<PAGE>

                           WHG BANCSHARES CORPORATION

                                  ANNUAL REPORT
                            For the Fiscal Year Ended
                               September 30, 1998
     -----------------------------------------------------------------------





<PAGE>




                           WHG BANCSHARES CORPORATION
                                  ANNUAL REPORT

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


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


                                                                   Page

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

Corporate Profile and Stock Market Information.....................  2 
 
Selected Financial Ratios and Other Data...........................  3

Management's Discussion and Analysis...............................  4

Independent Auditors' Report....................................... 15

Consolidated Financial Statements.................................. 16

Notes to Consolidated Financial Statements......................... 21 

Office Locations and Other Corporate Information................... 52



<PAGE>

              [LOGO]        [WHG BANCSHARES LETTERHEAD]

To Our Stockholders:

     On  behalf of our Board of  Directors  and  employees,  we are  pleased  to
present the 1998 Annual Report to  Stockholders  of WHG  Bancshares  Corporation
(the  "Company").   During  1998,  measures  were  undertaken  to  enhance  your
investment in the Company.  These measures,  which are discussed below, included
stock  repurchases and the declaration of special cash distribution of $3.00 per
share.  In addition,  in order to increase  earnings and leverage the  Company's
capital, we grew our assets by more than $34 million during 1998. We did this by
purchasing bonds and mortgage- backed  securities  issued by FNMA, FHLMC and the
FHLB.

     On  July  30,  1998,  we  announced  the  declaration  of  a  special  cash
distribution of $3.00 per share, in addition to our regular  quarterly  dividend
of $.08 per share.  Both  distributions  were paid on  September  10,  1998,  to
shareholders  of record as of August 13, 1998. At that time,  we estimated  that
the entire amount of the $3.00 per share special  distribution  would be treated
as a return of  capital  distribution.  The $3.00  return  of  capital  would be
treated as a reduction  in the cost basis of each share and would not be subject
to income tax as a dividend to our shareholders.  However, a final determination
as to an  exact  amount  of  the  return  of  capital  portion  of  the  special
distribution  cannot  be made  until  after  December  31,  1998.  The  Board of
Directors believes this strategy is reflective of our commitment to enhance your
long-term value in our Company.

     In September  1998, the Company  announced  plans to repurchase in the open
market up to 35,843  shares of its common stock.  To date,  we have  repurchased
3,222 shares pursuant to this recent  announcement.  We have repurchased a total
of 234,282 shares of our stock since we became a public company in March 1996.

     For the fiscal year ended  September 30, 1998, the Company earned  $680,579
or $.55 basic  earnings  per share,  as compared to net  earnings of $754,147 or
$.53 basic  earnings per share for the fiscal year ended  September 30, 1997. At
September  30,  1998,  the  Company's  total  assets grew by over $34 million to
$132,876,472,  as compared to $98,556,719  at September 30, 1997.  Stockholders'
equity at  September  30,  1998 was  $16,242,716  or a book  value of $11.69 per
share,  as  compared  to  $19,829,133  or a book  value of  $14.24  per share at
September 30, 1997.  Stockholders' equity decreased during 1998 primarily due to
the payment of the $3.00 special distribution to stockholders.

     We  believe  our  actions  in 1998  reflect  our  continued  commitment  to
enhancing your investment in the Company.

Sincerely,

/s/ John E. Lufburrow                       /s/ Peggy J. Stewart 
-----------------------------------         ------------------------------------
John E. Lufburrow                           Peggy J. Stewart
Chairman of the Board                       President and CEO


              1505 York Road * Lutherville, Maryland * 21093-5661

                     PHONE: 410-583-8700 FAX: 410-583-1863

                                      -1-

<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.

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.

<TABLE>
<CAPTION>
                                                                      Dividends
                     Date                       High         Low      Declared
                     ----                       ----         ---      --------

<S>                                          <C>         <C>           <C>
April 1, 1996 to June 30, 1996                 $11.75      $10.75        $--

July 1, 1996 to September 30, 1996              13.00       11.00         --

October 1, 1996 to December 31, 1996            13.75       12.50        .05

January 1, 1997 to March 31, 1997               14.75       12.75        .05

April 1, 1997 to June 30, 1997                  15.38       13.63        .05

July 1, 1997 to September 30, 1997              16.50       15.00        .05

October 1, 1997 to December 31, 1997            18.88       15.00        .08

January 1, 1998 to March 31, 1998               19.00       17.75        .08

April 1, 1998 to June 30, 1998                  19.75       15.75        .08

July 1, 1998 to September 30, 1998              16.75       11.00        .08


</TABLE>

                                      -2-
<PAGE>




The number of  shareholders  of record of common  stock as of the record date of
December 4, 1998,  was  approximately  245.  This does not reflect the number of
persons or entities who held stock in nominee or "street"  name through  various
brokerage firms. At December 4, 1998,  there were 1,385,780 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.


Selected Financial Ratios and Other Data
  
 
                                                        For the Years Ended
                                                           September 30,   
                                                           -------------   
                                                         1998          1997
                                                         ----          ----

Return on average assets..........................        .57%         .77%

Return on average equity..........................       3.46         3.49

Average equity to average assets ratios...........      16.53        22.03

Equity to assets at period end....................      12.22        20.12

Net interest rate spread..........................       2.58         2.89

Net yield on average interest-earnings assets.....       3.27         3.82

Non-performing loans to total assets..............        .29          .85

Allowance for loan loss to total loans............        .40          .32



                                      -3-



<PAGE>

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


General

         WHG Bancshares Corporation (the "Company") was formed in March, 1996 by
Heritage Savings Bank,  F.S.B. (the "Bank") to become the holding company of the
Bank  following the stock  conversion.  The Company's  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.

Market Risk

         Market  risk is defined  as the risk of loss due to adverse  changes in
market rates and prices.  The 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 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 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 Bank has
instituted  certain  asset and  liability  management  measures,  including  the
following measures:

          o    Maintains a large base of adjustable  rate  residential  mortgage
               loans. Such loans have been emphasized by the Bank. However,  the
               Bank offers fixed rate residential  mortgage loans in addition to
               ARMs to balance the loan portfolio.

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

          o    Maintains a portfolio of investments available for sale.

          o    Maintains a high  proportion  of  lower-costing,  non-certificate
               accounts in the deposit  portfolio.  At September 30, 1998,  such
               deposits totaled $26.3 million or 27.7% of total deposits.


                                      -4-
<PAGE>

Market Risk - Continued

         The Committee manages the interest rate sensitivity of the 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  Bank's
liquidity needs,  growth and capital adequacy.  The interest rates on the Bank's
liabilities  generally  change  faster than rates earned on assets,  because the
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 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
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
         Management  measures the Bank's interest rate risk by computing amounts
by which the net present value of the Bank's cash flows from assets, liabilities
and off balance sheet items (net  portfolio  value or "NPV") would change in the
event of a range of assumed changes in market interest rates. These computations
estimate the effect on the Bank's NPV from  instantaneous and permanent 1% to 4%
(100 to 400 basis  points)  increases and  decreases in market  interest  rates.
Based upon OTS  assumptions,  the  following  table  presents  the Bank's NPV at
September 30, 1998.

               Changes                NPV
               in Rate              Ratio(1)             Change(2)
               -------              --------             ---------
               +400 bp               10.39%              -1070 bp
               +300 bp               13.20%               -789 bp
               +200 bp               15.96%               -513 bp
               +100 bp               18.59%               -250 bp
                  0 bp               21.09%                 0
               -100 bp               23.34%               +225 bp
               -200 bp               25.67%               +458 bp
               -300 bp               28.23%               +714 bp
               -400 bp               30.82%               +973 bp

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

(1)  Calculated as the estimated NPV divided by present value of assets.
(2)  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.

                                      -5-
<PAGE>

Net Portfolio Value - Continued

         These  calculations  indicate that the Bank's net portfolio value could
be  adversely  affected by  increases  in interest  rates but could be favorably
affected by decreases in interest rates.  In addition,  the Bank would be deemed
to have  more  than a normal  level  of  interest  rate  risk  under  applicable
regulatory capital requirements.

         Computations  of  prospective  effects of  hypothetical  interest  rate
changes are based on numerous  assumptions,  including relative levels of market
interest rates,  prepayments and deposit  run-offs and should not be relied upon
as  indicative  of actual  results.  Certain  shortcomings  are inherent in such
computations.  Although certain assets and liabilities may have similar maturity
or periods  of  repricing  they may react at  different  times and in  different
degrees to changes in the market interest  rates.  The interest rates on certain
types of assets and  liabilities  may  fluctuate in advance of changes in market
interest  rates,  while rates on other types of assets and  liabilities  may lag
behind changes in market interest rates. Certain assets, such as adjustable rate
mortgages, generally have features which restrict changes in interest rates on a
short  term  basis and over the life of the  asset.  In the event of a change in
interest  rates,   prepayments  and  early   withdrawal   levels  could  deviate
significantly  from  those  assumed  in making  calculations  set  forth  above.
Additionally,  an  increased  credit  risk may  result  as the  ability  of many
borrowers to service  their debt may  decrease in the event of an interest  rate
increase.

Average Balance Sheet

         The following  table sets forth  information  relating to the Company's
average balance sheet and reflects the average yield on assets and average costs
of liabilities for the periods  indicated.  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  believes that the use of month-end balances is
representative of operations.

                                      -6-
<PAGE>



Average Balance Sheet - Continued
<TABLE>
<CAPTION>
                                                                                Year Ended September 30, 
                                                    ------------------------------------------------------------------------------ 
                                                                   1998                                      1997             
                                                    -------------------------------------    -------------------------------------
                                                       Average                   Average        Average                   Average
                                                       Balance     Interest    Yield/Cost       Balance       Interest   Yield/Cost
                                                       -------     --------    ----------       -------       --------   ----------
                                                                                  (Dollars in Thousands)
<S>                                                <C>          <C>            <C>         <C>            <C>            <C>  
Interest-earnings assets:
   Loans receivable(1)............................   $  77,911    $  6,012       7.72%       $ 78,643       $ 5,912        7.52%
   Investment securities(2).......................      22,247       1,440       6.47%          4,995           392        7.85%
   Mortgage-backed securities.....................       5,091         342       6.72%          2,937           199        6.78%
   Other interest-earning assets(3)...............      10,726         645       6.01%          9,292           547        5.89%
                                                      --------     -------                    -------        ------
      Total interest-earning assets...............   $ 115,975    $  8,439       7.28%       $ 95,867       $ 7,050        7.35%
                                                      ========      ======                    =======        ======
Non-interest-earning assets.......................       3,086                                  2,124
                                                      --------                                -------

      Total assets................................   $ 119,061                               $ 97,991
                                                      ========                                =======
Interest-bearing liabilities:
   Demand deposits................................   $  26,764    $   738        2.76%       $ 27,661       $   766       2.77%
   Time deposits..................................      58,046      3,201        5.52%         44,639         2,454       5.50%
   Other liabilities(4)...........................      14,234        713        5.01%          3,651           168       4.60%
                                                      --------     ------                     -------       -------
      Total interest-bearing liabilities..........      99,044    $ 4,652        4.70%         75,951       $ 3,388       4.46%
                                                                   ======                                    ======
Non-interest bearing liabilities..................         333                                    454
                                                      --------                                -------
      Total liabilities...........................      99,377                                 76,405

Stockholders' equity..............................      19,684                                 21,586
                                                      --------                                -------
      Total liabilities and stockholders' equity..   $ 119,061                               $ 97,991
                                                      ========                                 ======
Net interest income...............................                $ 3,787                                   $ 3,662
                                                                   ======                                    ======
Interest rate spread(5)...........................                               2.58%                                    2.89%
                                                                               ======                                   ======
Net yield on interest-earning assets(6)...........                               3.27%                                    3.82%
                                                                               ======                                   ======
Ratio of average interest-earning assets
 to average interest-bearing liabilities..........                             117.09%                                  126.22%
                                                                               ======                                   ======
</TABLE>
---------------------------

(1)  Average balances include non-accrual loans.
(2)  Includes available for sale securities, other investments held to maturity,
     ground rents and FHLB stock.
(3)  Includes  Federal  Funds,  interest-bearing  deposits  in  other  financial
     institutions and interest-earning 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.

                                      -7-
<PAGE>

Rate/Volume Analysis

         The following  table  analyzes the dollar amount of changes in interest
income  and   interest   expense   for  major   components   of  the   Company's
interest-earning   assets   and   interest-bearing    liabilities.   The   table
distinguishes  between (i) changes in net income attributable to volume (changes
in volume  multiplied by the prior period's  interest rate), (ii) changes in net
interest income  attributable  to rate (changes in interest rates  multiplied by
the prior period's volume), and (iii) changes in volume multiplied by changes in
rates.


                                                Year Ended September 30,     
                                          ------------------------------------
                                                    1998  vs.  1997           
                                          ------------------------------------
                                                   Increase (Decrease)
                                                         Due to               
                                          ------------------------------------ 
                                                               Rate/
                                          Volume     Rate     Volume      Net
                                          ------    ------    -------    -----
                                                  (Dollars in Thousands)
Interest income:
   Loans receivable ...................   $  (55)   $  156     $  (1)   $  100
   Investment securities...............    1,354       (69)     (237)    1,048
   Mortgage-backed securities..........      146        (2)       (1)      143
   Other interest earning assets.......       84        12         2        98
                                           -----     -----      ----     -----
      Total interest-earning assets....    1,529        97      (237)    1,389


Interest expense:
   Deposits............................      557       138        24       719
   Other liabilities(1)................      487        15        43       545
                                           -----     -----      ----     -----
      Total interest-bearing
       liabilities.....................    1,044       153        67     1,264
                                           -----     -----      ----     -----
Net change in net interest income......   $  485    $  (56)    $(304)   $  125
                                           =====     =====       =====   =====

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

                                      -8-
<PAGE>

Financial Condition

         Total assets of the Company were $132.9  million at September  30, 1998
compared to $98.6 million at September 30, 1997, an increase of $34.3 million or
34.8%. This increase was primarily due to increases in interest-bearing deposits
in other banks of $6.0 million, investments available for sale of $15.2 million,
other  investments  held to  maturity  of  $10.8  million  and  mortgage  backed
securities of $4.4 million.  These increases were off-set slightly by a decrease
in  loans  receivable  of $3.1  million.  The  increases  were  the  results  of
management's  strategy  to  maximize  the high  level of equity,  diversify  the
Company's balance sheet and increase profitability. Loan payments and repayments
exceeded new loan  originations  by $3.1 million during the fiscal year due to a
highly competitive loan market and management decision to diversify.

         The  Company's  deposits  increased by $20.9  million or 28.2% to $95.1
million at  September  30, 1998 from $74.2  million at September  30, 1997.  The
increase was a result of a $21.4 million  increase in  certificates  of deposit,
due to an  advertising  campaign  by  management  focusing  on two and five year
step-up  certificates of deposit. The increase was slightly off-set by decreases
in transaction and passbook accounts.  Borrowings  increased by $16.9 million as
management took advantage of favorable borrowing rates.

         The Company's  net worth  decreased by $3.6 million to $16.2 million at
September 30, 1998 from $19.8  million at September  30, 1997.  The decrease was
primarily due to a special cash distribution to shareholders in aggregate amount
of $4.2  million  ($3.00 per share) in July 1998,  an increase  in common  stock
dividends paid, partially off-set by fiscal 1998's net income.

Results of Operations

Net Income

         Net income  decreased  by $73,000 for the fiscal 1998 to $681,000  from
$754,000  for  fiscal  1997.  The  decrease  was  the  result  of  increases  in
non-interest  expense of $280,000 and the provision for loan losses of $134,000.
This was substantially off-set by an increase in net interest income of $125,000
and  non-interest  income of $175,000 and a decrease in the provision for income
taxes of $41,000 all of which is explained in more detail below.

Net Interest Income

     Net interest income increased by approximately $125,000 to $3.8 million for
fiscal 1998 from $3.7 million for fiscal 1997. The increase was the result of an
increase  in the amount of average  interest-earning  assets  exceeding  average
interest-bearing liabilities. (See Rate/Volume Analysis Table)

         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,  decreased in fiscal 1998 to 2.58% from 2.89% for
fiscal 1997.  The decrease in interest  rate spread is primarily the result of a
decline in the average yield on investment  securities combined with increase in
average cost of borrowings.

                                      -9-
<PAGE>

Results of Operations - Continued

Interest Income

         Interest  income on loans increased by  approximately  $100,000 to $6.0
million for fiscal 1998 from $5.9 million for fiscal 1997.  The increase was due
to an  increase  in the  average  yield on loans  of 20  basis  points  to 7.72%
compared to 7.52% for fiscal  1997.  This was off-set  slightly by a decrease in
the average  dollar amount of loans  outstanding in fiscal 1998 over fiscal 1997
of approximately $732,000.

         Interest  and dividend  income on  investment  securities  increased by
$1,048,000  or 267.3% to $1,440,000 in fiscal 1998 from $392,000 in fiscal 1997.
The  increase  was the result of an  increase in the  average  dollar  amount of
investment  securities  outstanding  of $17.3  million,  partially  off-set by a
decrease in the average  yield of 138 basis points to 6.47% for fiscal 1998 from
7.85% for fiscal 1997.

         Interest income on mortgage backed securities  increased by $143,000 or
71.9% to $342,000 for fiscal 1998 from  $199,000  for fiscal 1997.  The increase
was primarily due to an increase of $2.2 million or 75.9% in the average  dollar
amount outstanding.

         The above  increases  in the average  balances  were due  primarily  to
management's  strategy  to  diversify  the  balance  sheet as  discussed  in the
Financial Condition section herein.

         Other  interest  income  increased  by $98,000 or 17.99% to $645,000 in
fiscal 1998 from  $547,000 in fiscal 1997.  The increase was due to the increase
in the average dollar amount invested in other  interest-earning  assets of $1.4
million  combined  with a 12 basis point  increase in the average  yield.  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.

 Interest on Deposits

         Interest on deposits  increased by $720,000 or 22.4% to  $3,940,000  in
fiscal 1998 from $3,220,000 in fiscal 1997. The increase was primarily due to an
increase of $12.5  million or 17.3% in the average  dollar  amount  outstanding,
combined  with an increase in the average cost of these funds to 4.64% in fiscal
1998 from 4.45% in fiscal 1997.

         Interest  on  short-term  borrowings  increased  $357,000  or 212.5% to
$525,000 in fiscal 1998 from  $168,000 in fiscal  1997.  The increase was due to
the  Bank  using  FHLB  advances  as an  additional  funding  source  as part of
management  diversification  strategy of the balance  sheet.  This increased the
average amount of borrowings by $10,583,000 and rates paid by 41 basis points.

                                      -10-
<PAGE>

Results of Operations - Continued

Provision for Loan Losses
         The provision for loan losses for fiscal 1998 was increased by $134,000
to $195,000  from $61,000 for fiscal 1997.  During  fiscal 1998,  two  borrowers
experienced  financial  difficulties  that required the properties to be sold at
foreclosure  sales.  This resulted in the Bank  experiencing  net charge-offs of
$144,000 as compared to $6,000 during  fiscal 1997.  The  charge-offs  in fiscal
1998 resulted in management  reevaluating  the allowance for loan losses.  Based
upon the  additions to the allowance  for loan losses,  management  believes the
allowance for loan losses is adequate.  However,  there can be no assurance that
the allowance for loan losses will be adequate to cover significant  losses that
the Bank might incur in the future.

Non-Interest Income

         Non-interest  income increased $175,000 or 72.9% to $415,000 for fiscal
1998 from  $240,000 for fiscal  1997.  The increase was the result of the Bank's
subsidiary  Mapleleaf  Mortgage  Corporation  ("MMC")  increasing  its  mortgage
brokerage operation's activities with third parties.

Non-Interest Expenses

         Non-interest  expenses  increased  $280,000 or 10.8% to $2,867,000  for
fiscal 1998 from  $2,587,000  for fiscal  1997.  Salaries  and related  expenses
increased  $165,000 or 10.0% to $1,817,000  for fiscal 1998 from  $1,652,000 for
fiscal 1997.  Salaries and related  expenses  increased as a result of increased
compensation  to MMC  employees  as the  result  of  increased  activity  and an
increase in non-cash compensation under stock-based benefit plans resulting from
an increase in the average stock price.

     Occupancy  expense  decreased  $20,000 or 12.4% to $141,000 for fiscal 1998
from  $161,000 is fiscal 1997.  The decrease was  primarily due to a decrease in
repairs and maintenance.

         The Savings  Association  Insurance  Fund  ("SAIF")  deposit  insurance
premiums  decreased  by  approximately  $20,000 to $48,000  for fiscal 1998 from
$68,000 in fiscal 1997.  The Savings  Bank's  premiums were reduced from .23% of
insured deposits to .064% as of January 1, 1997.

         Depreciation of equipment expense increased $15,000 or 31.3% to $63,000
for fiscal 1998 from $48,000 for fiscal  1997.  The increase for fiscal 1998 was
the result of the purchase of additional equipment during fiscal 1998.

                                      -11-
<PAGE>

Results of Operations - Continued

Non-Interest Expenses - Continued

     Advertising  expense  increased by $54,000 or 101.9% to $107,000 for fiscal
1998 from $53,000 for fiscal 1997.  During  fiscal 1998,  the Bank  conducted an
aggressive advertising campaign for loans and deposits.

         Data processing  costs increased  $11,000 or 14.3% to $88,000 in fiscal
1998 from $77,000 in fiscal 1997.  The increase was the result of an increase in
data processing services and an increase in the number of deposit accounts.

         Other expenses increased by approximately  $70,000 or 22.2% to $386,000
for fiscal 1998 from  $316,000 in fiscal  1997.  The increase in fiscal 1998 was
primarily  due to an  increase  in  stationery,  printing  and office  supplies,
liability insurance, ATM expense and miscellaneous expenses.

         During fiscal 1998,  the Company  adopted a Year 2000  Compliance  Plan
(the "Plan") and established a Year 2000 Compliance Committee (the "Committee").
The  objectives of the Plan and the Committee are to prepare the Company for the
new millennium. As recommended by the Federal Financial Institutions Examination
Council,  the Plan  encompasses  the following  phases:  Awareness,  Assessment,
Renovation, Validation and Implementation.  These phases will enable the Company
to identify risks, develop an action plan, perform adequate testing and complete
certification that its processing systems will be Year 2000 ready.  Execution of
the  Plan is  currently  on  target.  The  Company  is  currently  in  Phase  4,
Validation,  which includes  testing and  verifications  of corrective  actions.
Concurrently,  the Company is also  addressing some issues related to subsequent
phases.  Prioritization  of the most critical  applications  has been addressed,
along with contract and service  agreements.  The primary operating software for
the Company is obtained and maintained by an external  provider of software (the
"External  Provider").  The Company has  maintained  ongoing  contact  with this
vendor so that  modification  of the software  for Year 2000  readiness is a top
priority and the testing Phase was completed in August of 1998.  The Company has
contacted all other  material  vendors and suppliers  regarding  their Year 2000
state of readiness.  Each of these third parties has delivered written assurance
to the  Company  that they  expect to be Year 2000  compliant  prior to the Year
2000.  The Company is in the process of  contacting  all material  customers and
non-information  technology  suppliers (i.e. utility systems,  telephone systems
and security  systems)  regarding  their Year 2000 state of readiness.  The next
Phase, the Implementation Phase, is to certify that systems are Year 2000 ready,
along with  assurances  that any new systems are  compliant  on a  going-forward
basis.  The  Implementation  Phase is targeted for  completion  by September 30,
1999.

                                      -12-
<PAGE>

Results of Operations - Continued

Non-Interest Expenses - Continued

         Costs will be incurred due to the replacement of  non-compliant  teller
hardware and software.  The Company does not anticipate that the related overall
costs will be material in any single year. In total, the Company  estimates that
its cost for compliance will amount to approximately $186,000, employee time not
included.  No assurance can be given that the Year 2000  Compliance Plan will be
completed  successfully by the Year 2000, in which event the Company could incur
significant  costs. If the External  Provider is unable to resolve the potential
problem in time, the Company would likely experience significant data processing
delays,  mistakes or failures.  These delays,  mistakes or failures could have a
significant adverse impact on the financial statements of the Company.

         Successful  and timely  completion of the Year 2000 project is based on
management's best estimates  derived from various  assumptions of future events,
which are  inherently  uncertain,  including  the  progress  and  results of the
Company's  External  Provider,  testing  plans,  and all vendors,  suppliers and
customer readiness.

Contingency Plan

         The Bank is  currently  developing  a  contingency  plan  (the  "Plan")
specific  to the Year 2000.  The Plan will  address  the  actions  that would be
undertaken if critical  business  functions  cannot be carried out in the normal
manner  upon  entering  the next  century  due to  computer  system or  supplier
failure.  If such events occur,  the Bank will input a manual  posting plan that
will entail  manual  postings  of  transactions  to the general  ledger and hand
calculations of interest for both savings  accounts and mortgages as well as the
calculations  of  dividends.  The Bank has a number of  employees  who have been
employed  by the Bank for at least 25 years who have  experience  in the  manual
postings to the general ledger as well as the hand  calculations of interest and
dividends.  The Bank is currently  devising a training program for all essential
personnel. Additionally, the Bank will have management personnel on site at each
office on the first  business  day of the Year 2000 to answer any  concerns  the
customer may have and offer any assistance to the Bank's employees.

Provision for Income Taxes

     Provision for income taxes  decreased by  approximately  $41,000 or 8.2% to
$460,000  for fiscal  1998 from  $501,000  for fiscal  1997.  The  decrease  was
primarily the result of a decrease in pretax income.

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 4% 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 Bank's  average  liquidity  ratio was
12.1% and 9.79% at September 30, 1998 and 1997, respectively.

                                      -13-
<PAGE>

Results of Operations - Continued

Liquidity and Capital Resources - Continued

         The Company's  sources of liquidity have  historically  included income
earned from operations, principal and interest payments and prepayments on loans
and  securities,  maturities  of  investment  securities,  deposit  inflows  and
borrowings from the FHLB of Atlanta.

         Net cash provided by operating activities was $563,000 and $724,000 for
fiscal 1998 and 1997.  Cash flows from  operations in fiscal 1998 decreased from
fiscal 1997 primarily due to an increase in accrued interest receivable, prepaid
and  refundable  income  taxes and other  assets  as well as a  decrease  in net
income. This was off-set in part by an increase in the provision for loan losses
and an increase in other liabilities in fiscal 1998 as compared to a decrease in
fiscal 1997.

         Net cash used by  investment  activities  for fiscal 1998 totaled $27.3
million, a significant  increase from $1.6 million for fiscal 1997. The increase
in cash used was due to  management's  decision  to  maximize  the high level of
capital and also  diversify  the  company.  This is evidenced by the purchase of
investments available for sale of $26.7 million, investments held to maturity of
$22.5  million and  mortgage  backed  securities  of $4.9  million.  The company
received  proceeds from sales and maturities of  investments  available for sale
and   investments   held  to  maturity  of  $11.4  million  and  $11.6  million,
respectively.  Principal  repayments on loans exceeded loan originations by $3.1
million.

         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
Company may in the future sell loans to secondary market participants.

         Net cash provided by financing activities for fiscal 1998 totaled $33.2
million compared to $1.6 million in fiscal 1997. During fiscal 1998 this was the
result of a net  increase  in  deposits  of $20.9  million,  and an  increase in
borrowings of $16.9 million.  This was offset slightly by a return of capital in
the amount of $4.2 million and dividends paid of $410,000.

         Management  believes it has ample cash flows and  liquidity to meet its
loan  commitments  of $1.1 million and unused lines of credit of $1.6 million at
September 30, 1998. The 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 Bank is subject to federal  regulations that impose certain minimum
capital requirements.  At September 30, 1998, the Bank had risk-based capital of
$16.6 million  compared to its  requirement of $4.5 million,  an excess of $12.1
million.  Each of the Bank's  tangible  and core  capital  was $16.4  million at
September 30, 1998,  compared to the  requirements  of $2.0 million for tangible
capital  and $4.0  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.  Management  monitors  projected
liquidity needs and determines the level desirable,  based in part on the Bank's
commitments to make loans and  management's  assessment of the Bank's ability to
generate funds.

                                      -14-
<PAGE>
                            ANDERSON ASSOCIATES, LLP
                          CERTIFIED PUBLIC ACCOUNTANTS
                                7621 Fitch Lane
                           Baltimore, Maryland 21236
                                  410-882-8050



                          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, 1998 and 1997,
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,
1998. These  consolidated  financial  statements are the  responsibility  of the
Company'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, 1998 and 1997, and the
consolidated  results of its operations and cash flows for each of the two years
in the two year period ended  September 30, 1998, in conformity  with  generally
accepted accounting principles.



                                             /s/ Anderson Associates LLP
                                           
                                          


December 10, 1998
Baltimore, Maryland


                                      -15-
<PAGE>


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

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 ----------------------------------------------

<TABLE>
<CAPTION>

                                                                                September 30,
                                                                                -------------
                                                                           1998               1997
                                                                           ----               ----
        Assets
        ------
<S>                                                               <C>                    <C>        
Cash                                                                $    1,179,349         $  1,003,528
Interest bearing deposits in other banks                                 9,849,431            3,898,946
Federal funds sold                                                       3,394,000            3,481,833
Investments available for sale (Note 2)                                 15,191,491                    -
Other investments held to maturity (Note 3)                             14,600,000            3,750,000
Mortgage backed securities (Note 4)                                      7,275,803            2,845,210
Loans receivable - net (Note 5)                                         75,357,978           78,450,370
Accrued interest receivable - loans                                        365,022              374,561
                            - investments                                  581,865               69,230
                            - mortgage backed securities                    40,979               15,998
Premises and equipment - net (Note 8)                                      876,926              721,932
Federal Home Loan Bank of Atlanta stock, at cost (Note 6)                1,000,000              753,200
Investment in and loans to affiliated corporation (Note 7)               2,575,000            2,925,000
Deferred income taxes (Note 14)                                            170,695              116,394
Prepaid and refundable income taxes                                        131,353                    -
Other assets                                                               286,580              150,517
                                                                       -----------           ----------
Total assets                                                          $132,876,472          $98,556,719
                                                                       ===========           ==========

     Liabilities and Stockholders' Equity

Liabilities
   Deposits (Note 9)                                                 $  95,065,922          $74,186,112
   Checks outstanding in excess of bank balance                             11,077                    -
   Borrowings (Note 10)                                                 20,937,168            4,000,000
   Advance payments by borrowers for taxes and insurance                   314,125              330,671
   Income taxes payable (Note 14)                                           16,780               64,284
   Other liabilities                                                       288,684              146,519
                                                                      ------------           ----------
Total liabilities                                                      116,633,756           78,727,586

Commitments and contingencies (Notes 5, 8, 10 and 11)

Stockholders' Equity (Notes 12 and 13)
   Common stock .10 par value; authorized 1,620,062
    shares; issued and outstanding 1,389,002 shares in
    1998 and 1,392,415 shares in 1997                                      138,900              139,241
   Additional paid-in capital                                            7,392,663           11,390,312
   Retained earnings (substantially restricted)                          9,651,860            9,381,773
   Net unrealized losses on investments available for sale                 (25,140)                   -          
                                                                     -------------           -----------
                                                                        17,158,283           20,911,326
   Employee Stock Ownership Plan                                          (915,567)          (1,082,193)
                                                                     -------------           ----------
Total stockholders' equity                                              16,242,716           19,829,133
                                                                     -------------           ----------

Total liabilities and stockholders' equity                            $132,876,472          $98,556,719
                                                                       ===========           ==========
</TABLE>

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

                                      -16-
<PAGE>



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

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------

<TABLE>
<CAPTION>

                                                                 Years Ended September 30,
                                                                 -------------------------
                                                                    1998                1997
                                                                    ----                ----
<S>                                                            <C>                  <C>       
Interest and fees on loans (Note 5)                               $6,011,855           $5,911,569
Interest and dividends on investment securities                    1,440,571              391,584
Interest on mortgage backed securities                               342,341              199,192
Other interest income                                                644,730              547,182
                                                                  ----------            ---------

Total interest income                                              8,439,497            7,049,527

Interest on deposits (Note 9)                                      3,939,755            3,219,849
Interest on short-term borrowings                                    525,449              167,538
Interest on long-term borrowings                                     187,171                  -          
                                                                  ----------           ----------
Total interest expense                                             4,652,375            3,387,387
                                                                   ---------           ----------

Net interest income                                                3,787,122            3,662,140
Provision for loan losses (Note 5)                                   195,000               60,644
                                                                  ----------          -----------
Net interest income after provision for loan losses                3,592,122            3,601,496

Non-Interest Income
   Gain on sale of investments                                         7,325                  -
   Other commissions and fees                                        282,704              111,550
   Fees and charges on loans                                          27,591               32,173
   Fees on transaction accounts                                       63,003               55,194
   Other income                                                       34,764               41,167
                                                                   ---------          -----------
Total non-interest income                                            415,387              240,084

Non-Interest Expenses
   Salaries and related expenses                                   1,816,659            1,651,615
   Occupancy                                                         140,648              160,616
   SAIF deposit insurance premium                                     48,159               67,822
   Depreciation of equipment                                          62,915               48,473
   Advertising                                                       107,476               52,743
   Data processing costs                                              88,248               77,049
   Professional services                                             216,559              211,848
   Other expenses                                                    386,374              316,433
                                                                  ----------            ---------
Total non-interest expenses                                        2,867,038            2,586,599
                                                                   ---------            ---------

Income before tax provision                                        1,140,471            1,254,981
Provision for income taxes (Note 14)                                 459,892              500,834
                                                                  ----------           ----------
Net income                                                       $   680,579          $   754,147
                                                                  ==========           ==========
Basic earnings per share                                         $       .55          $       .53
                                                                  ==========           ==========
Diluted earnings per share                                       $       .51          $       .51
                                                                  ==========           ==========

</TABLE>

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

                                      -17-
<PAGE>


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

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 -----------------------------------------------
                   FOR YEARS ENDED SEPTEMBER 30, 1998 AND 1997
                   -------------------------------------------
<TABLE>
<CAPTION>

                                                                                        Net
                                                                                 Unrealized Losses   Employee
                                                           Additional             on Investments      Stock         Total
                                                 Common      Paid-In     Retained   Available       Ownership    Stockholders'
                                                 Stock       Capital     Earnings    for Sale         Plan          Equity      
                                                 -----       -------     --------    --------         ----          ------      
<S>                                          <C>       <C>            <C>           <C>           <C>           <C>        
Balance - September 30, 1996                   $162,006   $15,403,857   $8,911,434  $         -     $(1,231,240)  $23,246,057
                                                                                           
Purchase of 227,647 shares of common stock      (22,765)   (3,347,408)          -             -              -     (3,370,173)
Compensation under Stock-Based Benefit Plan          -         64,572           -             -         149,047       213,619
Deferred compensation -                                                                    
 Management Stock Bonus Plan                         -       (882,927)          -             -              -       (882,927)
Compensation under Stock Bonus Plan                  -        152,218           -             -              -        152,218
Dividends paid ($.20 per share)                      -             -      (283,808)           -              -       (283,808)
Net income                                           -             -       754,147            -              -        754,147
                                                -------    ----------    ---------     ---------     ----------     ---------  

Balance - September 30, 1997                    139,241    11,390,312    9,381,773            -      (1,082,193)   19,829,133

Purchase of 3,413 shares of common stock           (341)      (53,413)          -             -          -            (53,754)
Compensation under Stock Bonus Plan                  -        158,477           -             -          -            158,477
Compensation under Stock-Based Benefit Plan          -         64,293           -             -         166,626       230,919
Net unrealized holding losses on available for
 sale securities                                     -             -            -        (25,140)        -            (25,140)
Dividends paid ($.32 per share)                      -             -      (410,492)           -          -           (410,492)
Special distribution ($3.00 per share)               -     (4,167,006)          -             -          -         (4,167,006)
Net income                                           -             -       680,579            -          -            680,579
                                                -------   -----------    ---------     ---------     ----------    ----------  
Balance - September 30, 1998                   $138,900  $  7,392,663   $9,651,860    $  (25,140)   $  (915,567)  $16,242,716
                                                =======   ===========    =========     =========     ==========    ==========  
</TABLE>

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


                                      -18-
<PAGE>


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

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
<TABLE>
<CAPTION>
                                                                            Years Ended September 30, 
                                                                            ------------------------- 
                                                                          1998                  1997
                                                                          ----                  ----
<S>                                                                   <C>                  <C>         
Operating Activities
--------------------
     Net income before other comprehensive income                   $     680,579          $   754,147
     Gain on sale of investment available for sale                         (7,325)                  -
     Adjustments to Reconcile Net Income to Net
      Cash Provided by Operating Activities            
      -------------------------------------            
         Net accretion/amortization of premiums and discounts
          of mortgage backed securities                                       371                 (826)
         Amortization of deferred loan fees                              (183,240)            (170,241)
         Loan fees deferred                                               165,963              105,511
         Decrease in discount on loans purchased                          (21,177)             (20,560)
         Provision for loan losses                                        195,000               60,644
         Non-cash compensation under stock-based
          benefit plans                                                   389,396              365,837
         Increase in accrued interest receivable                         (528,077)              (6,212)
         Provision for depreciation                                        82,404               66,782
         Decrease (increase) in deferred income taxes                     (38,483)             162,393
         Increase in prepaid and refundable income taxes                 (131,353)                  -
         Decrease (increase) in other assets                             (136,063)              56,097
         Decrease in accrued interest payable                                 (77)              (1,580)
         Decrease in income taxes payable                                 (47,504)            (173,172)
         (Decrease) increase in other liabilities                         142,165             (474,900)
                                                                     ------------           ----------
              Net cash provided by operating activities                   562,579              723,920

Cash Flows from Investment Activities
-------------------------------------
     Proceeds from maturing interest-bearing deposits                     437,679              783,000
     Purchases of interest-bearing deposits                                    -              (437,679)
     Decrease in securities purchased under
      agreement to resell                                                      -             2,000,000
     Proceeds from sales and maturities of investments
      available for sale                                               11,434,712                   -
     Purchase of investments available for sale                       (26,659,836)                  -
     Proceeds from maturing other investments - held
      to maturity                                                      11,600,000            2,000,000
     Purchase of other investments - held to maturity                 (22,450,000)          (3,250,000)
     Purchase of mortgage backed securities                            (4,936,300)                  -
     Principal collected on mortgage backed securities                    505,336              177,614
     Net decrease (increase) in shorter term loans                         40,194             (119,079)
     Loans purchased                                                     (224,480)                  -
     Longer term loans originated or acquired                         (13,530,622)         (11,963,341)
     Principal collected on longer term loans                          16,650,754            9,393,482
     Investment in premises and equipment                                (237,398)             (54,271)
     Purchase of stock in Federal Home Loan Bank of Atlanta              (246,800)             (70,400)
     (Increase) decrease on investment in and
      loans to joint ventures                                             350,000             (100,000)
                                                                    -------------         ------------

              Net cash used by investment activities                  (27,266,761)          (1,640,674)

</TABLE>

                                      -19-
<PAGE>

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

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
<TABLE>
<CAPTION>
                                                                       Years Ended September 30, 
                                                                       ------------------------- 
                                                                      1998                   1997
                                                                      ----                   ----
<S>                                                              <C>                    <C>         
Cash Flows from Financing Activities
     Net decrease in demand deposits, money
      market, passbook accounts and advances by
      borrowers for taxes and insurance                           $    (540,191)         $(1,130,148)
     Net increase in certificates of deposit                         21,403,532            3,225,329
     Increase in checks outstanding in excess of
      bank balance                                                       11,077                   -
     Borrowings                                                      16,937,168            4,000,000
     Special distribution                                            (4,167,006)                  -
     Stock repurchase                                                   (53,754)          (3,370,173)
     Stock purchased for Management Stock Bonus Plan                   -                    (882,927)
     Dividends                                                         (410,492)            (283,808) 
                                                                    ------------          ----------  

              Net cash provided by financing activities              33,180,334            1,558,273
                                                                    -----------           ----------

Increase in cash and cash equivalents                                 6,476,152              641,519
Cash and cash equivalents at beginning of year                        7,946,628            7,305,109
                                                                    -----------           ----------

Cash and cash equivalents at end of year                            $14,422,780         $  7,946,628
                                                                     ==========           ==========

The following is a Summary of Cash and Cash Equivalents:
--------------------------------------------------------
     Cash                                                           $ 1,179,349         $  1,003,528
     Interest bearing deposits in other banks                         9,849,431            3,898,946
     Federal funds sold                                               3,394,000            3,481,833
                                                                     ----------           ----------
     Balance of cash items reflected on
      Statement of Financial condition                               14,422,780            8,384,307

     Less - certificates of deposit with original maturities 
            of more than three months that are included
            in interest bearing deposits in other banks                      -               437,679
                                                                     ----------            ---------

Cash and cash equivalents reflected on the
 Statement of Cash Flows                                            $14,422,780         $  7,946,628
                                                                     ==========            =========
Supplemental Disclosure of Cash Flow Information:
-------------------------------------------------
     Cash paid during the year for:

         Interest                                                  $  4,552,437         $  3,388,967
                                                                     ==========            =========
         Taxes                                                     $    715,651         $    420,714
                                                                     ==========            =========
</TABLE>



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

                                      -20-
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                               SEPTEMBER 30, 1998
                               ------------------


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 - 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.  Amortization  of
          premiums and accretion of discounts on purchases is computed using the
          interest  method,  since  management  had the ability and intention to
          hold them to  maturity.  Gains and  losses  are  determined  using the
          specific identification method.

     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.

                                      -21-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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, 1998
          and 1997.

          The Bank services loans for others and pays the  participant its share
          of the 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.

          Statement  of  Financial  Accounting  Standards  ("SFAS")  No. 114, as
          amended by SFAS No. 118,  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


                                      -22-
<PAGE>




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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     G.   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.

          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 and certain direct loan  origination  costs are
          deferred  and  are   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 fair
          value less estimated  disposal cost.  Expenses  incurred on foreclosed
          real estate prior to disposition are charged to expense.  Gains on the
          sale of foreclosed real estate are recognized upon  disposition of the
          property.

                                      -23-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     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)

     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.   Employee Stock Ownership Plan - The Company  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)

     M.   Stock-Based  Compensation - SFAS No. 123,  "Accounting for Stock-Based
          Compensation" 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. Management decided to continue using the
          "intrinsic  value based  method" as  prescribed by APB Opinion No. 25.
          (See Note 12)

                                      -24-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     N.   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.

     O.   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.

     P.   Basic  and  Diluted  Earnings  Per  Share - The  Company  has  adopted
          Statement of Financial  Accounting  Standards  No. 128,  "Earnings Per
          Share"  in 1998.  This  Standard  establishes  revised  standards  for
          computing and presenting  earnings per share data ("EPS"). It requires
          dual  presentation  of "basic"  and  "diluted"  EPS on the face of the
          statements  of  income  and a  reconciliation  of the  numerators  and
          denominations  used in the  calculation  of the "basic" and  "diluted"
          EPS.  Prior  years'  EPS have  been  restated  to  conform  to the new
          standards.

          Basic EPS is computed by dividing net income by the  weighted  average
          number  of  common  shares  outstanding  for the  appropriate  period.
          Unearned ESOP shares are not included in outstanding  shares.  Diluted
          EPS is computed by dividing net income by the weighted  average shares
          outstanding  as adjusted for the dilutive  effect of stock options and
          unvested   stock  awards  based  on  the  "treasury   stock"   method.
          Information  relating  to the  calculation  of net income per share of
          common  stock is  summarized  for the  years  ended  September  30, as
          follows:

<TABLE>
<CAPTION>
                                                              1998                 1997
                                                              ----                 ----
<S>                                                    <C>                  <C>        
               Net income                                $   680,579          $   754,147
                                                           =========            =========
               Weighted Average Shares
                  Outstanding basic EPS                    1,233,797            1,425,308
               Dilutive Items
                  Stock options                               57,983                9,352
                  Unvested stock awards                       53,750               64,802
                                                           ---------            ---------
               Adjusted weighted average shares
                used for dilutive EPS                      1,345,530            1,499,462
                                                           =========            =========
</TABLE>

                                      -25-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

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

Note 2 - Investments Available for Sale
         ------------------------------

     The  amortized  cost and fair values of  investments  available for sale at
September 30, 1998 are as follows:
<TABLE>
<CAPTION>
                                                Gross         Gross
                               Amortized      Unrealized    Unrealized      Fair
                                  Cost           Gains        Losses       Value
                               ---------      ----------    ----------   -----------
<S>                          <C>             <C>           <C>         <C>        
 Equity investments          $     727,448     $     -       $165,823   $    561,625
 Federal Home Loan
  Bank - Bonds                  14,505,000      124,886            -      14,629,866
                                ----------      -------      --------     ----------
                               $15,232,448     $124,866      $165,823    $15,191,491
                                 =========      =======       =======     ==========
</TABLE>


     During the year ended September 30, 1998, the Company received  proceeds of
$5,184,712 from the sale of investments  that resulted in gross gains of $13,718
and gross losses of $6,393.  No gross gains or losses were  realized  during the
year ended September 30, 1997.

     The equity  investments have no stated maturity and all of the Federal Home
Loan Bank Bonds have a stated maturity date of ten years or more.

Note 3 - Other Investments - Held to Maturity
         ------------------------------------

     The amortized cost and fair values of other investments are as follows:
<TABLE>
<CAPTION>
                                                   Gross        Gross
                                   Amortized     Unrealized   Unrealized    Fair
                                     Cost          Gains        Losses      Value  
                                  ------------   ----------  -----------  -----------
                                        September 30, 1998               
                                       ------------------                
<S>                              <C>             <C>         <C>        <C>        
  Federal National Mortgage
   Association  Bonds             $  3,750,000   $   37,304    $ 3,611   $  3,783,693
  Federal Home Loan
   Bank Bonds                       10,850,000       74,169      1,000     10,923,169
                                    ----------    ---------     ------     ----------

                                   $14,600,000     $111,473    $ 4,611    $14,706,862
                                     =========      =======      =====      =========
</TABLE>

                                      -26-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 3 - Other Investments - Held to Maturity - Continued
         ------------------------------------
<TABLE>
<CAPTION>

                                                    Gross          Gross
                                  Amortized       Unrealized     Unrealized       Fair
                                     Cost           Gains         Losses          Value  
                                  -----------    ------------  -------------  ------------ 
                                                        September 30, 1997                  
                                  --------------------------------------------------------         
<S>                              <C>           <C>             <C>           <C>       
 Federal National Mortgage
  Association Bonds                $  500,000    $       -        $   8,000   $   492,000
 Federal Home Loan
  Bank Bonds                        2,250,000         3,000          21,850     2,231,150
 Federal Home Loan
  Mortgage Corporation
  Bonds                             1,000,000         1,000        -            1,001,000
                                    ---------     ---------      ----------     ---------
                                   $3,750,000    $    4,000      $   29,850    $3,724,150
                                     ========      ========       =========     =========
</TABLE>

     No gains or losses were realized  during the years ended September 30, 1998
or 1997.

     The scheduled maturities of other investments at September 30, 1998:
<TABLE>
<CAPTION>
                                               Amortized             Fair
                                                  Cost              Value
                                               ----------        -------------
<S>                                       <C>                  <C>          
 Due in one year or less                    $     250,000        $     253,502
 Due after five years through ten years           250,000              251,016
 Due after ten years                           14,100,000           14,202,344 
                                               ----------           -----------
                                            $  14,600,000        $  14,706,862
                                                =========            =========
</TABLE>

                                      -27-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 4 - Mortgage Backed Securities
         --------------------------
 
     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, 1998                        
                                     --------------------------------------------------------
<S>                                  <C>            <C>         <C>               <C>       
 GNMA participating certificates      $6,823,137      $174,119   $     -           $6,997,256
 FNMA participating certificates         452,666         9,369         -              462,035 
                                       ---------       -------    -------------     --------- 

                                      $7,275,803      $183,488   $     -           $7,459,291
                                       =========       =======    =============     =========

                                                       September 30, 1997                     
                                     -------------------------------------------------------- 

 GNMA participating certificates      $2,239,384     $  16,551   $     -           $2,255,935
 FNMA participating certificates         605,826          -              16,863       588,963
                                       ---------      --------    -------------     ---------

                                      $2,845,210     $  16,551   $       16,863    $2,844,898
                                       =========      ========    =============     =========
</TABLE>

     No gains or losses were realized  during the years ended September 30, 1998
and 1997.


                                      -28-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 5 - Loans Receivable
         ----------------
 
     Loans receivable at September 30, 1998 and 1997 consist of the following:
<TABLE>
<CAPTION>
                                                           1998                  1997
                                                           ----                  ----
<S>                                                      <C>                  <C>        
  One to four family residential mortgage loans            $67,057,267          $71,185,272
  Multifamily residential mortgage loans                        92,008               98,855
  Commercial mortgage loans                                  4,799,463            3,292,479
  Construction loans                                         1,967,500            1,462,000
  Lines of credit                                            2,031,161            1,036,125
  Land/lot loans                                               952,173            2,126,751
  Home improvement loans                                         5,668                6,632
  Share loans                                                  260,565              299,795
  Commercial loans secured by lease
   finance receivables                                         853,408            1,075,147
                                                            ----------           ----------
                                                            78,019,213           80,583,056

  Less - undisbursed portion of loans
               in process                                   (1,713,800)          (1,198,222)
           - unamortized discount on loans
                purchased                                     (125,337)            (146,514)
           - deferred loan origination fees                   (520,673)            (537,950)
           - allowance for loan losses                        (301,425)            (250,000)
                                                            ----------           ----------
                                                           $75,357,978          $78,450,370
                                                            ==========           ==========
</TABLE>

       The following is a summary of the allowance for loan losses:
<TABLE>
<CAPTION>
                                                                      September 30,          
                                                             ------------------------------  
                                                                1998                 1997
                                                                ----                 ----
<S>                                                         <C>                  <C>     
  Beginning balance                                           $250,000             $195,000
  Provision for loan losses                                    195,000               60,644
  Charge-offs                                                 (143,575)              (5,644) 
                                                               -------              -------   
  Balance end                                                 $301,425             $250,000
                                                               =======              =======
</TABLE>


                                      -29-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     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.

     There were no impaired  loans as defined by SFAS No. 114 at  September  30,
1998.  There was no interest  income  recognized  on impaired  loans during that
period.

     Impaired loans as defined by SFAS No. 114 are summarized as follows for the
year ended September 30, 1997.
<TABLE>
<CAPTION>

<S>                                              <C>    
 Recorded investment                                $76,036
 Allowance for loan losses                               -
</TABLE>

     Impaired  loans as defined by SFAS No.  114 for which  interest  income has
been reduced are as follows for the year ended September 30, 1997.
<TABLE>
<CAPTION>
<S>                                                            <C>   
Interest income that would have been recorded                    $7,095
Interest income recognized                                           -     
                                                                  =====
Total income not recognized                                      $7,095
                                                                  =====
</TABLE>

     The Bank was not committed to fund additional amounts on these loans.

                                      -30-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     Non-accrual  loans that are not subject to SFAS No. 114 for which  interest
has been reduced  totaled  approximately  $382,725 and $761,249 at September 30,
1998 and 1997.

     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:
<TABLE>
<CAPTION>
                                               1998                 1997
                                               ----                 ----
<S>                                          <C>                 <C>     
 Interest income that would have
  been recognized                             $30,781             $ 93,191
 Interest income recognized                     5,390               53,151
                                              -------              -------
 Interest income not recognized               $25,391             $ 40,040
                                               ======               ======
</TABLE>

     Loans  outstanding  to officers and directors  and their  affiliates of the
Bank at September 30, 1998 and 1997:
<TABLE>
<CAPTION>

Balance At                              Balance At                            Balance At
September       Loans      Principal    September      Loans     Principal    September
 30, 1998       Made       Repayment     30, 1997      Made      Repayment     30, 1996   
-----------     -----      ---------    ----------     -----     ---------    ----------
<S>          <C>           <C>         <C>           <C>        <C>          <C>       
$1,542,216    $213,104      $48,546     $1,377,658    $127,500   $ 29,545     $1,279,703

</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>
                                               1998                1997
                                               ----                ----
<S>                                       <C>                  <C>        
Mortgage loan portfolios serviced for:
   Other investors                          $ 7,038,699          $ 8,601,204
                                              =========            =========
</TABLE>

     Custodial Escrow balances  maintained in connection with the foregoing loan
servicings  were  approximately  $36,799 and $44,019 at  September  30, 1998 and
1997.

                                      -31-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 5 - Loans Receivable - Continued
         ----------------
 
     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,       
------------------------------------        -------------------------------
                                                1998                  1997
                                                ----                  ----
<S>                                         <C>                  <C>       
   Loan commitments                           $1,084,750           $2,809,700
   Unused lines of credit                      1,646,339                   -
</TABLE>

     Mortgage  loan  commitments  not  reflected in the  accompanying  financial
statements  at  September  30,  1998  are  for  fixed  rate  mortgages  totaling
$1,084,750 ranging from 6.75% to 7.75%.

     Mortgage  loan  commitments  not  reflected in the  accompanying  financial
statements at September 30, 1997 are $1,000,000  for  adjustable  rate mortgages
ranging  from  7.00% to 10.00%  and fixed  rate  mortgages  totaling  $1,809,700
ranging from 7.00% to 9.05%.

     Lines of credit are loan  commitments to individuals and companies and have
fixed  expiration  dates  as long as  there  is no  violation  of any  condition
established  in  the  contract.   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, 1998 as
a liability for credit loss.

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.

                                      -32-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 7 - Investment in and Loans to Affiliated Corporation
         -------------------------------------------------
 
     Bankers Affiliate, Inc., formerly "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  Bankers
Affiliate, 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,  Bankers
Affiliate, Inc. (See Note 1) are summarized as follows:
<TABLE>
<CAPTION>

                                                         September 30,            
                                                         -------------            
                                                     1998             1997
                                                     ----             ----
<S>                                              <C>              <C>      
Capital stock, at cost                            $     25,000     $     25,000
Loan payable                                         2,550,000        2,900,000
                                                     ---------        ---------

                                                    $2,575,000       $2,925,000
                                                      ========         ========
</TABLE>

     Summarized  financial  information as of June 30, 1998 and 1997 and for the
years ended June 30, 1998 and 1997 for Bankers Affiliate, Inc. are as follows:
<TABLE>
<CAPTION>

                                                     1998             1997
                                                     ----             ----
<S>                                              <C>              <C>      
Cash                                              $     24,587      $   191,991
Finance receivables                                  8,153,347        8,319,201
Real estate acquired through foreclosure                31,103          101,851
Other assets                                            42,571           46,729
                                                   -----------      -----------

                                                    $8,251,608       $8,659,772
                                                     =========        =========

Loans payable                                       $8,150,000       $8,550,000
Other liabilities                                       21,596           27,670
                                                     ---------        ---------
                                                     8,171,596        8,577,670
Stockholders' equity                                    80,012           82,102
                                                     ---------        ---------

                                                    $8,251,608       $8,659,772
                                                     =========        =========
</TABLE>

                                      -33-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 7 - Investment in and Loans to Affiliated Corporation - Continued
         -------------------------------------------------
<TABLE>
<CAPTION>
                                                           1998           1997
                                                           ----           ----
<S>                                                      <C>            <C>     
Income and Expense

Income:
   Interest                                               $857,925       $830,949
   Other income                                             32,330         37,865
                                                          --------       --------
                                                           890,255        868,814

Expenses:
   Interest                                                636,195        588,769
   Provision for losses on loans                            32,515         67,788
   Salaries and related expenses                           149,744        143,175
   Other expenses                                           79,249         60,575
                                                          --------       --------
                                                           897,703        860,307
                                                           -------        -------

Income (loss) before income tax provision (benefit)         (7,448)         8,507

Income tax provision (benefit)                              (5,358)        (7,636)
                                                         ---------       --------

Net income (loss)                                           (2,090)        16,143
Retained earnings (deficit) at beginning
 of fiscal year                                              7,102         (9,041)
                                                          --------       --------

Retained earnings at end of  fiscal year                  $  5,012       $  7,102
                                                          ========       ========
</TABLE>

Note 8 - Premises and Equipment
         ----------------------
 
     Premises and  equipment at September  30, 1998 and 1997 are  summarized  by
major classification as follows:
<TABLE>
<CAPTION>
                                                                       Useful Life
                                          1998              1997         in Years   
                                          ----              ----       -------------
<S>                                   <C>              <C>              <C>      
Land                                   $  224,056       $  224,056         -
Office buildings                          602,549          602,549        5-50
Furniture, fixtures and equipment         862,980          823,253        3-20
                                       ----------       ----------
                                        1,689,585        1,649,858
   Accumulated depreciation              (812,659)        (927,926)
                                        ---------        ---------
                                       $  876,926       $  721,932
                                        =========        =========
</TABLE>

                                      -34-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 8 - Premises and Equipment - Continued
         ----------------------
 
     The provision for depreciation for the periods ended September 30, 1998 and
1997 was $82,404 and $66,782, 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, 1998 and 1997 was $60,523 and $62,262,  respectively. At September 30, 1998,
the minimum rental commitments under noncancellable leases are as follows:
<TABLE>
<CAPTION>
Year Ended September 30,                       Total
------------------------                       -----
             <S>                           <C>      
               1999                         $  59,663
               2000                            51,903
               2001                            27,856
               2002                             3,600
                                              -------
                                             $143,022
                                              =======
</TABLE>

Note 9 - Deposits
         --------
 
     Deposits are summarized as follows at September 30:
<TABLE>
<CAPTION>
                                                1998                        1997                
                                      ------------------------    --------------------------    
                                                    Weighted-                     Weighted-
                                                     Average                       Average
Type of Account                          Amount        Rate          Amount         Rate      
---------------                          ------        ----          ------         ----      
<S>                                  <C>            <C>         <C>               <C>  
NOW and money market accounts
 including non-interest bearing
 deposits of $981,343 in 1998
 and $352,330 in 1997                  $11,586,661      2.33%       $11,628,286       1.22%
Passbook savings                        14,726,868      3.05%        15,208,888       3.05%
Certificates of deposit                 68,752,209      5.82%        47,348,677       5.74%
                                        ----------                   ----------
                                        95,065,738                   74,185,851
Accrued interest                               184                          261
                                        ----------                   ----------

                                       $95,065,922                  $74,186,112
                                        ==========                   ==========
</TABLE>

                                      -35-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 9 - Deposits - Continued
         --------
 
     The aggregate amount of certificates of deposit with a minimum denomination
of $100,000 was  approximately  $5,883,859  and $3,455,658 at September 30, 1998
and  1997.  Deposits  in excess  of  $100,000  are not  insured  by the  Savings
Association Insurance Fund.
<TABLE>
<CAPTION>
                                                  1998                 1997       
                                             ---------------      ----------------
                                                 Amount               Amount
                                                 ------               ------
<S>                                           <C>                  <C>        
Certificates accounts mature as follows:
   One year or less                              $32,396,930          $28,718,790
   More than 1 year through 2 years               14,801,388            9,654,831
   More than 2 years through 3 years               6,384,738            3,518,357
   More than 3 years                              15,169,153            5,456,699
                                                  ----------           ----------
                                                 $68,752,209          $47,348,677
                                                  ==========           ==========
</TABLE>

     Interest  expense on deposits is  summarized as follows for the years ended
September 30:
<TABLE>
<CAPTION>
                                1998                 1997
                                ----                 ----
<S>                          <C>                  <C>       
Certificates                   $3,201,106           $2,454,305
NOW and money market              294,378              292,045
Passbook                          444,271              473,499
                                ---------            ---------

                               $3,939,755           $3,219,849
                                =========            =========
</TABLE>

                                      -36-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 10- Borrowings
         ----------

     The Company's borrowings at September 30 are as follows:
<TABLE>
<CAPTION>
                                                          1998             1997
                                                          ----             ----
<S>                                                 <C>              <C>         
Short-term Federal Home Loan Bank advances            $  9,000,000     $  4,000,000
Long-term Federal Home Loan Bank advances               11,000,000               -
Other                                                      937,168               -          
                                                        ----------      -----------
Total                                                 $ 20,937,168     $  4,000,000
                                                        ==========      ===========
</TABLE>

     Federal Home Loan Bank advances at September 30, 1998 consist of short term
fixed and  adjustable  rate  advances  bearing  interest at 5.6475% to 6.02% per
annum and long term fixed rate advances  bearing  interest at 5.51% to 5.52% per
annum.

     The  Bank's  stock in the  Federal  Home Loan Bank of Atlanta is pledged as
security for the loan and under a blanket floating lien security  agreement with
the  Federal  Home Loan Bank of  Atlanta,  the Bank is  required  to maintain as
collateral for its advances, qualified home mortgage loans in an amount equal to
175% of the advances.

     Other borrowings consist of an long-term note currently bearing interest at
8.5%.  The interest rate is adjusted  quarterly  and is based on the  commercial
prime rate. The note is repayable over the next eight years. The Company has the
option to repurchase the note any time after February 1, 1999.

     Aggregate  maturities  required on Federal Home Loan Bank  advances and the
note, at September 30, 1998 are as follows:
<TABLE>
<CAPTION>

<S>                          <C>        
September 30, 1999             $ 9,129,604
September 30, 2000                 129,604
September 30, 2001                 129,604
September 30, 2002                 129,604
September 30, 2003               5,129,604
After September 30, 2003         6,289,148
                                ----------
      Total                    $20,937,168
                                ==========
</TABLE>

                                      -37-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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, 1998 and 1997.  The costs of funding  this plan were $21,240 and $18,534 for
the years ended September 30, 1998 and 1997, respectively.

     The following table sets forth the plan's related costs at September 30:
<TABLE>
<CAPTION>
                                       1998                 1997
                                       ----                 ----
<S>                                  <C>                 <C>     
Service cost                          $20,479             $ 21,599
Interest cost                          48,224               44,363
Actual return on plan assets          (37,216)             (44,093)
Other components                      (10,247)              (3,335)
                                       ------             --------

Net period pension costs              $21,240             $ 18,534
                                       ======               ======
</TABLE>

     The following table sets forth the plan's funded status at September 30:
<TABLE>
<CAPTION>
                                                           1998            1997
                                                           ----            ----
<S>                                                     <C>            <C>     
 Accumulated Benefit Obligation
    Vested                                                $509,795       $444,441
    Non-vested                                               4,522          3,133
                                                           -------        -------

       Total                                              $514,317       $447,574
                                                           =======        =======
 Projected benefit obligation                             $762,500       $701,623
    Fair value of plan assets as of September 30           722,564        664,051
                                                           -------        -------
    Plan assets in deficit of projected
     benefit obligation                                    (39,936)       (37,572)
    Unrecognized net loss                                  168,620        129,729
    Unrecognized net transition obligation                   2,025          2,227
                                                           -------        -------

        Prepaid pension cost                              $130,709       $ 94,384
                                                           =======         ======
</TABLE>

                                      -38-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 11- Pension Plan - Continued
         ------------
<TABLE>
<CAPTION>
                                                          1998          1997
                                                          ----          ----
<S>                                                      <C>          <C>     
 Reconciliation of Projected Benefit Obligation
 ----------------------------------------------
    Projected benefit obligation beginning of year         $701,623     $677,176
    Interest cost for the fiscal year                        48,224       44,363
    Service cost for the fiscal year                         20,479       21,599
    Benefit payments for the fiscal year                    (36,268)          -
    Actuarial (gain) loss for the fiscal year                28,442       69,301
                                                            -------      -------
    Projected benefit obligation as of September 30
     before settlement                                      762,500      812,439
    Effect of settlement                                         -      (110,816) 
                                                            -------      ------- 
    Projected benefit obligation as of September 30
     after settlement                                      $762,500     $701,623
                                                            =======      =======
</TABLE>

     The following interest rate assumptions were used for September 30:
<TABLE>
<CAPTION>
                                                       1998               1997
                                                       ----               ----
<S>                                                  <C>                <C>  
Weighted-average discount rate                         7.00%              7.25%
Long term rate of return                               8.00%              8.00%
Rate of compensation increase                          4.50%              4.00%
</TABLE>

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

     In 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.

     The Bank has  established  an Employee Stock  Ownership Plan ("ESOP"),  and
acquired  129,604  shares of the  Company's  common  stock.  The Employee  Stock
Ownership Plan  purchased  30,616  additional  shares with the proceeds from the
special  distribution.  Funds used to acquire the initial  shares were  borrowed
from the  Company  by the ESOP  with a direct  loan from the  Company  requiring
annual payments of $129,604. During the fiscal year ended September 30, 1998 the
Company  assigned  the loan to a third party with the option to  repurchase  the
loan at anytime after February 1, 1999.

                                      -39-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     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, 1998
and 1997 was $230,919 and $213,619, respectively.

     The ESOP shares as of September 30 were as follows:
<TABLE>
<CAPTION>
                                                     1998                 1997
                                                     ----                 ----
<S>                                            <C>                  <C>   
Allocated shares                                    35,887               17,132
Shares earned, but unallocated                       2,160                2,160
Unearned shares                                     91,557              108,220

Fair value of unearned shares at September 30   $1,064,350           $1,785,630
</TABLE>


     The Company has a Stock Option Plan (the "Plan")  whereby 183,058 shares of
common stock have been  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.  During the year ended  September  30,  1997,  the
Company granted options to purchase  162,006 shares at a weighted  average price
of $13.30 per share.  Such  shares and fair value have been  adjusted to 183,058
shares at a  weighted  average  price of $11.77  for the  effect of the  special
distribution that management anticipates will be a return of capital.

                                      -40-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     The following  table  summarizes the status of and changes in the Company's
stock option plan during the past two years, as  retroactively  adjusted for the
Company's  special  distribution  that management  anticipates will constitute a
return of capital.
<TABLE>
<CAPTION>
                                                         Weighted
                                                          Average
                                                         Exercise
                                             Shares        Price    
                                             ------        -----    
<S>                                        <C>          <C>   
Outstanding at September 30, 1996                 -           -
Granted                                      183,058      $11.77
                                             -------

Outstanding at September 30, 1997            183,058       11.77
                                             -------       -----

Outstanding at September 30, 1998            183,058       11.77
                                             =======       =====
Exercisable at September 30, 1998             35,922
                                             =======
</TABLE>

     SFAS No. 123, "Accounting for Stock-Based Compensation",  requires the Bank
to make certain  disclosures  as if the fair value method of accounting had been
applied to the Bank's stock option grants made subsequent to 1994.  Accordingly,
the Bank  estimated  the grant date fair value of each option  awarded in fiscal
1997 using the Black-Scholes  Option-Pricing  model with the following  relevant
assumptions:  dividend  yield  of 1.3%,  risk-free  interest  rate of 6.67%  and
expected lives of 10 years.  The assumption for expected  volatility was 18.17%.
Had 1997  compensation  cost  been  determined  including  the  weighted-average
estimate  of fair value of each option  granted of $5.31,  the Bank's net income
would be reduced to proforma amount of $226,125.  Proforma  earnings,  basic and
diluted, per share would have been $.16 in fiscal 1997.

     The Company has established 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 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 Bank funded the  purchase of 64,802
shares  of its  common  stock  at a  price  of  $13.62  to  provide  shares  for
distribution under the Stock Bonus Plan.

                                      -41-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 12- Common Stock and Stock Benefit Plans - Continued
         ------------------------------------
 
     During fiscal 1998, the Company  declared a special  distribution  of $3.00
per common  stock share from funds  retained  by the Company in the  conversion.
Management   anticipates   that  this  will  constitute  a  return  of  capital.
Accordingly,   the  Company  charged  the  return  of  capital  distribution  to
additional paid-in-capital. Management has obtained a Private Letter Ruling from
the Internal Revenue Service which states that the Company's  dividend  payments
in excess of accumulated  earnings and profits are considered a tax-free  return
of capital for federal income tax purposes. As a result, management believes the
entire  distribution  constitutes a tax-free return of capital.  However,  final
determination cannot be made until December 31, 1998.

Note 13- Retained Earnings
         -----------------
 
     The Bank is subject to various regulatory capital requirements administered
by the federal banking  agencies.  Failure to meet minimum capital  requirements
can initiate certain mandatory, and possible additional  discretionary,  actions
by the regulators  that, if undertaken,  could have a direct  material effect on
the Bank's  financial  statements.  Under capital  adequacy  guidelines  and the
regulatory  framework for prompt corrective  action, the Bank must meet specific
capital  guidelines  that involve  quantitative  measures of the Bank's  assets,
liabilities,  and certain off-balance sheet items as calculated under regulatory
accounting  practices.  The Bank's capital amounts and  classifications are also
subject to  qualitative  judgments  by the  regulators  about  components,  risk
weightings, and other factors.

     Quantitative  measures established by regulation to ensure capital adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of  total  and  Tier I  capital  (as  defined  in the  regulations)  and
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined).  Management  believes,  as of September 30, 1998,  that the
Bank meets all capital adequacy requirements to which it is subject.

     As of September 30, 1998, the most recent  notification  from the Office of
Thrift Supervision categorized the Bank as well capitalized under the regulatory
framework for prompt  corrective  action.  To be categorized as well capitalized
the Bank must maintain minimum total risk-based,  Tier I risk-based,  and Tier I
leverage  ratios as set forth in the table.  There are no  conditions  or events
since  that  notification  that  management  believes  have  changed  the Bank's
category. The Bank's actual capital amounts and ratios are also presented in the
table.

                                      -42-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 13- Retained Earnings - Continued
         -----------------
<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 (1)          $16,374,614     12.3%          $ 1,994,442     1.5%          $   N/A         N/A%
Tier I capital (2)    $16,374,614     28.8%          $    N/A        N/A%          $ 3,411,420     6.0%
Core (1)              $16,374,614     12.3%          $ 3,988,884     3.0%          $ 6,648,140     5.0%
Risk-weighted (2)     $16,626,614     29.2%          $ 4,548,560     8.0%          $ 5,685,700    10.0%
</TABLE>

(1)  To adjusted total assets.
(2)  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                                        $ 16,242,716
Add:  Negative equity of parent company                                209,731
       Less:  Non-allowable items
Intangible assets                                                       (1,190)
Net unrealized gains on available for sale of securities               (76,643)
                                                                   -----------
Tangible and core capital                                           16,374,614
    General valuation allowance                                        252,000
                                                                   -----------
Risk-based capital                                                $ 16,626,614
                                                                   ===========

Total assets                                                      $132,876,472
Loans to parent company                                              1,600,000
    Less: Unrealized gains on securities
                available for sale                                     (76,643)
              Intangible assets                                         (1,190)
             Asset of parent company                                (1,435,840)
                                                                   ----------- 
Tangible and adjusted tangible assets                             $132,962,799
                                                                   ===========
Risk-weighted assets                                              $ 56,857,000
                                                                   ===========

                                      -43-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     The income tax provision consists of the following:
<TABLE>
<CAPTION>
                                                       For Years Ended
                                                         September 30,          
                                                      ------------------  
                                                      1998          1997
                                                      ----          ----
<S>                                               <C>           <C>     
Current
   Federal                                          $432,533      $276,262
   State                                              93,712        62,179
                                                     -------       -------
                                                     526,245       338,441

Deferred
   Federal                                           (31,343)      133,736
   State                                              (7,140)       28,657
                                                      -------      -------
                                                     (38,483)      162,393
Other
   Market value adjustments for Employee Stock
     Ownership Plan and Management Stock
     Bonus Plan
   Federal                                           (23,112)           -
   State                                              (4,758)           -       
                                                      -------      -------
                                                     (27,870)           -     
                                                      -------      -------
                                                    $ 459,892     $500,834
                                                      =======      =======
</TABLE>

     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, 
                          1998 1997 
                                                       Percent                  Percent
                                                      of Pretax               of Pretax
                                        Amount          Income       Amount     Income  
                                        ------          ------       ------     ------  
<S>                                  <C>               <C>        <C>         <C>   
Tax at statutory rate                  $387,760          34.00      $426,693   34 .00
Increases (Decreases)
 Resulting From            
 --------------            
   State income tax net of
    federal income tax benefit           53,997           4.73       59,951      4.78
   Other                                 18,135           1.59       14,190      1.13
                                        -------         ------      -------     -----
                                       $459,892          40.32     $500,834     39.91
                                        =======         ======      =======     =====
</TABLE>

                                      -44-
<PAGE>



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


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------
  


Note 14- Income Taxes - Continued
         ------------
 
     The tax  effects of  temporary  differences  that give rise to  significant
portions of the deferred tax assets and  deferred tax  liabilities  at September
30, 1998 and 1997 are presented below:
<TABLE>
<CAPTION>
                                                      1998          1997
                                                      ----          ----
Deferred Tax Assets:
<S>                                                <C>          <C>     
   Deferred loan origination fees                    $201,084     $207,757
   Allowance for loan losses                          116,411       96,550
   Reserve for uncollected interest                     9,806       13,639
   ESOP contribution                                    8,331        8,331
   Net unrealized holding losses                       15,818           -
   Other                                               20,101           -
   NOL carryforward of subsidiary                       5,566       14,834
                                                    ---------     --------
      Total gross deferred tax assets                 377,117      341,111

Deferred Tax Liabilities:
   Tax reserve for bad debts in excess of
    base year amount                                   81,134      106,098
   Federal Home Loan Bank of Atlanta stock
    dividends                                          56,965       56,965
   Depreciation                                        17,843       25,203
   Pension plan                                        50,480       36,451
                                                     --------     --------
      Total gross deferred tax liabilities            206,422      224,717
                                                      -------      -------
            Net deferred tax assets                  $170,695     $116,394
                                                      =======      =======
</TABLE>

     One of the Company's  subsidiaries  has a NOL carryforward in the amount of
$14,411 that expires in 2012.

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

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.


                                      -45-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


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

     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 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.

     The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business,  including loan commitments. The loan commitments
were a blended rate based on the relative  risk of the  properties  involved and
the lines of credit are at adjustable rates.

     The  estimated  fair  values of the  Bank's  financial  instruments  are as
follows:
<TABLE>
<CAPTION>
                                                      September 30, 1998     
                                                      ------------------     
                                                     Carrying      Estimated
                                                       Value       Fair Value
                                                       -----       ----------
<S>                                               <C>            <C>        
Financial Assets
----------------
   Cash, interest-bearing deposits
    in other banks and federal funds                $14,422,780    $14,422,780
   Securities available for sale                     15,191,491     15,191,491
   Investment securities held to maturity            14,600,000     14,706,862
   Mortgage backed securities                         7,275,803      7,459,291
   Loans receivable                                  75,357,978     77,370,000
   Federal Home Loan Bank of Atlanta
    stock                                             1,000,000      1,000,000

Financial Liabilities
---------------------
   Deposits                                         $95,065,922    $95,448,000
   Commitments                                               -       1,084,750
</TABLE>


                                      -46-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 16- Condensed Financial Information (Parent Company Only)
         ----------------------------------------------------
 
     Information as to the financial  position of WHG Bancshares  Corporation as
of September 30, 1998 and 1997 and results of operations  and cash flows for the
two years ended September 30, 1998 is summarized  below.  During the years ended
September 30, 1998 and 1997,  the parent did not receive any dividends  from its
subsidiary, the Bank.

                                                          1998            1997
                                                          ----            ----
Statements of Financial Condition
    Cash                                             $        -    $    21,465
    Federal funds sold                                   578,000       206,935
    Interest-bearing deposits                                 -        145,679
    Securities available for sale                        561,625            -
    Loans receivable                                     125,574     4,103,794
    Equity in net assets of subsidiary                16,375,804    15,333,901
    Deferred income taxes                                 64,041            -
    Other assets                                         114,097        24,554
                                                      ----------    ----------
                                                     $17,819,141   $19,836,328
                                                      ==========    ==========

Checks outstanding in excess of bank balance         $    11,077   $        -   
Borrowings                                             1,600,000            -
Taxes payable                                                 -          6,195
Other liabilities                                         41,991         1,000
Stockholders' equity                                  16,166,073    19,829,133
                                                      ----------    ----------
                                                     $17,819,141   $19,836,328
                                                       =========     =========



                                      -47-
<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

SEPTEMBER 30, 1998
------------------



Note 16- Condensed Financial Information (Parent Company Only) - Continued
         ----------------------------------------------------
 
                  For the years ended September 30:
<TABLE>
<CAPTION>
                                                            1998                 1997
                                                            ----                 ----
Statements of Operations
<S>                                                <C>                  <C>          
    Interest Income                                  $     244,178        $     428,415
    Gain on sale of securities                              13,718                   -        
    Equity in net income of subsidiary                     652,507              519,213
                                                      ------------         ------------
    Total income                                           910,403              947,628

    Interest expense                                        12,175                   -          
    Non-interest expenses                                  186,582               57,645
                                                      ------------         ------------
    Total operating expenses                               198,757               57,645
                                                      ------------         ------------
    Net income before income taxes                         711,646              889,983
    Provision for income taxes                              31,067              135,836
                                                      ------------         ------------
    Net income                                       $     680,579        $     754,147
                                                      ============         ============
</TABLE>

     For the years ended September 30:

<TABLE>
<CAPTION>
                                                          1998                   1997
                                                          ----                   ----
<S>                                                <C>                   <C>         
Statements of Cash Flows

Cash Flows from Operating Activities:
   Net income                                        $     680,579         $    754,147
   Adjustment to Reconcile Net Income to Net
    Cash Provided by Operating Activities
      Equity in net income of subsidiary                  (652,507)            (519,213)
      Gain on sale of securities                           (13,718)           -
      Increase in other assets                             (89,543)             (16,196)
      Decrease in taxes payable                             (6,195)             (77,978)
      Increase in other liabilities                         40,991                1,000    
                                                        -----------          ----------  
         Net cash provided (used) by operating
          activities                                       (40,393)             141,760

</TABLE>


                                      -48-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 16- Condensed Financial Information (Parent Company Only) - Continued
         ----------------------------------------------------
<TABLE>
<CAPTION>
                                                        1998                1997
                                                        ----                ----
<S>                                               <C>                   <C>          
Cash Flows from Investing Activities:
   Proceeds from interest-bearing deposits         $    145,679          $        -
   Purchase of interest-bearing deposits                     -              (145,679)
   Proceeds from sales of securities                    202,043                   -
   Purchase of securities                              (915,774)                  -
   Decrease in securities purchased
     under agreement to resell                               -             2,000,000
   Loans purchased                                     (126,078)          (2,000,000)
   Principal collected on loans                       3,167,130            3,149,045
   Proceeds from assignment of ESOP loan                937,168                   -         
                                                    -----------          -----------

      Cash provided by investing activities           3,410,168            3,003,366

Cash Flows from Financing Activities:
   Increase in checks outstanding in excess
    of bank balance                                      11,077                   -
   Net increase in borrowings                         1,600,000                   -
   Repurchase of common stock                           (53,754)          (3,370,173)
   Dividends paid                                      (410,492)            (283,808)
   Special distribution                              (4,167,006)                  -         
                                                     ----------          -----------

         Net cash used by financing activities       (3,020,175)          (3,653,981)
                                                     ----------          -----------

(Decrease) increase in cash and cash
 equivalents                                        $   349,600           $ (508,855)
Cash and cash equivalents at beginning of year          228,400              737,255 
                                                     ----------           -----------

Cash and cash equivalents at end of year            $   578,000           $  228,400
                                                     ==========           ==========

Supplemental Disclosures of Cash Flows Information:

   Income taxes                                    $    141,887          $   121,714
                                                       ========             ========
   Interest paid                                   $     12,175          $        -
                                                       ========             ========

</TABLE>


                                      -49-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 17- Recent Accounting Pronouncements
         --------------------------------
 
     SFAS No.  130,  "Reporting  Comprehensive  Income" was issued in June 1997.
This  Statement  requires that  comprehensive  income - made up of all revenues,
expenses,  gains and losses - be reported and displayed in an entity's financial
statements  with  the  same  prominence  as  its  other  financial   statements.
Currently, the only item that would be presented as a component of the Company's
comprehensive  income  which is not also a  component  of its net  income is the
change  during  the  year in  unrealized  gain or loss  on  available  for  sale
securities. The Statement, which is effective for years beginning after December
15, 1997,  will not affect the  Company's  financial  position or its results of
operations.

     SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information"  was also issued in June 1997. This Statement  requires that public
business  enterprises  report financial and descriptive  information about their
reportable  operating  segments.  Reportable  operating  segments are defined as
components  of an  enterprise  about which  separate  financial  information  is
available and is evaluated  regularly by the chief operating decision maker as a
basis for allocating resources and assessing performance. It also requires those
enterprises to report  information about countries in which they do business and
about  major  customers.  The  Statement,   which  is  effective  for  financial
statements for periods  beginning  after December 15, 1997,  will not affect the
Company's financial position or its results of operations.

     SFAS  No.  132,   "Employers'   Disclosures   About   Pensions   and  Other
Postretirement   Benefits"  was  issued  in  February   1998.   This   Statement
standardizes the disclosure  requirements for pensions and other  postretirement
benefits to the extent practicable. The Statement, which is effective for fiscal
years beginning after December 15, 1997, will not affect the Company's financial
position or its results of operations.

     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities" was issued in June, 1998. This Statement standardizes the accounting
for derivative  instruments including certain derivative instruments embedded in
other contracts,  by requiring that an entity recognize these items as assets or
liabilities  in the  statement  of  financial  position and measure them at fair
value. This Statement generally provides for matching the timing of gain or loss
recognition on the hedging instrument with the recognition of the changes in the
fair value of the hedged asset or liability that are  attributable to the hedged
risk or the earnings effect of the hedged forecasted transaction. The Statement,
which is effective for all fiscal  quarters of all fiscal years  beginning after
June 15, 1999, will not affect the Company's  financial  position or its results
of operations.

                                      -50-
<PAGE>


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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------


Note 17- Recent Accounting Pronouncements - Continued
         --------------------------------
 
     Statement of Position  ("SOP")  98-5,  "Reporting  on the Costs of Start-Up
Activities".  This  Statement  provides  guidance on the financial  reporting of
start-up cost and  organization  cost. It requires costs of start-up  activities
and  organization  cost to be expensed as incurred.  The "SOP" also requires the
initial  application  to be  reported  as a  cumulative  effect  of a change  in
accounting  principle.  This "SOP" which is effective for fiscal years beginning
after  December  15, 1998 will not affect the  Company's  financial  position or
results of operations.

                                      -51-
<PAGE>



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

HERITAGE SAVINGS BANK, F.S.B.
       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


     Ellicott City Office                                  Golden Ring Office
  9396 Baltimore National Pike                          8767K Philadelphia Road
    Ellicott City, Maryland                               Baltimore, Maryland

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

John E. Lufburrow                         Philip W. Chase, Jr.
 Chairman of the Board                     Retired - 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

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

                                Peggy J. Stewart
                      President and Chief Executive Officer

    Robin L. Taylor                            Diana L. Rohrback
      Controller                        Vice President and Corporate Secretary

   Nicholas C. Tracht                          Daniel J. Gallagher
Vice President and Security Officer   Vice President and Chief Financial Officer
                      -------------------------------------

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, 1998 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  19, 1999 at 10:00 a.m. at the
Holiday Inn, 2004 Greenspring Drive, Timonium, Maryland.


                                      -52-