EXHIBIT 13


<PAGE>





                           WHG BANCSHARES CORPORATION

                                  ANNUAL REPORT
                            For the Fiscal Year Ended
                               September 30, 1996

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





<PAGE>




                           WHG BANCSHARES CORPORATION
                                  ANNUAL REPORT
--------------------------------------------------------------------------------

TABLE OF CONTENTS
--------------------------------------------------------------------------------




Letter to Stockholders..........................................   1


Corporate Profile and Stock Market Information.................    3


Selected Financial Ratios and Other Data.......................    4


Management's Discussion and Analysis...........................    5


Independent Auditors' Reports..................................   19


Consolidated Financial Statements..............................   20


Notes to Consolidated Financial Statements.....................   25


Office Locations and Other Corporate Information...............   49


<PAGE>
                                [WHG LETTERHEAD]


[WHG BANCSHARES CORPORATION LOGO]

                                                               December 20, 1996

To Our Stockholders:

        On behalf of our Board of  Directors  and  employees,  we are pleased to
present the first Annual Report to  Stockholders  of WHG Bancshares  Corporation
(the "Company").  As you will see from the Report, 1996 was an eventful year for
the Company and its wholly-owned subsidiary,  Heritage Savings Bank, F.S.B. (the
"Bank")

        On March 29, 1996, the Bank  successfully  completed its conversion from
the mutual to stock form of organization  and the concurrent  public offering of
1,620,062 shares of the Company's common stock (the "Conversion").  Net proceeds
to the Company and the Bank from the Conversion were  approximately $15 million.
While the Company is in the early stages of investing  the net proceeds from the
Conversion,  we expect  that the  investment  of these  proceeds  will  generate
increased core earnings.

        An additional significant event in 1996 affecting your investment in the
Company was the enactment of the Economic Growth and Paperwork  Reduction Act of
1996.  This federal law was enacted on  September  30,  1996,  and,  among other
things,  levied a special  assessment  on  deposits  of the Bank as of March 31,
1995,  of 65.7 basis  points.  The effect of this  assessment  on the  Company's
results  of  operations  and  financial   condition  is  discussed   below.  The
legislation  recapitalized the Savings  Association  Insurance Fund (SAIF) which
insures the deposits of all savings  associations such as the Bank. As a result,
the Bank will pay  lower  premiums  to the SAIF for  deposit  insurance.  We are
pleased that this issue has finally been  resolved by the Congress as we will no
longer be at a significant  competitive  disadvantage to commercial  banks which
were, prior to the legislation, paying significantly less for deposit insurance.










               1505 YORK ROAD. LUTHERVILLE, MARYLAND. 21093-5651
                      PHONE 410-583-8700    FAX 410-583-1863

<PAGE>

December 20, 1996
Page 2


        For the  fiscal  year ended  September  30,  1996,  the  Company  earned
$458,617 as compared to $672,858 for the fiscal year ended  September  30, 1995.
Earnings per share data is not  presented  as the  Conversion  was  completed on
March 29,  1996.  Earnings  for the  September  30,  1996 fiscal year and fourth
fiscal  quarter were adversely  impacted by the special  assessment of $310,583,
net of taxes.  Without the  imposition  of the special  assessment,  the Company
would have earned $769,200 for the 1996 fiscal year.

        At September 30, 1996, the Company's  assets  totalled  $96,528,114,  as
compared  to  $85,026,575  at  September  30,  1995.  Stockholders'  equity  was
$23,246,058  or $14.35 per share at September  30, 1996, as compared to retained
earnings  of  $8,452,817  at  September  30,  1995.  The  increase in assets and
stockholders'  equity was primarily  attributable  to the net proceeds  received
from the Conversion.

        We sincerely  appreciate the confidence in us shown by our customers and
local  community  in the  Conversion.  As you may know,  our stock  offering was
significantly  oversubscribed.  We are  pleased  to  report  that our  stock has
consistently  traded above its issue price of $10 per share since the completion
of the Conversion.

        The goal of your Board of Directors and  Management  is to  continuously
strive to enhance your  investment in the Company.  We expect to report progress
in this regard in our future reports to you.

                                           Sincerely,


                                           /s/ John E. Lufburrow
                                           John E. Lufburrow    
                                           Chairman of the Board 

 
                                           /s/ Peggy J. Stewart
                                           Peggy J. Stewart
                                           President and Chief Executive Officer



<PAGE>




                           WHG BANCSHARES CORPORATION

Corporate Profile

WHG Bancshares  Corporation (the "Company") is a Maryland corporation  organized
in December of 1995 at the  direction  of Heritage  Savings  Bank,  F.S.B.  (the
"Savings  Bank" or  "Heritage")  to acquire  all of the  capital  stock that the
Savings Bank issued in its conversion from the mutual to stock form of ownership
(the "Conversion"). On March 29, 1996, the Savings Bank completed the Conversion
and became a wholly owned  subsidiary  of the Company.  The Company is a unitary
savings and loan holding  company which,  under existing laws,  generally is not
restricted in the types of business  activities in which it may engage  provided
that  the  Savings   Bank   retains  a   specified   amount  of  its  assets  in
housing-related  investments.  The Company  conducts no significant  business or
operations  of its own other than  holding all of the  outstanding  stock of the
Savings Bank and investing the Company's portion of the net proceeds obtained in
the conversion.

The  Savings  Bank,  founded  in 1902  under  the name West  Baltimore  Building
Association,  is a federally  chartered  stock  savings  bank  headquartered  in
Lutherville,   Maryland.   The  Savings  Bank  is  subject  to  examination  and
comprehensive  regulation  by the Office of Thrift  Supervision  ("OTS") and its
deposits  are  federally  insured  by the  Savings  Association  Insurance  Fund
("SAIF").  The Savings Bank is a member of and owns capital stock in the FHLB of
Atlanta,  which is one of the 12 regional banks in the FHLB System.  The Savings
Bank has investments in two service corporations.

The Savings  Bank  operates a  traditional  savings  bank  business,  attracting
deposit accounts from the general public and using those deposits, together with
other funds, primarily to originate and invest in loans secured by single-family
residential  real  estate.  Since the middle of the 1980s,  the  Savings  Bank's
lending activities have emphasized adjustable rate mortgage loans.

Stock Market Information

The Company's  common stock has been traded on the Nasdaq  SmallCap Market under
the trading  symbol of "WHGB"  since it  commenced  trading in April  1996.  The
following  table  reflects high and low bid  quotations as published by The Wall
Street  Journal.  The quotations  reflect  inter-dealer  prices,  without retail
mark-up, markdown, or commission, and may not represent actual transactions.

                                                                      Dividends
                 Date                     High          Low           Declared
                 ----                     ----          ---           --------

April 1, 1996 to June 30, 1996           $11.75        $10.75             $0

July 1, 1996 to September 30, 1996        13.00        11.00              $0


The number of  shareholders  of record of common  stock as of the record date of
December 6, 1996,  was  approximately  274.  This does not reflect the number of
persons or entities who held stock in nominee or "street"  name through  various
brokerage firms. At December 6, 1996,  there were 1,620,062 shares  outstanding.
The Company's  ability to pay dividends to  stockholders  is dependent  upon the
dividends it receives from the Savings Bank. The Savings Bank may not declare or
pay a cash  dividend on any of its stock if the effect  thereof  would cause the
Savings Bank's  regulatory  capital to be reduced below (1) the amount  required
for the liquidation  account  established in connection with the Conversion,  or
(2) the regulatory capital  requirements imposed by the OTS. The Company did not
pay any dividends during the fiscal years ended September 30, 1995 and 1996.

                                       -3-



<PAGE>



Selected Financial Ratios and Other Data
<TABLE>
<CAPTION>

                                                  For the Years Ended September 30,
                                                  ---------------------------------
                                                       1996             1995      
                                                       ----             ----      

<S>                                                   <C>             <C>         
Return on average assets.................                .49%            .77%     

Return on average equity.................               2.68            8.32      

Average equity to average assets ratios..              18.45            9.29      

Equity to assets at period end...........              24.08            9.94      

Net interest rate spread.................               2.70            3.02      

Net yield on average interest-earnings

 assets..................................               3.59            3.41      

Non-performing loans to total assets.....                .50             .40      

Allowance for loan loss to total loans...                .26             .20      

</TABLE>

                                       -4-


<PAGE>



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

General

     WHG Bancshares  Corporation (the "Company") was recently formed,  therefore
its results  from  operations  consist  primarily  of  interest  income from the
investing of funds from the  proceeds  generated by the sale of common stock and
expense  incurred  in the  maintaining  of the  investment  portfolio.  Heritage
Savings Bank,  F.S.B.'s (the "Savings Bank" or "Heritage") results of operations
are  primarily  dependent on its net interest  income,  which is the  difference
between  the  interest  income  earned  on  its  assets,   primarily  loans  and
investments, and the interest expense on its liabilities, primarily deposits and
borrowings.  Net  interest  income  may be  affected  significantly  by  general
economic  and  competitive  conditions  and  policies  of  regulatory  agencies,
particularly  those  with  respect  to market  interest  rates.  The  results of
operations are also  influenced by the level of non-interest  expenses,  such as
employee  salaries and benefits and other income,  such as loan-related fees and
fees on deposit-related services.

Asset/Liability Management

    The Savings  Bank's net interest  income is sensitive to changes in interest
rates, as the rates paid on its  interest-bearing  liabilities  generally change
faster  than the  rates  earned on  interest-earning  assets.  As a result,  net
interest income will frequently  decline in periods of rising interest rates and
increase in periods of falling interest rates.

    To  mitigate  the  impact of  changing  interest  rates on its net  interest
income,  the Savings Bank manages its interest  sensitivity and  asset/liability
products  through a committee  which  meets  weekly and  consists of  department
supervisors,  overseen by the  President and Chairman of the Board of Directors.
The Chairman  reports to the Board of Directors of the Savings Bank on behalf of
the Committee.

    In an effort to  reduce  interest  rate  risk and  protect  itself  from the
negative  effects of rapid or prolonged  changes in interest rates,  the Savings
Bank has instituted certain asset and liability management  measures,  including
the following measures:

    .   Maintains a large base of adjustable  rate  residential  mortgage loans.
        Such loans have been  emphasized  by  Heritage.  However,  recently  the
        Savings Bank has begun to offer fixed rate residential mortgage loans in
        addition to ARMs to balance the loan portfolio.

                                       -5-


<PAGE>



    .   Maintains  moderate  levels  of interest-bearing deposits, federal funds
        and  U.S. Government  securities  with  short  to  intermediate terms to
        maturities.

    .   Maintains a high proportion of lower-costing,  non-certificate  accounts
        in the deposit  portfolio.  At September 30, 1996, such deposits totaled
        $28.0 million or 38.8% of total deposits.

    The  Committee  manages the interest  rate  sensitivity  of the Savings Bank
through the  determination  and adjustment of  asset/liability  composition  and
pricing strategies.  The Committee then monitors the impact of the interest rate
risk and earnings  consequences  of such  strategies  for  consistency  with the
Savings Bank's liquidity needs, growth and capital adequacy.  The Savings Bank's
principal   strategies   to  reduce  the  interest  rate   sensitivity   of  its
interest-earning  assets are the origination of  adjustable-rate  mortgage loans
("ARMs")  and the Savings  Bank's  objective  is to maintain 75% of its mortgage
loan  portfolio in ARMs.  However,  this  objective may become more difficult to
achieve during periods when consumers  perceive interest rates are declining and
consumer demand shifts towards fixed rate mortgage loans and away from ARMs. The
interest rates on the Savings Bank's  liabilities  generally  change faster than
rates earned on assets,  because the Savings Bank's deposit  liabilities consist
primarily  of  demand,   money  market  and  passbook  savings   accounts,   and
certificates  of deposit that mature in one year or less. The Savings Bank seeks
to mitigate the interest rate  sensitivity of its liabilities by offering higher
rates on longer term certificate accounts.  However,  depositors have not sought
such longer terms during  recent  periods.  The Savings Bank does not  currently
engage  in, or  intend  to  engage  in,  trading  activities  or use  derivative
instruments to control interest rate risk.

Net Portfolio Value

    In order to encourage  savings  associations  to reduce their  interest rate
risk,  the OTS  adopted  a rule,  that is not yet in  effect,  incorporating  an
interest rate risk ("IRR") component into the risk-based  capital rules. The IRR
component is a dollar  amount that will be deducted  from total  capital for the
purpose of calculating an institution's  risk-based  capital  requirement and is
measured  in terms of the  sensitivity  of its net  portfolio  value  ("NPV") to
changes in interest rates.  NPV is the difference  between incoming and outgoing
discounted cash flows from assets, liabilities, and off-balance sheet contracts.
An  institution's  IRR is  measured  as the  change  to its NPV as a result of a
hypothetical 200 basis point ("bp") change in market interest rates. A resulting
change in NPV of more than 2% of the  estimated  market value of its assets will
require the  institution  to deduct from its capital 50% of that excess  change.
The rules provide that the OTS will  calculate  the IRR component  quarterly for
each institution.  The Savings Bank, based on asset size and risk-based capital,
has been informed by the OTS that it is exempt from this rule.

                                       -6-


<PAGE>


Nevertheless,  the following  table presents the Savings Bank's NPV at September
30, 1996, as calculated by the OTS, based on information  provided to the OTS by
the Savings Bank.
<TABLE>
<CAPTION>

                                                                           NPV as % of PV
                        Net Portfolio Value                                  of Assets
                        -------------------                                  ---------
Changes                                                          NPV
in Rate        $ Amount      $Change(1)       %Change(2)       Ratio(3)      Change(4)
-------        --------      ----------       ----------       --------      ---------
<S>            <C>           <C>                 <C>            <C>            <C>   
+400 bp        $ 9,119       $  -7,483           -45%           10.54%         -684 bp

+300 bp         11,045          -5,557           -33%           12.43%         -495 bp

+200 bp         12,992          -3,609           -22%           14.25%         -313 bp

+100 bp         14,902          -1,700           -10%           15.95%         -143 bp

   0 bp         16,602                                          17.38%

-100 bp         18,028           1,426            +9%           18.52%         +114 bp

-200 bp         19,038           2,437           +15%           19.29%         +191 bp

-300 bp         19,987           3,386           +20%           19.98%         +261 bp

-400 bp         21,021           4,419           +27%           20.73%         +336 bp

</TABLE>

(1)     Represents  the excess  (deficiency)  of the  estimated NPV assuming the
        indicated  change in interest  rates minus the estimated NPV assuming no
        change in interest rates.
(2)     Calculated  as the amount of change in the  estimated NPV divided by the
        estimated NPV assuming no change in interest rates.
(3)     Calculated as the estimated NPV divided by average total assets.
(4)     Calculated as the excess (deficiency) of the NPV ratio assuming the
        indicated change in interest rates over the estimated NPV ratio assuming
        no change in interest rates.

                                                                      At
                                                                 September 30,
                                                                     1996
                                                                 -------------

***Risk Measures: 200 bp rate shock***

Pre-Shock NPV Ratio: NPV as % of PV of Assets............            17.38%

Exposure Measure: Post Shock NPV Ratio...................            14.25%

Sensitivity Measure: Change in NPV Ratio.................             -313 bp


                                       -7-


<PAGE>



        Although the OTS has informed the Savings Bank that it is not subject to
the IRR component discussed above, the Savings Bank is still subject to interest
rate risk and,  as can be seen above,  changes in interest  rates may reduce the
Savings  Bank's  NPV.  The OTS has the  authority  to require  otherwise  exempt
institutions to comply with the rule concerning interest rate risk.

        Certain  shortcomings are inherent in the preceding NPV tables since the
data reflect  hypothetical changes in NPV based upon assumptions used by the OTS
to evaluate the Savings  Bank as well as other  institutions.  Nonetheless,  the
experience of the Savings Bank has been that net interest  income  declines with
increases  in  interest  rates  and  that net  interest  income  increases  with
decreases in interest rates.  Generally,  during periods of increasing  interest
rates,  the Savings  Bank's  interest rate sensitive  liabilities  would reprice
faster than its interest rate sensitive  assets causing a decline in the Savings
Bank's  interest  rate spread and margin.  This would result from an increase in
the  Savings  Bank's  cost of funds that would not be  immediately  offset by an
increase  in its  yield on  earning  assets.  An  increase  in the cost of funds
without an  equivalent  increase  in the yield on earning  assets  would tend to
reduce net  interest  income.  As a result of the  increase  in market  interest
rates, the Savings Bank's net interest rate spread decreased  between the fiscal
years ended September 30, 1996 and September 30, 1995 to 2.70% from 3.02%.

        In times of decreasing  interest rates, fixed rate assets could increase
in value and the lag in repricing  of interest  rate  sensitive  assets could be
expected to have a positive effect on the Savings Bank.

                                      -8-


<PAGE>
Average Balance Sheet

        The  following  table sets forth  certain  information  relating  to the
Company's  average  balance  sheet and reflects the average  yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods  presented.  Average  balances  are  derived  from  month-end  balances.
Management does not believe that the use of month-end  balances instead of daily
average  balances  has  caused  any  material  differences  in  the  information
presented.

<TABLE>
<CAPTION>
                                                                             Year Ended September 30, 1996
                                                    ------------------------------------------------------
                                                                      1996                                         1995
                                                    ----------------------------------------   -----------------------------------
                                                    Average                    Average         Average                  Average
                                                    Balance     Interest     Yield/Cost        Balance     Interest     Yield/Cost
                                                    -------     --------     ----------        -------     --------     ----------
                                                    (Dollars in Thousands)

Interest-earnings assets:
<S>                                                 <C>         <C>               <C>          <C>         <C>               <C>  
   Loans receivable(1).........................     $73,581     $ 5,573           7.57%        $73,273     $ 5,541           7.56%
   Mortgage-backed securities..................       2,305         149           6.46%            579          44           7.60%
   Investment securities(2)....................       2,854         196           6.87%          1,146         102           8.92%
   Other interest-earning assets(3)............      12,316         756           6.14%          9,799         597           6.10%
                                                     ------      ------                         ------      ------
      Total interest-earning assets............     $91,056       6,674           7.33%        $84,797       6,284           7.41%
                                                     ======                                     ======

Non-interest-earning assets....................       1,804                                      2,190
                                                     ------                                     ------
      Total assets.............................     $92,860                                    $86,987
                                                     ======                                     ======

Interest-bearing liabilities:
   Demand deposits.............................     $27,863     $   794           2.85%        $29,733     $   837           2.82%
   Time deposits...............................      44,924       2,582           5.75%         46,697       2,509           5.37%
   Other liabilities(4)........................         712          30           4.21%            817          43           5.20%
                                                     ------      ------                         ------      ------
      Total interest-bearing liabilities.......     $73,499       3,406           4.63%        $77,247       3,389           4.39%
                                                     ======      ------                         ======      ------

Non-interest bearing liabilities...............       2,232                                      1,656
                                                     ------                                     ------
      Total liabilities........................      75,731                                     78,903

Stockholders' equity...........................      17,129                                      8,084
                                                     ------                                     ------
      Total liabilities and stockholders' equity    $92,860                                    $86,987
                                                     ======                                     ======
Net interest income............................                 $ 3,268                                    $ 2,895
                                                                 ======                                     ======
Interest rate spread(5)........................                                   2.70%                                      3.02%
                                                                                ======                                     ======

Net yield on interest-earning assets(6)........                                   3.59%                                      3.41%
                                                                                ======                                     ======
Ratio of average interest-earning assets
 to average interest-bearing liabilities.......                                 123.89%                                    109.77%
                                                                                ======                                     ======
</TABLE>
---------------------
(1)  Average balances include non-accrual loans.
(2)  Includes investment securities, ground rents and FHLB stock.
(3)  Includes interest-bearing deposits in other financial institutions, Federal
     Funds,  securities  purchased  under  agreements  to resell and interest on
     loans to affiliated corporations.
(4)  Includes FHLB advances and  interest-earning  advance payments by borrowers
     for taxes and insurance.
(5)  Interest-rate spread represents the difference between the average yield on
     interest-earning  assets  and  the  average  cost  of   interest-bearing
     liabilities.
(6)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                       -9-


<PAGE>



Rate/Volume Analysis

     The table  below  sets  forth  certain  information  regarding  changes  in
interest income and interest  expense of the Company for 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
(changes  in  average  volume  multiplied  by old rate);  (ii)  changes in rates
(changes in rate multiplied by old average volume); (iii) changes in rate-volume
(changes in rate multiplied by the change in average volume).

<TABLE>
<CAPTION>
                                                        Year Ended September 30,
                                                             1996  vs.  1995
                                                 -------------------------------------
                                                          Increase (Decrease)
                                                                Due to
                                                 -------------------------------------
                                                                        Rate/
                                                 Volume     Rate       Volume      Net
                                                 ------     ----       ------      ---
                                                           (Dollars in Thousands)

Interest income:
<S>                                              <C>        <C>        <C>       <C>   
   Loans receivable ..................           $   23     $    9     $  -      $   32
   Mortgage-backed securities.........              131         (7)       (19)      105
   Investment securities..............              152        (23)       (35)       94
   Other interest earning assets......              154          4          1       159
                                                  -----      -----      -----     -----
      Total interest-earning assets...           $  460     $  (17)    $  (53)   $  390
                                                  =====      =====      =====     =====

Interest expense:
   Deposits...........................           $ (159)    $  198     $   (9)   $   30
   Other liabilities(1)...............               (6)        (8)         1       (13)
                                                  -----      -----      -----     -----
      Total interest-bearing
       liabilities....................           $ (165)    $  190     $   (8)   $   17
                                                  =====      =====      =====     =====

Net change in net interest income.....           $  625     $ (207)    $  (45)   $  373
                                                  =====      =====      =====     =====
</TABLE>

(1) Includes  interest on advances from the FHLB of Atlanta and advance payments
by borrowers for taxes and insurance.

                                      -10-


<PAGE>






Financial Condition

   Total  assets  increased  by  $11.5  million  to  $96.5  million  or 13.5% at
September 30, 1996 from $85.0 million at September 30, 1995, primarily due to an
increase  in  loans  receivable  of $5.7  million,  federal  funds  sold of $1.3
million, other investments and securities purchased under agreement to resell of
$2.0 million each and  mortgage  backed  securities  of $2.5  million.  This was
partially  offset by a decrease in  interest-bearing  deposits in other banks of
$2.7 million.  New loan  originations  exceeded loan payments and prepayments as
the demand for new housing  project loans  increased.  All of the increases were
primarily the result of investing  funds raised due to the stock  conversion and
the use of interest-bearing deposits in other banks.

   The Company's  deposits decreased by $4.1 million or 5.4% to $72.1 million at
September  30, 1996 from $76.2 million at September  30, 1995.  Demand  accounts
decreased  by $.4  million  along with time  deposits  which  decreased  by $3.7
million as certain depositors converted their accounts to shares of stock during
the conversion.

   The  Company's  net worth  increased  by $14.7  million  to $23.2  million at
September 30, 1996 from $8.5 million at September 30, 1995. The increase was the
result of the sale of stock from the  conversion  in the amount of $14.3 million
and earnings for the 1996 fiscal year. The Savings Bank's net worth was equal to
24.1% of total assets at September 30, 1996.

Results of Operations

Net Income

   Net income  decreased by $214,000 for fiscal 1996 to $459,000  from  $673,000
for  fiscal  1995.  Net income was  reduced  by  $310,000  (net of tax) due to a
one-time  assessment  being  imposed on the Savings Bank.  (See  "--Non-Interest
Expenses"). If the Savings Bank had not had this special assessment, the Company
would have had net income of  $769,000  for fiscal  1996.  The  earnings  of the
Savings Bank and the Company  depend  primarily on the level of its net interest
income  which  is the  difference  between  interest  earned  on  the  Company's
interest-earning   assets   and   the   interest   expense   incurred   on   its
interest-bearing  liabilities.  Earnings are also  affected by the provision for
loan losses,  fees and other  charges,  the level of  non-interest  expenses and
provisions for income taxes.

Net Interest Income

   Net interest income increased by  approximately  $373,000 to $3.3 million for
fiscal 1996 from $2.9 million for fiscal 1995. The increase was the result of an
increase  in the amount of average  interest-earning  assets  exceeding  average
interest-bearing liabilities.

                                      -11-


<PAGE>



   Interest-earning  assets primarily consist of mortgage loans, mortgage backed
securities,  investment  securities,  securities  purchased  under  agreement to
resell,  interest-bearing  deposits  in  other  institutions  and  loans  to  an
affiliated  corporation.  Interest-bearing  liabilities  consist of deposits and
other borrowings.

   The interest rate spread which is the difference between the yield on average
interest-earning  assets and the  percentage  cost of  average  interest-bearing
liabilities  declined  in fiscal 1996 to 2.70% from 3.02% for fiscal  1995.  The
decline in interest  rate spread is primarily  the result of changes in the cost
of  interest-bearing  liabilities  being  greater  than changes in the yields on
interest-earning  assets.  Although  the  conversion  resulted in an increase in
interest-earning  assets,  there was a decline in the yield received,  while the
yield on the interest-bearing liabilities increased for the period.

Interest Income

   Interest income on loans increased by  approximately  $32,000 to $5.6 million
for fiscal  1996 from $5.5  million for fiscal  1995.  The slight  increase  for
fiscal 1996 was largely the result of an increase in the average  dollar  amount
of loans  outstanding  of  approximately  $300,000.  The average yield  remained
substantially the same. The average dollar amount of loans outstanding was lower
in the first half of the fiscal year and increased during the second part of the
year.

   Interest income on mortgage backed securities increased by $105,000 or 238.6%
to $149,000  for fiscal 1996 from  $44,000 for fiscal  1995.  The  increase  was
primarily due to an increase in average  dollar amount  outstanding  of mortgage
backed securities of $1.7 million,  off-set in part by a decrease in the average
yield to 6.46% in fiscal  1996 from  7.60% in fiscal  1995.  The  decline in the
average  yield is the  result of  purchasing  $2.6  million in  mortgage  backed
securities at a lower yielding rate, than those previously on the books.

   Interest  income on  investment  securities  increased by $94,000 or 92.2% to
$196,000 in fiscal 1996 from  $102,000 in fiscal 1995.  The increase was largely
the result of an increase  in the  average  dollar  amount  outstanding  of $1.7
million.  This was partially off-set by a decrease in the average yield to 6.87%
for fiscal  1996 from 8.92% for fiscal  1995.  The  decrease in yield was due in
part to the maturing of a higher yielding investment and the use of the proceeds
to purchase additional securities at lower yields.

   Other  interest  income  increased by $159,000 or 26.6% to $756,000 in fiscal
1996 from  $597,000 in fiscal 1995.  The increase in fiscal 1996 was largely the
result of an  increase in the average  dollar  amount of other  interest-earning
assets of $2.5 million. Other  interest-earning  assets consist of federal funds
sold,  interest-bearing  deposits in other  banks,  securities  purchased  under
agreement to resell, FHLB stock and a loan to affiliated  corporation.  Proceeds
from the stock conversion and the maturing of interest-bearing deposits in other
banks  were used to  purchase  additional  assets.  The  average  yield on these
investments,

                                      -12-


<PAGE>



which  increased  to 6.14% for  fiscal  1996 from 6.10% for  fiscal  1995,  also
contributed to the increase in other interest income.

   The yield on the average  balance of  interest-earning  assets  decreased  to
7.33% for fiscal 1996 from 7.41% for fiscal 1995.

Interest on Deposits

   Interest on deposits was similar  between fiscal 1996 and fiscal 1995 with an
increase in interest expense of approximately  $29,000 or .87%. The increase for
fiscal 1996 was due to an  increase in the average  cost of these funds to 4.64%
in fiscal  1996 from 4.38% in fiscal  1995.  These rates  increased  as interest
rates in general rose in fiscal 1996. The increase in average cost is the result
of certain time deposits repricing,  increasing average cost to 5.75% for fiscal
1996 from an average cost of 5.37% for fiscal 1995. This increase was off-set by
the  decrease  in the average  dollar  amount of  deposits  outstanding  by $3.6
million or 4.71% to $72.8  million for fiscal  1996 from 76.4% for fiscal  1995.
The  decrease  is the  result  of  depositors  withdrawing  funds  to be used to
purchase stock during Heritage's stock conversion,  and a withdrawal of maturing
certificates  of deposit by depositors for investment in higher  yielding mutual
funds.

   Interest on short-term  borrowings,  which is a less  significant  portion of
interest  expense,  decreased  $12,000 or 28.6% for fiscal 1996 to $30,000  from
$42,000  for  fiscal  1995,  as the  average  amount of  borrowings  outstanding
decreased by $105,000 and rates paid  decreased by 97 basis points.  The Savings
Bank uses FHLB  advances  as a funding  source  and  generally  uses  short-term
borrowings  with no prepayment  penalties.  The decrease in average balance is a
direct  result  of the  Company  using  proceeds  from the  conversion  to repay
outstanding advances.

   The weighted average cost paid on interest-bearing  liabilities  increased to
4.63% for fiscal 1996 from 4.39% for fiscal 1995.

Provision for Loan Losses

   The Savings  Bank's  management  monitors and adjusts its loan loss  reserves
based upon its  analysis of the loan  portfolio.  Reserves  are  increased  by a
charge to income,  the amount of which  depends upon an analysis of the changing
risks inherent in the Savings  Bank's loan portfolio and the relative  status of
the real  estate  market  and the  economy  in  general.  The  Savings  Bank has
historically experienced a limited amount of loan charge-offs and delinquencies.
However,  there can be no assurance  that  additions to the loan loss  allowance
will not be required in future  periods,  or that actual  losses will not exceed
estimated  amounts.  The Savings Bank's ratio of  non-performing  loans to total
assets was .50% and .40% for fiscal 1996 and 1995. The provision for loan losses
for fiscal 1996 was a $5,000  decrease to $55,000 from the fiscal 1995 provision
of $60,000. The Savings Bank had no charge-offs in fiscal 1996 and 1995.

                                      -13-


<PAGE>



Non-Interest Income

   Non-interest  income  increased  $19,000 or 15.8% to $139,000 for fiscal 1996
from $120,000 for fiscal 1995. Fees and charges on loans decreased  slightly for
fiscal 1996 to $31,000 from $33,000 for fiscal 1995. The decrease was the result
of a decrease in inspection fee income.

   Fees on transaction  accounts  increased by approximately  $6,000 or 13.6% to
$50,000 for fiscal 1996 from $44,000 for fiscal 1995.  The increase is due to an
overall increase in the NOW account portfolio of deposits.

   Other income increased for fiscal 1996 by  approximately  $13,000 or 28.9% to
$58,000  from  $45,000  for  fiscal  1995.  The  increase  was the  result of an
insurance recovery for storm damage and rental income on a portion of the Bank's
premises that was rented in 1996, but vacant in 1995.

Non-Interest Expenses

   Non-interest  expense  increased  $718,000 or 38.3% to $2,593,000  for fiscal
1996 from $1,875,000 for fiscal 1995.  Salaries and related  expenses  increased
$160,000 or 15.7% to $1,179,000 for fiscal 1996 from $1,019,000 for fiscal 1995.
Salaries and related expenses increased as a result of increased pension expense
and the adoption of the Employee Stock  Ownership  Plan  ("ESOP").  Salaries and
related  expenses  are  expected to continue to increase in future  periods as a
result of increases in those benefits and the  implementation  of the Management
Stock Bonus Plan  ("MSBP"),  and  revisions to the Savings  Bank's  pension plan
required by the Retirement Protection Act.

   Occupancy expense for fiscal 1996 did not fluctuate significantly from fiscal
1995.

   The Savings  Association  Insurance Fund ("SAIF") deposit  insurance  premium
increased by  approximately  $504,000 to $680,000 for fiscal 1996 from  $176,000
for fiscal 1995. This increase is the result of legislation passed that required
the Savings  Bank to pay a one-time  Federal  Deposit  Insurance  assessment  of
approximately  $506,000  which was .657% of insured  deposits at March 31, 1995.
This was offset  slightly  due to a decrease in deposits at the time the regular
Federal Deposit Insurance assessments were made. It is expected that the Savings
Bank's SAIF premiums will be reduced to approximately  .064% of insured deposits
beginning January 1, 1997 from the current rate of .23%.

   Depreciation  of equipment  expense  decreased  $6,000 or 8.2% to $67,000 for
fiscal 1996 from $73,000 for fiscal  1995.  The decrease for fiscal 1996 was the
result of certain equipment becoming fully depreciated in fiscal 1995.

   Advertising  expense decreased by $46,000 or 54.8% to $38,000 for fiscal 1996
from $84,000 for fiscal 1995.  Advertising  expense was reduced for fiscal 1996,
to allow funds raised by the conversion to be

                                      -14-


<PAGE>



invested before  additional  deposits were desired.  In fiscal 1995, the Savings
Bank  conducted an  aggressive  advertising  campaign for loans and deposits and
participation in the MOST Automated Teller Machine ("ATM") network.

   Data  processing  costs  increased  $5,000 or 7.0% to $76,000 for fiscal 1996
from $71,000 for fiscal 1995.

   Professional services increased $87,000 or 170.6% to $138,000 for fiscal 1996
from $51,000 for fiscal 1995. The increase in professional services is primarily
the direct result of the stock conversion which resulted in additional  services
being required for filings with the Securities and Exchange  Commission and also
with the implementation of the ESOP and MSBP.

   Other  expenses  increased by  approximately  $20,000 or 8.1% to $266,000 for
fiscal 1996 from  $246,000 for fiscal  1995.  The increase in fiscal 1996 is the
result of an  increase in ATM expense of $11,000 to $13,000 for fiscal 1996 from
$2,000 for fiscal  1995,  due to the  Savings  Bank going  "on-line"  for all of
fiscal  1996,  after  having been on-line only for the last part of fiscal 1995.
Other  increases  in expense  could also be found in  stationery,  printing  and
office supplies,  computer supplies,  telephone,  telegraph and postage totaling
approximately $10,000, offset by decreases in dues and subscriptions and Savings
Bank service charges.

   Provision for income taxes  decreased by  approximately  $108,000 or 26.4% to
$301,000 for fiscal 1996 from  $409,000 for fiscal 1995.  The decrease in fiscal
1996  compared to fiscal 1995 was  primarily  the result of a decrease in pretax
income.

   In August of 1996  legislation  was passed that  eliminated the percentage of
taxable  income  method of computing the Savings  Bank's bad debt  deduction and
requires  the  recapture  over a six year  period of the  excess  balance in the
reserve for bad debts above the December 31, 1987 reserve  balance.  This amount
is  approximately  $339,000 at  September  30, 1996 with an income tax effect of
approximately  $131,000.  The  legislation  will not impact the  Savings  Bank's
provisions for income taxes, but will have an immaterial negative impact on cash
flows of the Savings Bank because of increased income taxes payable.

Liquidity and Capital Resources

   The Company is required by OTS  regulations  to maintain,  for each  calendar
month, a daily average  balance of cash and eligible  liquid  investments of not
less than 5% of the average  daily balance of its net  withdrawable  savings and
borrowings (due in one year or less) during the preceding  calendar month.  This
liquidity  requirement may be changed from time to time by the OTS to any amount
within the range of 4% to 10%. The Savings  Bank's average  liquidity  ratio was
10.5% and 12.6% at September 30, 1996 and 1995, respectively.

   The Company's sources of liquidity have  historically  included income earned
from operations, principal and interest payments and prepayments

                                      -15-


<PAGE>



on loans and securities,  maturities of investment  securities,  deposit inflows
and  periodically  borrowings  from the FHLB of Atlanta.  For fiscal  1996,  the
Company also had the proceeds from the stock conversion as a source of funds.

   Cash flows from  operating  activities  were $980,000 and $517,000 for fiscal
1996 and 1995.  Cash flows from  operations in fiscal 1996 increased from fiscal
1995 because loan fees  collected in cash but deferred for financial  statements
purposes increased significantly as loan originations increased.  There was also
an increase in cash flows from an increase in other liabilities. This was offset
by the decline in earnings for fiscal 1996.

   Loan  prepayments  and  repayments  were $16.1  million and $10.2 million for
fiscal 1996 and 1995.

   Cash  disbursed for new loan  origination  was $21.6 million and $8.7 million
for fiscal 1996 and 1995. Loan demand  increased in fiscal 1996 and 1995 created
by economic conditions.

   In fiscal 1996,  management used a portion of the proceeds generated from the
conversion  to invest $8.4  million in  investment  securities,  $2.6 million in
mortgage  backed  securities  and $2.0  million in  securities  purchased  under
agreement  to resell.  These were also funded by the maturing of $6.5 million in
investment securities and interest-bearing deposits in other banks.

   The Company  primarily  originates  loans for its own  portfolio and does not
sell loans to secondary market  participants  such as Federal Home Loan Mortgage
Corporation  ("FHLMC") and the Federal National Mortgage  Association  ("FNMA"),
but does  occasionally sell loans to other financial  institutions.  The Savings
Bank may in the future sell loans to secondary market participants.  However, in
fiscal 1996 and 1995,  certain loan  origination  programs  generated more loans
than the Savings  Bank could  retain in its  portfolio  without  borrowing  from
external sources.  As a result, the Savings Bank sold $.5 million in fiscal 1996
of new loan  maturities and $3.2 million in fiscal 1995. The Savings Bank had no
loans held for sale at September  30, 1996.  All of the above loans were sold at
their carrying amount with no  gain or loss incurred.  The Savings Bank does not
rely  on the  sale of  loans  as a  source  of cash  flows  or on the  resulting
servicing fee income as a revenue source.

   During fiscal 1996, cash outflows from deposits were $4.0 million,  primarily
the result of depositors  withdrawing  funds to be used in the purchase of stock
during the conversion,  and the investing of the funds in higher yielding mutual
funds. In addition, in the latter part of the 1995 fiscal year, the Savings Bank
began an advertising  campaign for one year certificates of deposit at the upper
end of  competitive  interest  rates during a period of increasing  rates.  This
campaign was initiated in  anticipation of seasonal  disbursements  for payments
and borrowers' real estate taxes.

   The Company completed the stock conversion during the second quarter
of fiscal 1996 which generated $16.2 million of gross proceeds.  After

                                      -16-


<PAGE>



adjusting  for the leveraged  loan to the ESOP,  which  purchased  approximately
$1,296,040 or 8.0% of the outstanding  shares,  and the expenses  related to the
conversion of approximately  $640,000, the net proceeds from the conversion were
approximately  $14.3  million.  The net cash  provided to the  Company  from the
conversion was $12.9 million after  adjusting for $1.4 million of deposits which
were used to purchase stock.

   Management  believes it has ample cash flows and  liquidity  to meet its loan
commitments  of  $1,071,600  at  September  30,  1996.  The Savings Bank has the
ability to reduce its commitments for new loan  originations,  adjust other cash
outflows, and borrow from the FHLB of Atlanta, or others, should the need arise.

   The  Savings  Bank is subject  to federal  regulations  that  impose  certain
minimum  capital  requirements.  At  September  30,  1996,  the Savings Bank had
risk-based capital of $15.5 million compared to its requirement of $3.9 million,
an excess of $11.6 million. Each of the Savings Bank's tangible and core capital
was $15.3 million at September 30, 1996,  compared to the  requirements  of $1.4
million for tangible  capital and $2.8 million for core capital.  See Note 13 to
the Consolidated Financial Statements.

   Liquidity may be adversely affected by unexpected deposit outflows, excessive
interest rates paid by competitors,  adverse  publicity  relating to the savings
and loan  industry  and similar  matters.  Further,  the  disparity in insurance
premiums as described herein could result in the Savings Bank losing deposits to
the Bank  Insurance  Fund  ("BIF")  members  who have  lower  costs of funds and
therefore  are able to pay higher  rates of  interest  on  deposits.  Management
monitors projected liquidity needs and determines the level desirable,  based in
part on the Savings Bank's commitments to make loans and management's assessment
of the Savings Bank's ability to generate funds.

Recent Accounting Pronouncements

     Statement of Financial  Accounting  Standards No. 121,  "Accounting for the
Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of",
was issued by the Financial  Accounting  Standards Board ("FASB") in March 1995,
and will become  effective for fiscal years  beginning  after December 15, 1995.
This  Statement  requires  that  long-lived  assets  and  certain   identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be  recoverable.  Recoverability  is evaluated  based upon the estimated
future cash flows  expected to result from the use of the asset and its eventual
disposition.  If expected  cash flows are less than the  carrying  amount of the
asset, an impairment loss is recognized.  Additionally,  this Statement requires
that long-lived assets and certain identifiable intangibles to be disposed of be
reported  at the  lower of  carrying  amount  or fair  value  less cost to sell.
However,  based on existing  conditions,  and a preliminary  review,  management
believes that the impact of adopting this  Statement will not be material to the
Savings Bank's financial statements.

                                      -17-


<PAGE>



     In May  1995,  the  FASB  issued  the  Statement  of  Financial  Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights", which will become
effective,  on a prospective basis, for years beginning after December 31, 1995.
This Statement  requires  mortgage banking  enterprises to recognize as separate
assets rights to service  mortgage  loans,  however those  servicing  rights are
acquired. When mortgage loans, acquired either through a purchase transaction or
by  origination,  are sold or  securitized  with  servicing  rights  retained an
allocation  of the total cost of the  mortgage  loans should be made between the
mortgage  servicing rights and the loans based on their relative fair values. In
subsequent   periods,   all  mortgage   servicing  rights  capitalized  must  be
periodically  evaluated for impairment  based on the fair value of those rights,
and any  impairments  recognized  through a valuation  allowance.  The impact of
adopting  this  Statement is not  expected to be material to the Savings  Bank's
financial statements.

     In October  1995,  the FASB issued the  Statement of  Financial  Accounting
Standards No. 123,  "Accounting for Stock-Based  Compensation"  (SFAS 123). This
statement  defines a "fair value  based  method" of  accounting  for an employee
stock option  whereby  compensation  cost is measured at the grant date based on
the  value  of the  award  and is  recognized  over  the  service  period.  FASB
encourages all entities to adopt the fair value based method,  however,  it will
allow  entities  to  continue  the use of the  "intrinsic  value  based  method"
prescribed by  Accounting  Principles  Board  ("APB")  Opinion No. 25. Under the
intrinsic  value  based  method,  compensation  cost is the excess of the market
price of the stock at the grant  date over the  amount an  employee  must pay to
acquire the stock.  However,  most stock option plans have no intrinsic value at
the grant  date and,  as such,  no  compensation  cost is  recognized  under APB
Opinion No. 25. Entities electing to continue use of the accounting treatment of
APB Opinion No. 25 must make certain pro forma  disclosures as if the fair value
based method had been applied.  The accounting  requirements of SFAS No. 123 are
effective for transactions entered into in fiscal years beginning after December
15, 1995. Pro forma  disclosures  must include the effects of all awards granted
in fiscal years beginning after December 15, 1994. The Savings Bank  anticipates
to continue  using the  "intrinsic  value  based  method" as  prescribed  by APB
Opinion No. 25.  Accordingly,  the impact of adopting this Statement will not be
material to the Savings Bank's financial statements.

     In June  1996,  the FASB  issued  the  Statement  of  Financial  Accounting
Standards No. 125,  "Accounting for Transfers and Servicing of Financial  Assets
and   Extinguishments  of  Liabilities",   which  will  become  effective  on  a
prospective   basis  for  transfers  and  servicing  of  financial   assets  and
extinguishments of liabilities occurring after December 31, 1996. This Statement
will  require the Savings  Bank to record at fair value  assets and  liabilities
resulting  from a transfer of  financial  assets.  The impact of  adopting  this
Statement  is not  expected  to be  material  to the  Savings  Bank's  financial
statements.

                                      -18-

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
WHG Bancshares Corporation
Lutherville, Maryland

     We have audited the consolidated  statements of financial  condition of WHG
Bancshares  Corporation and  Subsidiaries as of September 30, 1996 and 1995, and
the related  consolidated  statements of operations,  retained earnings and cash
flows for each of the two years in the two year period ended September 30, 1996.
These   consolidated   financial   statements  are  the  responsibility  of  the
Corporation's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

       We conducted our audits in accordance  with generally  accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  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 WHG
Bancshares  Corporation and Subsidiaries at September 30, 1996 and 1995, and the
consolidated  results of its operations and cash flows for each of the two years
in the two year period ended  September 30, 1996, in conformity  with  generally
accepted accounting principles.



                                                /s/Anderson Associates, LLP

November 22, 1996
Baltimore, Maryland






                                      -19-

<PAGE>

                    WHG BANCSHARES CORPORATION AND SUBSIDIARIES
                    -------------------------------------------
                              Lutherville, Maryland
                              ---------------------
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 ----------------------------------------------
<TABLE>
<CAPTION>

                                                                           September 30,
                                                                           -------------
                                                                        1996              1995
                                                                        ----              ----

        Assets
        ------
<S>                                                                 <C>               <C>        
Cash                                                                $ 1,583,482       $ 1,105,528
Interest bearing deposits in other banks                              4,076,776         6,808,528
Federal funds sold                                                    2,427,851         1,042,225
Securities purchased under agreements to resell                       2,000,000            -
Other investments - fair value ($2,385,000 and
 $507,117, respectively) (Note 3)                                     2,500,000           497,825
Mortgage backed securities - fair value ($2,884,212
 and $546,001, respectively) (Note 4)                                 3,021,998           540,046
Loans receivable - net (Note 5)                                      75,736,786        70,028,255
Accrued interest receivable - loans                                     373,792           351,008
                            - investments                                62,755            21,736
                            - mortgage backed
                               securities                                17,030             3,422
Premises and equipment - net (Note 8)                                   734,443           807,626
Federal Home Loan Bank of Atlanta stock,
 at cost (Note 6)                                                       682,800           679,800
Investment in and loans to affiliated
 corporation (Note 7)                                                 2,825,000         2,975,000
Prepaid income taxes                                                      5,198            -
Deferred income taxes (Note 14)                                         273,589             3,848
Other assets                                                            206,614           161,728
                                                                     ----------        ----------

Total assets                                                        $96,528,114       $85,026,575
                                                                     ==========        ==========

     Liabilities and Stockholders' Equity
     ------------------------------------

Liabilities
-----------
   Deposits (Note 9)                                                $72,100,572       $76,180,631
   Advance payments by borrowers for taxes
    and insurance                                                       322,610           254,841
   Income taxes payable (Note 14)                                       237,456            20,965
   Other liabilities                                                    621,419           117,321
                                                                     ----------        ----------
Total liabilities                                                    73,282,057        76,573,758

Commitments and contingencies (Notes 5, 8 and 11)

Stockholders' Equity (Notes 12 and 13)
   Common stock .10 par value; authorized 1,620,062
    shares; issued and outstanding 1,620,062 shares                     162,006            -
   Additional paid-in capital                                        15,403,857            -
   Retained earnings (substantially restricted)                       8,911,434         8,452,817
                                                                     ----------        ----------
                                                                     24,477,297         8,452,817
   Employee Stock Ownership Plan                                     (1,231,240)           -
                                                                     ----------        ----------
Total stockholders' equity                                           23,246,057         8,452,817
                                                                     ----------        ----------

Total liabilities and stockholders' equity                          $96,528,114       $85,026,575
                                                                     ==========        ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
 of these statements.

                                      -20-
<PAGE>

                    WHG BANCSHARES CORPORATION AND SUBSIDIARIES
                    -------------------------------------------
                              Lutherville, Maryland
                              ---------------------
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------
<TABLE>
<CAPTION>

                                                                       Years Ended September 30,
                                                                       -------------------------
                                                                          1996           1995
                                                                          ----           ----

<S>                                                                    <C>            <C>       
Interest and fees on loans (Note 5)                                    $5,572,411     $5,540,450
Interest and dividends on investment securities                           196,132        102,235
Interest on mortgage backed securities                                    149,050         43,970
Other interest income                                                     756,069        597,448
                                                                        ---------      ---------

Total interest income                                                   6,673,662      6,284,103

Interest on deposits (Note 9)                                           3,375,289      3,346,312
Interest on short-term borrowings                                          30,138         42,536
                                                                        ---------      ---------

Total interest expense                                                  3,405,427      3,388,848
                                                                        ---------      ---------
Net interest income                                                     3,268,235      2,895,255
Provision for loan losses (Note 5)                                         55,161         59,839
                                                                        ---------      ---------
Net interest income after provision for loan losses                     3,213,074      2,835,416


Non-Interest Income
-------------------
   Fees and charges on loans                                               30,809         32,657
   Fees on transaction accounts                                            50,222         43,506
   Other income                                                            57,786         44,685
                                                                        ---------      ---------
Total non-interest income                                                 138,817        120,848


Non-Interest Expenses
---------------------
   Salaries and related expenses                                        1,179,072      1,019,499
   Occupancy                                                              148,241        145,544
   SAIF deposit insurance premium                                         679,625        176,425
   Depreciation of equipment                                               67,379         73,213
   Advertising                                                             38,452         84,157
   Data processing costs                                                   75,700         71,089
   Professional services                                                  138,295         51,490
   Loss on foreclosed real estate                                          -               7,265
   Other expenses                                                         265,994        245,917
                                                                        ---------      ---------
Total non-interest expenses                                             2,592,758      1,874,599
                                                                        ---------      ---------

Income before tax provision                                               759,133      1,081,665

Provision for income taxes (Note 14)                                      300,516        408,807
                                                                        ---------      ---------

Net income                                                             $  458,617     $  672,858
                                                                        =========      =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
 of these statements.

                                      -21-
<PAGE>

                    WHG BANCSHARES CORPORATION AND SUBSIDIARIES
                    -------------------------------------------
                              Lutherville, Maryland
                              ---------------------
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 -----------------------------------------------
                   FOR YEARS ENDED SEPTEMBER 30, 1996 AND 1995
                   -------------------------------------------
<TABLE>
<CAPTION>

                                                                                                      Employee
                                                                     Additional                         Stock            Total
                                                         Common       Paid-In          Retained       Ownership       Stockholders'
                                                          Stock       Capital          Earnings         Plan             Equity
                                                          -----       -------          --------         ----             ------

<S>                                                     <C>          <C>              <C>            <C>              <C>        
Balance - September 30, 1994                            $  -         $     -          $7,779,959     $     -          $ 7,779,959

Net income for year ended September 30, 1995               -               -             672,858           -              672,858
                                                         -------      ---------        ---------       ---------       ----------

Balance - September 30, 1995                               -               -           8,452,817           -            8,452,817

Issuance of common stock                                 162,006      15,398,998           -               -           15,561,004

Funds borrowed to purchase stock by
 Employee Stock Ownership Plan                             -               -               -          (1,296,040)      (1,296,040)

Compensation under stock-based benefit plan                -               4,859           -              64,800           69,659

Net income                                                 -               -             458,617           -              458,617
                                                         -------      ----------       ---------      ----------       ----------

Balance - September 30, 1996                            $162,006     $15,403,857      $8,911,434     $(1,231,240)     $23,246,057
                                                         =======      ==========       =========      ==========       ==========

</TABLE>

The accompanying notes to consolidated financial statements are an integral part
 of these statements.

                                      -22-
<PAGE>

                    WHG BANCSHARES CORPORATION AND SUBSIDIARIES
                    -------------------------------------------
                              Lutherville, Maryland
                              ---------------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
<TABLE>
<CAPTION>

                                                                             Years Ended September 30,
                                                                             -------------------------
                                                                              1996             1995
                                                                              ----             ----

Operating Activities
<S>                                                                      <C>              <C>        
  Net income                                                             $   458,617      $   672,858
  Adjustments to Reconcile Net Income to Net
   Cash Provided by Operating Activities
   -------------------------------------
      Amortization of discount of mortgage backed securities                    (592)             -
      Amortization of deferred loan fees                                    (195,680)        (207,391)
      Loan fees deferred                                                     275,956           92,119
      Decrease in discount on loans purchased                                (26,579)         (23,809)
      Other amortization                                                     (57,800)         (53,309)
      Provision for loan losses                                               55,161           59,839
      Non-cash compensation under stock-based benefit plans                   69,659              -
      Increase in accrued interest receivable                                (77,411)          (38,586)
      Loss on foreclosed real estate                                             -              7,265
      Provision for depreciation                                              80,984           86,429
      Loans sold                                                             560,000              -
      Loans originated for sale                                             (560,000)             -
      Increase in prepaid income taxes                                        (5,198)             -
      (Increase) decrease in deferred income taxes                          (269,741)          54,614
      Increase in other assets                                               (44,885)         (50,671)
      Increase (decrease) in accrued interest payable                         (2,925)             251
      Increase in income taxes payable                                       216,491           15,215
      Increase (decrease) in other liabilities                               504,097          (97,336)
                                                                          ----------       ----------

          Net cash provided by operating activities                          980,154          517,488


Cash Flows from Investment Activities
-------------------------------------
  Proceeds from maturing interest-bearing deposits                         1,076,000          193,000
  Purchases of interest-bearing deposits                                    (783,000)      (1,076,000)
  Purchase of mortgage backed securities                                  (2,614,902)             -
  Increase in securities purchased under agreement to resell              (2,000,000)             -
  Proceeds from maturing other investments                                 6,525,000              -
  Purchase of other investments                                           (8,469,375)             -
  Principal collected on mortgage backed securities                          133,542           93,326
  Net increase in shorter term loans                                        (324,572)         (13,552)
  Longer term loans originated or acquired                               (21,592,489)      (8,746,690)
  Principal collected on longer term loans                                16,099,672       10,202,333
  Loans sold                                                                     -          3,217,867
  Net proceeds from sale of foreclosed real estate                               -            153,179
  Investment in foreclosed assets                                                -            (14,317)
  Investment in premises and equipment                                        (7,801)         (76,702)
  Purchase of stock in Federal Home Loan Bank of Atlanta                      (3,000)         (16,600)
  (Increase) or decrease on investment in and loans
   to joint ventures                                                         150,000         (250,000)
                                                                          ----------       ----------

          Net cash provided (used) by investment activities              (11,810,925)       3,665,844
</TABLE>

                                      -23-



<PAGE>
                    WHG BANCSHARES CORPORATION AND SUBSIDIARIES
                    -------------------------------------------
                              Lutherville, Maryland
                              ---------------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
<TABLE>
<CAPTION>

                                                                          Years Ended September 30,
                                                                          -------------------------
                                                                             1996              1995
                                                                             ----              ----

Cash Flows from Financing Activities
  Net decrease in demand deposits, money
   market, passbook accounts and advances by
<S>                                                                      <C>               <C>         
   borrowers for taxes and insurance                                     $  (328,104)      $(4,369,224)
  Net increase (decrease) in certificates of deposit                      (3,681,261)        1,501,629
  Sale of common stock                                                    15,561,004               -
  Employee Stock Ownership Plan obligation                                (1,296,040)              -
                                                                          ----------        ----------

          Net cash provided (used) by financing activities                10,255,599        (2,867,595)
                                                                          ----------        ----------

Increase (decrease) in cash and cash equivalents                            (575,172)        1,315,737
Cash and cash equivalents at beginning of year                             7,880,281         6,564,544
                                                                          ----------        ----------

Cash and cash equivalents at end of year                                 $ 7,305,109       $ 7,880,281
                                                                         ===========       ===========

The following is a Summary of Cash and Cash Equivalents:
--------------------------------------------------------

  Cash                                                                   $ 1,583,482      $ 1,105,528
  Interest bearing deposits in other banks                                 4,076,776        6,808,528
  Federal funds sold                                                       2,427,851        1,042,225
                                                                          ----------       ----------
  Balance of cash items reflected on
   Statement of Financial condition                                        8,088,109        8,956,281

      Less    -  certificates  of deposit with original 
                 maturities of more than three months that
                 are included in interest bearing deposits
                 in other banks                                              783,000        1,076,000
                                                                          ----------       ----------

Cash and cash equivalents reflected on the
 Statement of Cash Flows                                                 $ 7,305,109      $ 7,880,281
                                                                          ==========       ==========

Supplemental Disclosure of Cash Flow Information:
-------------------------------------------------
  Cash paid during the year for:

      Interest                                                           $ 3,408,352      $ 3,388,597
                                                                          ==========       ==========
      Taxes                                                              $   352,466      $   338,978
                                                                          ==========       ==========
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
 of these statements.

                                      -24-
<PAGE>
                    WHG BANCSHARES CORPORATION AND SUBSIDIARIES
                    -------------------------------------------
                              Lutherville, Maryland
                              ---------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                               SEPTEMBER 30, 1996
                               ------------------

Note 1 - Summary of Significant Accounting Policies
         ------------------------------------------

     A.   Principles of  Consolidation - The consolidated  financial  statements
          include the accounts of  WHG  Bancshares  Corporation  ("the Company")
          and its  wholly-owned  subsidiary,  Heritage  Savings Bank,  FSB ("the
          Bank") and the Bank's subsidiary,  Mapleleaf Mortgage Corporation. All
          intercompany  accounts and  transactions  have been  eliminated in the
          accompanying consolidated financial statements.

     B.   Business - The Bank's primary  business  activity is the acceptance of
          deposits   from  the  general   public  and  using  the  proceeds  for
          investments and loan originations.  The Bank is subject to competition
          from  other  financial  institutions.  The  Bank  is  subject  to  the
          regulations  of  certain  federal  agencies  and  undergoes   periodic
          examinations by those regulatory authorities.

     C.   Basis of Financial Statement Presentation - The consolidated financial
          statements  have been prepared in conformity  with generally  accepted
          accounting   principles.   In  preparing  the  financial   statements,
          management is required to make estimates and  assumptions  that affect
          the reported  amounts of assets and  liabilities as of the date of the
          statement  of  financial  condition  and revenues and expenses for the
          period.   Actual  results  could  differ   significantly   from  those
          estimates.  Material  estimates that are  particularly  susceptible to
          significant change in the near-term relate to the determination of the
          allowance for loan losses and the valuation of foreclosed real estate.
          See Note G & H below for a  discussion  of the  determination  of that
          estimate.

     D.   Federal  Funds  -  Federal  funds  sold  are  carried  at  cost  which
          approximates market.

     E.   Investments  and Mortgage  Backed  Securities - As of October 1, 1994,
          the Bank adopted the  provisions of Statement of Financial  Accounting
          Standards ("SFAS") No. 115 "Accounting for Certain Investments in Debt
          and Equity  Securities".  Non-equity  investments  and mortgage backed
          securities will be held to maturity and,  accordingly,  are carried at
          amortized cost since  management has the ability and intention to hold
          them to maturity. As of September 30, 1994, non-equity investments and
          mortgage  backed  securities  were  carried  at  cost,   adjusted  for
          amortization of premiums and accretion of discounts on purchases using
          the interest method, since management had the ability and intention to
          hold them to maturity. Accordingly, the implementation of SFAS No. 115
          had no effect on the accompanying consolidated financial statements.

     F.   Loans  Receivable  - Net -  Loans  receivable  are  stated  at  unpaid
          principal  balances,  less  undisbursed  portion of loans in  process,
          unamortized  discounts on loans  purchased,  deferred loan origination
          fees and the  allowance  for loan  losses,  since  management  has the
          ability and intention to hold them to maturity.

                                      -25-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------
SEPTEMBER 30, 1996
------------------

Note 1 - Summary of Significant Accounting Policies - Continued
         ------------------------------------------

     F.   Loans  held for sale are  carried  at the  lower of cost or  estimated
          market value, determined in the aggregate. In computing cost, deferred
          loan origination fees are deducted from the principal  balances of the
          related loans. There were no loans held for sale at September 30, 1996
          and 1995.

          The Savings Bank  services  loans for others and pays the  participant
          its share of Savings Bank's collections, net of a stipulated servicing
          fee.  Loan  servicing  fees are  credited  to income  when  earned and
          servicing costs are charged to expense as incurred.

     G.   Allowance  for Loan Losses - An allowance  for loan losses is provided
          through charges to income in an amount that  management  believes will
          be  adequate  to  absorb  losses on  existing  loans  that may  become
          uncollectible, based on evaluations of the collectibility of loans and
          prior loan loss experience.  The evaluations  take into  consideration
          such  factors  as  changes  in the  nature  and  volume  of  the  loan
          portfolio,  overall  portfolio  quality,  review of  specific  problem
          loans, and current economic  conditions that may affect the borrowers'
          ability  to pay.  Determining  the  amount of the  allowance  for loan
          losses  requires  the  use of  estimates  and  assumptions,  which  is
          permitted  under  generally  accepted  accounting  principles.  Actual
          results could differ  significantly  from those estimates.  Management
          believes  the  allowance  for  losses  on  loans  is  adequate.  While
          management  uses available  information  to estimate  losses on loans,
          future  additions to the allowances may be necessary  based on changes
          in economic  conditions,  particularly  in the State of  Maryland.  In
          addition,  various regulatory  agencies,  as an integral part of their
          examination  process,  periodically  review the Bank's  allowances for
          losses on loans.  Such  agencies  may  require  the Bank to  recognize
          additions to the allowances based on their judgments about information
          available to them at the time of their examination.

          For the fiscal year ended September 30, 1996, the Bank implemented the
          provisions of Statement of Financial Accounting Standards ("SFAS") No.
          114,  as  amended  by  SFAS  No.  118.  The  Statement  addresses  the
          accounting  by  creditors  for  impairment  of  certain  loans.  It is
          generally  applicable  for all loans  except  large  groups of smaller
          balance   homogeneous  loans  that  are  collectively   evaluated  for
          impairment,   including   residential   mortgage  loans  and  consumer
          installment  loans. It also applies to all loans that are restructured
          in a troubled debt  restructuring  involving a modification  of terms.
          SFAS No. 114 requires  that  impaired  loans be measured  based on the
          present value of expected  future cash flows  discounted at the loan's
          effective  interest rate, or at the loan's  observable market price or
          the fair value of the collateral if the loan is collateral  dependent.
          A loan is considered  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.
          The impact of  adoption of SFAS No. 114 and as amended by SFAS No. 118
          was not material.

                                      -26-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 1 - Summary of Significant Accounting Policies - Continued
         ------------------------------------------

     G.   Accrual  of  interest  is  discontinued  on  a  loan  when  management
          believes,  after  considering  economic  and business  conditions  and
          collection  efforts,  that the borrower's  financial condition is such
          that collection of interest is doubtful. When a payment is received on
          a loan on  non-accrual  status,  the amount  received is  allocated to
          principal and interest in accordance with the contractual terms of the
          loan.

          Loan origination fees have been reflected in accordance with Statement
          of Financial  Accounting  Standards  ("SFAS")  No. 91. This  Statement
          requires  that  loan   origination   fees  and  certain   direct  loan
          origination costs be deferred and be recognized by the interest method
          over the  contractual  life of the related  loan as an  adjustment  of
          yield.

          Premiums and  discounts on loans  purchased  are  recognized in income
          over the  estimated  life of the  related  loans using the level yield
          method.

     H.   Foreclosed  Real  Estate  - Real  estate  acquired  through  or in the
          process of foreclosure is recorded at the lower of cost or fair value.
          Management  periodically  evaluates the recoverability of the carrying
          value of the real estate acquired through  foreclosure using estimates
          as described  under the caption  "Allowance  for Loan Losses".  In the
          event of a  subsequent  decline,  management  provides  an  additional
          allowance to reduce real estate  acquired  through  foreclosure to its
          fair value less estimated disposal cost.

     I.   Premises and  Equipment - Premises and  equipment  are carried at cost
          less  accumulated  depreciation.   Depreciation  and  amortization  of
          premises and equipment are accumulated by the use of the straight-line
          method over the  estimated  useful lives of the assets.  Additions and
          improvements are capitalized,  and charges for repairs and maintenance
          are  expensed  when  incurred.   The  related  cost  and   accumulated
          depreciation are eliminated from the accounts when an asset is sold or
          retired  and the  resultant  gain or loss is  credited  or  charged to
          income.

     J.   Investment In and Loans To Affiliated Corporation - Investments in and
          loans to  affiliated  corporation  represents  common  stock owned and
          advances  to a company  formed  for the  purpose  of  making  consumer
          installment loans. The Bank has a 33-1/3% interest in this company and
          its  proportionate  share of income or losses has not been recorded on
          the  equity  method,  since  such  amounts  are  not  material  to the
          accompanying consolidated financial statements.  The Bank is using the
          cost method of accounting to record this investment. (See Note 7)

                                      -27-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 1 - Summary of Significant Accounting Policies - Continued
         ------------------------------------------

     K.   Defined  Benefit Pension Plan - The Bank accounts for its Pension Plan
          in accordance with Statement of Financial Accounting Standards No. 87.
          Funding is limited to amounts that are available  for deduction  under
          the Internal Revenue Code (See Note 11).

     L.   Income Taxes - Deferred  income  taxes are  recognized  for  temporary
          differences between the financial reporting basis and income tax basis
          of assets and liabilities based on enacted tax rates expected to be in
          effect when such amounts are realized or settled.  Deferred tax assets
          are  recognized  only to the extent  that is more likely than not that
          such  amounts  will be realized  based on  consideration  of available
          evidence.  The effect on  deferred  tax assets  and  liabilities  of a
          change  in tax  rates is  recognized  in  income  in the  period  that
          includes the enactment date.

     M.   Statement  of Cash Flows - In the  statement  of cash flows,  cash and
          equivalents  include cash, Federal Home Loan Bank of Atlanta overnight
          deposits,  federal funds and  certificates  of deposit with a maturity
          date less than ninety days.

     N.   Earnings Per Share - Earnings per share data is not  presented for the
          year ended September 30, 1996,  since the Bank converted to stock form
          in March 1996, and such information would not be meaningful.

     O.   Employee  Stock  Ownership  Plan - The  Corporation  accounts  for its
          Employee Stock Ownership Plan ("ESOP") in accordance with Statement of
          Position  93-6 of the  Accounting  Standards  Division of the American
          Institute of Certified Public Accountants. (See Note 12)

     P.   Reclassification  and  Restatement - Certain prior years' amounts have
          been   reclassified  to  conform  to  the  current  year's  method  of
          presentation.

                                      -28-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 2 - Securities Purchased Under Agreements to Resell
         -----------------------------------------------

     The Company  enters  into  purchases  of  mortgage backed  securities under
agreements to resell substantially  identical  securities.  Securities purchased
under  agreements  to resell at September  30, 1996  consist of mortgage  backed
securities.

     The amounts advanced under these agreements  represent short-term loans and
are  reflected as a receivable  in the  statement  of financial  condition.  The
securities  underlying  the agreements  are  book-entry  securities.  During the
period,  the securities  were delivered by appropriate  entry into a third-party
custodian's  account  designated  by  the  Company  under  a  written  custodial
agreement  that  explicitly   recognizes  the  Corporation's   interest  in  the
securities.  At September 30, 1996, these agreements  matured within 90 days and
no material amount of agreements to resell securities  purchased was outstanding
with any individual  dealer.  Securities  purchased  under  agreements to resell
averaged  approximately  $2,400,000  during the fiscal year ended  September 30,
1996, and the maximum  amounts  outstanding  at any month-end  during the fiscal
year ended September 30, 1996 was $6,000,000.

Note 3 - Other Investments

     The amortized cost and fair values of other investments are as follows:
<TABLE>
<CAPTION>
                                            September 30, 1996
                           -----------------------------------------------------
                                             Gross          Gross
                           Amortized       Unrealized     Unrealized        Fair
                             Cost             Gain          Losses          Value
                             ----             ----          ------          -----

Federal National
 Mortgage Association
<S>                        <C>             <C>            <C>             <C>       
 Bonds                     $1,500,000      $   -          $   66,875      $1,433,125
Federal Home Loan
 Bank Bonds                 1,000,000          -              48,125         951,875
                            ---------       ---------      ---------       ---------
                           $2,500,000      $   -          $  115,000      $2,385,000
                            =========       =========      =========       =========

</TABLE>

                                      -29-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 3 - Other Investments - Continued
         -----------------
                                       September 30, 1995
                           ----------------------------------------- 
                                             Gross
                           Amortized       Unrealized          Fair
                              Cost            Gain             Value
                              ----            ----             -----

U.S. Treasury Bonds         $497,825        $  9,292           $507,117
                            =======          =======           =======

     No gains or losses were realized  during the years ended September 30, 1996
or 1995.

     The scheduled maturities of other investments at September 30, 1996:

                                           Amortized        Fair
                                              Cost          Value
                                              ----          -----

Due after five years through
 ten years                                 $1,500,000     $1,433,125
Due after ten years                         1,000,000        951,875
                                            ---------      ---------
                                           $2,500,000     $2,385,000
                                            =========      =========

Note 4 - Mortgage Backed Securities
         --------------------------

     Mortgage backed securities at September 30, consist of the following:

                                              1996           1995
                                              ----           ----
GNMA participating certificates           $2,405,906      $  540,046
FNMA participating certifcates               623,760             -
                                           ---------       ---------
                                           3,029,666         540,046

   Net - unamortized premiums
          and discounts                        7,668             -
                                           ---------      ----------
                                           $3,021,998     $  540,046
                                            =========      =========
                                      -30-



<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 4 - Mortgage Backed Securities - Continued
         --------------------------

     The  amortized  cost and fair value of mortgage  backed  securities  are as
follows:

<TABLE>
<CAPTION>
                                                    Gross          Gross
                                   Amortized      Unrealized      Unrealized             Fair
                                      Cost           Gains          Losses               Value
                                      ----           -----          ------               -----

                                                      September 30, 1996
                                  ---------------------------------------------------------------
<S>                               <C>             <C>             <C>                  <C>       
GNMA participating certificates   $2,398,423      $    1,754      $  104,736           $2,295,441
FNMA participating certifcates       623,575            -             34,804              588,771
                                   ---------       ---------       ---------            ---------
                                  $3,021,998      $    1,754      $  139,540           $2,884,212
                                   =========       =========       =========            =========

</TABLE>


<TABLE>
<CAPTION>

                                                       September 30, 1995
                                  ---------------------------------------------------------------
<S>                               <C>              <C>            <C>                  <C>       
GNMA participating certificates   $  540,046       $   6,101      $      146           $  546,001
                                   ========         ========       =========            =========
</TABLE>

     No gains or losses were realized  during the years ended September 30, 1996
and 1995.

Note 5 - Loans Receivable
         ----------------

     Loans receivable at September 30, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>

                                                             1996              1995
                                                             ----              ----
<S>                                                       <C>               <C>        
One to four family residential mortgage loans             $69,212,623       $65,349,372
Multifamily residential mortgage loans                        286,950           306,809
Commercial mortgage loans                                   3,026,330         3,004,969
Construction loans                                          3,277,500           887,000
Lines of credit                                               475,000           500,000
Land/lot loans                                                773,730           268,854
Home improvement loans                                          8,586            12,842
Share loans                                                   425,783           641,421
Lease finance receivables                                     828,126           283,660
                                                           ----------        ----------
                                                           78,314,628        71,254,927

     Less - undisbursed portion of loans
             in process                                    (1,613,088)         (370,776)
          - unamortized discount on loans
             purchased                                       (167,074)         (193,653)
          - deferred loan origination fees                   (602,680)         (522,404)
          - allowance for loan losses                        (195,000)         (139,839)
                                                           ----------        ----------
                                                          $75,736,786       $70,028,255
                                                           ==========        ==========

                                      -31-


<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 5 - Loans Receivable - Continued
         ----------------

     The following is a summary of the allowance for loan losses:

                                                         September 30,
                                                         -------------
                                                       1996         1995
                                                       ----         ----

     Beginning balance                               $139,839     $ 80,000
     Provision for loan losses                         55,161       59,839
     Charge-offs                                            -            -
                                                      -------      -------
     Balance end                                     $195,000     $139,839
                                                      =======      =======

     Residential lending is generally considered to involve less risk than other
forms of lending,  although  payment  experience  on these loans is dependent to
some  extent on  economic  and market  conditions  in the Bank's  lending  area.
Multifamily residential,  commercial, construction and other loan repayments are
generally dependent on the operations of the related properties or the financial
condition of its borrower or guarantor. Accordingly, repayment of such loans can
be more  susceptible  to adverse  conditions  in the real estate  market and the
regional economy.

     Substantially all of the Bank's loans receivable are mortgage loans secured
by residential  and commercial  real estate  properties  located in the State of
Maryland.  Loans are extended only after  evaluation by management of customers'
creditworthiness  and other relevant  factors on a case-by-case  basis. The Bank
generally  does not lend more than 90% of the appraised  value of a property and
requires private mortgage insurance on residential  mortgages with loan-to-value
ratios  in excess of 80%.  In  addition,  the Bank  generally  obtains  personal
guarantees  of  repayment   from   borrowers   and/or  others  for   multifamily
residential,  commercial  and  construction  loans and disburses the proceeds of
construction and similar loans only as work progresses on the related projects.

     Non-accrual loans for which interest has been reduced totaled approximately
$480,345  and $166,925 at  September  30, 1996 and 1995.  There were no impaired
loans as defined by SFAS No. 114 at September  30,  1996.  There was no interest
income recognized on impaired loans during these periods.

     Interest  income that would have been recorded  under the original terms of
such loans and the interest  actually  recognized for the years ended  September
30, are summarized below:

                                                        1996         1995
                                                        ----         ----

Interest income that would have
 been recognized                                     $ 57,085     $ 26,106
Interest income recognized                             25,073        9,373
                                                      -------      -------

   Interest income not recognized                    $ 32,012     $ 16,733
                                                      =======      =======

</TABLE>

                                      -32-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 5 - Loans Receivable - Continued
         ----------------

     Loans  outstanding  to officers and directors  and their  affiliates of the
Bank at September 30, 1996 and 1995:
<TABLE>
<CAPTION>
    Balance At                                Balance At                                Balance At
     September       Loans      Principal     September        Loans      Principal     September
     30, 1996        Made       Repayment      30, 1995        Made       Repayment      30, 1994
    ----------       -----      ---------     ----------       -----      ---------     ---------
<S>                 <C>         <C>           <C>             <C>         <C>           <C>       
    $1,110,156      $16,472     $ 39,890      $1,133,574      $ 8,484     $ 94,099      $1,219,189
</TABLE>

    Mortgage  loans  serviced  for others are not  included in the  accompanying
statements of financial condition.  The unpaid principal balances of these loans
at September 30, are summarized as follows:
<TABLE>
<CAPTION>
                                                                 1996            1995
                                                                 ----            ----
Mortgage loan portfolios serviced for:
<S>                                                          <C>             <C>        
   Other investors                                           $10,650,449     $12,870,484
                                                              ==========      ==========
</TABLE>

     Custodial Escrow balances  maintained in connection with the foregoing loan
servicings  were  approximately  $48,845 and $52,541 at  September  30, 1996 and
1995.

     Unless otherwise  noted, the Bank requires  collateral or other security to
support financial instruments with off-balance-sheet credit risk.
<TABLE>
<CAPTION>

Financial Instruments Whose Contract                              Contract Amount
 Amounts Represent Credit Risk                                    At September 30,
 -----------------------------                                    ----------------
                                                               1996            1995
                                                               ----            ----

<S>                                                          <C>             <C>       
   Standby letters of credit                                 $   13,460      $   13,460
   Loan commitments                                           1,071,600         197,000
   Line of credit                                               475,000         500,000
</TABLE>

     Standby  letters of credit are conditional  commitments  issued by the Bank
guaranteeing  performance  by  a  customer  to  various  municipalities.   These
guarantees are issued primarily to support performance arrangements,  limited to
real estate transactions.

     Mortgage  loan  commitments  not  reflected in the  accompanying  financial
statements at September 30, 1996 are $325,000 for an adjustable rate mortgage at
10.75% and fixed rate mortgages totaling $746,600 ranging from 7.5% to 8.00%.

     Lines of credit are loan  commitments to individuals  and companies as long
as there is no violation of any condition established in the contract.  Lines of
credit have a fixed expiration  date. The Bank evaluates each customer's  credit
worthiness on a case-by-case basis.

     The credit risk involved in these financial  instruments is essentially the
same as that involved in extending loan  facilities to customers.  No amount has
been recognized in the statement of financial condition at September 30, 1996 as
a liability for credit loss.

                                      -33-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 6 - Investment in Federal Home Loan Bank of Atlanta Stock
         -----------------------------------------------------

     The Bank is required to maintain an  investment in the stock of the Federal
Home  Loan Bank of  Atlanta  ("FHLB")  in an amount  equal to at least 1% of the
unpaid principal  balances of the Bank's  residential  mortgage loans or 1/20 of
its  outstanding  advances  from the FHLB,  whichever is greater.  Purchases and
sales of stock are made directly with the FHLB at par value.

Note 7 - Investment in and Loans to Affiliated Corporation
         -------------------------------------------------

     Cash,  Inc.  was  organized in April 1983 as a service  corporation.  It is
equally owned by the Bank and two other thrift  institutions  and makes consumer
loans to their  customers.  Loans to Cash,  Inc.  are due on demand  and bear an
adjustable  interest rate.  The Bank has a 33-1/3%  interest in this company and
its proportionate  share of income or losses has not been recorded on the equity
method,  since such  amounts are not material to the  accompanying  consolidated
financial statements.  The Bank is using the cost method of accounting to record
this investment.

     The Bank's investment in and loans to an affiliated corporation, Cash,
Inc. (See Note 1) are summarized as follows:

                                               September 30,
                                               -------------
                                           1996            1995
                                           ----            ----

Capital stock, at cost                  $   25,000      $   25,000
Loan payable                             2,800,000       2,950,000
                                         ---------       ---------
                                        $2,825,000      $2,975,000
                                         =========       =========

     Summarized  financial  information as of June 30, 1996 and 1995 and for the
years ended June 30, 1996 and 1995 for Cash, Inc. are as follows:
<TABLE>
<CAPTION>
                                                           1996            1995
                                                           ----            ----

<S>                                                     <C>            <C>       
Cash                                                    $  233,189     $  157,999
Finance receivables                                      8,035,536      8,277,384
Real estate acquired through foreclosure                   117,729        199,722
Other assets                                               113,667         38,834
                                                         ---------      ---------
                                                        $8,500,121     $8,673,939
                                                         =========      =========

Loans payable                                           $8,400,000     $8,573,000
Other liabilities                                           34,162         37,679
                                                         ---------      ---------
                                                         8,434,162      8,610,679
Stockholders' equity                                        65,959         63,260
                                                         ---------      ---------
                                                        $8,500,121     $8,673,939
                                                         =========      =========

</TABLE>

                                      -34-

<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 7 - Investment in and Loans to Affiliated Corporation - Continued
         -------------------------------------------------
<TABLE>
<CAPTION>

                                                           1996            1995
                                                           ----            ----
Income and Expense
------------------

Income:
<S>                                                     <C>            <C>       
   Interest                                             $  897,767     $  852,817
   Other income                                             33,866         28,920
                                                         ---------      ---------
                                                           931,633        881,737

Expenses:
   Interest                                                686,482        594,761
   Provision for losses on loans                            40,392         73,694
   Salaries and related expenses                           135,909        133,137
   Other expenses                                           63,101         65,181
                                                         ---------      ---------
                                                           925,884        866,773
                                                         ---------      ---------

Income before income tax provision                           5,749         14,964

Income tax provision                                         3,050         15,688
                                                         ---------      ---------

Net income (loss)                                            2,699           (724)
Retained earnings (deficit) at beginning
 of fiscal year                                            (11,740)        (11,016)
                                                         ---------       ---------

Retained earnings (deficit) at end of
 fiscal year                                            $   (9,041)     $  (11,740)
                                                         =========      =========
</TABLE>

                                      -35-

<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 8 - Premises and Equipment
         ----------------------

     Premises and  equipment at September  30, 1996 and 1995 are  summarized  by
major classification as follows:
<TABLE>
<CAPTION>

                                                                                      Useful Life
                                                1996              1995                 in Years
                                                ----              ----                ---------
<S>                                         <C>               <C>                       <C>   
Land                                        $  224,056        $  224,056                  -
Office buildings                               602,549           604,267                 5-50
Furniture, fixtures and equipment              769,652           768,080                 3-20
                                             ---------         ---------
                                             1,596,257         1,596,403

   Accumulated depreciation                   (861,814)         (788,777)
                                             ---------         ---------
                                            $  734,443        $  807,626
                                             =========         =========
</TABLE>

                The provision for  depreciation  for the periods ended September
30, 1996 and 1995 was $80,984 and $86,429, respectively.

                The Bank has  entered  into  several  operating  leases  for the
premises of its branch offices.  Rental expense under these leases for the years
ended  September  30, 1996 and 1995 was $54,964 and  $52,190,  respectively.  At
September 30, 1996, the minimum rental commitments under  noncancellable  leases
are as follows:

                Year Ended September 30,                         Total
                ------------------------                         -----
                       1997                                    $ 40,351
                       1998                                      22,218
                       1999                                      22,218
                       2000                                      22,218
                       2001                                       9,257
                                                                -------
                                                               $116,262
                                                                =======
Note 9 - Deposits
         --------

                Deposits are summarized as follows at September 30:
<TABLE>
<CAPTION>

                                                    1996                            1995
                                        ----------------------------     -------------------------------
                                                          Weighted-                        Weighted-
Type of Account                            Amount       Average Rate         Amount       Average Rate
---------------                            ------       ------------         ------       ------------
NOW and money market accounts
 including non-interest bearing
 deposits of $516,213 in 1996
<S>  <C>         <C>                    <C>                 <C>           <C>                     <C>  
 and $431,950 in 1995                   $12,338,661         2.59%         $12,191,909             2.72%
Passbook savings                         15,636,722         3.04%          16,179,347             3.04%
Certificates of deposit                  44,123,348         5.72%          47,804,609             5.93%
                                         ----------                        ----------
                                         72,098,731                        76,175,865
Accrued interest                              1,841                             4,766
                                         ----------                        ----------
                                        $72,100,572                       $76,180,631
                                         ==========                        ==========
</TABLE>

                                      -36-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 9 - Deposits - Continued
         --------

                The aggregate  amount of  certificates of deposit with a minimum
denomination  of  $100,000  was  approximately   $3,394,313  and  $3,720,138  at
September  30, 1996 and 1995.  Deposits in excess of $100,000 are not insured by
the Savings Association Insurance Fund.

                                                1996              1995
                                             -----------       -------
                                               Amount            Amount

Certificates accounts mature as follows:

   One year or less                          $25,337,111       $29,818,941
   More than 1 year through 2 years           10,948,754         4,940,715
   More than 2 years through
    3 years                                    4,561,182         7,627,319
   More than 3 years                           3,276,301         5,417,634
                                              ----------        ----------
                                             $44,123,348       $47,804,609

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

                Interest  expense on deposits is  summarized  as follows for the
years ended September 30:

                                            1996               1995
                                            ----               ----
Certificates                             $2,581,651        $2,509,445
NOW and money market                        315,593           329,876
Passbook                                    478,045           506,991
                                          ---------         ---------
                                         $3,375,289        $3,346,312
                                         ==========        ==========

                Deposit  Insurance  Reform.  Currently,  there  are two  deposit
insurance  funds  maintained  by  the  Federal  Deposit  Insurance   Corporation
("FDIC"),  the Bank Insurance Fund ("BIF") and the Savings Association Insurance
Fund ("SAIF").  The Bank's  deposits are insured by SAIF.  Legislation  has been
passed  concerning the Deposit  Insurance Reform that required the Bank to pay a
one-time  assessment of .657% of insured  deposits at March 31, 1995,  which was
approximately  $506,000.  The Bank's SAIF  deposit  insurance  premiums  will be
reduced to .064% of insured deposits  beginning January 1, 1997 from the current
rate of .23% of insured deposits. BIF and SAIF may be merged on January 1, 1999.

Note 10 - Borrowings

                The Bank had no  advances  from the  Federal  Home  Loan Bank of
Atlanta at September 30, 1996 and 1995.  During the fiscal year ended  September
30, 1996, the Bank had a line of credit  totaling  $10,000,000  from the Federal
Home Loan Bank of Atlanta.

                Outstanding  advances  are secured by Federal  Home Loan Bank of
Atlanta stock and the principal  balance of home mortgage loans equal to 165% of
the advances.

                                      -37-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 11 - Pension Plan
          ------------

                Substantially  all  employees  of the  Bank  are  included  in a
non-contributory  defined  benefit  pension  plan.  The Bank's policy is to fund
pension costs accrued. There were no unfunded or unamortized prior service costs
at September 30, 1996 and 1995.  The costs of funding this plan were $37,694 and
$19,102 for the years ended September 30, 1996 and 1995, respectively.

                The  following  table  sets forth the  plan's  related  costs at
September 30:

                                                         1996            1995
                                                         ----            ----
                Service cost                           $ 32,075        $ 23,615
                Interest cost                            48,995          36,803
                Actual return on plan assets            (39,168)        (23,344)
                Other components                         (4,208)        (17,972)
                                                        -------         -------
                   Net period pension costs            $ 37,694        $ 19,102
                                                        =======         =======

                The  following  table  sets forth the  plan's  funded  status at
September 30:
<TABLE>
<CAPTION>

                                                                            1996             1995
                                                                            ----             ----
Accumulated Benefit Obligation
------------------------------
<S>                                                                       <C>             <C>     
                Vested                                                    $465,738        $417,695
                Non-vested                                                   4,200           2,087
                                                                           -------         -------
                   Total                                                  $469,038        $419,782
                                                                           =======         =======

                Projected benefit obligation                              $677,176        $657,849
                Fair value of plan assets as of September 30               657,912         568,011
                                                                           -------         -------
                Plan assets in deficit of projected
                 benefit obligation                                        (19,264)        (89,838)
                Unrecognized net loss                                       89,765         144,679
                Unrecognized net transition obligation                       2,429           2,631
                                                                           -------         -------
                   Prepaid pension cost                                   $ 72,930        $ 57,472
                                                                           =======         =======

Reconciliation of Projected Benefit Obligation
----------------------------------------------
  Projected benefit obligation beginning of year                          $657,849        $490,774
  Interest cost for the fiscal year                                         48,995          36,803
  Service cost for the fiscal year                                          32,075          23,615
  Benefit payments for the fiscal year                                      (2,419)            -
  Actuarial (gain) loss for the fiscal year                                (59,324)        106,657
                                                                           -------         -------
  Projected benefit obligation as of September 30                         $677,176        $657,849
                                                                           =======         =======
</TABLE>

                The following  interest rate assumptions were used for September
30:

                                                        1996            1995
                                                        ----            ----
                Weighted-average discount rate           7.5%            7.5%
                Long term rate of return                 8.0%            8.0%
                Rate of compensation increase            4.5%            4.5%

                                      -38-


<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 12 - Common Stock and Stock Benefit Plans
          ------------------------------------

                On March 29, 1996, the Bank converted from a federally chartered
mutual savings bank to a federally chartered stock savings bank. Simultaneously,
the Bank  consummated  the formation of a new holding  company,  WHG  Bancshares
Corporation,  of which the Bank is a wholly-owned subsidiary. In connection with
the conversion, the Company  issued  1,620,062  shares  of its common stock, par
value $.10 per share (the "Common  Stock") for gross proceeds of $16,200,620 and
net proceeds of $15,560,905,  of which $6,484,461 was contributed to the Bank in
exchange for all of its outstanding common stock.

                 At the  same  time  of  conversion,  the  Bank  established  an
Employee  Stock  Ownership  Plan  ("ESOP"),  and acquired  129,604 shares of the
Corporation's  common stock. Funds used to acquire the shares were borrowed from
the  Company by the ESOP with a direct loan from the  Company  requiring  annual
payments of $129,604.

                The ESOP holds the common stock in a Trust for allocation  among
participating employees.

                All employees of the Bank who have completed one year of service
and attained the age of 21 are eligible to participate. Participants will become
100%  vested in their  accounts  after five  years of  service  with the Bank or
earlier upon death, disability or retirement.

                The ESOP is funded by contributions  made by the Bank in cash or
common stock and dividends on the shares held in the Trust.  The Bank recognizes
compensation  expense as shares are  committed  for release from  collateral  at
their  current  market  price.  Dividends on allocated  shares are recorded as a
reduction of retained earnings and dividends on unallocated  shares are recorded
as a reduction of Debt.  Compensation cost for the year ended September 30, 1996
was $69,659.

                The ESOP shares as of June 30, 1996 were as follows:

                                                                      1996
                                                                      ----

Allocated shares                                                       4,320
Shares earned, but unallocated                                         2,160
Unearned shares                                                      123,124

Fair value of unearned shares at September 30                     $1,600,612

     On  October 8, 1996,  the  stockholders of the Company  approved  the  1996
Stock  Option Plan (the  "Plan")  whereby  162,006  shares of common  stock were
reserved  for issuance  under the Plan.  Options  granted  under the Plan may be
Incentive  Stock  Options  within the  meaning of  Section  422 of the  Internal
Revenue  Code of 1986 as amended or  Non-Incentive  Stock  Options.  Options are
exercisable in five annual  installments  at the market price of common stock at
the date of grant.  The Options must be exercised within ten years from the date
of grant.  On October  8th,  options  for  131,402  shares of common  stock were
granted at $13.69 per share.

                                      -39-
<PAGE>



WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 12 - Common Stock and Stock Benefit Plans - Continued
          ------------------------------------

     On  October 8, 1996,  the  stockholders  of the  Company  also  approved  a
Management  Stock  Bonus Plan (the "Stock  Bonus  Plan" or "MSBP") to  encourage
directors,  officers  and key  employees to remain in the service of the Savings
Bank.  Up to 64,802 shares of common stock may be awarded under the terms of the
Stock Bonus Plan.  Shares of common  stock  awarded  under the plan vest in five
annual  installments  at a rate of 20% each year following the date of grant. On
October 8,  1996,  awards of 55,860  shares of common  stock  were  granted.  On
November 22, 1996,  the Savings Bank funded the purchase of 64,802 shares of its
common stock at a price of $13.625 to provide shares for distribution  under the
Stock Bonus Plan.

Note 13- Retained Earnings
         -----------------

     Under  the  regulatory  capital   requirements  of  the  Office  of  Thrift
Supervision  ("OTS"),  savings  banks are required to maintain  minimal  capital
requirements  by  satisfying  three  capital   standards:   a  tangible  capital
requirement,  a leverage ratio requirement and a risk-based capital requirement.
Under the tangible capital requirement,  the Bank's tangible capital (the amount
of stock and retained  earnings  computed under  generally  accepted  accounting
principles)  must be equal to 1.5% of adjusted total assets.  Under the leverage
ratio  requirement,  the Bank's core  capital  must be equal to 3.0% of adjusted
total assets. In addition,  under the risk-based capital  requirement,  the Bank
must maintain core and supplemental  capital (core capital plus any general loss
reserves) equal to 8% of  risk-weighted  assets (total assets plus  off-balance-
sheet items multiplied by the appropriate risk weights).

     The Federal Deposit Insurance Corporation  Improvement Act (FDICIA) of 1991
was signed into law on December  19,  1991,  and  regulations  implementing  the
prompt  corrective  action provisions became effective on December 12, 1992. The
prompt corrective action regulations define specific capital categories based on
an institution's capital ratios. The capital categories, in declining order, are
"well capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically  undercapitalized".  Institutions categorized
as "undercapitalized"  or lower are subject to certain  restrictions,  including
the  requirement  to file a capital  plan with its  primary  federal  regulator,
prohibitions  on the payment of dividends and management  fees,  restrictions on
executive  compensation,  and  increased  supervisory  monitoring,  among  other
things. To be considered "well  capitalized," an institution must generally have
a leverage capital ratio of at least 5%, a tier one risk-based  capital ratio of
at least 6% and a total  risk-based  capital ratio of at least 10%. At September
30, 1996, the Bank met the criteria required to be considered "well capitalized"
under this regulation.

                                      -40-
<PAGE>


WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 13- Retained Earnings - Continued
         -----------------

     The  following  table  presents the Bank's  capital  position  based on the
September 30, 1996 financial statements.
<TABLE>
<CAPTION>

                                                                                             To Be Well
                                                                                         Capitalized Under
                                                               For Capital               Prompt Corrective
                                     Actual                 Adequacy Purposes            Action Provisions
                              ----------------------     ----------------------  -------------------------
                                Amount           %          Amount         %         Amount           %
                                ------           -          ------         -         ------           -

<S>                           <C>              <C>       <C>              <C>    <C>                 <C> 
Tangible (A)                  $15,331,778      16.3%     $ 1,406,904      1.5%   $ 4,689,679         5.0%
Core (B)                       15,331,778      16.3%       2,813,807      3.0%     2,910,120         6.0%
Risk-weighted (C)              15,526,778      32.0%       3,880,160      8.0%     4,850,200        10.0%
</TABLE>

(A)  Percentage of capital to assets at September 30, 1996.
(B)  Percentage of capital to assets at September 30, 1996 for actual
     and capital adequacy  purposes and percentage of capital to risk- weighted
     assets to be well capitalized under prompt corrective action provisions.
(C) Percentage of capital to risk-weighted assets.

     The following  table  presents the  calculation  of risk-based  capital and
tangible assets used to determine the Bank's capital position.

                                                        Current Requirements
                                                        --------------------

Total stockholders' equity                                   $23,246,057
    Less:  Non-allowable items

Equity of parent company                                       7,914,279
                                                               ---------
Tangible and core capital                                     15,331,778
     General valuation allowance                                 195,000
                                                              ----------
Risk-based capital                                           $15,526,778
                                                              ==========

Total assets                                                 $96,528,114
   Add: pro-rata share of non-consolidated
         subsidiary                                               11,069
    Less: Non-includable
Asset of parent company                                        2,745,613
                                                               ---------
Tangible and adjusted tangible assets                        $93,793,570
                                                              ==========

Risk-weighted assets                                         $48,502,000
                                                              ==========

     The OTS has adopted an interest rate  component to the  regulatory  capital
requirements  effective January 1, 1994. The rule requires additional capital to
be maintained if the Bank's interest rate risk exposure, measured by the decline
in the market value of the Bank's net portfolio value, exceeds 2% of assets as a
result of a 200 basis point shift in interest  rates.  As of September 30, 1996,
the Bank is not subject to the interest rate risk requirement.

                                      -41-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 13- Retained Earnings - Continued
         -----------------

     For the purpose of granting to eligible  savings account holders a priority
in the event of future  liquidation,  the Bank  established a special account at
the time of  conversion to the stock form of ownership in an amount equal to its
total retained  income at March 29, 1996. In the event of future  liquidation of
the Bank (and only in such an event),  an eligible  account holder who continues
to maintain his savings account shall be entitled to receive a distribution from
the special  account.  The amount of the special account will be decreased in an
amount  proportionately  corresponding  to  decreases  in  the  savings  account
balances of eligible  account  holders on each subsequent  annual  determination
date.  The balance of the special  account at September  30, 1996 is included in
retained  earnings.  No  dividends  may be  paid  to the  stockholders  if  such
dividends would reduce regulatory  capital of the Bank below the amount required
for the special account.

     OTS   regulations   limit  the  payment  of  dividends  and  other  capital
distributions  by the Bank. The Bank is able to pay dividends  during a calendar
year without  regulatory  approval to the extent of the greater of (i) an amount
which will reduce by one-half its surplus  capital ratio at the beginning of the
year  plus all its net  income  determined  on the basis of  generally  accepted
accounting  principles  for that calendar year or (ii) 75% of net income for the
last four calendar quarters.

     The Bank is restricted  in paying  dividends on its stock to the greater of
the restrictions  described in the preceding paragraph,  or an amount that would
reduce its retained  earnings  below its  regulatory  capital  requirement,  the
accumulated bad debt  deduction,  or the  liquidation  account  described in the
second preceding paragraph.

Note 14- Income Taxes
         ------------

     The income tax provision consists of the following:

                                                         For Years Ended
                                                          September 30,
                                                    ------------------------
                                                      1996            1995
                                                      ----            ----

Current

   Federal                                          $467,752        $289,000
   State                                             102,505          65,193
                                                     -------         -------
                                                     570,257         354,193

Deferred

   Federal                                          (220,848)         44,715
   State                                             (48,893)          9,899
                                                     -------         -------
                                                    (269,741)         54,614
                                                    --------        --------
                                                    $300,516        $408,807
                                                     =======         =======

                                      -42-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 14- Income Taxes - Continued
         ------------

     The amount  computed by applying the statutory  federal  income tax rate to
income before taxes differs from the taxes provided for the following reasons:
<TABLE>
<CAPTION>

                                                     Years Ended September 30,
                                          --------------------------------------------------
                                                   1996                      1995          
                                          ------------------------   -----------------------
                                                          Percent                   Percent
                                                         of Pretax                 of Pretax
                                             Amount       Income       Amount       Income
                                             ------       ------       ------       ------

<S>                                        <C>            <C>        <C>            <C>  
Tax at statutory rate                      $258,105       34.00      $367,766        34.00
Increases (Decreases)
 Resulting From
   State income tax net of federal
    income tax benefit                        35,384        4.66        49,561        4.58
   Other                                       7,027         .93        (8,520)       (.79)
                                             -------       -----       -------       -----
                                            $300,516       39.59      $408,807       37.79
                                             =======       =====       =======       =====
</TABLE>

                The tax  effects  of  temporary  differences  that  give rise to
significant  portions of the deferred tax assets and deferred tax liabilities at
September 30, 1996 and 1995 are presented below:
<TABLE>
<CAPTION>

                                                            1996         1995
                                                            ----         ----
Deferred Tax Assets:
<S>                                                      <C>          <C>     
   Deferred loan origination fees                        $232,755     $201,753
   Allowance for loan losses                               75,309       54,006
   Reserve for uncollected interest                        12,363        6,462
   SAIF one-time assessment                               195,417         -
                                                          -------      -------
      Total gross deferred tax assets                     515,844      262,221

Deferred Tax Liabilities:
   Tax reserve for bad debts in excess of
    base year amount                                      131,061      146,651
   Federal Home Loan Bank of Atlanta stock
    dividends                                              56,965       56,965
   Depreciation                                            24,426       30,630
   Pension plan                                            29,803       24,127
                                                          -------      -------
      Total gross deferred tax liabilities                242,255      258,373
                                                          -------      -------
                  Net deferred tax assets                $273,589     $  3,848
                                                          =======      =======
</TABLE>

                The  Corporation  and its  Subsidiaries  file  their  income tax
returns on a calendar year basis.

                                      -43-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 15- Disclosure About Fair Value of Financial Instruments
         ----------------------------------------------------

                The estimated  fair values of the Bank's  financial  instruments
are  summarized  below.  The  fair  values  of a  significant  portion  of these
financial  instruments  are estimates  derived  using  present value  techniques
prescribed  by the  FASB  and may not be  indicative  of the net  realizable  or
liquidation  values.  Also, the calculation of estimated fair values is based on
market  conditions  at a specific  point in time and may not reflect  current or
future fair values.

                The carrying  amount is a reasonable  estimate of fair value for
cash,  federal  funds,  interest-bearing  deposits in other banks and securities
purchased  under  agreements  to resell  due to the  short-term  nature of these
investments.  Fair  value is based upon  market  prices  quoted by  dealers  for
investment  securities  and  estimates  using bid prices  published in financial
newspapers for mortgage backed  securities.  The carrying amount of Federal Home
Loan  Bank of  Atlanta  stock is a  reasonable  estimate  of fair  value.  Loans
receivable were discounted  using a single discount rate,  comparing the current
rates at which  similar  loans would be made to borrowers  with  similar  credit
ratings  and for the same  remaining  maturities,  except  for  adjustable  rate
mortgages which were considered to be at market rates. These rates were used for
each  aggregated  category  of  loans  as  reported  on  the  Office  of  Thrift
Supervision  Quarterly  Report.  The fair  value  of  demand  deposits,  savings
accounts  and money  market  deposits  is the  amount  payable  on demand at the
reporting  date.  The fair value of  fixed-maturity  certificates  of deposit is
estimated  using the rates  currently  offered on deposits of similar  remaining
maturities.

                It is not  practicable to estimate the fair value of outstanding
loan commitments, unused lines and letters of credit.

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

                                                    September 30, 1996
                                               ----------------------------
                                               Carrying          Estimated
                                                 Value           Fair Value
                                                 -----           ----------

Financial Assets
----------------
   Cash, interest-bearing deposits
    in other banks, federal funds
    and securities purchased under
    agreements to resell                     $10,088,109         $10,088,109
   Investment securities                       2,500,000           2,385,000
   Mortgage backed securities                  3,021,998           2,884,212
   Loans receivable                           75,736,786          75,621,000
   Federal Home Loan Bank of Atlanta
    stock                                        682,800             682,800

Financial Liabilities
---------------------
   Deposits                                  $72,100,572         $72,337,000





                                      -44-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 16- Condensed Financial Information (Parent Company Only)
         ----------------------------------------------------
                Information  as to the  financial  position  of  WHG  Bancshares
Corporation  as of September 30, 1996 and results of  operations  and cash flows
for the year ended September 30, 1996 is summarized below. During the year ended
September  30,  1996,  the  parent  did  not  receive  any  dividends  from  its
subsidiary, the Bank.
<TABLE>
<CAPTION>

                                                           September 30,
                                                               1996
                                                           -------------

Statement of Financial Condition
<S>                                                        <C>        
   Cash                                                    $    26,254
   Federal funds sold                                          711,001
   Securities purchased under agreement to resell            2,000,000
   Loans receivable                                          5,252,839
   Accrued interest receivable                                   8,358
   Equity in net assets of subsidiary                       15,331,778
                                                            ----------
                                                           $23,330,230
                                                            ==========

Taxes payable                                              $    84,173

Stockholders' equity                                        23,246,057
                                                            ----------
                                                           $23,330,230
                                                            ==========

     For the year ended September 30, 1996:

Statement of Operations
   Interest Income                                         $   233,437
   Equity in net income of subsidiary                          324,841
                                                            ----------
   Total Income                                                558,278
   General and administrative expenses                          15,488
                                                            ----------
   Net income before income taxes                              542,790
   Provision for income taxes                                   84,173
                                                            ----------
   Net income                                              $   458,617
                                                            ==========
</TABLE>

                                      -45-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 16- Condensed Financial Information (Parent Company Only) - Continued
         ----------------------------------------------------

     For the year ended September 30, 1996:
<TABLE>
<CAPTION>

Statement of Cash Flows

Cash Flows from Operating Activities:
<S>                                                            <C>        
   Net income                                                  $   458,617
   Adjustment to Reconcile Net Income to Net Cash
    Provided by Operating Activities
      Equity in net income of subsidiary                          (324,841)
      Amortization of discounts on investments                     (30,625)
      Increase in accrued interest receivable                       (8,358)
      Increase in taxes payable                                     84,173
                                                                ----------
         Net cash provided by operating activities                 178,966

Cash Flows from Investing Activities:

   Proceeds from maturing other investments                      6,000,000
   Purchase of other investments                                (5,969,375)
   Purchase of stock from subsidiary                            (6,484,461)
   Securities purchased under agreement to resell               (2,000,000)
   Loans originated                                             (5,796,040)
   Principal collected on loans                                    543,201
                                                                ----------
         Cash used by investing activities                     (13,706,675)

Cash Flows from Financing Activities:
   Proceeds from sale of common stock                          $15,561,004
   Employee Stock Ownership Plan                                (1,296,040)

         Net cash provided by financing activities              14,264,964
                                                                ----------

Increase in cash and cash equivalents                              737,255
Cash and cash equivalents at beginning at end of year                 -
                                                               -----------
                                                               $   737,255
                                                                ==========
</TABLE>

Supplemental Disclosures of Cash Flows Information:

     There was no cash paid during the year ended  September 30, 1996 for income
taxes or interest.

                                      -46-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 17- Recent Accounting Pronouncements
         --------------------------------

     FASB Statement on Accounting  for the  Impairment of Long-Lived  Assets and
for  Long-Lived  Assets  to  be  Disposed  of - In  March  1995,  the  Financial
Accounting  Standards  Board ("FASB") issued  Statement of Financial  Accounting
Standards No. 121, which will become  effective for fiscal years beginning after
December 15, 1995. This Statement  requires that  long-lived  assets and certain
identifiable  intangibles  to be held  and used by an  entity  be  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  Recoverability is evaluated
based upon the  estimated  future cash flows  expected to result from the use of
the asset and its eventual disposition. If expected cash flows are less than the
carrying amount of the asset,  an impairment  loss is recognized.  Additionally,
this  Statement  requires  that  long-lived  assets  and  certain   identifiable
intangibles  to be disposed  of be  reported at the lower of carrying  amount or
fair value  less cost to sell.  However,  based on  existing  conditions,  and a
preliminary  review,  management  believes  that the  impact  of  adopting  this
Statement will not be material to the Bank's financial statements.

     FASB Statement on Accounting for Mortgage  Servicing  Rights - In May 1995,
FASB issued  Statement of Financial  Accounting  Standards  No. 122,  which will
become effective, on a prospective basis, for years beginning after December 31,
1995.  This  Statement  requires  mortgage  banking  enterprises to recognize as
separate assets rights to service mortgage loans, however those servicing rights
are  acquired.   When  mortgage  loans,   acquired  either  through  a  purchase
transaction or by  origination,  are sold or securitized  with servicing  rights
retained an  allocation  of the total cost of the mortgage  loans should be made
between the mortgage servicing rights and the loans based on their relative fair
values. In subsequent periods, all mortgage servicing rights capitalized must be
periodically  evaluated for impairment  based on the fair value of those rights,
and any  impairments  recognized  through a valuation  allowance.  The impact of
adopting this  Statement is not expected to be material to the Bank's  financial
statements.

     FASB  Statement on Accounting  for  Stock-Based  Compensation  - In October
1995, FASB issued SFAS No. 123,  "Accounting for Stock Based Compensation." SFAS
No. 123 defines a "fair value based method" of accounting  for an employee stock
option  whereby  compensation  cost is  measured  at the grant date based on the
value of the award and is recognized  over the service  period.  FASB encourages
all  entities  to adopt the fair  value  based  method,  however,  it will allow
entities to continue the use of the "intrinsic value based method" prescribed by
Accounting  Principles  Board ("APB")  Opinion No. 25. Under the intrinsic value
based method, compensation cost is the excess

                                      -47-
<PAGE>

WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------

Note 17- Recent Accounting Pronouncements - Continued
         --------------------------------

of the market  price of the stock at the grant date over the amount an  employee
must pay to  acquire  the  stock.  However,  most  stock  option  plans  have no
intrinsic  value at the  grant  date  and,  as  such,  no  compensation  cost is
recognized  under APB Opinion No. 25.  Entities  electing to continue use of the
accounting  treatment  of APB  Opinion  No.  25  must  make  certain  pro  forma
disclosures  as if the fair value based method had been applied.  The accounting
requirements  of SFAS No. 123 are  effective  for  transactions  entered into in
fiscal years  beginning  after  December 15, 1995.  Pro forma  disclosures  must
include  the  effects of all  awards  granted in fiscal  years  beginning  after
December 15, 1994. The Bank  anticipates to continue using the "intrinsic  value
based method" as prescribed  by APB Opinion No. 25.  Accordingly,  the impact of
adopting this Statement will not be material to the Bank's financial statements.

     FASB  Statement on  Accounting  for  Transfers  and  Servicing of Financial
Assets and  Extinguishments of Liabilities - In June 1996, FASB issued Statement
of Financial  Accounting Standards ("SFAS") No. 125, which will become effective
on a  prospective  basis for  transfers  and  servicing of financial  assets and
extinguishments of liabilities occurring after December 31, 1996. This Statement
will require the Bank to record at fair value assets and  liabilities  resulting
from a transfer of financial  assets.  The impact of adopting this  Statement is
not expected to be material to the Bank's financial statements.

                                      -48-
<PAGE>

                                   WHG BANCSHARES CORPORATION
                                          1505 York Road
                                   Lutherville, Maryland 21093
                                          (410) 583-8700

                                     HERITAGE SAVINGS BANK, F.S.B.
<TABLE>
<CAPTION>
<S>                                    <C>                           <C>   
        Hamilton Office                     Main Office                     Woodlawn Office
       4228 Harford Road                  1505 York Road             Gwynn Oak Avenue and Windsor
      Baltimore, Maryland              Lutherville, Maryland                   Mill Road
                                                                           Baltimore, Maryland
</TABLE>

   Ellicott City Office                                  Golden Ring Office
   9396 Baltimore National Pike                          876K Philadelphia Road
   Ellicott City, Maryland                               Baltimore, Maryland

                       Board of Directors of WHG Bancshares Corporation
                                             and
                                Heritage Savings Bank, F.S.B.

<TABLE>
<CAPTION>
<S>                                              <C>
John E. Lufburrow                                Philip W. Chase, Jr.
   Chairman of the Board                            Owner - Chase, Fitzgerald & Co
Herbert A. Davis                                    (real estate brokerage)
   President - Herbert Davis Assoc.              Urban P. Francis, Jr.
   (real estate brokerage and development)          Retired - electrical contractor
D. Edward Lauterbach, Jr.                        Edwin C. Muhly, Jr.
   Consultant - insurance company                   Retired - baker
Hugh P. McCormick                                Herbert W. Spath
   Retired - McCormick & Co. (spices)               Retired - bank executive
August J. Seifert                                Peggy J. Stewart
   Chairman - Seifert's Florist                     President and Chief Executive Officer
</TABLE>

                        Executive Officers of WHG Bancshares Corporation and
                                    Heritage Savings Bank, F.S.B.

                                          Peggy J. Stewart
                                President and Chief Executive Officer
<TABLE>
<CAPTION>
<S>                                               <C>
     Robin L. Taylor                                Diana L. Rohrback
       Controller                                 Vice President and Corporate Secretary
    Nicholas C. Tracht                               Harry E. Finck
Vice President and Security Office                   Vice President
</TABLE>

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

Corporate Counsel                          Independent Auditors
Robert L. Stocksdale, Esquire              Anderson Associates, LLP
Stocksdale, Jarrell & Cvach                Certified Public Accountants
6717 Harford Road                          7621 Fitch Lane
Baltimore, Maryland  21234                 Baltimore, Maryland  21236

Special Counsel                            Transfer Agent and Registrar
Malizia, Spidi, Sloane & Fisch, P.C.       American Stock Transfer & Trust
One Franklin Square                        Company, 40 Wall Street
1301 K Street, N.W., Suite 700 East        New York, New York  10005
Washington, D.C. 20005                     (718) 921-8208

                            -----------------------
The Company's Annual Report for the year ended September 30, 1996 on Form 10-KSB
is available without charge upon written request.  For a copy of the Form 10-KSB
or any other investor  information,  please write or call Mrs. Peggy J. Stewart,
President  and Chief  Executive  Officer  at the  Company's  Office.  The Annual
Meeting of  Stockholders  will be held on January  21, 1997 at 10:00 a.m. at the
Holiday Inn, 2004 Greenspring Drive, Timonium, Maryland.

                                      -49-