10-K 1 l11214ae10vk.txt WINTON FINANCIAL CORPORATION 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 September 30, 2004 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: 0-18993 WINTON FINANCIAL CORPORATION ------------------------------------ (Exact name of registrant as specified in its charter) Ohio 31-1303854 ------------------------------- ----------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5511 Cheviot Road, Cincinnati, Ohio 45247 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (513) 385-3880 Securities registered pursuant to Section 12(b) of the Act: None ------------------ Securities registered pursuant to Section 12(g) of the Act: Common Shares, without 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 is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] Based upon the last sale price quoted by The American Stock Exchange as of December 15, 2004, the aggregate market value of the voting stock held by non-affiliates of the registrant on that date was $_____ million. On December 15, 2004, there were 5,069,824 of the registrant's common shares issued and outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part I of Form 10-K: Safe Harbor Under the Private Securities Litigation Reform Act of 1995, Exhibit 99.1. PART I ITEM 1. BUSINESS GENERAL Winton Financial Corporation, an Ohio corporation ("Winton Financial," the "Corporation" or "WFC"), is a unitary savings and loan holding company which owns all of the outstanding common shares of The Winton Savings and Loan Co., an Ohio savings and loan association ("Winton Savings" or the "Company"). The activities of Winton Financial have been limited primarily to holding the stock of Winton Savings. Organized in 1887 under the laws of the state of Ohio as a mutual savings and loan association, Winton Savings completed its conversion to stock form in fiscal 1988. Winton Savings conducts business from its principal office in the Monfort Heights area of Cincinnati, Ohio, its six branch offices in Hamilton County, Ohio, one loan production office in the eastern area of Cincinnati and one loan production office in southeastern Indiana. Winton Savings is principally engaged in the business of making first mortgage loans to finance the purchase, construction or improvement of residential or other real property. Winton Savings also invests in U.S. government guaranteed mortgage-backed securities and investment securities issued by the U.S. government and agencies thereof and municipal bonds. Funds for lending and investment are obtained primarily from savings deposits, loan principal and interest repayments, mortgage sales and borrowings from the Federal Home Loan Bank (the "FHLB") of Cincinnati, of which Winton Savings is a member. FORWARD-LOOKING STATEMENTS When used in this Annual Report on Form 10-K, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "projected," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including changes in economic conditions generally and in Winton's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in Winton's market area and competition. Factors listed above could affect WFC's financial performance and could cause WFC's actual results for future periods to differ materially from any statements expressed with respect to future periods. See Exhibit 99 hereto, "Safe Harbor Under the Private Securities Litigation Reform Act of 1995," which is incorporated herein by reference. WFC does not undertake, and specifically disclaims any obligation, to revise publicly any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. LENDING ACTIVITIES GENERAL. Winton's principal lending activity involves the origination of conventional fixed-rate and variable-rate mortgage loans for the acquisition or construction of one- to four-family residences located in Winton's primary market area, and of nonresidential and multifamily loans, including construction and permanent mortgage loans on condominiums, multi-unit properties and commercial properties. Each of such loans is secured by a mortgage on the underlying property. Winton also originates loans insured by the Federal Housing Administration and guaranteed by the Veterans Administration, both of which Winton sells into the secondary market. In addition to residential and nonresidential real estate lending, Winton originates consumer loans, including passbook, automobile, home improvement and home equity line of credit loans. 2 LOAN PORTFOLIO COMPOSITION. The following table sets forth certain information concerning the composition of Winton's loan portfolio at the dates indicated:

---------------- (1) Includes first and second mortgage loans, home equity lines of credit and loans held for sale. (2) Includes loans secured by one-to four-family, multifamily and nonresidential real estate. (3) Includes lines of credit that are available to businesses and that are secured by assets other than real estate. LOAN MATURITY. The following table sets forth certain information, as of September 30, 2004, regarding the dollar amount of loans maturing in Winton's portfolio based on their contractual terms to maturity, before giving effect to net items. Demand loans, loans having no stated schedule of repayments or without stated maturity and overdrafts are reported as due in one year or less.

---------------------- (1) Includes first and second mortgage loans, home equity lines of credit and loans held for sale. (2) Includes loans secured by one-to four-family, multifamily and nonresidential real estate. (3) Includes lines of credit that are available to businesses and that are secured by assets other than real estate. 3 The following table sets forth the dollar amount of all loans due after September 30, 2005, before net items, that have predetermined interest rates and floating or adjustable interest rates:

ONE- TO FOUR-FAMILY REAL ESTATE LOANS. The primary lending activity of Winton is the origination of conventional loans secured by one- to four-family residential properties located within Winton's primary market area. At September 30, 2004, a total of $285.8 million, or approximately 59.0%, of Winton's total loans consisted of one- to four-family residential real estate loans. The outstanding balance of Winton's largest one- to four-family real estate loan was $578,000 at September 30, 2004. Subject to OTS regulations regarding safety and soundness, there are no limits on the aggregate amount of assets Winton may invest in one- to four-family loans. OTS regulations and Ohio law limit the amount that Winton may lend to a single borrower in relationship to the appraised value of the real estate and improvements thereon at the time of loan origination. In accordance with such regulations, Winton makes loans on single-family residences up to 95% of the value of the real estate and improvements (the "Loan-to-Value Ratio" or "LTV"). Winton also makes loans over the 95% LTV, though most of those loans are sold in the secondary market. Generally, Winton requires private mortgage insurance and/or charges premium interest rates for loans over 80% LTV. Winton offers fixed interest rates on its one- to four-family real estate loans with terms of up to 30 years. Winton also offers mortgage loans with adjustable interest rates ("ARMs") with adjustment periods of generally one or three years. Winton determines the interest rates initially charged on ARMs and the new rate at each adjustment date by adding a stated margin to the one-year constant maturity treasury or three-year United States Treasury bill rate at the time it originates the loan. Winton sets the initial interest rate for a three-year ARM slightly higher than for the one-year ARM to compensate for the increased exposure to risk resulting from interest-rate fluctuations during the adjustment period. The maximum adjustment at each adjustment date for one-year ARMs is usually 2%, with a maximum adjustment of 6% over the term of the loan. The maximum adjustment on three-year ARMs presently originated by Winton is 2% at each adjustment date, with a maximum adjustment of 6% over the life of the loan. None of Winton's ARMs has negative amortization features. The one- to four-family real estate mortgage loans offered by Winton are usually originated for terms of 10 to 30 years. Due to the general long-term nature of an investment in mortgage loans, such loans could have an adverse effect upon the earnings spread of an association if such loans do not reprice as quickly as the association's cost of funds. To minimize such an effect, Winton sells certain fixed-rate mortgages in the secondary market. Furthermore, experience during recent years reveals that, as a result of prepayments in connection with refinancings and sales of the underlying properties, residential loans generally remain outstanding for periods that are substantially shorter than the maturity of such loans. At September 30, 2004, Winton had nonperforming loans totaling $488,000 in its one- to four-family portfolio. Winton considers a loan nonperforming when, in the opinion of management, the collection of additional interest on the loan is unlikely, the loan meets non-accrual criteria as established by regulatory authorities, or the loan is accruing interest but is more than 90 days past due. MULTIFAMILY REAL ESTATE LOANS. Winton originates adjustable- and fixed-rate loans secured by multifamily properties containing over four units. At September 30, 2004, a total of $73.9 million, or approximately 15.2%, of Winton's total loans consisted of multifamily real estate loans. The outstanding balance of Winton's largest multifamily real estate loan was $3.4 million at September 30, 2004. 4 Multifamily loans generally have terms of up to 25 years and a maximum LTV of 80%. Adjustable-rate multifamily residential loans are currently made with the same adjustment schedules, indexes and caps as for one- to four-family residential ARMs, with a margin of 3% over the index. Multifamily lending is generally considered to involve a higher degree of risk than one- to four-family residential lending because the loan amounts are larger and the borrower typically depends upon income generated by the project to cover operating expenses and debt service. The profitability of a project can be affected by economic conditions, government policies and other factors beyond the control of the borrower. Winton attempts to reduce the risk associated with multifamily lending by evaluating the credit-worthiness of the borrower and the projected income from the project and by obtaining personal guarantees on loans made to corporations and partnerships. Winton requires that the borrower agree to submit rent rolls and financial statements annually to enable Winton to monitor the loan. At September 30, 2004, Winton had $254,000 of nonperforming loans in its multifamily real estate portfolio. LAND AND LOT LOANS. Winton originates loans to individuals and to builders secured by mortgages on real estate upon which residential and nonresidential properties will be constructed. At September 30, 2004, a total of $4.9 million, or approximately 1.0%, of Winton's total loans consisted of land and lot loans. Ohio regulations limit the amount of any land and lot loan for a single person to two percent of total assets of the association. The outstanding balance of Winton's largest land and lot loan was $871,000 or .16% of Winton's total assets, at September 30, 2004. A developed building lot loan is generally made for a 20-year term with a five-year balloon payment of principal due upon expiration of the loan term and generally a maximum LTV of 75%. Loans on development real estate are generally considered to be subject to a higher degree of risk because the borrower typically depends on a sale of the property or the later improvement of the property to cover debt service. The ability to sell or develop unimproved real estate is affected by economic conditions, government policies and other factors beyond the control of the borrower. These risks are increased if the unimproved real estate is for an entire subdivision rather than a single residential lot. Winton reviews the viability of the unimproved real estate for improvement and sale and evaluates the credit-worthiness of the borrowers for these loans. At September 30, 2004, Winton had no nonperforming loans in its land and lot loan portfolio. NONRESIDENTIAL REAL ESTATE LOANS. Winton originates real estate loans secured by nonresidential real estate, including loans secured by retail, office and other types of business facilities located in its primary market area. At September 30, 2004, a total of $90.7 million, or approximately 18.7%, of Winton's total loans consisted of nonresidential real estate loans. The outstanding balance of Winton's largest nonresidential real estate loan was $2.3 million at September 30, 2004. Federal regulations limit the amount of nonresidential mortgage loans that an association may make to 400% of its capital, and Ohio regulations limit the amount of nonresidential loans that an association may make to 20% of total assets. At September 30, 2004, Winton's nonresidential permanent mortgage loans of $90.7 million and nonresidential construction loans of $3.8 million totaled 195.2% of Winton's capital and 17.1% of Winton's total assets. In recent years, nonresidential real estate loans have been made on an adjustable-rate and fixed-rate basis, with loan terms generally up to a maximum of 25 years. Winton typically originates these loans at a maximum 80% LTV. Adjustable-rate nonresidential real estate loans have the same adjustment schedules, index and caps as the residential ARMs described above in "One- to Four-Family Real Estate Loans." Nonresidential real estate lending is generally considered to involve a higher degree of risk than residential lending due to the relatively larger loan amounts and the effects of general economic conditions on the successful operation of income-producing properties. If the cash flow on the property is reduced, for example, as leases are not obtained or renewed, the borrower's ability to repay may be impaired. Winton has endeavored to reduce such risk by evaluating the credit history and past performance of the borrower, the location of the real estate, the quality of the management constructing and operating the property, the debt service ratio, the quality and characteristics of the income stream generated by the property and appraisals supporting the property's valuation. At September 30, 2004, Winton had $450,000 of nonperforming loans in its non-residential real estate portfolio. CONSTRUCTION LOANS. Winton offers residential construction loans both to owner-occupants and to builders for homes being built under contract with owner-occupants. To a very limited extent, Winton also makes construction loans to persons or businesses constructing projects for investment purposes, for multifamily properties and for nonresidential 5 projects. At September 30, 2004, a total of $30.2 million, or approximately 6.2%, of Winton's total loans consisted of construction loans. The outstanding balance of Winton's largest construction loan was $1.9 million at September 30, 2004. Construction loans generally have terms ranging from 6 to 12 months at fixed and adjustable rates of interest over the construction period. Adjustable-rate construction loan products are adjusted based on changes to the prime rate. Residential construction loans and nonresidential construction loans are interim loans which are replaced by permanent fixed- or adjustable-rate loans at the end of the construction period. Such permanent loans may or may not be obtained from Winton. Construction loans generally involve greater underwriting and default risks than do loans secured by mortgages on existing properties due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on real estate developments, developers, managers and builders. In addition, such loans are more difficult to evaluate and monitor. Winton advances loan funds upon the security of the project under construction, which is more difficult to value before the completion of construction. Moreover, because of the uncertainties inherent in estimating construction costs, it is relatively difficult to evaluate accurately the LTVs and the total loan funds required to complete a project. In the event a default on a construction loan occurs and foreclosure follows, Winton would have to take control of the project and attempt either to arrange for completion of construction or dispose of the unfinished project. Almost all of Winton's construction loans are secured by properties in its primary market area. The economy of such lending area has been relatively stable over the three years ended September 30, 2004. At September 30, 2004, Winton had no nonperforming loans in its construction loan portfolio. CONSUMER AND OTHER LOANS. Winton originates various types of consumer loans, including loans made to depositors on the security of their savings deposits, automobile loans, loans secured by stocks of publicly-traded companies, closed end and line of credit loans to businesses secured by non-real estate assets and unsecured personal loans. At September 30, 2004, a total of $17.8 million, or 3.7%, of Winton's total loans consisted of consumer and other loans. The outstanding balance of Winton's largest consumer or other loan was $2.5 million at September 30, 2004. Ohio regulations limit the amount of consumer loans that an association may make to 20% of total assets. At September 30, 2004, Winton's consumer loans represented approximately 3.2% of Winton's total assets. Consumer loans are generally made at fixed rates of interest consistent with the market rate for the type of collateral offered as security and for terms of 90 days to five years. Consumer loans, particularly consumer loans that are unsecured or are secured by depreciating assets such as automobiles and mobile homes, entail greater risk than residential loans. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance. The risk of default on consumer loans increases during periods of recession, high unemployment and other adverse economic conditions. At September 30, 2004, Winton had $53,000 of nonperforming loans in its consumer and other loan portfolio. LOAN SOLICITATION AND PROCESSING. Winton develops loan originations from a number of sources, including commissioned loan originators, loan brokers, continuing business with depositors, other borrowers and real estate developers, solicitations by Winton's directors, officers and lending staff and walk-in customers. Winton's loan personnel take all loan applications for permanent mortgage loans. Winton obtains a credit report, verification of employment and other documentation concerning the credit-worthiness of the borrower. Generally, an independent fee appraiser approved by the Board of Directors will prepare an appraisal of the fair market value of the real estate that will be given as security for the loan. An environmental study is conducted only if the appraiser or management has reason to believe that an environmental problem may exist. For multifamily and nonresidential mortgage loans, Winton generally requires a personal guarantee. Winton also obtains information with respect to prior projects completed by the borrower. Upon the completion of the appraisal and the receipt of information on the borrower, the application for a loan is submitted either to Winton's Loan Committee and/or the Board of Directors or to the secondary market for approval or rejection. Any loan applications that are not accepted by the secondary market are reviewed and accepted or rejected by Winton's Loan Committee. If a mortgage loan application is approved, Winton obtains an attorney's opinion of title or a title insurance policy on the real estate that will secure the mortgage loan. Winton requires borrowers to carry fire and casualty insurance and flood insurance, if applicable, and to name Winton as an insured mortgagee. 6 The procedure for approval of construction loans is the same as for permanent mortgage loans, except that an appraiser evaluates the building plans, construction specifications and estimates of construction costs. Winton also evaluates the feasibility of the proposed construction project and the experience and record of the builder. Consumer loans are underwritten on the basis of the borrower's credit history and an analysis of the borrower's income and expenses, ability to repay the loan and the value of the collateral, if any. Winton's mortgage loans carry provisions that the entire balance of the loan is due upon sale of the property securing the loan. LOAN ORIGINATIONS, PURCHASES AND SALES. Winton has been actively originating 30-year, 20-year and 15-year fixed-rate and adjustable-rate loans. Most residential fixed-rate loans made by Winton are originated on documentation which will permit a possible sale of such loans to the Federal Home Loan Mortgage Corporation ("FHLMC") or other secondary mortgage market participants. Winton sold $127.0 million of fixed-rate loans and $7.4 million of adjustable rate loans during fiscal 2004, compared to sales of $243.5 million of fixed-rate loans and $6.8 million of adjustable-rate loans in fiscal 2003. From time to time, Winton sells participation interests in mortgage loans originated by Winton or purchases participation interests in loans originated by other lenders. During fiscal 2004, Winton sold participation interests in loans totaling $125,000 to other lenders. During fiscal 2003, Winton sold participation interests in loans totaling $3.0 million to other lenders. During fiscal 2002, Winton sold participation interests in loans totaling $1.1 million to other lenders. Winton held participations in loans originated by other lenders of approximately $3.6 million at September 30, 2004. Loans in which Winton purchases participation interests must meet or exceed the underwriting standards for the loans that Winton originates. The following table presents Winton's mortgage loan origination, purchase, sale and principal repayment activity for the periods indicated:

---------------------------- (1) Consists primarily of auto and line of credit disbursements and change in loans in process. 7 FEDERAL LENDING LIMIT. OTS regulations impose a lending limit on the aggregate amount that a savings association can lend to one borrower to an amount equal to 15% of the association's total capital for risk-based capital purposes plus any loan reserves not already included in total capital (the "Lending Limit Capital"). A savings association may lend to one borrower an additional amount not to exceed 10% of the association's Lending Limit Capital, if the additional amount is fully secured by certain forms of "readily marketable collateral." Real estate is not considered "readily marketable collateral." In applying this limit, the regulations require that loans to certain related or affiliated borrowers be aggregated. An exception to this limit permits loans of any type to one borrower of up to $500,000. In addition, the OTS, under certain circumstances, may permit exceptions to the lending limit on a case-by-case basis. Based on the 15% limit, Winton was able to lend approximately $7.7 million to one borrower at September 30, 2004. Winton had no outstanding loans in excess of such limit at September 30, 2004. LOAN ORIGINATION AND OTHER FEES. Winton realizes loan origination fee and other fee income from its lending activities and also realizes income from late payment charges, application fees and fees for other miscellaneous services. Loan origination fees and other fees are a volatile source of income, varying with the volume of lending, loan repayments and general economic conditions. All nonrefundable loan origination fees and certain direct loan origination costs are deferred and recognized, in accordance with Statement of Financial Accounting Standards ("SFAS") No. 91, as an adjustment to yield over the life of the related loan. DELINQUENT LOANS, NONPERFORMING ASSETS AND CLASSIFIED ASSETS. Winton attempts to minimize loan delinquencies through the assessment of late charges and adherence to its established collection procedures. After a mortgage loan payment is 15 days delinquent, Winton assesses a late charge of 5% of the amount of the payment and contacts the borrower by mail or phone to request payment. In certain limited instances, Winton may modify the loan or grant a limited moratorium on loan payments to enable the borrower to reorganize the borrower's financial affairs. If the loan continues in a delinquent status for 90 days or more, Winton generally will initiate foreclosure proceedings. Real estate acquired by Winton as a result of foreclosure or by deed in lieu of foreclosure is classified as "real estate owned" until it is sold. When Winton acquires such property, Winton records the property at the lower of the loan's unpaid principal balance or fair value at the date of foreclosure less estimated selling expenses. Periodically, Winton reviews its real estate owned to ensure that fair value is not less than carrying value. Any allowance resulting from the review is charged to earnings as a provision for losses on real estate acquired through foreclosure. All costs incurred from the date of acquisition are expensed in the period paid. The following table reflects the amount of loans in delinquent status as of the dates indicated:

-------------------- (1) Includes loans held for sale. Winton reviews all delinquent loans on a regular basis and places loans on non-accrual status when, in the opinion of management, the collection of additional interest is doubtful. Winton places residential mortgage loans on non-accrual status when either principal or interest is considered uncollectible. Consumer loans generally are charged off when the loan becomes over 120 days delinquent. Nonresidential real estate loans are evaluated for non-accrual status when the loan is 90 days or more past due. Interest accrued and unpaid at the time a loan is placed on non-accrual status is charged against interest income. Subsequent payments are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment of the ultimate collectibility of the loan. The amount of interest that would have been earned on nonaccruing loans, had such loans been current, for the year ended September 30, 2004, was approximately $33,000. 8 The following table sets forth information with respect to Winton's nonperforming assets for the periods indicated. During the periods shown, Winton had no restructured loans within the meaning of SFAS No. 15. In addition, as of September 30, 2004, Winton had no loans that were not reflected in the table as non-accrual, 90 days past due or restructured, but which may become so in the near future because management has concerns as to the ability of the borrowers to comply with repayment terms.

---------------------------- (1) Non-accrual status denotes loans on which, in the opinion of management, the collection of additional interest is unlikely. Payments received on a non-accrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on management's assessment of the collectibility of the loan. (2) Consists of real estate acquired through foreclosure and other repossessed assets that are carried at the lower of cost or fair value less estimated selling expenses. OTS regulations require that each thrift institution classify its assets on a regular basis. Problem assets are classified as "substandard," "doubtful" or "loss." "Substandard" assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. "Doubtful" assets have the same weaknesses as "substandard" assets, with the additional characteristics that (i) the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable and (ii) there is a high possibility of loss. An asset classified "loss" is considered uncollectible and of such little value that its continuance as an asset of the institution is not warranted. The regulations also contain a "special mention" category, consisting of assets which do not currently expose an institution to a sufficient degree of risk to warrant classification, but which possess credit deficiencies or potential weaknesses deserving management's close attention. At September 30, 2004, Winton had approximately $6.6 million of loans designated as special mention. Generally, Winton classifies as "substandard" all loans that are delinquent more than 60 days, unless management believes the delinquency status is short-term due to unusual circumstances. Loans delinquent fewer than 60 days may also be classified if the loans have the characteristics described above rendering classification appropriate. At September 30, 2004, Winton's classified assets consisted of substandard assets of approximately $1.1 million and no loans classified as doubtful. No loans were classified as a loss at September 30, 2004. Federal examiners are authorized to classify an association's assets. If an association does not agree with an examiner's classification of an asset, the association may appeal the classification to the appropriate Regional Director of the OTS. Winton had no disagreements with the examiners regarding the classification of assets at the time of the last examination. 9 OTS regulations require that Winton establish prudent general allowances for loan losses for any loan classified as substandard or doubtful. If an asset, or portion thereof, is classified as loss, the association must either establish specific allowances for losses in the amount of 100% of the portion of the asset classified loss, or charge off such amount. ALLOWANCE FOR LOAN LOSSES. The Board of Directors reviews on a quarterly basis the allowance for loan losses as it relates to a number of relevant factors, including, but not limited to, trends in the level of nonperforming assets and classified loans, current and anticipated economic conditions in the primary lending area, past loss experience and possible losses arising from specific problem assets. To a lesser extent, management also considers loan concentrations to single borrowers and changes in the composition of the loan portfolio. While the Board of Directors believes that it uses the best information available to determine the allowance for loan losses, unforeseen market conditions could result in adjustments. Net earnings could be significantly affected by these adjustments if circumstances differ substantially from the assumptions used in making the final determination. At September 30, 2004, Winton's allowance for loan losses totaled $2.4 million. It is Winton's policy to provide valuation allowances for estimated losses on loans based on past loss experience, current trends in the level of delinquent and problem loans, loan concentrations to single borrowers, changes in the composition of the loan portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral and current and anticipated economic conditions in its primary lending areas. When the collection of a loan becomes doubtful, or otherwise troubled, Winton's records a charge-off equal to the difference between the fair value of the property securing the loan and the loan's carrying value. Major loans, including development projects, and major lending areas are reviewed periodically to determine potential problems at an early date. The allowance for loan losses is increased by charges to earnings and decreased by charge-offs (net of recoveries). Winton accounts for impaired loans in accordance with SFAS No. 114, "Accounting by Creditors for Impairment of a Loan." SFAS No. 114 requires that impaired loans be measured based upon the present value of expected future cash flows discounted at the loan's effective interest rate or, as an alternative, at the loan's observable market price or fair value of the collateral. A loan is defined under SFAS No. 114 as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. In applying the provisions of SFAS No. 114, Winton considers its investment in one- to four-family residential loans and consumer installment loans to be homogeneous and therefore excluded from separate identification for evaluation of impairment. With respect to Winton's investment in nonresidential and multifamily residential real estate loans, and its evaluation of impairment thereof, such loans are generally collateral dependent and, as a result, are carried as a practical expedient at the lower of cost or fair value. Collateral dependent loans that are more than ninety days delinquent are considered to constitute more than a minimum delay in repayment and are evaluated for impairment under SFAS No. 114 at that time. At September 30, 2004, Winton had no loans defined as impaired under SFAS No. 114. As a result of an analysis of historical experience, the volume and type of lending conducted by Winton, the status of past due principal and interest payments, and general economic conditions, particularly as such conditions relate to Winton's loan portfolio, management recorded a $300,000 provision for losses on loans during the fiscal year ended September 30, 2004, compared to a provision of $605,000 recorded in fiscal 2003. There can be no assurance that the allowance for loan losses of Winton will be adequate to cover losses on nonperforming assets in the future. 10 The following table sets forth an analysis of Winton's allowance for loan losses for the periods indicated.

--------------------------- (1) The recoveries were from consumer loans. (2) During the respective periods there were $493.4 million, $459.3 million, $443.2 million, $420.5 million and $420.0 million in average loans outstanding. The following table provides an allocation of Winton's allowance for loan losses as of each of the following dates:

11 INVESTMENT ACTIVITIES Winton Financial invests in municipal bonds, corporate securities, U.S. government and agency obligations. Municipal bonds owned are primarily bank qualified general obligations of states and municipalities whose interest in non-taxable and include private insurance support as to principal. The following table presents the amortized cost and market values of Winton's investment securities available for sale at the dates indicated:

The following table presents the contractual maturities or terms to repricing of U.S. Government and agency obligations and municipal bonds at annualized cost and the weighted-average yields at September 30, 2004:

(1) Tax exempt municipal bonds are shown at stated yields. Winton maintains a portfolio of mortgage-backed pass-through securities in the form of FHLMC, Federal National Mortgage Association ("FNMA") and Government National Mortgage Association ("GNMA") participation certificates. Mortgage-backed pass-through securities generally entitle Winton to receive a portion of the cash flows from an identified pool of mortgages and gives Winton an interest in the pool of mortgages. FHLMC, FNMA and GNMA securities are each guaranteed by their respective agencies as to principal and interest. 12 The following table sets forth certain information regarding Winton's investment in mortgage-backed securities at the dates indicated:

The combined amortized cost of mortgage-backed and related securities designated as held to maturity or available for sale at September 30, 2004 and 2003, by contractual terms to maturity are shown below. Actual maturities may differ from contractual maturities because borrowers generally may prepay obligations without prepayment penalties. Also, the timing of cash flows will be affected by management's intent to sell securities designated as available for sale under certain economic conditions.

DEPOSITS AND BORROWINGS GENERAL. Deposits have traditionally been the primary source of Winton's funds for use in lending and other investment activities. In addition to deposits, Winton derives funds from interest payments and principal repayments on loans and mortgage-backed securities, advances from the FHLB, income on earning assets, service charges and gains on the sale of assets. Loan payments are a relatively stable source of funds, while deposit inflows and outflows fluctuate more in response to general interest rates and money market conditions. FHLB advances are used on a short-term basis to compensate for reductions in the availability of funds from other sources or on a longer term basis for general business purposes. DEPOSITS. Historically, deposits have been attracted principally from within Winton's primary market area through the offering of a broad selection of deposit instruments, including checking accounts, regular passbook savings accounts, term certificate accounts and individual retirement accounts. In the recent past Winton has utilized the services of deposit brokers to market certificates of deposit. At September 30, 2004, the total amount of brokered deposits equaled approximately $9.0 million, or 2.5%, of total deposits. Interest rates paid, maturity terms, service fees and withdrawal penalties for the various types of accounts are established periodically by management of Winton based on Winton's liquidity requirements, growth goals and interest rates paid by competitors. Winton attempts to manage its interest rate risk by lengthening the term to maturity of its deposit liabilities. At September 30, 2004, Winton's certificates of deposit totaled $248.9 million, or 68.2% of total deposits. Of such amount, approximately $144.5 million in certificates of deposit mature within one year. Based on past experience and Winton's prevailing pricing strategies, management believes that a substantial percentage of such certificates will renew with 13 Winton at maturity, although brokered deposits are less likely to renew than other certificates of deposit. If there is a significant deviation from historical experience, Winton can, to a limited extent, utilize additional borrowings from the FHLB as an alternative to this source of funds. See "Borrowings" and "REGULATION - Federal Home Loan Banks." During fiscal 2004, 2003 and 2002, Winton offered certificates of deposit with terms from six months to five years at rates which adjust monthly with designated market indices, which were the prime rate, the six-month CD resale rate or the three-year Treasury rate. Approximately $8.2 million of these certificates of deposit were outstanding at September 30, 2004. Because these certificates of deposit are market rate sensitive, they increase Winton's interest rate risk. See "Asset/Liability Management." The following table sets forth the dollar amount of deposits in the various types of savings programs offered by Winton at September 30, 2004:

--------------- (1) Winton's weighted-average interest rate on passbook accounts fluctuates with the general movement of interest rates. The weighted-average interest rate on passbook accounts was 1.17% at September 30, 2004. (2) Winton's weighted-average interest rate paid on checking accounts fluctuates with the general movement of interest rates. The weighted-average rate on checking accounts was .60% at September 30, 2004. (3) Includes Individual Retirement Accounts and jumbo certificates of deposit (those with balances in excess of $100,000). Terms of certificates of deposit offered range from 30 days to 15 years, with the average accounts ranging from 90 days to five years. 14 The following table shows rate and maturity information for Winton's certificates of deposit as of September 30, 2004:

The following table presents the amount of Winton's certificates of deposit of $100,000 or more, by the time remaining until maturity at September 30, 2004:

BORROWINGS. During the year ended September 30, 2004, WFC's borrowings consisted of FHLB advances and a $2.0 million loan with a correspondent bank. The following table sets forth the maximum amount of WFC's FHLB advances and other borrowings outstanding at any month-end, during the periods shown, and the average aggregate balances of FHLB advances for such periods:

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

COMPETITION Winton competes for deposits with other savings associations, commercial banks and credit unions and with the issuers of commercial paper and other securities, such as shares in money market mutual funds. The primary factors in 15 competing for deposits are interest rates and convenience of office location. In making loans, Winton competes with other savings associations, commercial banks, consumer finance companies, credit unions, leasing companies, mortgage brokers and other lenders. Winton competes for loan originations primarily through the interest rates and loan fees it charges and through the efficiency and quality of services it provides to borrowers. Competition is affected by, among other things, the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors which are not readily predictable. The size of financial institutions competing with Winton is likely to increase as a result of changes in statutes and regulations eliminating various restrictions on interstate and inter-industry branching and acquisitions. Such increased competition may have an adverse effect upon Winton. SUBSIDIARY ACTIVITIES WFC has two subsidiaries, Winton and Walnut Street Enterprises L.L.C. Walnut Street Enterprises was incorporated in fiscal 2004 for the purpose of acquiring and owning real estate. PERSONNEL As of September 30, 2004, Winton had 134 full-time equivalent employees. Winton believes that relations with its employees are good. Winton offers health, disability, life and dependent care benefits. None of the employees of Winton are represented by a collective bargaining unit. REGULATION GENERAL WFC is a savings and loan holding company within the meaning of the Home Owners Loan Act, as amended (the "HOLA"). Consequently, WFC is subject to regulation, examination and oversight by the OTS and must submit periodic reports to the OTS concerning its activities and financial condition. In addition, as a corporation organized under Ohio law, WFC is subject to provisions of the Ohio Revised Code applicable to corporations generally. As an Ohio savings and loan association, Winton is subject to regulation, examination and oversight by the Superintendent of the Division of Financial Institutions (the "Ohio Superintendent"). Because Winton's deposits are insured by the FDIC, Winton also is subject to regulatory oversight by the FDIC. Winton must file periodic reports with the OTS concerning its activities and financial condition. Examinations are conducted periodically by federal and state regulators to determine whether Winton is in compliance with various regulatory requirements and is operating in a safe and sound manner. Winton is a member of the FHLB and is subject to certain regulations promulgated by the Board of Governors of the Federal Reserve System (the "FRB"). OHIO CORPORATION LAW MERGER MORATORIUM STATUTE. Chapter 1704 of the Ohio Revised Code regulates certain takeover bids affecting certain public corporations that have significant ties to Ohio. This statute prohibits, with some exceptions, any merger, combination or consolidation and any of certain other sales, leases, distributions, dividends, exchanges, mortgages or transfers between an Ohio corporation and any person who has the right to exercise, alone or with others, 10% or more of the voting power of such corporation (an "Interested Shareholder"), for three years following the date on which such person first becomes an Interested Shareholder. Such a business combination is permitted only if, prior to the time such person first becomes an Interested Shareholder, the Board of Directors of the issuing corporation has approved the purchase of shares which resulted in such person first becoming an Interested Shareholder. After the initial three-year moratorium, such a business combination may not occur unless (1) one of the specified exceptions applies, (2) the holders of at least two-thirds of the voting shares, and of at least a majority of the voting shares not beneficially owned by the Interested Shareholder, approve the business combination at a meeting called for such purpose, or (3) the business combination meets certain statutory criteria designed to ensure that the issuing public corporation's remaining shareholders receive fair consideration for their shares. An Ohio corporation may, under certain circumstances, "opt out" of the statute by specifically providing in its articles of incorporation that the statute does not apply to any business combination of such corporation. However, the statute still prohibits for twelve months any business combination that would have been prohibited but for the adoption of 16 such an opt-out amendment. The statute also provides that it will continue to apply to any business combination between a person who became an Interested Shareholder prior to the adoption of such an amendment as if the amendment had not been adopted. Neither WFC nor Winton has opted out of the protection afforded by Chapter 1704. CONTROL SHARE ACQUISITION. Section 1701.831 of the Ohio Revised Code (the "Control Share Acquisition Statute") requires that, with certain exceptions, acquisitions of voting securities which would result in the acquiring shareholder owning 20%, 33-1/3% or 50% of the outstanding voting securities of an Ohio corporation (a "Control Share Acquisition") must be approved in advance by the holders of at least a majority of the outstanding voting shares of such corporation represented at a meeting at which a quorum is present and a majority of the portion of the outstanding voting shares represented at such a meeting excluding the voting shares owned by the acquiring shareholder, by certain other persons who acquire or transfer voting shares after public announcement of the acquisition or by certain officers of the corporation or directors of the corporation who are employees of the corporation. The Control Share Acquisition Statute was intended, in part, to protect shareholders of Ohio corporations from coercive tender offers. TAKEOVER BID STATUTE. Ohio law provides that an offeror may not make a tender offer or request or invitation for tenders that would result in the offeror beneficially owning more than ten percent of any class of the target company's equity securities unless such offeror files certain information with the Ohio Division of Securities (the "Securities Division") and provides such information to the target company and the offerees within Ohio. The Securities Division may suspend the continuation of the control bid if the Securities Division determines that the offeror's filed information does not provide full disclosure to the offerees of all material information concerning the control bid. The statute also provides that an offeror may not acquire any equity security of a target company within two years of the offeror's previous acquisition of any equity security of the same target company pursuant to a control bid unless the Ohio offerees may sell such security to the offeror on substantially the same terms as provided by the previous control bid. The statute does not apply to a transaction if either the offeror or the target company is a savings and loan holding company and the proposed transaction requires federal regulatory approval. OHIO SAVINGS AND LOAN REGULATION The Ohio Superintendent is responsible for the regulation and supervision of Ohio savings and loan associations in accordance with the laws of the State of Ohio and imposes assessments on Ohio associations based on their asset size to cover the costs of supervision and examination. Ohio law prescribes the permissible investments and activities of Ohio savings and loan associations, including the types of lending that such associations may engage in and the investments in real estate, subsidiaries and corporate or government securities that such associations may make. The ability of Ohio associations to engage in these state-authorized investments and activities is subject to oversight and approval by the FDIC, if such investments or activities are not permissible for a federally-chartered savings association. The Ohio Superintendent also has approval authority over any mergers involving, or acquisitions of control of, Ohio savings and loan associations. The Ohio Superintendent may initiate certain supervisory measures or formal enforcement actions against Ohio associations. Ultimately, if the grounds provided by law exist, the Superintendent may place an Ohio association in conservatorship or receivership. In addition to being governed by the laws of Ohio specifically governing savings and loan associations, Winton is also governed by Ohio corporate law, to the extent such law does not conflict with the laws specifically governing savings and loan associations. OFFICE OF THRIFT SUPERVISION REGULATORY CAPITAL REQUIREMENTS. Winton is required by OTS regulations to meet certain minimum capital requirements. The tangible capital requirement requires savings associations to maintain "tangible capital" of not less than 1.5% of their adjusted total assets. Tangible capital is defined in OTS regulations as core capital minus any intangible assets. "Core capital" is comprised of common stockholders' equity (including retained earnings), noncumulative preferred stock and related surplus, minority interests in consolidated subsidiaries, certain nonwithdrawable accounts and pledged deposits of mutual associations. OTS regulations require savings associations to maintain core capital of at least 4% of their adjusted total assets, except for associations with the highest examination rating and acceptable levels of risk. OTS regulations require that savings associations maintain "risk-based capital" in an amount not less than 8% of their risk-weighted assets. Risk-based capital is defined as core capital plus certain additional items of capital, which in the case of Winton includes a general loan loss allowance of $2.4 million at September 30, 2004. The OTS may adjust the risk-based capital requirement on an individualized basis to take into account risks due to concentrations of credit and non-traditional activities. 17 The OTS has adopted regulations governing prompt corrective action to resolve the problems of capital deficient and otherwise troubled savings associations. At each successively lower defined capital category, an association is subject to more restrictive and more numerous mandatory or discretionary regulatory actions or limits, and the OTS has less flexibility in determining how to resolve the problems of the institution. In addition, the OTS generally can downgrade an association's capital category, notwithstanding its capital level, if, after notice and opportunity for hearing, the association is deemed to be engaging in an unsafe or unsound practice because it has not corrected deficiencies that resulted in it receiving a less than satisfactory examination rating on matters other than capital or it is deemed to be in an unsafe or unsound condition. Winton's capital at September 30, 2004, met the standards for the highest category, a "well-capitalized" institution. QUALIFIED THRIFT LENDER TEST. Savings associations must meet one of two tests in order to be a qualified thrift lender ("QTL"). The first test requires a savings association to maintain a specified level of investments in assets that are designated as qualifying thrift investments ("QTIs"). Generally, QTIs are assets related to domestic residential real estate and manufactured housing and include credit card, student and small business loans and stock issued by any FHLB, the FHLMC or the FNMA. Under the first test, at least 65% of an institution's "portfolio assets" (total assets less goodwill and other intangibles, property used to conduct business and 20% of liquid assets) must consist of QTI on a monthly average basis in nine out of every 12 months. The second test permits a savings association to qualify as a QTL by meeting the definition of "domestic building and loan association" under the Internal Revenue Code of 1986, as amended (the "Code"). In order for an institution to meet the definition of a "domestic building and loan association" under the Code, at least 60% of such institution's assets must consist of specified types of property, including cash loans secured by residential real estate or deposits, educational loans and certain governmental obligations. The OTS may grant exceptions to the QTL tests under certain circumstances. If a savings association fails to meet one of the QTL tests, the association and its holding company become subject to certain operating and regulatory restrictions. At September 30, 2004, Winton qualified as a QTL. TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to executive officers, directors and principal shareholders and their related interests must conform to the lending limit on loans to one borrower, and the total of such loans to executive officers, directors, principal shareholders and their related interests cannot exceed the association's Lending Limit Capital (or 200% of Lending Limit Capital for qualifying institutions with less than $100 million in deposits). Most loans to directors, executive officers and principal shareholders must be approved in advance by a majority of the "disinterested" members of the board of directors of the association, with any "interested" director not participating. All loans to directors, executive officers and principal shareholders must be made on terms substantially the same as offered in comparable transactions with the general public or as offered to all employees in a company-wide benefit program, and loans to executive officers are subject to additional limitations. Winton was in compliance with such restrictions at September 30, 2004. All transactions between savings associations and their affiliates must comply with Sections 23A and 23B of the Federal Reserve Act (the "FRA") and the Federal Reserve Board's Regulation W. An affiliate of a savings association is any company or entity that controls, is controlled by or is under common control with the savings association. WFC and Alpine Terrace II, LLC, a wholly owned subsidiary of Winton, are affiliates of Winton. Generally, Sections 23A and 23B of the FRA (i) limit the extent to which a savings association or its subsidiaries may engage in "covered transactions" with any one affiliate up to an amount equal to 10% of such institution's capital stock and surplus, (ii) limit the aggregate of all such transactions with all affiliates up to an amount equal to 20% of such capital stock and surplus, and (iii) require that all such transactions be on terms substantially the same, or at least as favorable to the association, as those provided in transactions with a non-affiliate. The term "covered transaction" includes the making of loans, purchasing of assets, acceptance of a security issued by the affiliate as collateral for an extension of credit to any person, issuance of a guarantee and other similar types of transactions. In addition to the limits in Sections 23A and 23B, a savings association may not make any loan or other extension of credit to an affiliate unless the affiliate is engaged only in activities permissible for a bank holding company and may not purchase or invest in securities of any affiliate except shares of a subsidiary. Winton was in compliance with these requirements and restrictions at September 30, 2004. LIMITATIONS ON CAPITAL DISTRIBUTIONS. The OTS imposes various restrictions or requirements on the ability of associations to make capital distributions. Capital distributions include, without limitation, payments of cash dividends, repurchases and certain other acquisitions by an association of its shares and payments to stockholders of another association in an acquisition of such other association. An application must be submitted and approval from the OTS must be obtained by a subsidiary of a savings and loan holding company (i) if the proposed distribution would cause total distributions for the calendar year to exceed the savings association's retained net income for that year to date plus the retained net income for the preceding two years; (ii) if the savings association will not be at least adequately capitalized following the capital distribution; (iii) if the proposed distribution would violate a prohibition contained in any applicable statute, regulation or agreement between the savings association and the OTS (or the FDIC), or violate a condition imposed on the savings association in an OTS-approved application or notice. If a savings association subsidiary of a holding company is not required to file an application, it must file a 30-day notice of the proposed capital distribution with the OTS. 18 HOLDING COMPANY REGULATION. As a savings and loan holding company within the meaning of the HOLA, WFC has registered with the OTS and is subject to OTS regulations, examination, supervision and reporting requirements. The HOLA generally prohibits a savings and loan holding company from controlling any other savings association or savings and loan holding company, without prior approval of the OTS, or from acquiring or retaining more than 5% of the voting shares of a savings association or holding company thereof, which is not a subsidiary. Under certain circumstances, a savings and loan holding company is permitted to acquire, with the approval of the OTS, up to 15% of the previously unissued voting shares of an undercapitalized savings association for cash without such savings association being deemed to be controlled by WFC. Except with the prior approval of the OTS, no director or officer of a savings and loan holding company or person owning or controlling by proxy or otherwise more than 25% of such holding company's stock may also acquire control of any savings institution, other than a subsidiary institution, or any other savings and loan holding company. As a unitary savings and loan holding company in existence on May 4, 1999, WFC generally has no restrictions on its activities. If the OTS determines that there is reasonable cause to believe that the continuation by a savings and loan holding company of an activity constitutes a serious risk to the financial safety, soundness or stability of its subsidiary savings association, however, the OTS may impose such restrictions as deemed necessary to address such risk, including limiting (i) payment of dividends by the savings association, (ii) transactions between the savings association and its affiliates, and (iii) any activities of the savings association that might create a serious risk that the liabilities of WFC and its affiliates may be imposed on the savings association. Notwithstanding the foregoing rules as to permissible business activities of a unitary savings and loan holding company, if the savings association subsidiary of a holding company fails to meet the QTL test, then such unitary savings and loan holding company would become subject to the activities restrictions applicable to multiple holding companies. At September 30, 2004, Winton met the QTL test. FEDERAL REGULATION OF ACQUISITIONS OF CONTROL OF WFC AND WINTON. In addition to the Ohio law limitations on the merger and acquisition of WFC, federal limitations generally require regulatory approval of acquisitions at specified levels. Under pertinent federal law and regulations, no person, directly or indirectly, or acting in concert with others, may acquire control of Winton or WFC without 60 days' prior notice to the OTS. "Control" is generally defined as having more than 25% ownership or voting power; however, ownership or voting power of more than 10% may be deemed "control" if certain factors are in place. If the acquisition of control is by a company, the acquiror must obtain approval, rather than give notice, of the acquisition. FEDERAL DEPOSIT INSURANCE CORPORATION DEPOSIT INSURANCE AND ASSESSMENTS. The FDIC is an independent federal agency that insures the deposits, up to prescribed statutory limits, of federally insured banks and savings and loan associations and safeguards the safety and soundness of the banking and savings and loan industries. The FDIC administers two separate insurance funds, the Bank Insurance Fund ("BIF") for commercial banks and state savings banks and the SAIF for savings associations. Winton is a member of the SAIF and its deposit accounts are insured by the FDIC up to the prescribed limits. The FDIC has examination authority over all insured depository institutions, including Winton, and has authority to initiate enforcement actions against federally-insured savings associations if the FDIC does not believe the OTS has taken appropriate action to safeguard safety and soundness and the deposit insurance fund. The FDIC is required to maintain designated levels of reserves in the SAIF and in the BIF. The FDIC may increase assessment rates for either fund if necessary to restore the fund's ratio of reserves to insured deposits to its target level within a reasonable time and may decrease such rates if such target level has been met. The FDIC has established a risk-based assessment system for both SAIF and BIF members. Under this system, assessments vary based on the risk the institution poses to its deposit insurance fund. The risk level is determined based on the institution's capital level and the FDIC's level of supervisory concern about the institution. STATE-CHARTERED ASSOCIATION ACTIVITIES. The ability of state-chartered associations to engage in any state-authorized activities or make any state-authorized investments is limited if such activity is conducted or investment is made in a manner different than that permitted for, or subject to different terms and conditions than those imposed on, federally chartered savings associations. Engaging as a principal in any such activity or investment not permissible for a federal association is subject to approval by the FDIC. Such approval will not be granted unless certain capital requirements are met and there is not a significant risk to the FDIC insurance fund. All of Winton's activities and investments at September 30, 2004, were permissible for a federal association. 19 FRB RESERVE REQUIREMENTS FRB regulations require savings associations to maintain certain reserves equal to a percentage of net transaction accounts (primarily NOW accounts). At September 30, 2004, Winton was in compliance with the present reserve requirements and the requirements then in effect. FEDERAL HOME LOAN BANKS The FHLBs provide credit to their members in the form of advances. Winton is a member of the FHLB of Cincinnati and must maintain an investment in the capital stock of the FHLB of Cincinnati in an amount equal to the greater of 1% of the aggregate outstanding principal amount of Winton's residential mortgage loans, home purchase contracts and similar obligations at the beginning of each year, or 5% of its advances from the FHLB of Cincinnati. Winton was in compliance with this requirement with an investment in stock of the FHLB of Cincinnati of $8.5 million at September 30, 2004. The FHLB is required to establish standards of community investment or service that its members must maintain for continued access to long-term advances. The standards take into account a member's performance under the Community Reinvestment Act and its record of lending to first-time home buyers. All long-term advances by the FHLB must be made only to provide funds for residential housing finance. TAXATION FEDERAL TAXATION WFC and Winton are each subject to the federal tax laws and regulations which apply to corporations generally. In addition to the regular income tax, WFC and Winton may be subject to an alternative minimum tax. An alternative minimum tax is imposed at a minimum tax rate of 20% on "alternative minimum taxable income" (which is the sum of a corporation's regular taxable income, with certain adjustments, and tax preference items), less any available exemption. Such tax preference items include interest on certain tax-exempt bonds issued after August 7, 1986. In addition, 75% of the amount by which a corporation's "adjusted current earnings" exceeds its alternative minimum taxable income computed without regard to this preference item and prior to reduction by net operating losses, is included in alternative minimum taxable income. Net operating losses can offset no more than 90% of alternative minimum taxable income. The alternative minimum tax is imposed to the extent it exceeds the corporation's regular income tax. Payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. However, the Taxpayer Relief Act of 1997 repealed the alternative minimum tax for certain "small corporations" for tax years beginning after December 31, 1997. A corporation initially qualifies as a small corporation if it had average gross receipts of $5,000,000 or less for the three tax years ending with its first tax year beginning after December 31, 1996. Once a corporation is recognized as a small corporation, it will continue to be exempt from the alternative minimum tax for as long as its average gross receipts for the prior three-year period does not exceed $7,500,000. In determining if a corporation meets this requirement, the first year that it achieved small corporation status is not taken into consideration. Winton's average gross receipts for the three tax years ending on September 30, 2004, is $32.1 million and as a result, Winton does not qualify as a small corporation exempt from the alternative minimum tax. Certain thrift institutions, such as Winton, are allowed deductions for bad debts under methods more favorable than those granted to other taxpayers. Qualified thrift institutions may compute deductions for bad debts using either the specific charge-off method of Section 166 of the Code or the experience method of Section 593 of the Code. The experience method is also available to small banks. Under the "experience" method, a thrift institution is generally allowed a deduction for an addition to its bad debt reserve equal to the greater of (i) an amount based on its actual average experience for losses in the current and five preceding taxable years, or (ii) an amount necessary to restore the reserve to its balance as of the close of the base year. Thrift institutions that are treated as small banks are allowed to utilize the experience method applicable to such institutions, while thrift institutions that are treated as large banks are required to use only the specific charge off method. A thrift institution required to change its method of computing reserves for bad debt will treat such change as a change in the method of accounting, initiated by the taxpayer and having been made with the consent of the Secretary of the Treasury. Section 481(a) of the Code requires certain amounts to be recaptured with respect to such change. Generally, the amounts to be recaptured will be determined solely with respect to the "applicable excess reserves" of the taxpayer. The amount of the applicable excess reserves will be taken into account ratably over a six-taxable year period, commencing with 20 the first taxable year beginning after 1995, subject to the residential loan requirement described below. In the case of a thrift institution that is treated as a large bank, the amount of the institution's applicable excess reserves generally is the excess of (i) the balances of its reserve for losses on qualifying real property loans (generally loans secured by improved real estate) and its reserve for losses on nonqualifying loans (all other types of loans) as of the close of its last taxable year beginning before January 1, 1996, over (ii) the balances of such reserves as of the close of its last taxable year beginning before January 1, 1988 (i.e., the "pre-1988 reserves"). In the case of a thrift institution that is treated as a small bank, like Winton, the amount of the institution's applicable excess reserves generally is the excess of (i) the balances of its reserve for losses on qualifying real property loans and its reserve for losses on nonqualifying loans as of the close of its last taxable year beginning before January 1, 1996, over (ii) the greater of the balance of (a) its pre-1988 reserves or (b) what the thrift's reserves would have been at the close of its last year beginning before January 1, 1996, had the thrift always used the experience method. The balance of the pre-1988 reserves is subject to the provisions of Section 593(e), as modified by the Act, which require recapture in the case of certain excessive distributions to shareholders. The pre-1988 reserves may not be utilized for payment of cash dividends or other distributions to a shareholder (including distributions in dissolution or liquidation) or for any other purpose (except to absorb bad debt losses). Distribution of a cash dividend by a thrift institution to a shareholder is treated as made: first, out of the institution's post-1951 accumulated earnings and profits; second, out of the pre-1988 reserves; and third, out of such other accounts as may be proper. To the extent a distribution by Winton to WFC is deemed paid out of its pre-1988 reserves under these rules, the pre-1988 reserves would be reduced and the gross income of Winton for tax purposes would be increased by the amount which, when reduced by the income tax, if any, attributable to the inclusion of such amount in its gross income, equals the amount deemed paid out of the pre-1988 reserves. As of September 30, 2004, the pre-1988 reserves of Winton for tax purposes totaled approximately $1.8 million. Winton believes it had approximately $38.9 million of accumulated earnings and profits for tax purposes as of September 30, 2004, which would be available for dividend distributions, provided regulatory restrictions applicable to the payment of dividends are met. No representation can be made as to whether Winton will have current or accumulated earnings and profits in subsequent years. The tax returns of Winton have been closed without audit through fiscal year 2000. In the opinion of management, any examination of open returns would not result in a deficiency which could have a material adverse effect on the financial condition of Winton. OHIO TAXATION WFC is subject to the Ohio corporation franchise tax, which, as applied to WFC, is a tax measured by both net earnings and net worth. The rate of tax is the greater of (i) 5.1% on the first $50,000 of computed Ohio taxable income and 8.5% of computed Ohio taxable income in excess of $50,000 or (ii) .400% times taxable net worth. In computing its tax under the net worth method, WFC may exclude 100% of its investment in the capital stock of Winton, as reflected on the balance sheet of WFC in computing its taxable net worth as long as it owns at least 25% of the issued and outstanding capital stock of Winton. The calculation of the exclusion from net worth is based on the ratio of the excludable investment (net of any appreciation or goodwill included in such investment) to total assets multiplied by the net value of the stock. As a holding company, WFC may be entitled to various other deductions in computing taxable net worth that are not generally available to operating companies. A special litter tax is also applicable to all corporations, including WFC, subject to the Ohio corporation franchise tax other than "financial institutions." If the franchise tax is paid on the net income basis, the litter tax is equal to .11% of the first $50,000 of computed Ohio taxable income and .22% of computed Ohio taxable income in excess of $50,000. If the franchise tax is paid on the net worth basis, the litter tax is equal to .014% times taxable net worth. WFC may elect to be a "qualified holding company" and, as such, be exempt from the net worth tax. A corporation franchise tax based solely on net earnings would still apply. To be exempt, WFC must satisfy all the requirements of the applicable statute, including making related member adjustments that could affect the taxable net worth of WFC's subsidiary, Winton. Winton is a "financial institution" for State of Ohio tax purposes. As such, it is subject to the Ohio corporate franchise tax on "financial institutions," which is imposed annually at a rate of 1.3% of the taxable book net worth of Winton determined in accordance with generally accepted accounting principles. As a "financial institution," Winton is not subject to any tax based upon net income or net profits imposed by the State of Ohio. 21 ITEM 2. PROPERTIES The following table sets forth certain information at September 30, 2004, regarding the properties on which the main office, each branch office and lending office of Winton is located. The aggregate net book value of the properties was $7.0 million at September 30, 2004.

--------------------- (1) In January 1990, Winton entered into a lease agreement pursuant to which it leases a building containing approximately 3,750 square feet adjacent to Winton's main office on Cheviot Road. The initial term of the lease was three years, renewable for seven successive three year periods. Winton has the right to purchase the building during the term of the lease. In January 2005, the lease will be renewed for an additional three year period. ITEM 3. LEGAL PROCEEDINGS Neither WFC nor Winton is presently engaged in any legal proceedings of a material nature. From time to time, Winton is involved in legal proceedings to enforce its security interest in collateral taken as security for its loans. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of the shareholders of WFC during the last quarter of the fiscal year ended September 30, 2004. 22 PART II ITEM 5. MARKET FOR WFC'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES WFC's common shares are listed on the American Stock Exchange, Inc. ("Amex"), under the symbol "WFI." As of December 10, 2004, WFC had 5,069,824 common shares outstanding and held of record by approximately 400 shareholders. The number of shareholders does not reflect the number of persons or entities who may hold stock in nominee or "street" name through brokerage firms or others. Presented below are the high and low sales prices for WFC's common shares, as well as the amount of cash dividends paid on the common shares for each quarter of fiscal 2004 and 2003. Such sales prices do not include retail financial markups, markdowns, or commissions. Information relating to sales prices has been obtained from Amex.

The earnings of WFC consist primarily of dividends from Winton. In addition to certain federal income tax considerations, regulations issued by the OTS impose limitations on the payment of dividends and other capital distributions by savings associations. Under the regulations, a subsidiary of a savings and loan holding company must file an application with the OTS before it can declare and pay a dividend if (1) the proposed distributions would cause total distributions for that calendar year to exceed net income for that year to date plus the savings association's retained net earnings for the preceding two years; (2) the savings association will not be at least adequately capitalized following the capital distribution; (3) the proposed distribution would violate a prohibition contained in any applicable statute, regulation, or agreement between the savings association and the OTS (or the FDIC), or a condition imposed on the savings association in an OTS-approved application or notice; or, (4) if the savings association has not received certain favorable examination ratings from the OTS. If a savings association subsidiary of a holding company is not required to file an application, it must file a notice with the OTS. ITEM 6. SELECTED FINANCIAL DATA The following tables set forth certain information concerning WFC's consolidated financial position and results of operations at the dates and for the periods indicated. This selected financial data should be read in conjunction with the consolidated financial statements appearing elsewhere herein. 23

----------------------- (1) Includes securities designated as available for sale. See Note A-2 of the Consolidated Financial Statements for additional information regarding Statement of Financial Accounting Standards ("SFAS") No. 115. (2) Includes loans held for sale. 24

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION General WFC's activities primarily have been limited to owning the outstanding common shares of Winton. Therefore, the discussion that follows focuses on the comparison of Winton's operations in fiscal 2004, 2003 and 2002. Forward-Looking Statements In the following pages, management presents an analysis of the financial condition of WFC as of September 30, 2004, and the results of operations for fiscal 2004 compared to prior years. In addition to this historical information, the following discussion contains forward-looking statements that involve risks and uncertainties. Economic circumstances, WFC's operations and WFC's actual results could differ significantly from those discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences are discussed herein, but also include changes in the economy and interest rates in the nation and in WFC's general market area. Without limiting the foregoing, some of the statements in the following referenced sections of this discussion and analysis are forward-looking and are therefore subject to such risks and uncertainties: 1. Management's analysis of the interest rate risk of Winton as set forth under "Asset/Liability Management;" 2. Management's discussion of the liquidity of Winton's assets and the regulatory capital of Winton as set forth under "Liquidity and Capital Resources;" and 3. Management's determination of the amount and adequacy of the allowance for loan losses as set forth under "Discussion of Changes in Financial Condition from September 30, 2003 to September 30, 2004," and "Comparison of Results of Operations for the Fiscal Years Ended September 30, 2004 and 2003." 25 Critical Accounting Policies Allowance for Loan Losses: It is the Company's policy to provide valuation allowances for estimated losses on loans based upon past loss experience, trends in the level of delinquent and specific problem loans, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral and current economic conditions in the Company's primary market areas. When the collection of a loan becomes doubtful or otherwise troubled, the Company records a loan loss provision equal to the difference between the fair value of the property collateralizing the loan and the loan's carrying value. Major loans and major lending areas are reviewed periodically to determine potential problems at an early date. The allowance for the loan losses is increased by charges to earnings and decreased by charge-offs (net of recoveries). The Company accounts for impaired loans in accordance with SFAS No. 114, "Accounting by Creditors for Impairment of a Loan." This Statement requires that impaired loans be measured based upon the present value of expected future cash flows discounted at the loan's effective interest rate or, as an alternative, at the loans observable market price or fair value of the collateral. A loan is defined under SFAS No. 114 as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. In applying the provisions of SFAS No. 114, the Company considers its investment in one- to four-family residential loans and consumer installment loans to be homogeneous and therefore excluded from separate identification for evaluation of impairment. With respect to the Company's investment in commercial and other loans, and its evaluation of impairment thereof, such loans are collateral dependent and as a result are carried as a practical matter at the lower of cost or fair value. It is the Company's policy to charge off unsecured credits that are more than ninety days delinquent. Similarly, collateral dependent loans which are more than ninety days delinquent are considered to constitute more than a minimum delay in repayment and are evaluated for impairment under SFAS No. 114 at that time. Mortgage Servicing Rights: Mortgage servicing rights are accounted for pursuant to the provisions of SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities," which requires that the company recognize as separate assets, rights to service mortgage loans for others, regardless of how those servicing rights are acquired. An institution that acquires mortgage servicing rights through either the purchase or origination of mortgage loans and sells those loans with servicing rights retained must allocate some of the cost of the loans to the mortgage servicing rights. SFAS No. 140 requires that capitalized mortgage servicing rights be assessed for impairment. Impairment is measured based on fair value. The mortgage servicing rights recorded by the Company, calculated in accordance with the provisions of SFAS No. 140, were segregated into pools for valuation purposes, using as pooling criteria the loan term and coupon rate. Once pooled, each grouping of loans was evaluated on a discounted earnings basis to determine the present value of future earnings that a purchaser could expect to realize from each portfolio. Earnings were projected from a variety of sources, including loan servicing fees, interest earned on float, net interest earned on escrows, miscellaneous income, and costs to service the loans. The present value of future earnings is the "economic" value of the pool (i.e., the net realizable present value to an acquiror of the acquired servicing rights). 26 Discussion of Changes in Financial Condition from September 30, 2003 to September 30, 2004 The Corporation had total assets of $551.8 million at September 30, 2004, an increase of $7.9 million, or 1.5%, over the September 30, 2003 total. The increase in assets was comprised of an increase in mortgage-backed securities of $12.4 million and an increase in office premises and equipment of $915,000, which were partially offset by a $4.2 million decrease in cash and interest bearing deposits, a $3.2 million decrease in investments available for sale and a $2.7 million decrease in loans receivable, including loans held for sale. The growth in assets was funded primarily by an increase in deposits of $10.5 million, undistributed earnings of $2.7 million and proceeds from the exercise of stock options of $2.8 million, which was partially offset by a decrease in Federal Home Loan Bank ("FHLB") advances of $7.5 million. Investment securities totaled $18.2 million at September 30, 2004, a decrease of $3.2 million, or 15.1%, over September 30, 2003 levels. The decrease in investment securities resulted from sales and maturities of $19.1 million, which more than exceeded purchases totaling $15.6 million. Purchases during the period consisted primarily of agency bonds and municipal securities with maturities ranging from one to five years. Mortgage-backed securities totaled $18.8 million at September 30, 2004, an increase of $12.4 million, or 194.5%, over September 30, 2003, due to purchases of $14.6 million, which were partially offset by principal repayments of $2.1 million. Loans receivable totaled $484.8 million at September 30, 2004, a decrease of $2.7 million, or .6%, compared to the September 30, 2003 total. The decrease was due primarily to $134.3 million in loans sold and $157.4 million in principal repayments, which exceeded loan originations of $291.3 million. Winton experienced a decline in loan origination volume compared to the previous year primarily as a result of the decline in loan refinance activity. The volume of loans sold during fiscal 2004 amounted to $134.3 million, a decrease of $116.0 million, or 46.3%, over fiscal 2003. Winton continued its strategy of selling lower yielding fixed-rate loans in fiscal 2004. The Company's allowance for loan losses totaled $2.4 million at September 30, 2004, an increase of $183,000, or 8.1%, over the total at September 30, 2003. At September 30, 2004, the allowance represented approximately 0.51% of the total loan portfolio and 196.6% of total nonperforming loans. Nonperforming loans totaled $1.2 million and $3.8 million at September 30, 2004 and 2003, respectively. At September 30, 2004, nonperforming loans were comprised primarily of $488,000 of loans secured by one- to four-family residential real estate, $450,000 of loans secured by nonresidential real estate, and $254,000 of multi-family loans. At September 30, 2004, the ratio of total nonperforming loans to total loans amounted to .61%, compared to .75% at September 30, 2003. Management believes all nonperforming loans are adequately collateralized and that there are no unreserved losses on such nonperforming loans at September 30, 2004. Although management believes that its allowance for loan losses at September 30, 2004 is adequate based on the available facts and circumstances, there can be no assurance that additions to such allowance will not be necessary in future periods, which could adversely affect WFC's results of operations. Real estate owned ("REO") increased $3.4 million, or 398.6%, due to the conversion of a $3.4 million non-performing commercial real estate loan to REO. The addition to REO consists of an office building and lot which was under sales contract for $4.2 million at September 30, 2004. The sale contract was ultimately terminated in October 2004. Management is presently evaluating its various sales scenarios for the property, including a sale at liquidation value. Such a sale strategy may result in a write-down or loss upon sale. Office premises and equipment totaled $7.0 million at September 30, 2004, an increase of $915,000, or 13.0%, over September 30, 2003. During fiscal 2004, the Company relocated an existing full service branch to a more strategic location. Deposits totaled $364.8 million at September 30, 2004, an increase of $10.5 million, or 3.0%, over September 30, 2003 levels. Deposits increased during fiscal 2004 due primarily to management's continuing efforts to grow the portfolio through marketing and pricing strategies, as well as continuing growth at new branch locations. Advances from the FHLB and other borrowings totaled $131.1 million at September 30, 2004, a decrease of $7.5 million, or 5.4%, from September 30, 2003 levels. During the year ended September 30, 2004, the Company repaid $104.5 million to the FHLB and borrowed $97.0 million. Shareholders' equity totaled $48.4 million at September 30, 2004, an increase of $4.2 million, or 9.5%, over September 30, 2003. The increase resulted from net earnings of $4.7 million and proceeds from the exercise of stock options of $2.8 million, which were partially offset by dividends to shareholders totaling $2.1 million, 27 purchases of treasury shares of $1.0 million and a decrease in unrealized gains on available for sale securities of $258,000. Winton is required to meet minimum capital standards promulgated by the Office of Thrift Supervision (the "OTS"). At September 30, 2004, the Company's regulatory capital exceeded such minimum capital requirements. Comparison of Results of Operations for the Fiscal Years Ended September 30, 2004 and 2003 General The Corporation recorded net earnings totaling $4.7 million for the fiscal year ended September 30, 2004, a decrease of $964,000 or 16.9%, compared to net earnings of $5.7 million in net earnings for fiscal 2003. The decrease in net earnings was comprised of a $751,000 decrease in other income and a $1.5 million increase in general, administrative and other expense, which were partially offset by a $526,000 decrease in provision for federal income taxes, a $472,000 increase in net interest income and a $305,000 decrease in the provision for losses on loans. Net Interest Income Total interest income amounted to $30.8 million for fiscal 2004, a decrease of $816,000, or 2.6%, from fiscal 2003. The decrease resulted primarily from a 52 basis point decrease in the weighted-average yield to 5.72% in fiscal 2004, which was partially offset by a $32.2 million, or 6.4%, increase in average interest-earning assets year to year. Interest income on loans and mortgage-backed securities totaled $29.9 million for the year ended September 30, 2004, a decrease of $870,000, or 2.8%, compared to fiscal 2003. The decrease resulted primarily from a reduction in the weighted-average yield of 66 basis points, to 5.94% for the fiscal year ended September 30, 2004, which was partially offset by a $37.1 million, or 8.0%, increase in the average balance outstanding. Interest income on investment securities and interest-bearing deposits increased by $54,000, or 5.9%, for the fiscal year ended September 30, 2004, compared to fiscal 2003, due primarily to an increase of 45 basis points in the weighted-average yield, to 2.68% for fiscal 2004, which was partially offset by an $4.9 million, or 11.9% decrease in the average balance outstanding year to year. Interest expense on deposits decreased by $1.0 million, or 10.5%, for the fiscal year ended September 30, 2004, compared to fiscal 2003. The decrease was primarily attributable to a 45 basis point decrease in the weighted-average cost of deposits, which was partially offset by a $22.9 million, or 6.7%, increase in the average balance of deposits outstanding year to year. The weighted-average cost of deposits amounted to 2.34% and 2.79% for the fiscal years ended September 30, 2004 and 2003, respectively. Net Interest Income Interest expense on borrowings decreased by $286,000, or 4.2%, during the fiscal year ended September 30, 2004, compared to fiscal 2003, due to a 53 basis point decrease in the weighted-average cost of borrowings, to 4.83% for fiscal 2004, which was partially offset by a $8.3 million increase in the average balance of borrowings outstanding year to year. As a result of the foregoing changes in interest income and interest expense, net interest income increased by $472,000, or 3.1%, to $15.7 million for the fiscal year ended September 30, 2004, compared to fiscal 2003. The interest rate spread decreased by 4 basis points, to 2.70% for fiscal 2004, while the net interest margin declined by 9 basis points, to 2.92% for fiscal 2004, compared to 3.01% for fiscal 2003. Provision for Losses on Loans Winton charges a provision for losses on loans to earnings to bring the total allowance for loan losses to a level considered appropriate by management based on historical experience, the volume and type of lending conducted 28 by the Company, the status of past due principal and interest payments, and general economic conditions, particularly as such conditions relate to the Company's loan portfolio and market area. As a result of such analysis, management recorded a $300,000 provision for losses on loans during the fiscal year ended September 30, 2004, compared to a provision of $605,000 recorded in fiscal 2003. The provision is based on an internal matrix which evaluates reserves based upon delinquency levels, risk classification of credits and inherent factors within the portfolio. There can be no assurance that the allowance for loan losses of the Company will be adequate to cover losses on nonperforming assets in the future. The following table sets forth information regarding the Company's delinquent loans, nonperforming assets and the allowance for loan losses.

While management believes that, based on information currently available, the allowance for loan losses is sufficient to cover losses inherent in the Company's loan portfolio at this time, no assurance can be given that the level of the allowance will be sufficient to cover future loan losses or that future adjustments to the allowance will not be necessary if economic and/or other conditions differ substantially from the economic and other conditions considered by management in evaluating the adequacy of the current level of the allowance. Other Income Other income totaled $3.7 million for the fiscal year ended September 30, 2004, a decrease of $751,000, or 17.0%, compared to fiscal 2003, due primarily to a $1.1 million, or 34.8%, decrease in mortgage banking income and a $282,000 reduction in gains on sale of office premises, which were partially offset by a $537,000 increase in gains on sale of investment securities, an $89,000 increase in gains on sale of real estate acquired through foreclosure and a $49,000 increase in other operating income. The decrease in mortgage banking income was due primarily to the decrease in sales volume of $116.0 million, or 46.3%, over the year ended September 30, 2003. General, Administrative and Other Expense General, administrative and other expense totaled $12.1 million for the fiscal year ended September 30, 2004, an increase of $1.5 million, or 14.4%, compared to fiscal 2003. The increase was due primarily to an increase in employee compensation and benefits of $740,000, or 12.7%, an increase in other operating expenses of $147,000, or 6.9%, an increase in occupancy and equipment expense of $364,000, or 27.0%, an increase in data processing expense of $80,000, or 17.9%, and an increase in franchise tax expense of $77,000, or 17.5%. Employee compensation and benefits increased primarily due to the decline in deferred salary cost as a result of decreased loan production year to year. The increase in other operating expense was due primarily to increased costs related to foreclosure activity, an increase in professional fees related to the implementation of Sarbanes-Oxley Act of 2002 and pro-rata increases in other operating expenses related to the Corporation's growth year to year. The increase in occupancy and equipment expense was due to lease costs associated with the opening of a new 29 mortgage operations facility and non-capitalizable costs associated with a restructuring and remodeling of the corporate administrative offices and opening a new branch. Federal Income Taxes The provision for federal income taxes amounted to $2.3 million for the fiscal year ended September 30, 2004, a decrease of $526,000, or 18.9%, compared to fiscal 2003. The reduction was due primarily to a decline in earnings before taxes of $1.5 million, or 17.5%, which was enhanced by the fiscal 2004 increase in nontaxable interest income. The effective tax rates were 32.3% and 32.8% for the fiscal years ended September 30, 2004 and 2003, respectively. Pending Acquisition On August 25, 2004, WesBanco, Inc. ("WesBanco"), WesBanco Bank, Inc., WFC and The Winton and Loan Co. entered into an Agreement and Plan of Merger (the "Merger Agreement") providing for the merger of WFC with and into WesBanco. Pursuant to the Merger Agreement, Winton shareholders will receive for each Winton share owned $20.75 in cash or 0.755 shares of WesBanco common stock, subject to the requirement that 60% of Winton's outstanding shares will be paid in stock and 40% in cash, via a pro ration formula described in the Merger Agreement. The transaction was approved by both companies and the regulatory authorities currently is valued at approximately $102.5 million. The consummation of the merger is subject to regulatory and Winton shareholder approval. Comparison of Results of Operations for the Fiscal Years Ended September 30, 2003 and 2002 General The Corporation recorded net earnings totaling $5.7 million for the fiscal year ended September 30, 2003, an increase of $683,000 or 13.6%, compared to net earnings of $5.0 million in net earnings for fiscal 2002. The increase in net earnings was comprised of a $736,000 increase in net interest income, a $655,000 decrease in the provision for losses on loans and a $936,000 increase in other income, which were partially offset by a $1.4 million increase in general, administrative and other expense and a $266,000 increase in the provision for federal income taxes. Net Interest Income Total interest income amounted to $31.6 million for fiscal 2003, a decrease of $2.3 million, or 6.8%, from fiscal 2002. The decrease resulted primarily from an 85 basis point decrease in the weighted-average yield to 6.24% in fiscal 2003, which was partially offset by a $28.0 million, or 5.9%, increase in average interest-earning assets year to year. Interest income on loans and mortgage-backed securities totaled $30.7 million for the year ended September 30, 2003, a decrease of $2.2 million, or 6.6%, compared to fiscal 2002. The decrease resulted primarily from a decrease in the weighted-average yield of 72 basis points, to 6.60% for the fiscal year ended September 30, 2003, which was partially offset by a $16.5 million, or 3.7%, increase in the average balance outstanding. Interest income on investment securities and interest-bearing deposits decreased by $139,000, or 13.2%, for the fiscal year ended September 30, 2003, compared to fiscal 2002, due primarily to a decrease of 136 basis points in the weighted-average yield, to 2.23% for fiscal 2003, which was partially offset by an $11.6 million, or 39.6%, increase in the average balance outstanding year to year. Interest expense on deposits decreased by $2.8 million, or 23.0%, for the fiscal year ended September 30, 2003, compared to fiscal 2002. The decrease was primarily attributable to a 110 basis point decrease in the weighted-average cost of deposits, which was partially offset by a $23.3 million, or 7.3%, increase in the average balance of deposits outstanding year to year. The weighted-average cost of deposits amounted to 2.79% and 3.89% for the fiscal years ended September 30, 2003 and 2002, respectively. 30 Net Interest Income Interest expense on borrowings decreased by $198,000, or 2.8%, during the fiscal year ended September 30, 2003, compared to fiscal 2002, due to a 26 basis point decrease in the weighted-average cost of borrowings, to 5.36% for fiscal 2003, which was partially offset by a $2.5 million increase in the average balance of borrowings outstanding year to year. The decreases in yields on interest-earning assets and costs of interest-bearing liabilities were due primarily to the overall decrease in interest rates in the economy. As a result of the foregoing changes in interest income and interest expense, net interest income increased by $736,000, or 5.1%, to $15.2 million for the fiscal year ended September 30, 2003, compared to fiscal 2002. The interest rate spread increased by 3 basis points, to 2.74% for fiscal 2003, while the net interest margin declined by 2 basis points, to 3.01% for fiscal 2003, compared to 3.03% for fiscal 2002. Provision for Losses on Loans As stated previously, Winton charges a provision for losses on loans to earnings to bring the total allowance for loan losses to a level considered appropriate by management based on historical experience, the volume and type of lending conducted by the Company, the status of past due principal and interest payments, and general economic conditions, particularly as such conditions relate to the Company's loan portfolio and market area. As a result of such analysis, management recorded a $605,000 provision for losses on loans during the fiscal year ended September 30, 2003, compared to a provision of $1.3 million recorded in fiscal 2002. The provision is based on an internal matrix which evaluates reserves based upon delinquency levels, risk classification of credits and inherent factors within the portfolio. There can be no assurance that the allowance for loan losses of the Company will be adequate to cover losses on nonperforming assets in the future. The following table sets forth information regarding the Company's delinquent loans, nonperforming assets and the allowance for loan losses.

31 While management believes that, based on information currently available, the allowance for loan losses is sufficient to cover losses inherent in the Company's loan portfolio at this time, no assurance can be given that the level of the allowance will be sufficient to cover future loan losses or that future adjustments to the allowance will not be necessary if economic and/or other conditions differ substantially from the economic and other conditions considered by management in evaluating the adequacy of the current level of the allowance. Other Income Other income totaled $4.4 million for the fiscal year ended September 30, 2003, an increase of $936,000, or 26.9%, compared to fiscal 2002, due primarily to a $972,000, or 42.1%, increase in mortgage banking income, a $282,000 gain on sale of office premises and a $112,000, or 16.8%, increase in other operating income, which were partially offset by a $13,000 increase in loss on sale of real estate acquired through foreclosure, a $167,000 reduction in gains on sale of investment securities and the absence of a $250,000 gain on sale of deposits recorded in fiscal 2002. The increase in mortgage banking income was due primarily to the increase in sales volume of $126.6 million, or 102.4%, over the year ended September 30, 2002. The Company sold its former Central Parkway branch and a tract of land next to its Harrison Branch, realizing gains of $243,000 and $39,000, respectively. The deposits related to the Central Parkway branch were sold in the fiscal year ended September 30, 2002, with the Company recognizing a $250,000 gain. The increase in other income was primarily attributable to prepayment fees on nonresidential real estate loans, loan payoff statement fees and growth in deposit service charges due to overall fee increases and fees on "Generations Gold," a new checking product introduced in fiscal 2002. General, Administrative and Other Expense General, administrative and other expense totaled $10.6 million for the fiscal year ended September 30, 2003, an increase of $1.4 million, or 15.0%, compared to fiscal 2002. The increase was due primarily to an increase in employee compensation and benefits of $631,000, or 12.1%, an increase in other operating expenses of $389,000, or 22.4%, and an increase in occupancy and equipment expense of $266,000, or 24.6%. Employee compensation and benefits increased primarily due to normal merit increases, an overall increase in staffing levels related primarily to the branch addition and increased loan production during the year, and expenses related to increased awards under the incentive bonus and 401(k) plan contributions year to year. The increase in other operating expense was due primarily to increased costs related to foreclosure activity, an increase in professional fees related to the implementation of Sarbanes-Oxley Act of 2002 and pro-rata increases in other operating expenses related to the Corporation's growth year to year. The increase in occupancy and equipment expense was due to lease costs associated with the opening of the new mortgage operations facility and non-capitalizable costs associated with a restructuring and remodeling of the corporate administrative offices and opening of the new branch. Federal Income Taxes The provision for federal income taxes amounted to $2.8 million for the fiscal year ended September 30, 2003, an increase of $266,000, or 10.5%, compared to fiscal 2002. The increase was due primarily to an increase in earnings before taxes of $949,000, or 12.6%, partially offset by an increase in nontaxable interest income in fiscal 2003. The effective tax rates were 32.8% and 33.4% for the fiscal years ended September 30, 2003 and 2002, respectively. 32 AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA The following table sets forth certain information relating to WFC's average balance sheet information and reflects the average yield on interest-earning assets and the average cost of interest-bearing liabilities for the years indicated. Such yields and costs are derived by dividing income or expense by the average monthly balance of interest-earning assets or interest-bearing liabilities, respectively, for the years presented. Average balances are derived from month-end balances, which include nonaccruing loans in the loan portfolio, net of the allowance for loan losses. Management does not believe that the use of month-end balances instead of daily balances has caused any material differences in the information presented.

--------------------------- (1) Includes loans held for sale and nonaccrual loans, net of the allowance for loan losses. Rate/Volume Table The table below describes the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities have affected WFC's interest income and expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (change in volume multiplied by prior year rate), (ii) changes in rate (change in rate multiplied by prior year volume) and (iii) total changes in rate and volume. The combined effects of changes in both volume and rate, which cannot be separately identified, have been allocated proportionately to the change due to volume and the change due to rate.

------------------------------ (1) Includes loans held for sale. (2) Includes interest-bearing deposits. Liquidity and Capital Resources Winton, like other financial institutions, is required under applicable federal regulations to maintain sufficient funds to meet deposit withdrawals, loan commitments and expenses. Liquid assets consist of cash and interest bearing deposits in other financial institutions, investments and mortgage-backed securities. Management monitors and assesses liquidity needs daily in order to meet deposit withdrawals, loan commitments and expenses. The primary sources of funds include deposits, borrowings, principal and interest repayments on loans and proceeds from the sale of mortgage loans. The Company's first preference is to fund liquidity needs with core deposits, if available, in the marketplace. Core deposits include non-interest bearing and interest-bearing retail deposits. Other funding sources included Federal Home Loan Bank advances and brokered deposits through the capital markets. The following table sets forth information regarding the Corporation's obligations and commitments to make future payments under contract as of September 30, 2004.

The Company's liquidity, represented by cash and cash-equivalents, is a function of its operating, investing and financing activities. These activities are summarized below for the periods indicated.

WFC believes that the Company's liquidity posture at September 30, 2004, is adequate to meet outstanding loan commitments and other cash requirements. Winton is subject to minimum capital standards promulgated by the OTS. Such capital standards generally require the maintenance of regulatory capital sufficient to meet each of the following three requirements: the tangible capital requirement, the core capital requirement and the risk-based capital requirement. At September 30, 2004, Winton's tangible capital of $48.6 million, or 8.8% of adjusted total assets, exceeded the 1.5% requirement by $40.3 million; its core capital of $48.6 million, or 8.8% of adjusted total assets, exceeded the minimum 4.0% requirement by $26.5 million; and its risk-based capital of $51.0 million, or 12.7% of risk-weighted assets, exceeded the 8% requirement by $18.9 million. 35 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Asset/Liability Management WFC's earnings depend primarily upon its net interest income, which is the difference between its interest income on interest-earning assets, such as mortgage loans, investment securities and mortgage-backed securities, and its interest expense paid on interest-bearing liabilities, consisting of deposits and borrowings. As market interest rates change, asset yields and liability costs do not change simultaneously. Due to maturity, repricing and timing differences between interest-earning assets and interest-bearing liabilities, WFC's earnings will be affected differently under various interest rate scenarios. Management believes that the steps which WFC has taken in asset/liability management may reduce the overall vulnerability of WFC's interest rate risk. WFC's principal financial objective is to enhance long-term profitability while reducing exposure to increases in interest rates. To accomplish this objective, WFC has formulated an asset and liability management policy, the principal elements of which are (1) to emphasize the origination of adjustable-rate mortgage loans, (2) to meet the consumer preference for fixed-rate loans in periods of low interest rates by selling the preponderance of such loans in the secondary market, and (3) to lengthen the maturities of liabilities to the extent practicable by marketing longer term certificates of deposit. In order to better compete for deposits, however, Winton has offered market-sensitive certificates of deposit, which result in increased interest expense in rising rate environments. Because interest-rate-sensitive liabilities continue to exceed interest-rate-sensitive assets, Winton would be negatively affected by a rising or protracted high interest rate environment and would be beneficially affected by a declining interest rate environment. At September 30, 2004, approximately $220.3 million, or 40.9%, of Winton's portfolio of interest-earning assets had adjustable rates. The management and Board of Directors of Winton attempt to manage Winton's exposure to interest rate risk (the sensitivity of an institution's earnings and net asset values to changes in interest rates) in a manner to maintain the market value of portfolio equity within the limits established by the Board of Directors, assuming a permanent and instantaneous parallel shift in interest rates. As a part of its effort to monitor its interest rate risk, Winton utilizes the "net portfolio value" ("NPV") methodology to assess its exposure to interest rate risk. Generally, NPV is the discounted present value of the difference between incoming cash flows on interest-earning and other assets and outgoing cash flows on interest-bearing liabilities. The application of the methodology attempts to quantify interest rate risk as the change in the NPV which would result from theoretical 100 basis point (100 basis points equals 1%) incremental changes in market interest rates. The following tables express an analysis of interest rate risk as measured by the change in the NPV ratio for instantaneous and sustained parallel shifts of 100-300 basis points in market interest rates.

(1) NPV Ratio represents the net portfolio value divided by the present value of assets. (2) Not meaningful because some market rates would compute to a rate less than zero. 36 Asset/Liability Management (continued) As illustrated in the table, the Company's NPV is more sensitive to rising rates than declining rates. Such difference in sensitivity occurs principally because, as rates rise, borrowers do not prepay fixed-rate loans as quickly as they do when interest rates are declining. Thus, in a rising interest rate environment, the amount of interest Winton would receive on its loans would increase relatively slowly as loans are slowly prepaid and new loans at higher rates are made. Moreover, the interest Winton would pay on its deposits would increase rapidly because Winton's deposits generally have shorter periods to repricing. As with any method of measuring interest rate risk, certain shortcomings are inherent in the NPV approach. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Further, in the event of a change in interest rates, expected rates of prepayment on loans and mortgage-backed securities, and early withdrawal levels from certificates of deposit, would likely deviate significantly from those assumed in making the risk calculations. In the event that interest rates rise, Winton's net interest income could be expected to be negatively affected. Moreover, rising interest rates could negatively affect Winton's earnings due to diminished loan demand. 37 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION CONSOLIDATED STATEMENTS OF EARNINGS CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS All financial statement schedules are omitted because the required information either is not applicable or is shown in the financial statements or in the notes thereto. 38 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Winton Financial Corporation We have audited the accompanying consolidated statements of financial condition of Winton Financial Corporation as of September 30, 2004 and 2003, and the related consolidated statements of earnings, comprehensive income, shareholders' equity and cash flows for each of the years in the three year period ended September 30, 2004. These consolidated financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Winton Financial Corporation as of September 30, 2004 and 2003, and the results of its operations and its cash flows for each of the years in the three year period ended September 30, 2004, in conformity with accounting principles generally accepted in the United States of America. /s/ Grant Thornton LLP Cincinnati, Ohio November 5, 2004 39 WINTON FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

The accompanying notes are an integral part of these statements. 40 WINTON FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS

The accompanying notes are an integral part of these statements. 41 WINTON FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

The accompanying notes are an integral part of these statements. 42 WINTON FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

The accompanying notes are an integral part of these statements. 43 WINTON FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS

44 WINTON FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

The accompanying notes are an integral part of these statements. 45 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Winton Financial Corporation ("Winton Financial" or the "Corporation") is a savings and loan holding company whose activities are primarily limited to holding the stock of The Winton Savings and Loan Co. ("Winton Savings" or the "Company"). The Company conducts a general banking business in southwestern Ohio and southeastern Indiana, which consists of attracting deposits from the general public and applying those funds to the origination of loans for residential, consumer and nonresidential purposes. The Company's profitability is significantly dependent on its net interest income, which is the difference between interest income generated from interest-earning assets (i.e. loans and investments) and the interest expense paid on interest-bearing liabilities (i.e. customer deposits and borrowed funds). Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by the Company can be significantly influenced by a number of environmental factors, such as governmental monetary policy, that are outside of management's control. The financial information presented herein has been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and general accounting practices within the financial services industry. In preparing consolidated financial statements in accordance with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period. Actual results could differ from such estimates. The following is a summary of the significant accounting policies which have been consistently applied in the preparation of the accompanying consolidated financial statements. 1. Principles of Consolidation The consolidated financial statements include the accounts of Winton Financial, its wholly-owned subsidiary, Winton Savings, and its wholly-owned subsidiary, Alpine Terrace II. In addition, during fiscal 2004, Winton Financial acquired 51% of Walnut Street Enterprises L.L.C., a real estate rental company which has been consolidated in the fiscal 2004 consolidated financial statements. Winton Savings formed Alpine Terrace II for the primary purpose of marketing and selling certain real estate acquired through foreclosure. All significant intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements. 2. Investment Securities and Mortgage-Backed Securities The Corporation accounts for investment and mortgage-backed securities in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires that investments be categorized as held-to-maturity, trading, or available for sale. Securities classified as held-to-maturity are carried at cost only if the Corporation has the positive intent and ability to hold these securities to maturity. Securities available for sale are carried at fair value with resulting unrealized gains or losses recorded to shareholders' equity. Investment and mortgage-backed securities are classified as held-to-maturity or available for sale upon acquisition. Realized gains and losses on the sale of investment and mortgage-backed securities are recognized using the specific identification method. 46 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3. Loans Receivable Loans held in portfolio are stated at the principal amount outstanding, adjusted for deferred loan origination fees, the allowance for loan losses and premiums and discounts on loans purchased and sold. Premiums and discounts on loans purchased and sold are amortized and accreted to operations using the interest method over the average life of the underlying loans. Interest is accrued as earned unless the collectibility of the loan is in doubt. Uncollectible interest on loans that are contractually past due is charged off, or an allowance is established based on management's periodic evaluation. The allowance is established by a charge to interest income equal to all interest previously accrued, and income is subsequently recognized only to the extent that cash payments are received until, in management's judgment, the borrower's ability to make periodic interest and principal payments has returned to normal, in which case the loan is returned to accrual status. If the ultimate collectibility of principal is in doubt, in whole or in part, all payments received on nonaccrual loans are applied to reduce principal until such doubt is eliminated. Loans held for sale are carried at the lower of cost or market, determined in the aggregate. In computing cost, deferred loan origination fees are deducted from the principal balances of the related loans. At September 30, 2004 and 2003, loans held for sale were carried at cost. Winton Savings accounts for mortgage servicing rights pursuant to the provisions of SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," which requires that Winton Savings recognize as separate assets, rights to service mortgage loans for others, regardless of how those servicing rights are acquired. An institution that acquires mortgage servicing rights through either the purchase or origination of mortgage loans and sells those loans with servicing rights retained must allocate some of the cost of the loans to mortgage servicing rights. SFAS No. 140 requires that capitalized mortgage servicing rights be assessed for impairment. Impairment is measured based on fair value. The mortgage servicing rights recorded by the Company, calculated in accordance with the provisions of SFAS No. 140, are segregated into pools for valuation purposes, using as pooling criteria the loan term and coupon rate. Once pooled, each grouping of loans is evaluated on a discounted earnings basis to determine the present value of future earnings that a purchaser could expect to realize from each portfolio. Earnings were projected from a variety of sources, including loan servicing fees, interest earned on float, net interest earned on escrows, miscellaneous income, and costs to service the loans. The present value of future earnings is the "economic" value for the pool, i.e., the net realizable present value to an acquirer of the acquired servicing. The Company recorded amortization related to mortgage servicing rights totaling approximately $159,000, $539,000 and $299,000 for the years ended September 30, 2004, 2003 and 2002, respectively. At September 30, 2004, the fair value and carrying value of the Company's mortgage servicing rights totaled approximately $1.1 million and $978,000, respectively. At September 30, 2003, the fair value and carrying value of the Company's mortgage servicing rights totaled approximately $660,000 and $519,000, respectively. 47 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. Loan Origination and Commitment Fees The Company accounts for loan origination fees in accordance with the provisions of SFAS No. 91, "Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases." Pursuant to the provisions of SFAS No. 91, origination fees received from loans, net of certain direct origination costs, are deferred and amortized to interest income using the interest method, giving effect to actual loan prepayments. Additionally, SFAS No. 91 generally limits the definition of loan origination costs to the direct costs attributable to originating a loan, i.e., principally actual personnel costs. Fees received for loan commitments that are expected to be drawn upon, based on the Company's experience with similar commitments, are deferred and amortized over the life of the related loan using the interest method. Fees for other commitments are deferred and amortized over the loan commitment period on a straight-line basis. 5. Allowance for Loan Losses It is the Company's policy to provide valuation allowances for estimated losses on loans based on past loss experience, current trends in the level of delinquent and problem loans, loan concentrations to single borrowers, changes in the composition of the loan portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral and current and anticipated economic conditions in its primary lending areas. When the collection of a loan becomes doubtful, or otherwise troubled, the Company records a charge-off equal to the difference between the fair value of the property securing the loan and the loan's carrying value. Major loans, including development projects, and major lending areas are reviewed periodically to determine potential problems at an early date. The allowance for loan losses is increased by charges to earnings and decreased by charge-offs (net of recoveries). The Company accounts for impaired loans in accordance with SFAS No. 114, "Accounting by Creditors for Impairment of a Loan." SFAS No. 114 requires that impaired loans be measured based upon the present value of expected future cash flows discounted at the loan's effective interest rate or, as an alternative, at the loan's observable market price or fair value of the collateral. A loan is defined under SFAS No. 114 as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. In applying the provisions of SFAS No. 114, the Company considers its investment in one- to four-family residential loans and consumer installment loans to be homogeneous and therefore excluded from separate identification for evaluation of impairment. With respect to the Company's investment in nonresidential and multi-family residential real estate loans, and its evaluation of impairment thereof, such loans are generally collateral dependent and, as a result, are carried as a practical expedient at the lower of cost or fair value. Collateral dependent loans which are more than ninety days delinquent are considered to constitute more than a minimum delay in repayment and are evaluated for impairment under SFAS No. 114 at that time. At September 30, 2004 and 2003, the Company had no loans that would be defined as impaired under SFAS No. 114. 48 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 6. Office Premises and Equipment Office premises and equipment are carried at cost, net of accumulated depreciation, and include expenditures which extend the useful lives of existing assets. Maintenance, repairs and minor renewals are expensed as incurred. For financial reporting, depreciation and amortization are provided on the straight-line and accelerated methods over the useful lives of the assets, estimated to be thirty to forty years for buildings, five to fifteen years for building improvements and three to fifteen years for furniture and equipment. An accelerated depreciation method is used for tax reporting purposes. 7. Real Estate Acquired through Foreclosure Real estate acquired through foreclosure is carried at the lower of the loan's unpaid principal balance (cost) or fair value less estimated selling expenses at the date of acquisition. Real estate loss provisions are recorded if the properties' fair value subsequently declines below the value determined at the recording date. In determining the lower of cost or fair value at acquisition, costs relating to development and improvement of property are considered. Costs relating to holding real estate acquired through foreclosure, net of rental income, are charged against earnings as incurred. 8. Federal Income Taxes The Corporation accounts for federal income taxes pursuant to SFAS No. 109, "Accounting for Income Taxes." In accordance with SFAS No. 109, a deferred tax liability or deferred tax asset is computed by applying the current statutory tax rates to net taxable or deductible temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements that will result in net taxable or deductible amounts in future periods. Deferred tax assets are recorded only to the extent that the amount of net deductible temporary differences or carryforward attributes may be utilized against current period earnings, carried back against prior years' earnings, offset against taxable temporary differences reversing in future periods, or utilized to the extent of management's estimate of future taxable income. A valuation allowance is provided for deferred tax assets to the extent that the value of net deductible temporary differences and carryforward attributes exceeds management's estimates of taxes payable on future taxable income. Deferred tax liabilities are provided on the total amount of net temporary differences taxable in the future. Deferral of income taxes results primarily from different methods of accounting for deferred loan origination fees and costs, Federal Home Loan Bank stock dividends, mortgage servicing rights, the general loan loss allowance and the percentage of earnings bad debt deduction. Additionally, a temporary difference is recognized for depreciation utilizing accelerated methods for federal income tax purposes. 9. Amortization of Intangible Assets Intangible assets arising from the acquisition of deposits from another financial institution are being amortized on the straight-line method over a ten-year period. 49 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 10. Employee Benefit Plans The Company has a contributory 401(k) profit sharing plan covering all employees who have attained the age of 21 and have completed six months of service. Contributions to the plan are voluntary and are matched at the discretion of the Board of Directors. Contributions to the plan by the Company totaled $278,000, $314,000 and $126,000 for the years ended September 30, 2004, 2003 and 2002, respectively. The Corporation had an Employee Stock Ownership Plan ("ESOP") which provided retirement benefits for substantially all employees who had completed one year of service. Contributions of $137,000 were made to the ESOP for the year ended September 30, 2002. Effective February 28, 2002, the ESOP was merged into the Company's 401(k) profit sharing plan. 11. Earnings Per Share Basic earnings per common share is computed based upon the weighted-average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under the Company's stock option plans. The computations are as follows:

Options to purchase 125,500 and 185,500 shares of common stock with a respective weighted-average exercise price of $13.25 and $12.53 were outstanding at September 30, 2003 and 2002, respectively, but were excluded from the computation of common share equivalents for those respective years because the exercise prices were greater than the average market price of common shares. 12. Stock Option Plans Shareholders of the Corporation have approved stock option plans that provide for the issuance of up to 1,498,165 shares of authorized but unissued shares of common stock to be granted at the discretion of the Board of Directors at the fair value at the date of grant. Under the 1988 Stock Option Plan, 649,680 common shares were reserved for issuance to directors, officers, and key employees of the Corporation and Winton Savings. Additional options may not be granted under the 1988 Plan. At September 30, 2004, 107,774 options under the 1988 Plan were subject to exercise at the discretion of the grantees through fiscal 2008. The 1999 Stock Option Plan reserved 401,530 common shares for issuance to directors, officers, and key employees of the Corporation and Winton Savings. At September 30, 2004, 292,030 options under the 1999 Plan were subject to exercise at the discretion of the grantees through fiscal 2013, while 10,000 options were ungranted. The 2003 Stock Option Plan reserved 446,955 common shares for issuance to directors, officers and key employers of the Corporation and Winton Savings. At September 30, 2004, 99,470 options under the 2003 Plan were 50 subject to exercise at the discretion of the grantees through fiscal 2013, while 347,485 options were ungranted. 51 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 12. Stock Option Plans (continued) The Corporation accounts for its stock option plans in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," which contains a fair value-based method for valuing stock-based compensation that entities may use, which measures compensation cost at the grant date based on the fair value of the award. Compensation is then recognized over the service period, which is usually the vesting period. Alternatively, SFAS No. 123 permits companies to continue to account for stock options and similar equity instruments under Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The ability to utilize alternative accounting for stock options under APB Opinion No. 25 is presently under review. However, in view of the pending business combination discussed in Note M, management does not believe revisions to the accounting literature will have a material effect on the Corporation's results of operations. Entities that continue to account for stock options using APB Opinion No. 25 are required to make pro forma disclosures of net earnings and earnings per share, as if the fair value-based method of accounting defined in SFAS No. 123 had been applied. The Corporation applies APB Opinion No. 25 and related Interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for the plans. Had compensation cost for the Corporation's stock option plans been determined based on the fair value at the grant dates for awards under the plans consistent with the accounting method utilized in SFAS No. 123, the Corporation's net earnings and earnings per share would have been reported at the pro-forma amounts indicated below:

The fair value of each option grant was estimated on the date of grant using the modified Black-Scholes options-pricing model. The following assumptions were used for grants in fiscal 2004: dividend yield of 3.60%, expected volatility of 54.8%, risk-free interest rate of 3.00% and an expected life of ten years. 52 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 12. Stock Option Plans (continued) A summary of the status of the Corporation's stock option plans as of September 30, 2004, 2003 and 2002, and changes during the years ended on those dates is presented below:

The following information applies to options outstanding at September 30, 2004: Number outstanding 274,274 Range of exercise prices $ 6.75 - $9.94 Number outstanding 225,000 Range of exercise prices $13.00 - $13.25 Weighted-average exercise price $10.51 Weighted-average remaining contractual life 4.6

13. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents includes cash and due from banks and interest-bearing deposits due from other financial institutions with original maturities of less than ninety days. 14. Fair Value of Financial Instruments SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosure of the fair value of financial instruments, both assets and liabilities whether or not recognized in the consolidated statement of financial condition, for which it is practicable to estimate that value. When quoted market prices are not available for financial instruments, fair values are based on estimates using present value and other valuation methods. 53 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 14. Fair Value of Financial Instruments (continued) The methods used are greatly affected by the assumptions applied, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in an exchange for certain financial instruments. The following methods and assumptions were used by the Corporation in estimating its fair value disclosures for financial instruments at September 30, 2004 and 2003: Cash and cash equivalents: The carrying amounts presented in the consolidated statements of financial condition for cash and cash equivalents are deemed to approximate fair value. Investment and mortgage-backed securities: For investment and mortgage-backed securities, fair value is deemed to equal the quoted market price. Loans receivable: The loan portfolio has been segregated into categories with similar characteristics, such as one- to four-family residential, multi-family residential and nonresidential real estate. These loan categories were further delineated into fixed-rate and adjustable-rate loans. The fair values for the resultant loan categories were computed via discounted cash flow analysis, using current interest rates offered for loans with similar terms to borrowers of similar credit quality. The historical carrying amount of accrued interest on loans is deemed to approximate fair value. Federal Home Loan Bank stock: The carrying amount presented in the consolidated statements of financial condition is deemed to approximate fair value. Deposits: The fair value of NOW accounts, passbook and club accounts, advance payments and amounts due on loans serviced for others are deemed to approximate the amount payable on demand. Fair values for fixed-rate certificates of deposit have been estimated using a discounted cash flow calculation using the interest rates currently offered for deposits of similar remaining maturities. Advances from the Federal Home Loan Bank and other borrowed money: The fair value of these borrowings is estimated using the interest rates currently offered for borrowings of similar remaining maturities or, when available, quoted market prices. Commitments to extend credit: For fixed-rate and adjustable-rate loan commitments, the fair value estimate considers the difference between current levels of interest rates and committed rates. The fair value of outstanding loan commitments at September 30, 2004 and 2003, was not material. 54 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 14. Fair Value of Financial Instruments (continued) Based on the foregoing methods and assumptions, the carrying value and fair value of the Corporation's financial instruments are as follows at September 30:

15. Advertising Advertising costs are expensed when incurred. 16. Reclassifications Certain prior year amounts have been reclassified to conform to the 2004 consolidated financial statement presentation. 17. Recent Accounting Developments In December 2003, the FASB issued FASB Interpretation No. 46(R) ("FIN 46(R)"), "Consolidation of Variable Interest Entities." FIN 46(R) requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns, or both. FIN 46(R) also requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a significant variable interest. The consolidation requirements of FIN 46(R) apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements of FIN 46(R) apply to existing entities in the first fiscal year ending after December 15, 55 2004. Winton Financial has consolidated all variable interest entities without material effect on its financial condition or results of operations. 56 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 17. Recent Accounting Developments (continued) In March 2004, the Emerging Issues Task Force ("EITF") issued EITF 03-01, "The Meaning of Other-than-Temporary Impairment and its Application to Certain Investments." EITF 03-01 requires that unrealized losses on investment securities that are deemed other-than-temporary be recorded as an adjustment to operations. The Statement applies both to securities designated as held to maturity and those designated as available for sale. EITF 03-01 provides that unrealized losses may be viewed as other-than-temporary as a result not only due to deterioration of the credit quality of the issuer, but due to changes in the interest rate environment as well. An investor must be able to demonstrate the positive ability and intent to hold such securities until a forecasted recovery takes place or until maturity of the security. EITF 03-01 requires separate disclosure related to unrealized losses for securities that have been in an unrealized loss position for a period of less than twelve months and for those that have been in an unrealized loss position for a period greater than twelve months, for financial statements issued for years ending after December 15, 2003. The loss recognition provisions of other-than-temporary losses under EITF 03-01 are effective September 30, 2004. It is management's belief that, given Winton Financial's liquidity position, and assuming no credit quality concerns, EITF 03-01 will have no material effect on Winton Financial's consolidated financial statements. In March 2004, the FASB issued a proposed Statement, "Share-Based Payment," that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments. The proposed Statement would eliminate the ability to account for share-based compensation transactions, including stock option grants, using APB Opinion No. 25, "Accounting for Stock Issued to Employees," and generally would require instead that such transactions be accounted for using a fair-value-based method. Issuance of the final standards are not expected prior to the business combination in Note M. NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of investment securities at September 30 are summarized as follows:

57 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued)

The amortized cost and estimated fair value of U.S. Government and agency obligations and municipal bonds at September 30, 2004 and 2003, by term to maturity are shown below.

At September 30, 2004, investment securities with a carrying value of $1.0 million were pledged to secure public deposits. Proceeds from sales of investment securities totaled $11.1 million, $3.6 million and $5.2 million in fiscal 2004, 2003 and 2002, respectively, resulting in gross realized gains of $634,000, $97,000 and $264,000 in those respective years. 58 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued) The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of mortgage-backed securities at September 30, 2004 and 2003, are shown below.

59 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued) The amortized cost of mortgage-backed securities, including those designated as available for sale, by contractual terms to maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may generally prepay obligations without prepayment penalties.

Mortgage-backed securities with a carrying value of $620,000 were pledged to secure public deposits at September 30, 2004. There were no sales of mortgage-backed securities in either fiscal 2004 or fiscal 2003. The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2004.

Management has the intent to hold these securities for the foreseeable future and the decline in the fair value is primarily due to an increase in market interest rates. The fair values are expected to recover as securities approach maturity dates. 60 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE C - LOANS RECEIVABLE The composition of the loan portfolio at September 30 is as follows:

The Company's lending efforts have historically focused on one- to four-family residential and multi-family residential real estate loans, which comprise approximately $365.0 million, or 76%, and $373.4 million, or 78%, of the total loan portfolio at September 30, 2004 and 2003, respectively. Generally, such loans have been underwritten on the basis of no more than an 80% loan-to-value ratio, which has historically provided the Company with adequate collateral coverage in the event of default. Nevertheless, the Company, as with any lending institution, is subject to the risk that residential real estate values could deteriorate in its primary lending area of southwestern Ohio, thereby impairing collateral values. However, management is of the belief that residential real estate values in the Company's primary lending area are presently stable. As discussed previously, the Company has sold whole loans and participating interests in loans in the secondary market, periodically retaining servicing on the loans sold. Loans sold and serviced for others totaled approximately $158.6 million and $87.7 million at September 30, 2004 and 2003, respectively. At September 30, 2004, loans sold with recourse totaled $947,000. NOTE D - ALLOWANCE FOR LOAN LOSSES The activity in the allowance for loan losses is summarized as follows for the years ended September 30:

61 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE D - ALLOWANCE FOR LOAN LOSSES (continued) At September 30, 2004, the Company's allowance for loan losses was solely general in nature, which is includible as a component of regulatory risk-based capital. Nonperforming loans at September 30, 2004, 2003 and 2002, totaled $1.2 million, $3.8 million and $3.4 million, respectively. Interest income that would have been recognized had nonperforming loans performed pursuant to contractual terms totaled approximately $33,000, $146,000 and $49,000 for the fiscal years ended September 30, 2004, 2003 and 2002, respectively. NOTE E - OFFICE PREMISES AND EQUIPMENT Office premises and equipment is comprised of the following at September 30:

During fiscal 2002, the Company began construction and remodeling projects for two office locations. The Company completed these projects in fiscal 2003 at a total cost of $1.7 million. During fiscal 2004, the Company finished a branch renovation project and relocated an existing branch to a more strategic location. The Company leases certain of its office locations and automobiles under operating lease agreements. At September 30, 2004, the Company's outstanding future lease obligations were as follows:

The Company recognized operating lease expense totaling $314,000, $309,000 and $177,000 for the fiscal years ended September 30, 2004, 2003 and 2002, respectively. 62 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE F - DEPOSITS Deposits consist of the following major classifications at September 30:

The Company had savings accounts with balances equal to or in excess of $100,000 totaling $95.5 million and $74.9 million at September 30, 2004 and 2003, respectively. Interest expense on deposits for the fiscal years ended September 30 is summarized as follows:

63 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE F - DEPOSITS (continued) Maturities of outstanding certificates of deposit at September 30 are summarized as follows:

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK Advances from the Federal Home Loan Bank, collateralized at September 30, 2004, by pledges of certain residential mortgage loans totaling $174.3 million and the Company's investment in Federal Home Loan Bank stock, are summarized as follows:

NOTE H - OTHER BORROWED MONEY Winton Financial has a $6.0 million line of credit with another financial institution, with interest payable at prime less 50 basis points. At September 30, 2004 and 2003, the Corporation had $2.0 million outstanding at an interest rate of 4.25% and 3.50%, respectively. This line of credit expires in the first quarter of fiscal 2006. The loan is secured by 162,420, or 40.0% of Winton Savings' outstanding shares. 64 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE I - FEDERAL INCOME TAXES Federal income taxes differ from the amounts computed at the statutory corporate tax rate for the years ended September 30 as follows:

The composition of the Corporation's net deferred tax liability at September 30 is as follows:

65 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE I - FEDERAL INCOME TAXES (continued) Prior to fiscal 1997, the Company was allowed a special bad debt deduction generally limited to 8% of otherwise taxable income, subject to certain limitations based on aggregate loans and savings account balances at the end of the year. If the amounts that qualified as deductions for federal income taxes are later used for purposes other than for bad debt losses, including distributions in liquidation, such distributions will be subject to federal income taxes at the then current corporate income tax rate. This percentage of earnings bad debt deduction had accumulated to approximately $1.8 million as of September 30, 2004. The amount of the unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $600,000 at September 30, 2004. Winton Savings is required to recapture as taxable income approximately $1.0 million of its tax bad debt reserve, which represents the post-1987 additions to the reserve, and will be unable to utilize the percentage of earnings method to compute its bad debt deduction in the future. Winton Savings has provided deferred taxes for this amount and began to amortize the recapture of the bad debt reserve into taxable income over a six-year period in fiscal 1999. NOTE J - LOAN COMMITMENTS The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers, including commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the consolidated statement of financial condition. The contract or notional amounts of the commitments reflect the extent of the Company's involvement in such financial instruments. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as those utilized for on-balance-sheet instruments. At September 30, 2004, the Company had total outstanding commitments of approximately $28.2 million to originate residential one- to four-family and multi-family real estate loans, of which $7.0 million were comprised of adjustable-rate loans at rates ranging from 3.50% to 6.75%, and $21.2 million were comprised of fixed-rate loans at rates ranging from 3.50% to 7.75%. The Company also had total outstanding commitments of approximately $3.1 million to originate nonresidential real estate and land loans, of which approximately $800,000 were comprised of fixed-rate loans ranging from 5.25% to 8.00%, and $2.3 million were comprised of adjustable rate loans at rates ranging from 4.75% to 5.125%. Additionally, the Company had unused lines of credit related to home equity loans and commercial loans totaling $25.8 million and $8.6 million, respectively. In the opinion of management, all loan commitments equaled or exceeded prevalent market interest rates as of September 30, 2004, and such commitments have been underwritten on the same basis as that of the existing loan portfolio. Management believes that all loan commitments are able to be funded through cash flow from operations. Fees received in connection with these commitments have not been recognized in earnings. The Company has an outstanding commitment to sell $9.6 million of loans in the secondary market at September 30, 2004. 66 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE K - REGULATORY CAPITAL Winton Savings is subject to minimum regulatory capital standards promulgated by the Office of Thrift Supervision ("OTS"). Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on Winton Savings' financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Winton Savings must meet specific capital guidelines that involve quantitative measures of Winton Savings' assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Winton Savings' capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The minimum capital standards of the OTS generally require the maintenance of regulatory capital sufficient to meet each of three tests, hereinafter described as the tangible capital requirement, the core capital requirement and the risk-based capital requirement. The tangible capital requirement provides for minimum tangible capital (defined as shareholders' equity less all intangible assets) equal to 1.5% of adjusted total assets. The core capital requirement provides for minimum core capital (tangible capital plus certain forms of supervisory goodwill and other qualifying intangible assets) equal to 4.0% of adjusted total assets. The risk-based capital requirement currently provides for the maintenance of core capital plus general loan loss allowances equal to 8.0% of risk-weighted assets as of September 30, 2004. In computing risk-weighted assets, Winton Savings multiplies the value of each asset on its statement of financial condition by a defined risk-weighted factor, e.g., one- to four-family residential loans carry a risk-weighted factor of 50%. During fiscal 2004, the Company was notified by the OTS that it was categorized as "well-capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well-capitalized," the Company must maintain minimum capital ratios as set forth in the following tables. As of September 30, 2004 and 2003, management believes that the Company met all capital adequacy requirements to which it was subject.

67 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE K - REGULATORY CAPITAL (continued) AS OF SEPTEMBER 30, 2003

The Company's management believes that under the current regulatory capital regulations, the Company will continue to meet its minimum capital requirements in the foreseeable future. However, events beyond the control of the Company, such as increased interest rates or a downturn in the economy in the Company's market area, could adversely affect future earnings and consequently, the ability to meet future regulatory capital requirements. 68 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE L - CONDENSED FINANCIAL STATEMENTS OF WINTON FINANCIAL CORPORATION The following condensed financial statements summarize the financial position of the Corporation as of September 30, 2004 and 2003, and the results of its operations and its cash flows for each of the years ended September 30, 2004, 2003 and 2002. WINTON FINANCIAL CORPORATION STATEMENTS OF FINANCIAL CONDITION September 30,

69 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE L - CONDENSED FINANCIAL STATEMENTS OF WINTON FINANCIAL CORPORATION (continued) WINTON FINANCIAL CORPORATION STATEMENTS OF EARNINGS Year ended September 30,

WINTON FINANCIAL CORPORATION STATEMENTS OF CASH FLOWS Year ended September 30,

70 WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE L - CONDENSED FINANCIAL STATEMENTS OF WINTON FINANCIAL CORPORATION (continued) Winton Savings is subject to regulations imposed by the OTS regarding the amount of capital distributions payable by the Company to the Corporation. Generally, Winton Savings' payment of dividends is limited, without prior OTS approval, to net earnings for the current calendar year plus the two preceding calendar years, less capital distributions paid over the comparable time period. Insured institutions are required to file an application with the OTS for capital distributions in excess of this limitation. NOTE M - PENDING ACQUISITION On August 25, 2004, WesBanco, Inc. ("WesBanco"), WesBanco Bank, Inc., Winton Financial and The Winton Savings and Loan Co. entered into an Agreement and Plan of Merger (the "Merger Agreement") providing for the merger of Winton Financial with and into WesBanco. Pursuant to the Merger Agreement, Winton shareholders will receive for each Winton share owned $20.75 in cash or 0.755 shares of WesBanco common stock, subject to the requirement that 60% of Winton's outstanding shares will be paid in stock and 40% in cash, via a pro ration formula described in the Merger Agreement. The transaction approved by both companies is valued at approximately $102.5 million. The consummation of the merger is subject to regulatory and Winton shareholder approval. NOTE N - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following table summarizes the Corporation's quarterly results for the fiscal years ended September 30, 2004 and 2003. Certain amounts, as previously reported, have been reclassified to conform to the 2004 presentation.

-71- WINTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE M - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (continued)

-72- ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. ITEM 9A. CONTROLS AND PROCEDURES The Corporation's management reviews the system of internal controls with a view towards continuous improvement. In this regard, management became aware that segregation of network access capabilities were not implemented. In addition, management became aware of a number of passed adjustments in connection with the audit of the consolidated financial statements. The Corporation's Audit Committee was advised by its independent auditors that these matters represented significant deficiencies as defined in the auditing literature. Management has implemented corrective action with respect to these matters. The Corporation's Chief Executive Officer and Chief Financial Officer evaluated the disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this annual report. Based upon that evaluation and the corrective actions which are in the implementation stages, the Chief Executive Officer and Chief Financial Officer have concluded that the Corporation's disclosure controls and procedures are effective. ITEM 9B. OTHER INFORMATION None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF WFC DIRECTORS The following are the current directors of WFC:

--------------------- (1) Robert L. Bollin, a director and the President of WFC, is the brother of Gregory J. Bollin, a Vice President of WFC. ROBERT E. HOEWELER, a certified public accountant, has served since 1990 as the President of the Hoeweler Group, a group of family-owned companies that includes Aluminum Extruded Shapes, Inc. TIMOTHY M. MOONEY has served as Vice President of Operations at St. Xavier High School since August 2004 and previously served as Executive Vice President and Chief Financial Officer of Kendle International Inc., a clinical research organization in Cincinnati. Mr. Mooney is a director of Regent Communications, Inc. J. CLAY STINNETT has served since 1993 as the President and a director of J.R. Concepts, Inc., a direct mail advertising company in Cincinnati. ROBERT L. BOLLIN has served since 1988 as the President and a director of Winton and since 1989 as the President and a director of WFC. -73- JILL M. BURKE is the Chief Financial Officer of WFC and Winton, positions she has held since 1989. She became a director in 2004. HENRY L. SCHULHOFF has served since 1976 as the President of Schulhoff and Company, Inc., a local investment counseling firm. THOMAS H. HUMES has served since 1978 as the President of Great Traditions Land and Development Co., a real estate and land development company in Cincinnati. The only committee of WFC is the Audit Committee. The Audit Committee of the Board of Directors of WFC is comprised of three directors, all of whom are considered "independent" under Section 121(A) of AMEX's listing standards. The members of WFC's Audit Committee are Thomas H. Humes, Timothy M. Mooney and J. Clay Stinnett. The Board of Directors has determined that Timothy M. Mooney is a financial expert. The Audit Committee is responsible for overseeing WFC's accounting functions and controls, as well as retaining an independent accounting firm to audit WFC's financial statements. The Audit Committee has adopted a revised written charter to set forth its responsibilities. The Audit Committee met nine times during the fiscal year ended September 30, 2004. EXECUTIVE OFFICERS In addition to Robert L. Bollin, the following individuals are current executive officers of WFC: GREGORY J. BOLLIN, age 50, is a Vice President of WFC, a position he has held since January 1994. Mr. Bollin also serves as Executive Vice President of Winton, a position he has held since January 1993. Mr. Bollin is the brother of Robert L. Bollin. JILL M. BURKE is the Chief Financial Officer of WFC and Winton, positions she has held since 1989. She became a director in 2004. GREGORY P. NIESEN, age 38, a certified public accountant, has served as Treasurer of WFC since February 2000 and as Secretary of WFC since October 2000. Prior to his employment by WFC, Mr. Niesen served as the Senior Vice President/Treasurer of Fidelity Financial of Ohio, Inc. for four years and as the Senior Vice President/Chief Financial Officer of Centennial Savings Bank for four years. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires WFC's officers and directors and persons who own 10% or more of the shares of WFC to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Commission. Officers, directors and 10% or greater shareholders are required by the Commission's regulations to furnish WFC with copies of all Forms 3, 4 and 5 they file. Based on WFC's review of the copies of such forms it has received, WFC believes that all of its officers, directors and 10% or greater shareholders filed on a timely basis all reports required by Section 16(a) of the Exchange Act during fiscal 2004. CODE OF BUSINESS CONDUCT AND ETHICS WFC's Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all employees and directors of WFC and Winton. A copy of the Code of Business Conduct and Ethics will be available at no charge to any person upon written request to: Winton Financial Corporation Attention: Jill M. Burke, Chief Financial Officer 5511 Cheviot Road Cincinnati, Ohio 45247-7095 -74- ITEM 11. EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION WFC does not pay any compensation to its executive officers. Winton compensates its executive officers for services rendered to Winton. Except for the persons set forth in the table below (the "Named Executive Officers"), no director or executive officer of WFC received more than $100,000 in salary and bonus payments from Winton during the year ended September 30, 2004: Summary Compensation Table

------------------------- (1) On February 28, 2002, The Winton Financial Corporation Employee Stock Ownership Plan (the "ESOP") was terminated and merged into The Winton Savings and Loan Co. 401(k) Profit Sharing Plan (the "401(k)"). Prior to the termination, contributions were made to the ESOP for the benefit of participants. (2) Consists of cash or stock contributions to the ESOP of $0, $0, and $4,788 allocated to Mr. Robert L. Bollin's account and $11,668, $11,868 and $6,089 in matching and profit sharing contributions to the 401(k) Plan for Mr. Robert L. Bollin's account for the years ended September 30, 2004, 2003, and 2002, respectively. (3) Consists of cash or stock contributions to the ESOP of $0, $0, and $4,788 allocated to Mr. Gregory J. Bollin's account and $9,335, $8,842 and $3,772 in matching and profit sharing contributions to the 401(k) Plan for Mr. Gregory J. Bollin's account for the years ended September 30, 2004, 2003, and 2002, respectively. (4) Consists of cash or stock contributions to the ESOP of $0, $0, and $3,681 allocated to Ms. Burke's account and $8,631, $8,570, and $3,435 in matching and profit sharing contributions to the 401(k) Plan for Ms. Burke's account for the years ended September 30, 2004, 2003, and 2002, respectively. (5) Consists of cash or stock contributions to the ESOP of $0, $0, and $2,526 allocated to Mr. Niesen's account and $5,991, $5,472, and $1,873 in matching and profit sharing contributions to the 401(k) Plan for Mr. Niesen's account for the years ended September 30, 2004, 2003, and 2002, respectively. -75- (6) Includes $4,665 awarded under the cost analysis revenue enhancement program in which Mr. Niesen contributed significantly. The following table sets forth information regarding the number and value of unexercised options granted pursuant to the 1988 Option Plan and the 1999 Option Plan and held by the Named Executive Officers. No options were granted under the 2003 Option Plan during fiscal 2004.

----------------------- (1) An option is "in-the-money" if the fair value of the underlying stock exceeds the exercise price of the option. The figure represents the value of such unexercised options, determined by multiplying the number of unexercised options by the difference between the exercise price of such options and the $21.12 closing bid price for the WFC shares reported by the American Stock Exchange ("AMEX"), on September 30, 2004. EMPLOYMENT AGREEMENTS WFC and Winton have entered into employment agreements with Robert L. Bollin, President of WFC and Winton, Gregory J. Bollin, Vice President of WFC and Executive Vice President of Winton, and Jill M. Burke, Chief Financial Officer of WFC and Winton. Each employment agreement has a term of three years and provides for an annual salary and annual bonus of not less than $230,000 for Robert L. Bollin, $163,000 for Gregory J. Bollin and $119,400 for Jill M. Burke, and an annual salary and performance review by the Boards of Directors. The employment agreements require the inclusion of Robert L. Bollin, Gregory J. Bollin and Jill M. Burke in any formally established employee benefit, bonus, pension and profit sharing plans for which senior management personnel are eligible and also provide for vacation and sick leave. WFC and Winton may terminate the employment agreements at any time. If the employment of Robert L. Bollin, Gregory J. Bollin or Jill M. Burke is terminated during the three-year term of his or her respective agreement for any reason other than "just cause" or a "change of control" of WFC or Winton (as defined in the agreements), he or she will be entitled to receive his or her annual compensation for the remainder of the three-year term of the agreement and a continuation of benefits substantially equal to those being provided at the date of termination of employment until the earliest to occur of the expiration of the term of the employment agreement or the date on which the employee becomes employed full-time by another employer. If WFC or Winton terminates the employment of Robert L. Bollin, Gregory J. Bollin or Jill M. Burke, or if their positions or responsibilities are substantially changed in connection with or within one year of a change of control of WFC or Winton, he or she will be entitled to receive an amount approximately equal to three times his or her then current annual -76- compensation, subject to any necessary reduction to comply with certain provisions of the Internal Revenue Code of 1986, as amended (the "Code"), regulations of the Internal Revenue Service and regulations of the Office of Thrift Supervision ("OTS"). He or she will also be entitled to continued benefits under all benefit plans until the earliest to occur of the expiration of the term of the employment agreement or the date on which the employee becomes employed full-time by another employer. SEVERANCE AGREEMENT Winton has entered into a Severance Agreement with Gregory P. Niesen, the Secretary and Treasurer of WFC and Winton. The Severance Agreement has a one-year term and provides that if Winton terminates Gregory P. Niesen's employment within six months before or within one year after a "change of control" of Winton (as defined in the Agreement), or Gregory P. Niesen voluntarily terminates his employment with Winton within one year after a change in control due to certain material changes in his employment (as set forth in the Agreement), he shall be entitled to receive $88,250, subject to any necessary reduction to comply with certain provisions of the Code, regulations of the Internal Revenue Service and regulations of the OTS. He will also be entitled to continued benefits under all benefit plans until the earliest to occur of the expiration of the term of the employment agreement or the date on which he becomes employed full-time by another employer. COMPENSATION COMMITTEE REPORT As a unitary savings and loan holding company, the business of WFC consists principally of holding the stock of Winton. The functions of the executive officers of WFC, who are also the executive officers of Winton, pertain primarily to the operations of Winton. The executive officers receive their compensation, therefore, from Winton, rather than from WFC. The Compensation Committee of Winton has furnished the following report concerning executive compensation: Process for Determining Compensation Decisions on cash compensation of Winton's executive officers are made by the three-member Compensation Committee of Winton's Board of Directors. Each member of the Compensation Committee is an independent director. The Compensation Committee reviews the compensation levels of the executive officers of Winton, including the CEO, each year. The Compensation Committee utilizes independent surveys of compensation of officers in the thrift industry, taking into account comparable asset bases and geographic locations. The Compensation Committee also assesses each particular executive officer's contribution to WFC and Winton, the skills and experiences required by his/her position and the potential of the executive officer. The Compensation Committee determines the compensation for the senior executive officers based on the foregoing factors. Compensation Policies toward Executive Officers Generally The Compensation Committee's executive compensation policies are designed to provide competitive levels of compensation that will attract and retain qualified executives and will reward individual performance, initiative and achievement, while enhancing overall corporate performance and shareholder value. The cash compensation program for executive officers consists of the following three elements: a base salary component, a discretionary cash bonus and an incentive component payable under an incentive plan (the "Incentive Plan"). The objectives of the discretionary cash bonuses are to motivate and reward the executive officers based on each individual's contribution to the total performance of Winton and WFC and to reinforce a strong performance orientation. -77- The Incentive Plan was established to motivate and reward the executive officers and employees in connection with the accomplishment of annual objectives of Winton and WFC, to reinforce a strong performance orientation with differentiation and variability in individual awards based on contribution to annual and long range business results and to provide a competitive compensation package that will attract, reward and retain individuals of the highest quality. The Incentive Plan provides that if WFC reaches a predetermined return on equity, a percentage of WFC's net income before taxes is set aside to be used for incentive awards. This incentive pool is distributed through cash awards as follows: 40% of the incentive pool is divided between the President and the Executive Vice President of Winton, 40% of the incentive pool is awarded to other executive officers and employees of WFC and Winton as determined appropriate by the President, and the remaining 20% of the incentive pool is contributed to the Profit Sharing plan. Determination of CEO's Compensation The Compensation Committee based the compensation of Mr. Robert L. Bollin in fiscal 2004 on the policies described above for executive officers. The corporate profitability measurements considered were return on equity, net income, earnings per WFC common share and return on assets. Additional corporate goals considered were merger and acquisition activities, continued updating and implementation of Winton's strategic plan and subsidiary oversight and progress. The Compensation Committee believes that the level of compensation paid to Mr. Robert L. Bollin in fiscal 2004 was fair and reasonable when compared with compensation levels in the thrift industry reported in various independent surveys. The compensation earned by Mr. Robert L. Bollin in 2004 reflects the significant management and leadership responsibilities required of him and the effective manner in which those responsibilities were fulfilled. Submitted by the Compensation Committee of Winton's Board of Directors Thomas H. Humes Timothy M. Mooney J. Clay Stinnett COMPENSATION COMMITTEE INTERLOCKS During fiscal 2004, no member of the Compensation Committee was a current or former executive officer or employee of WFC or Winton or had a reportable business relationship with WFC or Winton. -78- PERFORMANCE GRAPH The following graph compares the cumulative total return on WFC's shares for the fiscal year ended September 30, 2004, with the cumulative total return of the SNL Thrift Index, which is an index of thrifts whose shares are traded on The New York Stock Exchange, AMEX or The Nasdaq Stock Market and the cumulative total return of the Standard and Poor's 500 for the same period. [GRAPH]

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS The following table sets forth certain information with respect to shareholders, other than directors and executive officers of WFC, known by WFC to own beneficially more than five percent of the WFC common shares as of December 15, 2004:

--------------------- (1) Assumes a total of 5,069,824 WFC common shares outstanding. (2) All of the shares are held by Winton as Trustee for The Winton Savings and Loan Co. 401(k) Profit Sharing Plan (the "401(k)"). Pursuant to the 401(k), Winton, as Trustee, has shared investment power with respect to shares held in ESOP Transfer Accounts. The ESOP Transfer Accounts were created when The Winton Financial Corporation Employee Stock Ownership Plan (the "ESOP") was terminated and then merged into the 401(k). As previously announced, pursuant to the Agreement and Plan of Merger dated as of August 25, 2004 by and among WesBanco, Inc. ("WesBanco"), WesBanco Bank, Inc., WFC and Winton, WesBanco will acquire all of the outstanding -79- shares of WFC. As a result, WFC will be merged with and into WesBanco. It is anticipated that this merger will become effective in January 2005. The following table sets forth certain information with respect to the number of WFC common shares beneficially owned by each director of WFC and by all directors and executive officers of WFC as a group as of December 15, 2004:

-------------------------- (1) Each of the persons listed in this table may be contacted at the address of WFC, 5511 Cheviot Road, Cincinnati, Ohio 45247. (2) For each person, assumes a total of 5,069,824 WFC common shares outstanding, plus the number of WFC shares such person may acquire in the next 60 days pursuant to the Winton Financial Corporation Stock Option and Incentive Plan, as amended (the "1988 Option Plan"), the Winton Financial Corporation 1999 Stock Option and Incentive Plan (the "1999 Option Plan"), and the Winton Financial Corporation 2003 Stock Option and Incentive Plan (the "2003 Option Plan"). (3) Includes 52,500 shares that may be acquired upon the exercise of options. (4) Includes 32,500 shares that may be acquired upon the exercise of options. (5) Consists solely of shares that may be acquired upon the exercise of options. (6) Includes 30,560 shares that may be acquired upon the exercise of options. (7) Includes 17,600 shares owned by the Cathleen Schulhoff Trust, the trustee of which is Mr. Schulhoff's spouse, and as to which Mr. Schulhoff disclaims beneficial ownership. The following table shows, as of September 30, 2004, the number of shares issuable upon the exercise of outstanding stock options under both the 1988 Option Plan, the 1999 Option Plan and the 2003 Option Plan, the weighted-average exercise price of those stock options, and the number of common shares remaining for future issuance under the 1999 Option Plan and the 2003 Option Plan, excluding shares issuable upon the exercise of outstanding stock options: -80-

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Some of the directors and officers of WFC and Winton were customers of and had transactions with Winton in the ordinary course of Winton's business during the two years ended September 30, 2004. All loans and commitments to loan included in such transactions were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and, in the opinion of the management of WFC, do not involve more than the normal risk of collectibility or present other unfavorable features. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The aggregate fees billed by Grant Thornton LLP to WFC for the years ended September 30, 2004 and 2003 are as follows:

------------------------- (1) Permissible tax services include preparation of tax returns. (2) Includes reviews of Forms S-4 and 10-Q. PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 3.1 Articles of Incorporation, as amended through 1999, of Winton Financial Corporation 3.2 Regulations of Winton Financial Corporation, as amended 4 Instruments defining the rights of shareholders 10.1 The Winton Savings and Loan Co. 401(k) Profit Sharing Plan 10.2 Winton Financial Corporation, Stock Option and Incentive Plan, as Amended 10.3 The Winton Financial Corporation 1999 Stock Option and Incentive Plan -81- 10.4 The Winton Financial Corporation 2003 Stock Option and Incentive Plan 10.5 Employment Agreement between WFC, Winton and Robert L. Bollin, dated January 1, 2004 10.6 Employment Agreement between WFC, Winton and Gregory J. Bollin, dated January 1, 2004 10.7 Employment Agreement between WFC, Winton and Jill M. Burke, dated January 1, 2004 10.8 Severance Agreement between Winton and Gregory P. Niesen, dated January 1, 2004 10.9 Agreement and Plan of Merger dated as of August 25, 2004 by and among WesBanco, Inc., WesBanco Bank, Inc., WFC and Winton 21 Subsidiaries of the Registrant 23 Consent of Grant Thornton LLP regarding WFC's Consolidated Financial Statements and Forms S-8 for WFC's 1988 Stock Option Plan, 1999 Stock Option Plan and 401(k) Profit Sharing Plan 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer 32.1 Certification of Chief Executive Officer 32.2 Certification of Chief Financial Officer 99.1 Safe Harbor Under the Private Securities Litigation Reform Act of 1995 -82- 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 on December 17, 2004. WINTON FINANCIAL CORPORATION By: /s/ Robert L. Bollin ------------------------------ Robert L. Bollin, President, Chief Executive Officer and a Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been duly signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Jill M. Burke By:/s/ Thomas H. Humes -------------------------------- ------------------------------- Jill M. Burke, Thomas H. Humes, Principal Financial Officer Director and Principal Accounting Officer Date: December 17, 2004 Date: December 17, 2004 By: /s/ Robert E. Hoeweler By:/s/ Henry L. Schulhoff -------------------------------- ------------------------------- Robert E. Hoeweler, Henry L. Schulhoff, Director Director Date: December 17, 2004 Date: December 17, 2004 By: /s/ Timothy M. Mooney By:/s/ J. Clay Stinnett ------------------------------- ------------------------------- Timothy M. Mooney, J. Clay Stinnett, Director Director Date: December 17, 2004 Date: December 17, 2004 -36- INDEX TO EXHIBITS

WINTON FINANCIAL CORP 10-K