SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]  Annual report  pursuant to section 13 or 15 (d) of the Securities  Exchange
     Act of 1934 (No Fee required)

     For the fiscal year ended   September 30, 1996

[ ]  Transition report pursuant to section 13 or 15(d) of the Securities 
     Exchange Act of 1934 (No fee required)
     For the transition period from              to             .
                                    ------------    ------------

Commission File No. 0-27606

                           WHG Bancshares Corporation
                           --------------------------
                 (Name of Small Business Issuer in Its Charter)

Maryland                                                          52-1953867
--------                                                          ----------
(State or Other Jurisdiction of Incorporation                  I.R.S. Employer
or Organization)                                              Identification No.

1505 York Road, Lutherville, Maryland                               21093
-------------------------------------                               -----
(Address of Principal Executive Offices                           (Zip Code)

Issuer's Telephone Number, Including Area Code:               (410) 583-8700
                                                              ---------------

Securities registered under to Section 12(b) of the Exchange Act:    None
                                                                     ----

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

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

        Check whether the issuer: (1) has filed all reports required to be filed
by  Section  13 or 15(d) of the  Exchange  Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.
YES  X   NO    .  
    ---     ---

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year. $6,704,471

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  registrant,  based on the average  bid and asked price of the  registrant's
Common Stock on December 6, 1996 was $16.33 million.

     As of December 6, 1996, there were issued and outstanding  1,620,062 shares
of the registrant's Common Stock.

     Transition Small Business Disclosure Format (check one):
YES      NO  X
    ---     ---
                       DOCUMENTS INCORPORATED BY REFERENCE

     1. Portions of the Annual Report to Stockholders  for the Fiscal Year ended
September 30, 1996. (Parts I and II)

     2. Portions of the Proxy  Statement for the Annual Meeting of  Stockholders
for the Fiscal Year ended September 30, 1996. (Part III)

                                        


<PAGE>
PART I

Item 1.  Business
-----------------

Business of the Company

        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  "Bank") to acquire  all of the  capital  stock that the Bank issued in its
conversion  from the mutual to stock form of ownership  (the  "Conversion").  On
March 29, 1996,  the 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 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 Bank and investing the Company's portion of the
net proceeds obtained in the conversion.

Business of the Bank

        The Bank  which  was  founded  in 1902  under  the name  West  Baltimore
Building  Association is a federally  chartered stock savings bank headquartered
in Lutherville, Maryland. In 1975, the Bank changed its name to Heritage Savings
Association  and in 1987, the Bank became a federal savings bank and changed its
name to "Heritage Savings Bank, F.S.B.".  The Bank is subject to examination and
comprehensive  regulation  by the Office of Thrift  Supervision  ("OTS") and its
deposits have been federally insured by the Savings  Association  Insurance Fund
("SAIF")  and  its   predecessor,   the  Federal   Savings  and  Loan  Insurance
Corporation,  since 1954.  The 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
Bank  has  investments  in  two  service  corporations.  See  " --  Subsidiaries
Activities."

Competition

        The Bank is one of many financial  institutions  serving its market area
which  consists  of the  Baltimore,  Maryland  metropolitan  area that  includes
Baltimore City and its five  surrounding  counties  (Baltimore  County,  Harford
County, Howard County, Carroll County, and Anne Arundel County). The competition
for deposit  products comes from other insured  financial  institutions  such as
commercial banks, thrift  institutions,  credit unions, and multi-state regional
banks in the Bank's market area.  Deposit  competition also includes a number of
insurance  products sold by local agents and investment  products such as mutual
funds and other securities sold by local and regional brokers.  Loan competition
varies depending upon market  conditions and comes from other insured  financial
institutions  such as commercial  banks,  thrift  institutions,  credit  unions,
multi-state regional banks, and mortgage bankers.

Lending Activities

        General.   The  Bank's   loan   portfolio   predominantly   consists  of
adjustable-rate mortgage loans secured by one-to-four family residences and to a
lesser  extent the Bank  originates  commercial  loans  secured by real  estate,
construction  loans, land lot loans and savings account loans. It is the current
policy of the Bank to remain a portfolio lender,  though,  the Bank occasionally
sells,  with servicing  retained and without  recourse,  mortgage loans to other
Baltimore based savings associations.

                                        2


<PAGE>
        Analysis of Loan Portfolio. Set forth below is selected data relating to
the  composition  of the  Bank's  loan  portfolio  by type of loan  and  type of
security on the dates indicated:
<TABLE>
<CAPTION>

                                                           At September 30,
                                             --------------------------------------------------
                                                    1996                       1995
                                             ---------------------      -----------------------
                                               $             %            $              %
                                             ----          ----         ----           ----  
                                                        (Dollars in Thousands)

Type of Loans:
<S>                                         <C>           <C>           <C>             <C>   
  Residential.........................      $69,500         91.76%      $65,656           93.76%
  Commercial (real estate)............        3,026          4.00         3,005            4.29
  Construction loans..................        3,277          4.33           887            1.27
  Lines of credit(1)..................          475           .63           500             .71
  Land/lot............................          774          1.02           269             .38
  Home improvement loans..............            9           .01            13             .02
  Savings account loans...............          426           .56           641             .92
  Lease finance receivables...........          828          1.09           284             .40
                                             ------        ------       -------         -------
                                             78,315        103.40        71,255          101.75
Less:
  Loans in process....................       (1,613)        (2.13)         (371)           (.53)
  Deferred loan fees..................         (603)         (.79)         (522)           (.74)
  Allowance for loan losses...........         (195)         (.26)         (140)           (.20)
  Unearned discount on loans purchased         (167)         (.22)         (194)           (.28)
                                           --------        ------       -------          ------
Total loans, net......................      $75,737        100.00       $70,028          100.00%
                                             ======        ======        ======          ======
</TABLE>


(1)  Lines of credit consist of loans secured by residential and commercial real
     estate.

Loan Maturity Tables

        The following table sets forth the estimated maturity of the Bank's loan
portfolio  at  September  30, 1996.  The table does not include  prepayments  or
scheduled principal  repayments.  Prepayments and scheduled principal repayments
on  loans  totalled  $15.5  million  for the  year  ended  September  30,  1996.
Adjustable-rate  mortgage  loans  are  shown as  maturing  based on  contractual
maturities.
<TABLE>
<CAPTION>

                                                 Due after
                                  Due within     1 through      Due after
                                    1 year        5 years        5 years        Total
                                    ------        -------        -------        -----
                                                     (In Thousands)

<S>                                  <C>            <C>           <C>         <C>    
1-4 family real estate mortgage      $  204         $1,695        $70,336     $72,235
Other residential commercial...         650            280          3,157       4,087
Construction...................       3,277             --             --       3,277
Consumer.......................         427             --              8         435
Lines of Credit................         475             --             --         475
Investment in financing leases.          39            789             --         828
                                                                                  ---
                                                                              $81,337
                                                                              -------

Less:
   Loans in process............                                                (1,613)
   Unearned discount on loans
     purchased.................                                                  (167)
   Deferred loan fees..........                                                  (603)
   Allowance for loan losses..                                                   (195)
                                                                               ------
   Loans receivable, net (1)...                                               $78,759
                                                                               ======
</TABLE>
------------------
(1)  Includes mortgage backed securities

                                        3


<PAGE>
        The following  table sets forth the dollar amount of all loans due after
September  30, 1997,  which have  pre-determined  interest  rates and which have
floating or adjustable interest rates.

                                                     Floating or
                                  Fixed Rates     Adjustable Rates       Total
                                  -----------     ----------------       -----
                                                  (In Thousands)

1-4 family real estate mortgage       $21,906           $50,125          $72,031
Other........................             822             2,615            3,437
Construction.................              --                --               --
Consumer.....................               8                --                8
Lease financing receivables..             789                --              789
                                       ------             -----           ------
    Total....................         $23,525           $52,740          $76,265
                                       ======            ======           ======



        One-to  Four-Family   Residential  Loans.  The  Bank's  primary  lending
activity consists of the origination of one-to four-family  residential mortgage
loans secured by property  located in the Bank's  primary  market area. The Bank
generally originates one-to four-family residential mortgage loans in amounts up
to 80% of the lesser of the  appraised  value or selling  price of the mortgaged
property without requiring mortgage  insurance.  In certain instances,  the Bank
will  originate  a  mortgage  loan in an amount  up to 95% of the  lesser of the
appraised  value or selling  price of a mortgaged  property,  however,  mortgage
insurance  for the  borrower is  required.  The Bank  primarily  originates  and
retains  adjustable-rate  mortgage loans and to a lesser  extent,  the Bank will
originate  fixed-rate mortgage loans for retention in its portfolio.  A mortgage
loan originated by the Bank, whether fixed- or adjustable-rate,  can have a term
of up to 30 years.

        The  Bank  requires  for all  adjustable-rate  mortgage  loans  that the
borrower  qualify at a rate that is 2% above the  initial  contractual  interest
rate. The Bank's  adjustable-rate  mortgage loans provide for periodic  interest
rate adjustments of plus or minus 2% with a maximum  adjustment over the term of
the loan to 10.75% and a minimum  adjustment to 6%, except during the first year
following  origination.  Adjustable-rate  mortgage loans typically reprice every
year,  and provide for terms of up to 30 years with most loans  having  terms of
between 15 and 30 years.  The Bank originates  loans with initial interest rates
set below market rates and also originates adjustable-rate mortgage loans with a
fixed interest rate for five years and adjustable each year thereafter. Mortgage
loans  originated  and  held by the  Bank  in its  portfolio  generally  include
due-on-sale  clauses which provide the Bank with the  contractual  right to deem
the loan  immediately  due and payable in the event that the borrower  transfers
ownership of the property without the Bank's consent.

        The Bank offers adjustable-rate  mortgage loans using the weekly average
yield on U.S. Treasury  securities  adjusted to a constant maturity of one year.
Interest  rates  charged on mortgage  loans are  competitively  priced  based on
market conditions and the Bank's cost of funds.  Generally,  the Bank's standard
underwriting  guidelines for mortgage loans conform to FHLMC  guidelines.  It is
the current policy of the Bank to remain a portfolio lender.  The Bank typically
charges a 1% to 2% origination or commitment fee.

        Adjustable-rate  mortgage  loans  decrease  the  risks  associated  with
changes in interest rates by more closely reflecting these changes,  but involve
other risks because as interest rates increase,  the underlying  payments by the
borrower increase,  thus increasing the potential for default. At the same time,
the  marketability  of the underlying  collateral  may be adversely  affected by
higher interest  rates.  Upward  adjustment of the contractual  interest rate is
also limited by the adjustable-rate mortgage loan

                                        4


<PAGE>

documents,  thereby potentially  limiting their effectiveness  during periods of
rising interest rates. These risks have not had an adverse effect on the Bank.

        Commercial  Loans.  Commercial  loan  portfolio  consist solely of loans
secured by real estate,  such as church loans and small office  building  loans.
Loans  secured  by  commercial  property  may  be in  amounts  up to  75% of the
appraised  value for a  maximum  term of 25 years.  Commercial  lending  entails
significant  additional risks when compared with one-to four-family  residential
lending. For example, commercial loans typically involve larger loan balances to
single borrowers or groups of related borrowers,  the payment experience on such
loans  typically  is dependent  on the  successful  operation of the project and
these risks can be significantly  impacted by the cash flow of the borrowers and
supply and demand  conditions in the market for  commercial  office,  retail and
warehouse space.

        Construction Loans. Construction loans are made on a long term basis and
are classified as construction/permanent  loans. Approximately 95% of the Bank's
construction loan portfolio is for the construction of single-family residential
property to the individuals who will be the owners and occupants upon completion
of construction.  These construction loans usually require no principal payments
during the first six months,  after which the payments are set at an amount that
will amortize over the term of the permanent loan. The terms, including interest
rate, of single family residential  construction loans are the same as those for
a  loan  to  purchase  or  refinance  a  previously  constructed  single  family
residence.  The maximum loan to value for other  construction loans is dependent
on the type of property that will be constructed.

        Consumer Loans. Consumer and home equity loans are originated by Bankers
Affiliate,  formerly known as Cash, Inc., a subsidiary of the Bank, of which the
Bank owns a one-third  interest.  The Bank also makes  loans  secured by savings
accounts in the Bank (share loans) which  generally  have rates that adjust with
the rate on the  underlying  account and are  typically 2% above the rate on the
underlying  savings  account.  Share loans are offered  subject to a 90% loan to
collateral value limit.

        Loan Approval Authority and Underwriting.  All loans must be approved by
the Bank's loan  committee  and all loans over  $500,000 must be approved by the
Bank's Board of Directors.

        Upon  receipt  of  a  completed  loan  application  from  a  prospective
borrower,  a credit  report is  generally  ordered,  income  and  certain  other
information is verified and, if necessary,  additional financial  information is
requested.  An appraisal  from an  independent  fee appraiser of the real estate
intended to be used as security  for the  proposed  loan is  obtained.  The Bank
makes  construction/permanent  loans on individual  properties.  Funds  advanced
during  the  construction  phase  are  held  in a  loan-in-process  account  and
disbursed based upon various stages of completion in accordance with the results
of  inspection   reports  that  are  based  upon  physical   inspection  of  the
construction by a loan officer.  For real estate loans,  the Bank requires title
insurance.  Borrowers must also obtain fire and casualty insurance (for loans on
property  located in a flood zone,  flood  insurance is  required)  prior to the
closing of the loan.

        Loan  Commitments.  The Bank issues  written  commitments to prospective
borrowers on all approved real estate loans. Generally,  the commitment requires
acceptance  within 15 days of the date of issuance.  At September 30, 1996,  the
Bank had  $1,072,000 of  commitments  to cover  originations  and  $1,613,000 in
undisbursed funds for loans in process. In addition,  at September 30, 1996, the
Bank had $3,814,100 in loan  applications in process.  Management  believes that
virtually all of the Bank's commitments will be funded.

     Loans to One  Borrower.  SAIF-insured  savings  bank are subject to certain
lending  limitations to a single  borrower or group of borrowers.  Under current
law, the Bank's lending limits equals an

                                        5


<PAGE>



amount equal to 15% of unimpaired capital and unimpaired surplus on an unsecured
basis and an additional amount equal to 10% of unimpaired capital and unimpaired
surplus  if the  loan is  secured  by  readily  marketable  collateral.  Savings
associations are authorized to make loans to one borrower,  for any purpose,  in
an amount up to $500,000.  The Bank's  maximum  loan-to-one  borrower  limit was
approximately $1,000,000 at September 30, 1996.

        At  September  30,  1996,  the  Bank's  largest  amount  of loans to one
borrower were all performing residential real estate loans aggregating $850,000,
secured by real estate located in the Bank's market area.

Non-Performing and Problem Assets

        Loan  Delinquencies.  If a loan continues in a delinquent  status for 90
days past due and no repayment plan is in effect,  the account is turned over to
an attorney for  foreclosure.  Management  meets  regularly  to  determine  when
foreclosure  proceedings  should be initiated  and the borrower is notified when
foreclosure  has been commenced.  At September 30, 1996,  loans past due greater
than 90 days totalled $480,000.

        All balance  sheet  asset  accounts  and  supporting  subsidiary  ledger
accounts are analyzed by  management  of the Bank on a monthly basis in order to
identify  potential  classifiable  assets.  A general  valuation  allowance  was
established   by  the  Bank.   Assets   classified  as  "loss"  are   considered
uncollectible  and a specific  allowance for losses in the amount of 100% of the
portion  classified  as loss is  established  for such  assets or such amount is
charged against income.  Loans are generally placed on a non-accrual status when
the loan  becomes  more  than 90 days  delinquent  or when,  in the  opinion  of
management, the collection of additional interest is doubtful.  Interest accrued
and unpaid at the time a loan is placed on non-accrual status is charged against
interest income. Subsequent interest payments, if any, are either applied to the
outstanding  principal and interest  balance in accordance  with the contractual
terms of the loan.

        Non-Performing  Assets.  The  following  table  sets  forth  information
regarding  non-accrual  loans,  real estate owned, and certain other repossessed
assets and loans. As of the dates indicated,  the Bank had no loans  categorized
as troubled debt restructuring within the meaning of SFAS 15.

                                        6


<PAGE>
<TABLE>
<CAPTION>

                                                At September 30,
                                                ----------------
                                                1996         1995
                                                ----         ----
                                             (Dollars In Thousands)

Loans accounted for on a non-accrual basis:
Mortgage loans:
  Permanent loans secured by 1-4
<S>                                                 <C>         <C> 
    dwelling units.........................         $405        $ 82
  Commercial...............................           75          85
                                                     ---         ---
Total......................................         $480        $167
                                                     ===         ===

Accruing loans which are contractually past
  due 90 days or more:
Mortgage loans:
  Permanent loans secured by 1-4
    dwelling units.........................        $  --        $169
Non-mortgage loans:
  Consumer.................................           --          --
                                                    ----       -----
Total......................................        $  --        $169
                                                    ====         ===
Total non-accrual and accrual loans........         $480        $336
                                                     ===         ===
Real estate owned..........................        $  --      $   --
                                                    ====       =====
Other non-performing assets................        $  --      $   --
                                                    ====       =====
Total non-performing assets................        $  --        $336
                                                    ====         ===
Total non-accrual and accrual loans to
  net loans................................         .63%        .48%
                                                   ====        ====
Allowance for loan losses to total non-performing
  loans, including loans contractually past due
  90 days or more..........................       40.63%      46.67%
                                                  =====       =====
Total non-accrual and accrual loans to
  total assets.............................         .50%        .40%
                                                    ===        ====

Total non-performing assets to total assets         .50%        .40%
                                                    ===        ====
</TABLE>



        Interest  income that would have been recorded on loans accounted for on
a non-accrual  basis under the original  terms of such loans was  immaterial for
the year ended  September  30,  1996.  Amounts  included in the Bank's  interest
income for the year ended September 30, 1996 were, likewise, immaterial.

        Classified Assets. OTS regulations  provide for a classification  system
for problem assets of insured  institutions.  Under this classification  system,
problem  assets  of  insured   institutions  are  classified  as  "substandard,"
"doubtful," or "loss." An asset is considered  substandard if it is inadequately
protected by the current net worth and paying  capacity of the obligor or of the
collateral  pledged,  if any.  Substandard assets include those characterized by
the "distinct possibility" that the insured institution will sustain "some loss"
if the deficiencies are not corrected. Assets classified as doubtful have all of
the  weaknesses  inherent  in  those  classified  substandard,  with  the  added
characteristic  that the weaknesses  present make  "collection or liquidation in
full," on the basis of currently existing facts, conditions, and values, "highly
questionable  and  improbable."  Assets  classified as loss are those considered
"uncollectible"  and of such  little  value  that  their  continuance  as assets
without the  establishment  of a specific loss reserve is not warranted.  Assets
may be designated  "special mention" because of potential weakness that does not
currently warrant classification in one of the aforementioned categories.

                                        7


<PAGE>



        When  an  insured  institution   classifies  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets. When an insured  institution  classifies
problem assets as loss, it is required either to establish a specific  allowance
for losses equal to 100% of that portion of the asset so classified or to charge
off such amount. An institution's  determination as to the classification of its
assets and the amount of its  valuation  allowances  is subject to review by the
OTS, which may order the  establishment  of additional  general or specific loss
allowances.  A portion of general loss allowances  established to cover possible
losses  related to assets  classified as substandard or doubtful may be included
in determining an institution's  regulatory  capital,  while specific  valuation
allowances for loan losses generally do not qualify as regulatory capital.

        At September 30, 1996, the Bank had no assets  classified as doubtful or
loss,  $480,000 of assets classified as substandard loans and $333,000 of assets
classified as special mention.

        Foreclosed Real Estate.  Real estate acquired by the Bank as a result of
foreclosure or by deed in lieu of foreclosure is classified as real estate owned
until it is sold. When property is acquired, it is recorded at the fair value at
the date of foreclosure less estimated costs of disposition.

        Allowances  for Loan Losses.  It is  management's  policy to provide for
losses on unidentified loans in its loan portfolio.  A provision for loan losses
is charged to operations based on management's evaluation of the losses that may
be incurred in the Bank's loan  portfolio.  Such  evaluation,  which  includes a
review of all loans of which full  collectibility  of interest and principal may
not be reasonably assured, considers the Bank's past loan loss experience, known
and inherent  risks in the  portfolio,  adverse  situations  that may affect the
borrower's ability to repay, estimated value of any underlying  collateral,  any
existing guarantees,  past performance of the loan, available  documentation for
the loan, legal impediments to collection,  financial condition of the borrower,
and current economic conditions.

        Management  will  continue  to  review  the  entire  loan  portfolio  to
determine the extent, if any, to which further additional loss provisions may be
deemed  necessary.  There can be no assurance that the allowance for losses will
be adequate to cover losses which may in fact be realized in the future and that
additional provisions for losses will not be required.

                                        8


<PAGE>



        The following  table sets forth  information  with respect to the Bank's
allowance for loan losses at the dates indicated:

                                                          At September 30,
                                                        --------------------
                                                        1996            1995
                                                        ----            ----
                                                       (Dollars in Thousands)

Total loans outstanding..........................     $75,737         $70,028
                                                       ======          ======
Average loans outstanding........................     $73,582         $73,273
                                                       ======          ======

Allowance balances (at beginning of
  period)........................................         140              80
Provision (credit):
  Residential....................................          55              60
  Commercial real estate.........................          --              --
  Consumer.......................................          --              --
Net (Charge-offs) recoveries:
  Residential....................................          --              --
  Commercial real estate.........................          --              --
  Consumer.......................................          --              --
                                                         ----           -----
Allowance balance (at end of period).............       $ 195            $140
                                                         ====             ===
Allowance for loan losses as a percent
  of total loans outstanding.....................        .26%            .20%
Net loans charged off as a percent of
  average loans outstanding......................         --%             --%


Analysis of the Allowance for Loan Losses

        The  following  table  sets forth the  allocation  of the  allowance  by
category,  which  management  believes can be allocated  only on an  approximate
basis.  The  allocation  of the  allowance to each  category is not  necessarily
indicative  of future loss and does not  restrict  the use of the  allowance  to
absorb losses in any category.

                                        9


<PAGE>

<TABLE>
<CAPTION>
                                                                 September 30,
                                       --------------------------------------------------------------
                                                  1996                               1995
                                       ----------------------------       ---------------------------

                                                     % of Loans in                      % of Loans in
                                                     Each Category                      Each Category
                                       Amount        To Total Loans       Amount       To Total Loans
                                       ------        --------------       ------       --------------
                                                            (Dollars In Thousands)

Allocation of allowance for loan
losses(1)
Real estate:
<S>                                       <C>              <C>              <C>                <C>  
  Residential mortgage..............      $   90           88.75            $  84              92.14
  Commercial (real estate)..........          40            3.86               30               4.22
  Construction .....................          53            4.18               19               1.24
  Lines of credit...................           3             .61                3                .70
  Land/lot..........................           1             .99               --                .38
  Consumer..........................          --             .55               --                .92
  Investment in financing leases....           8            1.06                4                .40
                                            ----         -------             ----            -------
                                           $ 195          100.00%            $140             100.00%
                                            ====          ======              ===             ======
</TABLE>


Interest-Bearing Accounts

        At September 30, 1996, the Company held  $4,077,000 in interest  bearing
demand  deposits  in  other  financial  institutions,  principally  the  FHLB of
Atlanta. The Company maintains these accounts in order to maintain liquidity and
improve the interest-rate sensitivity of assets.

Mortgage-Backed Securities and Investment Activities

        General.  The Bank is required  under federal  regulations to maintain a
minimum  amount of liquid  assets which may be invested in specified  short-term
securities and certain other  investments.  The Bank has generally  maintained a
liquidity portfolio well in excess of regulatory requirements.  Liquidity levels
may  be  increased  or  decreased   depending  upon  the  yields  on  investment
alternatives  and upon  management's  judgment as to the  attractiveness  of the
yields then available in relation to other  opportunities and its expectation of
future yield levels,  as well as  management's  projections as to the short-term
demand for funds to be used in the Bank's loan origination and other activities.

        The Financial  Accounting  Standards Board ("FASB") has issued Statement
of  Financial  Accounting  Standards  ("SFAS") No. 115  "Accounting  for Certain
Investments  in Debt and Equity  Securities.  SFAS No. 115  requires the Bank to
classify all of its  investments  in debt and equity  securities  ("securities")
into three categories.  Debt securities which management has the positive intent
and ability to hold until  maturity are to be  classified  as  held-to-maturity.
Securities that are bought and held  principally for the purpose of selling them
in  the  near  term  are to be  classified  as  trading  securities.  All  other
securities are to be classified as available-for-sale securities.

        Unrealized  holding  gains and losses for trading  securities  are to be
included  in  earnings.  Unrealized  gains  and  losses  for  available-for-sale
securities  are to be excluded  from  earnings  and  reported  net of income tax
effect  as  a  separate  component  of  shareholders'   equity  until  realized.
Investments  classified as held to maturity are to be accounted for at amortized
cost.

                                       10


<PAGE>



        SFAS No. 115  requires  the Bank to account for a portion of its holding
of debt securities at market value (as opposed to amortized cost) and may result
in  greater  volatility  in its  earnings  and  capital  position.  It also  may
discourage investment in longer term debt securities,  which tend to have higher
yields than short term debt  securities,  and hence  reduce the  earnings of the
Bank.  No  securities  can be moved from a  particular  category  without  Board
approval.

        The Bank  anticipates  having the  ability to fund all of its  investing
activities from funds held on deposit at FHLB of Atlanta. The Bank will continue
to seek high  quality  investments  with short to  intermediate  maturities  and
duration from one to five years.

        The  Revenue  Reconciliation  Act of  1993  added a  Section  475 to the
Internal  Revenue Code.  Section 475 is a  mark-to-market  tax provision that is
different from SFAS No. 115. The term  "securities" in the tax statute  includes
not just traditional debt and equity securities,  but mortgages as well. Section
475  and  the  temporary   regulations   issued  thereunder  apply  to  "dealer"
institutions that regularly buy or sell more than a nominal amount of securities
in the ordinary course of a trade or business.  Section 475 requires the Bank to
identify securities held for sale within the meaning of the tax code and include
unrealized gains or losses on related security  transactions with its fiscal tax
return.  The tax reporting of unrealized gains and losses on securities held for
sale as defined by Section 475 and the related  regulations,  if different  from
SFAS No. 115, is a temporary  difference  as defined  under SFAS No. 109 and the
recording of a related deferred tax liability or asset will not affect generally
accepted accounting principles ("GAAP") basis net income. At September 30, 1996,
the Bank did not have any investments subject to Section 475.

Mortgage-Backed Securities

        To supplement lending activities,  in the past, the Bank has invested in
residential mortgage-backed securities.  Mortgage-backed securities can serve as
collateral  for  borrowings  (although the Bank has not used them as such ) and,
through repayments, as a source of liquidity.

        At September 30, 1996, the  mortgage-backed  securities  portfolio had a
fair value of $2,884,000 and an amortized cost of $3,022,000. Because the entire
portfolio is  classified  as held to maturity  (the Bank had no  mortgage-backed
securities classified as available for sale at September 30, 1995 and 1996), the
portfolio is recorded at amortized cost.

        The Bank's  mortgage-backed  securities are all issued by the Government
National Mortgage  Association  ("GNMA").  Expected  maturities will differ from
contractual maturities due to schedule repayments and because borrowers may have
the right to call or prepay obligations with or without prepayment penalties.

        GNMA is a government  agency within the  Department of Housing and Urban
Development  ("HUD")  which is  intended  to help  finance  government  assisted
housing programs.  GNMA guarantees the timely payment of principal and interest,
and GNMA securities are backed by the full faith and credit of the United States
Government.  Because  GNMA  was  established  to  provide  support  for low- and
middle-income  housing,  there are  limits  to the  maximum  size of loans  that
qualify for this  program.  GNMA limits its  maximum  loan size to $114,000  for
Veterans  Administration  ("VA")  loans and,  on  average,  $67,500  for Federal
Housing Administration ("FHA") loans.

        Mortgage-backed  securities represent a participation interest in a pool
of single-family or other type of mortgages, the principal and interest payments
on which  are  passed  from the  mortgage  originators,  through  intermediaries
(generally quasi-governmental agencies) that pool and repackage the

                                       11


<PAGE>



participation  interests in the form of  securities,  to  investors  such as the
Bank. Such quasi-governmental agencies, which guarantee the payment of principal
and interest to investors, primarily include FHLMC, GNMA and FNMA.

        Mortgage-backed  securities  typically are issued with stated  principal
amounts and the securities are backed by pools of mortgages that have loans with
interest  rates  that  are  within  a range  and have  varying  maturities.  The
underlying pool of mortgages can be composed of either  fixed-rate  mortgages or
adjustable-rate  mortgage  loans.   Mortgage-backed   securities  are  generally
referred to as mortgage participation certificates or pass-through certificates.
As a result,  the interest rate risk  characteristics  of the underlying pool of
mortgages, (i.e., fixed-rate or adjustable-rate) as well as prepayment risk, are
passed on to the certificate holder. The life of a mortgage-backed  pass-through
security  is  equal  to the life of the  underlying  mortgages.  Mortgage-backed
securities  issued  by  FHLMC,  FNMA,  and  GNMA  make  up  a  majority  of  the
pass-through certificates market.

Investment Activities

        Investment Portfolio.  The following table sets forth the carrying value
of the Company's investment securities portfolio,  short term investments,  FHLB
stock and mortgage-backed securities at the dates indicated.

                                                         At September 30,
                                                         ----------------
                                                        1996           1995
                                                        ----           ----
                                                          (In Thousands)

Investment Securities:
U.S. Government Securities........................      $    --       $   498
Federal National Mortgage Association bonds.......        1,500            --
Federal Home Loan Bank bonds......................        1,000            --
                                                          -----         -----
   Total Investment Securities....................       $2,500        $  498
                                                          =====         =====

Interest Bearing Deposits in Other Banks..........       $4,077        $6,809
Federal Funds Sold................................        2,428         1,042
Securities Purchased under agreements to resell...        2,000            --
Mortgage-Backed Securities........................        3,022           540
FHLB Stock........................................          683           680
                                                          -----         -----
   Total .........................................      $12,210        $9,071
                                                         ======         =====




                                       12


<PAGE>



        The  following  table sets forth  information  regarding  the  scheduled
maturities,  carrying  values,  market value and weighted average yields for the
Bank's  investment  securities  portfolio at September  30, 1996.  The following
table does not take into  consideration  the effects of scheduled  repayments or
the effects of possible prepayments.
<TABLE>
<CAPTION>

                                                            As of September 30, 1996
                    ----------------------------------------------------------------------------------------------------------------

                                           More than One to  More than Five to Ten
                                           ----------------  ---------------------
                    One Year or Less       Five Years             Years           More than Ten Years   Total Investment Securities
                    ----------------       ----------             -----           -------------------   ---------------------------
                    Carrying Average Carrying  Average   Carrying     Average   Carrying     Average  Carrying  Average    Market
                      Value   Yield    Value    Yield     Value        Yield     Value        Yield     Value     Yield     Value
                      -----   -----    -----    -----     -----        -----     -----        -----     -----     -----     -----
                                                               (Dollars in Thousands)

U.S. Government
<S>                   <C>      <C>     <C>      <C>     <C>             <C>     <C>           <C>    <C>          <C>    <C>    
 Obligations.......   $ --      --%    $ --      --%    $      --         --%   $       --       --% $       --      --% $        --
U.S. Agency 
  Obligations......     --      --       --      --      1,500,000      7.42     1,000,000     7.15   2,500,000    7.31   2,385,000
Municipal 
  Obligations......     --      --       --      --            --         --            --       --          --      --          --
Corporate 
  Notes and Bonds..     --      --       --      --            --         --            --       --          --      --          --
Other Securities...     --      --       --      --            --         --            --       --          --      --          --
                      ----     ---     ----    ----     ----------      ----    ----------     ----        ----    ----        ----
     Total.........   $ --      --%    $  --     --%    $1,500,000      7.42%   $1,000,000     7.15% $2,500,000    7.31%  $2,385,000
                      ====     ===     ====    ====     ==========      ====    ==========     ====   =========    ====    =========

</TABLE>



                                       13


<PAGE>

Sources of Funds

        General.  Deposits are the major external source of the Bank's funds for
lending and other investment purposes.  The Bank derives funds from amortization
and prepayment of loans and, to a much lesser  extent,  maturities of investment
securities,  borrowings,  mortgage-backed  securities and operations.  Scheduled
loan principal repayments are a relatively stable source of funds, while deposit
inflows and  outflows  and loan  prepayments  are  significantly  influenced  by
general interest rates and market  conditions.  The Bank had no FHLB advances at
September 30, 1996.

        Deposits.  Consumer and  commercial  deposits are attracted  principally
from within the Bank's  primary  market area through the offering of a selection
of  deposit  instruments  including  regular  savings  accounts,   money  market
accounts,  and term  certificate  accounts.  The Bank also offers IRA  accounts.
Deposit account terms vary according to the minimum balance  required,  the time
period the funds must  remain on deposit,  and the  interest  rate,  among other
factors. At September 30, 1996, the Bank had no brokered accounts.

        The following  table sets forth the average  balances and interest rates
based on month-end balances for  interest-bearing  non-certificate  deposits and
time deposits as of the dates indicated.
<TABLE>
<CAPTION>

                                                   Year Ended September 30,
                    --------------------------------------------------------------------------------------
                                       1996                                       1995
                    --------------------------------------------------------------------------------------
                       Interest-Bearing                          Interest-bearing
                      Non-Certificate             Time            Non-Certificate           Time
                           Deposits             Deposits             Deposits             Deposits
                           --------             --------             --------             --------

                                                    (Dollars in Thousands

<S>                          <C>                  <C>                   <C>                  <C>    
Average Balance....          $27,426              $44,924               $29,317              $46,697
Average Rate.......            2.89%                5.75%                 2.85%                5.37%

</TABLE>

        Certificates of Deposit. The following table indicates the amount of the
Bank's  certificates  of deposit of  $100,000  or more by time  remaining  until
maturity as of September 30, 1996.

                                                             Certificates
                                                              of Deposits
                                                              -----------
Maturity Period                                             (In Thousands)
---------------
Within three months.....................................        $  529
Three through six months................................           904
Six through twelve months...............................           229
Over twelve months......................................         1,732
                                                                ------
                                                                $3,394
                                                                ======

                                       14


<PAGE>

Borrowings

        The Bank may obtain  advances from the FHLB of Atlanta to supplement its
supply of  lendable  funds.  Advances  from the FHLB of  Atlanta  are  typically
secured by a pledge of the Bank's  stock in the FHLB of Atlanta and a portion of
the Bank's  first  mortgage  loans and certain  other  assets.  Each FHLB credit
program has its own interest rate, which may be fixed or variable,  and range of
maturities.  The Bank, if the need arises,  may also access the Federal  Reserve
Bank  discount  window to  supplement  its supply of lendable  funds and to meet
deposit withdrawal  requirements.  At September 30, 1996 and September 30, 1995,
the Bank had no borrowings from the FHLB of Atlanta.

                                                          During the Year Ended
                                                              September 30,
                                                          ---------------------
                                                           1996           1995
                                                           ----           ----
                                                             (In Thousands)

Maximum amount of borrowings outstanding at any 
month end:
  Advances from Federal Home Loan Bank.................   $2,000         $3,000


                                                          For the Year Ended
                                                             September 30,
                                                          ------------------
                                                           1996           1995
                                                           ----           ----
                                                            (In Thousands)

Approximate average short-term borrowings outstanding
with respect to:
  Advances from Federal Home Loan Bank.................    $  1,321      $  583
  Approximate weighted average rate paid on: (1)
  Advances from Federal Home Loan Bank.................       5.77%       6.06%



Subsidiaries Activities

        The Bank is  permitted  to invest up to 2% of its assets in the  capital
stock of, or secured or unsecured  loans to,  subsidiary  corporations,  with an
additional  investment  of 1% of  assets  when  such  additional  investment  is
utilized primarily for community  development  purposes.  At September 30, 1996,
the Bank had investments in two service corporation, incorporated under Maryland
law, Bankers Affiliate and Mapleleaf Mortgage Corporation.

        Bankers Affiliate (formerly named Cash, Inc.) - Bankers Affiliate ("BA")
was formed in April 1983 as a service corporation for the purpose of originating
consumer  loans.  BA is  equally  owned by the Bank and two other  local  thrift
institutions.  At September 30, 1996, the Bank's investment totalled $25,000 and
had a loan payable from this subsidiary of $2,800,000.

        Mapleleaf Mortgage  Corporation - Mapleleaf Mortgage Corporation ("MMC")
was  formed  in June 1996 and is a  wholly-owned  subsidiary  of the  Bank.  The
purpose of MMC is to engage in mortgage brokerage  activities.  At September 30,
1996, the Bank's investment totalled $50,000.

                                       15


<PAGE>

Employees

     At September 30, 1996 the Bank had 23 full-time and 11 part-time employees.
None of the Bank's employees are represented by a collective  bargaining  group.
The Bank believes that its relationship with its employees is good.

Regulation

        Set forth below is a brief  description of certain laws which related to
the regulation of the Company and the Bank. The description  does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.

Company Regulation

        General.  The  Company is a unitary  savings  and loan  holding  company
subject to regulatory  oversight by the OTS. As such, the Company is required to
register  and  file  reports  with  the OTS and is  subject  to  regulation  and
examination by the OTS. In addition,  the OTS has enforcement authority over the
Company and its non-savings association  subsidiaries,  should such subsidiaries
be formed,  which also permits the OTS to restrict or prohibit  activities  that
are determined to be a serious risk to the subsidiary savings association.  This
regulation  and  oversight  is  intended  primarily  for the  protection  of the
depositors of the Bank and not for the benefit of stockholders of the Company.

        Qualified  Thrift  Lender  Test.  As a unitary  savings and loan holding
company, the Company generally is not subject to activity restrictions, provided
the Bank  satisfies  the Qualified  Thrift  Lender  ("QTL") test. If the Company
acquires  control of another savings  association as a separate  subsidiary,  it
would become a multiple savings and loan holding company,  and the activities of
the  Company  and any of its  subsidiaries  (other  than the  Bank or any  other
SAIF-insured   savings   association)   would  become  subject  to  restrictions
applicable to bank holding  companies unless such other  associations  each also
qualify  as a QTL  and  were  acquired  in a  supervisory  acquisition.  See  "-
Regulation of the Bank Qualified Thrift Lender Test."

Regulation of the Bank

        General. As a federally chartered, SAIF-insured savings association, the
Bank is  subject  to  extensive  regulation  by the OTS  and the  FDIC.  Lending
activities and other  investments must comply with various federal statutory and
regulatory   requirements.   The  Bank  is  also  subject  to  certain   reserve
requirements promulgated by the Federal Reserve Board.

        The OTS, in conjunction with the FDIC,  regularly  examines the Bank and
prepares  reports for the  consideration of the Bank's Board of Directors on any
deficiencies that are found in the Bank's  operations.  The Bank's  relationship
with its depositors and borrowers is also regulated to a great extent by federal
and state law,  especially in such matters as the ownership of savings  accounts
and the form and content of the Bank's mortgage documents.

        The Bank  must file  reports  with the OTS and the FDIC  concerning  its
activities  and  financial  condition,   in  addition  to  obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended primarily for

                                       16


<PAGE>



the protection of the SAIF and depositors.  The regulatory  structure also gives
the  regulatory  authorities  extensive  discretion  in  connection  with  their
supervisory  and  enforcement  activities and  examination  policies,  including
policies with respect to the  classification  of assets and the establishment of
adequate  loan  loss  reserves  for  regulatory  purposes.  Any  change  in such
regulations, whether by the OTS, the FDIC, or the Congress could have a material
adverse impact on the Company, the Bank, and their operations.

        Insurance of Deposit  Accounts.  The Bank's deposit accounts are insured
by the SAIF to a maximum of $100,000 for each insured  member (as defined by law
and  regulation).  If an institution has no tangible  capital,  the FDIC has the
authority,  should it initiate proceedings to terminate an institution's deposit
insurance,  to suspend the  insurance  of any such  institution.  However,  if a
savings association has positive capital when it includes qualifying  intangible
assets,  the FDIC cannot  suspend  deposit  insurance  unless  capital  declines
materially, the institution fails to enter into and remain in compliance with an
approved  capital plan, or the  institution is operating in an unsafe or unsound
manner.

        Regardless of an institution's capital level,  insurance of deposits may
be  terminated  by the FDIC upon a finding that the  institution  has engaged in
unsafe or unsound  practices,  is in an unsafe or unsound  condition to continue
operations,  or has violated any  applicable  law,  regulation,  rule,  order or
condition imposed by the FDIC or the institution's  primary regulator.  The FDIC
may also  prohibit  an  insured  depository  institution  from  engaging  in any
activity  the  FDIC  determines  to  pose a  serious  threat  to the  SAIF.  The
management of the Bank is unaware of any practice,  condition, or violation that
might lead to termination of its deposit insurance.

        The FDIC  charges an annual  assessment  for the  insurance  of deposits
based on the risk a particular  institution poses to its deposit insurance fund.
Under this system,  a savings  association pays within a range of 23 cents to 31
cents per $100 of  domestic  deposits,  depending  upon the  institution's  risk
classification.  This risk  classification is based on an institution's  capital
group and supervisory subgroup assignment.  In addition,  the FDIC is authorized
to increase such deposit insurance rates on a semi-annual basis if it determines
that such  action is  necessary  to cause the  balance  in the SAIF to reach the
designated  reserve ratio of 1.25% of SAIF-insured  deposits within a reasonable
period of time. The SAIF was substantially underfunded at September 30, 1996. In
addition,  the FDIC may  impose  special  assessments  on SAIF  members to repay
amounts borrowed from the U.S. Treasury or for any other reason deemed necessary
by the FDIC. The Bank's federal deposit  insurance  premium expense for the year
ended September 30, 1996 amounted to approximately  $680,000. By comparison,  at
September 30, 1996, members of the BIF were required to pay substantially lower,
or virtually no, federal deposit insurance premiums.

        Effective  September  30,  1996,  federal  law was  revised to mandate a
one-time  special  assessment on SAIF members such as the Bank of  approximately
 .657% of deposits held on March 31, 1995.  The Bank recorded a $506,000  pre-tax
expense for this  assessment  at September  30,  1996,  and such  assessment  is
payable on November  27,  1996.  Beginning  January 1, 1997,  deposit  insurance
assessments for SAIF members are expected to be reduced to  approximately  .064%
of deposits on an annual basis through the end of 1999. During this same period,
BIF  members  are  expected  to be  assessed  approximately  0.13% of  deposits.
Thereafter, assessments for BIF and SAIF members should be the same and the SAIF
and BIF may be merged. It is expected that these continuing assessments for both
SAIF and BIF members  will be used to repay  outstanding  Financing  Corporation
bond obligations.  Assuming these changes occur,  beginning January 1, 1997, the
rate of deposit insurance assessed the Bank will decline by approximately 70%.

                                       17


<PAGE>

        Regulatory Capital Requirements. OTS capital regulations require savings
institutions to meet three capital standards: (1) tangible capital equal to 1.5%
of total adjusted assets,  (2) a leverage ratio (core capital) equal to at least
3% of total adjusted assets, and (3) a risk-based  capital  requirement equal to
8.0% of total risk-weighted assets.

        The following table sets forth the Bank's regulatory capital position at
September 30, 1996, as compared to the minimum regulatory  capital  requirements
imposed on the Bank by the OTS at that date.

                                                               Percent of
                                                Amount       Adjusted Assets
                                                ------       ---------------
                                                  (Dollars in Thousands)

GAAP Capital........................           $15,331            16.35%
Tangible Capital:
  Regulatory requirement............            $1,407             1.50%
  Actual capital....................            15,331             16.35
                                                ------             -----
      Excess........................           $13,924             14.85%
                                                ======             =====
Core Capital:
  Regulatory requirement............            $2,814             3.00%
  Actual Capital....................            15,331             16.35
                                                ------             -----
     Excess.........................           $12,517             13.35%
                                                ======             =====
Risk-Based Capital:
  Regulatory requirement............           $ 3,880             8.00%
  Actual capital....................            15,527             32.00
                                                ------             -----
     Excess.........................           $11,647             24.00%
                                                ======             =====


        Dividend and Other Capital  Distribution  Limitations.  OTS  regulations
require  the  Bank  to  give  the OTS 30 days  advance  notice  of any  proposed
declaration of dividends to the Company, and the OTS has the authority under its
supervisory powers to prohibit the payment of dividends to the Company.

        OTS regulations  impose  limitations  upon all capital  distributions by
savings  institutions,  such  as  cash  dividends,  payments  to  repurchase  or
otherwise acquire its shares, payments to shareholders of another institution in
a cash-out  merger and other  distributions  charged against  capital.  The rule
establishes  three tiers of  institutions,  based primarily on an  institution's
capital  level.  An  institution  that  exceeds  all  fully  phased-in   capital
requirements  before  and  after  a  proposed  capital   distribution  ("Tier  1
institution")  and has not  been  advised  by the OTS that it is in need of more
than the normal  supervision can, after prior notice but without the approval of
the OTS, make capital  distributions during a calendar year equal to the greater
of (i) 100% of its net income to date during the  calendar  year plus the amount
that would reduce by one-half its "surplus  capital  ratio" (the excess  capital
over its fully phased-in capital  requirements) at the beginning of the calendar
year,  or (ii) 75% of its net income over the most recent four  quarter  period.
Any additional capital  distributions  require prior regulatory approval.  As of
September 30, 1996, the Bank was a Tier 1  institution.  In the event the Bank's
capital fell below its fully  phased-in  requirement or the OTS notified it that
it was in need of more than  normal  supervision,  the  Bank's  ability  to make
capital distributions could be restricted. In addition, the OTS could prohibit a
proposed  capital  distribution  by any  institution,  which would  otherwise be
permitted by the regulation,  if the OTS determines that such distribution would
constitute an unsafe or unsound practice.

                                       18


<PAGE>



        Qualified Thrift Lender Test. Savings institutions must meet a QTL test.
If the Bank  maintains  an  appropriate  level of Qualified  Thrift  Investments
(primarily  residential  mortgages and related  investments,  including  certain
mortgage-related  securities) ("QTIs") and otherwise qualifies as a QTL, it will
continue  to enjoy  full  borrowing  privileges  from the FHLB of  Atlanta.  The
required  percentage of QTIs is 65% of portfolio  assets  (defined as all assets
minus  intangible  assets,  property used by the  institution  in conducting its
business and liquid  assets equal to 10% of total  assets).  Certain  assets are
subject to a  percentage  limitation  of 20% of portfolio  assets.  In addition,
savings associations may include shares of stock of the FHLBs, FNMA and FHLMC as
qualifying  QTIs. An  association  must be in compliance  with the QTL test on a
monthly basis in nine out of every 12 months. As of September 30, 1996, the Bank
was in compliance  with its QTL  requirement  with 89% of its assets invested in
QTIs.

        Federal  Home  Loan  Bank  System.  The Bank is a member  of the FHLB of
Atlanta,  which is one of 12 regional FHLBs that  administers the home financing
credit  function  of  savings  associations.  Each FHLB  serves as a reserve  or
central bank for its members within its assigned region.  It is funded primarily
from  proceeds  derived from the sale of  consolidated  obligations  of the FHLB
System.  It makes loans to members (i.e.,  advances) in accordance with policies
and procedures established by the Board of Directors of the FHLB.

        As a member,  the Bank is required to purchase and maintain stock in the
FHLB of  Atlanta  in an  amount  equal to at least  1% of its  aggregate  unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the beginning of each year.

        Federal  Reserve   System.   The  Federal  Reserve  Board  requires  all
depository  institutions to maintain  non-interest bearing reserves at specified
levels against their transaction  accounts (primarily  checking,  NOW, and Super
NOW checking accounts) and non-personal time deposits.  The balances  maintained
to meet the reserve  requirements  imposed by the Federal  Reserve  Board may be
used to satisfy  the  liquidity  requirements  that are  imposed by the OTS.  At
September 30, 1996, the Bank was in compliance  with these Federal Reserve Board
requirements.

Item 2. Description of Property
-------------------------------

(a)     Properties.

        The Bank operates from its main office and four branch offices.

          Location                          Leased or Owned   
          --------                          ---------------
          
          MAIN OFFICE:
            1505 York Road                      Owned
            Lutherville, Maryland
            21093
          
          HAMILTON OFFICE:          
            4228 Harford Road                   Owned
            Baltimore, Maryland  21214
          
                                       19


<PAGE>

          WOODLAWN OFFICE:         
            Gwynn Oak Avenue and             Leased until
            Windsor Mill Road                December 1997          
            Baltimore, Maryland  21207
          
          ELLICOTT CITY OFFICE:          
            9396 Baltimore National Pike     Leased until
            Ellicott City, Maryland            May 1997          
            21042
          
          GOLDEN RING OFFICE:
          8767 K Philadelphia Road           Leased until
          Baltimore, Maryland  21237          June 1997

(b)     Investment Policies.

     See  "Item 1.  Business"  above  for a general  description  of the  Bank's
investment  policies and any  regulatory  or Board of  Directors'  percentage of
assets  limitations  regarding certain  investments.  The Bank's investments are
primarily acquired to produce income,  and to a lesser extent,  possible capital
gain.

     (1)  Investments  in Real Estate or Interests in Real Estate.  See "Item 1.
Business  - Lending  Activities  and -  Regulation  of the  Bank,"  and "Item 2.
Description of Property."

     (2) Investments in Real Estate  Mortgages.  See "Item 1. Business - Lending
Activities and - Regulation of the Bank."

     (3) Investments in Securities of or Interests in Persons  Primarily Engaged
in Real Estate  Activities.  See "Item 1.  Business - Lending  Activities  and -
Regulation of the Bank."

(c) Description of Real Estate and Operating Data.

    Not Applicable.

Item 3. Legal Proceedings
-------------------------

        There are various  claims and  lawsuits in which the Company or the Bank
are  periodically  involved,  such as  claims  to  enforce  liens,  condemnation
proceedings  on properties in which the Bank holds  security  interests,  claims
involving  the making and  servicing of real  property  loans,  and other issues
incident to the Bank's business. In the opinion of management,  no material loss
is expected from any of such pending claims or lawsuits.

Item  4.  Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------

        No matter was submitted to a vote of security  holders during the fourth
quarter of the fiscal year.

                                       20


<PAGE>

                                     PART II

Item  5.  Market for Common Equity and Related Stockholder Matters
------------------------------------------------------------------

        The information  contained under the section  captioned "Market Price of
the Common Stock" on page 3 of the Company's Annual Report to Stockholders for
the fiscal year ended September 30, 1996 (the "Annual Report"),  is incorporated
herein by reference.

Item  6.  Management's Discussion and Analysis or Plan of Operation
-------------------------------------------------------------------

        The  information  contained  in  the  section  captioned   "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  on
pages 5 to 18 of the Annual Report is incorporated herein by reference.

Item  7.  Financial Statements
------------------------------

        The  Registrant's   financial   statements  listed  under  Item  13  are
incorporated herein by reference.

Item  8.  Changes  in and  Disagreements  with  Accountants  On  Accounting  and
--------------------------------------------------------------------------------
Financial Disclosure.
---------------------

        Not applicable.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
--------------------------------------------------------------------------------
with Section 16(a) of the Exchange Act.
---------------------------------------

        The information  contained under the sections  captioned  "Section 16(a)
Beneficial Ownership Reporting  Compliance" and "I - Information with Respect to
Nominees for Director,  Directors Continuing in Office, and Executive Officers -
Election  of  Directors"  and  "  -  Biographical  Information"  in  the  "Proxy
Statement" is incorporated herein by reference.

Item 10.  Executive Compensation
--------------------------------

        The  information  contained  in  the  section  captioned  "Director  and
Executive Officer Compensation" in the Proxy Statement is incorporated herein by
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

        (a)    Security Ownership of Certain Beneficial Owners

               Information  required  by this  item is  incorporated  herein  by
               reference  to the  first  chart  in the  section  captioned  "I -
               Information  with  Respect to Nominees  for  Director,  Directors
               Continuing  in  Office,  and  Executive  Officers"  in the  Proxy
               Statement.


                                       21


<PAGE>


        (b)    Security Ownership of Management

               Information  required  by this  item is  incorporated  herein  by
               reference  to the  first  chart  in the  section  captioned  "I -
               Information  with  Respect to Nominees  for  Director,  Directors
               Continuing  in  Office,  and  Executive  Officers"  in the  Proxy
               Statement.

        (c)    Management of the Registrant knows of no arrangements,  including
               any pledge by any person of  securities  of the  Registrant,  the
               operation of which may at a subsequent date result in a change in
               control of the Registrant.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

        The  information  required  by  this  item  is  incorporated  herein  by
reference  to  the  section   captioned   "Certain   Relationships  and  Related
Transactions" in the Proxy Statement.

Item 13. Exhibits, List, and Reports on Form 8-K
------------------------------------------------

        (a)    The following documents are filed as a part of this report:

               1.  The  following   financial   statements  and  the  report  of
independent  accountants of the Registrant  included in the Registrant's  Annual
Report to  Stockholders  for the  fiscal  year  ending  September  30,  1996 are
incorporated herein by reference and also in Item 7 hereof.

        Report of Independent Auditors

        Consolidated  Statements of Financial Condition as of September 30, 1995
and 1996.

        Consolidated  Statements of Operations for the Years Ended September 30,
1995 and 1996.

        Consolidated  Statements  of  Retained  Earnings  for  the  Years  Ended
September 30, 1995 and 1996.

        Consolidated  Statements of Cash Flows for the Years Ended September 30,
1995 and 1996.

        Notes to Consolidated Financial Statements.

               2. Other than as set forth below,  Financial  Statement Schedules
for which  provision is made in the  applicable  accounting  regulations  of the
Securities  and Exchange  Commission  ("SEC") are not required under the related
instructions or are inapplicable and therefore have been omitted.

               3. The  following  exhibits  are  included  in  this  Report  or 
incorporated herein by reference:

               (a)    List of Exhibits:

                3(i)  Articles of Incorporation of WHG Bancshares Corporation *

                3(ii) Bylaws of WHG Bancshares Corporation *


                                       22


<PAGE>


               10.1   Employment Agreement with Peggy J. Stewart *

               10.2   Severance Agreement with Robin L. Taylor *

               10.3   Severance Agreement with Diana Rohrback *

               10.4   Severance Agreement with Nicholas Tracht *

               10.5   1996 Stock Option Plan **

               10.6   Management Stock Bonus Plan and Trust Agreement **

               13     Annual  Report  to  Stockholders for the fiscal year ended
                      September 30, 1996

               21     Subsidiaries of the Registrant

               27     Financial Data Schedule ***

---------------------
*      Incorporated by reference to the registration statement on Form S-1 (File
       No. 33-80487) declared effective by the SEC on February 7, 1996.

**     Incorporated  by reference to the proxy statement for the special meeting
       of stockholders filed with the SEC on August 27, 1996.

***    Only included in electronic filing.

               (b)    Not applicable



                                       23


<PAGE>



                                   SIGNATURES

        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its   behalf   by   the   undersigned,   thereunto   duly   authorized   as   of
December 26, 1996.

                             WHG BANCSHARES CORPORATION

                             By: /s/ Peggy J. Stewart
                                 ----------------------------
                                 Peggy J. Stewart
                                 President, Chief Executive Officer and Director
                                 (Duly Authorized Representative)

        Pursuant to the requirement of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated as of December 26,  1996.


/s/ Peggy J. Stewart                           /s/ Robin L. Taylor
----------------------------------             -----------------------------
Peggy J. Stewart                               Robin L. Taylor
President, Chief Executive Officer             Controller
  and Director                                 (Principal Accounting Officer)
(Principal Executive Officer)

/s/ John E. Lufburrow                          /s/ Robin L. Taylor
----------------------------------             -----------------------------
John E. Lufburrow                              Robin L. Taylor
Chairman of the Board                          (Principal Financial Officer)

/s/ Philip W. Chaser, Jr.                      /s/ Herbert A. Davis
----------------------------------             -----------------------------
Philip W. Chase, Jr.                           Herbert A. Davis
Director                                       Director


<PAGE>


/s/ Urban P. Francis, Jr.                      /s/ D. Edward Lauterbach, Jr.
----------------------------------             -----------------------------
Urban P. Francis, Jr.                          D. Edward Lauterbach, Jr.
Director                                       Director

/s/ Hugh P. McCormick                          /s/ Edwin C. Muhly, Jr.
----------------------------------             -----------------------------
Hugh P. McCormick                              Edwin C. Muhly, Jr.
Director                                       Director

/s/ August J. Seifer                           /s/ Herbert W. Spath
----------------------------------             -----------------------------
August J. Seifert                              Herbert W. Spath
Director                                       Director