High Trade Low Trade Cash Dividends Declared Fiscal 2003 Quarter Ended September 30, 2002 $14.00 $11.50 $.095 December 31, 2002 13.25 10.00 .100 March 31, 2003 14.50 11.20 .100 June 30, 2003 14.50 11.44 .100

                      BUSINESS OF FFD FINANCIAL CORPORATION

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

FFD Financial  Corporation  ("FFD" or the  "Corporation") is the holding company
for First  Federal  Community  Bank ("First  Federal" or the "Bank"),  a federal
savings bank.

FFD was formed in 1996 in connection with the conversion of First Federal from a
mutual  savings  bank to a stock  savings  bank  (the  "Conversion").  Since its
formation,  FFD's  activities have been limited  primarily to holding the common
shares of First Federal.

First  Federal's  business  involves  attracting  deposits from  individual  and
business customers and using such deposits to originate loans to individuals and
businesses in its market area  consisting of Tuscarawas and contiguous  counties
in Ohio. The Bank provides a full array of deposit products including  checking,
savings,   money  market,  and  individual   retirement   accounts  as  well  as
certificates of deposit.  First Federal  originates  residential and home equity
loans,  construction  loans,  commercial  real estate loans,  business loans and
consumer  loans.  The Bank also invests in  securities  consisting  primarily of
United States government and government agency  obligations and  mortgage-backed
securities.

Funds for lending and investing activities are obtained primarily from deposits,
which are  insured up to  applicable  limits by the  Federal  Deposit  Insurance
Corporation  ("FDIC"),  from Federal Home Loan Bank ("FHLB") advances,  and from
loan sales and loan and  mortgage-backed  securities  repayments.  First Federal
conducts  business  from  three  locations,  two in  Dover,  Ohio and one in New
Philadelphia,  Ohio. Additionally,  the Bank provides access to its products and
services via the Internet at xxx.xxxxxxxxxxxxxx.xxx.

FFD is subject  to  regulation,  supervision  and  examination  by the Office of
Thrift  Supervision of the United States Department of the Treasury (the "OTS").
First Federal is subject to regulation,  supervision  and examination by the OTS
and the FDIC. First Federal is also a member of the FHLB of Cincinnati.


                                       1


                              MARKET PRICE OF FFD'S
                  COMMON SHARES AND RELATED SHAREHOLDER MATTERS

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

There were 1,191,140  common shares of FFD outstanding on July 30, 2004, held of
record by approximately  585  shareholders.  Price  information for FFD's common
shares is quoted on the  Nasdaq  SmallCap  Market  ("Nasdaq")  under the  symbol
"FFDF."

The  following  table sets forth the high and low trading  prices for the common
shares of FFD, as quoted by Nasdaq,  together  with the  dividends  declared per
share, for each quarter of fiscal years 2004 and 2003.



                            High Trade       Low Trade     Cash Dividends Declared
                                                          
Fiscal 2003
 Quarter Ended
    September 30, 2002        $14.00           $11.50              $.095
    December 31, 2002          13.25            10.00               .100
    March 31, 2003             14.50            11.20               .100
    June 30, 2003              14.50            11.44               .100


                            High Trade       Low Trade     Cash Dividends Declared
                                                          
Fiscal 2004
 Quarter Ended
    September 30, 2003        $15.32           $13.25              $.100
    December 31, 2003          15.30            14.59               .105
    March 31, 2004             15.50            13.64               .105
    June 30, 2004              15.65            13.00               .105


The income of FFD  consists  primarily of dividends  which may  periodically  be
declared  and paid by the Board of  Directors  of First  Federal  on the  common
shares of First Federal held by FFD. In addition to certain  federal  income tax
considerations,  OTS regulations  impose limitations on the payment of dividends
and other capital distributions by savings  associations.  Under OTS regulations
applicable to converted savings associations,  First Federal is not permitted to
pay a cash  dividend  on its common  shares if the  regulatory  capital of First
Federal would, as a result of the payment of such dividend, be reduced below the
amount required for the liquidation  account  established in connection with the
Conversion or applicable regulatory capital requirements prescribed by the OTS.


                                       2


                              SELECTED CONSOLIDATED
                      FINANCIAL INFORMATION AND OTHER DATA

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

The following table sets forth certain  information  concerning the consolidated
financial condition,  earnings and other data regarding FFD at the dates and for
the periods indicated.



Selected consolidated financial                                           At June 30,
condition data:                                   2004          2003          2002          2001          2000

                                                                         (In thousands)
                                                                                         
Total amount of:
Assets                                          $135,892      $136,408      $130,303      $133,097      $125,147
Interest-bearing deposits                          8,821        10,398        11,726         8,024         1,485
Investment securities available for sale -
  at market                                        4,402         1,502         2,047         1,000         2,875
Mortgage-backed securities available
  for sale - at market                               630           832         1,551         7,799         9,135
Mortgage-backed securities held to
  maturity - at cost                                 395           651         1,606         3,721         4,189
Loans receivable - net (1)                       114,505       115,966       107,055       107,467       102,939
Deposits                                         105,446       104,351        95,542        91,018        77,987
Advances from the FHLB and other
  borrowings                                      12,669        13,891        17,553        24,732        30,412
Shareholders' equity, restricted                  16,738        16,918        16,541        16,604        16,265


                                                                  For the year ended June 30,
Summary of earnings:                              2004          2003          2002          2001          2000
                                                             (In thousands, except per share data)
                                                                                         
Interest income                                 $  6,360      $  6,758      $  8,005      $  9,549      $  8,323
Interest expense                                   2,487         2,966         3,893         5,498         4,754
                                                --------      --------      --------      --------      --------
Net interest income                                3,873         3,792         4,112         4,051         3,569

Provision for losses on loans                         25           131           150           201           106
                                                --------      --------      --------      --------      --------
Net interest income after provision
  for losses on loans                              3,848         3,661         3,962         3,850         3,463

Other income                                         616         1,038           536           262           179
General, administrative and other
  expense                                          3,423         3,133         2,812         2,451         2,262
                                                --------      --------      --------      --------      --------
Earnings before income taxes                       1,041         1,566         1,686         1,661         1,380

Federal income taxes                                 354           534           573           560           458
                                                --------      --------      --------      --------      --------

Net earnings                                    $    687      $  1,032      $  1,113      $  1,101      $    922
                                                ========      ========      ========      ========      ========
Earnings per share
  Basic                                         $    .59      $    .88      $    .94      $    .86      $    .69
                                                ========      ========      ========      ========      ========

  Diluted                                       $    .58      $    .86      $    .92      $    .86      $    .68
                                                ========      ========      ========      ========      ========


----------
(1)   Includes loans held for sale.


                                       3




Selected financial ratios                                    At or for the year ended June 30,
  and other data:                                 2004          2003          2002          2001          2000
                                                                                          
Return on average assets                          0.50%         0.77%         0.84%         0.86%         0.77%
Return on average equity                          4.05          6.17          6.75          6.69          6.07
Interest rate spread                              2.79          2.62          2.85          2.75          2.51
Net interest margin                               2.97          2.95          3.22          3.26          3.06
General, administrative and other
  expense to average assets                       2.50          2.34          2.13          1.91          1.90
Average equity to average
  assets                                         12.40         12.50         12.50         12.81         12.75
Nonperforming and impaired assets
  to total assets                                 0.84          1.76          0.48          0.08          0.18
Nonperforming and impaired loans to
  total loans                                     0.98          1.88          0.58          0.10          0.22
Delinquent loans to total loans (1)               1.18          1.28          2.57          0.96          0.61
Allowance for loan losses to
  total loans                                     0.67          0.68          0.66          0.52          0.36
Allowance for loan losses to
  nonperforming and impaired loans               68.09         36.45        114.63        537.14        166.67
Average interest-earning assets
  to average interest-bearing liabilities       109.27        114.63        112.05        111.49        113.53
Dividend payout ratio                            70.34         44.89         39.89         41.86         49.28
Number of full service offices (2)                3             3             3             2             2


----------
(1)   Delinquent  loans are loans as to which a  scheduled  payment has not been
      made within 30 days after the due date.

(2)   The Bank's third full service office opened on July 3, 2002.


                                       4


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

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

                                     GENERAL

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

FFD was  incorporated  in 1996 for the purpose of owning all of First  Federal's
outstanding stock after the conversion. As a result, the discussion that follows
focuses on First Federal's  financial  condition and results of operations.  The
following  discussion  and analysis of the  financial  condition  and results of
operations of FFD and First Federal should be read in conjunction  with and with
reference  to the  consolidated  financial  statements,  and the notes  thereto,
included in this Annual Report.

       CHANGES IN FINANCIAL CONDITION FROM JUNE 30, 2003 TO JUNE 30, 2004

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

The Corporation's  assets at June 30, 2004,  totaled $135.9 million, a $516,000,
or 0.3%,  decrease from the total at June 30, 2003.  This decrease was comprised
primarily of a $1.6 million decrease in loans held for sale, partially offset by
a $1.0 million net increase in cash,  interest-bearing deposits, mortgage backed
securities and investment securities.

Cash and  interest-bearing  deposits  totaled  $10.8 million at June 30, 2004, a
decrease of $1.4 million,  or 11.6%, from June 30, 2003.  Investment  securities
totaled $4.4 million at June 30, 2004, an increase of $2.9  million.  Maturities
and  calls of  investment  securities  totaling  $2.5  million  were  offset  by
purchases of $5.5 million of U. S. Government agency securities.

Mortgage-backed securities totaled $1.0 million at June 30, 2004, a $458,000, or
30.9%,  decrease  from the total at June 30,  2003,  due  primarily to principal
repayments. Repayments of mortgage-backed securities totaled $442,000.

Loans receivable,  including loans held for sale, totaled $114.5 million at June
30, 2004,  a decrease of $1.5  million,  or 1.3%,  from the June 30, 2003 total.
Loan  disbursements  during  fiscal  2004  totaled  $69.8  million,  which  were
substantially  offset by principal repayments of $41.6 million and loans sold in
the secondary market totaling $29.8 million.  Loan origination volume during the
year ended June 30, 2004,  decreased  by $24.8  million,  or 26.2%,  compared to
fiscal  2003.  During  fiscal  2004,   management  continued  to  meet  consumer
preference for fixed-rate loans in the prevailing low interest rate environment,
by selling lower-yielding fixed-rate mortgage loans in the secondary market. The
volume of loans sold during fiscal 2004  decreased by $14.4  million,  or 32.6%,
from  fiscal  2003.  As a result,  the  portfolio  of loans  secured  by one- to
four-family residential real estate declined by $5.7 million to $57.0 million at
June 30,  2004.  Loans  secured by  nonresidential  real estate and land totaled
$35.0  million at June 30,  2004,  compared to $28.5  million at June 30,  2003.
Commercial  loans  totaled  $15.4  million at June 30,  2004,  compared to $19.5
million at June 30, 2003.  Nonresidential  real estate and commercial lending is
generally  considered to involve a higher degree of risk than  residential  real
estate  lending due to the  relatively  larger  loan  amounts and the effects of
general economic conditions on the successful  operation of the related business
or income-producing  properties.  The Bank has endeavored to reduce such risk by
evaluating the credit history and past performance of the borrower,  the quality
of  the  borrowers'  management,   the  debt  service  ratio,  the  quality  and
characteristics  of the income stream generated by the business and the property
and appraisals supporting the property's valuation, as applicable.

The allowance for loan losses totaled $779,000 and $818,000 at June 30, 2004 and
2003, respectively, which represented .67% and .68% of total loans and 68.1% and
36.5%  of  nonperforming   and  impaired  loans  at  those   respective   dates.
Nonperforming  and impaired  loans  amounted to $1.1 million and $2.2 million at
June


                                       5


30, 2004 and 2003, respectively.  The decrease in the nonperforming and impaired
loans is due to the results of  individual  loan  impairment  testing on certain
commercial  loans and improvement in the economy as of June 30, 2004, as well as
payments  received  to pay  off  loans.  Management  believes  that  the  Bank's
nonperforming and impaired loans at June 30, 2004 are adequately  collateralized
and no  unreserved  loss is  anticipated  on  such  loans.  Although  management
believes that the allowance for loan losses at June 30, 2004, was adequate based
upon the  available  facts and  circumstances,  there can be no  assurance  that
additions to the allowance will not be necessary in future periods,  which could
adversely affect the Corporation's net earnings.

Deposits  totaled  $105.4  million at June 30,  2004, a $1.1  million,  or 1.0%,
increase over total deposits at June 30, 2003. This increase resulted  primarily
from  management's  efforts to generate  growth through  advertising and pricing
strategies.  Proceeds from deposit  growth were used  primarily to fund new loan
originations and to repay FHLB advances during the period.

FHLB advances  totaled $12.7 million at June 30, 2004, a $1.2 million,  or 8.8%,
decrease from June 30, 2003. The repayment of FHLB advances was funded primarily
by the increase in deposits.

Shareholders'  equity  totaled  $16.7  million at June 30,  2004,  a decrease of
$180,000,  or 1.1%,  from June 30, 2003 levels,  as net earnings of $687,000,  a
$115,000  reduction  in the shares  acquired by benefit  plans,  and $314,000 in
proceeds  from the  exercise of stock  options,  were offset by  dividends  paid
totaling $504,000 and purchases of treasury shares totaling $769,000.

                         COMPARISON OF OPERATING RESULTS
                   FOR THE YEARS ENDED JUNE 30, 2004 AND 2003

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

The  consolidated  net  earnings  of FFD  depend  primarily  on its level of net
interest  income,  which is the  difference  between  interest  earned  on FFD's
interest-earning  assets and the interest paid on interest-bearing  liabilities.
Net interest  income is  substantially  affected by FFD's  interest rate spread,
which is the  difference  between the average  yield earned on  interest-earning
assets and the average rate paid on interest-bearing  liabilities, as well as by
the average  balance of  interest-earning  assets  compared to  interest-bearing
liabilities.

General.  FFD's net earnings totaled $687,000 for the fiscal year ended June 30,
2004, a decrease of $345,000, or 33.4%, compared to fiscal 2003. The decrease in
net  earnings  resulted  primarily  from a $554,000  decrease in gain on sale of
loans and a $290,000 increase in general administrative and other expense, which
were partially  offset by an $81,000 increase in net interest income, a $132,000
increase in other operating income, and a $180,000 decrease in the provision for
federal income taxes.

Net Interest Income. Total interest income decreased by $398,000,  or 5.9%, to a
total of $6.4 million for the year ended June 30, 2004, compared to $6.8 million
for the fiscal year ended June 30, 2003.  Interest  income on loans decreased by
$330,000,  or 5.2%,  due  primarily to a 50 basis point  decrease in the average
yield, to 5.27% in fiscal 2004, which was offset slightly by a $4.2 million,  or
3.8%,  increase in the average loan portfolio balance  outstanding year to year.
Interest income on mortgage-backed  securities  decreased by $41,000,  or 41.4%,
due  primarily  to a $1.0  million,  or 44.8%,  decrease in the average  balance
outstanding,  partially offset by a 27 basis point increase in the average yield
earned  on such  securities,  to  4.63%  in  fiscal  2004.  Interest  income  on
investment  securities  increased  by $23,000 due  primarily to a 77 basis point
increase in the average  yield earned on such  securities,  to 3.94%,  which was
partially  offset by a $88,000  decrease  in the  average  balance  outstanding.
Interest income on interest-bearing deposits decreased by $50,000, or 28.2%, due
primarily to a 33 basis point  decrease in the average yield and a $862,000,  or
7.1%, decrease in the average balance outstanding year to year. Decreases in the
average  yields on  interest-earning  assets were due  primarily  to the overall
reduction in interest rates in the economy.


                                       6


Interest expense on deposits  decreased by $483,000 or 20.3%, for the year ended
June 30,  2004,  compared to fiscal  2003,  due  primarily  to a decrease in the
average cost of deposits of 65 basis points, to 1.81% for fiscal 2004, which was
partially  offset by a $8.0 million,  or 8.2%,  increase in the average  deposit
portfolio  balance  outstanding  year to year.  Decreases in the average cost of
deposits  were due  primarily  to the overall  decline in interest  rates in the
economy.

Interest expense on borrowings  increased by $4,000, or 0.1%, due primarily to a
16 basis  point  increase in the average  cost of such  borrowings,  to 4.03% in
fiscal 2004 which was partially offset by a $478,000,  or 3.2%,  decrease in the
average  balance of advances  outstanding,  The Bank  elected to prepay  certain
advances that could be prepaid without penalty,  which were offset by additional
borrowings for match funding purposes.  Additional  prepayments of the remaining
higher cost advances are unlikely because of the significant penalties.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest  income  increased by $81,000,  or 2.1%,  for the fiscal year ended
June 30, 2004,  compared to fiscal 2003.  The interest  rate spread  amounted to
2.79% for the  fiscal  year ended June 30,  2004,  compared  to 2.62% for fiscal
2003, while the net interest margin was 2.97% in fiscal 2004,  compared to 2.95%
in fiscal 2003.

Provision  for Losses on Loans.  A  provision  for losses on loans is charged to
earnings  to bring the total  allowance  for loan  losses to a level  considered
appropriate by management  based on historical loss  experience,  the volume and
type of lending conducted by First Federal, the status of past due principal and
interest payments, general economic conditions,  particularly as such conditions
relate  to First  Federal's  market  area,  and  other  factors  related  to the
collectibility  of First Federal's loan  portfolio.  The provision for losses on
loans totaled  $25,000 for the year ended June 30, 2004, a decrease of $106,000,
or 80.9%,  compared to fiscal 2003.  First  Federal's  fiscal 2004 provision was
predicated  primarily  on  industry  loss  ratio  analysis  applied  to the loan
portfolio  in  accordance  with  Statement  of  Financial  Accounting  Standards
("SFAS") No. 5 and SFAS No. 114.  There can be no  assurance  that the loan loss
allowance of First  Federal  will be adequate to cover  losses on  nonperforming
assets in the future.

Other Income.  Other income totaled  $616,000 for the fiscal year ended June 30,
2004, a decrease of $422,000,  or 40.7%, from fiscal 2003. The decrease resulted
primarily  from a  $554,000,  or 61.0%,  decrease in gain on sale of loans and a
$7,000 loss on sale of real  estate  owned,  partially  offset by an increase of
$139,000 in other  operating  income.  The decrease in gain on sale of loans was
due  primarily to a $14.4  million,  or 32.6%,  decrease in sales volume year to
year. The increase in other operating income was due primarily to an increase in
service fee income from loans sold of $55,000 and a $21,000  increase in fees on
deposit  accounts and  transactions.  As interest rates rise, the volume of loan
sales and the amount of gain on sale of loans is likely to decline.

General,  Administrative  and Other Expense.  General,  administrative and other
expense  totaled  $3.4  million  for the fiscal  year ended  June 30,  2004,  an
increase of $290,000,  or 9.3%,  compared to fiscal 2003. The increase  resulted
primarily  from a $285,000,  or 22.8%,  increase in  employee  compensation  and
benefits.

The  increase  in employee  compensation  and  benefits  included  increases  of
$131,000  in wages and  related  benefit  expenses,  $31,000 in  employee  stock
ownership  and stock  option  plans,  and a $137,000  decrease in deferred  loan
origination  costs,  which were partially offset by a decrease of $26,000 in the
cost of the reward and  recognition  and stock  option  restructure  plans.  The
increase in wages and related expenses was due to increases in staff,  salaries,
and benefit  plans.  The increase in employee  stock  ownership and stock option
plans was the result of improved  average  stock  trading  prices and  increased
administrative  expense.  The reduction in deferred loan  origination  costs was
related to the reduction in the number of loans originated.  The decrease in the
cost of reward, recognition, and stock option restructure plans occurred because
benefits have fully vested or have been forfeited. The remaining $5,000 increase
in other  operating  expenses  was  comprised  primarily  of pro-rata  increases
related to the Corporation's overall growth year to year


                                       7


Federal Income Taxes.  The provision for federal  income taxes totaled  $354,000
for the fiscal  year ended June 30,  2004,  a decrease  of  $180,000,  or 33.7%,
compared to fiscal 2003. The decrease  resulted  primarily  from a $525,000,  or
33.5%, decrease in earnings before taxes. The effective tax rates were 34.0% and
34.1% for the fiscal years ended June 30, 2004 and 2003, respectively.

                         COMPARISON OF OPERATING RESULTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002

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

General.  FFD's net earnings totaled $1.0 million for the fiscal year ended June
30, 2003, a decrease of $81,000,  or 7.3%, compared to fiscal 2002. The decrease
in net  earnings  resulted  primarily  from a $320,000  decrease in net interest
income and a $321,000  increase  in general  administrative  and other  expense,
which were partially offset by a $502,000 increase in other income and a $39,000
decrease in the provision for federal income taxes.

Net Interest Income.  Total interest income decreased by $1.2 million, or 15.6%,
to a total of $6.8  million for the year ended June 30,  2003,  compared to $8.0
million  for the  fiscal  year  ended June 30,  2002.  Interest  income on loans
decreased by $1.0 million, or 13.9%, due primarily to a 101 basis point decrease
in the average yield,  to 5.77% in fiscal 2003,  which was offset  slightly by a
$1.2  million,   or  1.1%,  increase  in  the  average  loan  portfolio  balance
outstanding  year  to  year.  Interest  income  on  mortgage-backed   securities
decreased by $289,000,  or 74.5%,  due  primarily to a $5.1  million,  or 69.4%,
decrease in the average balance  outstanding,  and an 87 basis point decrease in
the average yield earned on such securities,  to 4.36% in fiscal 2003.  Interest
income on  investment  securities  increased by $95,000 due  primarily to a $3.0
million increase in the average balance outstanding,  which was partially offset
by a 40 basis point decrease in the average yield year to year.  Interest income
on interest-bearing  deposits decreased by $20,000, or 10.2%, due primarily to a
42 basis point  decrease in the average yield,  which was partially  offset by a
$1.7 million,  or 15.7%,  increase in the average  balance  outstanding  year to
year.  Decreases  in the  average  yields on  interest-earning  assets  were due
primarily to the overall reduction in interest rates in the economy.

Interest expense on deposits  decreased by $736,000 or 23.6%, for the year ended
June 30,  2003,  compared to fiscal  2002,  due  primarily  to a decrease in the
average cost of deposits of 88 basis points, to 2.46% for fiscal 2003, which was
partially  offset by a $3.6 million,  or 3.8%,  increase in the average  deposit
portfolio  balance  outstanding  year to year.  Decreases in the average cost of
deposits  were due  primarily  to the overall  decline in interest  rates in the
economy.

Interest expense on borrowings decreased by $191,000, or 24.6%, due primarily to
a  $5.5  million,  or  26.7%,  decrease  in  the  average  balance  of  advances
outstanding,  which was  partially  offset by a 10 basis  point  increase in the
average cost of such  borrowings,  to 3.87% in fiscal 2003.  The Bank elected to
prepay  certain  advances  that could be  prepaid  without  penalty.  Additional
prepayments  of the remaining  higher cost advances are unlikely  because of the
significant penalties.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest  income  decreased by $320,000,  or 7.8%, for the fiscal year ended
June 30, 2003,  compared to fiscal 2002.  The interest  rate spread  amounted to
2.62% for the  fiscal  year ended June 30,  2003,  compared  to 2.85% for fiscal
2002, while the net interest margin was 2.95% in fiscal 2003,  compared to 3.22%
in fiscal 2002.

Provision  for Losses on Loans.  A  provision  for losses on loans is charged to
earnings  to bring the total  allowance  for loan  losses to a level  considered
appropriate by management  based on historical loss  experience,  the volume and
type of lending conducted by First Federal, the status of past due principal and
interest payments, general economic conditions,  particularly as such conditions
relate  to First  Federal's  market  area,  and  other  factors  related  to the
collectibility  of First Federal's loan  portfolio.  The provision for losses on
loans totaled  $131,000 for the year ended June 30, 2003, a decrease of $19,000,
or 12.7%, compared


                                       8


to fiscal 2002. First Federal's  fiscal 2003 provision was predicated  primarily
on the growth in the  commercial  and  nonresidential  loan  portfolios  and the
increase in  nonperforming  loans.  There can be no assurance that the loan loss
allowance of First  Federal  will be adequate to cover  losses on  nonperforming
assets in the future.

Other Income.  Other income  totaled $1.0 million for the fiscal year ended June
30, 2003,  an increase of  $502,000,  or 93.7%,  over fiscal 2002.  The increase
resulted  primarily  from a  $688,000,  or 312.7%,  increase  in gain on sale of
loans,  partially offset by decreases of $119,000,  or 47.8%, in other operating
income and the absence of $67,000 in gain on sale of mortgage-backed securities.
The increase in gain on sale of loans was due primarily to a $25.0  million,  or
129.9%,  increase in sales volume year to year. The decrease in other  operating
income was due primarily to an increase in  amortization  of mortgage  servicing
rights of $135,000  and a $61,000  impairment  charge  recorded on the  mortgage
servicing  rights  asset based upon a fair value  analysis of this asset.  These
charges  were  partially  offset by an  increase  of  $85,000 in fees on deposit
accounts and transactions.  As interest rates rise, the volume of loan sales and
the amount of gain on sale of loans is likely to decline.

General,  Administrative  and Other Expense.  General,  administrative and other
expense  totaled  $3.1  million  for the fiscal  year ended  June 30,  2003,  an
increase of $321,000,  or 11.4%,  compared to fiscal 2002. The increase resulted
primarily from a $226,000,  or 28.0%,  increase in other  operating  expense,  a
$102,000, or 35.8%, increase in occupancy and equipment,  and $41,000, or 27.3%,
increase in franchise taxes, which were partially offset by a $51,000, or 15.9%,
decrease in data processing.

The increase in other operating  expenses included increases of $45,000 in check
printing charges,  and $35,000 in NOW account expense,  primarily related to the
Bank's  growth in deposits and home equity loans,  costs  incurred in connection
with the opening of the new Boulevard office,  including increases of $39,000 in
advertising  expense,  $27,000 in stationery and office  supplies and $14,000 in
legal  fees.  The  remaining  $66,000  increase in other  operating  expense was
comprised  primarily of pro-rata increases related to the Corporation's  overall
growth year to year.  The increase in occupancy  and  equipment  expense was due
primarily to an increase in depreciation  expense related to the new office that
opened in July of 2002. The increase in franchise taxes was due to the effect of
refunds  received in fiscal 2002. The decrease in data  processing fees resulted
from nonrecurring costs associated with the data conversion in fiscal 2002.

Federal Income Taxes.  The provision for federal  income taxes totaled  $534,000
for the fiscal  year ended  June 30,  2003,  a  decrease  of  $39,000,  or 6.8%,
compared to fiscal 2002. The decrease  resulted  primarily  from a $120,000,  or
7.1%,  decrease in earnings before taxes. The effective tax rates were 34.1% and
34.0% for the fiscal years ended June 30, 2003 and 2002, respectively.


                                       9


                  AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA

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

The  following  table sets forth certain  information  relating to FFD's average
balance sheet and reflects the average yield on interest-earning  assets and the
average cost of  interest-bearing  liabilities for the periods  indicated.  Such
yields and costs are  derived  by  dividing  income or  expense  by the  average
monthly  balance of  interest-earning  assets or  interest-bearing  liabilities,
respectively,  for the periods  presented.  Average  balances  are derived  from
month-end balances,  which include nonaccruing loans in the loan portfolio,  net
of the allowance for loan losses.



                                                                           Year ended June 30,
                                                    2004                            2003                             2002
                                        Average   Interest              Average   Interest              Average    Interest
                                      outstanding  earned/    Yield/  outstanding  earned/   Yield/   outstanding   earned/   Yield/
                                        balance     paid       rate     balance     paid      rate      balance      paid      rate
                                                                          (Dollars in thousands)
                                                                                                 
Interest-earning assets:
  Loans receivable                     $114,573    $6,043      5.27%   $110,406    $6,373     5.77%    $109,208    $7,406     6.78%
  Mortgage-backed securities              1,252        58      4.63       2,270        99     4.36        7,413       388     5.23
  Investment securities                   3,347       132      3.94       3,435       109     3.17          392        14     3.57
  Interest-bearing deposits
    and other                            11,360       127      1.12      12,222       177     1.45       10,563       197     1.87
                                       --------    ------    ------    --------    ------   ------     --------    ------   ------
  Total interest-earning assets         130,532     6,360      4.87     128,333     6,758     5.27      127,576     8,005     6.27

  Non-interest-earning assets             6,220                           5,382                           4,400
                                       --------                        --------                        --------

    Total assets                       $136,752                        $133,715                        $131,976
                                       ========                        ========                        ========

Interest-bearing liabilities:
  Deposits                             $104,872     1,899      1.81   $  96,886     2,382     2.46     $ 93,311     3,118     3.34
  Borrowings                             14,588       588      4.03      15,066       584     3.87       20,548       775     3.77
                                       --------    ------    ------    --------    ------   ------     --------    ------   ------
    Total interest-bearing
      liabilities                       119,460     2,487      2.08     111,952     2,966     2.65      113,859     3,893     3.42
                                                   ------    ------                ------   ------                 ------

Non-interest-bearing liabilities            334                           5,050                           1,620
                                       --------                        --------                        --------

  Total liabilities                     119,794                         117,002                         115,479

Shareholders' equity                     16,958                          16,713                          16,497
                                       --------                        --------                        --------

    Total liabilities and
      shareholders' equity             $136,752                        $133,715                        $131,976
                                       ========                        ========                        ========

Net interest income                                $3,873                          $3,792                          $4,112
                                                   ======                          ======                          ======

Interest rate spread                                           2.79%                          2.62%                           2.85%
                                                             ======                         ======                          ======

Net interest margin (net interest
  income as a percent of average
  interest-earning assets)                                     2.97%                          2.95%                           3.22%
                                                             ======                         ======                          ======

Average interest-earning assets to
  average interest-bearing liabilities                       109.27%                        114.63%                         112.05%
                                                             ======                         ======                          ======



                                       10


The table below  describes  the extent to which  changes in  interest  rates and
changes in volume of interest-earning  assets and  interest-bearing  liabilities
have affected FFD's interest income and expense during the years indicated.  For
each  category  of  interest-earning  assets and  interest-bearing  liabilities,
information  is  provided  on  changes  attributable  to (i)  changes  in volume
(changes in volume multiplied by prior year rate), (ii) changes in rate (changes
in rate  multiplied  by prior year  volume) and (iii) total  changes in rate and
volume. The combined effects of changes in both volume and rate, which cannot be
separately identified,  have been allocated proportionately to the change due to
volume and the change due to rate.



                                                                               Year ended June 30,
                                                                 2004 vs. 2003                     2003 vs. 2002
                                                           Increase                            Increase
                                                          (decrease)                          (decrease)
                                                            due to                              due to
                                                      Volume        Rate       Total      Volume        Rate          Total
                                                                                (In thousands)
                                                                                                   
Interest income attributable to:
  Loans receivable                                     $ 235       $(565)      $(330)      $  81       $(1,114)      $(1,033)
  Mortgage-backed securities                             (46)          5         (41)       (232)          (57)         (289)
  Investment securities                                   (3)         26          23          97            (2)           95
  Interest-bearing deposits and other                    (12)        (38)        (50)         29           (49)          (20)
                                                       -----       -----       -----       -----       -------       -------

     Total interest income                               174        (572)       (398)        (25)       (1,222)       (1,247)
                                                       -----       -----       -----       -----       -------       -------

Interest expense attributable to:
  Deposits                                               185        (668)       (483)        114          (850)         (736)
  Borrowings                                             (19)         23           4        (211)           20          (191)
                                                       -----       -----       -----       -----       -------       -------

     Total interest expense                              166        (645)       (479)        (97)         (830)         (927)
                                                       -----       -----       -----       -----       -------       -------

     Increase (decrease) in net interest income        $   8       $  73       $  81       $  72       $  (392)      $  (320)
                                                       =====       =====       =====       =====       =======       =======



                                       11


                         ASSET AND LIABILITY MANAGEMENT

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

First Federal,  like other financial  institutions,  is subject to interest rate
risk to the extent that its interest-earning assets reprice differently than its
interest-bearing  liabilities.  As part of its  effort  to  monitor  and  manage
interest rate risk,  First Federal uses the "net  interest  income"  ("NII") and
"net portfolio value" ("NPV")  methodologies.  Generally,  NPV is the discounted
present value of the difference between incoming cash flows on  interest-earning
and  other  assets  and  outgoing  cash  flows  on  interest-bearing  and  other
liabilities.  Interest rate risk is estimated as the percent and dollar  changes
in NII and NPV projected to occur should the yield curve  instantaneously  shift
up or down in a parallel  fashion from its beginning or base position.  The base
case rate  scenario  is defined  by the rate  environment  and is held  constant
throughout  the  simulation.  Rate shock  scenarios  are derived by adding to or
subtracting from base case rates.

Presented below, as of June 30, 2004 and 2003, is an analysis of First Federal's
interest rate risk as measured by changes in NII and NPV for  instantaneous  and
sustained  parallel  shifts of +100,  +200, +300 and -100 basis points in market
interest  rates.  In  consideration  of the interest  rate  environment  and the
improbability of negative rate adjustments greater than 100 basis points, shocks
greater than negative 100 basis points are not presented.



                                                        June 30, 2004
                  Net Interest Income                                               Net Portfolio Value

     Projected                    Change       Percent                                    Change          Percent
    interest rate    Estimated     from        change                   Estimated          from           change
      scenario          NII        base       from base                   value            base          from base
                                                                                        
         +300         $4,909       $ 903       22.54%                    $19,318           $2,417         14.30%
         +200          4,670         664       16.57                      18,742            1,842         10.90
         +100          4,360         354        8.83                      17,940            1,039          6.15
         Base          4,006          --          --                      16,901               --            --
         -100          3,609        (397)      (9.91)                     15,342           (1,559)        (9.22)


                                                        June 30, 2003
                  Net Interest Income                                               Net Portfolio Value

     Projected                    Change       Percent                                    Change          Percent
    interest rate    Estimated     from        change                   Estimated          from           change
      scenario          NII        base       from base                   value            base          from base
                                                                                        
         +300         $4,755       $ 980       25.95%                    $16,152          $ 3,501         27.68%
         +200          4,483         708       18.74                      15,337            2,687         21.24
         +100          4,153         378       10.01                      14,193            1,542         12.19
         Base          3,775          --          --                      12,651               --            --
         -100          3,400        (375)      (9.94)                     11,137           (1,513)       (11.96)


As with any method of measuring  interest rate risk,  certain  shortcomings  are
inherent in the NII and NPV approaches. For example, although certain assets and
liabilities may have similar maturities or periods of repricing,  they may react
in different  degrees to changes in market  interest  rates.  Also, the interest
rates on certain  types of assets and  liabilities  may  fluctuate in advance of
changes in market  interest  rates,  while interest rates on other types may lag
behind  changes in market rates.  Further,  in the event of a change in interest
rates, expected rates of prepayment on loans and mortgage-backed  securities and
early  withdrawal  levels from  certificates  of deposit  would  likely  deviate
significantly from those assumed in making the risk calculations.


                                       12


                         LIQUIDITY AND CAPITAL RESOURCES

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

First  Federal's  principal  sources of funds are  deposits,  proceeds from loan
sales, loan and mortgage-backed securities repayments,  maturities of securities
and other funds  provided by  operations.  First Federal also has the ability to
borrow from the FHLB of Cincinnati. While scheduled loan repayments and maturing
investments are relatively  predictable,  deposit flows, loan sales and loan and
mortgage-backed  securities  prepayments  are more influenced by interest rates,
general economic conditions and competition. First Federal maintains investments
in liquid assets based upon  management's  assessment of (i) the need for funds,
(ii) expected  deposit flows,  (iii) the yields  available on short-term  liquid
assets and (iv) the objectives of the  asset/liability  management  program.  At
June 30, 2004,  First  Federal had  commitments  to originate  loans,  including
unused lines of credit, totaling $26.5 million. Management anticipates that such
loan  commitments  will be funded  from normal  cash flows from  operations  and
existing excess liquidity.

Cash and cash equivalents, which is a component of liquidity, is a result of the
funds used in or provided by First Federal's operating,  investing and financing
activities.  These  activities are summarized below for the years ended June 30,
2004, 2003 and 2002:



                                                             Year ended June 30,
                                                      2004           2003           2002
                                                                (In thousands)
                                                                         
Net earnings                                        $    687       $  1,032       $  1,113
Adjustments to reconcile net earnings to
  net cash from operating activities                   1,621           (395)            42
                                                    --------       --------       --------
Net cash from operating activities                     2,308            637          1,155

Net cash from investing activities                    (2,645)        (5,956)         6,707
Net cash from financing activities                    (1,086)         4,346         (3,986)
                                                    --------       --------       --------
Net change in cash and cash equivalents               (1,423)          (973)         3,876

Cash and cash equivalents at beginning of year        12,243         13,216          9,340
                                                    --------       --------       --------

Cash and cash equivalents at end of year            $ 10,820       $ 12,243       $ 13,216
                                                    ========       ========       ========



                                       13


The following table sets forth information  regarding the Bank's obligations and
commitments to make future payments under contract as of June 30, 2004:



                                                                    Payments due by period
                                                     Less                                  More
                                                     than        1-3 years     3-5 years   than
                                                     1 year      years         years       5 years      Total
                                                                          (In thousands)
                                                                                        
Contractual obligations:
  Advances from the Federal Home Loan Bank          $   277      $   850      $ 7,991      $3,551      $12,669
  Certificates of deposit                                 7       20,899        1,501          --       48,227

Amount of commitments expiration per period
  Commitments to originate loans:
   Overdraft lines of credit                            157           --           --          --          157
   Home equity lines of credit                       10,457           --           --          --       10,457
   Commercial lines of credit                        12,456                                             12,456
   One- to four-family and multi-family loans         1,733           --           --          --        1,733
    Non-residential real estate and land loans        1,413           --           --          --        1,413
  Non mortgage loans                                    275           --           --          --          275
                                                    -------      -------      -------      ------      -------
Total contractual obligations                       $52,594      $20,013      $10,762      $4,018      $87,387
                                                    =======      =======      =======      ======      =======


First  Federal,  a  savings  association,  is  required  by  applicable  law and
regulation to meet certain minimum capital  standards,  which include a tangible
capital  requirement,  a core  capital  requirement  or  leverage  ratio,  and a
risk-based capital requirement.

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

"Core capital" is comprised of common  shareholders'  equity (including retained
earnings), noncumulative preferred stock and related surplus, minority interests
in  consolidated  subsidiaries,  certain  nonwithdrawable  accounts  and pledged
deposits of mutual  associations.  OTS  regulations  generally  require  savings
institutions to maintain core capital of at least 4% of the institution's  total
assets,  except for those  institutions with the highest  examination rating and
acceptable levels of risk.

OTS regulations require that savings institutions  maintain "risk-based capital"
in an amount not less than 8% of  risk-weighted  assets.  Risk-based  capital is
defined as core  capital  plus certain  additional  items of capital,  which for
First Federal  includes a general and specific loan loss allowance of 779,000 at
June 30, 2004.

First Federal exceeded all of its capital requirements and met the definition of
"well-capitalized"  under OTS  regulations at June 30, 2004. The following table
summarizes  First  Federal's  regulatory  capital  requirements  and  regulatory
capital at June 30, 2004:



                                                                                         Excess over current
                               Regulatory capital           Current requirement              requirement
                                Amount      Percent         Amount     Percent           Amount       Percent
                                                          (Dollars in thousands)
                                                                                   
Tangible capital               $15,883      11.70%          $2,034       1.50%          $13,849      10.20%
Core capital                    15,883      11.70%           5,425       4.00%           10,458        7.70%
Risk-based capital              16,314      17.40%           7,515       8.00%            8,799        9.40%



                                       14


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
FFD Financial Corporation

We have audited the accompanying  consolidated statements of financial condition
of FFD  Financial  Corporation  as of June 30,  2004 and 2003,  and the  related
consolidated statements of earnings,  comprehensive income, shareholders' equity
and cash flows for each of the three  years in the period  ended June 30,  2004.
These   consolidated   financial   statements  are  the  responsibility  of  the
Corporation's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of FFD  Financial
Corporation  as of June 30, 2004 and 2003, and the results of its operations and
its cash flows for each of the three years in the period ended June 30, 2004, in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Xxxxx Xxxxxxxx LLP

Cincinnati, Ohio
September 3, 2004


                                       15


                            FFD FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                             June 30, 2004 and 2003
                        (In thousands, except share data)



         ASSETS                                                                       2004            2003
                                                                                           
Cash and due from banks                                                          $   1,999       $   1,845
Interest-bearing deposits in other financial institutions                            8,821          10,398
                                                                                 ---------       ---------
         Cash and cash equivalents                                                  10,820          12,243

Investment securities designated as available for sale - at market                   4,402           1,502
Mortgage-backed securities designated as available for sale - at market                630             832
Mortgage-backed securities held to maturity - at amortized cost,
  approximate market value of $411 and $687 as of June 30,
  2004 and 2003, respectively                                                          395             651
Loans receivable - net                                                             114,288         114,199
Loans held for sale - at lower of cost or market                                       217           1,767
Real estate acquired through foreclosure                                                --             161
Office premises and equipment - at depreciated cost                                  2,028           2,134
Stock in Federal Home Loan Bank - at cost                                            2,047           1,967
Accrued interest receivable                                                            381             386
Prepaid expenses and other assets                                                      275             244
Prepaid federal income taxes                                                           409             322
                                                                                 ---------       ---------

         Total assets                                                            $ 135,892       $ 136,408
                                                                                 =========       =========

         LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                         $ 105,446       $ 104,351
Advances from the Federal Home Loan Bank                                            12,669          13,891
Accrued interest payable                                                                97              96
Other liabilities                                                                      719             935
Deferred federal income taxes                                                          223             217
                                                                                 ---------       ---------
         Total liabilities                                                         119,154         119,490

Commitments                                                                             --              --

Shareholders' equity
  Preferred stock - authorized 1,000,000 shares without par
    value; no shares issued                                                             --              --
  Common stock - authorized 5,000,000 shares without par or
    stated value; 1,454,750 shares issued                                               --              --
  Additional paid-in capital                                                         7,910           7,889
  Retained earnings - restricted                                                    12,385          12,202
  Accumulated comprehensive income (loss); unrealized gains (losses) on
    securities designated as available for sale, net of related tax effects            (66)              8
  Shares acquired by stock benefit plans                                              (444)           (559)
  Less 266,757 and 241,753 treasury shares at June 30, 2004 and 2003,
    respectively - at cost                                                          (3,047)         (2,622)
                                                                                 ---------       ---------
         Total shareholders' equity                                                 16,738          16,918
                                                                                 ---------       ---------

         Total liabilities and shareholders' equity                              $ 135,892       $ 136,408
                                                                                 =========       =========


The accompanying notes are an integral part of these statements.


                                       16


                            FFD FINANCIAL CORPORATION

                       CONSOLIDATED STATEMENTS OF EARNINGS

                     Year ended June 30, 2004, 2003 and 2002
                      (In thousands, except per share data)



                                                                         2004         2003         2002
                                                                                       
Interest income
  Loans                                                               $ 6,043       $6,373      $ 7,406
  Mortgage-backed securities                                               58           99          388
  Investment securities                                                   132          109           14
  Interest-bearing deposits and other                                     127          177          197
                                                                      -------       ------      -------
         Total interest income                                          6,360        6,758        8,005

Interest expense
  Deposits                                                              1,899        2,382        3,118
  Borrowings                                                              588          584          775
                                                                      -------       ------      -------
         Total interest expense                                         2,487        2,966        3,893
                                                                      -------       ------      -------

         Net interest income                                            3,873        3,792        4,112

Provision for losses on loans                                              25          131          150
                                                                      -------       ------      -------

         Net interest income after provision for losses on loans        3,848        3,661        3,962

Other income
  Gain on sale of loans                                                   354          908          220
   Loss on sale of real estate acquired through foreclosure                (7)          --           --
  Gain on sale of mortgage-backed securities designated
    as available for sale                                                  --           --           67
  Other operating                                                         269          130          249
                                                                      -------       ------      -------
         Total other income                                               616        1,038          536

General, administrative and other expense
  Employee compensation and benefits                                    1,537        1,252        1,249
  Occupancy and equipment                                                 391          387          285
  Franchise taxes                                                         210          191          150
  Data processing                                                         285          269          320
  Other operating                                                       1,000        1,034          808
                                                                      -------       ------      -------
         Total general, administrative and other expense                3,423        3,133        2,812
                                                                      -------       ------      -------

         Earnings before income taxes                                   1,041        1,566        1,686

Federal income taxes
  Current                                                                 311          520          598
  Deferred                                                                 43           14          (25)
                                                                      -------       ------      -------
         Total federal income taxes                                       354          534          573
                                                                      -------       ------      -------

         NET EARNINGS                                                 $   687       $1,032      $ 1,113
                                                                      =======       ======      =======

         EARNINGS PER SHARE
           Basic                                                      $   .59       $  .88      $   .94
                                                                      =======       ======      =======

           Diluted                                                    $   .58       $  .86      $   .92
                                                                      =======       ======      =======


The accompanying notes are an integral part of these statements.


                                       17


                            FFD FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                     Year ended June 30, 2004, 2003 and 2002
                                 (In thousands)



                                                                 2004          2003          2002
                                                                                 
Net earnings                                                    $ 687       $ 1,032       $ 1,113

Other comprehensive income (loss), net of tax:
  Unrealized holding gains (losses) on securities during
    the period, net of taxes (benefits) of $(38), $(5)
    and $4 in 2004, 2003 and 2002, respectively                   (74)          (11)            8

Reclassification adjustment for realized gains included in
  earnings, net of taxes of $23 in 2002                            --            --           (44)
                                                                -----       -------       -------

Comprehensive income                                            $ 613       $ 1,021       $ 1,077
                                                                =====       =======       =======

Accumulated comprehensive income (loss)                         $ (66)      $     8       $    19
                                                                =====       =======       =======


The accompanying notes are an integral part of these statements.


                                       18


                            FFD FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                For the years ended June 30, 2004, 2003 and 2002
                      (In thousands, except per share data)



                                                                                     Unrealized
                                                                                   gains (losses)    Shares
                                                                                    on securities  acquired by
                                                             Additional              designated       stock     Treasury
                                                    Common     paid-in    Retained  as available     benefit     shares-
                                                     stock     capital    earnings    for sale        plans      at cost     Total
                                                                                                      
Balance at July 1, 2001                            $     --   $  7,861    $ 10,962     $   55       $   (852)   $ (1,422)  $ 16,604

Net earnings for the year ended June 30, 2002            --         --       1,113         --             --          --      1,113
Purchase of treasury shares                              --         --          --         --             --        (936)      (936)
Amortization expense of stock benefit plans              --         16          --         --            175          --        191
Unrealized losses on securities designated as
  available for sale, net of related tax effects         --         --          --        (36)            --          --        (36)
Exercise of stock options                                --        (16)         --         --             --          67         51
Dividends of $.375 per share                             --         --        (446)        --             --          --       (446)
                                                   --------   --------    --------     ------       --------    --------   --------

Balance at June 30, 2002                                 --      7,861      11,629         19           (677)     (2,291)    16,541

Net earnings for the year ended June 30, 2003            --         --       1,032         --             --          --      1,032
Purchase of treasury shares                              --         --          --         --             --        (380)      (380)
Amortization expense of stock benefit plans              --         39          --         --            118          --        157
Unrealized losses on securities designated as
  available for sale, net of related tax effects         --         --          --        (11)            --          --        (11)
Exercise of stock options                                --        (11)         --         --             --          49         38
Dividends of $.395 per share                             --         --        (459)        --             --          --       (459)
                                                   --------   --------    --------     ------       --------    --------   --------

Balance at June 30, 2003                                 --      7,889      12,202          8           (559)     (2,622)    16,918

Net earnings for the year ended June 30, 2004            --         --         687         --             --          --        687
Purchase of treasury shares                                         --          --         --             --        (769)      (769)
Amortization expense of stock benefit plans              --         51          --         --            115          --        166
Unrealized losses on securities designated as
  available for sale, net of related tax effects         --         --          --        (74)            --          --        (74)
Exercise of stock options                                --        (30)         --         --             --         344        314
Dividends of $.415 per share                             --         --        (504)        --             --          --       (504)
                                                   --------   --------    --------     ------       --------    --------   --------

Balance at June 30, 2004                           $     --   $  7,910    $ 12,385     $  (66)      $   (444)   $ (3,047)  $ 16,738
                                                   ========   ========    ========     ======       ========    ========   ========



                                       19


                            FFD FINANCIAL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     Year ended June 30, 2004, 2003 and 2002
                                 (In thousands)



                                                                                   2004           2003           2002
                                                                                                    
Cash flows from operating activities:
  Net earnings for the year                                                    $    687       $  1,032       $  1,113
  Adjustments to reconcile net earnings to net cash provided by
  (used in) operating activities:
    Amortization of premiums and discounts on investments and
      mortgage-backed securities - net                                                5             67             47
    Amortization of deferred loan origination (fees) costs                           39            (24)           (16)
    Depreciation and amortization                                                   187            201            127
    Provision for losses on loans                                                    25            131            150
    Gain on sale of loans                                                           (62)          (443)           (18)
    Loans originated for sale in the secondary market                           (28,202)       (45,602)       (19,307)
    Proceeds from sale of mortgage loans in the secondary market                 29,814         44,615         19,228
    Loss on sale of real estate acquired through foreclosure                          7             --             --
    Gain on sale of mortgage-backed securities designated as
      available for sale                                                             --             --            (67)
    Amortization expense of stock benefit plans                                     166            157            191
    Federal Home Loan Bank stock dividends                                          (80)           (82)           (99)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable                                                     5             68             (3)
      Prepaid expenses and other assets                                             (24)            44            (83)
      Other liabilities                                                            (216)           522             16
      Accrued interest payable                                                        1             (4)           (47)
      Federal income taxes
        Current                                                                     (87)           (59)           (52)
        Deferred                                                                     43             14            (25)
                                                                               --------       --------       --------
         Net cash provided by operating activities                                2,308            637          1,155

Cash flows provided by (used in) investing activities:
  Purchase of investment securities designated as available for sale             (5,500)        (7,510)        (2,050)
  Proceeds from maturity of investment securities                                 2,500          8,000          1,000
  Purchase of mortgage-backed securities designated as available for sale            --           (956)            --
  Proceeds from sale of mortgage-backed securities designated
    as available for sale                                                            --             --          5,107
  Principal repayments on mortgage-backed securities                                442          2,602          3,223
  Loan principal repayments                                                      41,633         41,319         32,238
  Loan disbursements                                                            (41,639)       (49,068)       (31,863)
  Purchase of office premises and equipment                                         (81)          (343)          (948)
                                                                               --------       --------       --------
         Net cash provided by (used in) investing activities                     (2,645)        (5,956)         6,707
                                                                               --------       --------       --------

         Net cash provided by (used in) operating and investing
           activities (subtotal carried forward)                                   (337)        (5,319)         7,862
                                                                               --------       --------       --------



                                       20


                            FFD FINANCIAL CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     Year ended June 30, 2004, 2003 and 2002
                                 (In thousands)



                                                                            2004           2003           2002
                                                                                             
         Net cash provided by (used in) operating and investing
           activities (subtotal brought forward)                        $   (337)      $ (5,319)      $  7,862

Cash flows provided by (used in) financing activities:
  Net increase in deposit accounts                                         1,095          8,809          4,524
  Proceeds from Federal Home Loan Bank advances                            1,525             --         11,000
  Repayments of Federal Home Loan Bank advances                           (2,747)        (3,662)       (18,179)
  Proceeds from exercise of stock options                                    314             38             51
  Purchase of treasury shares                                               (769)          (380)          (936)
  Cash dividends paid on common stock                                       (504)          (459)          (446)
                                                                        --------       --------       --------
         Net cash provided by (used in) financing activities              (1,086)         4,346         (3,986)
                                                                        --------       --------       --------

Net increase (decrease) in cash and cash equivalents                      (1,423)          (973)         3,876

Cash and cash equivalents at beginning of year                            12,243         13,216          9,340
                                                                        --------       --------       --------

Cash and cash equivalents at end of year                                $ 10,820       $ 12,243       $ 13,216
                                                                        ========       ========       ========

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Federal income taxes                                                $    390       $    600       $    250
                                                                        ========       ========       ========

    Interest on deposits and borrowings                                 $  2,486       $  2,970       $  3,940
                                                                        ========       ========       ========

Supplemental disclosure of noncash investing activities:
  Unrealized losses on securities designated as
    available for sale, net of applicable tax effects                   $    (74)      $    (11)      $    (36)
                                                                        ========       ========       ========

  Recognition of mortgage servicing rights in accordance
    with SFAS No. 140                                                   $    292       $    465       $    202
                                                                        ========       ========       ========

  Transfers from loans to real estate acquired through foreclosure      $     --       $    161       $     --
                                                                        ========       ========       ========

  Loans originated upon sale of real estate acquired through
    foreclosure                                                         $    147       $     --       $     --
                                                                        ========       ========       ========


The accompanying notes are an integral part of these statements.


                                       21


                            FFD FINANCIAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      FFD  Financial  Corporation  (the  "Corporation")  is a  savings  and loan
      holding  company whose  activities  are  primarily  limited to holding the
      stock of its wholly-owned  subsidiary,  First Federal  Community Bank (the
      "Bank").  The Bank  conducts a general  banking  business in north central
      Ohio which  consists of attracting  deposits  from the general  public and
      applying those funds to the origination of loans for residential, consumer
      and  nonresidential  purposes.  The Bank's  profitability is significantly
      dependent on net interest income, which is the difference between interest
      income generated from interest-earning assets (i.e. loans and investments)
      and the  interest  expense  paid  on  interest-bearing  liabilities  (i.e.
      customer deposits and borrowed funds).  Net interest income is affected by
      the  relative  amount  of  interest-earning  assets  and  interest-bearing
      liabilities and the interest received or paid on these balances. The level
      of  interest  rates  paid or  received  by the Bank  can be  significantly
      influenced  by a number of  environmental  factors,  such as  governmental
      monetary policy, that are outside of management's control.

      The consolidated  financial information presented herein has been prepared
      in accordance with accounting  principles generally accepted in the United
      States of America ("U. S. GAAP") and general  accounting  practices within
      the  financial  services  industry.  In preparing  consolidated  financial
      statements in accordance  with U. S. GAAP,  management is required to make
      estimates and assumptions  that affect the reported  amounts of assets and
      liabilities and the disclosure of contingent assets and liabilities at the
      date of the  financial  statements  and revenues  and expenses  during the
      reporting period. Actual results could differ from such estimates.

      A summary of significant  accounting policies which have been consistently
      applied in the  preparation  of the  accompanying  consolidated  financial
      statements follows:

      1. Principles of Consolidation
         ---------------------------

      The accompanying consolidated financial statements include the accounts of
      the Corporation,  the Bank, and the Bank's wholly-owned subsidiary,  Dover
      Service  Corporation  ("Dover").  At  June  30,  2004  and  2003,  Dover's
      principal  assets  consisted of an  investment  in the stock of the Bank's
      data  processor  and a  deposit  account  in the  Bank.  All  intercompany
      balances  and  transactions  have  been  eliminated  in  the  accompanying
      consolidated financial statements.

      2. Investment Securities and Mortgage-backed Securities
         ----------------------------------------------------

      The Corporation accounts for investment and mortgage-backed  securities in
      accordance with Statement of Financial  Accounting  Standards ("SFAS") No.
      115  "Accounting for Certain  Investments in Debt and Equity  Securities."
      SFAS No. 115 requires that investments be categorized as held-to-maturity,
      trading, or available for sale.  Securities classified as held-to-maturity
      are carried at cost only if the  Corporation  has the positive  intent and
      ability to hold these  securities  to  maturity.  Trading  securities  and
      securities designated as available for sale are carried at fair value with
      resulting   unrealized   gains  or  losses   recorded  to   operations  or
      shareholders' equity, respectively.

      Realized gains and losses on sales of securities are recognized  using the
      specific identification method.


                                       22


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      3. Loans Receivable
         ----------------

      Loans are stated at the principal balance outstanding, reduced by deferred
      loan  origination  fees and the  allowance  for loan  losses.  Interest is
      accrued  as  earned  unless  the  collectibility  of the loan is in doubt.
      Interest on loans that are  contractually  past due is charged  off, or an
      allowance is established based on management's  periodic  evaluation.  The
      allowance  is  established  by a charge to  interest  income  equal to all
      interest previously accrued, and income is subsequently recognized only to
      the  extent  that  cash  payments  are  received  until,  in  management's
      judgment,  the borrower's  ability to make periodic interest and principal
      payments  has  returned  to normal,  in which case the loan is returned to
      accrual status. If the ultimate collectibility of the loan is in doubt, in
      whole or in part, all payments received on nonaccrual loans are applied to
      reduce principal until such doubt is eliminated.

      Loans held for sale are carried at the lower of cost or market, determined
      in the aggregate.  In computing cost,  deferred loan  origination fees are
      deducted from the principal  balance of the related loan. At June 30, 2004
      and 2003, loans held for sale were carried at cost.

      The Bank  retains the  servicing  on loans sold and agrees to remit to the
      investor  loan  principal  and  interest at  agreed-upon  rates.  The Bank
      recognizes  rights to service  mortgage loans for others  pursuant to SFAS
      No. 140,  "Accounting for Transfers and Servicing of Financial  Assets and
      Extinguishments  of  Liabilities."  In  accordance  with SFAS No.  140, an
      institution  that acquires  mortgage  servicing  rights through either the
      purchase  or  origination  of  mortgage  loans and sells  those loans with
      servicing  rights  retained must allocate some of the cost of the loans to
      the mortgage servicing rights.

      Capitalized  mortgage  servicing  rights and capitalized  excess servicing
      receivables  are required to be assessed  for  impairment.  Impairment  is
      measured based on fair value.  The mortgage  servicing  rights recorded by
      the Bank were  segregated  into  pools for  valuation  purposes,  using as
      pooling criteria the loan term and coupon rate. Once pooled, each grouping
      of loans was  evaluated on a discounted  earnings  basis to determine  the
      present value of future  earnings that a purchaser could expect to realize
      from each  portfolio.  Earnings were  projected  from a variety of sources
      including  loan servicing  fees,  interest  earned on float,  net interest
      earned on escrows,  miscellaneous  income, and costs to service the loans.
      The present value of future earnings is the "economic" value for the pool,
      i.e.,  the net  realizable  present  value to an acquirer of the  acquired
      servicing.

      The Bank  recorded  amortization  related  to  mortgage  servicing  rights
      totaling approximately $175,000, $174,000 and $39,000 for the fiscal years
      ended June 30, 2004, 2003 and 2002, respectively.  Additionally,  the Bank
      recovered  previously  recorded  impairment  charges on mortgage servicing
      rights  totaling  $13,000 in the fiscal year ended June 30, 2004.  At June
      30,  2004,  the carrying  value of the  Corporation's  mortgage  servicing
      rights, which approximated fair value was $633,000.  At June 30, 2003, the
      carrying  value of the  Corporation's  mortgage  servicing  rights,  which
      approximated fair value was $517,000.


                                       23


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      4. Loan Origination Fees
         ---------------------

      The Bank accounts for loan origination fees in accordance with SFAS No. 91
      "Accounting for  Nonrefundable  Fees and Costs Associated with Originating
      or Acquiring  Loans and Initial  Direct Costs of Leases."  Pursuant to the
      provisions of SFAS No. 91,  origination  fees received from loans,  net of
      certain direct  origination  costs, are deferred and amortized to interest
      income  using  the  level-yield  method,  giving  effect  to  actual  loan
      prepayments.  Additionally, SFAS No. 91 generally limits the definition of
      loan origination  costs to the direct costs  attributable to originating a
      loan, i.e.,  principally  actual  personnel costs.  Fees received for loan
      commitments  that are  expected  to be  drawn  upon,  based on the  Bank's
      experience with similar  commitments,  are deferred and amortized over the
      life of the  loan  using  the  level-yield  method.  Fees for  other  loan
      commitments are deferred and amortized over the loan commitment  period on
      a straight-line basis.

      5. Allowance for Loan Losses
         -------------------------

      It is the Bank's  policy to provide  valuation  allowances  for  estimated
      losses  on loans  based  on past  loan  loss  experience,  changes  in the
      composition of the loan  portfolio,  trends in the level of delinquent and
      problem loans,  adverse  situations that may affect the borrower's ability
      to repay, the estimated value of any underlying collateral and current and
      anticipated  economic  conditions in the primary  lending  area.  When the
      collection of a loan becomes  doubtful,  or otherwise  troubled,  the Bank
      records a charge-off equal to the difference between the fair value of the
      property securing the loan and the loan's carrying value.  Major loans and
      major  lending  areas are reviewed  periodically  to  determine  potential
      problems at an early date.  The  allowance for loan losses is increased by
      charges to earnings and decreased by charge-offs (net of recoveries).

      The Bank  accounts for  impaired  loans in  accordance  with SFAS No. 114,
      "Accounting  by Creditors for  Impairment of a Loan," which  requires that
      impaired loans be measured based upon the present value of expected future
      cash flows  discounted  at the loan's  effective  interest  rate or, as an
      alternative,  at the loan's  observable  market price or fair value of the
      collateral if the loan is collateral dependent.

      A loan is defined  under SFAS No. 114 as impaired  when,  based on current
      information  and events,  it is probable that a creditor will be unable to
      collect all amounts due  according  to the  contractual  terms of the loan
      agreement.  In applying the provisions of SFAS No. 114, the Bank considers
      its  investment  in one- to  four-family  residential  loans and  consumer
      installment  loans to be homogeneous and therefore  excluded from separate
      identification  for evaluation of  impairment.  With respect to the Bank's
      investment in nonresidential, commercial and multi-family residential real
      estate loans,  and its  evaluation of impairment  thereof,  such loans are
      generally  collateral-dependent  and,  as  a  result,  are  carried  as  a
      practical expedient at the lower of cost or fair value.

      Collateral-dependent  loans which are more than ninety days delinquent are
      considered  to  constitute  more than a minimum delay in repayment and are
      evaluated for impairment under SFAS No. 114 at that time.


                                       24


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      5. Allowance for Loan Losses (continued)
         -------------------------

      The Bank's impaired loan information is as follows at June 30:

                                                          2004        2003
                                                           (In thousands)

      Impaired loans with related allowance               $774      $2,244
      Impaired loans with no related allowance              --          --
                                                          ----      ------

           Total impaired loans                           $774      $2,244
                                                          ====      ======

      The Bank's average  balance of impaired loans was $929,000 in fiscal 2004.
      Interest income  recognized on impaired loans totaled $49,000 and $100,000
      for the fiscal years ended June 30, 2004 and 2003, respectively.  The Bank
      allocated  $348,000 of its general  valuation  allowance  to the  impaired
      loans at June 30, 2004.

      6. Real Estate Acquired through Foreclosure
         ----------------------------------------

      Real estate  acquired  through  foreclosure is carried at the lower of the
      loan's  unpaid  principal  balance  (cost) or fair  value  less  estimated
      selling  expenses at the date of acquisition.  Real estate loss provisions
      are recorded if the properties' fair value subsequently declines below the
      value  determined at the recording  date. In determining the lower of cost
      or  fair  value  at   acquisition,   costs  relating  to  development  and
      improvement  of property are  capitalized.  Costs relating to holding real
      estate acquired  through  foreclosure,  net of rental income,  are charged
      against earnings as incurred.

      7. Office Premises and Equipment
         -----------------------------

      Office premises and equipment are carried at cost and include expenditures
      which extend the useful lives of existing assets. Maintenance, repairs and
      minor  renewals  are  expensed  as  incurred.   For  financial  reporting,
      depreciation  and amortization  are provided on the  straight-line  method
      over the useful lives of the assets,  estimated  to be between  twenty and
      thirty years for buildings,  ten to thirty years for building improvements
      and five to ten years for furniture and equipment.  An accelerated  method
      is used for tax reporting purposes.

      8. Federal Income Taxes
         --------------------

      The  Corporation  accounts for federal  income taxes  pursuant to SFAS No.
      109,  "Accounting  for Income  Taxes." In accordance  with SFAS No. 109, a
      deferred  tax  liability or deferred tax asset is computed by applying the
      current  statutory  tax  rates  to net  taxable  or  deductible  temporary
      differences  between  the tax  basis  of an  asset  or  liability  and its
      reported amount in the consolidated  financial statements that will result
      in net  taxable or  deductible  amounts in future  periods.  Deferred  tax
      assets are recorded  only to the extent that the amount of net  deductible
      temporary  differences or carryforward  attributes may be utilized against
      current  period  earnings,  carried  back against  prior years'  earnings,
      offset against taxable temporary  differences reversing in future periods,
      or  utilized  to the extent of  management's  estimate  of future  taxable
      income.  A valuation  allowance is provided for deferred tax assets to the
      extent that the value of net


                                       25


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      8. Federal Income Taxes (continued)
         --------------------

      deductible  temporary  differences  and  carryforward  attributes  exceeds
      management's estimates of taxes payable on future taxable income. Deferred
      tax  liabilities  are  provided  on the  total  amount  of  net  temporary
      differences taxable in the future.

      The Corporation's principal temporary differences between pretax financial
      income and taxable income result  primarily from the different  methods of
      accounting  for deferred  loan  origination  fees,  Federal Home Loan Bank
      stock dividends,  mortgage servicing rights, general loan loss allowances,
      percentage  of earnings  bad debt  deductions  and certain  components  of
      retirement  expense.  A  temporary   difference  is  also  recognized  for
      depreciation expense computed using accelerated methods for federal income
      tax purposes.

      9. Benefit Plans
         -------------

      The  Corporation  has an Employee Stock  Ownership  Plan  ("ESOP"),  which
      provides  retirement  benefits for  substantially  all  employees who have
      completed  one  year of  service  and  have  attained  the age of 21.  The
      Corporation accounts for the ESOP in accordance with Statement of Position
      ("SOP") 93-6,  "Employers' Accounting for Employee Stock Ownership Plans."
      SOP  93-6  requires  the  measure  of  compensation  expense  recorded  by
      employers to equal the fair value of ESOP shares allocated to participants
      during a fiscal  year.  Expense  recognized  related  to the ESOP  totaled
      approximately  $191,000,  $167,000 and $155,000 for the fiscal years ended
      June 30, 2004, 2003 and 2002, respectively.

      Additionally,  during  fiscal  1997,  the Bank adopted a  Recognition  and
      Retention  Plan  ("RRP").  The Bank funded the RRP through the purchase of
      40,600 shares of the  Corporation's  common stock in the open market.  The
      Bank has awarded  30,871  shares under the RRP which vest over a five year
      period. A provision of $7,000,  $10,000 and $32,000 related to the RRP was
      charged to expense  for the fiscal  years  ended June 30,  2004,  2003 and
      2002, respectively.

      10. Earnings Per Share
          ------------------

      Basic  earnings per share is computed based upon  weighted-average  common
      shares  outstanding  less shares in the ESOP which are unallocated and not
      committed to be released. Weighted-average shares outstanding gives effect
      to a reduction for 39,513,  52,687 and 65,861  unallocated  shares held by
      the  ESOP  for the  fiscal  years  ended  June 30,  2004,  2003 and  2002,
      respectively.   Diluted   earnings  per  share  is  computed  taking  into
      consideration  common shares  outstanding  and dilutive  potential  common
      shares to be  issued  under  the  Corporation's  stock  option  plan.  The
      computations are as follows:



                                                   2004           2003           2002
                                                                     
      Weighted-average common shares
        outstanding (basic)                     1,162,085      1,167,450      1,183,697
      Dilutive effect of  assumed exercise
        of stock options                           29,016         27,290         22,862
                                                ---------      ---------      ---------
      Weighted-average common shares
        outstanding (diluted)                   1,191,101      1,194,740      1,206,559
                                                =========      =========      =========



                                       26


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      11. Stock Option Plan
          -----------------

      The FFD Financial  Corporation  1996 Stock Option and Incentive  Plan (the
      "Plan") provides for the issuance of 169,838 adjusted shares of authorized
      but unissued shares of common stock.

      The  Corporation  accounts for the Plan in  accordance  with SFAS No. 123,
      "Accounting   for  Stock-Based   Compensation,"   which  contains  a  fair
      value-based method for valuing stock-based  compensation that entities may
      use, which measures  compensation cost at the grant date based on the fair
      value of the  award.  Compensation  is then  recognized  over the  service
      period, which is usually the vesting period.  Alternatively,  SFAS No. 123
      permits  entities to  continue  to account  for stock  options and similar
      equity  instruments under Accounting  Principles Board ("APB") Opinion No.
      25, "Accounting for Stock Issued to Employees."  Entities that continue to
      account for stock  options  using APB Opinion No. 25 are  required to make
      pro forma  disclosures  of net earnings and earnings per share,  as if the
      fair  value-based  method of  accounting  defined in SFAS No. 123 had been
      applied.

      During fiscal 2001, the Corporation  canceled and reissued grants of stock
      options to certain option grant holders.  The Corporation recorded expense
      related to these  grants  totaling  $3,000,  $26,000 and $24,000 in fiscal
      2004, 2003 and 2002, respectively.

      The Corporation applies APB Opinion No. 25 and related  Interpretations in
      accounting  for its  Plan.  Accordingly,  no  compensation  cost  has been
      recognized  with respect to original  grants of shares under the Plan. Had
      compensation  cost for the Plan been determined based on the fair value at
      the grant date in a manner  consistent with the accounting method utilized
      in SFAS No. 123,  then the  Corporation's  consolidated  net  earnings and
      earnings  per share for the fiscal  years  ended June 30,  2004,  2003 and
      2002, would have been reduced to the pro forma amounts indicated below:



                                                       2004         2003         2002
                                                                      
    Net earnings (In thousands)    As reported         $687       $1,032       $1,113
                                                       ====       ======       ======

                                     Pro-forma         $654       $1,021       $1,095
                                                       ====       ======       ======

    Earnings per share
      Basic                        As reported         $.59       $  .88       $  .94
                                                       ====       ======       ======

                                     Pro-forma         $.56       $  .87       $  .92
                                                       ====       ======       ======

      Diluted                      As reported         $.58       $  .86       $  .92
                                                       ====       ======       ======

                                     Pro-forma         $.55       $  .85       $  .90
                                                       ====       ======       ======



                                       27


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      11. Stock Option Plan (continued)
          -----------------------------

      The fair  value of each  option  grant is  estimated  on the date of grant
      using the modified Black-Scholes  options-pricing model with the following
      weighted-average  assumptions  used for  grants in fiscal  2004,  2003 and
      2002: dividend yield of 3.0%, 2.8% and 3.5%; expected volatility of 38.2%,
      31.6%  and  36.7%;  a  risk-free  interest  rate of 4.3%,  4.1% and  3.0%,
      respectively, and an expected life of ten years for all grants.

      A summary of the status of the Corporation's  stock option plan as of June
      30,  2004,  2003 and 2002,  and  changes  during  the years then ended are
      presented below:



                                                     2004                       2003                       2002
                                                          Weighted-                  Weighted-                  Weighted-
                                                            average                    average                    average
                                                           exercise                   exercise                   exercise
                                              Shares          price      Shares          price      Shares          price
                                                                                               
      Outstanding at beginning of year       115,183       $   9.47     104,385       $   9.25     108,563       $   9.22
      Granted                                  4,500          14.87      14,920          10.94       2,000          12.00
      Exercised                              (28,365)          9.15      (4,122)          9.17      (5,578)          9.14
      Forfeited                               (1,320)          9.54          --             --        (600)         14.59
                                            --------       --------    --------       --------    --------       --------

      Outstanding at end of year              89,998       $   9.84     115,183       $   9.47     104,385       $   9.25
                                            ========       ========    ========       ========    ========       ========

      Options exercisable at year-end         68,755       $   9.33      91,809       $   9.22      90,604       $   9.21
                                            ========       ========    ========       ========    ========       ========
    Weighted-average fair value of
      options granted during the year                      $   4.36                   $   3.92                   $   3.59
                                                           ========                   ========                   ========

    The following information applies to options outstanding at June 30, 2004:

    Number outstanding                                                                                             74,721
    Range of exercise prices                                                                               $8.38 - $10.10
    Number outstanding                                                                                             15,277
    Range of exercise prices                                                                              $11.17 - $14.88
    Weighted-average exercise price                                                                                 $9.84
    Weighted-average remaining contractual life in years                                                        4.4 years


      12. Cash and Cash Equivalents
          -------------------------

      For purposes of reporting cash flows,  cash and cash equivalents  includes
      cash and due from banks and  interest-bearing  deposits in other financial
      institutions with original terms to maturity of less than ninety days.


                                       28


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      13. Fair Value of Financial Instruments
          -----------------------------------

      SFAS No. 107,  "Disclosures  about Fair Value of  Financial  Instruments,"
      requires  disclosure of fair value of financial  instruments,  both assets
      and liabilities,  whether or not recognized in the consolidated  statement
      of  financial  condition,  for which it is  practicable  to estimate  that
      value.  For  financial  instruments  where  quoted  market  prices are not
      available,  fair values are based on  estimates  using  present  value and
      other valuation methods.

      The  methods  used  are  greatly  affected  by  the  assumptions  applied,
      including the discount rate and estimates of future cash flows. Therefore,
      the fair values presented may not represent amounts that could be realized
      in an exchange for certain financial instruments.

      The following  methods and  assumptions  were used by the  Corporation  in
      estimating its fair value  disclosures  for financial  instruments at June
      30, 2004 and 2003:

            Cash and cash  equivalents:  The carrying  amounts  presented in the
            consolidated  statements  of financial  condition  for cash and cash
            equivalents are deemed to approximate fair value.

            Investment  and  mortgage-backed   securities:  For  investment  and
            mortgage-backed securities, fair value is deemed to equal the quoted
            market price.

            Loans  receivable:  The  loan  portfolio  has been  segregated  into
            categories with similar characteristics, such as one- to four-family
            residential,   multi-family   residential  and  nonresidential  real
            estate.   These  loan  categories   were  further   delineated  into
            fixed-rate  and  adjustable-rate  loans.  The  fair  values  for the
            resultant loan  categories  were computed via  discounted  cash flow
            analysis,  using  current  interest  rates  offered  for loans  with
            similar terms to borrowers of similar credit  quality.  For loans on
            deposit  accounts and  consumer  and other  loans,  fair values were
            deemed  to  equal  the  historic  carrying  values.  The  historical
            carrying   amount  of  accrued   interest  on  loans  is  deemed  to
            approximate fair value.

            Federal Home Loan Bank stock:  The carrying amount  presented in the
            consolidated   statements  of  financial   condition  is  deemed  to
            approximate fair value.

            Deposits:  The fair value of NOW accounts,  passbook  accounts,  and
            money market deposits is deemed to approximate the amount payable on
            demand. Fair values for fixed-rate certificates of deposit have been
            estimated  using  a  discounted  cash  flow  calculation  using  the
            interest rates currently  offered for deposits of similar  remaining
            maturities.

            Advances  from the Federal  Home Loan Bank:  The fair value of these
            advances is estimated using the rates currently  offered for similar
            advances of similar remaining maturities or, when available,  quoted
            market prices.

            Commitments  to extend credit:  For  fixed-rate and  adjustable-rate
            loan commitments,  the fair value estimate  considers the difference
            between  current levels of interest rates and committed  rates.  The
            difference between the fair value and notional amount of outstanding
            loan commitments at June 30, 2004 and 2003 was not material.


                                       29


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      13. Fair Value of Financial Instruments (continued)
          -----------------------------------

      Based on the foregoing  methods and  assumptions,  the carrying  value and
      fair value of the Corporation's financial instruments at June 30, 2004 and
      2003 are as follows:



                                                                2004                        2003
                                                      Carrying          Fair      Carrying          Fair
                                                         value         value         value         value
                                                                        (In thousands)
                                                                                    
      Financial assets
        Cash and cash equivalents                     $ 10,820      $ 10,820      $ 12,243      $ 12,243
        Investment securities                            4,402         4,402         1,502         1,502
        Mortgage-backed securities                       1,025         1,041         1,483         1,519
        Loans receivable                               114,505       110,976       115,966       111,147
        Federal Home Loan Bank stock                     2,047         2,047         1,967         1,967
                                                      --------      --------      --------      --------

                                                      $132,799      $129,286      $133,161      $128,378
                                                      ========      ========      ========      ========

      Financial liabilities
        Deposits                                      $105,446      $101,271      $104,351      $102,609
        Advances from the Federal Home Loan Bank        12,669        13,242        13,891        14,298
                                                      --------      --------      --------      --------

                                                      $118,115      $114,513      $118,242      $116,907
                                                      ========      ========      ========      ========


      14. Advertising
          -----------

      Advertising   costs  are  expensed  when   incurred.   The   Corporation's
      advertising  expense for the fiscal  years ended June 30,  2004,  2003 and
      2002 totaled $99,000, $140,000 and $101,000, respectively.

      15. Effects of Recent Accounting Pronouncements
          -------------------------------------------

      In March 2004, the Emerging  Issues Task Force ("EITF")  issued EITF 03-01
      "The Meaning of  Other-than-Temporary  Impairment  and its  Application to
      Certain  Investments."  EITF  03-01  requires  that  unrealized  losses on
      investment securities that are deemed  other-than-temporary be recorded as
      an adjustment  to  operations.  The  Statement  applies both to securities
      designated as held to maturity and those designated as available for sale.
      EITF   03-01   provides   that   unrealized   losses   may  be  viewed  as
      other-than-temporary  as a result  not only  due to  deterioration  of the
      credit  quality of the  issuer,  but due to changes in the  interest  rate
      environment as well. An investor must be able to demonstrate  the positive
      ability and intent to hold such  securities  until a  forecasted  recovery
      takes  place  or until  maturity  of the  security.  EITF  03-01  requires
      separate  disclosure related to unrealized losses for securities that have
      been in an  unrealized  loss  position  for a period of less  than  twelve
      months and for those that have been in an  unrealized  loss position for a
      period greater than twelve  months,  for financial  statements  issued for
      years ending after December 15, 2003. The loss  recognition  provisions of
      other-than-temporary  losses under EITF 03-01 are effective  September 30,
      2004. It is management's  belief that, given the  Corporation's  liquidity
      position, and assuming no credit quality concerns, EITF 03-01 will have no
      material effect on the Corporation's financial statements.


                                       30


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      15. Effects of Recent Accounting Pronouncements (continued)
          -------------------------------------------

      In March 2004,  the  Financial  Accounting  Standards  Board (the  "FASB")
      issued a proposed  Statement,  "Share-Based  Payment,"  that addresses the
      accounting for  share-based  payment  transactions  in which an enterprise
      receives employee  services in exchange for (a) equity  instruments of the
      enterprise  or (b)  liabilities  that are  based on the fair  value of the
      enterprise's  equity instruments or that may be settled by the issuance of
      such equity  instruments.  The  proposed  Statement  would  eliminate  the
      ability to account for share-based  compensation  transactions,  including
      stock  option  grants,  using APB  Opinion No. 25,  "Accounting  for Stock
      Issued to  Employees,"  and  generally  would  require  instead  that such
      transactions be accounted for using a fair-value-based method. Issuance of
      the final standards and adoption by the  Corporation  would be expected to
      result in  recognition  of  compensation  expense  for the effect of stock
      option grants in future periods.

      16. Reclassifications
          -----------------

      Certain prior year amounts have been  reclassified  to conform to the 2004
      consolidated financial statement presentation.

NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES

      The amortized cost, gross unrealized  gains,  gross unrealized  losses and
      estimated fair values of investment  securities at June 30, 2004 and 2003,
      are as follows:



                                                                              June 30, 2004
                                                                        Gross               Gross      Estimated
                                                     Amortized     unrealized          unrealized           fair
                                                          cost          gains              losses          value
                                                                              (In thousands)
                                                                                              
    Available for sale:
      U.S. Government agency obligations                $4,499          $  --               $ (97)        $4,402
                                                        ======          =====               =====         ======


                                                                              June 30, 2003
                                                                        Gross               Gross      Estimated
                                                     Amortized     unrealized          unrealized           fair
                                                          cost          gains              losses          value
                                                                              (In thousands)
                                                                                              
    Available for sale:
      U.S. Government agency obligations                $1,501          $   1               $  --         $1,502
                                                        ======          =====               =====         ======


      The U. S. Government agency  obligations  designated as available for sale
      at June 30, 2004, are scheduled to mature in fiscal 2013 and thereafter.

      The U. S. Government agency  obligations  designated as available for sale
      at June 30, 2003, are scheduled to mature in fiscal 2009 and thereafter.


                                       31


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)

      The amortized cost, gross unrealized  gains,  gross unrealized  losses and
      estimated  fair value of  mortgage-backed  securities at June 30, 2004 and
      2003, are shown below:



                                                                              2004
                                                                        Gross          Gross    Estimated
                                                       Amortized   unrealized     unrealized         fair
                                                            cost        gains         losses        value
                                                                          (In thousands)
                                                                                       
      Held to maturity:
        Federal Home Loan Mortgage
          Corporation participation certificates          $  313          $ 9            $--       $  322
        Government National Mortgage
          Association participation certificates              82            7             --           89
                                                          ------          ---            ---       ------
           Total mortgage-backed securities
             held to maturity                                395           16             --          411

      Available for sale:
        Federal National Mortgage
          Association participation certificates             424            2             (5)         421
        Federal Home Loan Mortgage
          Corporation participation certificates              41           --             --           41
        Government National Mortgage
          Association participation certificates             167            1             --          168
                                                          ------          ---            ---       ------
           Total mortgage-backed securities
             available for sale                              632            3             (5)         630
                                                          ------          ---            ---       ------

           Total mortgage-backed securities               $1,027          $19            $(5)      $1,041
                                                          ======          ===            ===       ======


                                                                              2003
                                                                        Gross          Gross    Estimated
                                                       Amortized   unrealized     unrealized         fair
                                                            cost        gains         losses        value
                                                                          (In thousands)
                                                                                       
      Held to maturity:
        Federal Home Loan Mortgage
          Corporation participation certificates          $  491          $20            $--       $  511
        Government National Mortgage
          Association participation certificates             160           16             --          176
                                                          ------          ---            ---       ------
           Total mortgage-backed securities
             held to maturity                                651           36             --          687

      Available for sale:
        Federal National Mortgage
          Association participation certificates             490            5             (2)         493
        Federal Home Loan Mortgage
          Corporation participation certificates              42            1             --           43
        Government National Mortgage
          Association participation certificates             288            8             --          296
                                                          ------          ---            ---       ------
           Total mortgage-backed securities
             available for sale                              820           14             (2)         832
                                                          ------          ---            ---       ------

           Total mortgage-backed securities               $1,471          $50            $(2)      $1,519
                                                          ======          ===            ===       ======



                                       32


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)

      The table below  indicates the length of time  individual  securities have
      been in a  continuous  unrealized  loss  position  at June 30,  2004.  The
      Corporation  had no securities in an unrealized loss position for a period
      greater than 12 months at June 30, 2004.

                                                        Less than 12 months
                                                          Fair  Unrealized
      Description of securities                          value      losses
                                                          (In thousands)

      Investments:
        Available for sale                              $4,402        $ 97
      Mortgage-backed securities:
        Available for sale                                 630           5
                                                        ------        ----

           Total temporarily impaired securities        $5,302        $102
                                                        ======        ====

      The  amortized  cost  of  mortgage-backed   securities,   including  those
      designated as available for sale at June 30, 2004, by contractual  term to
      maturity are shown below. Expected maturities will differ from contractual
      maturities  because  borrowers may generally  prepay  obligations  without
      prepayment penalties.

                                                                   Amortized
                                                                     cost
                                                                (In thousands)

      Due within five years                                         $   54
      Due within five to ten years                                     106
      Due after ten years                                              867
                                                                    ------

      Total                                                         $1,027
                                                                    ======

      As of June 30, 2004,  mortgage-backed securities and investment securities
      totaling $2.8 million were pledged to secure public deposits.


                                       33


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE C - LOANS RECEIVABLE

      The  composition  of the loan  portfolio  at June 30,  2004 and 2003 is as
      follows:

                                                           2004            2003
                                                            (In thousands)
      Residential real estate
        One- to four-family                            $ 56,972        $ 62,396
        Multi-family                                      6,056           4,905
      Nonresidential real estate and land                34,968          28,488
      Commercial loans - secured                         15,111          19,002
      Commercial loans - unsecured                          269             452
      Consumer and other loans                            2,769           2,352
      Deferred loan origination costs                       138             121
                                                       --------        --------
                                                        116,283         117,716
      Less:
        Undisbursed portion of loans in process           1,216           2,699
        Allowance for loan losses                           779             818
                                                       --------        --------

                                                       $114,288        $114,199
                                                       ========        ========

      The  Bank's  lending  efforts  have   historically   focused  on  one-  to
      four-family and multi-family residential real estate loans, which comprise
      approximately  $61.8 million,  or 54%, of the total loan portfolio at June
      30,  2004,  and  approximately  $64.6  million,  or 57%, of the total loan
      portfolio at June 30, 2003.  Generally,  such loans have been underwritten
      on the  basis  of no  more  than an 80%  loan-to-value  ratio,  which  has
      historically  provided the Bank with adequate  collateral  coverage in the
      event of default. Nevertheless, the Bank, as with any lending institution,
      is subject to the risk that real estate  values could  deteriorate  in its
      primary lending area of north central Ohio,  thereby impairing  collateral
      values.  However,  management  is of the belief that real estate values in
      the Bank's primary lending area are presently stable.

      As discussed  previously,  the Bank has sold whole loans and participating
      interests in loans in the secondary market,  generally retaining servicing
      on  the  loans  sold.   Loans  sold  and  serviced   for  others   totaled
      approximately  $73.0  million and $58.9 million at June 30, 2004 and 2003,
      respectively.

      In the ordinary course of business, the Bank has made loans to some of its
      directors  and  officers  and their  related  business  interests.  In the
      opinion of  management,  such  loans are  consistent  with  sound  lending
      practices and are within applicable  regulatory lending  limitations.  The
      balance of such loans totaled  approximately $2.2 million at both June 30,
      2004 and 2003.


                                       34


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE D - ALLOWANCE FOR LOAN LOSSES

      The activity in the allowance for loan losses is summarized as follows for
      the years ended June 30, 2004, 2003 and 2002:

                                            2004          2003          2002
                                                    (In thousands)

      Beginning balance                    $ 818         $ 713         $ 564
      Provision for losses on loans           25           131           150
      Loan charge-offs                       (64)          (26)           (1)
                                           -----         -----         -----

      Ending balance                       $ 779         $ 818         $ 713
                                           =====         =====         =====

      As of June 30, 2004,  the Bank's  allowance  for loan losses was comprised
      solely  of a  general  loan  loss  allowance,  which  is  includible  as a
      component of regulatory risk-based capital.

      Nonperforming  and impaired  loans totaled $1.1 million,  $2.2 million and
      $622,000,  respectively at June 30, 2004,  2003 and 2002.  Interest income
      that would have been recognized had nonaccrual loans performed pursuant to
      contractual terms totaled approximately  $49,000,  $45,000 and $13,000 for
      the fiscal years ended June 30, 2004, 2003 and 2002, respectively.

      NOTE E - OFFICE PREMISES AND EQUIPMENT

      Office  premises  and  equipment at June 30, 2004 and 2003 is comprised of
      the following:

                                                   2004          2003
                                                     (In thousands)

      Land                                       $  488        $  488
      Buildings and improvements                  1,446         1,424
      Furniture and equipment                     1,042         1,160
                                                 ------        ------
                                                  2,976         3,072
        Less accumulated depreciation and
          amortization                              948           938
                                                 ------        ------

                                                 $2,028        $2,134
                                                 ======        ======


                                       35


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE F - DEPOSITS

      Deposits consist of the following major  classifications  at June 30, 2004
      and 2003:



    Deposit type and weighted-                                  2004                             2003
    average interest rate                             Amount           %                 Amount         %
                                                                      (Dollars in thousands)
                                                                                           
    Demand deposit accounts                         $ 10,805         10.3%             $  7,867          7.5%
    NOW accounts
      2004 - 0.17%                                    12,888         12.2
      2003 - 0.20%                                                                       12,981         12.5
    Passbook
      2004 - 0.84%                                    33,526         31.8
      2003 - 0.83%                                                                       32,229         30.9
                                                    --------       ------              --------       ------
    Total demand, transaction and
      passbook deposits                               57,219         54.3                53,077         50.9

    Certificates of deposit
      Original maturities of:
        Less than 12 months
          2004 - 0.92%                                 1,843          1.7
          2003 - 1.29%                                                                    2,174          2.1
       12 months to 29 months
          2004 - 1.77%                                13,002         12.3
          2003 - 2.50%                                                                   14,524         13.9
       30 months to 47 months
          2004 - 4.09%                                16,189         15.4
          2003 - 4.42%                                                                   19,082         18.3
       48 months to 60 months
          2004 - 3.63%                                 2,250          2.1
          2003 - 3.60%                                                                      984          0.9
    Balances in excess of $100,000
          2004 - 3.01%                                 8,525          8.1
          2003 - 3.39%                                                                    7,832          7.5
    Individual retirement accounts
        2004 - 3.03%                                   6,418          6.1
        2003 - 3.44%                                                                      6,678          6.4
                                                    --------       ------              --------       ------

    Total certificates of deposit                     48,227         45.7                51,274         49.1
                                                    --------       ------              --------       ------

    Total deposit accoun105,446                     $105,446        100.0%             $104,351        100.0%
                                                    ========       ======              ========       ======


      Interest  expense on deposits for the years ended June 30, 2004,  2003 and
      2002 is summarized as follows:

                                          2004          2003          2002
                                                   (In thousands)

      Passbook                          $  300        $  365        $  586
      NOW accounts                          20            38            36
      Certificates of deposit            1,579         1,979         2,496
                                        ------        ------        ------

                                        $1,899        $2,382        $3,118
                                        ======        ======        ======


                                       36


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE F - DEPOSITS (continued)

      Maturities  of  outstanding  certificates  of deposit at June 30, 2004 and
      2003 are summarized as follows:

                                                     2004             2003
                                                        (In thousands)

      Less than one year                          $25,827          $24,023
      One year to three years                      20,899           25,315
      Three years to five years                     1,501            1,936
                                                  -------          -------

                                                  $48,227          $51,274
                                                  =======          =======

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

      Advances from the Federal Home Loan Bank,  collateralized at June 30, 2004
      by a pledge of certain  residential  mortgage loans totaling $15.9 million
      and the Bank's  investment in Federal Home Loan Bank stock, are summarized
      as follows:



      Interest                     Maturing in year
      rate                          ending June 30,                  2004                2003
                                                                      (Dollars in thousands)
                                                                             
      1.11% - 1.77%                    2004                       $    --             $ 2,500
      8.15%                            2005                             1                   5
      5.06% - 5.65%                    2009                         5,528               5,626
      1.94% - 6.10%                    After 2009                   7,140               5,760
                                                                  -------             -------

                                                                  $12,669             $13,891
                                                                  =======             =======

    Weighted-average interest rate                                   4.50%               3.95%
                                                                  =======             =======


NOTE H - FEDERAL INCOME TAXES

      Federal  income  taxes differ from the amounts  computed at the  statutory
      corporate  tax rate for the years  ended June 30,  2004,  2003 and 2002 as
      follows:



                                                                     2004           2003           2002
                                                                          (Dollars in thousands)
                                                                                         
      Federal income taxes at statutory rate                        $ 354          $ 532          $ 573
      Increase (decrease) in taxes resulting primarily from:
        Nontaxable interest income                                     (3)            (2)            (4)
        Other                                                           3              4              4
                                                                    -----          -----          -----
      Federal income taxes per consolidated
        financial statements                                        $ 354          $ 534          $ 573
                                                                    =====          =====          =====

      Effective tax rate                                             34.0%          34.1%          34.0%
                                                                    =====          =====          =====



                                       37


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE H - FEDERAL INCOME TAXES (continued)

      The  composition of the  Corporation's  net deferred tax liability at June
      30, 2004 and 2003 is as follows:



      Taxes (payable) refundable on temporary                                  2004          2003
      differences at statutory rate:                                             (In thousands)
                                                                                      
      Deferred tax assets:
        Retirement expense                                                    $  88         $  81
        General loan loss allowance                                             265           278
        Unrealized loss on securities designated as available for sale           33            --
        Other                                                                     9            12
                                                                              -----         -----
           Deferred tax assets                                                  395           371

      Deferred tax liabilities:
        Deferred loan origination costs                                         (67)          (85)
        Federal Home Loan Bank stock dividends                                 (310)         (283)
        Difference between book and tax depreciation                            (26)          (32)
        Unrealized gains on securities designated as available
          for sale                                                               --            (5)
        Percentage of earnings bad debt deduction                                --            (8)
        Mortgage servicing rights                                              (215)         (175)
                                                                              -----         -----
           Deferred tax liabilities                                            (618)         (588)
                                                                              -----         -----

           Net deferred tax liability                                         $(223)        $(217)
                                                                              =====         =====


      Prior to fiscal  1997,  the Bank was allowed a special bad debt  deduction
      generally limited to 8% of otherwise taxable income and subject to certain
      limitations  based on aggregate loans and deposit account  balances at the
      end of the year. If the amounts that  qualified as deductions  for federal
      income  taxes are later  used for  purposes  other  than bad debt  losses,
      including distributions in liquidation, such distributions will be subject
      to federal  income  taxes at the then current  corporate  income tax rate.
      Retained earnings at June 30, 2004, include approximately $1.7 million for
      which  federal  income  taxes  have  not  been  provided.  The  amount  of
      unrecognized  deferred tax liability  relating to the  cumulative bad debt
      deduction was approximately $550,000 at June 30, 2004.

      The Bank  was  required  to  recapture  as  taxable  income  approximately
      $281,000  of its tax bad debt  reserve,  which  represents  the  post-1987
      additions to the reserve,  and will be unable to utilize the percentage of
      earnings method to compute its bad debt deduction in the future.  The Bank
      has  provided  deferred  taxes for this amount and began to  amortize  the
      recapture  of the bad debt  reserve  into  taxable  income over a six year
      period finalized in fiscal 2004.


                                       38


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE I - LOAN COMMITMENTS

      The Bank is a party to financial instruments with  off-balance-sheet  risk
      in the  normal  course  of  business  to meet the  financing  needs of its
      customers,  including  commitments  to  extend  credit.  Such  commitments
      involve, to varying degrees,  elements of credit and interest-rate risk in
      excess of the amount recognized in the consolidated statement of financial
      condition. The contract or notional amounts of the commitments reflect the
      extent of the Bank's involvement in such financial instruments.

      The Bank's exposure to credit loss in the event of  nonperformance  by the
      other party to the financial  instrument for  commitments to extend credit
      is represented by the contractual  notional  amount of those  instruments.
      The  Bank  uses  the  same  credit  policies  in  making  commitments  and
      conditional   obligations   as   those   utilized   for   on-balance-sheet
      instruments.

      At June 30, 2004, the Bank had  outstanding  commitments of  approximately
      $3.5  million to originate  loans.  Additionally,  the Bank was  obligated
      under  unused  lines of credit  under home  equity  loans  totaling  $10.5
      million  and  unused  lines  of  credit  under  commercial  loans of $12.5
      million.  In the opinion of management,  all loan  commitments  equaled or
      exceeded prevailing market interest rates as of June 30, 2004, and will be
      funded from normal cash flow from operations.

NOTE J - REGULATORY CAPITAL

      The Bank is subject to minimum regulatory capital standards promulgated by
      the Office of Thrift  Supervision  (the  "OTS").  Failure to meet  minimum
      capital  requirements  can  initiate  certain  mandatory  -- and  possibly
      additional  discretionary  -- actions by regulators  that, if  undertaken,
      could  have  a  direct  material  effect  on  the  consolidated  financial
      statements. Under capital adequacy guidelines and the regulatory framework
      for  prompt  corrective  action,  the  Bank  must  meet  specific  capital
      guidelines  that  involve  quantitative  measures  of the  Bank's  assets,
      liabilities,  and  certain  off-balance-sheet  items as  calculated  under
      regulatory   accounting   practices.   The  Bank's  capital   amounts  and
      classification are also subject to qualitative judgments by the regulators
      about components, risk weightings, and other factors.

      The minimum capital standards of the OTS generally require the maintenance
      of regulatory capital sufficient to meet each of three tests,  hereinafter
      described  as  the  tangible   capital   requirement,   the  core  capital
      requirement and the risk-based capital  requirement.  The tangible capital
      requirement   provides   for   minimum   tangible   capital   (defined  as
      shareholders' equity less all intangible assets) equal to 1.5% of adjusted
      total  assets.  The core  capital  requirement  provides  for minimum core
      capital (tangible  capital plus certain forms of supervisory  goodwill and
      other qualifying  intangible  assets)  generally equal to 4.0% of adjusted
      total assets,  except for those associations with the highest  examination
      rating and acceptable levels of risk. The risk-based  capital  requirement
      provides for the  maintenance of core capital plus general loss allowances
      equal to 8.0% of risk-weighted assets. In computing  risk-weighted assets,
      the Bank  multiplies the value of each asset on its statement of financial
      condition by a defined  risk-weighting  factor,  e.g., one- to four-family
      residential loans carry a risk-weighted factor of 50%.


                                       39


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE J - REGULATORY CAPITAL (continued)

      During  fiscal  2003,  the  Bank  was  notified  by the  OTS  that  it was
      categorized  as  "well-capitalized"  under the  regulatory  framework  for
      prompt corrective action.  Management does not believe there have been any
      changes in facts and  circumstances  that would change the Bank's  capital
      category. To be categorized as  "well-capitalized"  the Bank must maintain
      minimum capital ratios as set forth in the following tables.

      As of June 30, 2004 and 2003,  management  believes  that the Bank met all
      capital adequacy requirements to which it was subject.



                                                                    As of June 30, 2004
                                                                                                       To be "well-
                                                                                                    capitalized" under
                                                               For capital                           prompt corrective
                                 Actual                      adequacy purposes                      action provisions
                                 ------                      -----------------                      -----------------
                             Amount    Ratio            Amount              Ratio                Amount                 Ratio
                                                                   (Dollars in thousands)
                                                                                                 
                                                  greater than          greater than        greater than           greater than
    Tangible capital        $15,883    11.7%      or equal to $2,034    or equal to 1.5%    or equal to $6,781     or equal to  5.0%

                                                  greater than          greater than        greater than           greater than
    Core capital            $15,883    11.7%      or equal to $5,425    or equal to 4.0%    or equal to $8,137     or equal to  6.0%

                                                  greater than          greater than        greater than           greater than
    Risk-based capital      $16,314    17.4%      or equal to $7,515    or equal to 8.0%    or equal to $9,393     or equal to 10.0%


                                                                     As of June 30, 2003
                                                                                                         To be "well-
                                                                                                      capitalized" under
                                                              For capital                              prompt corrective
                                 Actual                     adequacy purposes                         action provisions
                                 ------                     -----------------                         -----------------
                             Amount    Ratio            Amount              Ratio                Amount                 Ratio
                                                                    (Dollars in thousands)
                                                                                                 
                                                  greater than          greater than        greater than           greater than
    Tangible capital        $15,666    11.5%      or equal to $2,035    or equal to 1.5%    or equal to $6,785     or equal to  5.0%

                                                  greater than          greater than        greater than           greater than
    Core capital            $15,666    11.5%      or equal to $5,428    or equal to 4.0%    or equal to $8,142     or equal to  6.0%

                                                  greater than          greater than        greater than           greater than
    Risk-based capital      $16,484    18.4%      or equal to $7,177    or equal to 8.0%    or equal to $8,971     or equal to 10.0%


      The Bank's management  believes that, under the current regulatory capital
      regulations,   the  Bank  will  continue  to  meet  its  minimum   capital
      requirements in the foreseeable future. However, events beyond the control
      of the Bank, such as increased interest rates or a downturn in the economy
      in the Bank's market area,  could  adversely  affect future  earnings and,
      consequently,  the  ability  to meet  future  minimum  regulatory  capital
      requirements.


                                       40


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE K - CONDENSED FINANCIAL STATEMENTS OF FFD FINANCIAL CORPORATION

      The  following  condensed  financial  statements  summarize  the financial
      position of FFD Financial  Corporation  as of June 30, 2004 and 2003,  and
      the results of its  operations and its cash flows for the years ended June
      30, 2004, 2003 and 2002.

                            FFD FINANCIAL CORPORATION
                        STATEMENTS OF FINANCIAL CONDITION
                             June 30, 2004 and 2003
                                 (In thousands)



           ASSETS                                                                  2004             2003
                                                                                          
      Cash and due from banks                                                  $    103         $    407
      Loan receivable from ESOP                                                     404              523
      Investment in First Federal Community Bank                                 15,880           15,726
      Accrued interest receivable                                                     6               12
      Prepaid federal income taxes                                                  336              239
      Prepaid expenses and other assets                                               9               11
                                                                               --------         --------

           Total assets                                                        $ 16,738         $ 16,918
                                                                               ========         ========

           SHAREHOLDERS' EQUITY

      Shareholders' equity
        Common stock and additional paid-in capital                            $  7,910         $  7,889
        Retained earnings                                                        12,385           12,202
        Unrealized gains (losses) on securities designated as available
          for sale, net of related tax effects                                      (66)               8
        Shares acquired by stock benefit plans                                     (444)            (559)
        Treasury shares - at cost                                                (3,047)          (2,622)
                                                                               --------         --------

           Total shareholders' equity                                          $ 16,738         $ 16,918
                                                                               ========         ========


                            FFD FINANCIAL CORPORATION
                             STATEMENTS OF EARNINGS
                     Year ended June 30, 2004, 2003 and 2002
                                 (In thousands)



                                                      2004            2003            2002
                                                                          
      Revenue
        Interest income                              $   6         $    17         $    30
        Equity in earnings of subsidiary               813           1,153           1,221
                                                     -----         -------         -------
           Total revenue                               819           1,170           1,251

      General and administrative expenses              197             196             194
                                                     -----         -------         -------

           Earnings before income tax credits          622             974           1,057

      Federal income tax credits                       (65)            (58)            (56)
                                                     -----         -------         -------

           NET EARNINGS                              $ 687         $ 1,032         $ 1,113
                                                     =====         =======         =======



                                       41


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2004, 2003 and 2002

NOTE K - CONDENSED FINANCIAL STATEMENTS OF FFD FINANCIAL CORPORATION (continued)

                            FFD FINANCIAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                     Year ended June 30, 2004, 2003 and 2002
                                 (In thousands)



                                                                     2004            2003            2002
                                                                                         
      Cash provided by (used in) operating activities:
        Net earnings for the year                                   $ 687         $ 1,032         $ 1,113
        Adjustments to reconcile net earnings to net
        cash provided by (used in) operating activities:
          Undistributed earnings of subsidiary                        (86)           (403)           (221)
          Increase (decrease) in cash due to changes in:
            Prepaid expenses and other assets                          32              (7)             (2)
            Prepaid federal income taxes                              (97)            (58)            (56)
                                                                    -----         -------         -------
            Net cash provided by operating activities                 536             564             834

      Cash flows provided by investing activities:
        Proceeds from repayment of loan to ESOP                       119             112             105

      Cash flows provided by (used in) financing activities:
        Proceeds from other borrowed money                             --             405              --
        Repayments of other borrowed money                             --            (405)             --
        Proceeds from exercise of stock options                       314              38              51
        Purchase of treasury shares                                  (769)           (380)           (936)
        Cash dividends paid on common stock                          (504)           (459)           (446)
                                                                    -----         -------         -------
            Net cash used in financing activities                    (959)           (801)         (1,331)
                                                                    -----         -------         -------

      Net increase (decrease) in cash and cash equivalents           (304)           (125)           (392)

      Cash and cash equivalents at beginning of year                  407             532             924
                                                                    -----         -------         -------

      Cash and cash equivalents at end of year                      $ 103         $   407         $   532
                                                                    =====         =======         =======


      Regulations of the OTS impose  limitations on the payment of dividends and
      other capital distributions by savings associations. Generally, the Bank's
      payment of  dividends  is  limited,  without  prior OTS  approval,  to net
      earnings for the current  calendar  year plus the two  preceding  calendar
      years,  less capital  distributions  paid over the comparable time period.
      The Bank is required to submit a notice of dividends  payable with the OTS
      prior to payment. Insured institutions are required to file an application
      with the OTS for capital distributions in excess of this limitation.

NOTE L - RELATED PARTY TRANSACTIONS

      In connection with construction work performed, the Bank paid a contractor
      approximately $187,000, during fiscal 2003. A principal of the contracting
      company also serves as an outside director to FFD Financial Corporation.


                                       42


                            FFD FINANCIAL CORPORATION
                                       AND
                          FIRST FEDERAL COMMUNITY BANK
                        DIRECTORS AND EXECUTIVE OFFICERS

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


                                        
         Board of Directors of                         Executive Officers of
     FFD Financial Corporation and                   FFD Financial Corporation
     First Federal Community Bank

       Xxxxxxx X. Xxxxxxxx, Xx.                           Xxxxx X. Xxxxxx
                  CEO                          President and Chief Executive Officer
       AAA of Tuscarawas County
                                                         Xxxxx X. Xxxxxxx
          Xxxxxxx X. Xxxxxxx                         Executive Vice President
               President
       Capital Market Securities                         Xxxxxx X. Xxxxxx
                                                Vice President, Treasurer and Chief
           Xxxxxxx X. Xxxxx                              Financial Officer
               President
     Benchmark Construction, Inc.                       Xxxxxxx X. Xxxxxxx
                                                        Corporate Secretary
            Xxxx X. Loader
         Chairman of the Board
                  and                                  Executive Officers of
      Retired Senior Bank Officer                  First Federal Community Bank

           Xxxxxx X. Xxxxxx                               Xxxxx X. Xxxxxx
 President and Chief Executive Officer         President and Chief Executive Officer
        Dover Hydraulics, Inc.
                                                         Xxxxx X. Xxxxxxx
                   .                                 Executive Vice President
           Director Emeritus
     FFD Financial Corporation and                       Xxxxxx X. Xxxxxx
     First Federal Community Bank          Vice President, Treasurer and Chief Financial
                                                             Officer
            J. Xxxxxxx Xxxx
               Chairman                                   Xxxxx X'Xxxxxxx
         Hanhart Agency, Inc.                          Senior Vice President

           Xxxxxxx X. Xxxxxx                            Xxxxxxx X. Xxxxxxx
          Chairman - Retired                            Corporate Secretary
   Xxxxxx-Xxxxxx Funeral Homes, Inc.

         Xxx X. Xxxxxxxx, Xx.                            Other Officers of
            Managing Officer - Retired             First Federal Community Bank
     First Federal Community Bank
                                                         Xxxxxxx X. Xxxxxx
                                                          Vice President

                                                         Xxxx X. Xxxxxxxx
                                                          Banking Officer

                                                      Xxxxxxxx Law-Xxxxxxxxxx
                                                        Assistant Secretary



                                       43


                              SHAREHOLDER SERVICES

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

Registrar  and  Transfer   Company   serves  as  transfer   agent  and  dividend
distributing agent for FFD's shares. Communications regarding change of address,
transfer of shares, lost certificates and dividends should be sent to:

                         Registrar and Transfer Company
                                00 Xxxxxxxx Xxxxx
                         Xxxxxxxx, Xxx Xxxxxx 00000-0000
                                 (000) 000-0000

                                 ANNUAL MEETING

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

The Annual Meeting of Shareholders of FFD Financial  Corporation will be held on
October  19,  2004,  at 1:00 p.m.,  Eastern  Time,  at the Xxxxxxx  Xxxxxx,  000
Xxxxxxxxx, Xxxxx, Xxxx 00000. Shareholders are cordially invited to attend.

                          ANNUAL REPORT ON FORM 10-KSB

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

A copy of FFD's Annual Report on Form 10-KSB,  excluding exhibits, as filed with
the  Securities  and  Exchange  Commission,  will be  available  at no charge to
shareholders upon request to:

                            FFD Financial Corporation
                            000 Xxxxx Xxxxxxx Xxxxxx
                                Xxxxx, Xxxx 00000
                              Attention: Secretary


                                       44