FIRST CITIZENS BANC CORP /OH - 10-K Annual Report

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First Citizens Banc Corp

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

The Castalia Banking Company
The Citizens Banking Company
The Farmers State Bank
R. A. Reynolds Appraisal Service, Inc.
SCC Resources, Inc.

1999 Annual Report

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FIRST CITIZENS BANC CORP
CONTENTS

INSIDE

Message to Shareholders ............................................... 1
Five Year Consolidated Financial Summary................................... 2
Form 10-K .............................................................. 3
Index ................................................................ 4

PART I
Item 1. Business................................................... 5
Item 2. Properties.................................................19
Item 3. Legal Proceedings..........................................19
Item 4. Submission of Matters to a Vote
of Security Holders......................................19

PART II
Item 5. Market for Registrant's Common
Equity and Related Stockholder Matters...................19
Item 6. Selected Financial Data....................................20
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation.............21
Item 7a. Quantitative and Qualitative Disclosures About Market Risk.31
Item 8. Financial Statements and Supplementary Data
Independent Auditors' Report...............................35
Consolidated Financial Statements..........................36
Notes to Consolidated Financial Statements ................41
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure...................59

PART III
Item 10. Directors and Executive Officers of the Registrant.........60
Item 11. Executive Compensation.....................................61
Item 12. Security Ownership of Certain Beneficial Owners
and Management...........................................61
Item 13. Certain Relationships and Related Transactions.............61

PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K......................................62

Signatures ..........................................................63

First Citizens Banc Corp Directors and Officers............................64
Directors of Affiliated Companies..........................................65
Officers of Affiliated Companies...........................................67
First Citizens Banc Corp Shareholder Information...........................69

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FIRST CITIZENS BANC CORP
Castalia Banking Company
Citizens Banking Company
Farmers State Bank
R. A. Reynolds Appraisal Services, Inc.
SCC Resources, Inc.
- --------------------------------------------------------------------------------
100 East Water Street, Sandusky, Ohio 44870

Dear Shareholder:

Last year at this time we were facing three significant challenges.
They were the Year 2000, our data processing conversion, and continued expansion
of related non-traditional banking services.

We are pleased to report no Y2K related problems. Our software
conversion has brought us a higher level of technology more cost effectively.
The move has allowed us to introduce new highly visible products such as
Internet banking and bill paying. We are encouraged by the continued success of
our brokerage affiliation that has been expanded to all of our banks. Our
insurance affiliation has provided experience that will be beneficial as we
significantly expand our involvement in these services. Recent changes in the
banking laws will allow us to examine many other opportunities to increase
non-traditional services and enhance our non-interest income.

Pursuing traditional banking opportunities Farmers State has opened a
facility in Willard, Ohio while Citizens has opened a facility in Huron, Ohio
and recently introduced loan production capabilities in Ottawa County.

Last October we completed the move to Illinois Stock Transfer Company
as our stock transfer agent and manager of our Dividend Reinvestment Program. We
hope that you are as pleased with this move as we are. In your proxy is
information on a Stock Option and Stock Appreciation Rights Plan. We are asking
you to support the recommendation of the Directors for the adoption of this
proposal.

We believe that First Citizens has accomplished the transition to a
larger operation. The corporation continues to reach new levels of total
corporate earnings as we expand our banking franchise. Earnings have benefited
from one-time gains that have been used to offset one-time expenses such as
acquisition costs, Y2K and conversion costs, and entry costs in new locations
and services. We believe First Citizens is in a position to take advantage of
its size, locations, and complimentary products and services to increase
shareholder value.

Your Board of Directors and management are committed to enhancing your
investment in First Citizens Banc Corp. Your questions, comments, and
suggestions are always welcomed.

Very truly yours,

/s/ David A. Voight
President

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FIRST CITIZENS BANC CORP

FIVE YEAR CONSOLIDATED FINANCIAL SUMMARY

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1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Earnings

Net income (000) $ 6,062 $ 5,761 $ 4,441 $ 5,568 $ 5,278
Per Common Share(1):
Earnings $ 1.43 $ 1.35 $ 1.04 $ 1.31 $ 1.24
Book value 11.58 12.61 12.01 11.42 10.92
Dividends paid 1.15 1.11 1.07 1.02 0.71

Balances (in millions)
Assets $ 472.2 $ 508.9 $ 484.1 $ 455.9 $ 446.8
Deposits 403.2 417.9 402.2 375.8 369.2
Net loans 284.4 278.8 287.7 260.0 240.4
Shareholders' equity 48.2 53.7 51.2 48.7 46.6

Performance ratios
Return on average assets 1.24% 1.18% 0.95% 1.24% 1.22%
Return on average equity 11.58 10.95 8.75 11.71 12.20
Shareholders' equity to assets ratio 10.21 10.56 10.58 10.68 10.42
Net loans to deposit ratio 70.55 66.71 71.53 69.19 65.11
Allowance for loan losses to total loans 1.48 1.60 1.60 1.48 1.46

(1) Per share data has been adjusted for a 300% stock split paid in April 1996
and the business combination with Farmers State Bank in April 1998.
Dividends paid reflect the historical amounts paid by First Citizens Banc
Corp.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO ____________

COMMISSION FILE NUMBER 0 - 25980

FIRST CITIZENS BANC CORP
--------------------------------------
(Exact name of registrant as specified in its charter)

OHIO 34-1558688
- ------------------------------------ ----------------------
State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)

100 EAST WATER STREET, SANDUSKY, OHIO 44870
- ----------------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (419) 625 - 4121
------------------------

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

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, NO PAR VALUE
--------------------------
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.

The aggregate market value of the voting stock held by nonaffiliates of the
registrant based upon the closing market price as of January 31, 2000 was
$86,328,843.

As of January 31, 2000, there were 4,151,119 shares of no par value common stock
issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement, to be dated approximately March
17, 2000, are incorporated by reference into Item 10. Directors and Executive
Officers of the Registrant; Item 11. Executive Compensation; Item 12. Security
Ownership of Certain Beneficial Owners and Management; and Item 13. Certain
Relationships and Related Transactions, of Part III.

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INDEX

PART I
Item 1. Business........................................................ 5
Item 2. Properties...................................................... 19
Item 3. Legal Proceedings............................................... 19
Item 4. Submission of Matters to a Vote of Security Holders............. 19

PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters............................................. 19
Item 6. Selected Financial Data......................................... 20
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation...................................... 21
Item 7a. Quantitative and Qualitative Disclosures About Market Risk...... 31
Item 8. Financial Statements and Supplementary Data
Independent Auditor's Report.................................... 35
Consolidated Financial Statements............................... 36
Notes to Consolidated Financial Statements...................... 41
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure...................................... 59

PART III
Item 10. Directors and Executive Officers of the Registrant.............. 60
Item 11. Executive Compensation.......................................... 61
Item 12. Security Ownership of Certain Beneficial Owners and Management.. 61
Item 13. Certain Relationships and Related Transactions.................. 61

PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K........................................................ 62

Signatures................................................................ 63

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PART I

ITEM 1. BUSINESS

(a) GENERAL DEVELOPMENT OF BUSINESS

First Citizens Banc Corp (FCBC) was organized under the laws of the State
of Ohio on February 19, 1987 and is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended. The Corporation's office
is located at 100 East Water Street, Sandusky, Ohio. The Corporation had
total consolidated assets of $472,220,057 at December 31, 1999. FCBC and
its subsidiaries are referred to together as the Corporation.

THE CITIZENS BANKING COMPANY (Citizens), owned by the Corporation since
1987, opened for business in 1884 as The Citizens National Bank. In 1898,
Citizens was reorganized under Ohio banking law and was known as The
Citizens Bank and Trust Company. In 1908, Citizens surrendered its trust
charter and began operation under its current name. Citizens is an insured
bank under the Federal Deposit Insurance Act. Citizens maintains its main
office at 100 East Water Street, Sandusky, Ohio and operates three branch
banking offices in Perkins Township (Sandusky, Ohio), one branch banking
office in Berlin Heights, Ohio and one branch banking office in Huron,
Ohio. This subsidiary accounts for 59% of the Corporation's consolidated
assets at December 31, 1999.

THE FARMERS STATE BANK (Farmers), acquired by the Corporation in 1998, was
organized and chartered under the laws of the State of Ohio in 1916.
Farmers is an insured bank under the Federal Deposit Insurance Act. Farmers
maintains its main office at 102 South Kibler Street, New Washington, Ohio
and operates branch offices in the Ohio villages of Chatfield, Tiro,
Richwood and Green Camp. Farmers accounts for 30% of the Corporation's
consolidated assets at December 31, 1999.

THE CASTALIA BANKING COMPANY (Castalia), owned by the Corporation since
1990, was organized and chartered under the laws of the State of Ohio in
1907. Castalia is an insured bank under the Federal Deposit Insurance Act.
Castalia operates from one location, 208 South Washington Street, Castalia,
Ohio. Castalia, Ohio is located approximately 10 miles from Sandusky, Ohio.
Castalia accounts for 11% of the Corporation's consolidated assets at
December 31, 1999.

SCC RESOURCES INC. (SCC) was organized under the laws of the State of Ohio.
Begun as a joint venture of three local Sandusky, Ohio banks in 1966, SCC
provides item processing services for financial institutions, including the
Banks, and other nonrelated entities. The Corporation acquired total
ownership of SCC in February 1993. On June 19, 1998, SCC entered into an
agreement with Jack Henry & Associates, Inc. (JHA) to sell all of their
contracts for providing data processing services to community banks. JHA
agreed to pay SCC a fee based upon annual net revenue under a new JHA
contract for each bank that signed a five-year contract with JHA by January
31, 1999. This subsidiary accounts for less than one percent of the
Corporation's consolidated assets as of December 31, 1999.

R. A. REYNOLDS APPRAISAL SERVICES, INC. (Reynolds), owned by the
Corporation since 1993, was organized under the laws of the State of Ohio
in September 1993. Reynolds provides real estate appraisal services, for
lending purposes, to the Banks and to other financial institutions.
Reynolds accounts for less than one percent of the Corporation's
consolidated assets as of December 31, 1999.

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

FCBC is a bank holding company. Through the three subsidiary banks, the
Corporation is primarily engaged in the business of commercial banking,
which accounts for substantially all of its revenue, operating income and
assets. Reference is made to the statistical information regarding the
Corporation included elsewhere herein and to items of this Form 10-K for
financial information about the Corporation's banking business.

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(c) NARRATIVE DESCRIPTION OF BUSINESS

GENERAL

The Corporation's primary business is incidental to the three subsidiary
banks. Citizens, Farmers and Castalia, located in Erie, Crawford, Marion
and Union Counties, Ohio, conduct a general banking business that involves
collecting customer deposits, making loans and purchasing securities. The
subsidiary banks do not operate a trust department.

Interest and fees on loans accounted for 61% of total revenue for 1999 and
60% of total revenue for 1998. The primary focus of lending is real estate
mortgages. Residential real estate mortgages comprised 62% of the total
loan portfolio in 1999 and 61% of the total loan portfolio in 1998.
Citizens', Farmers' and Castalia's loan portfolios do not include any
foreign-based loans, loans to lesser-developed countries or loans to FCBC.
Citizens has a loan to SCC, which is secured by real estate.

On a parent company only basis, FCBC's only source of funds is the receipt
of dividends paid by its subsidiaries, principally the Banks. The ability
of the Banks to pay dividends is subject to limitations under various laws
and regulations and to prudent and sound banking principles. Generally,
subject to certain minimum capital requirements, each Bank may declare a
dividend without the approval of the State of Ohio Division of Financial
Institutions unless the total of the dividends in a calendar year exceeds
the total net profits of the bank for the year combined with the retained
profits of the bank for the two preceding years. Earnings have been
sufficient to support asset growth at the Banks and at the same time
provide funds to FCBC for shareholder dividends. FCBC has no debt service
obligations.

The Corporation's business is not seasonal, nor is it dependent on a single
or small group of customers.

In the opinion of management, the Corporation does not have exposure to
material costs associated with environmental hazardous waste cleanup.

COMPETITION

The primary market area for Citizens, Farmers and Castalia is Erie and
Crawford counties. A secondary market includes portions of Huron, Union,
Marion, Richland and Ottawa counties. Citizens, Farmers and Castalia are
operated as independent commercial banks in their respective market area.
Traditional financial service competition for the Banks consists of large
regional financial institutions, community banks, thrifts and credit unions
operating within the Corporation's market area. A growing nontraditional
source of competition for loan and deposit dollars comes from captive auto
finance companies, mortgage banking companies, internet banks, brokerage
companies, insurance companies and direct mutual funds.

EMPLOYEES

FCBC has no employees. The subsidiary companies employ approximately 206
full-time equivalent employees to whom a variety of benefits are provided.
FCBC and its subsidiaries are not parties to any collective bargaining
agreements. Management considers its relationship with its employees to be
good.

SUPERVISION AND REGULATION

FCBC, as a registered bank holding company, is subject to the Bank Holding
Company Act of 1956, as amended (Act), and to regulation by the Board of
Governors of the Federal Reserve System. The Act limits the activities in
which FCBC and its subsidiaries may engage to those activities that the
Federal

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Reserve Board finds to be closely related to banking, managing or
controlling banks. In addition, the Act requires FCBC and its subsidiaries
to obtain the prior approval of the Federal Reserve Board before engaging
in any new activities and before acquiring control of more than 5% of the
voting stock or substantially all the assets of any other bank. The Act
also restricts certain transactions between affiliates including, loans and
extensions of credit to affiliates, investments in the stock or securities
of affiliates, acceptance of an affiliate's stock as collateral for loans
to a borrower and acceptance of an affiliate's stock for leases, service
and other contracts between affiliates. Finally, the Act prohibits bank
holding companies and their subsidiaries from engaging in certain tie-in
arrangements in connection with any extension of credit, lease or sale of
any property or the furnishing of services.

Prior to enactment of the Interstate Banking and Branch Efficiency Act of
1994, neither FCBC nor its subsidiaries could acquire banks outside Ohio,
unless the laws of the state in which the target bank was located
specifically authorized the transaction. The Interstate Banking and Branch
Efficiency Act has eased restrictions on interstate expansion and
consolidation of banking operations by, among other things: (i) permitting
interstate bank acquisitions regardless of host state laws, (ii) permitting
interstate merger of banks unless specific states have opted out of this
provision and (iii) permitting banks to establish new branches outside the
state provided the law of the host state specifically allows interstate
bank branching.

The Federal Reserve Board has adopted risk-based capital guidelines to
evaluate the adequacy of capital of bank holding companies and state member
banks. The guidelines involve a process of assigning various risk weights
to different classes of assets, then evaluating the sum of the
risk-weighted balance sheet structure against the holding company's capital
base. Failure to meet capital guidelines could subject a banking
institution to various penalties, including termination of FDIC deposit
insurance. Both FCBC and its subsidiary Banks had risk-based capital ratios
above minimum requirements at December 31, 1999.

RECENT LEGISLATION

On November 12, 1999, President Clinton signed the Graham-Leach-Bliley Act
of 1999 (GLB Act), which is intended to modernize the financial services
industry. The GLB Act sweeps away large parts of a regulatory framework
that had its origins in the Depression Era of the 1930s. Effective March
11, 2000, new opportunities will be available for banks, other depository
institutions, insurance companies and securities firms to enter into
combinations that permit a single financial services organization to offer
customers a more complete array of financial products and services.

The GLB Act introduces the concept of functional regulation. Functional
regulation mandates that the Board of Governors of the Federal Reserve
System give deference to the Securities and Exchange Commission and
relevant state securities and insurance authorities with respect to
interpretations and enforcement of activities within their respective
jurisdictions.

The GLB Act amends the Bank Holding Company Act of 1956 to allow bank
holding companies to become certified as financial holding companies and
participate in the new financial activities contemplated in the GLB Act.
The Federal Reserve Board will serve as the umbrella regulator for
financial holding companies while the financial holding company's
separately regulated subsidiaries will be regulated by their primary
functional regulators. In addition to meeting "well capitalized" and "well
managed" standards, the GLB Act makes satisfactory or above Community
Reinvestment Act compliance for insured depository institutions necessary
in order for them to engage in new financial activities. Financial
subsidiaries of banks may also be formed to engage in a new range of
activities under the GLB Act.

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The GLB Act provides a federal right to privacy of non-public personal
information of individual customers. Federal regulatory agencies with
primary supervisory authority over numerous financial institutions have
responsibility for implementing this privacy provision and are currently in
the process of adopting regulations. FCBC and its subsidiaries are also
subject to certain state laws that deal with the use and distribution of
non-public personal information.

Given the fact that the legislation is new, the regulatory process is only
beginning and numerous final regulations are still forthcoming, we cannot
predict the impact that the GLB Act will have on the Corporation at this
time.

REGULATION OF BANK SUBSIDIARIES

In addition to regulation of FCBC, FCBC's banking subsidiaries are subject
to federal regulation regarding such matters as reserves, limitations on
the nature and amount of loans and investments, issuance or retirement of
their own securities, limitations on the payment of dividends and other
aspects of banking operations.

As Ohio chartered banks, all three of FCBC's banking subsidiaries,
Citizens, Castalia and Farmers, are supervised and regulated by the State
of Ohio Department of Commerce, Division of Financial Institutions. In
addition, Citizens and Castalia are members of the Federal Reserve System.
All three banks are subject to periodic examinations by the State of Ohio
Department of Commerce, Division of Financial Institutions and Citizens and
Castalia are additionally subject to periodic examinations by the Federal
Reserve Board. These examinations are designed primarily for the protection
of the depositors of the banks and not for their shareholders.

The deposits of Citizens, Castalia and Farmers are insured by the Bank
Insurance Fund of the Federal Deposit Insurance Corporation (FDIC), and all
three entities are subject to the Federal Deposit Insurance Act. Farmers is
subject to periodic examinations by the FDIC. Pursuant to the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, a subsidiary of
a bank holding company may be required to reimburse the FDIC for any loss
incurred due to the default of another FDIC insured subsidiary of the bank
holding company or for FDIC assistance provided to such a subsidiary in
danger of default.

EFFECTS OF GOVERNMENT MONETARY POLICY

The earnings of the Banks are affected by general and local economic
conditions and by the policies of various governmental regulatory
authorities. In particular, the Federal Reserve Board regulates money and
credit conditions and interest rates to influence general economic
conditions, primarily through open market acquisitions or dispositions of
United States Government securities, varying the discount rate on member
bank borrowings and setting reserve requirements against member and
nonmember bank deposits. Federal Reserve Board monetary policies have had a
significant effect on the interest income and interest expense of
commercial banks, including the Banks, and are expected to continue to do
so in the future.

(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES

The Corporation does not have any offices located in a foreign country, nor
do they have any foreign assets, liabilities, or related income and expense
for the years presented.

(e) STATISTICAL INFORMATION

Pages 9 through 18 present various statistical disclosures required for
bank holding companies.

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DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY,
INTEREST RATES AND INTEREST DIFFERENTIAL

The following table sets forth, for the years ended December 31, 1999, 1998 and
1997, the distribution of assets, liabilities and shareholders' equity,
including interest amounts and average rates of major categories of
interest-earning assets and interest-bearing liabilities:

1999 1998 1997
---------------------------- ----------------------------- ---------------------------
Average Yield/ Average Yield/ Average Yield/
ASSETS Balance Interest Rate Balance Interest Rate Balance Interest Rate
- ------ ------- -------- ---- ------- -------- ---- ------- -------- -----
(Dollars in thousands)
Interest-earning assets:

Loans (1)(2)(3) $ 284,080 $23,408 8.24% $ 288,108 $ 24,357 8.45% $ 280,141 $ 24,015 8.57%
Taxable securities (4) 115,240 6,645 5.87 114,099 6,752 6.11 111,485 6,821 6.19
Nontaxable
Securities (4)(5) 47,894 2,306 4.89 41,616 2,093 5.18 39,760 2,166 5.50
Federal funds sold 12,770 627 4.91 17,490 943 5.39 10,477 583 5.56
Interest-bearing deposits
in other banks 4,294 81 1.89 1,271 59 4.64 1,368 64 4.68
--------- ------- ---------- -------- --------- --------
Total interest-earning
assets 464,278 33,067 7.16 462,584 34,204 7.47 443,231 33,649 7.62
------- -------- --------
Noninterest-earning assets:
Cash and due from
financial institutions 11,538 13,238 13,517
Premises and
equipment, net 7,311 7,497 7,139
Accrued interest
receivable 3,723 3,682 3,517
Intangible assets 2,379 2,716 2,965
Other assets 2,444 2,668 3,024
Less allowance for
loan losses (4,431) (4,675) (3,633)
--------- ---------- ---------
Total $ 487,242 $ 487,710 $ 469,760
========= ========== =========

LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------

Interest-bearing liabilities:
Savings and interest-
bearing demand
accounts $ 164,246 $ 3,868 2.36% $ 155,080 $ 4,144 2.67% $ 157,745 $ 4,302 2.73%
Certificates of deposit 206,296 10,329 5.01 212,081 11,765 5.55 196,081 10,945 5.58
Federal Home Loan
Bank borrowings 4,348 254 5.84 13,913 797 5.73 15,126 867 5.73
Securities sold under
repurchase agreements 15,044 625 4.15 11,863 535 4.51 9,487 500 5.27
U.S. Treasury demand
notes payable 1,133 54 4.77 1,029 54 5.25 1,195 61 5.10
--------- ------- ---------- -------- --------- --------
Total interest-
bearing liabilities 391,067 15,130 3.87 393,966 17,295 4.39 379,634 16,675 4.40
--------- ------- ---------- -------- --------- --------
Noninterest-bearing liabilities:
Demand deposits 39,123 36,327 35,239
Other liabilities 4,705 4,822 4,127
--------- ---------- ---------
43,828 41,149 39,366
Shareholders' equity 52,347 52,595 50,760
--------- ---------- ---------
Total $ 487,242 $ 487,710 $ 469,760
========= ========== =========
Net interest income $17,937 $ 16,909 $ 16,974
======= ======== ========
Net yield on interest-
earning assets 3.89% 3.69% 3.84%
==== ==== ====

(1) For purposes of these computations, the daily average loan amounts
outstanding are net of unearned income and include loans held for sale.
(2) Included in loan interest income are loan fees of $782,115 in 1999,
$639,371 in 1998, and $811,737 in 1997.
(3) Nonaccrual loans are included in loan totals and do not have a material
impact on the analysis presented.
(4) Average balance is computed using the carrying value of securities. The
average yield has been computed using the historical amortized cost average
balance for available-for-sale securities.
(5) Interest income is reported on a historical basis without tax-equivalent
adjustment.

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CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
RESULTING FROM CHANGES IN VOLUME AND CHANGES IN RATE

The following table sets forth, for the periods indicated, a summary of the
changes in interest income and interest expense resulting from changes in volume
and changes in rate.

1999 compared to 1998 1998 compared to 1997
Increase (decrease) Increase (decrease)
due to (1) due to (1)
-------------------------------------- --------------------------------------
VOLUME RATE NET VOLUME RATE NET
------ ---- --- ------ ---- ---
(Dollars in thousands)
Interest income:

Loans $ (337) $ (612) $ (949) $ 677 $ (335) $ 342
Taxable securities 164 (271) (107) 64 (133) (69)
Nontaxable securities 337 (124) 213 56 (129) (73)
Federal funds sold (237) (79) (316) 379 (19) 360
Interest-bearing deposits
in other banks 74 (52) 22 (5) -- (5)
--------- ---------- ---------- ---------- ---------- ----------

Total interest-
earning assets $ 1 $ (1,138) $ (1,137) $ 1,171 $ (616) $ 555
========= ========== ========== ========== ========== ==========

Interest expense:
Savings and interest-
bearing demand
accounts $ 235 $ (511) $ (276) $ (72) $ (86) $ (158)
Certificates of deposit (314) (1,122) (1,436) 888 (68) 820
Federal Home Loan
Bank borrowings (558) 15 (543) (70) -- (70)
Securities sold under
repurchase agreements 135 (45) 90 114 (79) 35
U.S. Treasury demand
notes payable 5 (5) -- (9) 2 (7)
--------- ---------- ---------- ---------- ---------- ----------

Total interest-
bearing liabilities $ (497) $ (1,668) $ (2,165) $ 851 $ (231) $ 620
========= ========== ========== ========== ========== ==========

Net interest income $ 498 $ 530 $ 1,028 $ 320 $ (385) $ (65)
========= ========== ========== ========== ========== ==========

(1) The change in interest income and interest expense due to changes in both
volume and rate, which cannot be segregated, has been allocated
proportionately to the change due to volume and the change due to rate.

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SECURITY PORTFOLIO

The following table sets forth the carrying amount of securities at December 31.

1999 1998 1997
---- ---- ----
(Dollars in thousands)

AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. Government corporations and agencies $ 63,224 $ 70,125 $ 72,286
Obligations of states and political subdivisions (1) 52,606 54,404 34,587
Other securities, including mortgage-backed securities (1) 34,425 47,424 30,344
----------- ----------- -----------

Total $ 150,255 $ 171,953 $ 137,217
=========== =========== ===========

HELD TO MATURITY

U.S. Treasury securities and obligations of
U.S. Government corporations and agencies $ -- $ -- $ 1,000
Obligations of states and political subdivisions (1) 232 355 4,004
Other securities, including mortgage-backed securities (1) 174 455 1,733
----------- ----------- -----------

Total $ 406 $ 810 $ 6,737
=========== =========== ===========

(1) The Corporation has no securities of an "issuer" where the aggregate
carrying value of such securities exceeded ten percent of shareholders'
equity.

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The following tables set forth the maturities of securities at December 31, 1999
and the weighted average yields of such securities. Maturities are reported
based on stated maturities and do not reflect principal prepayment assumptions.

Maturing
-------------------------------------------------------------------------------------
After one After five
Within but within but within After
one year five years ten years ten years
-------- ---------- --------- ---------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ------ ----- ------ ----- ------ -----
(Dollars in thousands)
AVAILABLE FOR SALE (4)

U.S. Treasury securities
and obligations of
U.S. government
corporations and
agencies $ 12,833 5.77% $ 48,258 5.75% $ 2,134 6.86%
Obligations of states
and political
subdivisions (1) 7,304 5.13 27,788 4.66 16,944 4.52 $ 570 5.24%
Other securities (2) 3,400 6.09 9,611 5.91 -- -- -- --
---------- ---------- --------- ---------

Total $ 23,537 5.62% $ 85,657 5.41% $ 19,078 4.78% $ 570 5.24%
========== ========== ========= =========

HELD TO MATURITY

Obligations of states
and political
subdivisions (1) $ 78 4.54% $ 155 4.54%
Other securities (3) -- -- -- --
---------- ----------

Total $ 78 4.54% $ 155 4.54%
========== ==========

(1) Weighted average yields on nontaxable obligations have been computed based
on actual yields stated on the security.

(2) Excludes $13,665,647 of mortgage-backed securities, $2,952,453 of equity
securities, $4,207,400 of Federal Home Loan Bank stock and $587,650 of
Federal Reserve stock which have no stated maturity.

(3) Excludes $173,608 of mortgage-backed securities.

(4) The weighted average yield has been computed using the historical amortized
cost for available-for-sale securities.

12
15

LOAN PORTFOLIO

TYPES OF LOANS

The amounts of gross loans outstanding at December 31 are shown in the following
table according to types of loans.

1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands)

Commercial and agricultural $ 26,077 $ 24,140 $ 26,657 $ 24,053 $ 22,455
Commercial real estate 48,301 53,804 49,428 44,599 41,636
Residential real estate 178,876 173,789 183,031 165,148 154,176
Real estate construction 4,482 3,493 3,923 3,449 1,573
Consumer 28,106 27,490 28,759 25,949 24,225
Leases 392 589 736 883 612
Credit card and other 3,576 1,426 1,694 1,850 1,117
------------ ------------- ------------ ------------ ------------

$ 289,810 $ 284,731 $ 294,228 $ 265,931 $ 245,794
============ ============= ============ ============ ============

Commercial loans are those made for commercial, industrial and professional
purposes to sole proprietorships, partnerships, corporations and other business
enterprises. Agricultural loans are for financing agricultural production,
including all costs associated with growing crops or raising livestock. These
loans may be secured, other than by real estate, or unsecured, requiring one
single repayment or on an installment repayment schedule. The loans involve
certain risks relating to changes in local and national economic conditions and
the resulting effect on the borrowing entities. Secured loans not collateralized
by real estate mortgages maintain a loan-to-value ratio ranging from 50% as in
the case of certain stocks, to 90% in the case of collateralizing with a savings
or time deposit account. Unsecured credit relies on the financial strength and
previous credit experience of the borrower and in many cases the financial
strength of the principals when such credit is extended to a corporation.

Commercial real estate mortgage loans are made predicated on security interest
in real property and secured wholly or substantially by that lien on real
property. Commercial real estate mortgage loans generally maintain a
loan-to-value ratio of 75%.

Residential real estate mortgage loans are made predicated on security interest
in real property and secured wholly or substantially by that lien on real
property. Such real estate mortgage loans are primarily loans secured by one- to
four-family real estate. At year-end 1999, loans secured by one- to four-family
real estate represented 77% of total real estate mortgage loans (75% in 1998 and
77% in 1997). Residential real estate mortgage loans generally pose less risk to
the Corporation due to the nature of the collateral being less susceptible to
sudden changes in value.

Real estate construction loans are for the construction of new buildings or
additions to existing buildings. Generally, these loans are secured by one- to
four-family real estate. The Corporation controls disbursements.

Consumer loans are made to individuals for household, family and other personal
expenditures. These include the purchase of vehicles or furniture, educational
expenses, medical expenses, taxes or vacation expenses. Consumer loans may be
secured, other than by real estate, or unsecured, generally requiring repayment
on an installment repayment schedule. Consumer loans pose a relatively higher
credit risk. This higher risk is moderated by the use of certain loan value
limits on secured credits and aggressive collection efforts. The collectibility
of consumer loans is influenced by local and national economic conditions.

13
16

Credit card loans are made as a convenience to existing customers of the
Corporation. All such loans are made on an unsecured basis, lines over $5,000
require documentation on the financial strength of the borrower. As unsecured
credit, they pose the greatest credit risk to the Corporation.

Letters of credit represent extensions of credit granted in the normal course of
business, which are not reflected in the Corporation's consolidated financial
statements. As of December 31, 1999 and 1998, the Corporation was contingently
liable for $507,000 and $623,000 of letters of credit. In addition, the
Corporation had issued lines of credit to customers. Borrowings under such lines
of credit are usually for the working capital needs of the borrower. At December
31, 1999 and 1998, the Corporation had commitments to extend credit in the
aggregate amounts of approximately $27,060,000 and $26,727,000. Of these
amounts, $23,982,000 and $23,412,000 represented lines of credit and
construction loans, and $3,078,000 and $3,315,000 represented credit card
commitments. Such amounts represent the portion of total commitments that had
not been used by customers as of December 31, 1999 and 1998.

MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
- ------------------------------------------------------------------

The following table shows the amount of commercial and agricultural, commercial
real estate and real estate construction loans outstanding as of December 31,
1999, which, based on the contract terms for repayments of principal, are due in
the periods indicated. In addition, the amounts due after one year are
classified according to their sensitivity to changes in interest rates.

MATURING
-----------------------------------------------------------------
After one
Within but within After
one year five years five years Total
-------- ---------- ---------- -----
(Dollars in thousands)

Commercial and agricultural $ 12,084 $ 8,461 $ 5,532 $ 26,077
Commercial real estate 1,620 7,170 39,511 48,301
Real estate construction 866 3,616 -- 4,482
------------ ------------- ------------ ------------

$ 14,570 $ 19,247 $ 45,043 $ 78,860
============ ============= ============ ============

Interest
Sensitivity
-------------------------------
Fixed Variable
Rate Rate
---- ----
(Dollars in thousands)

Due after one but within five years $ 15,917 $ 3,330
Due after five years 15,038 30,005
------------ -------------

$ 30,955 $ 33,335
============ =============

The preceding maturity information is based on contract terms at December 31,
1999 and does not include any possible "rollover" at maturity date. In the
normal course of business, the Corporation considers and acts on the borrower's
request for renewal of loans at maturity. Evaluation of such requests includes a
review of the borrower's credit history, the collateral securing the loan and
the purpose for such request.

14
17

RISK ELEMENTS

The following table presents information concerning the amount of loans at
December 31 that contain certain risk elements.

1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands)

Loans accounted for on a nonaccrual basis (1) $ 1,682 $ 1,693 $ 1,969 $ 921 $ 1,432

Loans contractually past due 90 days or
more as to principal or interest payments (2) 834 1,235 1,717 1,308 1,770

Loans whose terms have been renegotiated to
provide a reduction or deferral of interest or
principal because of a deterioration in the
financial position of the borrower (3) 693 305 308 -- --
---------- --------- --------- --------- ---------

Total $ 3,209 $ 3,233 $ 3,994 $ 2,229 $ 3,202
========== ========= ========= ========= =========

Impaired loans included in above totals $ 994 $ 1,196 $ 864 $ 1,745 $ 1,920
Impaired loans not included in above totals 3,166 2,963 3,571 1,470 1,597
---------- --------- --------- --------- ---------

Total impaired loans $ 4,160 $ 4,159 $ 4,435 $ 3,215 $ 3,517
========== ========= ========= ========= =========

There are no loans as of December 31, 1999, other than those disclosed above,
where known information about possible credit problems of borrowers caused
management to have serious doubts as to the ability of such borrowers to comply
with the present loan repayment terms. There are no other interest-bearing
assets that would be required to be disclosed in the table above, if such assets
were loans as of December 31, 1999.

(1) Loans are placed on nonaccrual status when doubt exists as to the
collectibility of the loan, including any accrued interest. With a few
immaterial exceptions, commercial and agricultural, commercial real estate,
residential real estate and construction loans past due 90 days are placed
on nonaccrual unless they are well collateralized and in the process of
collection. Generally, consumer loans are charged-off within 30 days after
becoming past due 90 days unless they are well collateralized and in the
process of collection. Credit card loans are charged-off before reaching
120 days of delinquency. Once a loan is placed on nonaccrual, interest is
then recognized on a cash basis where future collections of principal is
probable.
(2) Excludes loans accounted for on a nonaccrual basis.
(3) Excludes loans accounted for on a nonaccrual basis and loans contractually
past due ninety days or more as to principal or interest payments.

Interest income recognition associated with impaired loans was as follows.

1999 1998 1997 1996 1995
---- ---- ---- ---- ----

Interest income on impaired loans, including
interest income recognized on a cash basis $ 320,000 $ 273,000 $ 227,000 $ 242,000 $ 316,000
========== ========== ========== ========= ==========
Interest income on impaired loans recognized on
a cash basis $ 320,000 $ 273,000 $ 182,000 $ 141,000 $ 227,000
========== ========== ========== ========= ==========

No concentrations of loans exceeded 10% of total loans.

15
18

SUMMARY OF LOAN LOSS EXPERIENCE

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

The following table shows the daily average loan balances and changes in the
allowance for loan losses for the years indicated.

1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands)

Daily average amount of loans,
net of unearned income $ 284,080 $ 288,108 $ 280,141 $ 250,719 $ 236,831
============ ============= ============= ============= ==============

Allowance for possible loan
losses at beginning of year $ 4,567 $ 4,707 $ 3,935 $ 3,585 $ 3,250

Loan charge-offs:
Commercial and agricultural and
commercial real estate 63 134 53 90 95
Real estate mortgage 95 40 70 32 24
Real estate construction -- -- -- -- --
Consumer 582 490 387 344 188
Leases -- -- -- 3 64
Credit card and other 49 61 47 51 42
------------ ------------- ------------- ------------- --------------
789 725 557 520 413

Recoveries of loans previously Charged-off:
Commercial and agricultural and
commercial real estate 29 32 48 41 161
Real estate mortgage 13 31 2 2 28
Real estate construction -- -- -- -- --
Consumer 171 133 132 82 75
Leases -- -- -- -- --
Credit card and other 17 27 18 12 27
------------ ------------- ------------- ------------- --------------
230 223 200 137 291
------------ ------------- ------------- ------------- --------------
Net charge-offs (1) (559) (502) (357) (383) (122)

Provision for loan losses (2) 266 362 1,129 733 457
------------ ------------- ------------- ------------- --------------

Allowance for loan losses
at end of year $ 4,274 $ 4,567 $ 4,707 $ 3,935 $ 3,585
============ ============= ============= ============= ==============

Allowance for loan losses
as a percent of loans
at year-end 1.48% 1.60% 1.60% 1.48% 1.46%
======== ======= ======== ======== =======

Ratio of net charge-offs during
the year to average loans
outstanding .20% .17% .13% .15% .05%
======== ======= ======== ======== =======

(1) The amount of net charge-offs fluctuates from year to year due to factors
relating to the condition of the general economy and specific business
segments.

(2) The determination of the balance of the allowance for loan losses is based
on an analysis of the loan portfolio and reflects an amount that, in
management's judgment, is adequate to provide for probable loan losses.
Such analysis is based on a review of specific loans, the character of the
loan portfolio, current economic conditions, past loan loss experience and
such other factors as management believes require current recognition in
estimating probable loan losses.

16
19

ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

The following table allocates the allowance for loan losses at December 31 to
each loan category. The allowance has been allocated according to the amount
deemed to be reasonably necessary to provide for the probable losses estimated
to be incurred within the following categories of loans at the dates indicated.

1999
----
Percentage
of loans to
(Dollars in thousands) Allowance total loans
--------- -----------

Commercial and agricultural $ 531 9.0%
Commercial real estate 152 16.7
Real estate mortgage 1,447 61.7
Real estate construction -- 1.6
Consumer 544 9.7
Credit card and other 12 1.2
Leases 23 0.1
Unallocated 1,565
-----------

$ 4,274 100.0%
=========== ========

1998 1997
---- ----
Percentage Percentage
of loans to of loans to
Allowance total loans Allowance total loans
--------- ----------- --------- -----------

Commercial and agricultural and commercial
real estate $ 932 27.4% $ 768 25.9%
Real estate mortgage 1,202 61.0 1,509 62.2
Real estate construction -- 1.2 -- 1.3
Consumer 784 9.7 377 9.8
Credit card and other 22 0.5 15 0.6
Leases 24 0.2 29 0.2
Unallocated 1,603 2,009
----------- -------- ----------- -------

$ 4,567 100.0% $ 4,707 100.0%
=========== ======== =========== =======

1996 1995
---- ----
Percentage Percentage
of loans to of loans to
Allowance total loans Allowance total loans
--------- ----------- --------- -----------

Commercial and agricultural and commercial
real estate $ 1,152 25.8% $ 1,162 26.1%
Real estate mortgage 308 62.1 534 62.7
Real estate construction -- 1.3 -- 0.6
Consumer 235 9.8 313 9.9
Credit card and other 11 0.7 11 0.5
Leases 35 0.3 34 0.2
Unallocated 2,194 1,531
----------- -------- ----------- -------

$ 3,935 100.0% $ 3,585 100.0%
=========== ======== =========== =======

17
20

DEPOSITS

The average daily amount of deposits (all in domestic offices) and average rates
paid on such deposits is summarized for the years indicated.

1999 1998 1997
------------------------ -------------------------- ----------------------
Average Average Average Average Average Average
balance rate paid balance rate paid balance rate paid
------- --------- ------- --------- ------- ---------
(Dollars in thousands)

Noninterest-bearing
demand deposits $ 39,123 N/A $ 36,327 N/A $ 35,239 N/A
Interest-bearing demand
deposits 49,189 1.36% 40,798 2.12% 45,533 2.18%
Savings, including Money
Market deposit accounts 115,057 2.78 114,282 2.87 112,212 2.95
Certificates of deposit,
including IRAs 206,296 5.01 212,081 5.55 196,081 5.58
------------ ------------ ------------

$ 409,665 $ 403,488 $ 389,065
============ ============ ============

Maturities of certificates of deposits and individual retirement accounts of
$100,000 or more outstanding at December 31, 1999 are summarized as follows.

Individual
Certificates Retirement
of Deposits Accounts Total
----------- -------- -----
(Dollars in thousands)

3 months or less $ 8,285 $ 233 $ 8,518
Over 3 through 6 months 8,928 253 9,181
Over 6 through 12 months 2,950 507 3,457
Over 12 months 2,487 1,701 4,188
----------- ---------- -----------

$ 22,650 $ 2,694 $ 25,344
=========== ========== ===========

SHORT-TERM BORROWINGS

See Note 8 to the consolidated financial statements and "Distribution of Assets,
Liabilities and Shareholders' Equity, Interest Rates and Interest Differential"
for the statistical disclosures for short-term borrowings for 1999 and 1998. No
short-term borrowings were outstanding in 1997 for which the average balance
exceeded thirty percent of shareholders' equity.

RETURN ON EQUITY AND ASSETS

The ratio of net income to daily average total assets, average shareholders'
equity and certain other ratios, are as follows.

DECEMBER 31,
----------------------------------
1999 1998 1997
---- ---- ----

Percentage of net income to:

Average total assets 1.24% 1.18% 0.95%

Average shareholders' equity 11.58 10.95 8.75

Dividends declared as a percentage of net income 80.22 77.50 79.84

Percentage of average shareholders' equity to average total assets 10.74 10.78 10.81

18
21

ITEM 2. PROPERTIES

FCBC neither owns nor leases any properties. Citizens maintains its main office
at 100 East Water Street, Sandusky, Ohio, which is also the office of FCBC.
Citizens also owns and operates three branch banking offices in Perkins Township
(Sandusky, Ohio), and a branch banking office in the Ohio communities of Berlin
Heights and Huron. Farmers maintains its main office at 102 South Kibler Street,
New Washington, Ohio. Farmers also owns and operates a branch banking office in
the Ohio communities of Chatfield, Tiro, Richwood and Green Camp. Castalia owns
its main office located at 208 South Washington Street, Castalia, Ohio. SCC owns
its processing center located at 1845 Superior Street, Sandusky, Ohio and leases
offices in downtown Sandusky, Ohio. Reynolds leases offices in downtown
Sandusky, Ohio.

FCBC has three wholly-owned subsidiary banks, a wholly-owned item processing
company subsidiary and a wholly-owned real estate appraisal company subsidiary.

ITEM 3. LEGAL PROCEEDINGS

The Corporation's management is aware of no pending or threatened litigation in
which the Corporation faces potential loss or exposure that will materially
affect the consolidated financial statements.

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

No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders through the solicitation of proxies
or otherwise.

PART II

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

The Corporation has no established public trading market for its common stock
and is not listed on any exchange. The brokerage firms of Everen Securities,
Merrill Lynch and McDonald & Company handle the sale and purchase of the
Corporation's stock. However, such firms are not "market makers" of such stock
since they do not purchase and hold for investment purposes any such shares.
Information below is the range of sale prices as reported by the brokerage
firms.

1999
----
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------

$25.50 to $28.00 $28.25 to $28.00 $28.63 to $28.00 $28.03 to $28.70

1998
----
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------

$38.81 to $40.00 $38.00 to $28.75 $30.25 to $27.31 $25.00 to $24.31

The Corporation has no outstanding options or warrants to purchase shares of its
common stock or securities convertible into shares of common stock.

The number of holders of record of the Corporation's common stock at December
31, 1999 was 881.

19
22

Dividends per share declared by the Corporation on common stock were as follows.

1999 1998
---- ----

February $ .16 $ .15
May .16 .15
August .16 .15
November .67 .66
-------- -------

$ 1.15 $ 1.11
======== =======

ITEM 6. SELECTED FINANCIAL DATA

FIVE-YEAR SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth certain selected consolidated financial
information of the Corporation and is qualified in its entirety by reference to
the detailed information and consolidated financial statements of the
Corporation included in Item 8 hereof.

YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)

Statements of income:
Total interest income $ 33,067 $ 34,204 $ 33,649 $ 32,138 $ 31,195
Total interest expense 15,130 17,295 16,675 15,856 15,122
------------ ------------- ------------ ------------ ------------
Net interest income 17,937 16,909 16,974 16,282 16,073
Provision for loan losses 266 362 1,129 733 457
------------ ------------- ------------ ------------ ------------
Net interest income after
provision for loan losses 17,671 16,547 15,845 15,549 15,616

Security gains (losses) (1) 1,602 575 107 59 (223)
Other noninterest income 3,926 5,651 4,238 3,787 3,172
------------ ------------- ------------ ------------ ------------
Total noninterest income 5,528 6,226 4,345 3,846 2,949

Total noninterest expense 14,771 14,679 14,190 11,900 11,573
------------ ------------- ------------ ------------ ------------
Income before federal income taxes 8,428 8,094 6,000 7,495 6,992
Federal income tax expense 2,366 2,333 1,559 1,927 1,715
------------ ------------- ------------ ------------ ------------

Net income $ 6,062 $ 5,761 $ 4,441 $ 5,568 $ 5,277
============ ============= ============ ============ ============

Per share of common stock:
Net income $ 1.43 $ 1.35 $ 1.04 $ 1.31 $ 1.24
Dividends 1.15 1.11 1.07 1.02 .71
Book value 11.58 12.61 12.01 11.42 10.92

Average common shares outstanding 4,242,546 4,263,401 4,263,401 4,263,401 4,263,401

Year-end balances:
Loans, net $ 284,446 $ 278,782 $ 287,738 $ 260,023 $ 240,359
Securities 150,661 172,763 143,954 157,442 160,350
Total assets 472,220 508,889 484,118 455,909 446,819
Deposits 403,160 417,899 402,183 375,810 369,241
Borrowings 18,000 30,576 25,643 27,406 26,461
Shareholders' equity 48,195 53,741 51,199 48,688 46,563

20
23

YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----

Average balances:
Loans, net $ 279,649 $ 283,433 $ 276,508 $ 246,943 $ 234,324
Securities 163,134 155,715 151,245 159,830 158,402
Total assets 487,242 487,710 469,760 449,254 433,261
Deposits 409,665 403,488 389,065 371,179 356,213
Borrowings 20,525 26,805 25,808 26,448 25,931
Shareholders' equity 52,347 52,595 50,760 47,549 43,256

Selected ratios:
Net yield on average interest-
earning assets 3.89% 3.69% 3.84% 3.84% 3.91%
Return on average total assets 1.24 1.18 .95 1.24 1.22
Return on average shareholders'
equity 11.58 10.95 8.75 11.71 12.20
Average shareholders' equity
as a percent of average total
assets 10.74 10.78 10.81 10.58 9.98
Net loan charge-offs as a percent
of average loans .20 .17 .13 .15 .05
Allowance for loan losses as a percent
of loans at year-end 1.48 1.60 1.60 1.48 1.46
Shareholders' equity as a percent
of total year-end assets 10.21 10.56 10.58 10.68 10.42

(1) Other-than-temporary declines in the values of a security of $226,000 were
recorded during 1995. Partial recoveries of $10,000, $25,000, $214,000 and
$39,000 were received in 1999, 1998, 1997 and 1996.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION - AS OF DECEMBER 31, 1999 AND DECEMBER 31, 1998
AND FOR THE YEARS ENDING DECEMBER 31, 1999, 1998 AND 1997

GENERAL

The following paragraphs more fully discuss the significant highlights, changes
and trends as they relate to the Corporation's financial condition, results of
operations, liquidity and capital resources as of December 31, 1999 and 1998,
and during the three-year period ended December 31, 1999. This discussion should
be read in conjunction with the consolidated financial statements and notes to
consolidated financial statements, which are included elsewhere in this report.

FORWARD-LOOKING STATEMENTS

When used in this discussion or future filings by the Corporation with the
Securities and Exchange Commission, or other public or shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project," "believe" or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The Corporation
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, including regional and national economic
conditions, changes in levels of market interest rates, credit risks of lending
activities and competitive and regulatory factors, could affect the
Corporation's financial performance and could cause the Corporation's actual
results for future periods to differ materially from those anticipated or
projected.

21
24

The Corporation is not aware of any trends, events or uncertainties that will
have or are reasonably likely to have a material effect on its liquidity,
capital resources or operations except as discussed herein. The Corporation is
not aware of any current recommendations by regulatory authorities that would
have such effect if implemented.

The Corporation does not undertake, and specifically disclaims, any obligation
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect occurrence of anticipated or unanticipated
events or circumstances after the date of such statements.

FINANCIAL CONDITION

At December 31, 1999, total assets were $472,220,000 compared to $508,889,000 at
December 31, 1998. Net loans increased $5,664,000, or 2.0% from 1998 to 1999.
Commercial and agricultural loans increased $1,937,000, or 8.0% from 1998 to
total $26,077,000. Residential real estate loans increased by $5,088,000, or
2.9% from 1998 to 1999 to total $178,876,000. Consumer loans increased $616,000,
or 2.2% over 1998 to total $28,105,000. Credit card and other loans, which
include overdraft protection (ODP) lines of credit, increased $2,149,000 from
1998 to total $3,575,000.

In 1998, the Banks became involved in selling fixed-rate mortgages on the
secondary market. In 1999, due to rising interest rates, demand began to shift
to our three-year variable loans. As the demand for variable-rate loans
increased and demand for fixed-rate loans decreased, we started to retain more
loans and sell fewer loans. In addition to the $5,088,000 increase in mortgage
loans, the Corporation originated mortgage loans held for sale totaling
$10,041,000 in 1999.

Many commercial loans and lines of credit are cyclical, depending on the type of
business. However, additional calling and marketing efforts have been made in
the commercial loan area to increase the Corporation's share of the commercial
market.

While year-end 1999 deposit balances declined from 1998, average deposit
balances for 1999 were $409,665,000 compared to $403,488,000 for 1998, an
increase of $6,177,000, or 1.5%. Deposit growth has been limited as a result of
increased competition for deposit dollars from traditional and nontraditional
financial service providers and increasingly sophisticated consumers using
alternatives to traditional banking deposits. Noninterest-bearing deposits
averaged $39,123,000 for 1999 compared to $36,327,000 for 1998, increasing
$2,796,000, or 7.7%. Savings, NOW, and MMIA accounts averaged $164,246,000 for
1999 compared to $155,080,000 for 1998. Average time deposits decreased
$5,785,000 to total an average balance of $206,296,000 for 1999.

Borrowings from the Federal Home Loan Bank of Cincinnati decreased from
$13,235,000 at December 31, 1998 to $1,959,000 at December 31, 1999. This
decrease of $11,276,000 was a result of scheduled paydowns, including balloon
payments in February and April of 1999 on previous advances. The Corporation had
no new advances from the Federal Home Loan Bank in 1999.

The Banks offer repurchase agreements in the form of sweep accounts to
commercial checking account customers. At December 31, 1999, total repurchase
agreements in the form of sweep accounts totaled $12,975,000. This compares to
$16,370,000 at December 31, 1998. United States Treasury Notes maintained under
the Banks' control are pledged as collateral for the repurchase agreements.

Securities decreased $22,102,000, or 12.8% from $172,763,000 on December 31,
1998 to $150,661,000 on December 31, 1999. Municipal securities decreased
$1,920,000, or 3.5% from 1998 to 1999. Other securities decreased $13,281,000,
or 27.7% from 1998 to 1999. Securities decreased due to sales of equity
securities and principal paydowns of mortgage-backed securities. Securities were
allowed to mature without being replaced as an alternative to pursuing higher
priced deposits during a period of slower loan demand.

22
25

Securities held to maturity at December 31, 1999 had unrealized gains of
approximately $2,000 and unrealized losses of less than $1,000. Since management
intends to hold this portion of the portfolio to maturity, the unrealized gains
and losses have no impact on operations of the Corporation. Securities available
for sale had an estimated fair value at December 31, 1999 of $150,255,000. This
fair value includes unrealized gains of approximately $1,885,000 and unrealized
losses of approximately $2,182,000. Equity securities consisting of common stock
accounted for $1,501,000 in unrealized gains on securities. The net effect of
the unrealized gains and losses on securities available for sale, net of taxes,
was a reduction to shareholders' equity of $196,000, compared to an increase in
equity of $3,672,000 at December 31, 1998. The change is due to realizing gains
from the sales of equity securities and market value declines in the security
portfolio due to interest rates increasing during 1999.

Mortgage-backed securities totaled $13,839,000 at December 31, 1999 and none are
considered unusual or "high risk" securities as defined by regulating
authorities. Of this total, $4,588,000 are pass-through securities issued by the
Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage
Corporation (FHLMC); $9,220,000 are collateralized mortgage obligations (CMOs)
and real estate mortgage investment conduits (REMICs) issued by FNMA and FHLMC;
and $31,000 are privately issued and are collateralized by mortgage-backed
securities issued or guaranteed by FNMA, FHLMC, or Government National Mortgage
Association (GNMA). The average interest rate of the portfolio at December 31,
1999 was 5.89%. Also, 1.19% of the December 31, 1999 portfolio, or $167,000 are
floating rate securities adjusting at least quarterly. The average maturity at
December 31, 1999 was approximately 2.25 years. The Corporation has not invested
in any derivative securities.

Total shareholders' equity decreased $5,546,000, or 10.3% during 1999 to
$48,195,000. The ratio of total shareholders' equity to total assets was 10.2%
in 1999 and 10.6% in 1998. The decline was caused by repurchase of the
Corporation's common stock and decline in fair value of securities available for
sale.

RESULTS OF OPERATIONS

The operating results of the Corporation are affected by general economic
conditions, the monetary and fiscal policies of federal agencies and the
regulatory policies of agencies that regulate financial institutions. The
Corporation's cost of funds is influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
influenced by the demand for real estate loans, and other types of loans, which
in turn is affected by the interest rates at which such loans are made, general
economic conditions and the availability of funds for lending activities.

The Corporation's net income primarily depends on its net interest income, which
is the difference between the interest income earned on interest-earning assets,
such as loans and securities, and interest expense incurred on interest-bearing
liabilities, such as deposits and borrowings. The level of net interest income
is dependent on the interest rate environment and the volume and composition of
interest-earning assets and interest-bearing liabilities. Net income is also
affected by provisions for loan losses, service charges, gains on the sale of
assets, other income, noninterest expense and income taxes.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 AND
DECEMBER 31, 1998

NET INCOME

The Corporation's net income for the year ended December 31, 1999 was $6,062,000
compared to $5,761,000 for the year ended December 31, 1998, an increase of
$301,000, or 5.2%. The increase in net income was the result of the items
discussed in the following sections.

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NET INTEREST INCOME

Net interest income for 1999 was $17,937,000, an increase of $1,028,000, or 6.1%
from 1998. The change in the net interest income for 1999 was the net result of
a decrease in interest income of $1,137,000 and a decrease in interest expense
of $2,165,000.

Total interest income decreased $1,137,000, or 3.3% for 1999 compared to
$34,204,000 for 1998. This decrease in interest income can be attributed to a
decrease in the rate on earning assets from 7.47% in 1998 to 7.16% in 1999. The
effects of the decrease in rate were partially offset by an increase in the
average interest-earning assets from $462,584,000 to $464,278,000 from 1998 to
1999.

Total interest expense decreased $2,165,000, or 12.5% for 1999 compared to
$17,295,000 in 1998. The decrease in interest expense can be attributed to a
decrease in average interest-bearing liabilities from $393,966,000 to
$391,067,000, or $2,899,000 from 1998 to 1999, as well as a decrease in the rate
on interest-bearing liabilities from 4.39% to 3.87%.

Refer to "Distribution of Assets, Liabilities and Shareholders' Equity, Interest
Rates and Interest Differential" and "Changes in Interest Income and Interest
Expense Resulting from Changes in Volume and Changes in Rate" for further
analysis of the impact of changes in interest-bearing assets and liabilities on
the Corporation's net interest income.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

The following table contains information relating to the provision for loan
losses, activity in and analysis of the allowance for loan losses for the
three-year period ended December 31, 1999.

AS OF AND FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------
1999 1998 1997
---- ---- ----

Net loan charge-offs $ 559,000 $ 502,000 $ 357,000

Provision for loan losses charged to expense 266,000 362,000 1,129,000
Net loan charge-offs as a percent of average
outstanding loans .20% .17% .13%

Allowance for loan losses $ 4,274,000 $ 4,567,000 $ 4,707,000
Allowance for loan losses as a percent
of year-end outstanding loans 1.48% 1.60% 1.60%
Allowance for loan losses as a percent
of impaired loans 102.74 109.81 106.13

Impaired loans $ 4,160,000 $ 4,159,000 $ 4,435,000
Impaired loans as a percent of gross
year-end loans 1.44% 1.46% 1.51%
Nonaccrual and 90 days or more past due loans
as a percent of gross year-end loans .87 1.03 1.25

The Corporation's policy is to maintain the allowance for loan losses at a level
to provide for probable losses. Management's periodic evaluation of the adequacy
of the allowance is based on past loan loss experience, known and inherent risks
in the portfolio, adverse situations that may affect the borrower's ability to
repay, the estimated value of any underlying collateral and current economic
conditions.

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The provision for loan losses declined by $96,000 in 1999 from $362,000 in 1998
to $266,000 in 1999. Efforts are continually made to examine both the level and
mix of the reserve by loan type as well as the overall level of the reserve.

Loans are considered impaired if full principal or interest payments are not
anticipated. Impaired loans are carried at the present value of expected cash
flows discounted at the loan's effective interest rate or at the fair value of
collateral if the loan is collateral dependent. A portion of allowance for loan
losses is allocated to impaired loans.

Management analyzes commercial and commercial real estate loans on an individual
basis and classifies a loan as impaired when an analysis of the borrower's
operating results and financial condition indicates that underlying cash flows
are not adequate to meet its debt service requirements. Often this is associated
with a delay or shortfall in payments of 90 days or more. Smaller-balance
homogeneous loans are evaluated for impairment in total. Such loans include
residential first mortgage loans secured by one- to four-family residences,
residential construction loans and consumer automobile, boat, home equity and
credit card loans. In addition, loans held for sale and leases are excluded from
consideration as impaired. Loans are generally moved to nonaccrual status when
90 days or more past due. These loans are also often considered impaired.
Impaired loans, or portions thereof, are charged-off when deemed uncollectible.

NONINTEREST INCOME

Noninterest income totaled $5,528,000 in 1999 compared to $6,226,000 in 1998.
Income from the data processing and computer services division totaled
$1,216,000 for 1999, a 61.7% decrease from 1998 income of $3,174,000. The loss
in revenue is related to the sale of SCC Resources' data processing contracts to
Jack Henry & Associates, Inc. (JHA). First, there was no gain from sale of
contracts in 1999. The Corporation recognized a gain of $1,534,000 from the sale
of SCC Resources' data processing contracts in 1998. Second, as the banks
serviced by SCC Resources converted processing to JHA, the revenue stream
associated with their data processing ended. SCC Resources still provides item
processing services for 10 financial institutions plus the three subsidiary
banks.

Service charges on deposit accounts totaled $1,053,000 in 1999, an increase of
$95,000, or 9.9% over 1998 income of $958,000. Additional services and account
features have been introduced to generate increased noninterest income from the
deposit accounts of the Banks. In addition, the Banks began to review service
charges on all products and services to ensure reasonable compensation for the
services provided. Some of the fee changes were in place by the end of 1999,
with the remaining changes scheduled for completion by the first quarter of
2000.

For 1999, the Corporation received $10,000 in payments against an investment
security previously written off. As a result of the filing of bankruptcy by the
Towers Financial Corporation (parent company) in 1993, the Corporation
determined that an other-than-temporary decline in the value of Tower Healthcare
Receivables Corp. bonds had occurred. Accordingly, a $700,000 writedown in the
cost of those bonds was made in 1993, and a writedown of $226,000 was made in
1995. The carrying value of these securities was $0 at December 31, 1999 and
1998.

In addition, during 1999, the Corporation recognized gains from calls of
securities of $9,000 and $1,583,000 from the sales of securities available for
sale, of which the majority was from the sales of equity securities at Farmers.
The Corporation decided to take advantage of significant increases in the market
values and sell a portion of the portfolio. At December 31, 1999 the fair market
value of Farmers' equity portfolio totaled $2,528,000 with an amortized cost of
$1,028,000.

Other noninterest income totaled $1,461,000 in 1999 compared to $1,284,000 in
1998. Increases in other noninterest income are a result of additional products
and services introduced to generate noninterest income which include the
following areas. Brokerage fees increased $20,000 in 1999 due to increased

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volume. The Corporation added three additional ATMs in 1999. The additional
volume of the new ATMs, combined with an ATM surcharge originally instituted in
January 1997, led to an increase in fee income of $26,000. The increase in the
number of credit card merchants, led to an increase in fee income of $126,000.

NONINTEREST EXPENSE

Noninterest expense totaled $14,771,000 in 1999, an increase of $92,000, or 0.6%
over 1998. The following discussion highlights the significant items that
resulted in increases or decreases in the components of noninterest expense.

Salaries, wages and benefits totaled $6,908,000 in 1999 compared to $7,167,000
in 1998 for a decrease of $259,000. The decrease is primarily due to having
fewer employees resulting from the sale of SCC Resources' data processing
contracts to JHA.

Net occupancy expense totaled $754,000 in 1999 compared to $933,000 in 1998.
Equipment expense totaled $865,000 in 1999 compared to $784,000 in 1998. The
decrease in occupancy expense and the increase in equipment expense are
primarily related to the sale of SCC Resources' data processing contracts.

FDIC premiums totaled $48,000 in 1999 compared to $161,000 in 1998. The decrease
in FDIC premiums of $113,000 from 1998 to 1999 is a result of a change in the
FDIC rating at Farmers for a six-month period in 1998.

State of Ohio Franchise taxes were $587,000 in 1999 compared to $657,000 in
1998. The franchise taxes are based on the capital positions of the Banks.
Castalia and Farmers paid special dividends to First Citizens at the end of 1998
thus, reducing franchise tax expense. These were used to continue the current
dividend policy of the Corporation, as well as provide funding for possible
stock repurchases.

Professional fees represent legal, audit and outside consulting fees paid by the
Corporation. Professional fees totaled $896,000 in 1999 compared to $911,000 in
1998. The overall decrease in professional fees is due to the absence of fees
associated with the purchase of Farmers, partially offset by increased advisor
fees. The increase in advisor fees can be attributed to the conversion of data
processing systems as well as preparation for the Year 2000 date change.

Amortization of intangible assets remained constant from 1998 to 1999 at
$336,000.

Data processing expense was $465,000 in 1999 and relates to data processing
services provided by JHA. Prior to 1999, SCC Resources provided this service to
the Banks. This expense would have been reflected in salaries, wages and
benefits, net occupancy expense and equipment expense in prior years.

Other operating expenses totaled $3,912,000 in 1999 compared to $3,729,000 in
1998. Increased expenditures in advertising, marketing, and employee education
and training in customer service and cross selling make up the $183,000 increase
in 1999.

INCOME TAX EXPENSE

Income before federal income taxes amounted to $8,428,000 in 1999 and $8,094,000
in 1998. The Corporation's effective income tax rate was 28.1% in 1999 compared
to 28.8% in 1998.

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COMPARISON OF RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 AND
DECEMBER 31, 1997

NET INCOME

The Corporation's net income for the year ended December 31, 1998 was $5,761,000
compared to $4,441,000 for the year ended December 31, 1997, an increase of
$1,320,000, or 29.7%. The increase in net income was mainly the result of the
gain on the sale of SCC's data processing contracts. Other factors are explained
below.

NET INTEREST INCOME

Net interest income for 1998 was $16,909,000, a decrease of $65,000, or 0.4%
from 1997. The change in net interest income for 1998 was the net result of an
increase in interest income of $555,000 and an increase in interest expense of
$620,000.

Total interest income increased $555,000, or 1.6% from 1997 to 1998. This
increase in interest income can be attributed to an increase in average
interest-earning assets from $443,231,000 to $462,584,000, or 4.4% between 1997
and 1998. The increase in net volume of average interest-earning assets offset a
decrease in the average yield on interest-earning assets of 15 basis points from
7.62% in 1997 to 7.47% in 1998.

Total interest expense increased $620,000, or 3.7% from 1997 to 1998. The
increase in interest expense can be attributed to an increase in average
interest-bearing liabilities from $379,634,000 to $393,966,000, or 3.8% from
1997 to 1998.

Refer to "Distribution of Assets, Liabilities and Shareholders' Equity, Interest
Rates and Interest Differential" and "Changes in Interest Income and Interest
Expense Resulting from Changes in Volume and Changes in Rate" for further
analysis of the impact of changes in interest-bearing assets and liabilities on
the Corporation's net interest income.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

The provision for loan losses declined by $767,000 from 1997 to $362,000 for
1998. The larger provision in the prior year was primarily related to Farmers.
In 1997, Farmers experienced significant growth in the balance of loans
outstanding. During this period, Farmers operated without the benefit of a
formal loan policy and credit underwriting decisions and loan collateral
perfection was not always well documented. As a part of the Corporation's due
diligence procedures related to the acquisition of Farmers and also as a part of
regulatory examinations conducted at Farmers, concerns were raised regarding
certain lending procedures. Farmers' management responded by retaining an
outside consultant to assist in reviewing and risk-grading a significant volume
of new loan originations. Based on the results of this evaluation, Farmers
increased its provision for loan losses. Since that time, management of Farmers
has implemented a new loan policy that provides credit underwriting criteria and
has aggressively worked to improve the loan file documentation and the Bank's
collateral position for many of the loans originated in 1997. As a result of
these improvement efforts, the 1998 provision for loan losses declined.

NONINTEREST INCOME

Noninterest income totaled $6,226,000 in 1998 compared to $4,345,000 in 1997.
Income from the data processing and computer services division totaled
$3,174,000 for 1998, a 44.9% increase over 1997 income of $2,191,000. The
increase in revenue is attributed to a gain of $1,534,000 from the sale of SCC
Resources' data processing contracts in 1998, which offset the decreased data
processing fees. The Corporation also recognized gains of $550,000 on the sales
and calls of securities in 1998.

Service charges on deposit accounts totaled $958,000 in 1998, an increase of
$34,000, or 3.6% over 1997 income of $924,000. Additional services and account
features have been introduced to generate increased

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noninterest income from the deposit accounts of the Banks. In addition, service
charges are reviewed annually to ensure reasonable compensation for the services
provided.

For 1998, the Corporation received $25,000 in payments against an investment
security previously written off. As a result of the filing of bankruptcy by the
Towers Financial Corporation (parent company) in 1993, the Corporation
determined that an other-than-temporary decline in the value of Tower Healthcare
Receivables Corp. bonds had occurred. Accordingly, a $700,000 writedown in the
cost of those bonds was made in 1993, and a writedown of $226,000 was made in
1995. The carrying value of these securities was $0 at December 31, 1998 and
1997.

Net gains on sales of loans increased from $61,000 in 1997 to $235,000 in 1998
primarily due to increased emphasis on and involvement in selling fixed rate
mortgages on the secondary market.

Other noninterest income totaled $1,284,000 in 1998 compared to $1,062,000 in
1997. Increases in other noninterest income are a result of additional products
and services introduced to generate noninterest income, which include the
following areas: Brokerage fees, ATM fee income and Credit Card Merchant fees.
Brokerage fees increased $29,000 in 1998 due to increased volume. The
Corporation added two additional ATMs in 1998. The additional volume of the new
ATMs, combined with an ATM surcharge originally instituted in January of 1997,
led to an increase in fee income of $26,000.

NONINTEREST EXPENSE

Noninterest expense totaled $14,679,000 in 1998, an increase of $489,000, or
3.4% over 1997. The following discussion highlights the significant items that
resulted in increases or decreases in the components of noninterest expense.

Salaries, wages and benefits totaled $7,167,000 in 1998 compared to $7,074,000
in 1997, for an increase of $93,000.

Net occupancy expense totaled $933,000 in 1998 compared to $661,000 in 1997.
Equipment expense totaled $784,000 in 1998 compared to $861,000 in 1997. The
increase in occupancy expense and the decrease in equipment expense can be
attributed to two factors. First, in 1998, the Corporation reclassified certain
assets from equipment to building. Also in 1998, Farmers made adjustments to
their building depreciation and equipment depreciation to more accurately
reflect the life of these assets.

FDIC premiums totaled $161,000 in 1998 compared to $48,000 in 1997. The increase
in FDIC premiums of $113,000 from 1997 to 1998 is a result of a change made by
the FDIC in the rating of Farmers for a six-month period in 1998.

State of Ohio Franchise taxes were $657,000 in 1998 compared to $631,000 in
1997. The franchise taxes are based on the capital positions of the Banks. The
current dividend policy of the Banks, combined with a lack of growth, results in
a relatively constant capital position of the Banks and hence little changes in
the amount of the franchise tax.

Professional fees represent legal, audit and outside consulting fees paid by the
Corporation. Professional fees totaled $911,000 in 1998 compared to $1,110,000
in 1997. Decreases in these fees represent the additional consulting costs
incurred in 1997 as a result of the acquisition of The Farmers State Bank of New
Washington, which was completed in April 1998.

Amortization of intangible assets remained almost constant from 1997 to 1998,
increasing from $326,000 to $336,000.

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Other operating expenses totaled $3,729,000 in 1998 compared to $3,479,000 in
1997 due to increased expenditures in advertising, marketing, and employee
education and training in customer service and cross selling.

INCOME TAX EXPENSE

Income before federal income taxes amounted to $8,094,000 in 1998 and $5,999,000
in 1997. The Corporation's effective income tax rate was 28.8% in 1998 compared
to 26.0% in 1997. The effective tax rate increased in 1998 due to the Banks
having less tax-exempt income on state and municipal securities and political
subdivision loans.

LIQUIDITY AND CAPITAL RESOURCES

The Banks maintain a conservative liquidity position. Liquidity is evidenced by
1999 year-end balances of $4,600,000 in federal funds sold and by approximately
$150,255,000 in securities available for sale. The Consolidated Statements of
Cash Flows contained in the consolidated financial statements detail the
Corporation's cash flows from operating activities resulting from net earnings.

Cash provided by operations for 1999 was $7,343,000. This includes net income of
$6,062,000 plus net adjustments of $1,281,000 to reconcile net earnings to net
cash provided by operations. Cash provided by investing activities was
$25,868,000 in 1999 which includes maturities, prepayments and sales of
securities and federal funds partially offset by new loans and security
purchases. Cash used in financing activities for 1999 totaled $35,056,000. This
includes the reduction in deposits, repayments of FHLB borrowings and the
payments of dividends. Cash used by financing activities exceeded cash generated
by operating activities and investing activities by $1,845,000, which resulted
in a decrease in cash and cash equivalents to $14,599,000.

Future loan demand of the Banks can be funded by proceeds from payments on
existing loans, the maturity of securities, the sale of securities classified as
available for sale and the use of excess funds invested in the federal funds
market. Additional sources of funds may also come from borrowing in the federal
funds market and/or borrowing from the Federal Home Loan Bank. On a separate
entity basis, the Corporation's only source of funds is dividends paid primarily
by the subsidiary Banks. The ability of the Banks to pay dividends is subject to
limitations under various laws and regulations, and to prudent and sound banking
principles. Generally, subject to applicable minimum capital requirements, the
Banks may declare a dividend without the approval of the State of Ohio
Department of Commerce, Division of Financial Institutions, provided the total
dividends in a calendar year do not exceed the total of its profits for that
year combined with its retained profits for the two preceding years. In 1999,
Citizens paid dividends of $2,600,000 to the Corporation. Also in 1999, Farmers
paid a special $941,000 dividend to the Corporation with the approval of the
State of Ohio Department of Commerce, Division of Financial Institutions. In
1998, Castalia paid a special $2,500,000 dividend to the Corporation. This
dividend was paid with the approval of the State of Ohio Division of Financial
Institutions and the Federal Reserve Bank. Also in 1998, Farmers paid a special
$2,000,000 dividend to the Corporation. Farmers' special dividend was not
subject to any approval because payment of such did not fall outside of the
requirements described above. The purpose of these dividends was to accumulate
cash at the Corporation to be used for general corporate purposes including the
possible repurchase of its common stock. The amount of unrestricted dividends
available to be paid by the Banks to the Corporation was approximately
$3,507,000 at December 31, 1999. Management believes the future earnings of the
Banks will be sufficient to support anticipated asset growth at the Banks and
provide funds to the Corporation to continue dividends at their current level.

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CAPITAL ADEQUACY

The Corporation's policy is, and always has been, to maintain its capital levels
above the minimum regulatory standards. Under the regulatory capital standards,
total capital has been defined as tier I (core) capital and tier II
(supplementary) capital. The Corporation's tier I capital includes shareholders'
equity (net of unrealized security gains) and tier II capital includes the
allowance for possible loan losses. The definition of assets has also been
modified to include items both on and off the balance sheet. Each item is then
assigned a risk weight or risk adjustment factor to determine ratios of capital
to risk adjusted assets. The standards require that total capital (tier I plus
tier II) be a minimum of 8% of risk adjusted assets, with at least 4% being in
tier I capital. The Corporation's ratios as of December 31, 1999 and 1998 were
18.7% and 18.8% respectively for total capital, and 17.3% and 17.4% respectively
for tier I capital.

Additionally, the Federal Reserve Board has adopted minimum leverage-capital
ratios. These standards were established to supplement the previously issued
risk based capital standards. The leverage ratio standards use the existing tier
I capital definition but the ratio is applied to average total assets instead of
risk adjusted assets. The standards require that tier I capital be a minimum of
4% of total average assets for high rated entities such as the Corporation. The
Corporation's leverage ratio was 9.6% and 9.5% at December 31, 1999 and 1998.

EFFECTS OF INFLATION

The Corporation's balance sheet is typical of financial institutions and
reflects a net positive monetary position whereby monetary assets exceed
monetary liabilities. Monetary assets and liabilities are those which can be
converted to a fixed number of dollars and include cash assets, securities,
loans, money market instruments, deposits and borrowed funds.

During periods of inflation, a net positive monetary position may result in an
overall decline in purchasing power of an entity. No clear evidence exists of a
relationship between the purchasing power of an entity's net positive monetary
position and its future earnings. Moreover, the Corporation's ability to
preserve the purchasing power of its net positive monetary position will be
partly influenced by the effectiveness of its asset/liability management
program. Management does not believe that the effect of inflation on its
nonmonetary assets (primarily bank premises and equipment) is material as such
assets are not held for resale and significant disposals are not anticipated.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Corporation disclosed the estimated fair value of its financial instruments
at December 31, 1999 and 1998 in Note 14 to the consolidated financial
statements. The fair value of the Corporation's financial instruments generally
decreased relative to their carrying values in 1999 as a result of an increase
in the general level of interest rates. The fair value of loans at December 31,
1999 was 94.5% of the carrying value compared to 101.3% at December 31, 1998.
The fair value of deposits at December 31, 1999 was 99.9% of the carrying value,
compared to 99.2% at December 31, 1998.

YEAR 2000

The Corporation formed Year 2000 (Y2K) Health Check Teams to be on hand January
1, 2000 to establish that all systems were in working order after the new year
date change. The teams consisted of employees representing each company,
department and branch. A checklist procedure was developed for each affiliate
company to follow so that the following areas would be tested and signed-off
that each was Y2K compliant: Facilities, Network Servers, Security, Hardware and
Software. A training class was held late in December 1999 to go over the
checklist and the procedures for verifying Y2K compliance. On January 1, 2000,
as each team finished their checklist, they signed-off and reported to a central
location that all was well. There were no significant problems caused by the
date change and all offices opened for business, providing full services to our
customers on Monday, January 3, 2000.

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ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Corporation's primary market risk exposure is interest-rate risk and, to a
lesser extent, liquidity risk. All of the Corporation's transactions are
denominated in U.S. dollars with no specific foreign exchange exposure.

Interest-rate risk (IRR) is the exposure of a banking organization's financial
condition to adverse movements in interest rates. Accepting this risk can be an
important source of profitability and shareholder value. However, excessive
levels of IRR can pose a significant threat to the Corporation's earnings and
capital base. Accordingly, effective risk management that maintains IRR at
prudent levels is essential to the Corporation's safety and soundness.

Evaluating a financial institution's exposure to changes in interest rates
includes assessing both the adequacy of the management process used to control
IRR and the organization's quantitative level of exposure. When assessing the
IRR management process, the Corporation seeks to ensure that appropriate
policies, procedures, management information systems and internal controls are
in place to maintain IRR at prudent levels with consistency and continuity.
Evaluating the quantitative level of IRR exposure requires the Corporation to
assess the existing and potential future effects of changes in interest rates on
its consolidated financial condition, including capital adequacy, earnings,
liquidity and, where appropriate, asset quality.

The Federal Reserve Board, together with the Office of the Comptroller of the
Currency and the Federal Deposit Insurance Corporation, adopted a Joint Agency
Policy Statement on interest-rate risk, effective June 26, 1996. The policy
statement provides guidance to examiners and bankers on sound practices for
managing interest-rate risk, which will form the basis for ongoing evaluation of
the adequacy of interest-rate risk management at supervised institutions. The
policy statement also outlines fundamental elements of sound management that
have been identified in prior Federal Reserve guidance and discusses the
importance of these elements in the context of managing interest-rate risk.
Specifically, the guidance emphasizes the need for active board of director and
senior management oversight and a comprehensive risk-management process that
effectively identifies, measures, and controls interest-rate risk. Financial
institutions derive their income primarily from the excess of interest collected
over interest paid. The rates of interest an institution earns on its assets and
owes on its liabilities generally are established contractually for a period of
time. Since market interest rates change over time, an institution is exposed to
lower profit margins (or losses) if it cannot adapt to interest-rate changes.
For example, assume that an institution's assets carry intermediate- or
long-term fixed rates and that those assets were funded with short-term
liabilities. If market interest rates rise by the time the short-term
liabilities must be refinanced, the increase in the institution's interest
expense on its liabilities may not be sufficiently offset if assets continue to
earn at the long-term fixed rates. Accordingly, an institution's profits could
decrease on existing assets because the institution will have either lower net
interest income or, possibly, net interest expense. Similar risks exist when
assets are subject to contractual interest-rate ceilings, or rate sensitive
assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate
environment.

Several techniques may be used by an institution to minimize interest-rate risk.
One approach used by the Corporation is to periodically analyze its assets and
liabilities and make future financing and investment decisions based on payment
streams, interest rates, contractual maturities, and estimated sensitivity to
actual or potential changes in market interest rates. Such activities fall under
the broad definition of asset/liability management. The Corporation's primary
asset/liability management technique is the measurement of the Corporation's
asset/liability gap, that is, the difference between the cash flow amounts of
interest sensitive assets and liabilities that will be refinanced (or repriced)
during a given period. For example, if the asset amount to be repriced exceeds
the corresponding liability amount for a certain day, month, year, or longer
period, the institution is in an asset sensitive gap position. In this
situation, net interest income would increase if market interest rates rose or
decrease if market interest rates fell. If, alternatively, more liabilities than
assets will reprice, the institution is in a liability sensitive position.
Accordingly, net interest income would decline when rates rose and increase when
rates fell.

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Also, these examples assume that interest rate changes for assets and
liabilities are of the same magnitude, whereas actual interest rate changes
generally differ in magnitude for assets and liabilities.

Several ways an institution can manage interest-rate risk include selling
existing assets or repaying certain liabilities; matching repricing periods for
new assets and liabilities, for example, by shortening terms of new loans or
securities; and hedging existing assets, liabilities, or anticipated
transactions. An institution might also invest in more complex financial
instruments intended to hedge or otherwise change interest-rate risk. Interest
rate swaps, futures contracts, options on futures, and other such derivative
financial instruments often are used for this purpose. Because these instruments
are sensitive to interest rate changes, they require management expertise to be
effective. Financial institutions are also subject to prepayment risk in falling
rate environments. For example, mortgage loans and other financial assets may be
prepaid by a debtor so that the debtor may refund its obligations at new, lower
rates. The Corporation has not purchased derivative financial instruments in the
past and does not intend to purchase such instruments in the near future.
Prepayments of assets carrying higher rates reduce the Corporation's interest
income and overall asset yields. A large portion of an institution's liabilities
may be short term or due on demand, while most of its assets may be invested in
long term loans or securities. Accordingly, the Corporation seeks to have in
place sources of cash to meet short term demands. These funds can be obtained by
increasing deposits, borrowing, or selling assets. Also, FHLB advances and
wholesale borrowings may also be used as important sources of liquidity for the
Corporation.

The following table provides information about the Corporation's financial
instruments that are sensitive to changes in interest rates as of December 31,
1999 and 1998, based on the information and assumptions set forth in the notes.
The Corporation believes that the assumptions utilized, which are based on
statistical data provided by a federal regulatory agency in the Corporation's
market area, are reasonable. The Corporation had no derivative financial
instruments or trading portfolio as of December 31, 1999 or 1998. Expected
maturity date values for interest-bearing core deposits were calculated based on
estimates of the period over which the deposits would be outstanding as set
forth in the notes. From a risk management perspective, the Corporation believes
that repricing dates for adjustable-rate instruments, as opposed to expected
maturity dates, may be a more relevant measure in analyzing the value of such
instruments. The Corporation's borrowings were tabulated by contractual maturity
dates and without regard to any conversion or repricing dates.

32
35

DECEMBER 31, 1999

On-Balance-Sheet Financial Instruments (Dollars in thousands)

2000 2001 2002 2003 2004 Thereafter Total Fair value
---- ---- ---- ---- ---- ---------- ----- ----------

Interest-earning assets:
Loans receivable(1)(2)
Fixed rate $ 12,781 $ 5,497 $ 11,427 $ 11,884 $ 23,392 $ 89,805 $154,786 $147,861
Avg. int. rate 8.24% 9.84% 8.85% 8.89% 8.19% 7.77% 8.11%

Adj. rate $ 12,604 $ 1,402 $ 1,956 $ 1,591 $ 1,938 $115,533 $135,024 $126,370
Avg. int. rate 9.25% 8.55% 8.53% 7.72% 8.06% 7.53% 7.73%

Mortgage-backed
securities(3)
Fixed rate $ 1,439 $ 462 $ 898 $ 10,873 $ 13,672 $ 13,673
Avg. int. rate 5.50% 6.00% 6.00% 5.93% 5.89%

Adj. rate $ 168 $ 168 $ 168
Avg. int. rate 6.06% 6.06%

Securities(4) $ 28,465 $ 26,252 $ 22,152 $ 25,626 $ 8,975 $ 25,352 $136,822 $136,822
Avg. int. rate 5.78% 6.36% 6.23% 5.69% 5.96% 5.55% 5.90%

Fed funds sold 4,600 $ 4,600 $ 4,600
Avg. int. rate 5.50% 5.50%

Interest-bearing
deposit $ 51 $ 51 $ 51
Avg. int. rate 5.88% 5.88%

Total $ 58,501 $ 33,151 $ 36,974 $ 39,563 $ 35,203 $241,731 $445,123 $429,545

Interest-bearing liabilities:
Interest-bearing
deposits and
escrows(5) $195,688 $ 65,825 $ 39,213 $ 20,890 $ 356 $ 40,942 $362,914 $362,873
Avg. int. rate 4.27% 3.98% 3.54% 2.79% 4.64% 1.76% 3.77%

Borrowings $ 16,600 $ 592 $ 625 $ 183 $ 18,000 $ 17,959
Avg. int. rate 4.53% 5.61% 5.61% 5.58% 4.62%

Total $212,288 $ 66,417 $ 39,838 $ 21,073 $ 356 $ 40,942 $380,914 $380,832

33
36

DECEMBER 31, 1998

On-Balance-Sheet Financial Instruments (Dollars in thousands)

1999 2000 2001 2002 2003 Thereafter Total Fair Value
---- ---- ---- ---- ---- ---------- ----- ----------

Interest-earning assets:
Loans receivable(1)(2)
Fixed rate $ 24,549 $ 17,327 $ 14,705 $ 14,533 $ 8,895 $ 57,471 $137,480 $137,825
Avg. int. rate 8.79% 8.74% 8.49% 8.21% 8.37% 7.83% 8.26%

Adj. rate $ 8,524 $ 3,937 $ 1,157 $ 1,530 $ 1,656 $130,447 $147,251 $150,477
Avg. int. rate 8.61% 8.27% 8.10% 8.11% 7.89% 7.59% 7.68%

Mortgage-backed
securities(3)
Fixed rate 197 $ 1,959 $ 658 $ 17,743 $ 20,557 $ 20,563
Avg. int. rate 6.63% 5.50% 6.00% 6.03% 5.27%

Adj. rate $ 217 $ 217 $ 217
Avg. int. rate 6.29% 6.29%

Securities(4) $ 27,140 $ 24,911 $ 26,078 $ 19,298 $ 17,608 $ 36,954 $151,989 $151,997
Avg. int. rate 6.39% 6.33% 6.33% 6.29% 5.51% 5.44% 6.02%

Fed funds sold 19,950 $ 19,950 $ 19,950
Avg. int. rate 5.40% 5.40%

Total $ 80,360 $ 46,175 $ 41,940 $ 37,320 $ 28,817 $242,832 $477,444 $481,029

Interest-bearing liabilities:
Interest-bearing
deposits and
escrows(5) $213,024 $ 58,972 $ 42,072 $ 20,189 $ 744 $ 44,324 $379,325 $376,038
Avg. int. rate 4.63% 3.95% 3.31% 3.80% 5.81% 1.77% 4.00%

Borrowings $ 28,618 $ 559 $ 591 $ 625 $ 183 $ 30,576 $ 30,576
Avg. int. rate 4.73% 5.74% 5.81% 6.15% 7.46% 4.81%

Total $241,642 $ 59,531 $ 42,663 $ 20,814 $ 927 $ 44,324 $409,901 $406,614

Market Risk Disclosure Footnotes

(1) Net of undisbursed loan proceeds and does not include net deferred loan fees
or allowance for loan losses. (2) Substantially all of the Corporation's
adjustable rate loans reprice on an annual basis based on either the
National Average Contract Rate for Major Lenders on Previously Occupied
Homes or Federal National Mortgage Association's 6/2 rate capped one-year
adjustable rate.
(3) Substantially all of the Corporation's adjustable rate mortgage-backed
securities reprice on a monthly basis based on changes in the three-month
LIBOR index.
(4) Totals include the Corporation's investment in equity securities.
(5) For passbook and statement savings accounts, assumes an annual decay rate
of 31% for year one, 29% for year two, 23% for year three and 17% for year
four.

34
37

[CROWE CHIZEK LOGO]

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
First Citizens Banc Corp
Sandusky, Ohio

We have audited the accompanying consolidated balance sheets of First Citizens
Banc Corp as of December 31, 1999 and 1998, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First Citizens Banc
Corp as of December 31, 1999 and 1998, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles.

/s/ Crowe, Chizek and Company LLP

Crowe, Chizek and Company LLP

Columbus, Ohio
January 28, 2000

35
38

FIRST CITIZENS BANC CORP
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998

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

1999 1998
---- ----
ASSETS

Cash and due from financial institutions $ 14,598,566 $ 16,443,613
Federal funds sold 4,600,000 19,950,000
Interest-bearing deposits 51,031 248,282
Securities available for sale 150,254,933 171,952,700
Securities held to maturity (Estimated fair values of
$407,765 in 1999 and $823,632 in 1998) 406,108 810,122
Loans held for sale 2,217,250 2,273,509
Loans, net 284,446,025 278,782,075
Premises and equipment, net 7,457,886 7,363,513
Accrued interest receivable 3,680,082 3,717,568
Intangible assets 2,197,916 2,533,963
Other assets 2,310,260 4,813,518
----------------- -----------------

Total assets $ 472,220,057 $ 508,888,863
================= =================

LIABILITIES
Deposits
Noninterest-bearing $ 40,246,502 $ 38,574,055
Interest-bearing 362,913,881 379,325,190
----------------- -----------------
Total deposits 403,160,383 417,899,245
Federal Home Loan Bank advances 1,958,960 13,235,165
Securities sold under repurchase agreements 12,975,188 16,369,681
U.S. Treasury interest-bearing demand note payable 3,065,681 971,558
Accrued expenses and other liabilities 2,865,057 6,672,283
----------------- -----------------
Total liabilities 424,025,269 455,147,932
----------------- -----------------

SHAREHOLDERS' EQUITY
Common stock, no par value, 10,000,000 shares authorized,
4,263,401 shares issued 23,257,520 23,257,520
Retained earnings 28,010,371 26,811,264
Treasury Stock, 100,586 shares at cost (2,877,032) --
Accumulated other comprehensive income (loss) (196,071) 3,672,147
----------------- -----------------
Total shareholders' equity 48,194,788 53,740,931
----------------- -----------------

Total liabilities and shareholders' equity $ 472,220,057 $ 508,888,863
================= =================

See accompanying notes to consolidated financial statements.

36

39

FIRST CITIZENS BANC CORP
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 1999, 1998 and 1997

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

1999 1998 1997
---- ---- ----
INTEREST AND DIVIDEND INCOME

Loans, including fees $ 23,407,541 $ 24,357,161 $ 24,015,061
Taxable securities 6,644,790 6,751,399 6,820,602
Tax-exempt securities 2,305,993 2,093,206 2,166,143
Federal funds sold 627,370 943,431 582,845
Other 81,225 58,739 64,361
--------------- --------------- ----------------
33,066,919 34,203,936 33,649,012
INTEREST EXPENSE
Deposits 14,196,629 15,909,096 15,247,451
Federal Home Loan Bank advances 253,925 797,265 866,482
Other 678,972 588,874 561,067
--------------- --------------- ----------------
15,129,526 17,295,235 16,675,000
--------------- --------------- ----------------

NET INTEREST INCOME 17,937,393 16,908,701 16,974,012

Provision for loan losses 266,443 361,886 1,129,468
--------------- --------------- ----------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 17,670,950 16,546,815 15,844,544
--------------- --------------- ----------------

NONINTEREST INCOME
Computer center data and item processing fees 1,215,507 1,640,275 2,191,004
Gain on sale of data processing contracts -- 1,534,120 --
Service charges 1,052,646 957,573 923,957
Net gains on sale of securities 1,601,924 574,981 107,057
Net gains on sale of loans 197,446 234,973 61,317
Other 1,461,188 1,284,273 1,062,015
--------------- --------------- ----------------
5,528,711 6,226,195 4,345,350

NONINTEREST EXPENSE
Salaries, wages and benefits 6,908,328 7,167,285 7,074,025
Net occupancy expense 754,360 933,377 661,157
Equipment expense 864,745 784,206 860,983
Federal deposit insurance premiums 48,320 160,812 47,950
State franchise tax 586,802 657,283 631,061
Professional services 895,666 910,867 1,109,808
Amortization of intangible assets 336,048 336,048 326,048
Contracted data processing 464,837 -- --
Other operating expenses 3,912,310 3,729,109 3,479,379
--------------- --------------- ----------------
14,771,416 14,678,987 14,190,411
--------------- --------------- ----------------

Income before income taxes 8,428,245 8,094,023 5,999,483
Income tax expense 2,366,076 2,333,356 1,558,939
--------------- --------------- ---------------

NET INCOME $ 6,062,169 $ 5,760,667 $ 4,440,544
=============== =============== ===============

EARNINGS PER COMMON SHARE $ 1.43 $ 1.35 $ 1.04
=============== =============== ===============

See accompanying notes to consolidated financial statements.

37

40

FIRST CITIZENS BANC CORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended December 31, 1999, 1998 and 1997

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

Accumulated
Other Total
Common Stock Retained Treasury Comprehensive Shareholders'
Shares Amount Earnings Stock Income Equity
------ ------ -------- ----- ------ ------

Balance,
January 1, 1997 4,263,401 $ 23,257,520 $ 24,619,419 $ -- $ 811,399 $ 48,688,338

Comprehensive income:
Net income 4,440,544 4,440,544
Change in unrealized
gain (loss) on
securities available
for sale, net of
reclassification and
tax effects 1,615,663 1,615,663
--------------
Total comprehensive
income 6,056,207

Cash dividends
($1.07 per share) (3,265,110) (3,265,110)

Cash dividends declared
Farmers, prior to
merger (280,000) (280,000)
------------- ------------- ------------- ------------ ------------ --------------

Balance,
December 31, 1997 4,263,401 23,257,520 25,514,853 -- 2,427,062 51,199,435

Comprehensive income:
Net income 5,760,667 5,760,667
Change in unrealized
gain (loss) on
securities available
for sale, net of
reclassification and
tax effects 1,245,085 1,245,085
--------------
Total comprehensive
income 7,005,752

Cash paid for
fractional shares (3,451) (3,451)

Cash dividends
($1.11 per share) (4,368,805) (4,368,805)

Cash dividends declared
Farmers, prior to
merger (92,000) (92,000)
------------- ------------- ------------- ------------ ------------ --------------

Balance,
December 31, 1998 4,263,401 $ 23,257,520 $ 26,811,264 $ -- $ 3,672,147 $ 53,740,931
============= ============= ============= ============ ============ ==============

(Continued)

38

41

FIRST CITIZENS BANC CORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued)
Years ended December 31, 1999, 1998 and 1997

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

Accumulated
Common Stock Other Total
------------ Retained Treasury Comprehensive Shareholders'
Shares Amount Earnings Stock Income (loss) Equity
------ ------ -------- ----- ------------- ------

Balance,
December 31, 1998 4,263,401 $ 23,257,520 $ 26,811,264 $ -- $ 3,672,147 $ 53,740,931

Comprehensive income:
Net income 6,062,169 6,062,169
Change in unrealized
gain (loss) on
securities available
for sale, net of
reclassification and
tax effects (3,868,218) (3,868,218)
--------------
Total comprehensive
income 2,193,951

Cash dividends
($1.15 per share) (4,863,062) (4,863,062)

Purchase of treasury
stock, at cost (100,586) (2,877,032) (2,877,032)
------------- ------------- ------------- ------------ ------------ --------------

Balance,
December 31, 1999 4,162,815 $ 23,257,520 $ 28,010,371 $ (2,877,032) $ (196,071) $ 48,194,788
============= ============= ============= ============ ============ ==============

See accompanying notes to consolidated financial statements.

39

42

FIRST CITIZENS BANC CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1999, 1998 and 1997

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

1999 1998 1997
---- ---- ----

CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,062,169 $ 5,760,667 $ 4,440,544
Adjustments to reconcile net income to net cash from
operating activities
Security amortization, net of accretion 644,696 371,550 156,086
Depreciation 888,887 1,014,740 886,933
Write-down of obsolete property and equipment -- 437,501 --
Amortization of intangible assets 336,048 336,048 326,048
Net realized (gain) loss on sales of securities (1,601,924) (574,981) 106,629
FHLB stock dividends (287,100) (273,000) (243,300)
Provision for loan losses 266,443 361,886 1,129,468
Loans originated for sale (10,040,992) (10,921,465) (2,892,410)
Proceeds from sale of loans 10,167,243 9,463,171 2,262,728
Gain on sale of loans (197,446) (234,973) (61,317)
Amortization of mortgage servicing rights 45,962 11,405 --
Deferred income taxes (395,283) 726,990 (257,542)
Change in
Net deferred loan fees (162,905) (162,502) (61,927)
Accrued interest receivable 37,486 (365,621) (107,378)
Other assets 2,560,194 (2,411,988) (304,254)
Accrued interest, taxes and other expenses (980,916) (226,473) 402,027
--------------- -------------- ---------------
Net cash from operating activities 7,342,562 3,312,955 5,782,335

CASH FLOWS FROM INVESTING ACTIVITIES
Securities available for sale
Maturities, prepayments and calls 34,044,498 51,168,709 22,940,951
Purchases (24,509,471) (84,947,103) (19,433,147)
Sales 7,546,840 1,412,990 10,427,598
Securities held to maturity
Maturities, prepayments and calls 403,304 5,919,787 5,557,254
Purchases -- -- (4,904,789)
Sales -- -- 1,329,289
Loan originations, net of loan payments (5,767,488) 8,761,592 (28,782,920)
Proceeds from the sale of assets 26,182 -- 32,350
Property and equipment expenditures (1,423,194) (815,265) (550,268)
Change in federal funds sold 15,350,000 (2,350,000) (8,179,000)
Maturity of interest bearing deposit 197,251 99,000 686,000
--------------- -------------- ---------------
Net cash from investing activities 25,867,922 (20,750,290) (20,876,682)

CASH FLOWS FROM FINANCING ACTIVITIES
Branch acquisition -- -- 12,153,945
Change in deposits (14,738,862) 15,716,004 11,797,095
Repayment of Federal Home Loan Bank borrowings (11,276,205) (1,252,869) (1,183,652)
Change in securities sold under repurchase agreements (3,394,493) 8,590,335 (2,177,686)
Change in U.S. Treasury interest-bearing notes payable 2,094,123 (2,403,900) 1,598,957
Cash dividends paid (4,863,062) (4,464,256) (3,545,110)
Purchase of treasury stock (2,877,032) -- --
--------------- -------------- ---------------
Net cash from financing activities (35,055,531) 16,185,314 18,643,549
--------------- -------------- ---------------

Net change in cash and cash equivalents (1,845,047) (1,252,021) 3,549,202
Cash and cash equivalents at beginning of year 16,443,613 17,695,634 14,146,432
--------------- -------------- ---------------

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 14,598,566 $ 16,443,613 $ 17,695,634
=============== ============== ===============

See accompanying notes to consolidated financial statements.

40
43

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the accounting policies adopted by First Citizens
Banc Corp, which have a significant effect on the financial statements.

CONSOLIDATION POLICY: The consolidated financial statements include the accounts
of First Citizens Banc Corp (FCBC) and its wholly-owned subsidiaries, The
Citizens Banking Company (Citizens), The Farmers State Bank (Farmers), The
Castalia Banking Company (Castalia), SCC Resources, Inc. (SCC), and R. A.
Reynolds Appraisal Services, Inc. (Reynolds), together referred to as the
Corporation. Intercompany balances and transactions are eliminated in
consolidation.

NATURE OF OPERATIONS: The Corporation provides financial services through its
offices in the Ohio counties of Erie, Crawford, Marion and Union. Its primary
deposit products are checking, savings, and term certificate accounts, and its
primary lending products are residential mortgage, commercial, and installment
loans. Substantially all loans are secured by specific items of collateral
including business assets, consumer assets and real estate. Commercial loans are
expected to be repaid from cash flow from operations of businesses. Real estate
loans are secured by both residential and commercial real estate. Other
financial instruments that potentially represent concentrations of credit risk
include deposit accounts in other financial institutions. In 1999, SCC provided
item processing for 10 financial institutions in addition to the three
subsidiary banks. SCC accounted for 3.1% of the Corporation's total revenues.
Reynolds provides real estate appraisal services for lending purposes to the
subsidiary banks and other financial institutions. Reynolds accounts for less
than 1.0% of total Corporation revenues. Management considers the Corporation to
operate primarily in one reportable segment, banking.

USE OF ESTIMATES: To prepare financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided, and future
results could differ. The allowance for loan losses, fair values of financial
instruments, and status of contingencies are particularly subject to change.

CASH: Cash and cash equivalents include cash on hand and demand deposits with
financial institutions. Net cash flows are reported for federal funds sold,
customer loan transactions, deposit transactions, securities sold under
agreements to repurchase and other short-term borrowings. For the years ended
December 31, 1999, 1998 and 1997, the Corporation paid interest of $15,505,000,
$17,527,000 and $16,594,000, and income taxes of $2,718,000, $1,415,000 and
$2,034,000.

SECURITIES: Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported in other comprehensive income.
Other securities such as Federal Home Loan Bank stock are carried at cost.

Interest income includes amortization of purchase premium or discount. Gains and
losses on sales are based on the amortized cost of the security sold. Securities
are written down to fair value when a decline in fair value is not temporary.

(Continued)

41

44
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LOANS: Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at the principal
balance outstanding, net of unearned interest, deferred loan fees and costs, and
an allowance for loan losses. Loans held for sale are reported at the lower of
cost or market, on an aggregate basis.

Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over the loan term. Interest income is not
reported when full loan repayment is in doubt, typically when the loan is
impaired or payments are past due over 90 days (180 days for residential
mortgages). Payments received on such loans are reported as principal
reductions.

ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is a valuation
allowance for probable credit losses, increased by the provision for loan losses
and decreased by charge-offs less recoveries. Management estimates the allowance
balance required using past loan loss experience, risks in the nature and volume
of the portfolio, information about specific borrower situations and estimated
collateral values, economic conditions, and other factors. Allocations of the
allowance may be made for specific loans, but the entire allowance is available
for any loan that, in management's judgment, should be charged-off.

A loan is impaired when full payment under the loan terms is not expected.
Impairment is evaluated in total for smaller-balance loans of similar nature
such as residential mortgage, consumer, and credit card loans, and on an
individual loan basis for other loans. If a loan is impaired, a portion of the
allowance is allocated so the loan is reported, net, at the present value of
estimated future cash flows using the loan's existing rate or at the fair value
of collateral if repayment is expected solely from the collateral.

PREMISES AND EQUIPMENT: Premises and equipment are stated at cost less
accumulated depreciation. Depreciation is computed using both accelerated and
straight-line methods over the estimated useful life of the asset.

OTHER REAL ESTATE: Other real estate acquired through or instead of loan
foreclosure is initially recorded at fair value when acquired, establishing a
new cost basis. Any reduction from carrying value of the related loan to fair
value at the time of acquisition is accounted for as a loan loss. Any subsequent
reduction in fair value is recognized in a valuation allowance by a charge to
income. Other real estate owned included in other assets totaled approximately
$431,000 at December 31, 1999 and $456,000 at December 31, 1998.

SERVICING RIGHTS: Servicing rights are recognized as assets for the allocated
value of retained servicing rights on loans sold. Servicing rights are expensed
in proportion to, and over the period of, estimated net servicing revenues.
Impairment is evaluated based on the fair value of the rights, using groupings
of the underlying loans as to interest rates and then, secondarily, as to
geographic and prepayment characteristics. Fair value is determined using prices
for similar assets with similar characteristics, when available, or based upon
discounted cash flows using market-based assumptions. Any impairment of a
grouping is reported as a valuation allowance.

(Continued)

42
45
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

INTANGIBLE ASSETS: Amounts, as reported on the consolidated balance sheets,
represent goodwill that arose from the purchase of Castalia in 1990 and core
deposit intangibles that arose from the purchase of two branch offices and
assumption of related deposits in 1997. Goodwill is being amortized on the
straight-line method over 15 years and core deposit intangibles are being
amortized on the straight-line method over 12 years. The Corporation assesses
the recoverability of intangible assets by determining whether the balance can
be recovered through undiscounted future operating cash flows of Castalia and
the branches. At December 31, 1999, the remaining balances of goodwill and core
deposit intangibles totaled $1,123,000 and $1,075,000. At December 31, 1998, the
remaining balances of goodwill and core deposit intangibles totaled $1,276,000
and $1,258,000.

LONG-TERM ASSETS: These assets are reviewed for impairment when events indicate
their carrying amounts may not be recoverable from future undiscounted cash
flows. If impaired, the assets are recorded at discounted amounts.

REPURCHASE AGREEMENTS: Substantially all repurchase agreement liabilities
represent amounts advanced by various customers. Securities are pledged to cover
these liabilities, which are not covered by federal deposit insurance.

INCOME TAXES: Income tax expense is the total of the current year income tax due
or refundable and the change in deferred tax assets and liabilities. Deferred
tax assets and liabilities are the expected future tax amounts for the temporary
differences between carrying amounts and tax basis of assets and liabilities,
computed using enacted tax rates. A valuation allowance, if needed, reduces
deferred tax assets to the amount expected to be realized.

RETIREMENT PLANS: The Corporation sponsors a noncontributory defined benefit
retirement plan for all full-time employees who have attained the age of 21 and
have a minimum of six months of service. Pension expense is the net of service
and interest cost, return on plan assets and amortization of gains and losses
not immediately recognized. Accrued pension costs are funded to the extent
deductible for federal income tax purposes.

The Corporation also provides a savings and retirement 401(k) plan for all
full-time eligible employees who elect to participate. The decision to make
contributions to the plan, which represent a match of a portion of the salary
deferred by participants, is made annually by the Board of Directors. Such
contributions are funded as they are accrued.

FINANCIAL INSTRUMENTS: Financial instruments include off-balance-sheet credit
instruments, such as commitments to make loans and standby letters of credit,
issued to meet customer financing needs. The face amount for these items
represents the exposure to loss, before considering customer collateral or
ability to repay. Such financial instruments are recorded when they are funded.

COMPREHENSIVE INCOME: Comprehensive income consists of net income and other
comprehensive income. Other comprehensive income includes unrealized gains and
losses on securities available for sale, which are also recognized as a separate
component of shareholders' equity.

(Continued)

43
46
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LOSS CONTINGENCIES: Loss contingencies, including claims and legal actions
arising in the ordinary course of business, are recorded as liabilities when the
likelihood of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there now are such matters that will have
a material effect on the financial statements.

DIVIDEND RESTRICTION: Banking regulations require maintaining certain capital
levels and may limit the dividends paid by the Banks to FCBC or by FCBC to
shareholders.

FAIR VALUE OF FINANCIAL INSTRUMENTS: Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in a separate note. Fair value estimates involve uncertainties and
matters of significant judgment regarding interest rates, credit risk,
prepayments, and other factors, especially in the absence of broad markets for
particular items. Changes in assumptions or in market conditions could
significantly affect these estimates.

EARNINGS PER COMMON SHARE: Basic earnings per share is computed based on the
weighted average number of common shares outstanding during the period. Basic
weighted average common shares outstanding totaled 4,242,546 in 1999 and
4,263,401 in 1998 and 1997. Dividends per share are based on the number of
shares outstanding at the record date.

FINANCIAL STATEMENT PRESENTATION: Certain items in the 1998 and 1997 financial
statements have been reclassified to correspond with the 1999 presentation.

NOTE 2 - SECURITIES

Year-end securities are as follows.

_______________________________1 9 9 9______________________________
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------- ------- -------- -------

AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies $ 64,114,363 $ 32,178 $ (921,945) $ 63,224,596
Obligations of state and political
subdivisions 53,004,191 328,583 (727,110) 52,605,664
Other securities, including mortgage-
backed and equity securities 33,433,455 1,524,465 (533,247) 34,424,673
--------------- -------------- ------------- ----------------

Total securities available for sale $ 150,552,009 $ 1,885,226 $ (2,182,302) $ 150,254,933
=============== ============== ============= ================

HELD TO MATURITY
Obligations of state and political
subdivisions $ 232,500 $ 475 $ (31) $ 232,944
Other securities, including mortgage-
backed securities 173,608 1,343 (130) 174,821
--------------- -------------- ------------- ----------------

Total securities held to maturity $ 406,108 $ 1,818 $ (161) $ 407,765
=============== ============== ============= ================

(Continued)

44
47
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 2 - SECURITIES (Continued)

_______________________________1 9 9 8______________________________
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----

AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies $ 69,024,266 $ 1,198,600 $ (98,129) $ 70,124,737
Obligations of state and political
subdivisions 52,759,051 1,661,950 (17,364) 54,403,637
Other securities, including mortgage-
backed and equity securities 44,605,521 2,858,743 (39,938) 47,424,326
--------------- -------------- ------------- -------------

Total securities available for sale $ 166,388,838 $ 5,719,293 $ (155,431) $ 171,952,700
============== ============== ============= =============

HELD TO MATURITY
Obligations of state and political
subdivisions $ 355,000 $ 7,564 $ -- $ 362,564
Other securities, including mortgage-
backed securities 455,122 6,054 (108) 461,068
-------------- -------------- ------------- -------------

Total securities held to maturity $ 810,122 $ 13,618 $ (108) $ 823,632
============== ============== ============= =============

The contractual maturities of securities at year-end 1999 were as follows.
Securities not due at a single maturity date, primarily mortgage-backed
securities and equity securities, are shown separately.

Held to maturity Available for sale
---------------- ------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---- ----- ---- -----

Due in one year or less $ 77,500 $ 77,669 $ 23,515,911 $ 23,536,892
Due from one to five years 155,000 155,275 86,761,240 85,656,799
Due from five to ten years -- -- 19,444,172 19,078,092
Due after ten years -- -- 570,000 570,000
Mortgage-backed 173,608 174,821 14,013,938 13,665,647
Equity securities -- -- 6,246,748 7,747,503
-------------- -------------- ------------- -------------

Total $ 406,108 $ 407,765 $ 150,552,009 $ 150,254,933
============== ============== ============= =============

During 1995, management concluded that one of its investments, Tower Healthcare
Receivables Corp., had no market value. Therefore, the Corporation eliminated
the remaining carrying value of the bonds, which was $226,000 after cash
payments received during 1995. These securities had previously been written down
by $700,000 when Towers Financial Corp. (parent company) filed bankruptcy in
1993. The Corporation received $10,000, $25,000 and $214,000 in recoveries from
Tower Financial Corp. in 1999, 1998 and 1997.

(Continued)

45
48
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 2 - SECURITIES (Continued)

Proceeds from sales of securities, gross realized gains and gross realized
losses were as follows.

Gross Gross
Realized Realized
Sales Proceeds Gains Losses
-------------- ----- ------

Year ended December 31, 1999 $ 7,547,000 $ 1,586,000 $ 3,000
Year ended December 31, 1998 1,413,000 542,000 --
Year ended December 31, 1997 11,757,000 63,000 170,000

During 1997, Farmers sold securities classified as held to maturity for interest
rate risk management purposes. As a result, all remaining held to maturity
securities at Farmers were transferred to the available for sale portfolio as of
December 31, 1997. Proceeds from these sales totaled $1,329,289, resulting in
gross realized gains of $45,289. These sales are included in the above totals.
The amortized cost of the remaining held to maturity portfolio transferred to
available for sale was $34,998,000. The net unrealized gain on these securities
was $720,000 on the date of transfer.

Securities called or settled by the issuer resulted in gains of $9,000 and
$8,000 in 1999 and 1998. No gains resulted from securities being called in 1997.

Securities with a carrying value of $62,614,000 and $60,960,000 were pledged as
of December 31, 1999 and 1998, to secure public deposits and other deposits and
liabilities as required or permitted by law.

NOTE 3 - LOANS

Loans at year-end were as follows.

1999 1998
---- ----

Commercial and agricultural $ 26,077,141 $ 24,139,620
Commercial real estate 48,301,000 53,804,390
Residential real estate 178,876,326 173,788,501
Real estate construction 4,482,294 3,492,928
Consumer 28,105,412 27,489,889
Credit card and other 3,575,411 1,426,312
Leases 392,042 589,015
---------------- -----------------
Total loans 289,809,626 284,730,655
Allowance for loan losses (4,273,825) (4,567,126)
Net deferred loan fees (977,613) (1,140,518)
Unearned interest (112,163) (240,936)
---------------- -----------------

Net loans $ 284,446,025 $ 278,782,075
================ =================

(Continued)

46
49
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 3 - LOANS (Continued)

Loans to directors and executive officers, including their immediate families
and companies in which they are principal owners during 1999 were as follows.

Balance - January 1, 1999 $ 5,277,318
New loans and advances 3,695,729
Repayments (2,621,343)
Effect of changes in related parties (62,219)
--------------

Balance - December 31, 1999 $ 6,289,485
==============

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

A summary of the activity in the allowance for loan losses was as follows.

1999 1998 1997
---- ---- ----

Balance - January 1 $ 4,567,126 $ 4,707,051 $ 3,935,038
Provision for loan losses 266,443 361,886 1,129,468
Loans charged-off (789,067) (724,739) (557,701)
Recoveries 229,323 222,928 200,246
--------------- -------------- --------------

Balance - December 31 $ 4,273,825 $ 4,567,126 $ 4,707,051
=============== ============== ==============

Impaired loans were as follows.

1999 1998
---- ----

Year-end loans with no allocated allowance for loan losses $ -- $ --
Year-end loans with allocated allowance for loan losses 4,160,000 4,159,000
Amount of allowance for loan losses allocated 1,145,000 1,173,000

1999 1998 1997
---- ---- ----

Average balance of impaired loans
during year $ 4,118,000 $ 3,915,000 $ 3,264,000
Interest income recognized during
impairment 320,000 273,000 227,000
Interest income recognized on a
cash basis 320,000 273,000 182,000

Nonperforming loans were as follows.

1999 1998
---- ----

Loans past due over 90 days still on accrual $ 834,000 $ 1,235,000
Nonaccrual loans 1,682,000 1,693,000

(Continued)

47
50
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 4 - ALLOWANCE FOR LOAN LOSSES (Continued)

Nonperforming loans would include some loans which are classified as impaired,
and smaller balance homogeneous loans, such as residential mortgage and consumer
loans, that are collectively evaluated for impairment.

NOTE 5 - PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows.

1999 1998
---- ----

Land and improvements $ 807,232 $ 807,232
Buildings and improvements 7,480,558 6,854,051
Furniture and equipment 6,507,128 7,132,152
--------------- ----------------
Total 14,794,918 14,793,435
Accumulated depreciation 7,337,032 7,429,922
--------------- ----------------

Premises and equipment, net $ 7,457,886 $ 7,363,513
=============== ================

The Corporation has no material future lease commitments.

NOTE 6 - INTEREST-BEARING DEPOSITS

Interest-bearing deposits as of December 31, 1999 and 1998 were as follows.

1999 1998
---- ----

Demand $ 52,659,391 $ 58,453,216
Statement and passbook savings 113,509,210 108,492,369
Certificates of deposit:
In excess of $100,000 22,650,261 35,453,288
Other 150,702,363 152,538,800
Individual Retirement Accounts 23,392,656 24,387,517
----------------- -----------------

Total $ 362,913,881 $ 379,325,190
================= =================

Scheduled maturities of certificates of deposit and IRAs at December 31, 1999
were as follows.

2000 $ 128,974,089
2001 28,197,660
2002 12,528,862
2003 3,055,362
2004 356,011
Thereafter 240,640
----------------

Total $ 173,352,624
================

(Continued)

48
51
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS

The Corporation has fixed-rate mortgage-matched advances from the Federal Home
Loan Bank. Mortgage-matched advances are utilized to fund specific fixed-rate
loans with certain prepayment of principal permitted without penalty.

At December 31, 1999 and 1998, Federal Home Loan Bank borrowings were as
follows.

1999 1998
---- ----

5.95 percent secured note $ -- $ 7,731,782
5.80 percent secured note 381,087 487,630
5.60 percent secured note 969,788 1,234,451
5.55 percent secured note 608,085 765,362
5.25 percent secured note -- 3,015,940
--------------- ----------------

$ 1,958,960 $ 13,235,165
=============== ================

The notes outstanding at December 31, 1999 had required annual principal
payments as follows.

2000 $ 558,990
2001 591,260
2002 625,394
2003 183,316
---------------

$ 1,958,960

Federal Home Loan Bank borrowings are collateralized by Federal Home Loan Bank
stock and by $2,938,440 and $19,852,748 of residential mortgage loans under a
blanket lien arrangement at year-end 1999 and 1998. The Corporation has a $10
million cash management advance line of credit with the Federal Home Loan Bank.
No advances were outstanding on this line as of December 31, 1999.

NOTE 8 - OTHER BORROWINGS

Information concerning securities sold under agreements to repurchase and
treasury tax and loan deposits was as follows.

1999 1998
---- ----

Average balance during the year $ 16,177,000 $ 12,892,000
Average interest rate during the year 4.20% 4.58%
Maximum month-end balance during the year 24,895,000 17,341,000

Securities underlying repurchase agreements at year-end were as follows.

1999 1998
---- ----

Carrying value of securities $ 15,989,000 $ 24,351,000
Fair Value 15,989,000 24,351,000

(Continued)

49
52
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 9 - INCOME TAXES

Income tax expense was as follows.

1999 1998 1997
---- ---- ----

Current $ 2,761,359 $ 1,606,366 $ 1,816,481
Deferred (395,283) 726,990 (257,542)
--------------- -------------- --------------

Income tax expense $ 2,366,076 $ 2,333,356 $ 1,558,939
=============== ============== ==============

Effective tax rates differ from the statutory federal income tax rate of 34% due
to the following.

1999 1998 1997
---- ---- ----

Income taxes computed at the
statutory federal tax rate $ 2,865,603 $ 2,751,968 $ 2,039,824
Add (subtract) tax effect of
Nontaxable interest income, net of
nondeductible interest expense (676,296) (608,005) (641,403)
Dividends received deduction (5,777) (45,306) (47,588)
Amortization of goodwill 68,522 68,522 68,522
Nondeductible reorganization costs -- 89,879 105,992
Other 114,024 76,298 33,592
--------------- -------------- --------------

Income tax expense $ 2,366,076 $ 2,333,356 $ 1,558,939
=============== ============== ==============

Tax expense attributable to security gains totaled $544,654, $195,494 and
$36,399 in 1999, 1998 and 1997.

Year-end deferred tax assets and liabilities were due to the following.

1999 1998
---- ----

Allowance for loan losses $ 1,081,210 $ 1,180,970
Deferred loan fees 274,534 325,291
Unrealized loss on securities available for sale 101,008 --
Other 88,749 76,852
-------------- --------------
Deferred tax asset 1,545,501 1,583,113
-------------- --------------

Tax depreciation in excess of book depreciation (301,992) (267,057)
Discount accretion on securities (6,870) (10,726)
Pension costs (28,825) (79,502)
Undistributed equity earnings of computer center (269,700) (269,700)
Federal Home Loan Bank stock dividends (461,074) (364,310)
Unrealized gain on securities available for sale -- (1,891,712)
Intangible asset amortization (131,510) (133,822)
Leases (72,240) (80,740)
Deferred installment gain -- (654,881)
Other (101,792) (47,168)
-------------- --------------
Deferred tax liability (1,374,003) (3,799,618)
-------------- --------------

Net deferred tax asset (liability) $ 162,998 $ (2,216,505)
============== ==============

(Continued)

50
53
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 10 - RETIREMENT PLANS

The Corporation sponsors a savings and retirement 401(k) plan, which covers all
employees who meet certain eligibility requirements and who choose to
participate in the plan. The matching contribution to the 401(k) plan was
$68,000, $67,000 and $59,000 in 1999, 1998 and 1997.

The Corporation and its subsidiaries also sponsor a pension plan which is a
noncontributory defined benefit retirement plan for all employees who have
attained the age of 21, completed six months of service and work 1,000 or more
hours per year. Annual payments, subject to the maximum amount deductible for
federal income tax purposes, are made to a pension trust fund. No contributions
were allowable in 1999, 1998 or 1997.

Information about the pension plan was as follows.

1999 1998
---- ----

Change in benefit obligation:
Beginning benefit obligation $ 4,039,171 $ 3,633,341
Service cost 283,799 234,494
Interest cost 249,499 239,789
Actuarial (gain) loss (394,398) 909,770
Benefits paid (522,331) (929,373)
Expenses paid (25,884) (48,850)
------------ ------------
Ending benefit obligation 3,629,856 4,039,171

Change in plan assets, at fair value:
Beginning plan assets 3,921,683 4,935,505
Actual return 381,219 (35,599)
Employer contribution -- --
Benefits paid (522,331) (929,373)
Expenses paid (25,884) (48,850)
------------ ------------
Ending plan assets 3,754,687 3,921,683
------------ ------------

Funded status 124,831 (117,488)
Unrecognized net actuarial loss 361,446 827,453
Unrecognized prior service cost 103,305 116,363
Unrecognized net transition asset at January 1, 1989
being recognized over 17 years (495,656) (574,961)
------------ ------------

Prepaid benefit cost $ 93,926 $ 251,367
============ ============

(Continued)

51

54
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 10 - RETIREMENT PLANS (Continued)

The components of pension expense and related actuarial assumptions were as
follows.

1999 1998 1997
---- ---- ----

Service cost $ 283,799 $ 234,494 $ 253,096
Interest cost 249,499 239,789 259,514
Expected return on plan assets (355,335) 84,449 (580,437)
Net amortization and deferral (20,522) (567,124) 120,351
------------ ------------ ------------
Net $ 157,441 $ (8,392) $ 52,524
============ ============ ============

Discount rate on benefit obligation 7.64% 6.52% 7.27%
Long-term rate of return on plan assets 9.00 9.00 9.00
Rate of compensation increase 4.00 4.00 5.00

During 1997 and the first seven months of 1998, Farmers maintained a fully
insured defined benefit pension plan covering substantially all employees.
Pension costs were funded through the purchase of retirement income insurance
and retirement annuity policies. The plan was terminated on July 31, 1998. The
plan assets were distributed to the participants in 1999. The employees affected
by the termination were included in the existing retirement plans sponsored by
the Corporation beginning April 30, 1998. No gain or loss was realized as a
result of the termination.

NOTE 11 - COMMITMENTS, CONTINGENCIES AND OFF-BALANCE-SHEET RISK

Some financial instruments, such as loan commitments, credit lines, letters of
credit, and overdraft protection are issued to meet customer financing needs.
These are agreements to provide credit or to support the credit of others, as
long as conditions established in the contract are met, and usually have
expiration dates. Commitments may expire without being used. Off-balance-sheet
risk to credit loss exists up to the face amount of these instruments, although
material losses are not anticipated. The same credit policies are used to make
such commitments as are used for loans, including obtaining collateral at
exercise of the commitment.

The contractual amount of financial instruments with off-balance-sheet risk was
as follows at year-end.

1999 1998
---- ----

Commitments to extend credit:
Lines of credit and construction loans $ 23,982,000 $ 23,412,000
Credit cards 3,078,000 3,315,000
Letters of credit 507,000 623,000
-------------- --------------

$ 27,567,000 $ 27,350,000
============== ==============

Commitments to make loans are generally made for a period of one year or less.
Fixed-rate loan commitments included above totaled $4,484,000 and have interest
rates ranging from 3.75% to 10.00% at December 31, 1999. Maturities extend up to
30 years.

(Continued)

52
55
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 11 - COMMITMENTS, CONTINGENCIES AND OFF-BALANCE-SHEET RISK (Continued)

The subsidiary Banks are required to maintain certain daily reserve balances on
hand in accordance with Federal Reserve Board requirements. The average reserve
balance maintained in accordance with such requirements at December 31, 1999 and
1998 approximated $3,065,000 and $2,326,000.

NOTE 12 - CAPITAL REQUIREMENTS AND RESTRICTION ON RETAINED EARNINGS

The Corporation and the subsidiary Banks are subject to regulatory capital
requirements administered by the federal banking agencies. Capital adequacy
guidelines and, additionally for banks, prompt corrective action regulations
involve quantitative measures of assets, liabilities and certain
off-balance-sheet items calculated under regulatory accounting practices.
Capital amounts and classification are also subject to qualitative judgments by
the regulators. Failure to meet capital requirements can initiate regulatory
action.

Prompt corrective action regulations provide five classifications: well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized, although these terms are not
used to represent overall financial condition. If adequately capitalized,
regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and capital restoration plans are required.

The Corporation and the Banks were well capitalized at December 31, 1999 and
1998. No conditions or events have occurred since the last notification from
regulators that management believes has changed the Corporation's or the Banks'
classification.

(Continued)

53
56
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 12 - CAPITAL REQUIREMENTS AND RESTRICTION ON RETAINED EARNINGS
(Continued)

At December 31, 1999 and 1998, the Corporation's and the Banks' actual capital
levels and minimum required levels were as follows.

To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------ ----------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(Dollars in Millions)

1999
Total capital to risk-
weighted assets
Consolidated $ 49.8 18.7% $ 21.3 8.0% $ 26.6 10.0%
Citizens 25.0 15.5 12.9 8.0 16.2 10.0
Castalia 5.5 17.6 2.5 8.0 3.1 10.0
Farmers 14.7 21.0 5.6 8.0 7.0 10.0
Tier I (Core) capital to risk-
weighted assets
Consolidated 46.2 17.3 10.7 4.0 16.0 6.0
Citizens 23.0 14.2 6.5 4.0 9.7 6.0
Castalia 5.2 16.4 1.3 4.0 1.9 6.0
Farmers 13.8 19.7 2.8 4.0 4.2 6.0
Tier I (Core) capital to
average assets
Consolidated 46.2 9.6 19.2 4.0 23.9 5.0
Citizens 23.0 8.1 11.4 4.0 14.2 5.0
Castalia 5.2 10.3 2.0 4.0 2.5 5.0
Farmers 13.8 9.7 5.7 4.0 7.1 5.0

1998
Total capital to risk-
weighted assets
Consolidated $ 51.3 18.8% $ 21.8 8.0% $ 27.3 10.0%
Citizens 23.4 14.2 13.2 8.0 16.5 10.0
Castalia 4.8 15.5 2.5 8.0 3.1 10.0
Farmers 13.7 18.2 6.0 8.0 7.5 10.0
Tier I (Core) capital to risk-
weighted assets
Consolidated 47.5 17.4 10.9 4.0 16.4 6.0
Citizens 21.4 13.0 6.6 4.0 9.9 6.0
Castalia 4.4 14.3 1.2 4.0 1.9 6.0
Farmers 12.7 17.0 3.0 4.0 4.5 6.0
Tier I (Core) capital to
average assets
Consolidated 47.5 9.5 20.0 4.0 25.0 5.0
Citizens 21.4 7.5 11.4 4.0 14.2 5.0
Castalia 4.4 8.4 2.1 4.0 2.6 5.0
Farmers 12.7 8.1 6.3 4.0 7.9 5.0

(Continued)

54
57
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 12 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS (Continued)

FCBC's primary source of funds for paying dividends to its shareholders and for
operating expenses is dividends received from the Banks. Payment of dividends by
the Banks to FCBC is subject to restrictions by their regulatory agencies. These
restrictions generally limit dividends to the current and prior two years
retained earnings as defined by the regulations. In addition, dividends may not
reduce capital levels below minimum regulatory requirements. Under the most
restrictive of these requirements, the Corporation estimates that retained
earnings available for payment of dividends by the Banks to FCBC approximates
$3,507,000 and $2,414,000 at December 31, 1999 and 1998.

NOTE 13- PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of FCBC follows.

CONDENSED BALANCE SHEETS 1999 1998
---- ----

Assets:

Cash $ 2,353,850 $ 6,876,368
Securities available for sale 389,044 --
Investment in bank subsidiaries 43,956,980 44,751,727
Investment in nonbank subsidiaries 2,079,779 2,123,078
Other assets 119,729 426,322
--------------- ----------------

Total assets $ 48,899,382 $ 54,177,495
=============== ================

Liabilities and Shareholders' Equity:
Deferred income taxes and other liabilities $ 704,594 $ 436,564
Common stock 23,257,520 23,257,520
Retained earnings 28,010,371 26,811,264
Treasury Stock (2,877,032) --
Accumulated other comprehensive income (loss) (196,071) 3,672,147
--------------- ----------------

Total liabilities and shareholders' equity $ 48,899,382 $ 54,177,495
=============== ================

CONDENSED STATEMENTS OF INCOME 1999 1998 1997
---- ---- ----

Dividends from bank subsidiaries $ 3,541,000 $ 7,511,664 $ 3,693,249
Other income 24,657 31,000 24,417
Other expense, net (533,652) (273,627) (297,824)
-------------- -------------- ---------------

Earnings before equity in undistributed
net earnings of subsidiaries 3,032,005 7,269,037 3,419,842

(Distributions in excess of earnings of subsidiaries)/
equity in undistributed net earnings of subsidiaries 3,030,164 (1,508,370) 1,020,702
-------------- -------------- ---------------

Net income $ 6,062,169 $ 5,760,667 $ 4,440,544
============== ============== ===============

(Continued)

55
58
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 13- PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Continued)

CONDENSED STATEMENTS OF CASH FLOWS 1999 1998 1997
---- ---- ----

Operating activities:
Net income $ 6,062,169 $ 5,760,667 $ 4,440,544
Adjustment to reconcile net income to net cash
provided by operating activities:
Change in other assets and other liabilities 274,615 41,992 (121,031)
Distributions in excess of/(equity in
undistributed) net earnings of subsidiaries (3,030,164) 1,508,370 (1,020,702)
-------------- -------------- ---------------
Net cash from operating activities 3,306,620 7,311,029 3,298,811
-------------- -------------- ---------------

Investing activities:
Purchase of securities (389,044) -- --
Change in loan to subsidiary 300,000 -- (300,000)
-------------- -------------- ---------------
Net cash from investing activities (89,044) -- (300,000)
-------------- -------------- ---------------

Financing activities:
Cash paid for treasury stock (2,877,032) -- --
Cash dividends paid (4,863,062) (4,372,256) (3,545,110)
-------------- -------------- ---------------
Net cash from financing activities (7,740,094) (4,372,256) (3,545,110)
-------------- -------------- ---------------

Net change in cash and cash equivalents (4,522,518) 2,938,773 (546,299)

Cash and cash equivalents at beginning of year 6,876,368 3,937,595 4,483,894
-------------- -------------- ---------------

Cash and cash equivalents at end of year $ 2,353,850 $ 6,876,368 $ 3,937,595
============== ============== ===============

(Continued)

56

59
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 14 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amount and estimated fair values of financial instruments were as
follows.

December 31, 1999 December 31, 1998
----------------- -----------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------ ---------- ------ ----------
Financial assets:

Cash and due from banks $ 14,598,566 $ 14,599,000 $ 16,443,613 $ 16,444,000
Federal funds sold 4,600,000 4,600,000 19,950,000 19,950,000
Interest-bearing deposits 51,031 51,000 248,282 248,000
Securities available for sale 150,254,933 150,255,000 171,952,700 171,953,000
Securities held to maturity 406,108 408,000 810,122 824,000
Loans held for sale 2,217,250 2,217,000 2,273,509 2,274,000
Loans, net of allowance for
loan losses 284,446,025 268,867,000 278,782,075 282,353,000
Accrued interest receivable 3,680,082 3,680,000 3,717,568 3,718,000

Financial liabilities:
Deposits (403,160,383) (403,119,000) (417,899,245) (414,612,000)
Federal Home Loan Bank
borrowings (1,958,960) (1,918,000) (13,235,165) (13,235,000)
Securities sold under
repurchase agreements
and other borrowings (16,040,869) (16,041,000) (17,341,239) (17,341,000)
Accrued interest payable (1,533,720) (1,534,000) (1,924,373) (1,924,000)

The estimated fair value approximates carrying amount for all items except those
described below. Estimated fair value for securities is based on quoted market
values for the individual securities or for equivalent securities. For fixed
rate loans or deposits and for variable rate loans or deposits with infrequent
repricing or repricing limits, fair value is based on discounted cash flows
using current market rates applied to the cash flow analysis or underlying
collateral values. Fair value of loans held for sale is based on market quotes.
Fair value of debt is based on current rates for similar financing. The fair
value of off-balance-sheet items is based on the current fees or cost that would
be charged to enter into or terminate such arrangements and are considered
nominal.

NOTE 15 - ACQUISITION

Effective April 28, 1998, the Corporation acquired Farmers. The transaction was
accounted for as a pooling of interests. The Corporation issued approximately
1.2 million shares of common stock to the shareholders of Farmers based upon an
exchange ratio of 6.06 shares of the Corporation for each outstanding share of
Farmers common stock. The historical financial statements have been restated to
show the Corporation and Farmers on a combined basis.

(Continued)

57
60
FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

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

NOTE 16 - OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) components and related taxes were as follows.

1999 1998 1997
---- ---- ----

Unrealized holding gains and (losses) on available
for sale securities $ (4,259,012) $ 2,461,473 $ 2,340,917
Reclassification adjustments for (gains) and
losses later recognized in income (1,601,924) (574,981) 107,057
------------ ------------- ------------
Net unrealized gains and losses (5,860,938) 1,886,492 2,447,974

Tax effect 1,992,720 (641,407) (832,311)
------------ ------------ ------------

Other comprehensive income (loss) $ (3,868,218) $ 1,245,085 $ 1,615,663
============ ============ ============

NOTE 17 - SCC RESOURCES, INC., SALE OF DATA PROCESSING CONTRACTS

On June 19, 1998, SCC entered into an agreement with Jack Henry & Associates,
Inc. (JHA) to sell all of their contracts for providing data processing services
to community banks. JHA agreed to pay SCC a fee based upon annual net revenue
under a new JHA contract for each bank that signed a five-year contract with
JHA. The Corporation recognized $2,966,692 of income as a result of the sale of
contracts in 1998. Expenses of $1,432,572 relating primarily to the write down
of software and intangible assets, lease termination costs and employee
severance costs were also recorded. The net gain of $1,534,120 has been
reflected in other income for the year ended December 31, 1998. SCC retained its
item processing services.

58

61

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- -------------------------------------------------------------------------------

The Corporation has had no disagreements with the independent accountants on
matters of accounting principles or financial statement disclosure required to
be reported under this item.

59

62

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following information is furnished with respect to directors and executive
officers of the Corporation as of December 31, 1999.

Director
Name Age Position since (1)
---- --- -------- --------
DIRECTORS

John L. Bacon 74 Chairman Emeritus 1973
Mack Iron Works Company

Robert L. Bordner 63 President, Herald Printing Co. 1998

Mary Lee G. Close 84 Personal Investments 1983

Blythe A. Friedley 50 Owner and President, Friedley Insurance Co. 1998

Richard B. Fuller 78 Retired, former President of Universal 1960
Clay Products, Inc.

H. Lowell Hoffman, M.D. 76 Retired, former Surgeon 1980

Lowell W. Leech 73 Chairman of the Board, 1975
First Citizens Banc Corp
The Citizens Banking Company
The Castalia Banking Company

Dean S. Lucal 62 Attorney, Lucal & McGookey 1973

W. Patrick Murray 59 Attorney, Murray and Murray 1983
Company, L.P.A.

George L. Mylander 67 Retired Educator 1965
Chairman, Firelands Community
Hospital

Paul H. Pheiffer 74 Chairman of the Board, 1968
Sandusky Bay Development Company
(operates the Battery Park Marina in
Sandusky, Ohio)

David A. Voight 57 President, First Citizens Banc Corp 1989
President, Chief Executive Officer
The Citizens Banking Company

Richard O. Wagner 86 Retired, former Chairman of First Citizens 1968
Banc Corp and former President of
The Citizens Banking Company

60
63

Name Age Position
---- --- --------

EXECUTIVE OFFICERS

James O. Miller 47 Executive Vice President
First Citizens Banc Corp
The Citizens Banking Company

LeRoy C. Link 51 Senior Vice President First Citizens Banc Corp
President, SCC Resources, Inc.

Todd A. Michel 35 Senior Vice President/Controller
First Citizens Banc Corp
The Citizens Banking Company

Charles C. Riesterer 45 Senior Vice President
First Citizens Banc Corp
The Citizens Banking Company

(1) Directorships were with The Citizens Banking Company alone until 1984 and
with the Corporation since such date.

ITEM 11. EXECUTIVE COMPENSATION.

The information contained under the caption "Executive Compensation" in the
Proxy Statement, to be dated approximately March 17, 2000 used in connection
with the Corporation's Annual Shareholders' Meeting is incorporated herein by
reference.

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

The information contained under the caption "Nominees for Election as Directors"
and "Directors Continuing in Office" in the Proxy Statement, to be dated
approximately March 17, 2000 utilized in connection with the Corporation's
Annual Shareholders' Meeting is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information contained under the caption "Certain Relationships and Related
Transactions" in the Proxy Statement, to be dated approximately March 17, 2000
used concerning the Corporation's Annual Shareholders' Meeting is incorporated
herein by reference.

61
64

PART IV

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

(a) DOCUMENTS FILED AS A PART OF THE REPORT

1 FINANCIAL STATEMENTS. The following financial statements, together with the
applicable report of independent auditors, can be located under Item 8 of
this Form 10-K.

2 FINANCIAL STATEMENT SCHEDULES. All schedules are omitted because they are
not applicable or the required information is shown in the financial
statements or notes thereto.

3 EXHIBITS
(3)(i) Articles of Incorporation, as amended, of First Citizens Banc Corp
have been filed under separate pages of the 1999 Form 10-K and are
available to shareholders upon request.

(3)(ii) Code of Regulations of First Citizens Banc Corp has been filed
under separate pages of the 1999 Form 10-K and is available to
shareholders upon request.

(4) Certificate for Registrant's Common Stock has been filed under
separate pages of the 1999 Form 10-K and is available to
shareholders upon request.

(10)(i) Supplemental Retirement Benefit Agreement - Donald E. Gosser has
been filed under separate pages of the 1999 Form 10-K and is
available to shareholders upon request.

(11) Statement regarding earnings per share is included in Note 1 to
the Consolidated Financial Statements and can be located under
Item 8 of this Form 10-K.

(21) Subsidiaries of the Registrant have been filed as separate pages
of the 1999 Form 10-K and are available to shareholders upon
request.

(27) Financial Data Schedule.

(99) Safe Harbor Under the Private Securities Litigation Reform Act of
1995 is incorporated by reference to First Citizens Banc Corp's
Form 10-K for the year ended December 31, 1997.

(b) REPORTS ON FORM 8-K. The Company filed no reports on Form 8-K during the
fourth quarter of the year ended December 31, 1999.

62
65

SIGNATURES

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

(Registrant) First Citizens Banc Corp
-----------------------------------------------------------------

By /s/ David A. Voight
-------------------------------------------------------------------------
David A. Voight, President (Principal Executive Officer)

By /s/ James O. Miller
-------------------------------------------------------------------------
James O. Miller, Executive Vice President and Controller (Principal
Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed on March 21, 2000 by the following persons (including a majority
of the Board of Directors of the Registrant) in the capacities indicated:

/s/ Lowell W. Leech /s/ David A. Voight
- ---------------------------------- ---------------------------------
Lowell W. Leech David A. Voight
Chairman of the Board President, Director

/s/ John L. Bacon /s/ Dean S. Lucal
- ---------------------------------- ---------------------------------
John L. Bacon Dean S. Lucal
Director Director

/s/ Robert L. Bordner /s/ W. Patrick Murray
- ---------------------------------- ---------------------------------
Robert L. Bordner W. Patrick Murray
Director Director

/s/ Mary Lee G. Close /s/ George L. Mylander
- ---------------------------------- ---------------------------------
Mary Lee G. Close George L. Mylander
Director Director

/s/ Blythe A. Friedley /s/ Paul H. Pheiffer
- ---------------------------------- ---------------------------------
Blythe A. Friedley Paul H. Pheiffer
Director Director

/s/ Richard B. Fuller /s/ Richard O. Wagner
- ---------------------------------- ---------------------------------
Richard B. Fuller Richard O. Wagner
Director Director

/s/ H. Lowell Hoffman, M.D.
- ----------------------------------
H. Lowell Hoffman, M.D.
Director

63
66

FIRST CITIZENS BANC CORP

DIRECTORS

JOHN L. BACON DEAN S. LUCAL
Chairman Emeritus Attorney, Lucal & McGookey
Mack Iron Works Company W. PATRICK MURRAY
ROBERT L. BORDNER Attorney, Murray and Murray Company, L.P.A.
President GEORGE L. MYLANDER
Herald Printing Company Chairman, Firelands Community Hospital
MARY LEE G. CLOSE PAUL H. PHEIFFER
BLYTHE A. FRIEDLEY Chairman, Sandusky Bay Development Company
Owner/President DAVID A. VOIGHT
Friedley & Co. Insurance Agency President, First Citizens Banc Corp
RICHARD B. FULLER President, Chief Executive Officer
H. LOWELL HOFFMAN, M.D. The Citizens Banking Company
LOWELL W. LEECH RICHARD O. WAGNER
Chairman of the Board
The First Citizens Banc Corp
The Citizens Banking Company
The Castalia Banking Company

OFFICERS

LOWELL W. LEECH DONNA J. DALFERRO
Chairman of the Board Vice President and Secretary
DAVID A. VOIGHT KAREN S. RUTGER
President Assistant Vice President Human Resources
JAMES O. MILLER DOUGLAS A. GREULICH
Executive Vice President Investment Officer
LEROY C. LINK BRENDA R. LEAL
Senior Vice President Risk Manager
TODD A. MICHEL VICKY L. DOSKI
Senior Vice President, Controller Compliance/CRA Officer
CHARLES C. RIESTERER
Senior Vice President

64

67

DIRECTORS OF AFFILIATED COMPANIES

The Citizens Banking Company
- -------------------------------------------------------------------------------

GRADY MCDONALD
JOHN L. BACON W. PATRICK MURRAY
Chairman Emeritus Attorney, Murray and Murray Company, L.P.A.
Mack Iron Works Company GEORGE L. MYLANDER
MARY LEE G. CLOSE Chairman, Firelands Community Hospital
RICHARD B. FULLER PAUL H. PHEIFFER
ANTHONY S. GUERRA Chairman, Sandusky Bay Development Company
President, LEWCO, Inc. DAVID A. VOIGHT
H. LOWELL HOFFMAN, M.D. President, Chief Executive Officer
LOWELL W. LEECH The Citizens Banking Company
Chairman of the Board RICHARD O. WAGNER
The Citizens Banking Company
DEAN S. LUCAL
Attorney, Lucal & McGookey
YVONNE MASON
Board Treasurer/General Manager Director Emeritus
Akil. Inc. LELAND J. WELTY, CPA

The Castalia Banking Company
- --------------------------------------------------------------------------------

JOHN L. BACON LOWELL W. LEECH
Chairman Emeritus Chairman of the Board
Mack Iron Works Company The Castalia Banking Company
JACK D. BOHN W. PATRICK MURRAY
Partner, Bohn Implement Company Attorney, Murray and Murray Company, L.P.A.
Farmer ROBERT L. RANSOM
BRUCE A. BRAVARD Funeral Director, Ransom Funeral Home
President DAVID H. STRACK, D.D.S.
The Castalia Banking Company Bay Area Dental, Inc.
JOYCE A. KELLER

65

68

THE FARMERS STATE BANK
- --------------------------------------------------------------------------------

ROBERT L. BORDNER JAY R. PRESSLER
Chairman, CEO President
Herald Printing Co. The Farmers State Bank
RONALD E. DENTINGER DOROTHY L. ROBEY
Manager Chairman of the Board
Country Star Co-op The Farmers State Bank
BLYTHE A. FRIEDLEY WILLIAM G. SHEAFFER
Owner/President Senior Vice President
Friedley & Co. Insurance Agency The Farmers State Bank
DEAN S. LUCAL DAVID A. VOIGHT
Attorney, Lucal & McGookey President, First Citizens Banc Corp
RICHARD A. NIEDERMIER President, Chief Executive Officer
Owner, Niedermier Sunoco The Citizens Banking Company
ROBERT M. OBRINGER GERALD B. WURM
President Owner/President
Studer-Obringer Construction Co. Wurm's Woodworking Co.

SCC Resources, Inc.
- -------------------------------------------------------------------------------

H. LOWELL HOFFMAN, M.D.
LEROY C. LINK DAVID A. VOIGHT
President President, First Citizens Banc Corp
SCC Resources, Inc. President, Chief Executive Officer
The Citizens Banking Company

R. A. Reynolds Appraisal Services, Inc.
- -------------------------------------------------------------------------------

DEAN S. LUCAL DAVID A. VOIGHT
Attorney, Lucal & McGookey President, First Citizens Banc Corp
JOHN F. STAUFFER President, Chief Executive Officer
President The Citizens Banking Company
Reynolds Appraisal Service, Inc.

66

69

OFFICERS OF AFFILIATED COMPANIES

The Citizens Banking Company
- -------------------------------------------------------------------------------

Chairman of the Board Lending/customer Service Officer
- --------------------- --------------------------------
Lowell W. Leech Lois A. Bilgen
President, Chief Executive Officer Christine J. Kane
- ----------------------------------
David A. Voight Linda G. Kelley
Executive Vice President Lisa M. Schwerer
- ------------------------
James O. Miller L. Cathy Wright
Senior Vice President Paula J. York
- ---------------------
Todd A. Michel, Controller Lending Officers
----------------
Charles C. Riesterer James P. Greek
Vice Presidents Connie M. Lewis
- ---------------
Phyllis L. Bransky David G. Majoy
Donna J. Dalferro, Secretary Brenda J. Stallard
Lee A. Jordan Mortgage Loan Administrator
---------------------------
David L. Ott Kenneth C. Hahn
Assistant Vice President Mortgage Loan Specialist
- ------------------------ ------------------------
Judy A. Burkey Richard C. Finneran, Jr.
Robin J. Grathwol Marcia A. Gasteier
Karen S. Rutger Suellen M. Williams
Investment Officer & Cashier Operations Officers
- ---------------------------- -------------------
Douglas A. Greulich Ann E. Baum
Credit Card Administrator Joann M. Geis
- -------------------------
Paul D. Mesenburg Shirley J. Hoover
-
Customer Service Officer Susan A. Winkel
- ------------------------
Beverly A. Knupke
Deborah E. Morrow

The Castalia Banking Company
- ---------------------- ---------------------------------------------------------

Chairman of the Board Lending Officer
- --------------------- ---------------
Lowell W. Leech Virginia L. Bluhm
President Mortgage Loan Specialist
- ---------- ------------------------
Bruce A. Bravard Christina A. Raftery
Senior Vice President Operations Officers
- --------------------- -------------------
Mary K. Schlessman Karen M. Irons
Vice President & Cashier Mary K. Meyer
- ------------------------
Sharon K. Keimer, Secretary Customer Service Officer
------------------------
Marie K. Greene
Gloria J. Mesenburg

67
70

The Farmers State Bank
- -------------------------------------------------------------------------------

Chairman of the Board Mortgage Loan Specialist
- --------------------- ------------------------
Dorothy L. Robey Gloria J. Miller
President Cherynn D. Reebel
- ---------
Jay R. Pressler Lending/Customer Service Officer
--------------------------------
Senior Vice President Cindy S. Berridge
- --------------------- Constance F. Bores
Donna M. Miller, Cashier Sharon K. Ehrman
William G. Sheaffer Nancy L. Everly
Vice President Douglas A. Hancock
- --------------
Wanda J. White Customer Service Officer
Controller ------------------------
- ---------- Janet E. Rowland
Doris M. Lambert
Commercial Lender/Collections Officer Operations Officer
- ------------------------------------- ------------------
Carl F. Arnold Roxann A. Young
Consumer/Mortgage Lending Officer Teller Supervisor
- --------------------------------- -----------------
Jack R. O. Vetter Tammy J. Hale

SCC Resources, Inc.
- -------------------------------------------------------------------------------

President Operations Officer
- --------- ------------------
LeRoy C. Link Rae L. Cox
Vice Presidents David J. Dillon
- --------------- Geriann M. Sartor
Richard A. Bast
Ralph M. Chicotel Secretary-Treasurer
-------------------
William E. Couch James O. Miller

R. A. Reynolds Appraisal Services, Inc.
- -------------------------------------------------------------------------------

President Secretary-treasurer
- --------- -------------------
John F. Stauffer James O. Miller

68

71

FIRST CITIZENS BANC CORP

SHAREHOLDER INFORMATION

The Annual Meeting of the Shareholders of First Citizens Banc Corp will be held
at The Citizens Banking Company, 100 East Water Street, Sandusky, Ohio on April
18, 2000 at 2:00 p.m. Notice of the meeting and a proxy statement will be sent
to shareholders in a separate mailing.

REGISTRAR AND TRANSFER AGENT
Illinois Stock Transfer Company
209 West Jackson Boulevard, Suite 903
Chicago, Illinois 60606-6905
Tel: (312) 427-2953 or 1-800-757-5755 (Toll Free)
Fax: (312) 427-2879

FIRST CITIZENS BANC CORP
100 East Water Street
Sandusky, Ohio 44870
Tel: (419) 625-4121 Fax: (419) 627-0103

AFFILIATES
The Citizens Banking Company
100 East Water Street
Sandusky, Ohio 44870
Tel: (419) 625-4121 Fax: (419) 627-0103

The Farmers State Bank
102 South Kibler Street
New Washington, Ohio 44854
Tel: (419) 492-2177 Fax: (419) 492-2757

The Castalia Banking Company
208 South Washington Street
Castalia, Ohio 44824
Tel: (419) 684-5333 Fax: (419) 684-7051

SCC Resources, Inc.
165 East Water Street
Sandusky, Ohio 44870
Tel: (419) 625-1605 Fax: (419) 625-0081

R. A. Reynolds Appraisal Services, Inc.
165 East Water Street
Sandusky, Ohio 44870
Tel: (419) 627-4543 Fax: (419) 625-0081

69