Obligations of the undersigned, whether due or not due, to bank:
after such application and the return of any surplus the
undersigned agrees to be and remains liable to Bank for any and
every deficiency after application as aforesaid upon this and
any other Obligation.  the undersigned shall pay all costs of
collection incurred by Bank, including its attorney's fees, if
this note is referred to an attorney for collection, whether  or
not payment is obtained before entry of judgment, which costs
and fees are Obligations secured by the Collateral.

  If any payment is not paid when due (whether by acceleration or
otherwise) or within 10 days thereafter, the undersigned agrees
to pay to Bank a late payment fee as provided for in any loan
agreement or 5% of the payment amount, whichever is greater,
with a minimum fee of $20.00.  After an Event of Default, the
undersigned agrees to pay to Bank a fixed charge of $25.00, or
the undersigned agree that Bank may, without notice, increase
the above stated interest rate by 6%, whichever is greater. 
Under no circumstances shall said interest rate be raised to a
rate which shall be in excess of the maximum rate of interest
allowable under the state and/or federal usury laws in force at
the time of such change.  

  The undersigned may prepay all or part of this note, which
prepaid amounts shall be applied to the amounts due in reverse
order  of their due dates.  Upon such prepayments, including
involuntary prepayment by acceleration, the undersigned shall
pay a premium of 2% of the maximum principal amount permitted
under this note.  Partial prepayments shall not excuse any
subsequent payment due.

  ENTIRE AGREEMENT:  The undersigned agrees that there are no
conditions or understandings which are not expressed in this
note and the documents referred to herein.

  WAIVER:  No failure on the part of Bank to exercise any of its
rights hereunder shall be deemed a waiver of any such rights or
of any default.  Demand, presentment, protest, notice of
dishonor, notice of protest, and notice of default are hereby
waived.  Each of the undersigned, including but not limited to
all co-makers and accommodation makers of this note, hereby
waives all suretyship defenses including but not limited to all
defenses based upon impairment of collateral and all suretyship
defenses described in Section 3-605 of the Uniform Commercial
Code, as revised in 1990 (the "UCC").  Such waiver is entered to
the full extent permitted by Section 3-605 (i) of the UCC.

  JURY WAIVER:  THE UNDERSIGNED, AND ANY ENDORSER OR GUARANTOR
HEREOF, WAIVE THE RIGHT TO A TRIAL BY JURY OF ANY MATTERS
ARISING OUT OF THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

  The declaration of invalidity of any provision of this note
shall not affect any part of the remainder of the provisions.

  This note is supplemented by the terms and conditions of a loan
agreement dated January 7, 1997 between the undersigned and Bank.

  Warrant of attorney:  The undersigned, jointly and severally,
authorize any attorney-at-law to appear in any court of record
after maturity of this note, whether by acceleration or
otherwise, to waive the issuance and service of process and to
confess judgment against them in favor of the Bank for the
principal sum due hereon together with interest, charges, court
costs and attorney's fees, and to waive and release all errors,
rights of appeal, exemptions and stays of execution.  The
undersigned also agrees that the attorney acting for the
undersigned as set forth in this paragraph may be compensated by
Bank for such services, and the undersigned waive any conflict
of interest caused by such representation and compensation
arrangement.  This warrant of attorney to confess judgment shall
be construed under the laws of the State of Ohio.

  WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO
NOTICE AND COURT TRIAL.  IF YOU DO NOT PAY ON TIME A COURT
JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE
AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO
COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

Due Date  January 2, 2003                  Peoples Bancorp Inc.
Address   138 Putnam Street                /s/  JOHN W. CONLON
       	  Marietta, OH  45750              John W. Conlon
					                                      Its Chief Financial Officer



                            				ADDENDUM 
                     			      TO TERM NOTE
                             			  FROM 
                      			  PEOPLES BANCORP INC.
                             			   TO
                       		  THE FIFTH THIRD BANK
		     
                       			    (dated 1/7/97)


  THIS ADDENDUM is intended to be attached to, and the provisions
hereof are hereby incorporated into that certain Term Note,
dated January 7, 1997, in the principal amount of $3,000,000
(the "Note"), executed by PEOPLES BANCORP INC., an Ohio
corporation (the "Borrower") and made payable to THE FIFTH THIRD
BANK, and Ohio corporation (the "Bank").

  1.1  Term Loan.  (a)  Bank agrees, subject to the terms
and conditions hereinafter set forth, to make a term loan (the
"Term Loan") to Borrower on the date of this Note in the amount
of  Three Million Dollars ($3,000,000).

       (b)  The principal amount of the Term Note will
be payable in ten (10) semi-annual installments of principal
which will be due on January 2, 1998 and on the first (1st)
business day of each July and January thereafter during the term
hereof.  The final payment of principal will be due on January
2, 2003.  The first nine (9) semi-annual installments of
principal will be in the amount of $150,000 and the final
installment of principal will be in the amount of the entire
unpaid balance of the Term Loan, plus all accrued and unpaid
interest and any other charges, advances and fees, if any,
outstanding under the Term Loan.

       (c)  Borrower will pay interest to Bank on the
outstanding principal amount of the Term Loan at rate per annum
equal to the interest rate set forth in the Term Note.  Interest
will be payable in immediately available funds at the principal
office of Bank on the first (1st) day of each calendar month
during the term hereof.  Any principal amount not paid when due
(at maturity, by acceleration or otherwise) will bear interest
thereafter until paid at the Default Rate; this provision does
not constitute waiver of any Events of Default or an agreement
by Bank to permit any late payments whatsoever.

       (d)  The proceeds of the Term Loan will be used for 
general working capital and to fund a portion of the purchase 
price of acquisitions of the assets or stock of banks and/or 
savings and loan associations.  

  1.2  Prepayment.  Borrower may prepay any portion of any
of the  Loan in whole or in increments of $300,000 at any time
without premium or penalty.  Any prepayments in advance of any
amortized payments will be applies to reduce the outstanding
principal amount of such Loan in the inverse chronological order
of maturity.  

  1.4  Fee.  On July 1, 1997, Borrower agrees to pay to Bank
a one-time, non refundable loan fee in an amount equal to an
amount equal to the product of (a) .00125% multiplied by (b) the
positive difference between the outstanding principal balance of
the Term Loan as of July 1, 1997 minus $1,430,000.


Section 2.  Representations And Warranties.
       	    -------------------------------

  Borrower hereby warrants and represents to Bank the following:

  2.1  Organization and Qualifications.  Borrower is a duly
organized, validly existing corporation in good standing under
the laws of the State of Ohio, its state of incorporation, has
the power and authority (corporate and otherwise) to carry on
its business and to enter into and perform this Note and the
other Loan Documents, is qualified and licensed to do business
in each jurisdiction in which such qualifications or licensing
is required.  All information provided to Bank with respect to
Borrower and its operations is true and correct.

  2.2  Due Authorization.   The execution, delivery and
performance by Borrower of the Pledge Agreement, the Note and
the other Loan Documents have been duly authorized by all
necessary corporate action, and will not contravene any law or
any government rule or order binding on Borrower, or the
articles of incorporation, code of regulations or bylaws of
Borrower, nor violate any agreement or instrument by which
Borrower is bound nor result in the creation of Lien on any
assets of Borrower except the Lien granted to Bank herein. 
Borrower has duly executed and delivered this Note, the Pledged
Agreement and the other Loan Documents and they are valid and
binding obligations of Borrower enforceable according to their
respective terms except as limited by equitable principles and
by bankruptcy, insolvency or similar laws affecting the rights
of creditors generally.  No notice to or consent by any
governmental body is needed in connection with this transaction.

  2.3  Litigation.   There are no suits or proceedings
pending or threatened against of effecting Borrower, and no
proceeding before any governmental body are pending or
threatened against Borrower.

  2.4  Margin Stock.   No part of the Loan will be used to
purchase or carry, or to reduce or retire or refinance any
credit incurred to purchase or carry, any margin stock (within
the meaning of Regulations U and X of the Board of Governors of
the Federal Reserve System) or to extend credit to others for
the purpose of purchasing or carrying any margin stock.  If
requested by Bank, Borrower will furnish to Bank statements in
conformity with the requirements of Federal Reserve Form U-1.

  2.5  Business.   Borrower is not a party to or subject to
any agreement or restriction which in the opinion of  Borrower's
management is so unusual or burdensome that it might have a
material adverse effect on Borrower's business, properties or
prospects.

  2.6  Licenses, etc.   Borrower has obtained any and all
licenses, permits, franchises, governmental authorizations,
patents, trademarks, copyrights or other necessary for the
ownership of its properties and the advantageous conduct of its
business.  Borrower possesses adequate licenses, patents, patent
applications, copyrights, trademarks, trademark applications,
and trade names to continue to conduct its business as
heretofore conducted by it, without ant conflict with the rights
of any other person or entity.  All of the foregoing are in full
force and effect and none of the foregoing are in known conflict
with the rights of others. 

  2.7  Laws and Taxes.   Borrower is in compliance with all
laws, regulations, rulings, orders, injunctions, decrees,
conditions or other requirements applicable to or imposed upon
Borrower by any law or by any governmental authority, court or
agency.  Borrower has filed all required tax returns and reports
that are now required to be  filed by it in connection with any
federal, state and local tax, duty or charge levied, assessed or
imposed upon Borrower or its assets, including unemployment,
social security, and real estate taxes.  Borrower has paid all
taxes which are now due and payable.  No taxing authority has
asserted or assessed any additional tax liabilities against
Borrower which are outstanding on the date of this Note, and
Borrower has not filed for any extension of time for the payment
of any tax or the filing of any tax return or report.

  2.8  Financial Condition.   All financial information
relating to Borrower which has been or may hereafter be
delivered by Borrower or on its behalf to Bank is true and
correct and has been prepared in accordance with generally
accepted accounting principles consistently applied.  Borrower
has no material obligations or liabilities of any kind not
disclosed in that financial information, and there has been no
material adverse change in the financial condition of Borrower
nor has Borrower suffered any damage, destruction or loss which
adversely affected its business or assets since the submission
of the most recent financial information to Bank.

  2.9  Defaults.   Borrower is in compliance with all
material agreements applicable to it and there does not now
exist any default or violation by Borrower of or under any of
the terms, conditions or obligations of (a) its Articles of
Incorporation or Regulations/Bylaws, or (b) any indenture,
mortgage, deed of trust, franchise, permit, contract, agreement
or other instrument to which Borrower is a party or by which it
is bound, and the consummation of the transactions contemplated
by this Note will not result in such default or violation.  


Section 3.  Negative Covenants.            
       	    -------------------

  3.1  Merger; Disposition of Assets.   Borrower will not,
without the prior written consent of Bank, which consent shall
not be unreasonably withheld, (a) change its capital structure,
(b) merge of consolidate with any corporation, (c) amend or
change its Articles of Incorporation or Code of Regulations or
(d) sell, transfer or otherwise dispose of all or any substantial 
part of its assets, whether now owned or hereafter acquired.

  3.2  Minimum Tangible Net Worth.   Borrower will not
permit its Tangible Net Worth, on a consolidated basis, to be
less than $50,000,000 as of the date hereof which shall be
increased as of the first day of each fiscal quarter (commencing
with the first fiscal quarter commencing subsequent to the date
of this Note) by an amount equal to 40% of Borrower's cumulative
earnings for each prior fiscal quarter of Borrower.

  3.3  Loan Loss Reserve to Non-Performing Assets.  
Borrower will not permit the ratio of (a) its Minimum Loan Loss
Reserve, on a consolidated basis (as shown on Borrower's
quarterly and annual financial statements delivered to Bank), to
(b) its Non-Performing Assets (as shown on Borrower's quarterly
and annual financial statements delivered to Bank) to be less
than 1.75 to 1.00 at any time during the term hereof.

  3.4  Adequate Capitalization.   Borrower will not  permit
its Capitalization Ratios as required by 12 U.S.C. Section 1831
(and any regulations issued thereunder) to be less that the
minimums required by such statute at any time during the term
hereof.


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

  4.1  "Collateral" shall mean all shares of common capital
stock of First National Bank of Southeastern Ohio.

  4.2  "Default Rate" means six percent (6%0 in excess of
the interest rate otherwise in effect under amounts outstanding
under the Note.  In no vent will the interest rate accruing
under such Note be increased to be in excess of the maximum
interest rate permitted by applicable state or federal usury
laws then in effect. 

  4.3  "Lien" means any security interest, mortgage, pledge,
assignment, lien or other encumbrance of any kind, including
interests of vendors or lessors under conditional sale contracts
and capitalized leases.

  4.4  "Loan Document" means this Note, the Pledged
Agreement, and every other document or agreement executed by any
party evidencing, guarantying or securing any of the
Obligations; and "Loan Document" means any one of the Loan
Documents.

  4.5  "Obligation(s)" means all loans, advances,
indebtedness, liabilities and obligations of Borrower owed to
each of Bank and the Affiliates of Fifth Third Bancorp of every
kind and description whether now existing or  hereafter arising
including without limitation, those owed by Borrower to others
and acquired by Bank or any Affiliate of Fifth Third Bancorp, by
purchase, assignment or otherwise, and whether direct or
indirect, primary or as guarantor or surety, absolute or
contingent, liquidated or unliquidated, matured or unmatured,
whether or not secured by additional collateral, and including
without limitation all liabilities, obligations and indebtedness
arising under this Note and the other Loan Documents, all
obligations to perform or forbear from performing acts, all
amounts represented by letters of credit now or hereafter issued
by Bank for the benefit of or at the request of Borrower, and
all expenses and attorneys' fees incurred by Bank and any
Affiliates of Fifth third Bancorp under this Note or any other
document or instrument related to any of the foregoing.

  4.6  "Pledged Agreement" means the Pledged Agreement of
even date herewith between Borrower and Bank, securing the
Obligations.  

  4.5  "Prime Rate" means the rate of interest per annum
announced to be its prime rate from time to time by Bank at its
principal office in Cincinnati, Ohio whether or not Bank will at
times lend to borrowers at lower rates of interest or, if there
is no such prime rate, then its base rate or such other rate as
may be substituted by Bank for the prime rate.

  4.6  "Tangible Net Worth" means the total of the capital
stock (less treasury stock), paid-in surplus, general
contingency reserves and retained earnings (deficit) of 
Borrower and any Subsidiary as determined on a consolidated
basis in accordance with generally accepted accounting
principles, after eliminating all inter-company items and all
amounts properly attributable to minority interests, if any, in
the stock and surplus of any Subsidiary, minus the following
items (without duplication of deductions) if any, appearing on
the consolidated balance sheet of Borrower:

       (i)    all deferred charges (less amortization, unamortized debt
       	      discount and expense and corporate organization expenses);

       (ii)   the book amount of all assets which would be treated as
       	      intangibles under generally accepted accounting principles,
       	      including, without limitation, such items as good-will,
       	      trademark applications, trade names, service marks, brand
       	      names, copyrights, patents, patent applications and
       	      licenses, and rights with respect to the foregoing; 

       (iii)  the amount by which aggregate inventories or aggregate
       	      securities appearing on the asset side of such consolidated
	             balance sheet exceed the lower of cost or market value (at the
       	      date of such balance sheet) therefor; and

       (iv)   any subsequent write-up in the book amount of any asset
       	      resulting from a revaluation thereof from the book amount
	             entered upon acquisition of such asset. 

       
IN WITNESS WHEREOF, this Addendum to Term Note was executed on
the 8th day of April, 1994.

       WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE
       AND COURT TRIAL.  IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY
       BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE
       POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF   
       ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR 
       RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO
       COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.

	 
				PEOPLES BANCORP INC.
				
				By:  /s/  JOHN W. CONLON
				     John W. Conlon
				     Its: Chief Financial Officer                    



                             				ADDENDUM 
                     			      TO TERM NOTE
                             				  FROM 
                        	  PEOPLES BANCORP INC.
                             				   TO
                      			  THE FIFTH THIRD BANK

                      			     (dated 2/7/97)


  THIS ADDENDUM is intended to be attached to, and the provisions
hereof are hereby incorporated into that certain Term Note,
dated February 7, 1997, in the principal amount of $3,000,000
(the "Note"), executed by PEOPLES BANCORP INC., an Ohio
corporation (the "Borrower") and made payable to THE FIFTH THIRD
BANK, and Ohio corporation (the "Bank").

  1.1   Term Loan.  (a)  Bank agrees, subject to the terms
and conditions hereinafter set forth, to make a term loan (the
"Term Loan") to Borrower on the date of this Note in the amount
of  Three Million Dollars ($3,000,000).

       (b)  The principal amount of the Term Note will
be payable in ten (10) semi-annual installments of principal
which will be due on January 2, 1998 and on the first (1st)
business day of each July and January thereafter during the term
hereof.  The final payment of principal will be due on January
2, 2003.  The first nine (9) semi-annual installments of
principal will be in the amount of $150,000 and the final
installment of principal will be in the amount of the entire
unpaid balance of the Term Loan, plus all accrued and unpaid
interest and any other charges, advances and fees, if any,
outstanding under the Term Loan.

       (c)  Borrower will pay interest to Bank on the
outstanding principal amount of the Term Loan at rate per annum
equal to the interest rate set forth in the Term Note.  Interest
will be payable in immediately available funds at the principal
office of Bank on July 1, 1997 and on the first (1st) business
day of each July and January thereafter during the term hereof. 
Any principal amount not paid when due (at maturity, by
acceleration or otherwise) will bear interest thereafter until
paid at the Default Rate; this provision does not constitute
waiver of any Events of Default or an agreement by Bank to
permit any late payments whatsoever.

       (d)  The proceeds of the Term Loan will be
used for general working capital and to fund a portion of the
purchase price of acquisitions of the assets or stock of banks
and/or savings and loan associations.  

  1.2  Prepayment.  Borrower may prepay any portion of any
of the  Loan in whole or in increments of $300,000 at any time
without premium or penalty.  Any prepayments in advance of any
amortized payments will be applies to reduce the outstanding
principal amount of such Loan in the inverse chronological order
of maturity.  

  1.4  Fee.  On July 1, 1997, Borrower agrees to pay to Bank
a one-time, non refundable loan fee in an amount equal to an
amount equal to the product of (a) .00125% multiplied by (b) the
positive difference between the outstanding principal balance of
the Term Loan as of July 1, 1997 minus $1,430,000.


Section 2.  Representations And Warranties.
       	    -------------------------------

  Borrower hereby warrants and represents to Bank the following:

  2.1  Organization and Qualifications.  Borrower is a duly
organized, validly existing corporation in good standing under
the laws of the State of Ohio, its state of incorporation, has
the power and authority (corporate and otherwise) to carry on
its business and to enter into and perform this Note and the
other Loan Documents, is qualified and licensed to do business
in each jurisdiction in which such qualifications or licensing
is required.  All information provided to Bank with respect to
Borrower and its operations is true and correct.





                                EXHIBIT 10(f)

                PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
                    FOR FISCAL YEAR ENDED DECEMBER 31, 1996


    SUMMARY OF PERFORMANCE COMPENSATION PROGRAM OF PEOPLES BANCORP INC.


  In late 1996, Peoples Bancorp Inc. (the "Company") established a
new Performance Compensation Program ("Program") in which all
employees of the Company and its subsidiaries are eligible to
participate.  This Program replaced the Company's Incentive
Bonus Plan established in 1988 for certain senior officers of
the Company and its subsidiaries.  The Company's Executive
Committee and Board of Directors approved the Program in late
1996 for implementation and use in the 1997 calendar year.

  The Program is designed to reward all employees for balanced
growth and increased profitability.  The amount of the award
available for distribution is based upon the Company's
performance with regard to specified performance goals.  In
1997, the majority of potential incentive payout is based on the
performance of the Company's consolidated financial results. 
The remaining incentive payout for employees is based on the
results of performance goals in certain subordinate models (such
as subsidiary or branch models).  This payout percentage may be
adjusted on an annual basis.

  In 1997, the performance goals focus on loan and deposit growth,
profitability, asset quality, and productivity (increased
operational efficiency).  The Program compares current year
performance to prior year and rewards employees for incremental
growth in the key performance goals previously listed.  Each
performance goal is weighted according to contribution to net
income.  In general, the key performance goals are evenly
weighted for 1997.  The Program also establishes a range of
payout percentages which reflect the extent to which the Company
has met the performance goals.  The payout percentage is
uniformly applied to the gross salaries of each eligible
employee.  Consequently, enhanced performance in relation to the
performance goals creates higher incentive bonuses.





                           				 EXHIBIT 11

          		 PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
		              FOR FISCAL YEAR ENDED DECEMBER 31, 1996


          		       COMPUTATION OF EARNINGS PER SHARE

							
                                   					    Year Ended December 31,       
                            				     --------------------------------------
                                  					1996          1995          1994 
PRIMARY EARNINGS PER SHARE                                       
- --------------------------
EARNINGS:                                        
Net income                           $7,651,000    $6,050,000    $5,748,000 

AVERAGE SHARES OUTSTANDING:                                      
Weighted average Common Shares 
 outstanding                          3,437,997     3,481,176     3,508,941 
Net effect of the assumed 
 exercise of stock options based 
 on the treasury stock method            43,002        17,779        11,396 
                             			     ----------    ----------    ----------
   Total                              3,480,999     3,498,955     3,520,337 
                            				     ==========    ==========    ==========

   PRIMARY EARNINGS PER SHARE             $2.20         $1.73         $1.63 
                            				     ==========    ==========    ==========

FULLY DILUTED EARNINGS PER SHARE                                        
- --------------------------------
EARNINGS:                                        
Net income                           $7,651,000    $6,050,000    $5,748,000 

AVERAGE SHARES OUTSTANDING:                                     
Weighted average Common Shares 
 outstanding                          3,437,997     3,481,176     3,508,941 
Net effect of the assumed 
 exercise of stock options based 
 on the treasury stock method            68,999        37,948        14,871 
                            				     ----------    ----------    ----------
   Total                              3,506,996     3,519,124     3,523,812 
                            				     ==========    ==========    ==========

   FULLY DILUTED EARNINGS PER SHARE       $2.18         $1.72         $1.63 
                            				     ==========    ==========    ==========





                           				 EXHIBIT 12        

            		PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
             	    FOR FISCAL YEAR ENDED DECEMBER 31, 1996


                     			   COMPUTATION OF RATIOS


NET INCOME PER SHARE               Net income/Weighted average common shares
                            				   outstanding 

CASH DIVIDENDS PER SHARE           Cash dividends paid/Common shares
                            				   outstanding at date of declaration 

BOOK VALUE PER SHARE               Total shareholders' equity/Common shares
                             			   outstanding at year-end 

RETURN ON AVERAGE ASSETS           Net income/Average assets 

RETURN ON AVERAGE SHAREHOLDERS'    Net income/Average shareholders' equity 
EQUITY
		 
NET INTEREST MARGIN                Fully-tax equivalent net interest
                             			   income/Average earning assets 

NON-INTEREST EXPENSE TO AVERAGE    Non-interest expense/Average assets 
ASSETS
		
EFFICIENCY RATIO                   Total expenses/(Net interest income plus
                            				   non-interest income) 

AVERAGE LOANS TO AVERAGE DEPOSITS  Average gross loans/Average deposits 

DIVIDEND PAYOUT RATIO              Dividends declared/Net income 

AVERAGE STOCKHOLDERS' EQUITY TO    Average stockholders' equity/
AVERAGE ASSETS                     Average assets 

PRIMARY CAPITAL TO PERIOD END      (Stockholders' equity plus allowance 
TOTAL ASSETS                       for loan losses less intangible assets)/
                            				   (Period end total assets plus allowance 
                            				   for loan losses less intangible assets) 

TIER 1 CAPITAL RATIO               Shareholders' equity less intangible
                            				   assets less securities mark-to-market 
                                   capital reserve ("Tier 1 Capital")/
                            				   Risk adjusted assets 

TOTAL CAPITAL RATIO                Tier 1 Capital plus allowance for loan
                            				   losses/Risk adjusted assets 

TIER 1 LEVERAGE RATIO              Tier 1 Capital/Total assets 

NET CHARGE-OFFS TO AVERAGE LOANS   (Gross chargeoffs less recoveries)/
                            				   Average net loans 

NONPERFORMING LOANS AS A           (Nonaccrual loans plus loans past 
PERCENTAGE OF PERIOD END LOANS     due 90 days or greater plus other 
                            				   real estate owned)/Gross loans net 
                             			   of unearned interest 

ALLOWANCE FOR LOAN LOSSES TO       Allowance for loan losses/Gross 
PERIOD END TOTAL LOANS             loans net of unearned interest 





PRESIDENT'S LETTER TO SHAREHOLDERS


  This report presents Peoples Bancorp's 1996 results.  As you
can see by the financial highlights on page 13, it was a record
year for your Company in terms of growth and profitability. 
During 1996, we reinforced our commitment to total shareholder
return and as a direct result, earnings per share reached record
highs. 

  At Peoples Bancorp, we value consistency.  1996 marks the 23rd
consecutive year of increased earnings, with total net income of
$7,651,000, an increase of 26.5% compared to 1995.  Earnings per
share reached $2.18, up $0.46 over 1995's $1.72.  Dividends per
share continued to grow, reaching $0.65 per share in 1996, an
increase of $0.09 per share (or 16.1%) compared to 1995. 
Peoples Bancorp also declared a 10% stock dividend to
shareholders of record on July 15, 1996.

  Earnings in 1995 were affected by expenses related to a
voluntary early retirement program offered to qualified
employees.  Our existing employees accepted the challenge to
remain the financial services leader in our markets despite the
loss of many valued, experienced associates.  Our workforce
should be commended for a job well done.

           	      www.peoplesbancorp.com  
  
  The language of business has certainly changed over the past 
several years.  Financial products and their delivery systems 
have revolutionized the banking industry.  Peoples Bancorp's 
web site attracts many information seekers each day.  
The "Information Age" has arrived.  A variety of industries 
have discovered their customers want products or information 
readily accessible when it's convenient for the customer.  

  Banking is no different.  24-hour banking could become an
industry standard and electronic banking is certainly the wave
of the future.  Who could have predicted that Peoples Bancorp
could be accessed worldwide from your telephone?  From a
computer?  From your own home?  Regardless of the method of
communication, one key remains:  to be successful, we must be
able to understand our customer's diversified needs and provide
financial services or products to satisfy those needs.  Peoples
Bancorp must provide communication systems that enable prompt
professional delivery of information that meets customer needs.

  We have learned many things over the years, but one principle
remains constant:  change.  The ability to adapt to shifting
customer needs and preferences provides the base for consistent
return to investors.  Peoples Bancorp has come a long way from
the origin of the Company in 1902, capitalized for $100,000 and
serving a handful of customers from a single location.  That
initial investment by the founders of The Peoples Banking and
Trust Company in Marietta, Ohio, has blossomed into Peoples
Bancorp, a multi-bank holding company with 19 locations and over
$600 million in assets, $56 million in equity, and thousands of
customers in locations both near and far.

  In effect, Peoples Bancorp is striving towards operation of a
"multi-tiered business" offering "traditional" banking products
such as deposits, loans, trust services, etc., and
"non-traditional" products, including annuities, life insurance,
property and casualty insurance, etc.  In time, all of these
products will become traditional banking products, but today, we
recognize the importance of managing this delicate balance as
our markets change.

  In order to provide competitive shareholder return, Peoples
Bancorp must be an efficient financial service provider.  We
must partner with our customers to provide distinct financial
services through committed, highly-trained, educated resources. 
We strive to be both revolutionary in our thinking and reactive
in our methods.

  Revolutionary thinking can be defined as "bringing about a
major or fundamental change" and Peoples Bancorp has broadened
our financial service offering through insurance products and
electronic delivery methods.

  In order to be reactive, one must have an ear to the ground. 
Peoples Bancorp strives to be aware of customer needs through an
open line of communication (TeleBank, the Internet, etc.) and
work to recognize opportunities to be a full-service financial
institution.  We realize that customer satisfaction is never a
finished job and that we must communicate this special
relationship to customers.

  Recently we initiated a strategy to increase shareholder return
through enhanced operating efficiency.  I am pleased to report
Peoples Bancorp achieved substantial improvement in 1996, as the
Company's efficiency ratio totaled 53.89% compared to 57.62% in
1995.  We will surely be challenged by our shareholders and 
competitors to continue to improve operating efficiency in 
1997 and beyond.  It is not Peoples Bancorp's strategy 
to be simply efficient, because improved operational 
effectiveness is not enough in a highly competitive industry
such as banking.  Continuous improvement is needed and our
associates are committed to enhanced operating efficiency
through investments in technology and education. 

  In addition to enhanced operating efficiencies, Peoples Bancorp
obtained significant growth in 1996 through the acquisition of
three full-service offices in Pomeroy, Gallipolis, and Rutland. 
In addition to providing nearly $75 million in deposits, these
offices provided many bankers with strong experience and
extended our market penetration in southeastern Ohio.

  In addition to deposit growth, loan demand continues to be
strong in the markets we serve.  Total loans grew nearly $43
million in 1996 to over $422 million.  Our lenders believe
investment in our communities is an integral part of the role of
today's financial institution.

  Effective January 1, 1997, we completed the acquisition of
Russell Federal Savings Bank in northeast Kentucky. 
Russell Federal represents our first whole-bank acquisition
since 1987 (First National Bank of Chesterhill, now under our
First National Bank of Southeastern Ohio subsidiary) and Peoples
Bancorp's first ever purchase of a federally chartered savings
bank.  At the time of purchase, Russell Federal owned
approximately $28 million in assets and had over $8 million in
equity.  We are excited by the many customer service
opportunities in the tri-state areas of Ohio, Kentucky, and West
Virginia, and proud to have Russell Federal affiliated with
Peoples Bancorp.

  More recently we announced intentions to acquire a full-service
branch office in Baltimore, Ohio, from an unaffiliated financial
institution.  This central Ohio location will complement the
existing loan production office in neighboring Licking County
and provide Peoples Bank with approximately $17 million in
deposits.  The transaction is expected to be completed in the
first quarter and extend market penetration by Peoples Bank in
central Ohio, one of the fastest growing economic sectors in the
state.

  Peoples Bancorp's strategy evolves from the expansion of our
current markets, penetrating Ohio, West Virginia, and Kentucky
with our wide variety of financial products.  Peoples Bancorp
will continue to make acquisitions in markets that complement
our existing markets and expanding product mix.  With the rise
in electronic banking services, banking has no geographical
boundaries, but it remains important to take care of those
markets where we have developed long-term relationships.

  In 1997, we adopted an incentive plan specifically designed to
reward our associates for increasing shareholder value.  We
believe our associates are stakeholders in the Company and
should share the same competitive goals as our owners.  Peoples
Bancorp is committed to the growth and development of our
customers and their communities.  Through this incentive plan,
we will strive to position ourselves as the financial services
leader in the markets we serve with our wide variety of
products, concentrating on delivering needed services at a fair
return for our shareholders.

  The increased use of technology will allow our associates to
identify creative methods to serve our customers.  Our
Company-wide electronic communication network increases the
power of shared information and leverages our associates to
efficiently serve customers.  Our homepage on the Internet
provides instant information to customers and investors from the
convenience of a computer.  We welcome your comments and
appreciate any feedback you may provide concerning our available
information - both financial services/products and investor
relations.

  We want to give special recognition to James B. Stowe, who
joins our Emeritus Director group upon completion of his active
director term at the Annual Meeting.  Jim has been a Director of
Peoples Bancorp continuously since its organization in 1980.  He
has also served the Company as a Chairman of the Audit Committee
for many years.  Mr. Stowe is also a Director of The Peoples
Banking and Trust Company, having served for more than 26 years.
His attention to customer service and business development has
continually kept us focused on satisfying our customers' needs. 
His contribution as a Director, customer, stockholder, and
friend continues to benefit us all.

  We remain committed to positioning the Company for future
growth through continuous improvements in operating efficiency,
growth through internal means or acquisition, investments in
technology designed to enhance the customer service process, and
continued sales and marketing activities.  We invite you to
enjoy the benefits of Peoples Bancorp's many financial services.

                             				Sincerely,

                             				/s/ ROBERT E. EVANS
                             				Robert E. Evans
                             				President and Chief Executive Officer



SELECTED FINANCIAL DATA            


  The information below under the captions "Operating
Data", "Balance Sheet Data" and "Per Share Data" for each of the
five years in the period ended December 31, 1996 has been
derived from the Consolidated Financial Statements of the
Company.                                                        


                  (Dollars in thousands, except ratios and per share data)
                     			    1996      1995      1994      1993      1992   

OPERATING DATA <1>                                                         
FOR THE YEAR ENDED:                                                  
Total interest income     $ 47,397  $ 43,068  $ 35,801  $ 35,086  $ 37,505  
Total interest expense      21,966    20,777    15,424    15,263    17,887  
Net interest income         25,431    22,291    20,377    20,048    19,820  
Provision for loan losses    1,965     1,315       765     1,592     2,387   
Other income                 5,178     4,481     4,141     4,177     3,716   
Other expenses              17,522    16,818    15,672    15,124    14,945  
Net income                   7,651     6,050     5,748     5,071     4,550   

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

BALANCE SHEET DATA                                                     
AT YEAR END:
Total assets              $616,635  $543,430  $498,006  $465,373  $468,562    
Investment securities      147,783   131,762    99,419   103,349   112,556   
Net loans                  415,540   372,800   354,570   315,305   285,448    
Total deposits             504,692   429,077   403,819   385,639   401,623   
Long-term borrowings        29,200    23,142    23,787    20,331    15,506  
Stockholders' equity        56,193    51,474    45,635    42,778    38,497  

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

SIGNIFICANT RATIOS <1>,<2>                                               
Net income to:                                                            
 Average total assets         1.29%     1.15%     1.20%     1.09%     1.01% 
 Average stockholders' 
  equity                      14.4      12.3      12.9      11.9      11.8    
Average stockholders' 
 equity to average 
 total assets                  8.9       9.3       9.3       8.8       7.5      
Average loans to 
 average deposits             84.0      85.2      85.5      78.4      70.2    
Primary capital to 
 period end total assets       9.2      10.4      10.1      10.1       8.9    
Dividend payout ratio         29.3      32.2      29.3      29.8      28.0    

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

PER SHARE DATA <1>,<2>,<3>                                              
Net income:                                                        
 Primary                  $   2.20  $   1.73  $   1.63  $   1.50  $   1.41    
 Fully diluted <4>            2.18      1.72      1.63      1.48      1.32
Cash dividends paid           0.65      0.56      0.48      0.43      0.40   
Book value at 
 end of period               16.32     15.04     13.01     12.15     11.42  

- --------------------------------------------------------------------------  
															
Notes:                                                                          

<1> 1993 net income and per share information based upon net
    income after adjustment for cumulative effect of accounting     
    changes of $314,000 or $0.09 per share.
									       
<2> Adjusted to reflect a 10% stock dividend issued July 15,
    1996, a 10% dividend issued October 25, 1995, a two-for-one
    stock split issued April 29, 1994, and a 10% stock
    dividend issued April 15, 1993.                                   

                     			  1996       1995       1994       1993       1992 
<3> Primary shares 
     outstanding        3,480,999  3,498,955  3,520,337  3,384,796  3,223,079 
    Fully diluted shares 
     outstanding        3,506,996  3,519,124  3,523,812  3,438,808  3,557,184 

<4> Fully diluted net income per share for 1993 and 1992 is
    calculated as if the Subordinated Convertible Debenture were    
    converted as of the issue date, with a corresponding increase 
    from the after-tax reduction in interest expense.            

 
 
COMMON STOCK 


Return to Investors
- -------------------
  The Company's goal is to become the financial services leader in
all the communities we serve.  Achieving this objective will
lead to increases in shareholder value, the most important
measure of our financial success.  Peoples Bancorp's strong
capital base ensures the Company's safety and allows opportunity
for growth and expansion.  Shareholder return on this investment
continues to be a top priority, through both dividends and
growth in the market value of the Company's stock. 

  Management focuses on several key ratios that define our
dedication to shareholder return.  We concentrate on earnings
per share, return on shareholders' equity, and dividends per
share.  Enhancement of net income and profitability through
increased efficiencies are major Company goals, as well as
positioning the Company for increased future profits.  Under
normal circumstances, as earnings per share increase, the
dividends paid per share should follow with a similar increase
and have a positive effect on the market value of the Company's
common stock.  Our associates are committed to enhancing the
total return to our shareholders and the following graphs
illustrate our commitment.

  In the last five years, the Company's earnings per share have
grown by a compound annual average rate of 10.6%.  Net income
per share reached $2.18 in 1996.  Through investments in
technology, the Company has gained efficiencies to enhance
overall performance.  Increases in net interest income and other
income streams (such as income generated in our Investment and
Trust Division) have also contributed to the profitability of
the Company. 

  In addition to increasing shareholder wealth through growth in
stock price, we believe a competitive dividend rate is also
important to the overall return to our shareholders.  In the
last five years, the compound annual average growth rate of the
Company's per share dividend was 10.2%.  The Company has paid
cash dividends on its Common Stock for over 40 consecutive years
and has increased the annual dividend in each of the last 31
years.  The Company plans to continue to pay quarterly cash
dividends, subject to certain regulatory restrictions as
described in Note 11 to the audited financial statements. 

  In recent years the financial services industry has emphasized
return on shareholders' equity (or "ROE") as a means of
measuring an entity's performance.  Recently the Company has
implemented several strategic initiatives designed to increase
ROE.  The graph to the right shows the significant increase in
ROE in 1996 for the Company.  Management will continue to
emphasize this ratio in the future as a method of maximizing the
return on our shareholders' investment. 

       	  Earnings      Dividends       Return on Average
       	  per share     per share     Shareholders' Equity
       	  ---------     ---------     --------------------
1992        $1.32         $0.40              12.77%
1993         1.48          0.43              12.45
1994         1.63          0.48              12.94
1995         1.72          0.56              12.33
1996         2.18          0.65              14.43


  Since February 9, 1993, the Company's common stock has traded on
the Nasdaq National Stock Market (National Association of
Securities Dealers Automated Quotation).  Nasdaq provides
brokers and others with immediate access to the best stock price
for the Company and thousands of other companies across the
world.  The Company's symbol is PEBO.  In 1996, the Company also
created a web site at address www.peoplesbancorp.com., where the
Company's information can be accessed electronically.  In 1996,
there were 309,076 shares traded through the Nasdaq system, an
average daily volume of 1,206 shares.  The table below sets forth 
the high and low bid quotations for the indicated periods, and the 
cash dividends declared, with respect to the Company's Common Stock.

  Currently seven companies serve as market makers on the Nasdaq
National Stock Market on behalf of the Company.  Market prices
have been obtained directly from the Nasdaq quotation system. 
The bid quotations and per share dividends have been
retroactively adjusted for a 10% stock dividend issued on July
15, 1996, a 10% stock dividend issued on October 25, 1995 and a
two-for-one stock split issued on April 29, 1994.  Peoples
Bancorp had 1,072 stockholders of record on December 31, 1996.


Quarterly Market and Dividend Information
- -----------------------------------------
                            				      PER SHARE                       
              		       High Bid        Low Bid         Dividend 

  1996                                                           
Fourth Quarter         $ 28.00         $ 23.75         $  0.17 
Third Quarter            24.00           21.02            0.17 
Second Quarter           21.36           20.91            0.15 
First Quarter            21.59           20.91            0.15 

- --------------------------------------------------------------------------  
 
  1995                                                           
Fourth Quarter         $ 21.48         $ 20.23         $  0.15 
Third Quarter            20.66           18.18            0.14 
Second Quarter           20.05           18.18            0.14 
First Quarter            20.66           18.59            0.14 

- --------------------------------------------------------------------------
								 
  1994                                                            
Fourth Quarter         $ 21.07         $ 19.22         $  0.13 
Third Quarter            20.25           18.18            0.13 
Second Quarter           19.84           16.53            0.12 
First Quarter            18.59           15.70            0.12 

- --------------------------------------------------------------------------   
								
  
  The following graph presents the closing stock price of the
Company's common stock for each of the last five years (adjusted
for stock splits and stock dividends):

      	       Closing Stock Price
	             -------------------
1992                 $14.65
1993                  17.25
1994                  19.84
1995                  21.48
1996                  26.50


  Stockholders are cordially invited to attend the Annual Meeting
of Stockholders of Peoples Bancorp Inc. to be held Thursday,
April 10, 1997 at 10:00 A.M. in the Peoples Bank Conference
Room, 138 Putnam Street, Marietta, Ohio.  

  On written request, a copy of our Annual Report to the
Securities and Exchange Commission on Form 10-K is available to
interested Stockholders.  Requests should be addressed to Ruth
Otto, Corporate Secretary, Peoples Bancorp Inc., P.O. Box 738,
Marietta, Ohio 45750. 


CONSOLIDATED BALANCE SHEETS    

                                            						   December 31,        
			                                    		       1996             1995
Assets 
- ------
Cash and cash equivalents:                                       
 Cash and due from banks                   $ 26,200,000     $ 17,251,000 
 Interest-bearing deposits in other banks       217,000          243,000 
 Federal funds sold                           2,100,000        3,500,000 
					                                      ------------     ------------
    Total cash and cash equivalents          28,517,000       20,994,000 
					                                      ------------     ------------
Available-for-sale investment securities, 
 at estimated fair value (amortized cost                                    
 of  $145,619,000 in 1996 and 
 $128,021,000 in 1995)                      147,783,000      131,762,000 
                                   					   ------------     ------------
Loans, net                                  422,413,000      379,526,000 
Allowance for loan losses                    (6,873,000)      (6,726,000) 
                                   					   ------------     ------------
    Net loans                               415,540,000      372,800,000 
                                   					   ------------     ------------
Bank premises and equipment, net             11,508,000       10,575,000 
Other assets                                 13,287,000        7,299,000 
                                   					   ------------     ------------
     Total assets                          $616,635,000     $543,430,000 
                                   					   ============     ============
Liabilities                                      
- -----------
Deposits:                                        
 Non-interest bearing                      $ 63,410,000     $ 50,067,000 
 Interest bearing                           441,282,000      379,010,000 
                                   					   ------------     ------------
    Total deposits                          504,692,000      429,077,000 
                                   					   ------------     ------------
Short-term borrowings:                                   
 Federal funds purchased and securities 
 sold under repurchase agreements            17,022,000       12,060,000 
 Federal Home Loan Bank advances              2,500,000       21,216,000 
                                   					   ------------     ------------
    Total short-term borrowings              19,522,000       33,276,000 
                                   					   ------------     ------------
Long-term borrowings                         29,200,000       23,142,000 
Accrued expenses and other liabilities        7,028,000        6,461,000 
                                   					   ------------     ------------
      Total liabilities                     560,442,000      491,956,000 
                                   					   ------------     ------------
Stockholders' Equity                                     
- --------------------
Common stock, no par value, 6,000,000 
 shares authorized - 3,445,075 shares 
 issued in 1996 and 3,332,598 issued in
 1995, including shares in treasury          34,349,000       30,898,000 
Net unrealized holding gain on 
 available-for-sale securities,
 net of deferred taxes                        1,428,000        2,469,000 
Retained earnings                            20,470,000       21,786,000 
                                    				   ------------     ------------
                                   					     56,247,000       55,153,000 
Treasury stock, at cost, 2,000 shares 
 in 1996 and 220,406 shares in 1995             (54,000)      (3,679,000) 
                                   					   ------------     ------------
    Total stockholders' equity               56,193,000       51,474,000 
                                   					   ------------     ------------
    Total liabilities and 
     stockholders' equity                  $616,635,000     $543,430,000 
                                   					   ============     ============

See notes to consolidated financial statements.



CONSOLIDATED STATEMENTS OF INCOME      

                                   					  Year ended December 31,               
                            				      1996          1995          1994 
Interest Income:                                                                
- ----------------
 Interest and fees on loans        $37,140,000   $34,177,000   $28,545,000 
 Interest and dividends on:                                             
  Obligations of U.S. 
   Government and its agencies       7,205,000     5,338,000     4,266,000 
  Obligations of states and 
   political subdivisions            1,402,000     1,543,000     1,613,000 
  Other interest income              1,650,000     2,010,000     1,377,000 
                            				   -----------   -----------   -----------
    Total interest income           47,397,000    43,068,000    35,801,000 
                            				   -----------   -----------   -----------
Interest Expense:                                                               
- -----------------
 Interest on deposits               18,880,000    18,384,000    13,616,000 
 Interest on short-term 
  borrowings                         1,449,000     1,010,000       337,000 
 Interest on long-term 
  borrowings                         1,637,000     1,383,000     1,471,000 
                            				   -----------   -----------   -----------
    Total interest expense          21,966,000    20,777,000    15,424,000 
                            				   -----------   -----------   -----------
    Net interest income             25,431,000    22,291,000    20,377,000 

  Provision for loan losses          1,965,000     1,315,000       765,000 
                            				   -----------   -----------   -----------
    Net interest income after 
     provision for loan losses      23,466,000    20,976,000    19,612,000 
                            				   -----------   -----------   -----------

Other Income:                                                           
- -------------
 Income from fiduciary activities    1,897,000     1,751,000     1,607,000 
 Service charges on deposit 
  accounts                           1,937,000     1,565,000     1,456,000 
 Gain (loss) on sales of 
  securities                            48,000        24,000      (237,000) 
 Other                               1,296,000     1,141,000     1,315,000 
                            				   -----------   -----------   -----------
    Total other income               5,178,000     4,481,000     4,141,000 
                            				   -----------   -----------   -----------

Other Expenses:                                                                 
- ---------------
 Salaries and employee benefits      7,514,000     7,836,000     6,779,000 
 Net occupancy                       1,193,000     1,126,000     1,040,000 
 Equipment                           1,329,000     1,241,000     1,205,000 
 Insurance                             175,000       656,000     1,038,000 
 Supplies                              713,000       572,000       619,000 
 Taxes other than income taxes         833,000       588,000       575,000 
 Amortization of excess cost 
  over net assets acquired             419,000       159,000       159,000 
 Other                               5,346,000     4,640,000     4,257,000 
                            				   -----------   -----------   -----------
    Total other expenses            17,522,000    16,818,000    15,672,000 
                            				   -----------   -----------   -----------
Income before federal income taxes  11,122,000     8,639,000     8,081,000 
                            				   -----------   -----------   -----------
Federal Income Taxes:                                                  
- ---------------------
 Current                             3,303,000     2,792,000     2,330,000 
 Deferred                              168,000      (203,000)        3,000 
                            				   -----------   -----------   -----------
    Total federal income taxes       3,471,000     2,589,000     2,333,000 
                            				   -----------   -----------   -----------
NET INCOME                         $ 7,651,000   $ 6,050,000   $ 5,748,000 
                            				   ===========   ===========   ===========

Earnings per share:                                                             
- -------------------
 Primary                                 $2.20         $1.73         $1.63 
 Assuming full dilution                  $2.18         $1.72         $1.63 


Weighted average number of shares outstanding:                           
- ----------------------------------------------
 Primary                             3,480,999     3,498,955     3,520,337 
 Assuming full dilution              3,506,996     3,519,124     3,523,812 


See notes to consolidated financial statements.



<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY       

<CAPTION>
                                                                   					Net
                                                               									Unrealized
                                                                								Holding
                                                               									Gain (Loss)
									                                                               on
				                                                               					Available-
                              	 Common Stock              Retained      for-Sale      Treasury			           
                               	Shares      Amount        Earnings      Securities    Stock          Total
<S>                             <C>         <C>           <C>           <C>           <C>            <C>
- ----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993      1,509,540   $24,290,000   $20,012,000                 $(1,524,000)   $42,778,000 
- ----------------------------------------------------------------------------------------------------------------
Adjustment for change in method                                                                                          
 of accounting, net of taxes                                            $ 3,048,000                    3,048,000 
Net income                                                  5,748,000                                  5,748,000 
Purchase of treasury stock,                                                                                      
 10,488 shares                                                                           (215,000)      (215,000) 
Two-for-one stock split         1,509,540                                                                                
Exercise of common 
 stock options                        520         5,000                                                    5,000 
Issuance of common stock under                                                                                   
 dividend reinvestment plan         1,308        31,000                                                   31,000 
Net change in unrealized 
 gain (loss) on available-
 for-sale securities                                                     (4,078,000)                  (4,078,000) 
Cash dividends declared                                                                                          
 of $0.48 per share                                        (1,682,000)                                (1,682,000) 
- ----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994      3,020,908    24,326,000    24,078,000    (1,030,000)   (1,739,000)    45,635,000 
- ----------------------------------------------------------------------------------------------------------------
Net income                                                  6,050,000                                  6,050,000 
Purchase of treasury stock,                                                                                      
 87,340 shares                                                                         (1,940,000)    (1,940,000) 
10% stock dividend               302,470      6,394,000                                               (6,394,000)           
Exercise of common 
 stock options                     2,722         26,000                                                   26,000 
Issuance of common stock under                                                                                   
 dividend reinvestment plan        6,498        152,000                                                  152,000 
Net change in unrealized 
 gain (loss) on available-
 for-sale securities                                                      3,499,000                    3,499,000 
Cash dividends declared                                                                                          
 of $0.56 per share                                        (1,948,000)                                (1,948,000) 
- ----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995      3,332,598    30,898,000    21,786,000     2,469,000    (3,679,000)    51,474,000 
- ----------------------------------------------------------------------------------------------------------------
Net income                                                  7,651,000                                  7,651,000 
Purchase of treasury stock,                                                                                      
 14,000 shares                                                                           (332,000)      (332,000) 
10% stock dividend (reissued                                                                                     
 226,989 treasury shares)          85,468     2,871,000    (6,727,000)                  3,856,000                
Exercise of common stock                                                                                         
 options (reissued 5,417                                                                                     
 treasury shares)                  16,434       330,000                                   101,000        431,000 
Issuance of common stock under                                                                                   
 dividend reinvestment plan        10,575       250,000                                                  250,000
Net change in unrealized 
 gain (loss) on available-
 for-sale securities                                                     (1,041,000)                  (1,041,000)
Cash dividends declared                                                                                          
 of $0.65 per share                                        (2,240,000)                                (2,240,000) 
- ----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996      3,445,075   $34,349,000   $20,470,000   $ 1,428,000   $   (54,000)   $56,193,000 
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.



CONSOLIDATED STATEMENTS OF CASH FLOWS         
					  
                                 					    Year ended December 31,      
				                                  1996          1995          1994 
Cash flows from operating activities:                             
- -------------------------------------
 Net income                        $ 7,651,000   $ 6,050,000   $ 5,748,000 
 Adjustments to reconcile net 
  income to net cash provided   
  by operating activities:                                                  
   Provision for loan losses         1,965,000     1,315,000       765,000 
   (Gain) loss on sale of 
    investment securities              (48,000)      (24,000)      237,000 
   Depreciation, amortization, 
    and accretion                    2,068,000     1,564,000     1,884,000 
   Increase in interest receivable     (31,000)     (480,000)          
   Increase in interest payable        486,000       238,000       185,000 
   Deferred income tax expense 
    (benefit)                          168,000      (203,000)        3,000 
   Deferral of loan origination 
    fees and costs                      73,000        17,000       410,000 
   Other, net                          820,000       896,000       (91,000) 
- --------------------------------------------------------------------------
      Net cash provided by 
       operating activities         11,512,000     9,373,000     9,141,000 
- --------------------------------------------------------------------------
						 
Cash flows from investing activities:                                     
- -------------------------------------
 Purchases of available-for-sale 
  securities                       (45,240,000)  (52,955,000)  (35,659,000) 
 Purchases of held-to-maturity 
  securities                                      (1,230,000)   (4,409,000) 
 Proceeds from sales of 
  available-for-sale securities      5,522,000     1,066,000    23,072,000 
 Proceeds from maturities of 
  available-for-sale securities     22,034,000    25,337,000    16,479,000 
 Proceeds from maturities of 
  held-to-maturity securities                        803,000     2,025,000 
 Net increase in loans             (44,504,000)  (19,562,000)  (40,576,000) 
 Expenditures for premises 
  and equipment                     (1,773,000)   (1,122,000)   (1,142,000) 
 Proceeds from sales of 
  other real estate owned                             77,000       137,000 
 Purchase of branches, 
  net of cash received              68,004,000      
- --------------------------------------------------------------------------
      Net cash used in 
       investing activities          4,043,000   (47,586,000)  (40,073,000) 
- --------------------------------------------------------------------------

Cash flows from financing activities:                           
- -------------------------------------
 Net increase in non-interest 
  bearing deposits                   8,393,000     1,946,000     3,016,000 
 Net (decrease) increase in 
  interest bearing deposits         (6,894,000)   23,312,000    15,164,000 
 Net (decrease) increase in 
  short-term borrowings            (13,754,000)   13,509,000     7,507,000 
 Proceeds from long-term 
  borrowings                        10,500,000     2,500,000     7,700,000 
 Payments on long-term 
  borrowings                        (4,442,000)   (3,145,000)   (4,244,000) 
 Cash dividends paid                (1,934,000)   (1,702,000)   (1,623,000) 
 Purchase of treasury stock           (332,000)   (1,940,000)     (215,000) 
 Proceeds from issuance of 
  common stock                         431,000        26,000         5,000 
- --------------------------------------------------------------------------
      Net cash (used in) provided 
       by  financing activities     (8,032,000)   34,506,000    27,310,000 
- --------------------------------------------------------------------------
      Net increase (decrease) in 
       cash and cash equivalents     7,523,000    (3,707,000)   (3,622,000) 

Cash and cash equivalents 
 at beginning of year               20,994,000    24,701,000    28,323,000 
- --------------------------------------------------------------------------
      Cash and cash equivalents 
       at end of year              $28,517,000   $20,994,000   $24,701,000 
==========================================================================

Supplemental cash flow information:                            
 Interest paid                     $21,757,000   $20,540,000   $15,239,000 
 Income taxes paid                 $ 3,832,000   $ 2,364,000   $ 2,383,000 


See notes to consolidated financial statements.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS   
- ----------------------------------------------

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

  The accounting and reporting policies of Peoples Bancorp Inc.
and Subsidiaries (the "Company") conform to generally accepted
accounting principles and to general practices within the
banking industry.  The Company considers all of its principal
activities to be banking related.  The preparation of the
financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes.  Actual results could differ
from those estimates.  The following is a summary of significant
accounting policies followed in the preparation of the financial
statements.  Certain amounts in the 1995 and 1994 financial
statements have been reclassified to conform to the 1996
presentation.

Principles of Consolidation:
- ----------------------------
  The consolidated financial statements include the accounts of
Peoples Bancorp Inc. and its wholly-owned subsidiaries.  All
significant intercompany accounts and transactions have been
eliminated.

Cash and Cash Equivalents:
- --------------------------
  Cash and cash equivalents include cash and due from banks,
interest bearing deposits in other banks, and federal funds
sold, all with original maturities of ninety days or less.

Investment Securities:
- ----------------------
  Management determines the appropriate classification of
investment securities at the time of purchase.  Held-to-maturity
securities are those securities that the Company has the
positive intent and ability to hold to maturity and are recorded
at amortized cost.  Available-for-sale securities are those
securities that would be available to be sold in the future in
response to the Company's liquidity needs, changes in market
interest rates, and asset-liability management strategies, among
others.  Available-for-sale securities are reported at fair
value, with unrealized holding gains and losses reported in a
separate component of stockholders' equity, net of applicable
deferred income taxes.  The cost of securities sold is based on
the specific identification method.

Allowance for Loan Losses:
- --------------------------
  The allowance for loan losses is maintained at a level believed
adequate by management to absorb potential losses in the loan
portfolio.  Management's determination of the adequacy of the
allowance for loan losses is based on a quarterly evaluation of
the portfolio, historical loan loss experience, current national
and local economic conditions, volume, growth and composition of
the portfolio, and other relevant factors.

  On January 1, 1995, the Company adopted SFAS  No. 114
"Accounting by Creditors for Impairment of a Loan", as amended
by SFAS No. 118.  The allowance for loan losses related to loans
that are identified for evaluation in accordance with SFAS No.
114 is based on discounted cash flows using the loan's initial
effective interest rate or the fair value of the collateral for
certain collateral dependent loans.  Prior to the adoption of
SFAS No. 114, the allowance for loan losses related to these
loans was based on undiscounted cash flows or the fair value of
the collateral on collateral dependent loans.  The adoption of this
standard did not have a material effect on the Company's
financial position, results of operations, accounting policies,
or the determination of the adequacy of the allowance for loan
losses.  Impaired loans at December 31, 1996 and 1995 and the
average investment in impaired loans for the year then ended
were immaterial to the financial statements.

Bank Premises and Equipment:
- ----------------------------
  Bank premises and equipment are stated at cost less accumulated
depreciation.  Depreciation is computed on the straight-line
method over the estimated useful lives of the related assets.

Other Real Estate:
- ------------------
  Other real estate owned, included in other assets on the
consolidated balance sheet, represents properties acquired by
the Company's subsidiary banks in satisfaction of a loan.  Real
estate is recorded at the lower of cost or fair value based on
appraised value at the date actually or constructively received,
less estimated costs to sell the property.

Intangibles:
- ------------
  Intangible assets representing the present value of future 
net income to be earned from deposits are being amortized 
on an accelerated basis over a ten year period.  The excess 
of cost over the fair value of net assets acquired (goodwill) 
is being amortized on a straight-line basis over a 
ten-year period.

Income Recognition:
- -------------------
  Interest income is recognized by methods which result in level
rates of return on principal amounts outstanding.  Amortization
of premiums has been deducted from and accretion of discounts
has been added to the related interest income.  Nonrefundable
loan fees are deferred and recognized as income over the life of
the loan as an adjustment of the yield.  Subsidiary banks
discontinue the accrual of interest when, in management's
opinion, collection of all or a portion of contractual interest
has become doubtful, which generally occurs when a loan is 90
days past due.  When deemed uncollectible, previously accrued
interest recognized in income in the current year is reversed
and interest accrued in prior years is charged against the
allowance for loan losses.  Interest received on non-accrual
loans is included in income only if principal recovery is
reasonably assured.  A non-accrual loan is restored to accrual
status when it is brought current, has performed in accordance
with contractual terms for a reasonable period of time, and the
collectibility of the total contractual principal and interest
is no longer in doubt.

Income Taxes:
- -------------
  Deferred income taxes (included in other assets) are provided
for temporary differences between the tax basis of an asset or
liability and its reported amount in the financial statements at
the statutory tax rate.  The Company and its banking
subsidiaries file a consolidated federal income tax return and
income tax expense is allocated among all companies on a
separate return basis.

Earnings Per Share:
- -------------------
  Primary and fully diluted earnings per share are computed by
dividing net income by average common shares outstanding during
the year plus the dilutive effect of common stock equivalents. 
Options granted under the Company's stock option plans are
considered common stock equivalents for the purpose of computing
earnings per share.   


2.  FAIR VALUES OF FINANCIAL INSTRUMENTS:

  The following methods and assumptions were used by the Company
in estimating its fair value disclosures for financial
instruments in accordance with SFAS No. 107:

Cash and due from banks, interest bearing deposits in other
banks, and federal funds sold:
- -----------------------------------------------------------
  The carrying amounts reported in the balance sheet for these
captions approximate their fair values.

Investment securities:
- ----------------------
  Fair values for investment securities are based on quoted market
prices, where available.  If quoted market prices are not
available, fair values are estimated using quoted market prices
of comparable securities.

Loans:
- ------
  The fair value of performing variable rate loans that reprice
frequently and performing demand loans, with no significant
change in credit risk, is based on carrying value.  The fair
value of certain mortgage loans is based on quoted market prices
of similar loans sold in conjunction with securitization
transactions, adjusted for differences in loan characteristics. 
The fair value of other performing loans (e.g., commercial real
estate, commercial and consumer loans) is estimated using
discounted cash flow analyses, using interest rates currently
being offered for loans with similar terms to borrowers of
similar credit quality.

  The fair value for significant nonperforming loans is based on
either the estimated fair value of underlying collateral or
estimated cash flows discounted at a rate commensurate with the
risk.  Assumptions regarding credit risk, cash flows, and
discount rates are determined using available market information
and specific borrower information.

Deposits:
- ---------
  The carrying amounts of demand deposits, savings accounts and
certain money market deposits approximate their fair values. 
The fair value of fixed maturity certificates of deposit is
estimated using a discounted cash flow calculation that applies
current rates offered for deposits of similar remaining
maturities.

Short-term borrowings:
- ----------------------
  The carrying amounts of federal funds purchased, Federal Home
Loan Bank advances, and securities sold under repurchase
agreements approximate their fair values.

Long-term borrowings:
- ---------------------
  The fair value of long-term borrowings is estimated using
discounted cash flow analysis based on rates currently available
to the Company for borrowings with similar terms.

Financial instruments:
- ----------------------
  The fair value of loan commitments and standby letters of credit
is estimated using the fees currently charged to enter into
similar agreements taking into account the remaining terms of
the agreements and the counterparties' credit standing.  The
estimated fair value of these commitments approximates their
carrying value.  The fair value of the interest rate floor is
based on quotes from other financial institutions.

  The estimated fair values of the Company's financial instruments
are as follows:

                          				  1996                        1995        
                   			Carrying         Fair       Carrying        Fair
                   			 Amount          Value       Amount         Value
FINANCIAL ASSETS:                                              
Cash and due from 
 banks, interest 
 bearing deposits with 
 other banks, and 
 federal funds sold   $ 28,517,000  $ 28,517,000  $ 20,994,000  $ 20,994,000 
Investment securities  147,783,000   147,783,000   131,762,000   131,762,000 
Loans, net             415,540,000   418,921,000   372,800,000   378,612,000 

FINANCIAL LIABILITIES:                                                 
Deposits               504,692,000   506,039,000   429,077,000   430,184,000 
Short-term borrowings   19,522,000    19,522,000    33,276,000    33,276,000 
Long-term borrowings    29,200,000    29,289,000    23,142,000    23,255,000 

OFF-BALANCE SHEET INSTRUMENTS:                                             
Interest rate floors  $     71,000  $    325,000  $    116,000  $    751,000 


3.  INVESTMENT SECURITIES:

  Effective January 1, 1994, the Company adopted the provisions of
SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities".  The effect of this change in accounting
principle resulted in an unrealized holding gain of $3,048,000
(net of $1,570,000 in deferred income taxes), for securities
classified as available-for-sale effective January 1, 1994, and
has been reflected in a separate component of stockholders'
equity.

  In late 1995, the Financial Accounting Standards Board ("FASB")
issued a Special Report, "A Guide to Implementation of Statement
of Financial Accounting Standards ("SFAS") No. 115 on Accounting
for Certain Investments in Debt and Equity Securities".  In
accordance with provisions in that Special Report, the Company
chose to reclassify all held-to-maturity securities to
available-for-sale.  At the date of transfer the amortized cost
of those securities was $9,644,000 and the unrealized holding
gain, net of deferred income taxes, on those securities was
$271,000, which is included in stockholders' equity.

  The estimated maturities presented in the tables below may
differ from the contractual maturities because borrowers may
have the right to call or prepay obligations without call or
prepayment penalties.  Rates are calculated on a taxable
equivalent basis using a 34% federal income tax rate.  The
portfolio contains no single issue (excluding U.S. Government
and U.S. Agency securities) which exceeds 10% of stockholders'
equity.

Securities classified as available-for-sale
At December 31, 1996:
- -------------------------------------------
                                    					  Gross       Gross 
                     	 		     Amortized  Unrealized  Unrealized     Fair
			                             Cost        Gains      Losses       Value
U.S. Treasury securities 
 and obligations of U.S. 
 government agencies 
 and corporations         $ 41,855,000  $  742,000  $(126,000)  $ 42,471,000 
Obligations of states and  
 political subdivisions     23,949,000     743,000    (36,000)    24,656,000 
Other mortgage-backed 
 securities                 61,197,000     280,000   (697,000)    60,780,000 
Other securities            18,618,000   1,277,000    (19,000)    19,876,000 
                     			  ------------  ----------  ---------   ------------
    Total securities 
     available-for-sale   $145,619,000  $3,042,000  $(878,000)  $147,783,000 
                     			  ============  ==========  =========   ============
   
<TABLE>

MATURITY DISTRIBUTION OF SECURITIES AVAILABLE-FOR-SALE

Contractual maturities at December 31, 1996               

<CAPTION>

		                U.S. Treasury
              		 securities and  Obligations
              		 obligations of   of states                                     Total
              	      U.S.           and          Mortgage-                   available
             		   Government     political        backed        Other         for-sale
	             	    Agencies     subdivisions    securities    securities     securities
<S>               <C>            <C>            <C>            <C>            <C>
Within one year                                                             
- ---------------
Amortized cost    $ 9,492,000    $ 3,560,000    $ 2,582,000    $ 2,499,000    $ 18,133,000 
Fair value        $ 9,553,000    $ 3,601,000    $ 2,568,000    $ 2,535,000    $ 18,257,000 
Yield                    6.98%          8.39%          6.02%          7.03%           7.13% 

1 to 5 years                                                                 
- ------------
Amortized cost     29,029,000      7,456,000     19,587,000      7,008,000      63,080,000 
Fair value         29,371,000      7,727,000     19,720,000      7,072,000      63,890,000 
Yield                    6.83%          8.68%          7.01%          6.78%           7.10% 

5 to 10 years                                                               
- -------------
Amortized cost      3,334,000      7,317,000     22,909,000      1,501,000      35,061,000 
Fair value          3,547,000      7,526,000     22,650,000      1,509,000      35,232,000 
Yield                    7.40%          8.30%          7.17%          7.02%           7.42% 

Over 10 years                                                               
- -------------
Amortized cost                     5,616,000     16,119,000      7,610,000      29,345,000 
Fair value                         5,802,000     15,842,000      8,760,000      30,404,000 
Yield                                   8.41%          7.16%          6.10%           7.12% 
              		  ------------   -----------    -----------    -----------    ------------
Total amortized 
 cost             $41,855,000    $23,949,000    $61,197,000    $18,618,000    $145,619,000 
Total fair value  $42,471,000    $24,656,000    $60,780,000    $19,876,000    $147,783,000 
Total yield              6.91%          8.46%          7.07%          6.55%           7.19% 
              		  -----------    -----------    -----------    -----------    ------------
 
</TABLE>

Securities classified as available-for-sale
At December 31, 1995:
- -------------------------------------------
                                    					  Gross      Gross 
                    			     Amortized   Unrealized  Unrealized     Fair
                     			       Cost        Gains      Losses       Value
U.S. Treasury securities 
 and obligations of U.S.                                      
 government, agencies 
 and corporations         $ 39,242,000  $1,319,000  $ (28,000)  $ 40,533,000 
Obligations of states and 
 political subdivisions     24,879,000     997,000    (16,000)    25,860,000 
Other mortgage-backed 
 securities                 45,465,000     619,000    (68,000)    46,016,000 
Other securities            18,435,000     920,000     (2,000)    19,353,000 
                     			  ------------  ----------  ---------   ------------
    Total securities
     available-for-sale   $128,021,000  $3,855,000  $(114,000)  $131,762,000 
                     			  ============  ==========  =========   ============


Securities classified as available-for-sale
At December 31, 1994:
- -------------------------------------------
                                  				  Gross        Gross 
                  			     Amortized   Unrealized   Unrealized     Fair
                   			       Cost        Gains       Losses       Value
U.S. Treasury securities 
 and obligations of U.S.                                         
 government, agencies 
 and corporations         $32,361,000  $  181,000  $  (585,000)  $31,957,000 
Obligations of states and 
 political subdivisions    21,624,000     312,000     (233,000)   21,703,000 
Other mortgage-backed 
 securities                23,430,000      16,000   (1,535,000)   21,911,000 
Other securities           14,368,000     554,000     (321,000)   14,601,000 
                     			  -----------  ----------  -----------   -----------
    Total securities     
     available-for-sale   $91,783,000  $1,063,000  $(2,674,000)  $90,172,000 
                     			  ===========  ==========  ===========   ===========
								

Securities classified as held-to-maturity
At December 31, 1994:
- -----------------------------------------
                                  					  Gross       Gross 
                  			     Amortized   Unrealized  Unrealized     Fair
                   			       Cost        Gains      Losses       Value
U.S. Treasury securities 
 and obligations of U.S.                                         
 government, agencies 
 and corporations         $ 4,683,000   $  5,000   $ (35,000)   $ 4,653,000 
Obligations of states and 
 political subdivisions     3,414,000     40,000    (123,000)     3,331,000 
Other mortgage-backed 
 securities                   992,000          0     (38,000)       954,000 
Other securities              158,000          0      (7,000)       151,000 
                     			  -----------   --------   ---------    -----------
    Total securities 
     held-to-maturity     $ 9,247,000   $ 45,000   $(203,000)   $ 9,089,000 
                     			  ===========   ========   =========    ===========


  Gross realized gains were $48,000 and $24,000 in 1996 and 1995,
respectively.  Gross realized gains and realized losses were
$126,000 and $363,000, respectively, in 1994.   At December 31,
1996 and 1995, investment securities having a par value of
$88,404,000 and $68,501,000, respectively, were pledged to
collateralize government and trust department deposits in
accordance with federal and state requirements.


4.  LOANS:

  Loans are comprised of the following at December 31:

                                          						1996            1995  
 
Commercial, financial, and agricultural     $127,927,000    $117,306,000 
Real estate, construction                      9,944,000       5,919,000 
Real estate, mortgage                        175,505,000     154,469,000 
Consumer                                     109,037,000     101,832,000 
                                    				    ------------    ------------
    Total loans                             $422,413,000    $379,526,000 
                                   					    ============    ============


  Changes in the allowance for loan losses for each of the three
years in the period ended December 31, 1996, were as     
follows:

                           				  1996          1995         1994 

Balance, beginning of year     $6,726,000    $6,783,000   $6,370,000 
			    
Charge-offs                    (2,329,000)   (1,803,000)  (1,124,000) 
Recoveries                        511,000       431,000      772,000 
                     			       ----------    ----------   ---------- 
  Net charge-offs              (1,818,000)   (1,372,000)    (352,000) 
Provision for loan losses       1,965,000     1,315,000      765,000 
                     			       ----------    ----------   ---------- 
    Balance, end of year       $6,873,000    $6,726,000   $6,783,000 
                     			       ==========    ==========   ==========


  The Company's lending is primarily focused in the local
southeastern Ohio market and consists principally of retail
lending, which includes single-family residential mortgages and
other consumer lending.  The Company's largest group of business
loans consists of automobile dealer floor plans, which totaled
$13,673,000 and $16,455,000 at December 31, 1996 and 1995,
respectively.  It is the Company's policy to obtain the
underlying inventory as collateral on these loans.  The Company
does not extend credit to any single borrower or group of
related borrowers in excess of the combined legal lending limits
of its subsidiary banks.

  In the normal course of its business, the subsidiary banks have
granted loans to executive officers and directors of the Company
and to their associates.  Related party loans were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable loans
with unrelated persons and did not involve more than normal risk
of collectibility.  The following is an analysis of activity of
related party loans for the year ended December 31, 1996:


	Balance, January 1, 1996        $12,255,000 
	    New loans                     9,851,000 
	    Repayments                   13,653,000 
                            					-----------
	Balance, December 31, 1996      $ 8,453,000 
                            					===========

  In June 1996, the FASB issued Statement No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" which is applicable to the Company effective
January 1, 1997.  However, in December 1996, the FASB agreed to
defer the effective date for one year for the following
transactions:  securities lending, repurchase agreements, dollar
rolls and other similar secured transactions.  The delay in
implementation was necessary to allow companies to overcome
technological problems in their systems which would create
control and accountability issues.  Statement No. 125
establishes standards for determining whether certain transfers
of financial assets should be considered sales of all or part of
the assets or secured borrowings.  Statement No. 125 also
establishes standards for settlements of liabilities through the
transfer of assets to a creditor or obtaining an unconditional
release and whether these settlements should prove the debt
extinguished.  The adoption of Statement No. 125 is not expected
to have a material effect on the Company's financial statements.


5.  BANK PREMISES AND EQUIPMENT:

  The major categories of bank premises and equipment and
accumulated depreciation are summarized as follows at December 31:

                                  					  1996               1995 

Land                                  $ 1,836,000        $ 1,607,000 
Building and premises                  11,299,000         10,341,000 
Furniture, fixtures and equipment       8,162,000          7,274,000 
                            				      -----------        ----------- 
                            				       21,297,000         19,222,000 
  Accumulated depreciation              9,789,000          8,647,000 
                            				      -----------        -----------
Net book value                        $11,508,000        $10,575,000 
                            				      ===========        ===========
 
  Depreciation expense was $1,358,000, $1,230,000, and $1,110,000
for the years ended December 31, 1996, 1995 and 1994,
respectively.

  The Company leases a banking facility and equipment under
various agreements with original terms providing for fixed
monthly payments over periods ranging from two to ten years. 
The future minimum payments, by year and in the aggregate, under
noncancelable operating leases with initial or remaining terms
of one year or more consisted of the following at December 31,
1996:

	   Year Ending December 31,         Operating Leases 
	   
	   1997                                 $192,000 
	   1998                                  182,000 
	   1999                                  116,000 
	   2000                                   48,000 
	   2001                                   34,000 
	   Thereafter                             54,000 
                                   						--------
	     Total minimum lease payments       $626,000 
                                    					========
  
  Rent expense was $150,000, $170,000 and $181,000 in 1996, 1995
and 1994, respectively.


6.  DEPOSITS:

  Deposits from related parties approximated $6.2 million and $9.4
million at December 31, 1996 and 1995, respectively.  Included
in interest-bearing deposits are various time deposit products. 
The maturities of time deposits for each of the next five years
and thereafter are as follows:  $160,204,000 in 1997, $45,814,
000 in 1998; $28,589,000 in 1999; $5,725,000 in 2000; $6,183,000
in 2001; and $1,976,000 thereafter.


7.  LONG-TERM BORROWINGS:

  Long-term borrowings consisted of the following at December 31:

                           				      1996             1995 

Term note payable, at prime                        $ 1,560,000 
Federal Home Loan Bank advances, 
 bearing interest at rates                              
 ranging from 4.15% to 7.00%      $29,200,000       21,582,000 
                            				  -----------      -----------
    Total long-term borrowings    $29,200,000      $23,142,000 
                            				  ===========      ===========    


  The Federal Home Loan Bank ("FHLB") advances consist of various
borrowings with maturities ranging from 10 to 15 years.  The
advances are collateralized by the Company's real estate
mortgage portfolio and all of the FHLB common stock owned by the
banking subsidiaries.  The most restrictive requirement of the
debt agreement requires the Company to provide real estate
mortgage loans as collateral in an amount not less than 150% of
advances outstanding.

  The aggregate minimum annual retirements of long-term borrowings
in the next five years and thereafter are as follows:

              		      1997                5,802,000 
              		      1998                8,125,000 
              		      1999                2,681,000 
              		      2000                2,752,000 
              		      2001                2,837,000 
              		      Thereafter          7,003,000 
                                   					-----------
      Total long-term borrowings        $29,200,000 
                                    				===========


8.  EMPLOYEE BENEFIT PLANS:

  The Company has a noncontributory defined benefit pension plan
which covers substantially all employees.  The plan provides
benefits based on an employee's years of service and
compensation.  The Company's funding policy is to contribute
annually an amount that can be deducted for federal income tax
purposes.

  Net pension cost included the following components:

                            				  1996         1995         1994 

Service cost-benefits 
 earned during the year         $248,000    $  254,000    $260,000 
Interest cost on projected 
 benefit obligations             416,000       444,000     401,000 
Actual return on plan assets    (635,000)     (831,000)   (414,000) 
Early retirement benefits                      777,000                         
Net amortization and deferral    220,000       381,000     (13,000) 
                              		--------    ----------    --------
    Net pension cost            $249,000    $1,025,000    $234,000 
                            				========    ==========    ========


  The following table sets forth the funded status and amounts
recognized for the defined benefit pension plan in the
consolidated balance sheets at December 31:

                            				       1996           1995 
Actuarial present value of 
accumulated benefit obligations:                     
  Vested benefits                  $ 4,598,000    $ 5,555,000 
  Nonvested benefits                   118,000        186,000 
                            				   -----------    -----------
Accumulated benefit obligation       4,716,000      5,741,000 
Impact of future salary increases    1,152,000      1,164,000 
                            				   -----------    -----------
Actuarial present value of 
 projected benefit obligation for 
 service rendered to date            5,868,000      6,905,000 
Plan assets at fair value, 
 primarily U.S. Government 
 obligations and collective 
 investment stock and bond funds     5,034,000      5,460,000  
                            				   -----------    -----------
Projected benefit obligations 
 in excess of plan assets             (834,000)    (1,445,000) 
Unrecognized prior service cost        (73,000)       (82,000) 
Unrecognized net gain from past 
 experience different from that 
 assumed and effects of changes 
 in assumptions                       (552,000)      (171,000) 
Unrecognized net transition asset      (48,000)       (59,000) 
                            				   -----------    -----------
    Accrued pension cost included 
     in other liabilities          $(1,507,000)   $(1,757,000) 
                            				   ===========    ===========


  The rates used in determining the actuarial present value of the
projected benefit obligation were as follows:

                                   					   1996        1995       1994 

Discount rate                              8.00%       7.50%      8.50% 
Rate of increase in compensation levels    4.50%       4.00%      5.00% 
Long-term rate of return on assets         9.00%       9.00%      8.50% 


  The unrecognized net gain increased in 1996 due to the change in
the discount rate.  In late 1995, the Company offered a
voluntary early retirement program to a select group of
employees who met certain qualifications.  All employees
eligible for the early retirement program accepted the offer and
the Company incurred $777,000 in additional expense.

  The Company has a contributory defined benefit postretirement
plan for former employees who were retired as of December 31,
1992.  The plan provides for health and life insurance benefits.
The Company's policy is to fund the cost of the benefits as
they are incurred.   The net periodic postretirement benefit
cost, which relates primarily to interest cost, was $62,000,
$65,000, and $68,000 for 1996, 1995, and 1994, respectively.  

  The following table sets forth the funded status and amounts
recognized in the consolidated balance sheets at December 31:


                                         						   1996          1995 

Accumulated postretirement benefit obligation   $(865,000)    $(857,000) 
Unrecognized net (gain) loss                      (34,000)        1,000 
                                          						---------     ---------
    Accrued postretirement benefit cost 
     included in other liabilities              $(899,000)    $(856,000) 
                                          						=========     =========


  The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 8.00% at
December 31, 1996 and 7.50% at December 31, 1995.

  The weighted average annual assumed rate of increase in the per
capita cost of covered benefits (i.e. health care cost trend
rate) is 8% for 1997, grading down 1% per year to an ultimate
rate of 5%.  The health care cost trend rate assumption has a
significant effect on the amounts reported.  For example,
increasing the assumed health care cost trend rates by one
percentage point each year would increase the accumulated
benefit obligation for the plan at December 31, 1996, by $87,000
and the net periodic postretirement benefit cost in 1996 by
$6,000.


9.  FEDERAL INCOME TAXES:

  The effective federal income tax rate in the consolidated
statement of income is less than the statutory corporate tax
rate due to the following: 

                                   					   Year ended December 31         
                            				      1996          1995           1994   

Statutory corporate tax rate          34.0%         34.0%          34.0% 
Differences in rate resulting from:                                    
  Interest on obligations of state 
   and political subdivisions         (3.7)         (5.0)          (5.8)        
Other, net                             0.9           1.0            0.7        
                            				      ----          ----           ----
                             			      31.2%         30.0%          28.9% 
                            				      ====          ====           ====


  The significant components of the Company's deferred tax assets
and liabilities consisted of the following at December 31:

                                     		 1996             1995 

Deferred tax assets:                                     
  Allowance for loan losses          $1,888,000        $1,709,000 
  Accrued employee benefits             945,000           991,000 
  Deferred loan fees and costs          191,000           333,000 
  Other                                 240,000           211,000 
                            				     ----------        ----------
    Total deferred tax assets         3,264,000         3,244,000 

Deferred tax liabilities:                                       
  Available-for-sale securities         736,000         1,272,000 
  Bank premises and equipment           593,000           546,000 
  Other                                 587,000           446,000 
                            				     ----------        ----------
    Total deferred tax liabilities    1,916,000         2,264,000 
	                            			     ----------        ----------
       	Net deferred tax assets      $1,348,000        $  980,000 
                            				     ----------        ----------

  The related federal income tax expense (benefit) on securities
transactions approximated $16,000 in 1996, $8,000 in 1995, and
$(81,000) in 1994.


10. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:

  In the normal course of business, the Company is party to
financial instruments with off-balance sheet risk necessary to
meet the financing needs of customers and to manage its own
exposure to fluctuations in interest rates.  These financial
instruments include commitments to extend credit, standby
letters of credit, and interest rate floors.  The instruments
involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the balance
sheets.  The contract or notional amounts of these instruments
express the extent of involvement the Company has in these
financial instruments.

Loan Commitments and Standby Letters of Credit:
- -----------------------------------------------
  Loan commitments are made to accommodate the financial needs of
the Company's customers.  Standby letters of credit commit the
Company to make payments on behalf of customers when certain
specified future events occur.  Historically, most loan
commitments and standby letters of credit expire unused.  The
Company's exposure to credit loss in the event of nonperformance
by the counter-party to the financial instrument for loan
commitments and standby letters of credit is represented by the
contractual amount of those instruments.  The Company uses the
same underwriting standards in making commitments and
conditional obligations as it does for on-balance sheet
instruments.  The amount of collateral obtained is based on
management's credit evaluation of the customer.  Collateral held
varies, but may include accounts receivable, inventory,
property, plant, and equipment, and income-producing commercial
properties.  The total amounts of loan commitments and standby
letters of credit are summarized as follows at December 31:

                           				     Contract Amount                          
                           				  1996              1995 

Loan commitments              $50,518,000       $36,106,000 
Standby letters of credit       3,164,000         2,116,000 
Unused credit card limits      17,718,000        14,582,000 


Interest Rate Floors:
- ---------------------
  In February, 1995, the Company entered into several interest
rate floor contracts with two unaffiliated financial
institutions as a means of managing the risks of changing
interest rates.  Interest rate floors are agreements to receive
payments for interest rate differentials between an index rate
and a specified floor rate, computed on notional amounts.  The
Company is subject to the risk that the effect of changes in
interest rates will cause the Company to earn less than the then
current market rates on its assets.  These interest rate floors
subject the Company to the risk that the counter-parties may
fail to perform.  In order to minimize such risk, the Company
deals only with high-quality, financially secure financial
institutions.  The exposure to credit risk is significantly less
than the notional amounts of $20,000,000 since the Company will
only receive the interest rate differential.  These interest
rate contracts expire in February, 1998.


11.  REGULATORY MATTERS:

  The primary source of funds for the dividends paid by the
Company is dividends received from its banking subsidiaries. 
The payment of dividends by banking subsidiaries is subject to
various banking regulations.  The most restrictive provision
requires regulatory approval if dividends declared in any
calendar year exceed the total net profits of that year plus the
retained net profits of the preceding two years.  At December
31, 1996, approximately $7,257,000 of retained net profits of
the banking subsidiaries were available for the payment of
dividends to Peoples Bancorp Inc. without regulatory approval.

  The Company and its banking subsidiaries are subject to various
regulatory capital requirements administered by the banking
regulatory agencies.  Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Company
and each of its banking subsidiaries must meet specific capital
guidelines that involve quantitative measures of each entity's
assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices.  The Company's
and each of its banking subsidiaries' capital amounts and
classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.

  Quantitative measures established by regulation to ensure
capital adequacy require the Company and each of its banking
subsidiaries to maintain minimum amounts and ratios of total and
Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined), and of Tier I capital (as defined) to
average assets (as defined).  The Company and each of its
banking subsidiaries met all capital adequacy requirements at
December 31, 1996.

  As of December 31, 1996, the most recent notifications from the
banking regulatory agencies categorized the Company and each of
its banking subsidiaries as well capitalized under the
regulatory framework for prompt corrective action.  To be
categorized as well capitalized, the Company and each of its
banking subsidiaries must maintain minimum total risk-based,
Tier I risk-based and Tier I leverage ratios as set forth in the
table below.  There are no conditions or events since these
notifications that management believes have changed the
Company's or any of its banking subsidiaries' category.

  The Company's and its significant banking subsidiary's, The
Peoples Banking and Trust Company ("Peoples Bank"), actual
capital amounts and ratios are also presented in the table below.

                                                   								   Well
                                			       For Capital      Capitalized  
                			      Actual             Adequacy        Provision
                    			  Amount    Ratio     Amount  Ratio   Amount   Ratio   
As of December  31, 1996:                                   
- -------------------------
Total capital (to 
Risk Weighted Assets)                                                       
  The Company          $53,560,000  12.9%  $33,324,000  8%  $41,654,000  10% 
  Peoples Bank          41,727,000  11.4%   29,354,000  8%   36,693,000  10%  
- ----------------------------------------------------------------------------
Tier 1 (to 
Risk Weighted Assets)                                                
  The Company           48,332,000  11.6%   16,662,000  4%   24,993,000   6%  
  Peoples Bank          34,125,000   9.3%   14,677,000  4%   22,016,000   6%  
- ----------------------------------------------------------------------------
Tier 1 (to 
Average Assets)                                                      
  The Company           48,332,000   7.9%   24,408,000  4%   30,510,000   5%
  Peoples Bank          34,125,000   6.5%   21,163,000  4%   26,454,000   5%  
- ----------------------------------------------------------------------------
															

As of December  31, 1995:                                  
- -------------------------
Total capital (to 
Risk Weighted Assets)                                            
  The Company           52,631,000  13.8%   30,408,000  8%   38,010,000  10% 
  Peoples Bank          43,504,000  12.9%   26,969,000  8%   33,711,000  10% 
- ----------------------------------------------------------------------------
Tier 1 (to 
Risk Weighted Assets)                                               
  The Company           47,880,000  12.6%   15,204,000  4%   22,806,000   6%  
  Peoples Bank          36,290,000  10.8%   13,485,000  4%   20,227,000   6% 
- ----------------------------------------------------------------------------
Tier 1 (to 
Average Assets)                                                     
  The Company           47,880,000   8.8%   21,739,000  4%   27,174,000   5% 
  Peoples Bank          36,290,000   7.7%   18,779,000  4%   23,473,000   5% 
- ----------------------------------------------------------------------------


12. FEDERAL RESERVE REQUIREMENTS:

  The subsidiary banks are required to maintain average reserve
balances with the Federal Reserve Bank.  The Reserve requirement
is calculated on a percentage of total deposit liabilities and
averaged $7,963,000 for the year ended December 31, 1996.


13. ACQUISITIONS:

  On April 26, 1996, the Company acquired three
full-service banking offices in the cities of Pomeroy,
Gallipolis, and Rutland, Ohio, and assumed approximately $75
million in deposit liabilities from an unaffiliated institution
for a cash consideration of approximately $5.4 million. 
Accordingly, consolidated results include the operations of the
three full-service banking offices subsequent to the acquisition
date.

  The purchase prices of the above and other previous
acquisitions were allocated to the identifiable tangible and
intangible assets acquired based upon their fair value at the
acquisition date.  Deposit intangibles, included in other
assets, approximated $1,827,000 at December 31, 1996 while the
related amortization expense approximated $206,000 in 1996. 
Goodwill, included in other assets, approximated $4,606,000 and
$1,125,000 at December 31, 1996 and 1995, respectively, and the
related amortization expense approximated $419,000 and $159,000
in 1996 and 1995, respectively.  

  On January 1, 1997, the Company acquired Russell Federal Savings
Bank ("Russell Federal") for a cash consideration of
approximately $9.25 million.  The Company plans to operate
Russell Federal as a federal savings bank subsidiary of Peoples
Bancorp with continuity of management, officers and directors. 
Russell Federal has one full service office located in Russell,
Kentucky, and had total assets of $28.0 million, deposits of
$19.5 million and shareholders' equity of $8.0 million at
December 31, 1996.  This acquisition was accounted for under the
purchase method of accounting. 

  In November 1996, the Company entered into a definitive
agreement to assume approximately $17 million in deposit
liabilities from an unaffiliated institution.  In the agreement,
the Company will also acquire one full-service banking office in
the city of Baltimore, Ohio.  Regulatory approval was received
in January 1997 and the acquisition is expected to be completed
in the first quarter of 1997.  This acquisition will be
accounted for under the purchase method.

	
14. CHANGES IN CAPITAL STRUCTURE:

  On June 14, 1996, the Company declared a 10% stock dividend
issued on August 1, 1996 to shareholders of record as of  July
15, 1996.   On August 22, 1995, the Company declared a 10% stock
dividend issued on October 25, 1995 to shareholders of record as
of October 10, 1995.  On March 24, 1994, the Company declared a
two-for-one stock split issued on April 29, 1994 to shareholders
of record as of April 15, 1994.   All per share information in
the accompanying consolidated financial statements gives
retroactive effect to these stock transactions.


15.  STOCK OPTIONS:

  The Company's stock option plans provide for the granting of
both incentive stock options and non-qualified stock options of
up to 387,200 shares of common stock.   Under the provisions of
the plans, the option price per share shall not be less than the
fair market value of the common stock on the date of grant of
such option, therefore no compensation expense is recognized. 
All granted options vest in periods ranging from six months to
five years and expire 10 years from the date of grant.  The
weighted average remaining contractual life of options
outstanding at December 31, 1996 was 7.6 years.

  As permitted, the Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") and related interpretations in accounting
for its employee stock options.  Pro forma information regarding
net income and earnings per share is required by FASB Statement
123, "Accounting for Stock-Based Compensation"  ("Statement
123") and has been determined as if the Company had accounted
for its employee stock options under the fair value method of
that Statement.  However, pro forma financial information has
not been included herein because the effect of applying
Statement 123's fair value method to the Company's stock-based
awards in 1996 and 1995 results in net income and earnings per
share that are not materially different from amounts reported.


  Activity in the plans is summarized as follows:

                                  1996                     1995     
                    			    Number       Option      Number        Option
                    			   of shares     price      of shares      price

Non-qualified stock options                                
- ---------------------------
Outstanding at beginning 
 of year                    50,120   $16.12-19.42    19,965   $16.12-18.18 
  Granted                    1,785          21.14    30,155    18.59-19.42 
  Exercised                  6,142    16.95-19.42               
  Canceled                   1,065    16.95-18.60                   
                      		   -------   ------------   -------   ------------
Outstanding at end of year  44,698    16.12-21.14    50,120    16.12-19.42 
                      		   =======   ============   =======   ============

Exercisable at end of year  29,481   $16.12-21.14    27,288   $16.12-19.42 
                     			   =======   ============   =======   ============
Weighted average fair 
 value of options granted  
 during the year                     $       3.54             $       3.14 
                            				     ============             ============
									
Incentive stock options                                           
- -----------------------
Outstanding at beginning 
 of year                   202,065   $14.47-19.32   207,515   $14.47-19.32 
  Granted                                                                    
  Exercised                 17,615    14.47-19.32     5,450          14.47 
  Canceled                   4,235          19.32                          
                     			   -------   ------------   -------   ------------
Outstanding at end of year 180,215    14.47-19.32   202,065    14.47-19.32 
                     			   =======   ============   =======   ============

Exercisable at end of year  69,063   $14.47-19.32    49,603   $14.47-19.32 
                     			   =======   ============   =======   ============


16.  PARENT COMPANY ONLY FINANCIAL INFORMATION:

                                          						      December 31,        
Condensed Balance Sheets                          1996            1995 
- ------------------------
ASSETS:                                         
Cash                                           $    20,000     $    20,000 
Interest bearing deposits in subsidiary bank       239,000         533,000 
Receivable from subsidiary bank                    900,000         969,000 
Investment securities:  Available-for-sale 
 (amortized cost of $1,297,000 and $1,098,000 
 at December 31, 1996 and 1995, respectively)    2,447,000       1,636,000 
Capital note receivable from subsidiary bank     3,000,000       3,000,000 
Investments in subsidiaries:                                    
  Banks                                         48,951,000      46,299,000 
  Non-banks                                      1,125,000       1,065,000 
Excess cost over net assets acquired               830,000         967,000 
Other                                              939,000         906,000 
                                    				       -----------     -----------
    Total assets                               $58,451,000     $55,395,000 
					                                          ===========     ===========
					
LIABILITIES:                                    
Accrued pension                                $ 1,525,000     $ 1,757,000 
Accrued expenses                                   148,000          75,000 
Dividends payable                                  585,000         529,000 
Long-term borrowings                                             1,560,000 
					                                          -----------     -----------
    Total liabilities                            2,258,000       3,921,000 
                                   					       -----------     -----------
Stockholders' equity                            56,193,000      51,474,000 
                                    				       -----------     -----------
    Total liabilities and stockholders' equity $58,451,000     $55,395,000 
                                   					       ===========     ===========


                                   					   Year ended December 31,
Consolidated Statements of Income      1996         1995          1994 
- ---------------------------------
INCOME:                                                                 
Dividends from subsidiary banks    $4,010,000    $3,415,000    $2,280,000 
Dividends from other subsidiaries      40,000        50,000        40,000 
Interest                              346,000       393,000       301,000 
Management fees from subsidiaries     902,000       907,000       818,000 
Other                                  64,000        69,000       123,000 
                            				   ----------    ----------    ----------
    Total income                    5,362,000     4,834,000     3,562,000 
                            				   ----------    ----------    ----------
EXPENSES:                                                               
Salaries and benefits               1,156,000     1,183,000       948,000 
Interest                              118,000       148,000       141,000 
Other                                 784,000       764,000       549,000 
                            				   ----------    ----------    ----------
    Total expenses                  2,058,000     2,095,000     1,638,000 
                            				   ----------    ----------    ----------
Income before federal income taxes 
 and equity in undistributed 
 earnings of subsidiaries           3,304,000     2,739,000     1,924,000 
Applicable income tax benefit        (190,000)     (200,000)     (100,000) 
Equity in undistributed 
 earnings of subsidiaries           4,157,000     3,111,000     3,724,000 
                            				   ----------    ----------    ----------
      Net income                   $7,651,000    $6,050,000    $5,748,000 
                            				   ==========    ==========    ==========


                                   					  Year ended December 31,        
STATEMENTS OF CASH FLOWS              1996          1995         1994 

Cash flows from operating activities:                                   
- -------------------------------------
Net income                         $7,651,000    $6,050,000    $5,748,000
Adjustment to reconcile net income 
 to cash provided by operations:                                      
  Amortization and depreciation       208,000       179,000       134,000 
  Equity in undistributed 
   earnings of subsidiaries        (4,157,000)   (3,111,000)   (3,724,000) 
  Other, net                         (382,000)      189,000     1,103,000 
- -------------------------------------------------------------------------
    Net cash provided by 
     operating activities           3,320,000     3,307,000     3,261,000 
- -------------------------------------------------------------------------

Cash flows from investing activities:                                  
- -------------------------------------
Purchase of investment securities    (199,000)     (340,000)     (188,000) 
Expenditures for premises and 
 equipment                            (89,000)      (87,000)      (46,000) 
Investment in subsidiaries                         (150,000)                
- -------------------------------------------------------------------------
    Net cash used in 
     investing activities            (288,000)     (577,000)     (234,000) 
- -------------------------------------------------------------------------

Cash flows from financing activities:                                 
- -------------------------------------
Payments on long-term borrowings   (1,560,000)     (260,000)     (260,000) 
Purchase of treasury stock           (332,000)   (1,940,000)     (215,000) 
Change in receivable from 
 subsidiary                            69,000     1,043,000      (406,000) 
Proceeds from issuance of 
 common stock                         431,000        26,000         5,000 
Cash dividends paid                (1,934,000)   (1,702,000)   (1,623,000) 
- -------------------------------------------------------------------------
    Net cash used in 
     financing activities          (3,326,000)   (2,833,000)   (2,499,000) 
- -------------------------------------------------------------------------

    Net (decrease) increase in cash  (294,000)     (103,000)      528,000 
Cash and cash equivalents at the 
 beginning of the year                553,000       656,000       128,000 
- -------------------------------------------------------------------------
    Cash and cash equivalents 
     at the end of the year        $  259,000    $  553,000    $  656,000 
========================================================================= 
  
  The  parent company paid interest totaling $118,000, $148,000
and $141,000 during the years ended December 31, 1996, 1995 and
1994, respectively.                                                             


17.  SUMMARIZED QUARTERLY INFORMATION (UNAUDITED):

  A summary of selected quarterly financial information for 1996 
and 1995 follows.  The quarterly data includes certain 
reclassifications from interest income to other income to 
conform to the year ended December 31, 1996, presentation.  
These reclassifications did not have any impact on net income 
or earnings per share.
                                  					       1996                     
                   			 -----------------------------------------------------
                    			  First        Second         Third        Fourth 
                    			 Quarter       Quarter       Quarter       Quarter

Interest income        $11,316,000   $11,725,000   $12,046,000   $12,310,000 
Interest expense         5,367,000     5,416,000     5,539,000     5,644,000 
Net interest income      5,949,000     6,309,000     6,507,000     6,666,000 
Provision for possible 
 loan losses               360,000       435,000       585,000       585,000 
Investment securities 
 gains                      26,000                                    22,000 
Other income             1,162,000     1,271,000     1,304,000     1,393,000 
Other expenses           4,013,000     4,299,000     4,578,000     4,632,000 
Income taxes               883,000       875,000       818,000       895,000 
Net income               1,881,000     1,971,000     1,830,000     1,969,000 
Earnings per share 
 assuming full dilution      $0.55         $0.57         $0.53         $0.56 


                                  					       1995           
                       -----------------------------------------------------
                     			  First        Second         Third        Fourth 
                     			 Quarter       Quarter       Quarter       Quarter

Interest income        $10,017,000   $10,705,000   $11,006,000   $11,340,000 
Interest expense         4,616,000     5,228,000     5,476,000     5,457,000 
Net interest income      5,401,000     5,477,000     5,530,000     5,383,000 
Provision for possible 
 loan losses               285,000       310,000       360,000       360,000 
Investment securities 
 gains                                                  17,000         7,000 
Other income             1,088,000     1,103,000     1,183,000     1,083,000 
Other expenses           4,067,000     4,082,000     4,038,000     4,631,000 
Income taxes               651,000       654,000       722,000       562,000 
Net income               1,486,000     1,534,000     1,610,000     1,420,000 
Earnings per share 
 assuming full dilution      $0.42         $0.44         $0.46         $0.41 



REPORT OF INDEPENDENT AUDITORS         


To the Stockholders and Board of Directors:     

  We have audited the accompanying consolidated balance sheets of
Peoples Bancorp Inc. and Subsidiaries as of December 31, 1996
and 1995, and the related consolidated statements of income,
stockholders' equity, and cash flows for the years then ended. 
These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.  The
financial statements of Peoples Bancorp Inc. and Subsidiaries
for the year ended December 31, 1994, were audited by other
auditors whose report dated January 26, 1995, expressed an
unqualified opinion on those statements.

  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
consolidated financial position of Peoples Bancorp Inc. and
Subsidiaries at December 31, 1996 and 1995 and the consolidated
results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting
principles.

                      				       /s/ ERNST & YOUNG LLP
                      				       Ernst & Young LLP

Charleston, West Virginia
January 31, 1997


<TABLE>

<CAPTION>

AVERAGE BALANCES AND ANALYSIS OF NET INTEREST INCOME   


                                             						   (Dollars in Thousands)                                                 
                            				  1996                          1995                          1994   
                        					    Average                       Average                       Average
                    			Average   Income/   Yield/    Average   Income/   Yield/    Average   Income/   Yield/
                    			Balance   Expense    Rate     Balance   Expense    Rate     Balance   Expense    Rate
<S>                    <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>

Securities <F1>:                                                   
- ----------------
Taxable                $127,815   $ 8,655    6.77%   $ 95,056   $ 6,667    6.98%   $ 77,649   $ 5,308    6.80%
Nontaxable <F2>          22,621     1,906    8.42%     23,761     2,117    8.91%     24,027     2,220    9.24%
               	       --------   -------   ------   --------   -------   ------   --------   -------   ------
  Total                 150,436    10,561    7.02%    118,817     8,784    7.40%    101,676     7,528    7.40%

Loans <F3> <F4>:                                                       
- ----------------
Commercial              125,138    11,944    9.54%    114,020    11,270    9.88%    105,315     8,934    8.48%   
Real estate             172,367    14,322    8.31%    156,598    13,663    8.73%    146,966    12,311    8.38%   
Consumer                102,759    10,949   10.66%     96,604     9,305    9.63%     85,219     7,340    8.61%   
Valuation reserve        (6,799)                       (6,719)                       (6,680)
                       --------   -------   ------   --------   -------   ------   --------   -------   ------
  Total                 393,465    37,215    9.46%    360,503    34,238    9.50%    330,820    28,585    8.64%   

Money Market:                                                      
- -------------
Interest-bearing 
 deposits                   622        29    4.64%        526        31    5.80%      1,744        61    3.51%   
Federal funds sold        5,900       315    5.35%     13,226       780    5.90%     10,580       422    3.99%   
              		       --------   -------   ------   --------   -------   ------   --------   -------   ------
  Total                   6,522       344    5.28%     13,752       811    5.90%     12,324       483    3.92%   
              		       --------   -------   ------   --------   -------   ------   --------   -------   ------
  Total earning assets  550,423    48,120    8.75%    493,072    43,833    8.89%    444,820    36,596    8.30%   
                  				 --------   -------            --------   -------            --------   -------
Other assets             42,021                        34,910                        35,204                                  
              		       --------                      --------                      --------                    
    Total assets       $592,444                      $527,982                      $480,024
              		       ========                      ========                 

Deposits:                                                    
- ---------
Savings                $ 75,805     2,302    3.04%   $ 68,867     2,307    3.35%   $ 75,422     2,106    2.79%   
Interest-bearing 
 demand                 111,376     3,656    3.28%     92,280     3,228    3.50%     85,326     2,212    2.59%   
Time                    234,550    12,922    5.51%    222,898    12,849    5.76%    187,842     9,298    4.95%   
              		       --------   -------   ------   --------   -------   ------   --------   -------   ------
  Total                 421,731    18,880    4.48%    384,045    18,384    4.79%    348,590    13,616    3.91%   

Borrowed Funds:                                            
- ---------------
Short-term               33,166     1,408    4.25%     19,993     1,010    5.05%     10,953       337    3.08%   
Long-term                23,490     1,678    7.14%     22,612     1,383    6.12%     24,614     1,471    5.98%   
              		       --------   -------   ------   --------   -------   ------   --------   -------   ------
  Total                  56,656     3,086    5.45%     42,605     2,393    5.62%     35,567     1,808    5.08%   
              		       --------   -------   ------   --------   -------   ------   --------   -------   ------
  Total interest-       
   bearing liabilities  478,387    21,966    4.59%    426,650    20,777    4.87%    384,157    15,424    4.02%   
                  				 --------   -------            --------   -------            --------   -------
Noninterest-bearing    
 demand deposits         54,923                        46,876                        46,224                                  
Other liabilities         6,115                         5,396                         5,029                                   
              		       --------                      --------                      --------                            
  Total liabilities     539,425                       478,922                       435,410

Stockholders' equity     53,019                        49,060                        44,614
              		       --------                      --------                      --------                                        
    Total liabilities 
     and stockholders' 
     equity            $592,444                      $527,982                      $480,024                                         
              		       ========                      ========                      ========
Interest rate spread              $26,154    4.15%              $23,056    4.02%              $21,172    4.28%   
                            				  -------   ------              -------   ------              -------   ------
Interest revenue/earning assets              8.74%                         8.89%                         8.30%   
Interest expense/earning assets              3.99%                         4.21%                         3.47%   
                                   					    ------                        ------                        ------
Net yield on earning assets 
 (net interest margin)                       4.75%                         4.68%                         4.83%   
                                   					    ======                        ======                        ======

<FN>

<F1>  Average balances of investment securities based on historical cost.  

<F2>  Computed on a fully tax equivalent basis using a tax rate
      of 34%.  Interest income was increased by $723,000, $765,000 and
      $775,000 for 1996, 1995 and 1994, respectively.
																					
<F3>  Nonaccrual and impaired loans are included in the average
      balances listed.  Related interest income on nonaccrual loans
      prior to the loan being put on nonaccrual status is included in
      loan interest income.  At December 31, 1996, 1995 and 1994,
      nonaccrual loans outstanding were $999,000, $482,000 and
      $902,000, respectively.                                             

<F4>  Loan fees included in interest income for 1996, 1995 and
      1994 were $460,000, $428,000 and $358,000, respectively.            
																	
</FN>

</TABLE>



RATE VOLUME ANALYSIS/MATURITIES TABLES        

<TABLE>

<CAPTION>

Rate Volume Analysis 
- --------------------
(Dollars in Thousands)                                                 

            		      Change in Income/Expense <F1>            Rate Effect                    Volume Effect    

                    			1996      1995      1994        1996      1995       1994        1996      1995      1994 
<S>                    <C>       <C>       <C>         <C>       <C>        <C>         <C>       <C>       <C>     
Investment income:                                                 
- ------------------
Taxable                $1,988    $1,359    $ (730)     $ (237)   $  141     $ (635)     $2,225    $1,218    $  (95)
Nontaxable               (211)     (103)     (330)       (112)      (79)       (17)        (99)      (24)     (313) 
              		       ------    ------    ------      ------    ------     -------      ------    ------    ------
   Total                1,777     1,256    (1,060)       (349)       62       (652)      2,126     1,194      (408) 
              		       ------    ------    ------      ------    ------     -------      ------    ------    ------
Loan income:                                                 
- ------------
Commercial                674     2,336       934        (397)    1,557        174       1,071       779       760 
Real estate               659     1,352       819        (672)      525       (133)      1,331       827       952 
Consumer                1,644     1,965       454       1,028       923       (541)        616     1,042       995
              		       ------    ------    ------      ------    ------    -------      ------    ------    ------
    Total               2,977     5,653     2,207         (41)    3,005       (500)      3,018     2,648     2,707
              		       ------    ------    ------      ------    ------    -------      ------    ------    ------
Money market funds       (467)      328      (344)        (75)      262        151        (392)       66      (495)
              		       ------    ------    ------      ------    ------    -------      ------    ------    ------
Total interest income   4,287     7,237       803        (465)    3,329     (1,001)      4,752     3,908     1,804
              		       ======    ======    ======      ======    ======    =======      ======    ======    ======
Interest expense:                                       
- -----------------
Savings                    (5)      201        (1)       (226)      395        (70)        221      (194)       69
Interest-bearing                                                      
 demand deposits          428     1,016       214        (208)      824         80         636       192       134
Time                       73     3,551      (452)       (583)    1,664        (30)        656     1,887      (422)
Short-term borrowings     398       673       134        (182)      294         90         580       379        44
Long-term borrowings      295       (88)      266         240        34        (34)         55      (122)      300
              		       ------    ------    ------      ------    ------    -------      ------    ------    ------
Total interest expense  1,189     5,353       161        (959)    3,211         36       2,148     2,142       125
              		       ------    ------    ------      ------    ------    -------      ------    ------    ------
              		       $3,098    $1,884    $  642      $  494    $  118    $(1,037)     $2,604    $1,766    $1,679
              		       ======    ======    ======      ======    ======    =======      ======    ======    ======

<FN>                                                              

<F1>  The change in interest due to both rate and volume has been
      allocated to volume and rate changes in proportion to the
      relationship of the dollar amounts of the change in each.
																				
</FN>

</TABLE>


Loan Maturities at December 31, 1996                            
- ------------------------------------
                            				   Due in
                     			Due in     One Year      Due  
              		       One Year    Through      After  
              		       or Less    Five Years  Five Years    Total
LOAN TYPE             
Commercial loans:              
- -----------------  
  Fixed                $  6,821    $  7,894    $  3,322    $ 18,037 
  Variable               45,655      26,824      37,411     109,890 
              		       --------    --------    --------    --------
                     			 52,476      34,718      40,733     127,927 
              		       --------    --------    --------    --------
Real estate loans:           
- ------------------
  Fixed                   4,605      14,952      31,329      50,886 
  Variable               28,196      23,762      82,605     134,563 
              		       --------    --------    --------    --------
                     			 32,801      38,714     113,934     185,449 
              		       --------    --------    --------    --------
Consumer loans:                           
- ---------------  
  Fixed                  28,718      62,283       4,381      95,382 
  Variable                9,352       3,741         562      13,655 
              		       --------    --------    --------    --------
                     			 38,070      66,024       4,943     109,037 
               	       --------    --------    --------    --------

    Total              $123,347    $139,456    $159,610    $422,413 
              		       ========    ========    ========    ========
											

Maturities of  Certificates of Deposit over $100,000 at December 31:       
- --------------------------------------------------------------------
											
             		     1996         1995         1994         1993 

Under 3 months     $16,437      $18,662      $ 5,657      $ 5,761 
3 to 6 months        8,279        9,319        2,149        2,241 
6 to 12 months      10,309        5,140        5,868        2,859 
Over 12 months       8,356        8,266       12,695        6,939 
              		   -------      -------      -------      -------    
    Total          $43,381      $41,387      $26,369      $17,800 
              		   =======      =======      =======      =======



LOAN PORTFOLIO ANALYSIS        

                            				       (Dollars in thousands)            
                     			  1996       1995       1994       1993       1992
Year-end balances:                                                   
- ------------------  
Commercial, financial 
 and agricultural       $127,927   $117,306   $117,015   $101,633   $ 91,138
Real estate              175,505    154,469    150,289    135,704    125,586
Real estate 
 construction              9,944      5,919      2,528      5,421      4,514
Consumer                 102,044     95,464     86,098     74,775     66,129
Credit card                6,993      6,368      5,423      4,142      3,768
                     			--------   --------   --------   --------   --------
    Total               $422,413   $379,526   $361,353   $321,675   $291,135 
                     			========   ========   ========   ========   ========

Average total loans     $400,264   $367,222   $337,500   $306,282   $291,033
Average allowance 
 for loan losses          (6,799)    (6,719)    (6,680)    (6,095)    (5,298)
                     			--------   --------   --------   --------   --------
  Average loans, 
   net of allowance     $393,465   $360,503   $330,820   $300,187   $285,735
	                     		========   ========   ========   ========   ========
 
Allowance for loan 
 losses, January 1      $  6,726   $  6,783   $  6,370   $  5,687   $  4,273
Allowance for loan losses 
 of acquired branch                                                      721 
															
Loans charged off:                                                  
- ------------------
Commercial, financial 
 and agricultural            342        256         39        193      1,163
Real estate                   93         82        189        143        295
Consumer                   1,726      1,352        842        816        826
Credit card                  168        113         54         51         33
                     			--------   --------   --------   --------   --------
    Total                  2,329      1,803      1,124      1,203      2,317
                     			--------   --------   --------   --------   --------
Recoveries:                                                          
- -----------
Commercial, financial 
 and agricultural             36        111        392         60        241
Real estate                   75         60         61         65        110
Consumer                     391        251        304        157        267
Credit card                    9          9         15         12          5
                     			--------   --------   --------   --------   --------
    Total                    511        431        772        294        623
                     			--------   --------   --------   --------   --------
															
Net chargeoffs:                                                   
- ---------------
Commercial, financial 
 and agricultural            306        145       (353)       133        922 
Real estate                   18         22        128         78        185
Consumer                   1,335      1,101        538        659        559
Credit card                  159        104         39         39         28
                      		--------   --------   --------   --------   --------
    Total                  1,818      1,372        352        909      1,694
                      		--------   --------   --------   --------   --------
Provision for 
 loan losses               1,965      1,315        765      1,592      2,387
                     			--------   --------   --------   --------   --------
Allowance for loan 
 losses,  December 31   $  6,873   $  6,726   $  6,783   $  6,370   $  5,687
                     			========   ========   ========   ========   ========


Allocation of allowance for loan losses at December 31
- ------------------------------------------------------                  
Commercial              $  2,741   $  3,440   $  3,281   $  3,185   $  2,651
Real estate                1,050      1,517      1,828      2,000      1,189
Consumer                   2,078      1,519      1,096        987        602
Credit card                  131        100         89        166         45
Unallocated                  873        150        489         32      1,200
                     			--------   --------   --------   --------   --------
    Total               $  6,873   $  6,726   $  6,783   $  6,370   $  5,687
                     			========   ========   ========   ========   ========

Percent of loans to total loans at December 31:                         
- -----------------------------------------------
Commercial                 30.3%      30.9%      32.4%      31.6%      31.3% 
Real estate                41.5       40.7       41.6       42.2       43.1 
Real estate, construction   2.3        1.5        0.7        1.7        1.6
Consumer                   24.2       25.2       23.8       23.2       22.7 
Credit card                 1.7        1.7        1.5        1.3        1.3 
                      		--------   --------   --------   --------   --------
    Total                 100.0%     100.0%     100.0%     100.0%     100.0%
                       	========   ========   ========   ========   ========

Ratio of net chargeoffs to average total loans:
- -----------------------------------------------
Commercial                 0.08%      0.04%     (0.11)%     0.04%      0.32%
Real estate                0.00       0.01       0.04       0.03       0.06 
Consumer                   0.33       0.30       0.16       0.22       0.19 
Credit card                0.04       0.03       0.01       0.01       0.01 
                     			--------   --------   --------   --------   --------
    Total                  0.45%      0.38%      0.10%      0.30%      0.58%
                     			========   ========   ========   ========   ========
Nonperforming loans:                                  
- --------------------
Nonaccrual loans             999        482        902      1,416      1,279
Loans 90+ days past due      621      1,236      1,082        896      1,284
Other real estate owned       28         45         97         38         49
                     			--------   --------   --------   --------   --------
    Total               $  1,648   $  1,763   $  2,081   $  2,350   $  2,612
                     			========   ========   ========   ========   ========
							  
Nonperforming loans as a 
 percent of total loans    0.39%      0.46%      0.58%      0.73%      0.90%
                     			========   ========   ========   ========   ========
																			

  Interest income on nonaccrual loans which would have been
recorded under the original terms of the loans for 1996, 1995
and 1994 was $78,000 (of which $11,000 was actually recorded),
$19,000 (of which $10,000 was actually recorded) and $48,000 (of
which $36,000 was actually recorded), respectively.


MANAGEMENT'S DISCUSSION AND ANALYSIS     

Introduction
- ------------
  The following discussion and analysis of the consolidated
financial statements of Peoples Bancorp Inc. (the "Company") is
presented to give the reader insight into management'
assessment of the financial results.  It also recaps the
significant events that led to the results.  The Company's
subsidiaries, The Peoples Banking and Trust Company ("Peoples
Bank"), The First National Bank of Southeastern Ohio ("First
National") and The Northwest Territory Life Insurance Company,
provide financial services to individuals and businesses within
our market area.  Peoples Bank is chartered by the State of Ohio
and subject to regulation, supervision, and examination by the
Federal Deposit Insurance Corporation ("FDIC") and the Ohio
Division of Banks.  First National is a member of the Federal
Reserve System and subject to regulation, supervision, and
examination by the Office of the Comptroller of the Currency. 
This discussion and analysis should be read in conjunction with
the audited Consolidated financial statements and footnotes and
the ratios, statistics, and discussions contained elsewhere in
this Annual Report.

  The following text will include references to three separate
acquisition transactions that have affected or will affect the
Company's results of operations.  In April 1996, Peoples Bank
completed the acquisition of three full-service banking centers
from an unaffiliated financial institution in the cities of
Pomeroy, Gallipolis, and Rutland, Ohio ("Banking Center
Acquisition").  The Company acquired approximately $75 million
in deposits related to the Banking Center Acquisition.  On
January 1, 1997, the Company completed the purchase of Russell
Federal Savings Bank ("Russell Federal") in Russell, Kentucky,
for approximately $9.25 million in cash ("Russell Federal
Acquisition").  Management plans to continue Russell Federal's
operations as a federal savings bank subsidiary of the Company
with continuity of management, officers and directors.  Russell
Federal had total assets of $28.0 million, deposits of $19.5
million and shareholders' equity of $8.0 million at December 31,
1996.  Russell Federal is a member of the Federal Home Loan
Bank, and is subject to regulation, supervision, and examination
by the Office of Thrift Supervision, and is also subject to
limited regulation by the Board of Governors of the Federal
Reserve System.  In November, 1996, the Company announced that
Peoples Bank had entered an agreement to acquire a full-service
banking facility in Baltimore, Ohio ("Baltimore Banking Center
Acquisition").  In the transaction, Peoples Bank will assume
approximately $17 million in deposits from this central Ohio
banking facility.  The FDIC has already approved the acquisition
and the transaction is expected to be completed in the first
quarter of 1997.


Overview of the Income Statement
- --------------------------------
  The Company recognized an increase in net income of $1,601,000
or 26.5%, to $7,651,000 in 1996 from $6,050,000 in 1995.  Net
income in 1995 was negatively impacted in the amount of $513,000
in non-recurring expenses related to a voluntary early
retirement program.  In April 1996, the Banking Center
Acquisition and related acquired deposits positively impacted
growth in the Company's balance sheet and revenue streams. 
Fully tax equivalent net interest income increased $3,098,000 in
1996 to $26,154,000, up 13.4% compared to 1995.  The yield on
interest-earning assets decreased modestly from 8.89% in 1995 to
8.75% in 1996.  The average interest rate paid on
interest-bearing liabilities also decreased, from 4.87% in 1995
to 4.59% in 1996.  Net interest margin for the Company reached
4.75% compared to 4.67% last year.  Increased net interest
income can be attributed to the growth in the Company's
higher-yielding assets such as loans and the decrease in costs
associated with interest-bearing liabilities.  Strong loan
growth prompted an increase in the provision for loan losses in
1996, totaling  $1,965,000, up from $1,315,000 in 1995. 
Non-interest income (excluding gains or losses on sales of
investment securities) increased 15.1% to $5,130,000 in 1996,
compared to $4,457,000 in 1995.  Gains on sales of investment
securities totaled $48,000 in 1996, up from 1995's total gain of
$24,000.  Non-interest expense increased 4.2% in 1996 to
$17,522,000.


Interest Income and Expense
- ---------------------------
  Net interest income is the amount by which interest income on
earning assets exceeds interest paid on interest-bearing
liabilities.  Interest-earning assets include loans and
investment securities.  Interest-bearing liabilities include
interest-bearing deposits and borrowed funds such as Federal
Home Loan Bank borrowings.  Net interest income remains the
primary source of revenue for the Company.  Changes in market
interest rates, as well as adjustments in the mix of
interest-earning assets and interest-bearing liabilities,
continue to impact net interest income.

  Market rates did not significantly fluctuate in 1996.  In
general, long-term interest rates were flat for most of 1996,
increasing slightly in the fourth quarter.  Short-term rates
remained relatively unchanged.  The national prime rate was
8.50% at December 31, 1995, moved to 8.25% in the first quarter
of 1996 and remained at that level despite the increase in
long-term interest rates.  The Company's Asset Liability
Committee ("ALCO") meets on a regular basis and monitors
adjustments in interest rates and sets pricing guidelines for
the Company.

  In 1996, the Company recorded net interest income of
$25,431,000, an increase of 14.1% from 1995.  Total interest
income reached $47,397,000 while interest expense totaled
$21,966,000.  Included in interest income is $1,399,000 of
tax-exempt income from investments issued by states and
political subdivisions.  Since these revenues are not taxed, it
is more meaningful to analyze net interest income on a fully-tax
equivalent ("FTE") basis.

  Net interest margin is calculated by dividing FTE net interest
income by average interest-earning assets and serves as a
measurement of the net revenue stream generated by the Company's
balance sheet.  In 1996, net interest margin was 4.75%, an
increase of 7 basis points compared to last year's 4.68%.  This
increase can be attributed to the Company's strong loan growth
of over $40 million in 1996 as well as the assumption of
approximately $75 million in deposits related to the Banking
Center Acquisition.  These deposits were primarily utilized as
funding sources for 1996's loan growth and also allowed the
Company to pay off certain higher-cost borrowings.  Management
anticipates increasing pressure on future net interest margin.

  Detailed analysis of several categories within interest-earning
assets and interest-bearing liabilities reveal changes in mix
and shifts in interest rates.  In 1996, average balances in
commercial loans increased $11,118,000 or 9.8%.  The average
yield on those loans decreased from 9.88% in 1995 to 9.54% in
1996 due primarily to the increasing competition for commercial
loans in the Company's markets.  Average real estate loan
balances grew $15,769,000 or 10.1% to $172,367,000.  This volume
increase provided additional interest income on real estate
loans of $689,000 to $14,322,000, an increase of 4.8%, despite a
decrease in average yield of 42 basis points to 8.31%.  Consumer
loans also continued to grow, increasing $6,155,000 or 6.4% to
an average of $102,759,000 in 1996.  The Company's yield on
consumer loans significantly increased, reaching 10.66% in 1996
compared to 9.63% in the prior year.  This reflects management's
intent to price consumer loans at levels commensurate with the
inherent risk of these loans, in particular in the indirect
portfolio.  The Company has been able to meet its operating
goals through the growth of the loan portfolio at competitive
but profitable yields.

  The Company's interest costs in 1996 increased $1,189,000, but
the rate paid on these funding sources decreased from 4.87% in
1995 to 4.59% in 1996.  The Banking Center Acquisition allowed
the Company to quickly grow its balance sheet yet maintain
competitive pricing on its funding sources.  In addition, the
Company had $10 million of brokered certificates of deposits
mature, which were replaced with lower interest rate funding
sources.

  Interest costs on traditional deposit products decreased 31
basis points to 4.48% compared to 1995.  The most significant
component of interest expense in 1996 was interest paid on time
deposits (i.e., certificates of deposits).  In 1996, the Company
paid interest of $12,922,000, or 5.51%, on average time deposit
balances of $234,550,000.  In 1995, the average rate paid on
time deposits totaled 5.76% on average balances of $222,898,000.
The largest increase occurred in average interest-bearing
demand deposits, which grew $19,096,000 to $111,376,000.  The
cost of these funding sources averaged 3.28% in 1996, down 22
basis points from 1995.  Management expects deposit pricing to
be increasingly competitive in 1997.

  In 1996, the Company continued its expanded use of short-term
borrowings as a funding source.  Historically the Company's
cash management services offered to a variety of business
customers have provided short-term funding, specifically
overnight repurchase agreements.  In 1995, the Company's average
balances of overnight repurchase agreements increased $3,226,000
(or 32.6%) to $13,134,000.  The average rate paid in 1996 on
overnight repurchase agreements totaled 3.82%, down 19 basis
points from the prior year's average rate of 4.01%.  These rates
are based on selected indices which modestly decreased in 1996.

  Interest expense on average short-term Federal Home Loan Bank
("FHLB") advances in 1996 totaled $698,000, an average interest
rate of 5.68%.  Average short-term FHLB balances totaled
$8,110,000 in 1995 at an average cost of 6.13%.  Management
plans to maintain access to FHLB borrowings as an appropriate
funding source.

  Interest expense on long-term borrowings increased significantly
in 1996.  Total interest costs related to long-term borrowings
totaled $1,678,000 in 1996, up $295,000 (or 21.3%) compared to
1995.  The rate paid on average long-term borrowings totaled
7.14% in 1996, an increase of 102 basis points compared to
1995's average rate of 6.12%, reflecting the increase in
long-term borrowing rates in 1996.  The majority of the
Company's long-term borrowings are fixed rate FHLB borrowings.


Non-Interest Income
- -------------------
  Non-interest income (excluding securities transactions) from
operations reached new levels in 1996, totaling $5,130,000, an
increase of 15.1% compared to 1995.  Several categories had
strong growth compared to 1995.  Management continues to focus
on non-interest income as a primary source of cost-recovery.

  The Company's Investment and Trust Division continued its strong
earnings trend.  The fee structure for fiduciary activities is
based primarily on the fair value of assets being managed, which
totaled nearly $430 million at December 31, 1996, an increase of
$40 million from the previous year-end.  As a result of the
growth in market values and in the number of accounts served,
income from fiduciary activities totaled $1,897,000, an increase
of 8.3% compared to 1995.  In 1997, management plans to continue
expansion of the Investment and Trust Division's presence in our
new markets and correspondingly increase non-interest income
through this expansion in service area.

  In 1996, service charge income related to deposits
increased $372,000 or 23.8% to $1,937,000.  Several factors
contributed to this growth, but primarily revenue streams
related to the $75 million growth in deposits assumed in the
Banking Center Acquisition.  Increases in fee income were fueled
primarily by this growth in number of customers and their
related deposit accounts.  Management is pleased with the
performance of the new banking centers and anticipates similar
revenue in the future.  Revenues from electronic banking fees
and other cost-recovery based fees and charges also increased in
early 1996 due to a combination of modifications in the
Company's fee schedule and increased volume.  Other sources of
non-interest income increased as a result of the Company's
continued investment in electronic banking products such as the
Peoples Connect Card, a debit card first introduced in 1996.

  In late 1995, First National Bank's subsidiaries, Northwest
Territory Life Insurance Agency, Inc. and Northwest Territory
Property and Casualty Insurance Agency, Inc. (the "Agencies"),
were awarded insurance agency powers in the State of Ohio.  The
Agencies received Certificates of Qualification to provide full
life and property insurance product lines to consumers in Ohio. 
These Agencies were the first in Ohio to be affiliated with a
financial institution.  Although the Agencies' results of
operations did not have a material impact on 1996 results, they
are anticipated to produce income growth and long-term value to
the Company through internal development as well as external
affiliation and acquisition.  Currently, the Agencies are
generating fee income on sales of annuities, mutual funds, and
other similar investment products, as well as life insurance
policies.  Management intends to develop the Agencies' property
and casualty insurance product lines through both internal
development and acquisition of existing independent agencies.

  Management will continue to explore new methods of enhancing
non-interest income in the future.  Both traditional and
non-traditional financial service products are being analyzed
for inclusion in the product mix currently being offered by the
Company.


Non-Interest Expense
- --------------------
  Maintaining acceptable levels of non-interest expense and
operating efficiency are important performance objectives for
the Company.  In 1996, non-interest expense totaled $17,522,000,
an increase of 4.2% over the prior year.  In 1996, non-interest
expense was affected by a variety of sources, including a
reduction in FDIC insurance premiums and additional amortization
of intangibles and operational expense related to the Banking
Center Acquisition.

  In 1995, non-interest expense was impacted by the voluntary
early retirement program offered to certain qualifying employees
(representing approximately 7% of the Company's employee base at
the time).  In addition to rewarding long-time employees for
their valuable years of service, the program was designed to
position the Company to manage the future challenges facing the
banking industry.  All employees eligible for the program
accepted the offer and as a result, the Company recognized a
charge to salaries and employee benefits of $777,000 in 1995.  

  Salaries and employee benefits in 1996 totaled $7,514,000, down
4.1% from 1995's amount (which included the early retirement
charge).  Management expects salaries and employee benefits to
modestly increase in 1997 due to the January completion of the
Russell Federal Acquisition, the expected completion of an
acquisition of the Baltimore Banking Center in first quarter
1997, and the impact of a full-year's operation of the three
full-service offices from the 1996 Banking Center Acquisition.

  Non-interest expense decreased in 1996 due to a reduction in
insurance premiums paid on Bank Insurance Fund ("BIF") deposits.
In 1995, BIF related expense totaled $481,000 compared to
$61,000 in 1996.  On September 30, 1996, legislation was passed
to recapitalize the Savings Association Insurance Fund ("SAIF")
and affected the Company, due to small balances of "Oakar"
deposits held at Peoples Bank.  The Company paid a one-time
expense of $40,000 to recapitalize the SAIF (the fund
established to insure the deposits of thrift institutions). 

  The legislation also mandated future assessments for insurance
premiums.  In years 1997 to 1999, the Company expects to pay an
annual rate of 1.29 cents for every $100 of domestic deposits
held at Peoples Bank and First National Bank.  In addition, the
Company will also annually pay 6.44 basis points per $100 of
deposits to the SAIF for its balance of "Oakar" deposits
held at Peoples Bank as well as the deposits held at Russell
Federal.  For the years 2000 to 2017, both banks and thrifts
will annually pay 2.43 basis points per $100 of deposits. 
Although 1997's expense to insure the Company's deposit base
will increase due to the Russell Federal and Baltimore 
Banking Center acquisitions, management does not expect
the BIF-SAIF combination to have a material impact on the
Company's future results of operations.  Lower deposit insurance
premiums in the future should improve the Company's related
efficiency ratios.

  Several categories within non-interest expense remained at
levels comparable to the prior year.  As expected, net occupancy
expenses and depreciation expense on furniture and fixtures
increased slightly due to the Banking Center Acquisition's
related fixed assets.  The Company's increased investment in
technology and other customer-service enhancements will also
impact depreciation expense in the future.  Management feels
that non-interest expense was leveraged in 1996 to enhance
customer service and improve market share.

  In 1996, amortization of intangibles totaled $419,000 compared
to $159,000 in 1995.  This increase was due to the intangibles
related to the Banking Center Acquisition.  Future amortization
of intangibles will be increased in 1997 by the Russell Federal
and Baltimore Banking Facility acquisitions.  Management does 
not expect the additional expense to materially impact the 
results of operations of the Company.

  In October 1995, the FASB approved SFAS No. 123, "Accounting for
Stock-Based Compensation".  SFAS No. 123 defines a fair value
based method of accounting for an employee stock option or
similar equity instrument or allows an entity to continue to
measure compensation cost for those plans using the intrinsic
value based method prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees" ("Opinion No. 25").  SFAS No. 123
is effective for transactions entered into in fiscal years that
begin after December 15, 1995.

  Under the fair value based method, compensation cost is measured
at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting
period.  Under the intrinsic value based method, compensation
cost is the excess, if any, of the quoted market price of the
stock at grant date or other measurement date over the amount an
employee must pay to acquire the stock.  The Company maintains
fixed price stock option plans which have no intrinsic value at
the grant date, and under Opinion No. 25, there is no
compensation expense to be recognized.

  As permitted by SFAS No. 123, the Company will continue to
account for stock-based compensation under Opinion No. 25.  The
effect of applying SFAS No. 123's fair value method to the
Company's 1996 and 1995 granted stock options results in net
income and earnings per share that are not materially different
from amounts reported.


Return on Assets
- ----------------
  For the year ended December 31, 1996, return on average assets
("ROA") was 1.29%, up from 1995's ratio of 1.15%.  The increase
in ROA can be attributed to increased net income through
enhanced net interest income as well as the effect of the early
retirement program on 1995's results of operations.  Management
will continue to review opportunities to improve the efficiency
of the Company's operations and expects ROA to remain stable or
increase slightly in 1997.


Return on Equity
- ----------------
  Management recognizes that the Company's return on average
stockholders' equity ("ROE") is an important indicator of an
entity's financial performance.  Due mostly to the negative
impact to 1995's net income related to the early retirement
program expense, ROE was 12.33% a year ago.  In 1996, ROE
reached 14.43%, the highest level in the Company's history.

  1996's increase in ROE compared to 1995 can be attributed
primarily to increased net income as well as the effect of
leveraging of the Company's balance sheet through assumed
deposits in the Banking Center Acquisition, which provided
approximately $75 million in deposits and increased revenue
potential without increasing stockholders' equity.  The
Company's capital is adequate under regulatory and industry
standards, as discussed in Note 11 of the Notes to the Company's
Consolidated Financial Statements.

  Total equity was also affected in 1996 by the adjustment in the
net unrealized holding gain, net of deferred income taxes, on
available-for-sale securities.  The adjustment of equity related
to the net unrealized holding gain on investment securities
decreased from $2,469,000 at year-end 1995 to $1,428,000 at
December 31, 1996, due to modest increases in long-term interest
rates since December 31, 1995.

  Management will continue to emphasize improvement in ROE, among
other indicators, as a method of measuring performance in 1997.


Federal Income Tax Expense
- --------------------------
  Federal income taxes increased from $2,589,000 in 1995 to
$3,471,000 in 1996.  This increase can be attributed to the
Company's higher pre-tax income and a modest decrease in
tax-exempt income.  The Company's effective tax rate for 1996
was 31.2%, up modestly from 1995's effective tax rate of 30.0%.


Overview of Balance Sheet
- -------------------------
  In 1996, the Company grew its balance sheet primarily through
increased loan balances, funded by the deposits assumed in the
Banking Center Acquisition.  Total assets increased $73,205,000
or 13.5% to $616,635,000 at year-end 1996.  Since December 31,
1995, the Company's asset growth has primarily occurred in
interest earning assets such as loans and investment
securities.  Loans grew nearly $43 million (or 11.3%) to
$422,413,000 and investment securities grew $16 million (or
12.2%) to $147,783,000.

  Growth in assets in 1996 was provided primarily from the funds
acquired in the Banking Center Acquisition.  Total deposits
increased $75,615,000 (or 17.6%) to $504,692,000, which enabled
the Company to reduce higher-costing short-term borrowings with
the Federal Home Loan Bank and enhance net interest margin. 
Long-term borrowings, comprised primarily of FHLB borrowings
with maturities greater than one year, grew $6,058,000 (or
26.2%) to $29,200,000 at December 31, 1996.

  Stockholders' equity increased $4,719,000, or 9.2%, to
$56,193,000 at December 31, 1996.  Certain components of
stockholders' equity and all per share information have been
adjusted for the 10% stock dividend issued to shareholders of
record as of July 15, 1996.  The Company purchased $332,000 of
treasury shares in 1996 and also reissued treasury shares in the
10% stock dividend and through exercised stock options,
resulting in total balance of treasury stock of $54,000 at
December 31, 1996.  Please see the Consolidated Statements of
Stockholders' Equity found on page 18 in this Report for
additional information regarding the changes in stockholders'
equity.


Cash and Cash Equivalents
- -------------------------
  The Company's cash and cash equivalents totaled $28,517,000 at
December 31, 1996, an increase of $7,523,000 compared to
year-end 1995.  The Company's balance sheet growth essentially
dictated the need for increased Federal Reserve cash
requirements.  Total cash and cash equivalents fluctuate on a
daily basis due to transactions in process and other liquidity
needs.  Management feels the liquidity needs of the Company are
satisfied by the current balance of cash and cash equivalents,
readily available access to traditional and non-traditional
funding sources, and the portion of the investment and loan
portfolios that mature within one year.  These sources of funds
should enable the Company to meet cash obligations and
off-balance sheet commitments as they come due.


Investment Securities
- ---------------------
  Investment securities totaled $147,783,000, up $16,021,000 or
12.2% from year-end 1995.  All of the Company's investment
securities are classified as available-for-sale.  Management
believes the available-for-sale classification provides
flexibility for the Company in terms of selling securities as
well as interest rate risk management opportunities.  At
December 31, 1996, the amortized cost of the Company's
investment securities totaled $145,619,000, resulting in
unrealized appreciation in the investment portfolio of
$2,164,000.

  Except for investments in mortgage-backed securities, the
specific components of the Company's investment portfolio
remained relatively unchanged in 1996.  At year-end, investments
in mortgage-backed securities totaled $60,780,000, up
$14,764,000 (or 32.1%) from December 31, 1995's balance of
$46,016,000.  Increases in this category can be attributed
primarily to a growth strategy implemented in early 1996.  In
anticipation of the Banking Center Acquisition (and its
associated deposits), management initiated a pre-acquisition
investment program to take advantage of more favorable asset
yields on mortgage-backed securities.  As a result, balances in
mortgage-backed securities grew significantly in the first
quarter of 1996 and remained at those levels throughout the
year.  These acquisitions reflect a portion of the strategy
implemented by the Company in 1995 to increase incremental
amounts of net interest income by investing in higher-yield
instruments.  The pre-acquisition investment strategy was also
designed to position the portfolio for future earnings while
maintaining adequate liquidity and acceptable interest rate risk.

  Management monitors the earnings performance and liquidity of
the investment portfolio on a regular basis through ALCO
meetings.  The group also monitors net interest income, sets
pricing guidelines, and manages interest rate risk for the
Company.  Through active balance sheet management and analysis
of the investment securities portfolio, the Company maintains
sufficient liquidity to satisfy depositor requirements and the
various credit needs of its customers.


Loans
- -----
  Loan volumes increased significantly in 1996 from further
penetration in the Company's markets.  Total loans increased
$42,887,000 or 11.3% to $422,413,000.  Growth occurred in all
types of loans in 1996.

  Real estate loans to our retail customers continue to be the
largest portion of the loan portfolio.  Total real estate loans
reached $175,505,000 at December 31, 1996, an increase of
$21,036,000 (or 13.6%) compared to year-end 1995.  In 1996,
significant growth occurred in 1 to 4 family residential loans
due in part to a special loan program which offered fixed rate
loans to single family residential borrowers.  The program met
its goals in mid-1996 and was well accepted in the markets
served by the Company.  Residential real estate lending
continues to represent a major focus of the lending portfolio
due to the lower risk factors associated with these types of
loans and the opportunity to provide additional products and
services to these consumers.

  Also, real estate loan activity accelerated in 1996 due to the
Company's special home equity credit line ("Equiline") program,
designed to respond to the growing credit needs of the Company's
customers during mid-1996.  The special program offered 5-year,
fixed rate Equilines at competitive interest rates and no loan
closing costs.  As a direct result of the special program, the
Company's Equiline balances increased to $15,453,000 at December
31, 1996, up $5,179,000 (or 50.4%) since year-end 1995.  In the
process, the Company nearly doubled the number of Equiline
accounts as a result of the special program, which reached its
intended goals near the end of second quarter 1996.  As
expected, outstanding balances have increased.  Management is
pleased with the response to the special Equiline promotion and
will continue to strive for quality loan programs designed to
meet the needs of the Company's customers.

  Lending activity in the Banking Center Acquisition markets has
centered primarily on real estate loans.  Management expects to
continue to penetrate these local southeastern Ohio markets in
1997, providing increased loan activity.  Mortgage lending will
remain a vital part of the Company's lending operation due to
the programs offered to customers, who continue to seek quality
real estate loan products in a competitive environment.

  In 1996, commercial, financial, and agricultural loans
("commercial loans") increased $10,621,000 (or 9.1%) to
$127,927,000.  Commercial loan demand continues to be strong in
several of our markets.  In particular, the Licking County
market in central Ohio continued its loan growth in 1996,
reaching over $23 million in loans at year-end.  Established in
1993, this office has initiated increases in both the number of
customers served as well as loan balances (up approximately $10
million in 1996) in the central Ohio market, one of the leading
growth markets and economic sectors in Ohio.

  The financial services industry has experienced recent increases
in consumer debt and the Company is no exception as its consumer
lending has grown to meet customer demand.  The Company's total
consumer loans were $109,037,000 at December 31, 1996, an
increase of $7,205,000 (or 7.1%) from year-end 1995.  The
majority of the Company's consumer loans are in the indirect
lending area.  At December 31, 1996, the Company had indirect
loan balances of $68,333,000, up $5,686,000 (or 9.1%) from
year-end 1995's balance of $62,647,000.  This growth can be
attributed to the Company's commitment to quality customer
service and the continued strong demand for indirect loans in
the markets served by the Company.  Lenders use a tiered pricing
system that enables the Company to apply interest rates
commensurate with the risks inherent in the indirect loan. 
Management recently initiated steps to reinforce the use of this
tiered system and anticipate growth in indirect loan balances to
be tempered in 1997.

  The Company's credit card balances at December 31, 1996, were
$6,993,000, an increase of $625,000 (or 9.8%) from the prior
year's balance of $6,368,000.  The Company has offered several
new products to better serve the credit needs of our customers,
including a no-fee credit card, increased credit limits to
qualified customers, and specialty credit cards issued to
specific organizational groups.  Management will continue to
evaluate new opportunities to serve our credit card customers.

  In May 1995, the FASB issued SFAS No. 122, "Accounting for
Mortgage Servicing Rights" ("SFAS No. 122").  SFAS No. 122
amends SFAS No. 65 and requires financial institutions to
recognize as separate assets rights to service mortgage loans
for others, whether those rights were acquired through purchase
or through the origination and subsequent sale of loans with
servicing rights retained.  SFAS No. 122 is to be applied
prospectively for years beginning after December 15, 1995, with
earlier application encouraged.  The Company does not engage in
significant secondary market activity, and accordingly, the
adoption of SFAS No. 122 was immaterial to the Company's
financial statements.


Loan Concentration
- ------------------
  The Company does not have a concentration of its loan portfolio
in any one industry.  Real estate lending (both mortgage and
construction loans) continues to be the largest component of the
loan portfolio, representing $185,449,000 (or 43.9%) of total
loans, while commercial, financial, and agricultural loans
totaled $127,927,000 (or 30.3%) at December 31, 1996.

  The Company's lending is primarily focused in the local
southeastern Ohio market and consists principally of retail
lending, which includes single-family residential mortgages and
other consumer loan products.  One of the Company's largest
group of commercial loans consists of automobile dealer floor
plans, which totaled $13,672,000 at year-end 1996.  It is the
Company's policy to obtain the underlying inventory as
collateral on these loans.


Allowance for Loan Losses
- -------------------------
  The allowance for loan losses as a percentage of total loans
decreased from 1.77% at December 31, 1995 to 1.63% at year-end
1996.  The total dollar amount of the reserve increased $147,000
over the same period.  The Company's 1996 provision for loan
losses totaled $1,965,000, while gross chargeoffs were
$2,329,000 and recoveries amounted to $511,000.  In 1995, the
Company had gross chargeoffs of $1,803,000 and recoveries of
$431,000.  The Company's provision for loan losses increased in
1996 due to the combination of loan growth, loan delinquencies,
and anticipated chargeoff activity in the consumer loan
portfolio.

  Chargeoff activity in 1996 was very similar to 1995.  A
significant portion of the Company's chargeoffs in 1996 occurred
in consumer lending.  Increased loan activity and loan
delinquencies, especially in the indirect lending area, resulted
in total gross chargeoffs of $1,726,000 in 1996, up $374,000 (or
27.7%) compared to 1995.  Management had anticipated consumer
chargeoff activity to decrease in 1996, but consumer credit
delinquency increased modestly.  As a result, management
increased its allocation of the allowance to consumer loans to
address this exposure and now expects the rate of consumer
chargeoffs to remain steady for 1997.

  Commercial loan chargeoffs totaled $342,000 and recoveries were
$36,000, resulting in net chargeoffs of $306,000 in 1996 (up
$195,000 compared to 1995).  Real estate loan chargeoffs and
recoveries were insignificant in both 1996 and 1995.  Management
continually monitors the loan portfolio through its credit
review department and loan loss committee to determine the
adequacy of the allowance for loan losses and considers it to be
adequate at December 31, 1996.  Management expects 1997's loan
loss provision to be comparable to 1996's, due mostly to
anticipated loan growth and industry predictions of continued
consumer credit delinquencies.  Management believes the current
allowance for loan losses of 1.63% of total loans at year-end
1996 to be adequate to absorb inherent losses in the portfolio.

  Nonaccrual loans and those loans 90 days past due totaled
$999,000 and $621,000, respectively, at December 31, 1996. 
Nonperforming loans as a percentage of outstanding loans totaled
0.39% at year-end 1996, an improvement from 0.46% at December
31, 1995.  Management believes the current nonperforming loan
ratio reflects the overall quality of the Company's loan
portfolio.


Funding Sources
- ---------------
  The Company considers deposits, short-term borrowings, and
long-term borrowings when evaluating funding sources. 
Traditional deposits continue to be the most significant source
of funds for the Company and the expansion of the deposit base
through the Banking Center Acquisition sustained the asset
growth of the Company.  In 1996, total deposits grew 17.6% to
$504,692,000, with the majority of the growth occurring in time
deposits.  The Banking Center Acquisition accounted for most of
this increase.

  In 1996, the most significant change to the Company's funding
sources occurred as a result of the Banking Center Acquisition,
causing a shift from year-end 1995 balances in short-term
borrowings to traditional customer deposits in April, 1996.  In
late 1995, the Company implemented a growth strategy designed to
enhance net interest income and other performance ratios, where
investment securities were funded with short-term borrowings. 
At December 31, 1995, short-term borrowings totaled $33,276,000.
The funds associated with the Banking Center Acquisition
essentially replaced the short-term borrowings as a funding
source in the second quarter of 1996.

  After utilizing short-term borrowings in early 1996 in
anticipation of the Banking Center Acquisition, the Company
decreased total short-term borrowings to below those at year-end
1995.   At December 31, 1996, the Company had $19,522,000 in
total short-term borrowings, consisting primarily of corporate
deposit accounts in the form of repurchase agreements.  The
Company will continue to access short-term FHLB borrowings as
necessary and had a balance of $2,500,000 in this type of
borrowing at year-end 1996.

  Growth occurred in all major categories of traditional deposits
in 1996, occurring primarily through the Banking Center
Acquisition.  Growth in interest bearing deposits totaled
$62,272,000 (or 16.4%) in 1996, rising to $441,282,000 at
December 31, 1996.  Non-interest bearing deposits totaled
$63,410,000 at year-end 1996, up $13,343,000 (or 26.7%) from
December 31, 1995, representing management's focus on increasing
non-interest bearing balances.  Management feels the deposit
base remains the most significant funding source for the Company
and will continue to concentrate on deposit growth and
maintaining adequate net interest margin to meet the Company's
strategic goals. 

  Nearly all major categories of deposits experienced growth in
1996, in particular certificates of deposit ("CD's"), which
totaled over $248 million at December 31, 1996, up nearly $30
million (or 13.5%).  The Company continues to offer deposit
specials to remain competitive in its market area.  In the
Banking Center Acquisition, the Company acquired approximately
$41 million in CD's and Individual Retirement Accounts.  During
1996, the Company also replaced $10 million of brokered CD's
with a combination of lower cost short-term and long-term FHLB
borrowings.

  Other deposit categories also grew in 1996.  Interest-bearing
transaction accounts totaled $116,442,000 at December 31, 1996,
up $25,131,000 (or 27.5%) from $91,311,000 at year-end 1995. 
Savings deposits were up $7,632,000 (or 11.1%) to $76,347,000 at
December 31, 1996.  The Banking Center Acquisition bolstered
growth in deposits in 1996 and management is pleased with the
overall retention of those deposits.  Internal growth was
minimal in 1996 but management expects internal growth to be
generated in 1997 due to special programs to be offered,
designed to increase non-interest and interest bearing deposits.
Management also expects deposit balances to increase in 1997
through the Russell Federal Acquisition ($19.5 million in
deposits) and the Baltimore Banking Center Acquisition
(approximately $17.5 million in deposits).

  In addition to traditional deposits, the Company continues to
maintain long-term borrowings from the FHLB.  This provides the
Company with a reliable source of funds at fixed and indexed
rates for longer periods of time than traditional deposit
products, and the opportunity to match longer term fixed rate
mortgages and other extended-maturity asset commitments against
a similar funding source.  Total long-term FHLB advances were
$29,200,000 at December 31, 1996, a net increase of $7,618,000
since year-end 1995 (new advances totaled $10,500,000 and
scheduled principal paydowns were $2,882,000).  Management plans
to utilize long-term FHLB borrowings as an appropriate funding
source and currently has additional borrowing capacity with the
FHLB. 

  On December 31, 1996, as scheduled, the Company also retired
long-term debt held with an unaffiliated financial institution
in the amount of $1,430,000.  The payment was funded from a
corresponding dividend from Peoples Bank.

  Effective January 1, 1997, the Company completed the Russell
Federal Acquisition with a cash payment of $9.25 million.  The
Company funded the purchase with internally generated sources,
including dividends from Russell Federal (after completion of
the purchase) and payoff of a $3 million intercompany capital
note with Peoples Bank.  The Company incurred additional debt in
January 1997, with an unaffiliated financial institution in the
amount of $3 million, to assist in the funding of the Russell
Federal Acquisition.


Capital/Stockholders' Equity
- ----------------------------
  The capital position of the Company grew approximately $4.7
million (or 9.2%) to over $56 million at December 31, 1996,
providing a strong base for profitable growth.  Stockholders'
equity increased in 1996 for several reasons, but primarily from
the retention of net income.  The Company paid dividends of
$2,240,000 in 1996, a dividend payout ratio of 29.28% of
earnings.  Management feels this is an acceptable payout ratio
for the Company and anticipates similar payout ratios in future
periods.

  Equity growth was tempered in 1996 by the adjustment for the net
unrealized holding gain on available-for-sale securities, net of
deferred income taxes, which decreased $1,041,000 to a net gain
of $1,428,000 at year-end 1996.  Since all of the investment
securities in the Company's portfolio are classified as
available-for-sale, both the investment and equity sections of
the Company's balance sheet are more sensitive to the changing
market values of investments.  In 1996, long-term interest rates
modestly increased, causing a corresponding decrease in the
market value of the investment portfolio.

  The Company has also complied with the standards of capital
adequacy mandated by the banking industry.  Bank regulators have
established "risk-based" capital requirements designed to
measure capital adequacy.  Risk-based capital ratios reflect the
relative risks of various assets banks hold in their portfolios.
A weight category of either 0% (lowest risk assets), 20%, 50%,
or 100% (highest risk assets) is assigned to each asset on the
balance sheet.  Detailed information concerning the Company's
risk-based capital ratios can be found in Note 11 of the Notes
to the Consolidated Financial Statements.  At December 31, 1996,
all of the Company's and each of its banking subsidiaries'
risk-based capital ratios were above the minimum standards for a
well-capitalized institution.  Management continues to monitor
risk-based capital ratios and the capital position of the
Company and each of its banking subsidiaries as part of its
strategic decision process.

  On August 1, 1996, the Company issued a 10% stock dividend to
shareholders of record on July 15, 1996, marking the third time
in the last four years that the Company has issued a 10% stock
dividend.  The Company also declared a two-for-one stock split
in 1994.  The Company retired all treasury shares as part of the
issuance of the 10% stock dividend in August 1996. Subsequently, 
the Company's Board of Directors authorized the Company to 
purchase up to 10,000 additional treasury shares at market 
prices for use in conjunction with employee benefit plans.  
At December 31, 1996, the Company had 2,000 shares in treasury 
for use in its employee benefit plans. 


Liquidity
- ---------
  Liquidity measures an organization's ability to meet cash
obligations as they come due.  During the year ended December
31, 1996, the Company generated cash from operating and
investing activities of $15,555,000 and used $8,032,000 in
financing activities.  The major cash inflow was the cash
received in the Banking Center Acquisition of $68,004,000, and
the major outlays were for loans of $44,504,000 and securities
of $45,240,000.  The Consolidated Statements of Cash Flows
presented on page 19 of the Company's Consolidated Financial
Statements provides analysis of cash flow activity.

  Additionally, management considers that portion of the
investment securities and loan portfolios that matures within
one year as part of liquid assets.  The Company's liquidity is
monitored by the ALCO, which establishes ranges of acceptable
liquidity.  The current liquidity position is adequate to fund
off-balance sheet commitments and liabilities as they come due. 
Please see additional discussion of off-balance sheet
commitments in Note 10 of the Notes to the Consolidated
Financial Statements.


Effects of Inflation on Financial Statements
- --------------------------------------------
  Substantially all of the Company's assets relate to banking and
are monetary in nature.  Therefore, they are not impacted by
inflation in the same manner as companies in capital intensive
industries.  During a period of rising prices, a net monetary
asset position results in loss in purchasing power and
conversely a net monetary liability position results in an
increase in purchasing power.  In banks, monetary assets
typically exceed monetary liabilities and therefore, as prices
have increased over the past year, financial institutions
experienced a modest decline in the purchasing power of their
assets.


Interest Rate Sensitivity
- -------------------------
  The following table presents the Company's interest rate
sensitivity position using the static gap method at December 31,
1996 (dollars in thousands):

                          0 - 3      4 - 12     1 - 5      Over 
                      		  Months     Months     Years     5 Years     Total 
                     			---------  ---------  ---------  ---------  ---------
Interest earning assets:                                       
- ------------------------
Investment securities 
(all securities 
available-for-sale):                      
  Taxable               $  20,891  $  16,799  $  52,675  $  41,207  $ 131,572 
  Tax-exempt                  251      1,676      3,913     10,371     16,211 
                     			---------  ---------  ---------  ---------  ---------
    Total                  21,142     18,475     56,588     51,578    147,783 
Federal funds sold          2,100                                       2,100 
Loans                     148,703    124,370    112,958     36,382    422,413 
Interest-bearing 
 deposits with banks         217                                         217 
                     			---------  ---------  ---------  ---------  ---------
      Total               151,020    142,845    169,546     87,960    572,513 
                     			---------  ---------  ---------  ---------  ---------

Interest-bearing liabilities:                                     
- -----------------------------
Deposits                  248,124    104,893     86,289      1,976    441,282 
Federal funds purchased        37                                          37 
Securities sold under 
 agreements to repurchase  16,985                                      16,985 
Short-term Federal Home 
 Loan Bank borrowings       2,500                                       2,500 
Long-term Federal Home 
 Loan Bank borrowings       4,120      7,882     13,503      3,695     29,200 
                     			---------  ---------  ---------  ---------  ---------
      Total               271,766    112,775     99,792      5,671    490,004 
                     			---------  ---------  ---------  ---------  ---------
  Interest 
    sensitivity         $ (99,604) $  30,070  $  69,754  $  82,289  $  82,509 
                     			=========  =========  =========  =========  =========


  The Interest Rate Sensitivity table above shows that the Company
is in a net asset sensitive position.  In theory, this means
that if interest rates increase, the Company's net income will
increase over time.  Conversely, if interest rates decline, so
too will net income.  The above table allocates interest rate
sensitivity within various time frames.  Within zero to three
months, the Company is liability sensitive and all other
categories are asset sensitive.  Management monitors the asset
and liability sensitivity through the ALCO and uses this data to
make appropriate strategic decisions.

  In addition to the interest rate sensitivity schedule and
asset/liability repricing schedules, management has recently
added simulation modeling to its analysis of interest rate risk.
This combination provides dynamic information concerning the
Company's balance sheet structure in different interest rate
environments.  When using simulation modeling, assumptions based
on anticipated market pricing are made to interest-earning
assets and interest-bearing liabilities.  These adjustments more
accurately determine the interest rate risk of the Company.  In
1996, the Company implemented in-house technology, which
provides more simulation modeling to assist the ALCO in terms of
balance sheet structure and interest rate risk management.

  As part of its asset/liability strategies, the Company may use
certain off-balance sheet derivatives to manage interest rate
risks.  In February 1995, the Company paid a $195,000 premium 
for interest rate floors with a total notional value of 
$20 million.  The interest rate floors require the counter-party 
to pay the difference between the specified floor rate and 
an index rate.  The Company receives nothing if the index rate 
exceeds the specified floor rate.  The Company is subject to 
the risk that the effect of changes in interest rates will 
cause the Company to earn less than the current market rates 
on the commercial loans associated with these floors.  These 
interest rate floors also subject the Company to the risk that 
the counter-parties may fail to perform.  To minimize this
credit risk, the Company only enters into these types of
transactions with high-quality, financially secure financial
entities.  The exposure to credit risk is substantially less
than the notional principal amounts since only the interest rate
differential is received and the premium was paid at the
inception.  In 1996, due to interest rates being below the
indexed "strike" rate on the interest rate floors for all of
1996, the Company experienced a modest enhancement to net
interest margin and increased net interest income.  These
agreements expire in February 1998 and did not materially affect
net income in 1996.


Outlook for 1997
- ----------------
  Management is excited with the Company's future potential and
the plans for 1997.  Operating results for 1996 represent
management's commitment to improved financial performance.  The
consistent earnings record has positioned the Company to achieve
established goals and enhance investor return.  Management feels
the current combination of people and technology has positioned
the Company well for future customer service challenges. 
Continued investments in technology provide the opportunity to
compete at higher levels than other financial institutions of
similar size. 

  Many goals have been established for future operations, most of
which focus on customer service enhancement as a means of
increasing shareholder value.  In addition to providing superior
customer service, management feels growth into new markets, as
well as further penetration of existing markets, is a priority
of the Company.  In 1997, the first quarter acquisition of
Russell Federal in Kentucky and the expected completion of a
full-service office in Baltimore, Ohio, are evidence of the
Company's commitment.

  The Banking Center Acquisition and its associated deposits in
1996 provided increased funding sources and new markets for the
Company.  Although virtually no loans were assumed, the markets
of the Banking Center Acquisition have produced nearly $10
million in new loans.  Management believes significant
opportunities exist for future growth in loans.  In addition,
the Company has retained nearly all of the deposits purchased in
the Banking Center Acquisition, one of the main strategic goals
of the purchase.  Management looks forward to continuing the
development of these markets and is confident the performance of
the new offices is an enhancement to the future performance of
the Company.

  Recent technological advances should provide a more efficient
product delivery system to our customers.  Investment in a
PC-based system for the Company's customer service
representatives ("CSR's") was completed in 1996, which allows
each CSR to be connected to the Company-wide electronic network
that provides a faster, more efficient method of serving our
customers.  The system expands the integration of the Company's
financial information and enhances customer service through
readily available product information.  Management believes the
Company is prepared for an electronic distribution system of the
future.

  The Company's balance sheet growth and future leveraging of
equity is a management focus for 1997.  Future loan growth will
rely on the Company's ability to serve both existing markets
(and markets to be penetrated via acquisition) and selected
customers outside those traditional geographic markets. 
Construction loans started in 1996 through low-income housing
projects in southeastern Ohio and expanded opportunities for
construction of model homes outside of the Company's geographic
markets should provide strong future revenue streams.  Also,
management expects loan activity in the Russell Federal market
to boost loan balances.  Management is comfortable with the
current loan to deposit ratio of 83.70% and expects the loan to
deposit ratio to remain stable in early 1997 and decrease
slightly throughout the year due to the increase in deposits
assumed through acquisition.

  External acquisitions will play an important role in the results
of operations in 1997.  In January 1997, the Company completed
the acquisition of Russell Federal in northeastern Kentucky
along the Ohio River.  Management plans to continue Russell
Federal's operation as a savings bank subsidiary with continuity
of management, officers and directors.  At December 31, 1996,
Russell Federal had over $28 million in assets and deposits
exceeding $19 million, and operated one full-service office.  

  Russell Federal represents the first thrift-chartered subsidiary
of the Company.  As a recently converted mutual savings bank,
Russell Federal has a substantial capital base.  The Company's
management anticipates leveraging its capital base to increase
Russell Federal's earnings potential.  The tri-state markets of
southern Ohio, northeastern Kentucky, and western West Virginia
offer expansive growth opportunities and represent some of the
biggest urban markets the Company serves.

  In early 1997 the Company plans to complete the Baltimore
Banking Center Acquisition.  In the transaction, Peoples Bank
will assume approximately $17 million in deposits.  This new
full-service office will allow the Company to expand central
Ohio operations and complement our existing business production
office in Licking County, one of the Company's primary producers
of commercial and real estate loans.  Baltimore is located in
Fairfield County and is part of one of the fastest growing
sectors of Ohio and will add a deposit-gathering presence in
central Ohio for the Company, creating a synergy for efforts in
this area.  Amortization of intangibles related to this
acquisition are not expected to have a material impact on future
results of operations.

  Russell Federal and the Baltimore Banking Center Acquisition
represent the Company's intention to continue to expand its
geographic customer service area.  Future acquisitions, if they
occur, may not be limited to geographic location or proximity to
current markets, rather they will depend upon financial service
opportunities that strengthen the core competencies developed by
the Company.  Management considers mergers and acquisitions to
be a viable method of enhancing the Company's earnings potential
and will continue to pursue appropriate business opportunities
as they develop.

  The recent increase in loan balances has also spurred growth in
delinquencies and net chargeoffs.  Consumer loan chargeoffs
continue to comprise the majority of the Company's loan losses
and delinquencies in other loans such as commercial loans have
increased modestly in recent quarters and as a result, net
chargeoffs in this category slightly increased in late 1996. 
Management feels consumer chargeoffs have stabilized and that
the current allowance for loan losses is adequate to cover
potential chargeoffs as they occur, based on the inherent risk
in the remainder of the loan portfolio.  The 1997 provision for
loan losses is expected to remain at 1996 levels for the near
term and may be affected by the delinquencies in all loan
categories.

  Enhanced non-interest income and controlled non-interest expense
are critical to the success of the Company and is measured in
the financial services industry by the efficiency ratio.  For
the year ended December 31, 1996, the Company's efficiency ratio
was 53.89%, compared to 57.62% for the same period last year. 
Management will continue to focus on its efficiency ratio as a
method of enhancing profitability and strives to reach 50%
efficiency ratio in 1997 through income growth and leveraging of
technology and existing delivery resources.

  The interest rate environment will play an important role in the
future earnings of the Company.  Net interest income in 1996
reached record levels.  In 1997, management expects pressures on
net interest margin to continue.  However, due to the structure
of the balance sheet and other off-balance sheet items,
management estimates net interest income to remain level or
modestly increase in 1997.  The 1997 acquisitions could enhance
net interest income depending on how quickly the Company can
invest the acquired deposits in interest-earning assets with
acceptable yields.  Movements in interest rates continue to
impact the performance of financial institutions but the Company
does not solely manage its balance sheet based upon interest
rate forecasts.  Through its ALCO, management evaluates the
balance sheet and monitors earnings performance, as well as
effectiveness of its liquidity policy.  The group also monitors
net interest income, sets pricing guidelines, and manages
interest rate risk for the Company.

  Management continues to strive for both traditional and
non-traditional methods to increase the Company's earnings and
strengthen the commitment to the communities we serve.  As an
example, in 1996, Peoples Bank entered into an agreement to fund
a low-income housing project in a historic district of Marietta,
Ohio.  As a part of the agreement, Peoples Bank agreed to fund
the construction of the project (expected to be completed in
mid-1997) and participate as an equity contributor to the
project.  In general terms, the Company can anticipate historical
tax credits in 1997 once the structure is certified as a
historically rehabilitated building (estimated mid to late 1997
if construction occurs as planned).  In addition, low-income
housing tax credits can be expected over future periods.  This
project will lower the Company's effective tax rate in 1997.

  The rapid changes in banking combined with increased competition
from all arenas have caused our organization to rethink the way
we do business.  A strong customer focus has been identified 
as key to the continued future growth, as the Company will 
continue to build a "Sales and Service" delivery process 
in 1997, representing a renewed commitment to emphasizing 
our existing strength in serving our customers.  The new 
emphasis is designed to enhance our staff of associates with
the ability to serve the changing needs of our customers over
their lifetimes. 

  Management concentrates on return on equity and earnings per
share objectives, plus other methods, to measure and direct the
performance of the Company.  Many industries have gravitated
towards performance-based compensation for their associates, and
in 1997, the Company will adopt a new incentive plan for all
associates.  This plan is designed to enhance the earnings
potential of the Company and increase shareholder wealth based
on several growth and efficiency measurements, creating an
environment where each employee has a personal stake in the
overall performance of the Company.  Management is excited with
the unlimited potential of the new incentive program and benefit
to the shareholder.  While past results are not an indication of
future earnings, management feels the Company is positioned to
maintain performance of normal operations in 1997.


Comparison of 1995 to 1994
- --------------------------
  The Company reported an increase in net income of 5.3%, to
$6,050,000 in 1995 from $5,748,000 in 1994.  This increase in
earnings provided primary and fully diluted earnings per share
of $1.73 and $1.72, respectively, for the year ended December
31, 1995.  Assets grew to over $543 million, a 9.1% increase
from 1994 total assets of $498 million.  For the year ended 
December 31, 1995, return on average assets was 1.15%, a decline
of five basis points from the 1994 ratio 1.20%.  Return on
stockholders' equity declined to 12.33%.  The primary reason for
these declines was expense related to an early retirement
program offered to qualified employees in late 1995.

  From year-end 1994 to December 31, 1995, the Company's asset
growth occurred primarily in the area of investment securities,
which increased $32,343,000 (or 32.5%) to $131,762,000 at
year-end 1995.  In addition, total gross loans grew $18,173,000
(or 5.0%) to nearly $380 million.  Funding for these increases
was provided by deposit growth and short-term borrowings.  Total
deposits grew to over $429 million, a 6.3% increase over the
December 31, 1994 balance of $403,819,000.  The growth in
short-term borrowings consisted primarily of advances from the
FHLB.  Short-term borrowings rose 68.3% to $33,276,000 at
December 31, 1995.  Long-term borrowings, comprised mostly of
FHLB borrowings with maturities greater than one year, remained
relatively constant, totaling $23,142,000 at December 31, 1995.

  The growth in loan volume and investment securities produced an
increase in total average earnings assets.  Total average
earning assets increased from $444,602,000 at December 31, 1994
to $493,072,000 at December 31, 1995, an increase of 10.9%. From
1995 to 1994, the average yield associated with total average
earnings assets also grew to 8.9% from 8.3%.  The average yield
on loans rose from 8.6% at December 31, 1994, to 9.5% at
December 31, 1995.  However, 1995 average assets yield increases
were more than offset by a corresponding increase in the average
rate associated with deposits and borrowed funds from 1994 to
1995.  Interest revenue and expense both increased at nearly the
same rate during 1995, which resulted in a decrease of 0.15% in
the net yield on average earning assets (net interest margin)
from 4.83% in 1994 to 4.68% in 1995.  

  Non-interest income (excluding gains and losses on sales of
investment securities) increased $99,000 to $4,457,000.  Several
categories of non-interest income had increases in 1995 compared
to 1994.  During 1995, the Company's Investment and Trust
Division continued its earnings trend and provided a strong
boost to non-interest income.  Income from fiduciary activities
totaled $1,751,000 for 1995, an increase of 9.0% compared to
1994.  Income related to account service charges increased
$109,000 (or 7.5%) over 1994 to $1,565,000 in 1995.  Several
factors contributed to this growth, but is primarily due to
increased revenues from electronic banking fees and other
cost-recovery based fees and charges.

  During 1995, the Company recorded net gains of $24,000 resulting
from the sales of investment securities.  This is in contrast to
the net loss of $237,000 recorded on the sales of investment
securities in 1994.  During 1994 management elected to sell some
of the lower yielding investments in its available-for-sale
investment portfolio, and replace those securities with
higher-yielding instruments.  This opportunity to improve the
overall yield of the portfolio was available due to increases in
market interest rates during 1994.

  In December 1995, the Company recognized the results of a
voluntary early retirement program to certain qualifying
employees representing approximately seven percent of the
Company's employee base.  All employees eligible for the program
accepted the offer and as a result, the Company recognized a
charge to salaries and employee benefits of $777,000.  This
expense effectively decreased 1995 net income approximately
$513,000, which impacted comparative results to 1995.

       
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995
- ---------------------------------------------------------------
  The statements in this Annual Report which are not historical
fact are forward looking statements that involve risks and
uncertainties, including, but not limited to, the interest rate
environment, the effect of federal and state banking and tax
regulations, the effect of economic conditions, the impact of
competitive products and pricing, and other risks detailed in
the Company's Securities and Exchange Commission filings.



PEOPLES BANCORP INC.
====================

DIRECTORS
- ---------
Dennis D. Blauser
President, Blauser Energy Corp.

George W. Broughton
Executive Vice President/Sales and Marketing, Broughton Foods Company

Wilford D. Dimit
Owner, First Settlement Square

Robert E. Evans
President and Chief Executive Officer, Peoples Bancorp Inc.

Barton S. Holl
Chairman of the Board, Logan Clay Products

Rex E. Maiden
Chairman of the Board, Maiden & Jenkins Construction Co.

Norman J. Murray
Retired, The Airolite Company

James B. Stowe
Chairman of the Board, Stowe Truck and Equipment Company

Paul T. Theisen
Attorney, Theisen, Brock, Frye, Erb, & Leeper Co., L.P.A.

Thomas C. Vadakin
President, Vadakin, Inc.

Joseph H. Wesel, Chairman
Chairman of the Board and Chief Executive Officer
Marietta Automotive Warehouse, Inc.

Directors Emeritus
- ------------------
Jewell Baker
R. Neil Christy
William K. Hamer
William E. McKinney
Fred R. Price


OFFICERS
- --------
Robert E. Evans
President and Chief Executive Officer

Carol A. Schneeberger
Vice President, Operations

Rolland B. Swart
Vice President, Business Development

Charles R. Hunsaker
General Counsel

John W. Conlon
Chief Financial Officer

Jeffrey D. Welch
Treasurer

RobRoy Walters
Controller

Ruth I. Otto
Corporate Secretary

Karen V. Clark
Auditor

Johanna Burke
Compliance Officer

Teresa A. Pyles
Security Officer

Mark F. Bradley
Manager of Accounting and External Reporting


THE PEOPLES BANKING AND TRUST COMPANY
=====================================

DIRECTORS
- ---------
Dave M. Archer
President, Pioneer Pipe, Inc.

Dennis D. Blauser
President, Blauser Energy Corp.

George W. Broughton
Executive Vice President/Sales and Marketing, Broughton Foods Company

Wilford D. Dimit
Owner, First Settlement Square

Robert E. Evans
President and Chief Executive Officer

Brenda R. Jones, M.D.
Medical Director, Marietta Ophthalmology Associates, Inc.

Harold D. Laughlin
Owner, Laughlin Music and Vending

Rex E. Maiden
Chairman of the Board, Maiden & Jenkins Construction Co.

Norman J. Murray, Chairman
Retired, The Airolite Company

T. Pat Sauber
Owner, McDonald's Restaurants

James B. Stowe
Chairman of the Board, Stowe Truck and Equipment Company

Paul T. Theisen
Attorney, Theisen, Brock, Frye, Erb, & Leeper Co., L.P.A.

Thomas C. Vadakin
President, Vadakin, Inc.

Joseph H. Wesel, Chairman
Chairman of the Board, Marietta Automotive Warehouse, Inc.

Directors Emeritus
- ------------------
R. Neil Christy
William K. Hamer
William E. McKinney


OFFICERS
- --------
Executive Officers
- ------------------
Robert E. Evans
President and Chief Executive Officer

David B. Baker
President, Investment and Trust Division

John W. Conlon
Chief Financial Officer and Treasurer

Larry E. Holdren
Executive Vice President, Director of Human Resources

Robert A. McKnight
Executive Vice President, Lending

Joseph S. Yazombek
Executive Vice President, Mortgage Lending

Banking and Lending
- -------------------
John L. Cornett
Vice President, MGM Division

Carol S. Herrold
Vice President, Athens Division

John A. King
Vice President

William L. Malster
Vice President

Jerald L. Post
Vice President

David M. Redrow
Vice President, Licking Co.

David L. Batten
Assistant Vice President

Joseph P. Flinn
Assistant Vice President, Personal Loan Manager

Betty L. Reynolds
Assistant Vice President

Larry P. Smith
Assistant Vice President

Stuart C. Goldsberry
Private Banking Manager

Sondra K. Herlan
Loan Officer

Cathleen S. Knox
Loan Officer

Cathy J. Linscott
Loan Officer

Beverly C. Mellinger
Loan Officer

Charles V. Robinson, Jr.
Loan Officer, Credit Administration

Jonathan T. Schenz
Loan Officer

Operations
- ----------
Charles R. Hunsaker
Vice President and General Counsel

Susan L. Corcoran
Assistant Vice President, Operations

Mary Ann Mitchell
Assistant Vice President

Stephen L. Nulter
Assistant Vice President, Information Systems

Charles A. Snodgrass
Assistant Vice President

Mark F. Bradley
Manager of Accounting and External Reporting

Julie L. Giffin
Manager, Account Services

Karen L. Mills
Secretary to the Board

Ruth I. Otto
Assistant Secretary to the Board

RobRoy Walters
Controller

Electronic Banking
- ------------------
R. Joe Cowdery
Vice President

Paul A. Huffman
Assistant Vice President

Investment and Trust Division
- -----------------------------
David B. Baker
President, Investment and Trust Division

Rose N. Haas
Vice President and Senior Investment Officer

Jeffrey D. Welch
Vice President

Beth Ann Worthington
Vice President, Personal Trust Officer

Ronald L. Close
Financial Planning Officer

Richard J. Flanagan
Assistant Investment Officer

Kelly A Sheppard
Assistant Trust Officer

Lori O'Connor
Assitant Trust Officer

Joy L. Bowen
Assitant Trust Officer



THE FIRST NATIONAL BANK OF SOUTHEASTERN OHIO
============================================

DIRECTORS
- ---------
Larry J. Armstrong
Armstrong and Smith

Carl Baker, Jr.
Co-Owner, B & N Coal Company

Robert E. Evans
President and Chief Executive Officer
Peoples Bancorp Inc.

Wilfred O. Hill
Retired, Oil and Gas

Charles R. Hunsaker
General Counsel

H. Clayton John
Vice Chairperson

James D. McKinney
Retired Superintendent, Morgan County Schools

Carol A. Schneeberger, Chairperson
Vice President, Operations, Peoples Bancorp Inc.

Paul T. Theisen
Attorney, Theisen, Brock, Frye, Erb, & Lepper Co., L.P.A.

Rick D. Turner
President and Chief Executive Officer

Directors Emeritus
- ------------------
Marcus Gant


OFFICERS
- --------
Rick D. Turner
President and Chief Executive Officer

Kenneth E. Shafer
Executive Vice President and Cashier

Catherine R. Ogle
Vice President, Lending

Thomas D. Hesson
Assistant Vice President, Operations

Kristi A. Shafer
Assistant Vice President, Marketing and Business Development

Michael J. Schramm
Assistant Vice President, Manager, McConnelsville Office

Tori J. Allen
Personal Banking Officer

Cheryl L. Hanson
Loan Officer, Manager, Chesterhill Office

Teresa A. Pyles
Security Officer

Ruth I. Otto
Secretary to the Board

Karen L. Mills
Assistant Secretary to the Board

Charles R. Hunsaker
General Counsel


RUSSELL FEDERAL SAVINGS BANK
============================

DIRECTORS
- ---------
David B. Baker
President, Investment and Trust Division
The Peoples Banking and Trust Company

Charles M. Daniels
Attorney-at-Law

Robert E. Evans, Chairman
Chief Executive Officer, Peoples Bancorp Inc.

Dr. Lewis E. Franz
Dentist

Charles R. Hunsaker
General Counsel
Peoples Bancorp Inc.

John T. Lawson
Retired, Lawson's Hardware

James D. McConnell
Senior Staff Engineer, AK Steel

Norman R. Menshouse
Executive Vice President, Russell Federal Savings Bank

Carol A. Schneeberger
Vice President, Operations, Peoples Bancorp Inc.

RobRoy Walters
Chief Executive Officer, Russell Federal Savings Bank

Joseph H. Wesel
Chairman of the Board, Marietta Automotive Warehouse, Inc.

Joseph S. Yazombek
Executive Vice President, The Peoples Banking and Trust Company


OFFICERS
- --------
RobRoy Walters
President and Chief Executive Officer

Norman R. Menshouse
Executive Vice President

Ronald L. Fraley
Vice President, Treasurer and Secretary to the Board

Shirley A. Menshouse
Vice President and Corporate Secretary





                          				 EXHIBIT 21        

       	       PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
		                FOR FISCAL YEAR ENDED DECEMBER 31, 1996



Subsidiaries of Peoples Bancorp Inc.                     
- ------------------------------------
  The following are the only subsidiaries of Peoples Bancorp Inc.:            


                                                 							Jurisdiction
                                                 							     of
Name of Subsidiary                                      Incorporation 
- ----------------------------------------------------    -------------
The Peoples Banking and Trust Company                       Ohio 

The First National Bank of Southeastern Ohio            United States
 ("First National Bank") 
   Northwest Territory Life Insurance Agency, Inc.          Ohio
     (Subsidiary of First National Bank)            
   Northwest Territory Property & Casualty Life             Ohio
     Insurance Agency, Inc. (Subsidiary of           
     First National Bank)                

The Northwest Territory Life Insurance Company            Arizona 

Russell Federal Savings Bank                            United States 






                 			       EXHIBIT 23(a)        

      	      PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
             		 FOR FISCAL YEAR ENDED DECEMBER 31, 1996


            		     CONSENT OF INDEPENDENT AUDITORS


  We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Peoples Bancorp Inc. of our report dated
January 31, 1997, included in the 1996 Annual Report to
Shareholders of Peoples Bancorp Inc.

  We also consent to the incorporation by reference in the
Registration Statements pertaining to the Amended and Restated
1993 Stock Option Plan (Form S-8, No. 33-67878) and the 1995
Stock Option Plan (Form S-8, No. 33-59569) of Peoples Bancorp
Inc. of our report dated January 31, 1997, with respect to the
consolidated financial statements of Peoples Bancorp Inc. and
Subsidiaries incorporated by reference in the Annual Report on
Form 10-K for the year ended December 31, 1996.


                        				  /s/ ERNST & YOUNG L.L.P.
                         			  Ernst & Young L.L.P.


Charleston, West Virginia
March 27, 1997




                        				EXHIBIT 23(b)        

        	      PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
              		  FOR FISCAL YEAR ENDED DECEMBER 31, 1996


               		    CONSENT OF INDEPENDENT ACCOUNTANTS


  We consent to the incorporation by reference in the registration
statement of Peoples Bancorp Inc. on Form S-8 of our report
dated January 26, 1995, on our audit of the consolidated
financial statements of Peoples Bancorp Inc. for the year ended
December 31, 1994, which report is included in this Annual
Report on Form 10-K.


                          				  /s/  COOPERS & LYBRAND L.L.P.
                          				  Coopers & Lybrand L.L.P.


Columbus, Ohio
March 24, 1997




<TABLE> <S> <C>

<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Form 10-K filed as of December 31, 1996.
</LEGEND>
<CIK> 0000318300
<NAME> PEOPLES BANCORP INC.
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               DEC-31-1996
<CASH>                                          26,200
<INT-BEARING-DEPOSITS>                             217
<FED-FUNDS-SOLD>                                 2,100
<TRADING-ASSETS>                                     0
<INVESTMENTS-HELD-FOR-SALE>                    147,783
<INVESTMENTS-CARRYING>                               0
<INVESTMENTS-MARKET>                                 0
<LOANS>                                        422,413
<ALLOWANCE>                                      6,873
<TOTAL-ASSETS>                                 616,635
<DEPOSITS>                                     504,692
<SHORT-TERM>                                    19,522
<LIABILITIES-OTHER>                              7,028
<LONG-TERM>                                     29,200
                                0
                                          0
<COMMON>                                        34,349
<OTHER-SE>                                      21,844
<TOTAL-LIABILITIES-AND-EQUITY>                 616,635
<INTEREST-LOAN>                                 37,140
<INTEREST-INVEST>                                8,607
<INTEREST-OTHER>                                 1,650
<INTEREST-TOTAL>                                47,397
<INTEREST-DEPOSIT>                              18,880
<INTEREST-EXPENSE>                              21,966
<INTEREST-INCOME-NET>                           25,431
<LOAN-LOSSES>                                    1,965
<SECURITIES-GAINS>                                  48
<EXPENSE-OTHER>                                 17,522
<INCOME-PRETAX>                                 11,122
<INCOME-PRE-EXTRAORDINARY>                       7,651
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     7,651
<EPS-PRIMARY>                                     2.20
<EPS-DILUTED>                                     2.18
<YIELD-ACTUAL>                                    4.75
<LOANS-NON>                                        999
<LOANS-PAST>                                       621
<LOANS-TROUBLED>                                     0
<LOANS-PROBLEM>                                      0
<ALLOWANCE-OPEN>                                 6,726
<CHARGE-OFFS>                                    2,329
<RECOVERIES>                                       511
<ALLOWANCE-CLOSE>                                6,873
<ALLOWANCE-DOMESTIC>                             6,873
<ALLOWANCE-FOREIGN>                                  0
<ALLOWANCE-UNALLOCATED>                            873
        

</TABLE>


                           				 EXHIBIT 99       

     	       PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
            		   FOR FISCAL YEAR ENDED DECEMBER 31, 1996



To the Stockholders and Board of Directors of Peoples Bancorp Inc.

  We have audited the accompanying consolidated statements income,
stockholder's equity, and cash flows of Peoples Bancorp Inc. and
Subsidiaries for the year ended December 31, 1994.  These
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

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

  In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
results of operations and cash flows of Peoples Bancorp Inc. and
Subsidiaries for the year ended December  31, 1994 in conformity
with generally accepted accounting principles.

  As discussed in Note 3 to the consolidated financial statements,
the Corporation changed its method of accounting for investment
securities in 1994.  


                       				    /s/  COOPERS & LYBRAND L.L.P.
                       				    Coopers & Lybrand L.L.P.


Columbus, Ohio
January 26, 1995




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