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. Since its formation in 1996, FFD's activities...

                      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.  Since its formation in 1996,  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,  and 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, loan sales
and principal repayments on loans and mortgage-backed securities.  First Federal
conducts business from its main office in Dover, Ohio, branches in Dover and New
Philadelphia,  Ohio,  and lending  offices in Sugarcreek  and  Coshocton,  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  1,190,844  common  shares of FFD  outstanding  on September 2, 2005.
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 2005.



                                            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



                                            High Trade          Low Trade            Cash Dividends Declared
                                                                                      
Fiscal 2005
 Quarter Ended
    September 30, 2004                          $16.50              $13.05                     $.105
    December 31, 2004                            16.40               13.44                      .110
    March 31, 2005                               16.75               14.26                      .110
    June 30, 2005                                18.39               13.50                      .110


FFD's income 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.  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 to stock form 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:                                2005       2004       2003       2002       2001

                                                                (In thousands)
                                                                          
Total amount of:
Assets                                       $148,559   $135,892   $136,408   $130,303   $133,097
Interest-bearing deposits                       5,672      8,821     10,398     11,726      8,024
Investment securities available for sale -
  at market                                     3,485      4,402      1,502      2,047      1,000
Mortgage-backed securities available
  for sale - at market                            500        630        832      1,551      7,799
Mortgage-backed securities held to
  maturity - at cost                              220        395        651      1,606      3,721
Loans receivable - net (1)                    131,493    114,505    115,966    107,055    107,467
Deposits                                      111,495    105,446    104,351     95,542     91,018
Advances from the FHLB                         17,880     12,669     13,891     17,553     24,732
Shareholders' equity, restricted               17,402     16,738     16,918     16,541     16,604



                                                           For the year ended June 30,
Summary of earnings:                           2005       2004       2003       2002       2001
                                                      (In thousands, except per share data)
                                                                          
Interest income                              $  7,073   $  6,360   $  6,758   $  8,005   $  9,549
Interest expense                                2,521      2,487      2,966      3,893      5,498
                                             --------   --------   --------   --------   --------
Net interest income                             4,552      3,873      3,792      4,112      4,051

Provision for losses on loans                      11         25        131        150        201
                                             --------   --------   --------   --------   --------
Net interest income after provision
  for losses on loans                           4,541      3,848      3,661      3,962      3,850

Other income                                      917        616      1,038        536        262
General, administrative and other
  expense                                       3,813      3,423      3,133      2,812      2,451
                                             --------   --------   --------   --------   --------
Earnings before income taxes                    1,645      1,041      1,566      1,686      1,661

Federal income taxes                              559        354        534        573        560
                                             --------   --------   --------   --------   --------

Net earnings                                 $  1,086   $    687   $  1,032   $  1,113   $  1,101
                                             ========   ========   ========   ========   ========
 Earnings per share
  Basic                                      $    .94   $    .59   $    .88   $    .94   $    .86
                                             ========   ========   ========   ========   ========

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


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

(1)   Includes loans held for sale.


                                       3




Selected financial ratios                              At or for the year ended June 30,
  and other data:                              2005       2004       2003       2002       2001
                                                                          
Return on average assets                       0.78%      0.50%      0.77%      0.84%      0.86%
Return on average equity                       6.39       4.05       6.17       6.75       6.69
Interest rate spread                           3.24       2.79       2.62       2.85       2.75
Net interest margin                            3.41       2.97       2.95       3.22       3.26
General, administrative and other
  expense to average assets                    2.73       2.50       2.34       2.13       1.91
Average equity to average
  assets                                      12.14      12.40      12.50      12.50      12.81
Nonperforming and impaired assets
  to total assets                              0.82       0.84       1.76       0.48       0.08
Nonperforming and impaired loans to
  total loans                                  0.90       0.98       1.88       0.58       0.10
Delinquent loans to total loans (1)            1.02       1.18       1.28       2.57       0.96
Allowance for loan losses to
  total loans                                  0.57       0.67       0.68       0.66       0.52
Allowance for loan losses to
  nonperforming and impaired loans            62.99      68.09      36.45     114.63     537.14
Average interest-earning assets
  to average interest-bearing liabilities    108.86     109.27     114.63     112.05     111.49
Dividend payout ratio                         46.28      70.34      44.89      39.89      41.86
Number of full service offices                    3          3          3          3          2


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

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


                                       4


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

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

                                     GENERAL

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

The principal  business of FFD is owning all of First  Federal's stock issued in
its 1996 conversion from mutual to stock form. 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.

Forward-Looking Statements are Subject to Change

Certain  statements  contained in this report that are not historical  facts are
forward looking  statements that are subject to certain risks and uncertainties.
When used herein, the terms "anticipates,"  "plans," "expects,"  "believes," and
similar  expressions  as they relate to FFD or its  management  are  intended to
identify such forward looking statements.  FFD's actual results,  performance or
achievements  may  materially  differ  from  those  expressed  or implied in the
forward-looking  statements.   Risks  and  uncertainties  that  could  cause  or
contribute to such material differences include, but are not limited to, general
economic conditions,  interest rate environment,  competitive  conditions in the
financial  services  industry,   changes  in  law,   governmental  policies  and
regulations, and rapidly changing technology affecting financial services.

Critical Accounting Policies

The  preparation  of  consolidated   financial  statements  in  conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to use judgments in making  estimates and assumptions  that
affect the reported amounts of assets,  liabilities,  revenues and expenses. The
following critical  accounting policy is based upon judgments and assumptions by
management that includes inherent risks and uncertainties.

The  allowance  for loan  losses  is an  accounting  estimate  of  probable  but
unconfirmed  asset  impairment  that  has  occurred  in the  Corporation's  loan
portfolio as of the date of the consolidated  financial statements before losses
have  been  confirmed  via a  recorded  charge-off  or  write-down.  It  is  the
Corporation's  policy to provide  valuation  allowances for estimated  losses on
loans  based  upon past loss  experience,  adjusted  for  changes  in trends and
conditions of certain items, including:

      o     Local market areas and national economic developments;

      o     Levels of and trends in delinquencies and impaired loans;

      o     Levels of and trends in recoveries of prior charge-offs;

      o     Adverse  situations that may affect specific  borrowers'  ability to
            repay;

      o     Effects of any changes in lending policies and procedures;

      o     Credit concentrations;

      o     Volume and terms of loans; and

      o     Current collateral values, where appropriate.

When the  collection  of a loan becomes  doubtful,  or otherwise  troubled,  the
Corporation  records a loan loss provision  equal to the difference  between the
fair value of the  property  securing  the loan and the loan's  carrying  value.
Major loans and major  lending  areas are  reviewed  periodically  to  determine
potential  problems at an early date. The allowance for loan losses is increased
by charges to earnings and decreased by charge-offs (net of recoveries).


                                       5


The  Corporation  accounts for its  allowance  for losses on loans in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 5, "Accounting for
Contingencies,"  and SFAS No. 114,  "Accounting by Creditors for Impairment of a
Loan." Both Statements require the Corporation to evaluate the collectibility of
both contractual  interest and principal loan payments.  SFAS No. 5 requires the
accrual  of a loss when it is  probable  that a loan has been  impaired  and the
amount of the loss can be  reasonably  estimated.  SFAS No.  114  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.

A loan is impaired  under SFAS No. 114 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 Corporation  considers its investment in one- to
four-family residential loans and consumer loans to be homogeneous and therefore
excluded from  separate  identification  for  evaluation  of  impairment.  These
homogeneous loan groups are evaluated for impairment in accordance with SFAS No.
5. With  respect  to  nonresidential  real  estate and other  loans,  management
believes such loans are adequately collateralized and as a result impaired loans
are carried at the lower of cost or fair value.

It is the  Corporation's  policy to charge off  unsecured  credits that are more
than ninety days delinquent. Similarly, once a collateral dependent loan becomes
more than ninety days  delinquent,  it is considered  to constitute  more than a
minimum delay in repayment and is evaluated for impairment under SFAS No. 114 at
that time.

       CHANGES IN FINANCIAL CONDITION FROM JUNE 30, 2004 TO JUNE 30, 2005

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

The  Corporation's  assets at June 30, 2005,  totaled  $148.6  million,  a $12.7
million,  or 9.3%,  increase  from the June 30, 2004 total.  This  increase  was
comprised  primarily of a $17.0 million increase in loans receivable,  which was
partially offset by a $4.3 million decrease in cash,  interest-bearing deposits,
mortgage-backed securities and investment securities.

Cash and  interest-bearing  deposits  totaled  $7.8  million at June 30, 2005, a
decrease of $3.0 million,  or 28.0%, from June 30, 2004.  Investment  securities
totaled $3.5 million at June 30,  2005, a decrease of $917,000.  Maturities  and
calls of investment securities totaled $1.0 million.

Mortgage-backed  securities  totaled  $720,000 at June 30, 2005, a $305,000,  or
29.8%,  decrease  from the total at June 30,  2004,  due  primarily to principal
repayments.  Repayments of mortgage-backed securities during fiscal 2005 totaled
$308,000.

Loans receivable,  including loans held for sale, totaled $131.5 million at June
30, 2005, an increase of $17.0 million,  or 14.8%, from the June 30, 2004 total.
Loan disbursements  during fiscal 2005 totaled $66.6 million,  which were offset
by principal  repayments of $36.2 million and loans sold in the secondary market
totaling $10.5 million.  Loan origination  volume during the year ended June 30,
2005, decreased by $3.2 million, or 4.6%, compared to fiscal 2004. During fiscal
2005,  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 2005 decreased by $19.3 million,  or 64.8%,  from fiscal 2004. The
portfolio  of loans  secured  by one- to  four-family  residential  real  estate
increased by $4.1 million to $61.1  million at June 30, 2005.  Loans  secured by
nonresidential  real estate and land  totaled  $42.8  million at June 30,  2005,
compared to $35.0  million at June 30,  2004.  Commercial  loans  totaled  $16.7
million  at  June  30,  2005,  compared  to  $15.4  million  at June  30,  2004.
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


                                       6


reduce such risk by evaluating  the credit  history and past  performance of the
borrower, the quality of the borrower's 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 $766,000 and $779,000 at June 30, 2005 and
2004, respectively, which represented .57% and .68% of total loans and 63.0% and
68.1%  of  nonperforming   and  impaired  loans  at  those   respective   dates.
Nonperforming  and impaired  loans  amounted to $1.2 million and $1.1 million at
June 30,  2005 and  2004,  respectively.  Management  believes  that the  Bank's
nonperforming and impaired loans at June 30, 2005 are adequately  collateralized
and no  unreserved  loss is  anticipated  on  such  loans.  Although  management
believes that the allowance for loan losses at June 30, 2005, 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  $111.5  million at June 30,  2005, a $6.1  million,  or 5.7%,
increase over total deposits at June 30, 2004. This increase resulted  primarily
from  management's  efforts to generate  deposit growth through  advertising and
pricing strategies. Proceeds from deposit growth were used primarily to fund new
loan originations.

FHLB advances totaled $17.9 million at June 30, 2005, a $5.2 million,  or 41.1%,
increase from June 30, 2004. The increase in FHLB advances was primarily used to
fund loan growth.

Shareholders'  equity  totaled  $17.4  million at June 30, 2005,  an increase of
$664,000,  or 4% from June 30, 2004 levels.  This  increase was due primarily to
net earnings of $1.1  million,  a $110,000  reduction in the shares  acquired by
benefit  plans,  and $267,000 in proceeds  from the  exercise of stock  options,
which were  partially  offset by dividends  totaling  $517,000 and  purchases of
treasury shares totaling $411,000.

                         COMPARISON OF OPERATING RESULTS
                   FOR THE YEARS ENDED JUNE 30, 2005 AND 2004

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

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 $1.1 million for the fiscal year ended June
30, 2005, an increase of $399,000 or 58.1% compared to fiscal 2004. The increase
in net  earnings  resulted  primarily  from a $679,000  increase in net interest
income,  a $329,000 gain on redemption of securities,  and a $93,000 increase in
other operating  income,  which were partially offset by a $390,000  increase in
general,  administrative  and other expense, a $128,000 decrease in gain on sale
of loans, and a $205,000 increase in the provision for federal income tax.

Net Interest Income. Total interest income increased by $713,000, or 11.2%, to a
total of $7.1 million for the year ended June 30, 2005, compared to $6.4 million
for the fiscal year ended June 30, 2004.  Interest  income on loans increased by
$640,000,  or 10.6%,  due primarily to a 24 basis point  increase in the average
yield,  to 5.51% in fiscal 2005,  and a $6.7 million,  or 5.9%,  increase in the
average loan portfolio  balance  outstanding  year to year.  Interest  income on
mortgage-backed  securities  decreased by $22,000,  or 37.9%, due primarily to a
$405,000, or 32.4%, decrease in the average balance outstanding,  and a 34 basis
point  decrease  in the average  yield  earned on such  securities,  to 4.29% in
fiscal 2005. Interest income on investment  securities  increased by $38,000 due
primarily  to a 23 basis  point  increase in the  average  yield  earned on such
securities,   to  4.17%,  and  a  $725,000   increase  in  the  average  balance
outstanding. Interest income on interest-


                                       7


bearing  deposits  increased by $51,000,  or 44.9%, due primarily to a 136 basis
point  increase  in the  average  yield,  which was  partially  offset by a $4.0
million,  or 35.1%,  decrease in the average balance  outstanding  year to year.
Increases in the average yields on interest-earning assets were due primarily to
the overall increase interest rates in the economy.

Interest expense on deposits  increased by $18,000,  or 0.9%, for the year ended
June 30, 2005,  compared to fiscal 2004,  due  primarily to a $3.9  million,  or
3.76%,  increase in the average deposit  portfolio  balance  outstanding year to
year,  partially offset by a decrease in the average cost of deposits of 5 basis
points to 1.76% for fiscal 2005.

Interest expense on borrowings increased by $16,000, or 2.7%, due primarily to a
32 basis  point  increase in the average  cost of such  borrowings,  to 4.35% in
fiscal 2005,  partially offset by a $706,000,  or 4.8%,  decrease in the average
balance of advances outstanding.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest income  increased by $679,000,  or 17.5%, for the fiscal year ended
June 30, 2005,  compared to fiscal 2004.  The interest  rate spread  amounted to
3.24% for the  fiscal  year ended June 30,  2005,  compared  to 2.79% for fiscal
2004, while the net interest margin was 3.41% in fiscal 2005,  compared to 2.97%
in fiscal 2004.

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  $11,000 for the year ended June 30, 2005, a decrease of $14,000,
or 56.0%,  compared to fiscal 2004.  First  Federal's  fiscal 2005 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 First  Federal's
loan loss allowance will be adequate to cover losses on nonperforming  assets in
the future.

Other Income.  Other income totaled  $917,000 for the fiscal year ended June 30,
2005,  an increase of $301,000 or 48.9% from fiscal 2004. An increase in gain on
redemption  of securities  resulted from a $329,000  pre-tax gain on the sale of
Intrieve,  Incorporated  shares to Xxxxxxx  Financial  Solutions.  This increase
resulted  from the gain on  redemption  of  securities  and an increase in other
operating income, which were partially offset by a $128,000,  or 36.2%, decrease
in gain on sale of loans.  The  increase  in other  operating  income of $93,000
consisted  primarily  of a decrease in the  amortization  of mortgage  servicing
rights and increases in miscellaneous operating income.

General,  Administrative  and Other Expense.  General,  administrative and other
expense  totaled  $3.8  million  for the fiscal  year ended  June 30,  2005,  an
increase of $390,000,  or 11.4%,  compared to fiscal 2004. The increase resulted
from increases of $218,000,  or 14.2%, in employee compensation and benefits and
$177,000, or 17.7%, in other operating expense,  which were slightly offset by a
$7,000 decrease in occupancy and equipment.

The increase in employee compensation and benefits included increases of $90,000
in wages and related benefit  expenses,  $50,000 in employee stock ownership and
stock option plans, and an $82,000 decrease in deferred loan origination  costs,
which were slightly offset by a decrease of $4,000 in the cost of the reward and
recognition and stock option 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  expense  was the result of higher
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 plans occurred because benefits have fully vested or have been forfeited.
The  remaining  $177,000  increase in other  operating  expenses  was  comprised
primarily of pro-rata


                                       8


increases  related to the Corporation's  overall growth year to year,  including
the opening of two new loan production offices.

Federal Income Taxes.  The provision for federal  income taxes totaled  $559,000
for the fiscal year ended June 30,  2005,  an increase  of  $205,000,  or 57.9%,
compared to fiscal 2004. The increase  resulted  primarily  from a $604,000,  or
58.0%, increase in earnings before taxes. The effective tax rates were 34.0% for
both of the fiscal years ended June 30, 2005 and 2004.

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

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

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  increases  of  $81,000  in net  interest  income and
$139,000 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.
Decreases  in the  average  yield on loan  assets was due  primarily  to the low
interest rates that prevailed  throughout the 2004 fiscal 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,  which was
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 an $88,000 decrease in the average balance outstanding.  The yields on
mortgage-backed and investment  securities began to rise in 2004 in anticipation
of the Federal Reserve  Board's June 2004 decision to increase  rates.  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.

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%,  which was  partially
offset by an $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 sustained low level of 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%, which
was partially offset by a $478,000,  or 3.2%, decrease in the average balance of
advances  outstanding,  During fiscal year 2004, the Bank repaid $2.7 million of
maturing  advances  and  replaced  them with  $1.5  million  of new  fixed  rate
borrowings for match funding purposes and interest rate risk management. At June
30, 2004,  the Bank had a total of $12.7  million in advances with rates ranging
from  1.11% to 6.10%.  Prepayments  of the higher  cost  advances  are  unlikely
because of the significant penalties involved.

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.


                                       9


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,  which were  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  continue  to
decrease.

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
$143,000 in wages and related benefit expenses, and $5,000 in stock benefit plan
expense,  and a $137,000  decrease  in  deferred  loan  origination  costs.  The
increase in wages and related expenses was due to increases in staff,  salaries,
and benefit plans. The increase in stock benefit plan expenses was the result of
a $31,000  increase in ESOP  expense due to higher  average  trading  prices for
FFD's stock,  which was substantially  offset by $3,000 expense reduction due to
the  completion  of vesting of the Bank's  recognition  and  retention  plan and
$23,000  due to the  forfeiture  of  stock  options  by a former  employee.  The
decrease in deferred loan origination  costs was related to the reduction in the
number of loans originated. The remaining $5,000 increase in all other operating
expense categories was comprised primarily of immaterial  increases in a variety
of expenses from year to year

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 Corporation's  effective tax rates
were  34.0%  and  34.1%  for the  fiscal  years  ended  June 30,  2004 and 2003,
respectively.


                                       10


                  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,
                                                          2005                                  2004
                                           Average      Interest                 Average      Interest
                                         outstanding    earned/     Yield/     outstanding    earned/     Yield/
                                           balance        paid       rate        balance        paid       rate
                                                                  (Dollars in thousands)
                                                                                         
Interest-earning assets:
  Loans receivable                       $    121,282   $  6,683       5.51%   $    114,573   $  6,043       5.27%
  Mortgage-backed securities                      847         36       4.29           1,252         58       4.63
  Investment securities                         4,072        170       4.17           3,347        132       3.94
  Interest-bearing deposits
    and other                                   7,369        184       2.48          11,360        127       1.12
                                         ------------   --------   --------    ------------   --------   --------
  Total interest-earning assets               133,570      7,073       5.29         130,532      6,360       4.87

  Non-interest-earning assets                   6,287                                 6,220
                                         ------------                          ------------

    Total assets                         $    139,857                          $    136,752
                                         ============                          ============

Interest-bearing liabilities:
  Deposits                               $    108,820      1,917       1.76    $    104,872      1,899       1.81
  Borrowings                                   13,882        604       4.35          14,588        588       4.03
                                         ------------   --------   --------    ------------   --------   --------
    Total interest-bearing
      liabilities                             122,702      2,521       2.05         119,460      2,487       2.08
                                                        --------   --------                   --------   --------

Non-interest-bearing liabilities                  170                                   334
                                         ------------                          ------------

  Total liabilities                           122,872                               119,794

Shareholders' equity                           16,985                                16,958
                                         ------------                          ------------

    Total liabilities and
      shareholders' equity               $    139,857                          $    136,752
                                         ============                          ============

Net interest income                                     $  4,552                              $  3,873
                                                        ========                              ========

Interest rate spread                                                   3.24%                                 2.79%
                                                                     ======                                ======
Net interest margin (net interest
  income as a percent of average
  interest-earning assets)                                             3.41%                                 2.97%
                                                                     ======                                ======
Average interest-earning assets to
  average interest-bearing liabilities                               108.86%                               109.27%
                                                                     ======                                ======


                                                 Year ended June 30,
                                                         2003
                                           Average      Interest
                                         outstanding    earned/     Yield/
                                           balance        paid       rate
                                                (Dollars in thousands)
                                                              
Interest-earning assets:
  Loans receivable                       $    110,406   $  6,373       5.77%
  Mortgage-backed securities                    2,270         99       4.36
  Investment securities                         3,435        109       3.17
  Interest-bearing deposits
    and other                                  12,222        177       1.45
                                         ------------   --------   --------
  Total interest-earning assets               128,333      6,758       5.27

  Non-interest-earning assets                   5,382
                                         ------------

    Total assets                         $    133,715
                                         ============

Interest-bearing liabilities:
  Deposits                               $     96,886      2,382       2.46
  Borrowings                                   15,066        584       3.87
                                         ------------   --------   --------
    Total interest-bearing
      liabilities                             111,952      2,966       2.65
                                                        --------   --------

Non-interest-bearing liabilities                5,050
                                         ------------

  Total liabilities                           117,002

Shareholders' equity                           16,713
                                        ------------

    Total liabilities and
      shareholders' equity               $    133,715
                                         ============

Net interest income                                     $  3,792
                                                        ========

Interest rate spread                                                   2.62%
                                                                   ========

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

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



                                       11


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,
                                              2005 vs. 2004            2004 vs. 2003
                                            Increase                Increase
                                           (decrease)               (decrease)
                                             due to                   due to
                                        Volume    Rate    Total    Volume    Rate    Total
                                                          (In thousands)
Interest income attributable to:
                                                                   
  Loans receivable                      $ 360    $ 280    $ 640    $ 235    $(565)   $(330)
  Mortgage-backed securities              (18)      (4)     (22)     (46)       5      (41)
  Investment securities                    30        8       38       (3)      26       23
  Interest-bearing deposits and other     (57)     114       57      (12)     (38)     (50)
                                        -----    -----    -----    -----    -----    -----

     Total interest income                315      398      713      174     (572)    (398)
                                        -----    -----    -----    -----    -----    -----

Interest expense attributable to:
  Deposits                                 71      (53)      18      185     (668)    (483)
  Borrowings                              (29)      45       16      (19)      23        4
                                        -----    -----    -----    -----    -----    -----
     Total interest expense                42       (8)      34      166     (645)    (479)
                                        -----    -----    -----    -----    -----    -----

     Increase in net interest income    $ 273    $ 406    $ 679    $   8    $  73    $  81
                                        =====    =====    =====    =====    =====    =====



                                       12


                         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, 2005 and 2004, 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, -200, -300 basis points
in market interest rates. Due to the  improbability of negative rate adjustments
greater than 100 basis points,  in the fiscal 2004  interest  rate  environment,
shocks greater than negative 100 basis points were not presented.



                                                         June 30, 2005
                  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         $6,218      $1,168       23.13%                    $22,827           $3,125         15.86%
         +200          5,917         867       17.17                      22,107            2,406         12.21
         +100          5,508         458        9.08                      21,102            1,401          7.11
         Base          5,050          --          --                      19,702               --            --
         -100          4,575        (475)      (9.41)                     18,003           (1,699)        (8.62)
         -200          3,911      (1,139)     (22.55)                     16,008           (3,694)       (18.75)
         -300          3,239      (1,811)     (35.86)                     14,003           (5,699)       (28.93)



                                                         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)


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.


                                       13


                         LIQUIDITY AND CAPITAL RESOURCES

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

First  Federal's  principal  sources of funds are  deposits,  proceeds from loan
sales, principal repayments on loan and mortgage-backed  securities,  maturities
of investment  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 principal  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, 2005,  First  Federal had  commitments  to originate  loans,  including
unused lines of credit, totaling $35.6 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,
2005, 2004 and 2003:



                                                         Year ended June 30,
                                                   2005        2004        2003
                                                         (In thousands)
                                                                
Net earnings                                     $  1,086    $    687    $  1,032
Adjustments to reconcile net earnings to
  net cash from operating activities                3,666       1,621        (395)
                                                 --------    --------    --------
Net cash from operating activities                  4,752       2,308         637
Net cash used in investing activities             (18,386)     (2,645)     (5,956)
Net cash from (used in) financing activities       10,599      (1,086)      4,346
                                                 --------    --------    --------
Net change in cash and cash equivalents            (3,035)     (1,423)       (973)

Cash and cash equivalents at beginning of year     10,820      12,243      13,216
                                                 --------    --------    --------

Cash and cash equivalents at end of year         $  7,785    $ 10,820    $ 12,243
                                                 ========    ========    ========



                                       14


The following table sets forth information  regarding the Bank's obligations and
commitments  including  undisbursed  loans in process,  to make future  payments
under contract as of June 30, 2005:



                                                                       Payments due by period
                                                      Less                                    More
                                                      than             1-3          3-5       than
                                                     1 year           years        years     5 years       Total
                                                                           (In thousands)
                                                                                        
Contractual obligations:
  Advances from the Federal Home Loan Bank          $  2,452       $  7,813     $  6,914       $701    $  17,880
  Certificates of deposit                             27,831         24,600        3,427         --       55,858

Amount of commitments expiring per period
  Commitments to originate loans:
    Overdraft lines of credit                            703             --           --         --          703
    Home equity lines of credit                       13,381             --           --         --       13,381
    Commercial lines of credit                        13,698             --           --         --       13,698
    One- to four-family and multi-family loans         2,626             --           --         --        2,626
    Non-residential real estate and land loans         3,766             --           --         --        3,766
  Non-mortgage loans                                      50             --           --         --           50
  Purchase loans                                         485             --           --         --          485
                                                    --------       --------     --------       ----    ---------
Total contractual obligations                       $ 64,992       $ 32,413     $ 10,341       $701    $ 108,447
                                                    ========       ========     ========       ====    =========


First  Federal 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 loss allowance of $565,000 at June 30, 2005.

First   Federal   exceeded   all   of   its   capital   requirements   and   was
"well-capitalized"  under OTS  regulations at June 30, 2005. The following table
summarizes  First  Federal's  regulatory  capital  requirements  and  regulatory
capital at June 30, 2005:



                                                                                         Excess over current
                               Regulatory capital           Current requirement              requirement
                                Amount      Percent         Amount     Percent           Amount     Percent
                                                          (Dollars in thousands)

                                                                                   
Tangible capital               $16,471      11.1%           $2,225       1.5%           $14,246      9.6%
Core capital                   $16,471      11.1%           $5,934       4.0%           $10,537      7.1%
Risk-based capital             $17,036      14.8%           $9,222       8.0%            $7,814      6.8%



                                       15


             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,  2005 and 2004,  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,  2005.
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. The Corporation is not required to
have,  nor were we  engaged to perform  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion  on  the  effectiveness  of  the  Corporation's  internal  control  over
financial reporting.  Accordingly, we express no such opinion. 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, 2005 and 2004, and the results of its operations and
its cash flows for each of the three years in the period ended June 30, 2005, in
conformity with accounting principles generally accepted in the United States of
America.


/s/ Xxxxx Xxxxxxxx LLP

Cincinnati, Ohio
August 18, 2005 (except for Note M, as to which the date is September 15, 2005)


                                       16


                            FFD FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                             June 30, 2005 and 2004
                        (In thousands, except share data)



         ASSETS                                                                    2005         2004
                                                                                     
Cash and due from banks                                                       $   2,113    $   1,999
Interest-bearing deposits in other financial institutions                         5,672        8,821
                                                                              ---------    ---------
         Cash and cash equivalents                                                7,785       10,820

Investment securities designated as available for sale - at market                3,485        4,402
Mortgage-backed securities designated as available for sale - at market             500          630
Mortgage-backed securities held to maturity - at amortized cost,
  approximate market value of $225 and $411 as of June 30,
  2005 and 2004, respectively                                                       220          395
Loans receivable - net                                                          131,168      114,288
Loans held for sale - at lower of cost or market                                    325          217
Office premises and equipment - at depreciated cost                               2,031        2,028
Stock in Federal Home Loan Bank - at cost                                         2,140        2,047
Accrued interest receivable                                                         450          381
Prepaid expenses and other assets                                                   239          275
Prepaid federal income taxes                                                        252          409
                                                                              ---------    ---------

         Total assets                                                         $ 148,595    $ 135,892
                                                                              =========    =========

         LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                      $ 111,495    $ 105,446
Advances from the Federal Home Loan Bank                                         17,880       12,669
Accrued interest payable                                                            155           97
Other liabilities                                                                 1,385          719
Deferred federal income taxes                                                       242          223
                                                                              ---------    ---------
         Total liabilities                                                      131,157      119,154

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                                                      7,987        7,910
  Retained earnings - restricted                                                 12,954       12,385
  Accumulated comprehensive  loss; unrealized  losses on
    securities designated as available for sale, net of related tax effects          (9)         (66)
  Shares acquired by stock benefit plans                                           (334)        (444)
  Less 264,773 and 266,757 treasury shares at June 30, 2005 and 2004,
    respectively - at cost                                                       (3,160)      (3,047)
                                                                              ---------    ---------
         Total shareholders' equity                                              17,438       16,738
                                                                              ---------    ---------

         Total liabilities and shareholders' equity                           $ 148,595    $ 135,892
                                                                              =========    =========


The accompanying notes are an integral part of these statements.


                                       17


                            FFD FINANCIAL CORPORATION

                       CONSOLIDATED STATEMENTS OF EARNINGS

                    Years ended June 30, 2005, 2004 and 2003
                     (In thousands, except per share data)



                                                                      2005       2004      2003
                                                                                
Interest income
  Loans                                                            $ 6,683    $ 6,043    $6,373
  Mortgage-backed securities                                            36         58        99
  Investment securities                                                170        132       109
  Interest-bearing deposits and other                                  184        127       177
                                                                   -------    -------    ------
         Total interest income                                       7,073      6,360     6,758

Interest expense
  Deposits                                                           1,917      1,899     2,382
  Borrowings                                                           604        588       584
                                                                   -------    -------    ------
         Total interest expense                                      2,521      2,487     2,966
                                                                   -------    -------    ------

         Net interest income                                         4,552      3,873     3,792

Provision for losses on loans                                           11         25       131
                                                                   -------    -------    ------

         Net interest income after provision for losses on loans     4,541      3,848     3,661

Other income
  Gain on sale of loans                                                226        354       908
  Loss on sale of real estate acquired through foreclosure              --         (7)       --
  Gain on redemption of securities                                     329         --        --
  Other operating                                                      362        269       130
                                                                   -------    -------    ------
         Total other income                                            917        616     1,038

General, administrative and other expense
  Employee compensation and benefits                                 1,755      1,537     1,252
  Occupancy and equipment                                              384        391       387
  Franchise taxes                                                      209        210       191
  Data processing                                                      288        285       269
  Other operating                                                    1,177      1,000     1,034
                                                                   -------    -------    ------
         Total general, administrative and other expense             3,813      3,423     3,133
                                                                   -------    -------    ------

         Earnings before income taxes                                1,645      1,041     1,566

Federal income taxes
  Current                                                              569        311       520
  Deferred                                                             (10)        43        14
                                                                   -------    -------    ------
         Total federal income taxes                                    559        354       534
                                                                   -------    -------    ------

         NET EARNINGS                                              $ 1,086    $   687    $1,032
                                                                   =======    =======    ======

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

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


The accompanying notes are an integral part of these statements.


                                       18


                            FFD FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                    Years ended June 30, 2005, 2004 and 2003
                                 (In thousands)



                                                              2005     2004       2003
                                                                      
Net earnings                                               $ 1,086    $ 687    $ 1,032

Other comprehensive income, net of tax:
  Unrealized holding gains (losses) on securities during
    the period, net of taxes (benefits) of $29, $(38)
    and $(5) in 2005, 2004 and 2003, respectively               57      (74)       (11)
                                                           -------    -----    -------

Comprehensive income                                       $ 1,143    $ 613    $ 1,021
                                                           =======    =====    =======

Accumulated comprehensive income (loss)                    $    (9)   $ (66)   $     8
                                                           =======    =====    =======


The accompanying notes are an integral part of these statements.


                                       19


                            FFD FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                For the years ended June 30, 2005, 2004 and 2003
                     (In thousands, except per share data)



                                                                                                     Unrealized
                                                                                                   gains (losses)
                                                                                                    on securities
                                                                      Additional                     designated
                                                            Common     paid-in         Retained     as available
                                                            stock      capital         earnings       for sale
                                                                                             
Balance at July 1, 2002                                    $     --    $  7,861        $ 11,629          $  19

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

Balance at June 30, 2003                                         --       7,889          12,202              8

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

Balance at June 30, 2004                                         --       7,910          12,385            (66)

Net earnings for the year ended June 30, 2005                    --          --           1,086             --
Purchase of treasury shares                                      --          --              --             --
Amortization expense of stock benefit plans                      --          72              --             --
Unrealized gains on securities designated as available
  for sale, net of related tax effects                           --          --              --             57
Exercise of stock options                                        --           5              --             --
Dividends of $.435 per share                                     --          --            (517)            --
                                                           --------    --------        --------          -----

Balance at June 30, 2005                                   $     --    $  7,987        $ 12,954          $  (9)
                                                           ========    ========        ========          =====



                                                           Shares
                                                         acquired by
                                                            stock        Treasury
                                                           benefit        shares-
                                                            plans         at cost        Total
                                                                               
Balance at July 1, 2002                                    $   (677)    $    (2,291)    $ 16,541

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

Balance at June 30, 2003                                       (559)         (2,622)      16,918

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

Balance at June 30, 2004                                       (444)         (3,047)      16,738

Net earnings for the year ended June 30, 2005                    --              --        1,086
Purchase of treasury shares                                      --            (411)        (411)
Amortization expense of stock benefit plans                     110              --          182
Unrealized gains on securities designated as available
  for sale, net of related tax effects                           --              --           57
Exercise of stock options                                        --             298          303
Dividends of $.435 per share                                     --              --         (517)
                                                           --------     -----------     --------

Balance at June 30, 2005                                   $   (334)    $    (3,160)    $ 17,438
                                                           ========     ===========     ========


The accompanying notes are an integral part of these statements.


                                       20


                            FFD FINANCIAL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                    Years ended June 30, 2005, 2004 and 2003
                                 (In thousands)



                                                                                 2005         2004         2003
                                                                                              
Cash flows from operating activities:
  Net earnings for the year                                                  $  1,086     $    687     $  1,032
  Adjustments to reconcile net earnings to net cash provided by
  operating activities:
    Amortization of premiums and discounts on investments and
      mortgage-backed securities - net                                             --            5           67
    Amortization of deferred loan origination (fees) costs                         48           39          (24)
    Depreciation and amortization                                                 175          187          201
    Gain on redemption of investment securities                                  (329)          --           --
    Provision for losses on loans                                                  11           25          131
    Gain on sale of loans                                                         (65)         (62)        (443)
    Loans originated for sale                                                 (10,530)     (28,202)     (45,602)
    Proceeds from sale of mortgage loans in the secondary market               10,487       29,814       44,615
    Proceeds from sale of loans to other financial institutions                 2,921           --           --
    Loss on sale of real estate acquired through foreclosure                       --            7           --
    Amortization expense of stock benefit plans                                   182          166          157
    Federal Home Loan Bank stock dividends                                        (93)         (80)         (82)
    Tax benefit of stock options exercised                                         36           32           --
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable                                                 (69)           5           68
      Prepaid expenses and other assets                                            21          (24)          44
      Other liabilities                                                           666         (216)         522
      Accrued interest payable                                                     58            1           (4)
      Federal income taxes
        Current                                                                   157          (87)         (59)
        Deferred                                                                  (10)          43           14
                                                                             --------     --------     --------
         Net cash provided by operating activities                              4,752        2,340          637

Cash flows used in investing activities:
  Purchase of investment securities designated as available for sale               --       (5,500)      (7,510)
  Proceeds from maturity of investment securities                               1,000        2,500        8,000
  Proceeds from redemption of investment securities                               344           --           --
  Purchase of mortgage-backed securities designated as available for sale          --           --         (956)
  Principal repayments on mortgage-backed securities                              308          442        2,602
  Loan principal repayments                                                    36,188       41,633       41,319
  Loan disbursements                                                          (56,048)     (41,639)     (49,068)
  Purchase of office premises and equipment                                      (178)         (81)        (343)
                                                                             --------     --------     --------
         Net cash  used in investing activities                               (18,386)      (2,645)      (5,956)
                                                                             --------     --------     --------

         Net cash  used in operating and investing
           activities (subtotal carried forward)                              (13,634)        (305)      (5,319)
                                                                             --------     --------     --------


The accompanying notes are an integral part of these statements.


                                       21


                            FFD FINANCIAL CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                    Years ended June 30, 2005, 2004 and 2003
                                 (In thousands)



                                                                                        2005         2004         2003
                                                                                                     

         Net cash  used in operating and investing
           activities (subtotal brought forward)                                    $(13,634)    $   (305)    $ (5,319)

Cash flows provided by (used in) financing activities:
  Net increase in deposit accounts                                                     6,049        1,095        8,809
  Proceeds from Federal Home Loan Bank advances                                       10,495        1,525           --
  Repayments of Federal Home Loan Bank advances                                       (5,284)      (2,747)      (3,662)
  Proceeds from exercise of stock options                                                267          282           38
  Purchase of treasury shares                                                           (411)        (769)        (380)
  Cash dividends paid on common stock                                                   (517)        (504)        (459)
                                                                                    --------     --------     --------
         Net cash provided by (used in) financing activities                          10,599       (1,118)       4,346
                                                                                    --------     --------     --------

Net decrease in cash and cash equivalents                                             (3,035)      (1,423)        (973)

Cash and cash equivalents at beginning of year                                        10,820       12,243       13,216
                                                                                    --------     --------     --------

Cash and cash equivalents at end of year                                            $  7,785     $ 10,820     $ 12,243
                                                                                    ========     ========     ========

Supplemental disclosure of cash flow information: Cash paid during the year for:
    Federal income taxes                                                            $    376     $    390     $    600
                                                                                    ========     ========     ========

    Interest on deposits and borrowings                                             $  2,463     $  2,486     $  2,970
                                                                                    ========     ========     ========

Supplemental disclosure of noncash investing activities:
  Unrealized gains (losses) on securities designated as
    available for sale, net of applicable tax effects                               $     57     $    (74)    $    (11)
                                                                                    ========     ========     ========

  Recognition of mortgage servicing rights in accordance
    with SFAS No. 140                                                               $    161     $    292     $    465
                                                                                    ========     ========     ========

  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.


                                       22


                            FFD FINANCIAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          June 30, 2005, 2004 and 2003

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  consolidated   financial  statements  include  the  accounts  of  the
      Corporation,  the Bank, and Dover Service  Corporation  ("Dover Service"),
      the  Bank's  wholly-owned   subsidiaries.   All  significant  intercompany
      balances and transactions have been eliminated.

      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.

      In addition to investment  securities,  Dover Service was incorporated for
      the  primary  purpose of  holding  shares in the  Bank's  data  processing
      provider,  Intrieve,  Incorporated  ("Intrieve").  The principal assets of
      Dover at June 30,  2004,  consisted  of an  investment  in common stock of
      Intrieve  totaling  approximately  $15,000.  In April 2005,  Intrieve  was
      acquired by Xxxxxxx Financial Solutions.  As a result, Dover received cash
      consideration of approximately  $344,000 for its shares of Intrieve,  Inc.
      resulting in a pretax gain on redemption totaling $329,000.


                                       23


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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 both June 30,
      2005 and 2004, 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  $108,000,  $175,000  and  $174,000 for the fiscal
      years ended June 30, 2005, 2004 and 2003, respectively.  Additionally, the
      Bank  recovered   previously   recorded  impairment  charges  on  mortgage
      servicing  rights totaling $48,000 in the fiscal year ended June 30, 2005.
      At June  30,  2005,  the  carrying  value  of the  Corporation's  mortgage
      servicing rights, which approximated fair value totaled $687,000.  At June
      30,  2004,  the carrying  value of the  Corporation's  mortgage  servicing
      rights, which approximated fair value was $633,000.


                                       24


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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, which are 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.


                                       25


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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:

                                                   2005               2004
                                                        (In thousands)

      Impaired loans with related allowance        $266               $371
      Impaired loans with no related allowance      707                403
                                                   ----               ----

         Total impaired loans                      $973               $774
                                                   ====               ====

      The Bank's average  balance of impaired loans was $914,000 in fiscal 2005.
      Interest  income  recognized on impaired loans totaled $50,000 and $49,000
      for the fiscal years ended June 30, 2005 and 2004, respectively.  The Bank
      had allocated $201,000 of its general valuation  allowance to the impaired
      loans at June 30, 2005.

      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


                                       26


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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
      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  related to the ESOP totaled  approximately
      $202,000,  $191,000 and $167,000 for the fiscal years ended June 30, 2005,
      2004 and 2003, 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 had previously  awarded 30,871 shares under the RRP which vested over
      a five year period.  A provision of $3,000,  $7,000 and $10,000 related to
      the RRP was charged to expense for the fiscal  years ended June 30,  2005,
      2004 and 2003, 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 26,339,  39,513 and 52,687  unallocated  shares held by
      the  ESOP  for the  fiscal  years  ended  June 30,  2005,  2004 and  2003,
      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:

                                                2005         2004         2003
      Weighted-average common shares
        outstanding (basic)                  1,153,561    1,162,085    1,167,450
      Dilutive effect of  assumed exercise
        of stock options                        20,464       29,016       27,290
                                             ---------    ---------    ---------
      Weighted-average common shares
        outstanding (diluted)                1,174,025    1,191,101    1,194,740
                                             =========    =========    =========


                                       27


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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 $42,000, $3,000 and $26,000 in fiscal 2005,
    2004 and 2003, respectively.

    The Corporation applies APB Opinion No. 25 and related Interpretations in
    accounting for the 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, 2005, 2004 and 2003, would
    have been reduced to the pro forma amounts indicated below:

                                                      2005      2004      2003

      Net earnings (In thousands)    As reported    $1,086    $  687    $1,032
                                                    ======    ======    ======

                                       Pro-forma    $1,062    $  654    $1,021
                                                    ======    ======    ======

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

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

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

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


                                       28


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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. No options were
      granted in fiscal 2005. The following  weighted-average  assumptions  were
      used for grants in fiscal 2004 and 2003:  dividend yield of 3.0% and 2.8%;
      expected volatility of 38.2% and 31.6% ; a risk-free interest rate of 4.3%
      and 4.1%, respectively, and an expected life of ten years for all grants.

      A summary  of the status of the Plan as of June 30,  2005,  2004 and 2003,
      and changes during the years then ended are presented below:



                                                    2005                      2004                       2003
                                                        Weighted-                 Weighted-                 Weighted-
                                                          average                   average                   average
                                                         exercise                  exercise                  exercise
                                              Shares        price       Shares        price       Shares        price
                                                                                          
      Outstanding at beginning of year        89,998    $    9.84      115,183    $    9.47      104,385    $    9.25
      Granted                                     --           --        4,500        14.87       14,920        10.94
      Exercised                              (29,305)        9.15      (28,365)        9.15       (4,122)        9.17
      Forfeited                                  (75)       12.48       (1,320)        9.54           --           --
                                           ---------    ---------    ---------    ---------    ---------    ---------

      Outstanding at end of year              60,618    $   10.17       89,998    $    9.84      115,183    $    9.47
                                           =========    =========    =========    =========    =========    =========

      Options exercisable at year-end         46,831    $    9.66       68,755    $    9.33       91,809    $    9.22
                                           =========    =========    =========    =========    =========    =========
      Weighted-average fair value of
        options granted during the year                       N/A                 $    4.36                 $    3.92
                                                        =========                 =========                 =========


      The following information applies to options outstanding at June 30, 2005:

      Number outstanding                                             45,466
      Range of exercise prices                                 $8.38-$10.10
      Number outstanding                                             15,152
      Range of exercise prices                                $11.17-$14.88
      Weighted-average exercise price                                $10.17
      Weighted-average remaining contractual life in years        4.5 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.


                                       29


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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, 2005 and 2004:

                  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 fair value of outstanding loan
                  commitments at June 30, 2005 and 2004 was not material.


                                       30


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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, 2005 and
      2004 were as follows:



                                                            2005                   2004
                                                    Carrying        Fair    Carrying        Fair
                                                       value       value       value       value
                                                                  (In thousands)
                                                                            
      Financial assets
        Cash and cash equivalents                   $  7,785    $  7,785    $ 10,820    $ 10,820
        Investment securities                          3,485       3,485       4,402       4,402
        Mortgage-backed securities                       720         725       1,025       1,041
        Loans receivable                             131,493     129,109     114,505     110,976
        Federal Home Loan Bank stock                   2,140       2,140       2,047       2,047
                                                    --------    --------    --------    --------

                                                    $145,623    $143,244    $132,799    $129,286
                                                    ========    ========    ========    ========

      Financial liabilities
        Deposits                                    $111,495    $106,605    $105,446    $101,271
        Advances from the Federal Home Loan Bank      17,880      18,003      12,669      13,242
                                                    --------    --------    --------    --------

                                                    $129,375    $124,608    $118,115    $114,513
                                                    ========    ========    ========    ========


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

      Advertising   costs  are  expensed  when   incurred.   The   Corporation's
      advertising  expense for the fiscal  years ended June 30,  2005,  2004 and
      2003 totaled $122,000, $99,000 and $140,000, respectively.

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

      In December 2004, the Financial  Accounting  Standards  Board (the "FASB")
      issued a revision to Statement of Financial  Accounting Standards ("SFAS")
      No. 123 which establishes standards for the accounting for transactions in
      which an entity  exchanges its equity  instruments  for goods or services,
      primarily  on  accounting  for  transactions  in which an  entity  obtains
      employee services in share-based  transactions.  This Statement,  SFAS No.
      123(R),  requires a public entity to measure the cost of employee services
      received  in  exchange  for an award of  equity  instruments  based on the
      grant-date  fair value of the award,  with limited  exceptions.  That cost
      will be recognized over the period during which an employee is required to
      provide services in exchange for the award - the requisite service period.
      No  compensation  cost is  recognized  for  equity  instruments  for which
      employees do not render the requisite  service.  Employee  share  purchase
      plans  will not  result in  recognition  of  compensation  cost if certain
      conditions are met.


                                       31


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

      Initially, the cost of employee services received in exchange for an award
      of equity  instruments  will be measured based on current fair value;  the
      fair value of that award will be remeasured subsequently at each reporting
      date  through  the  settlement  date.  Changes  in fair  value  during the
      requisite service period will be recognized as compensation cost over that
      period.  The  grant-date  fair value of employee share options and similar
      instruments will be estimated using option-pricing models adjusted for the
      unique  characteristics  of those  instruments  (unless  observable market
      prices for the same or similar  instruments are  available).  If an equity
      award is modified after the grant date, incremental compensation cost will
      be  recognized  in an amount  equal to the excess of the fair value of the
      modified  award  over the fair  value of the  original  award  immediately
      before the modification.

      Excess tax  benefits,  as defined by SFAS No. 123(R) will be recognized as
      an addition to  additional  paid in capital.  Cash retained as a result of
      those excess tax benefits will be presented in the statement of cash flows
      as financing cash inflows.  The write-off of deferred tax assets  relating
      to unrealized tax benefits  associated with recognized  compensation  cost
      will be  recognized  as income  tax  expense  unless  there are excess tax
      benefits from  previous  awards  remaining in  additional  paid in capital
      against which it can be offset.

      Compensation  cost is required to be  recognized  in the  beginning of the
      annual  period that begins after  December 31, 2005, or July 1, 2006 as to
      the Corporation.

      Management  currently believes the effect of SFAS No. 123(R) on operations
      will  approximate the annual  economic  effects set forth in the pro-forma
      stock option disclosure set forth above.

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

      Certain prior year amounts have been  reclassified  to conform to the 2005
      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, 2005 and 2004,
      were as follows:



                                                                     June 30, 2005
                                                                   Gross          Gross       Estimated
                                                Amortized     unrealized     unrealized            fair
                                                     cost          gains         losses           value
                                                                    (In thousands)
                                                                                     
      Available for sale:
        U.S. Government agency obligations         $3,500            $--           $(15)         $3,485
                                                   ======            ===           ====          ======



                                       32


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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



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


      The U. S. Government agency  obligations  designated as available for sale
      at June 30,  2005 and 2004,  are  scheduled  to mature in fiscal  2013 and
      thereafter.

      The amortized cost, gross unrealized  gains,  gross unrealized  losses and
      estimated  fair value of  mortgage-backed  securities at June 30, 2005 and
      2004, are shown below:



                                                                                      2005
                                                                                Gross          Gross      Estimated
                                                             Amortized     unrealized     unrealized           fair
                                                                  cost          gains         losses          value
                                                                                  (In thousands)
                                                                                                   
      Held to maturity:
        Federal Home Loan Mortgage
          Corporation participation certificates                  $184           $  3           $ --           $187
        Government National Mortgage
          Association participation certificates                    36              2             --             38
                                                                  ----           ----           ----           ----
           Total mortgage-backed securities
             held to maturity                                      220              5             --            225

      Available for sale:
        Federal National Mortgage
          Association participation certificates                   380             --             --            380
        Government National Mortgage
          Association participation certificates                   120             --             --            120
                                                                  ----           ----           ----           ----
           Total mortgage-backed securities
             available for sale                                    500             --             --            500
                                                                  ----           ----           ----           ----

           Total mortgage-backed securities                       $720           $  5           $ --           $725
                                                                  ====           ====           ====           ====



                                       33


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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



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


      The tables below  indicates the length of time  individual  securities had
      been in a continuous unrealized loss position at June 30, 2005 and 2004.



                                                                   June 30, 2005
                                 Less than 12 months               12 - 24 months                       Total
    Description of                 Fair Unrealized                 Fair Unrealized                 Fair   Unrealized
      securities                   value  losses                   value  losses                   value    losses
                                                              (Dollars in thousands)
                                                                                            
    Investments available
      for  sale                  $3,485    $  15                   $--       $--                  $3,485      $  15
                                 ======     ====                   ===       ===                  ======       ====



                                                                   June 30, 2004
                                 Less than 12 months               12 - 24 months                       Total
    Description of                 Fair Unrealized                 Fair Unrealized                 Fair   Unrealized
      securities                   value  losses                   value  losses                   value    losses
                                                              (Dollars in thousands)
                                                                                            
    Investments available
      for  sale                  $4,402    $  97                   $--       $--                  $4,402      $  97
    Mortgage-backed
      securities available
      for sale                      630        5                    --        --                     630          5
                                 ------     ----                   ---       ---                  ------       ----

    Total temporarily impaired
      securities                 $5,032     $102                   $--       $--                  $5,032       $102
                                 ======     ====                   ===       ===                  ======       ====


      Management  has the intent to hold these  securities  for the  foreseeable
      future and the declines in the fair value are  primarily  due to increases
      in market  interest  rates.  The fair  values are  expected  to recover as
      securities approach the maturity date.


                                       34


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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

      The  amortized  cost  of  mortgage-backed   securities,   including  those
      designated as available for sale at June 30, 2005, 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                                        $ 60
      Due within five to ten years                                   18
      Due after ten years                                           642
                                                                   ----

      Total                                                        $720
                                                                   ====

      As of June 30, 2005,  mortgage-backed securities and investment securities
      totaling $2.9 million were pledged to secure public deposits.

NOTE C - LOANS RECEIVABLE

      The  composition  of the loan  portfolio  at June 30, 2005 and 2004 was as
      follows:

                                                       2005        2004
                                                      (In thousands)
      Residential real estate
        One- to four-family                         $61,157     $56,972
        Multi-family                                  9,082       6,056
      Nonresidential real estate and land            42,763      34,968
      Commercial loans - secured                     16,388      15,111
      Commercial loans - unsecured                      279         269
      Consumer and other loans                        4,896       2,769
      Deferred loan origination costs                   139         138
                                                   --------    --------
                                                    134,704     116,283
      Less:
        Undisbursed portion of loans in process       2,770       1,216
        Allowance for loan losses                       766         779
                                                   --------    --------

                                                   $131,168    $114,288
                                                   ========    ========


                                       35


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE C - LOANS RECEIVABLE (continued)

      The  Bank's  lending  efforts  have   historically   focused  on  one-  to
      four-family and multi-family residential real estate loans, which comprise
      approximately  $67.5 million,  or 51%, of the total loan portfolio at June
      30,  2005,  and  approximately  $61.8  million,  or 54%, of the total loan
      portfolio at June 30, 2004.  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  $74.9  million and $73.0 million at June 30, 2005 and 2004,
      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 made on market terms, 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, 2005 and 2004.

NOTE D - ALLOWANCE FOR LOAN LOSSES

      The activity in the allowance for loan losses is summarized as follows for
      the years ended June 30, 2005, 2004 and 2003:

                                        2005      2004      2003
                                            (In thousands)

      Beginning balance                $ 779     $ 818     $ 713
      Provision for losses on loans       11        25       131
      Loan charge-offs                   (24)      (64)      (26)
                                       -----     -----     -----

      Ending balance                   $ 766     $ 779     $ 818
                                       =====     =====     =====

      As of June 30, 2005, the Bank's allowance for loan losses was comprised of
      a general  loan  loss  allowance  component  totaling  $565,000,  which is
      includible  as  a  component  of  regulatory  risk-based  capital  and  an
      allowance totaling $201,000 allocated to impaired loans.

      Nonperforming  and impaired  loans totaled $1.2 million,  $1.1 million and
      $2.2  million,  respectively  at June 30,  2005,  2004 and 2003.  Interest
      income that would have been  recognized  had  nonaccrual  loans  performed
      pursuant to contractual terms totaled approximately  $37,000,  $49,000 and
      $45,000  for the  fiscal  years  ended  June  30,  2005,  2004  and  2003,
      respectively.


                                       36


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE E - OFFICE PREMISES AND EQUIPMENT

Office  premises and  equipment  at June 30, 2005 and 2004 was  comprised of the
following:

                                                             2005           2004
                                                                (In thousands)

Land                                                       $  488         $  488
Buildings and improvements                                  1,518          1,446
Furniture and equipment                                     1,148          1,042
                                                           ------         ------
                                                            3,154          2,976
  Less accumulated depreciation and
    amortization                                            1,123            948
                                                           ------         ------

                                                           $2,031         $2,028
                                                           ======         ======


                                       37


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE F - DEPOSITS

      Deposits consist of the following major  classifications  at June 30, 2005
      and 2004:



    Deposit type and weighted-                                  2005                              2004
    average interest rate                               Amount           %                 Amount         %
                                                                       (Dollars in thousands)
                                                                                             
    Demand deposit accounts                           $  9,386          8.4%             $ 10,805         10.3%
    NOW accounts
      2005 - 0.38%                                      13,998         12.6
      2004 - 0.17%                                                                         12,888         12.2
    Passbook
      2005 - 1.14%                                      32,253         28.9
      2004 - 0.84%                                                                         33,526         31.8
                                                      --------       ------              --------       ------
    Total demand, transaction and
      passbook deposits                                 55,637         49.9                57,219         54.3

    Certificates of deposit
      Original maturities of:
        Less than 12 months
          2005 - 2.28%                                   1,885          1.7
          2004 - 0.92%                                                                      1,843          1.7
       12 months to 29 months
          2005 - 2.75%                                  17,532         15.7
          2004 - 1.77%                                                                     13,002         12.3
       30 months to 47 months
          2005 - 3.99%                                  13,343         12.0
          2004 - 4.09%                                                                     16,189         15.4
       48 months to 60 months
          2005 - 3.81%                                   3,915          3.5
          2004 - 3.63%                                                                      2,250          2.1
    Balances in excess of $100,000
          2005 - 3.37%                                  12,562         11.3
          2004 - 3.01%                                                                      8,525          8.1
    Individual retirement accounts
          2005 - 3.21%                                   6,621          5.9
          2004 - 3.03%                                                                      6,418          6.1
                                                      --------       ------              --------       ------

    Total certificates of deposit                       55,858         50.1                48,227         45.7
                                                      --------       ------              --------       ------

    Total deposit accounts                            $111,495        100.0%             $105,446        100.0%
                                                      ========       ======              ========       ======


      Interest  expense on deposits for the years ended June 30, 2005,  2004 and
      2003 is summarized as follows:

                                              2005        2004        2003
                                                     (In thousands)

      Passbook                              $  316      $  300      $  365
      NOW accounts                              33          20          38
      Certificates of deposit                1,568       1,579       1,979
                                            ------      ------      ------

                                            $1,917      $1,899      $2,382
                                            ======      ======      ======


                                       38


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE F - DEPOSITS (continued)

      Maturities  of  outstanding  certificates  of deposit at June 30, 2005 and
      2004 are summarized as follows:

                                                       2005           2004
                                                       (In thousands)

      Less than one year                            $27,831        $25,826
      One year to three years                        24,600         19,163
      Three years to five years                       3,427          2,771
      More than five years                               --            467
                                                    -------        -------

                                                    $55,858        $48,227
                                                    =======        =======

      At June  30,  2005 and  2004,  FFD had  $13.7  million  and $9.5  million,
      respectively, in certificates of deposit greater than $100,000.

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

      Advances from the Federal Home Loan Bank,  collateralized at June 30, 2005
      by a pledge of certain  residential  mortgage loans totaling $22.4 million
      and the Bank's  investment in Federal Home Loan Bank stock, are summarized
      as follows:

      Interest                Maturing in year
      rate                     ending June 30,          2005           2004
                                                      (Dollars in thousands)

      8.15%                       2005               $    --        $     1
      3.15%-3.53%                 2006                 2,000             --
      3.10%-5.65%                 2010                 8,209          5,906
      3.26%-6.10%                 After 2010           7,671          6,762
                                                     -------        -------

                                                     $17,880        $12,669
                                                     =======        =======

      Weighted-average interest rate                    4.32%          4.50%
                                                        ====           ====

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,  2005,  2004 and 2003 as
      follows:



                                                                 2005       2004       2003
                                                                   (Dollars in thousands)
                                                                             
      Federal income taxes at statutory rate                    $ 559      $ 354      $ 532
      Increase (decrease) in taxes resulting primarily from:
        Nontaxable interest income                                 (2)        (3)        (2)
        Other                                                       2          3          4
                                                                -----      -----      -----
      Federal income taxes per consolidated
        financial statements                                    $ 559      $ 354      $ 534
                                                                =====      =====      =====

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



                                       39


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE H - FEDERAL INCOME TAXES (continued)

      The  composition of the  Corporation's  net deferred tax liability at June
      30, 2005 and 2004 is as follows:



      Taxes (payable) refundable on temporary                              2005      2004
      differences at statutory rate:                                       (In thousands)
                                                                              
      Deferred tax assets:
        Retirement expense                                                $ 106     $  88
        General loan loss allowance                                         261       265
        Unrealized loss on securities designated as available for sale        4        33
        Other                                                                18         9
                                                                          -----     -----
           Deferred tax assets                                              389       395

      Deferred tax liabilities:
        Deferred loan origination costs                                     (56)      (67)
        Federal Home Loan Bank stock dividends                             (342)     (310)
        Difference between book and tax depreciation                         --       (26)
        Mortgage servicing rights                                          (233)     (215)
                                                                          -----     -----
           Deferred tax liabilities                                        (631)     (618)
                                                                          -----     -----

           Net deferred tax liability                                     $(242)    $(223)
                                                                          =====     =====


      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, 2005, 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, 2005.

NOTE I - 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.


                                       40


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE I - COMMITMENTS (continued)

      At June 30, 2005, the Bank had  outstanding  commitments of  approximately
      $3.7 million,  net of undisbursed  loans in process,  to originate  loans.
      Additionally,  the Bank was  obligated  under unused lines of credit under
      home equity loans  totaling  $13.4  million,  unused lines of credit under
      commercial  loans of $13.7 million and overdraft  lines of credit totaling
      $703,000.  In the opinion of management,  all loan commitments  equaled or
      exceeded prevailing market interest rates as of June 30, 2005, and will be
      funded from normal cash flow from operations.

      At June 30,  2005,  the  Bank  had  outstanding  commitments  to  purchase
      $485,000 in loans and outstanding commitments to sell $325,000 of loans.

      The  Corporation  has  entered  into lease  agreements  during the current
      fiscal year for office  premises  under  operating  leases which expire at
      various dates  through the fiscal year ended June 30, 2008.  The following
      table  summarizes  minimum annual  payments due under lease  agreements by
      year:

               Year ending
                 June 30,                                      (In thousands)

                  2006                                              $18
                  2007                                               13
                  2008                                               11
                                                                    ---

                                                                    $42
                                                                    ===

      Rental expense under operating leases totaled approximately $5,000 for the
      year ended June 30, 2005.

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


                                       41


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE J - REGULATORY CAPITAL (continued)

      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%.

      During  fiscal  2005,  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, 2005 and 2004,  management  believes  that the Bank met all
      capital adequacy requirements to which it was subject.



                                                                As of June 30, 2005
                                                                                                To be "well-
                                                                                             capitalized" under
                                                                    For capital               prompt corrective
                                             Actual               adequacy purposes          action provisions
                                        ----------------          -----------------          -----------------
                                         Amount    Ratio           Amount    Ratio             Amount     Ratio
                                                               (Dollars in thousands)
                                                                                        
    Tangible capital                    $16,471    11.1%         =>$2,225    =>1.5%         =>$ 7,418     => 5.0%

    Core capital                        $16,471    11.1%         =>$5,934    =>4.0%         =>$ 8,901     => 6.0%

    Risk-based capital                  $17,036    14.8%         =>$9,222    =>8.0%         =>$11,527     =>10.0%



                                                                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)
                                                                                        
    Tangible capital                    $15,883    11.7%         =>$2,034    =>1.5%          =>$6,781     => 5.0%

    Core capital                        $15,883    11.7%         =>$5,425    =>4.0%          =>$8,137     => 6.0%

    Risk-based capital                  $16,314    17.4%         =>$7,515    =>8.0%          =>$9,393     =>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.


                                       42


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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, 2005 and 2004,  and
      the results of its  operations and its cash flows for the years ended June
      30, 2005, 2004 and 2003.

                            FFD FINANCIAL CORPORATION
                        STATEMENTS OF FINANCIAL CONDITION
                             June 30, 2005 and 2004
                                 (In thousands)



           ASSETS                                                      2005         2004
                                                                          
      Cash and due from banks                                      $    167     $    103
      Loan receivable from ESOP                                         278          404
      Investment in First Federal Community Bank                     16,531       15,880
      Accrued interest receivable                                         3            6
      Prepaid federal income taxes                                      445          336
      Prepaid expenses and other assets                                  14            9
                                                                   --------     --------

           Total assets                                            $ 17,438     $ 16,738
                                                                   ========     ========

           SHAREHOLDERS' EQUITY

      Shareholders' equity
        Common stock and additional paid-in capital                $  7,987     $  7,910
        Retained earnings                                            12,954       12,385
        Unrealized losses on securities designated as available
          for sale, net of related tax effects                           (9)         (66)
        Shares acquired by stock benefit plans                         (334)        (444)
        Treasury shares - at cost                                    (3,160)      (3,047)
                                                                   --------     --------

           Total shareholders' equity                              $ 17,438     $ 16,738
                                                                   ========     ========


                            FFD FINANCIAL CORPORATION
                             STATEMENTS OF EARNINGS
                    Years ended June 30, 2005, 2004 and 2003
                                 (In thousands)

                                                    2005      2004        2003
      Revenue
        Interest income                          $     7     $   6     $    17
        Equity in earnings of subsidiary           1,228       813       1,153
                                                 -------     -----     -------
           Total revenue                           1,235       819       1,170

      General and administrative expenses            223       197         196
                                                 -------     -----     -------

           Earnings before income tax credits      1,012       622         974

      Federal income tax credits                     (74)      (65)        (58)
                                                 -------     -----     -------

           NET EARNINGS                          $ 1,086     $ 687     $ 1,032
                                                 =======     =====     =======


                                       43


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

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

                            FFD FINANCIAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                    Years ended June 30, 2005, 2004 and 2003
                                 (In thousands)



                                                                   2005      2004        2003
                                                                             
      Cash provided by (used in) operating activities:
        Net earnings for the year                               $ 1,086     $ 687     $ 1,032
        Adjustments to reconcile net earnings to net
        cash provided by (used in) operating activities:
          Undistributed earnings of subsidiary                     (466)      (86)       (403)
          Increase (decrease) in cash due to changes in:
            Prepaid expenses and other assets                        52        32          (7)
            Prepaid federal income taxes                            (73)      (97)        (58)
                                                                -------     -----     -------
            Net cash provided by operating activities               599       536         564

      Cash flows provided by investing activities:
        Proceeds from repayment of loan to ESOP                     126       119         112

      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                     267       314          38
        Purchase of treasury shares                                (411)     (769)       (380)
        Cash dividends paid on common stock                        (517)     (504)       (459)
                                                                -------     -----     -------
            Net cash used in financing activities                  (661)     (959)       (801)
                                                                -------     -----     -------

      Net increase (decrease) in cash and cash equivalents           64      (304)       (125)

      Cash and cash equivalents at beginning of year                103       407         532
                                                                -------     -----     -------

      Cash and cash equivalents at end of year                  $   167     $ 103     $   407
                                                                =======     =====     =======


      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 of the Corporation.

                                       44


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2005, 2004 and 2003

NOTE M - STOCK SPLIT

      During  fiscal  2005,  the  Corporation's  directors  approved a motion to
      effect a split of the  Corporation's  common shares.  A special meeting of
      shareholders  was scheduled  for September  2005 to consider a proposal to
      amend the  Corporation's  Articles  of  Incorporation  thereby  enabling a
      1-for-350  reverse  stock  split  and  the  repurchase  of  all  resulting
      fractional  shares;  followed  immediately by a forward  350-for-1 forward
      stock split of the  Corporation's  common shares. As a result of the stock
      splits,  each  shareholder  owning  less  than 350  common  shares  of the
      Corporation  immediately prior to the stock split would receive $19.00 per
      share  in cash  for each  common  share  owned  and  will no  longer  be a
      shareholder.  The  Corporation  expected to expend $1.5 million in cash to
      redeem all fractional  shares created by the 1-for-350 stock split with an
      attendant reduction in shareholders' equity.

      Prior to the special meeting of shareholders, large numbers of individuals
      purchased  blocks of FFD shares in quantities  less than 350. The dramatic
      increase in the number of  shareholders  increased  the costs of the stock
      splits from an estimated $1.5 million to an estimated $4.5 million. Due to
      the substantially  increased cost of effecting the stock splits, the Board
      announced on September  15, 2005 to withdraw the splits from the agenda of
      the  special  meeting.   The  Board  concluded  that  the  expenditure  of
      approximately  $4.5  million to  complete  the stock  splits  would not be
      prudent.

      The  purpose  of the  stock  splits  were to  enable  the  Corporation  to
      deregister its common shares under the Securities and Exchange Act of 1934
      (the Act),  as amended.  Management  believes that  deregistration  of the
      Corporation's  common  shares will result in future cost savings that more
      than offset any benefits  derived  from  maintaining  registration  of the
      Corporation's shares under the Act.


                                       45


                            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.                                        Xxxxx X. X'Xxxxxxx
                                                                  Senior Vice President and 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. X'Xxxxxxx
               Hanhart Agency, Inc.                               Senior Vice President and Corporate Secretary

                 Xxxxxxx X. Xxxxxx
                Chairman - Retired                                              Other Officers of
         Xxxxxx-Xxxxxx Funeral Homes, Inc.                                First Federal Community Bank

               Xxx X. Xxxxxxxx, Xx.                                             Xxxxxxx X. Xxxxxx
            Managing Officer - Retired                                           Vice President
           First Federal Community Bank
                                                                                Xxxx X. Xxxxxxxx
                                                                                 Banking Officer



                                       46


                              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  25,  2005,  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 will be available at no charge to
shareholders upon request to:

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


                                       47