BCSB BANKCORP, INC.








         [LOGO]











                                                      2003 ANNUAL REPORT

<PAGE>



BCSB BANKCORP, INC.
--------------------------------------------------------------------------------

     BCSB Bankcorp,  Inc. (the "Company")  serves as the holding company for its
wholly owned  subsidiary,  Baltimore County Savings Bank,  F.S.B.  (the "Bank").
Baltimore  County  Savings Bank,  M.H.C.  (the "MHC"),  a federal mutual holding
company,  owns 63.9% of the Company's  outstanding common stock. The Company has
no  significant  assets other than its  investment  in the Bank.  The Company is
primarily  engaged in the business of directing,  planning and  coordinating the
business activities of the Bank.

     The Bank is a  federal  savings  bank  operating  through  sixteen  banking
offices serving the Baltimore Metro area. The Bank's principal business consists
of  attracting  deposits from the general  public and  investing  these funds in
loans secured by first mortgages on owner-occupied,  single-family residences in
the Bank's  market  area,  and, to a lesser  extent,  other real  estate  loans,
consisting  of  construction  loans,  single-family  rental  property  loans and
commercial real estate loans, and consumer loans, particularly automobile loans.
The Bank derives its income  principally from interest earned on loans and, to a
lesser  extent,  interest  earned on  mortgage-backed  securities and investment
securities and other income. Funds for these activities are provided principally
by  operating  revenues,  deposits  and  repayments  of  outstanding  loans  and
investment securities and mortgage-backed securities.

MARKET INFORMATION
--------------------------------------------------------------------------------

     The  Company's  common stock began  trading  under the symbol "BCSB" on the
Nasdaq  National  Market System on July 9, 1998.  There are currently  5,885,593
shares of the common stock outstanding and approximately  1040 holders of record
of the  common  stock.  Following  are the high and low bid  prices,  by  fiscal
quarter,  as reported on the Nasdaq  National  Market  System during the periods
indicated, as well as dividends paid on the common stock during each quarter.
<TABLE>
<CAPTION>

                                                       High              Low            Dividends Per Share
                                                       ----              ---            -------------------
        <S>                                            <C>                <C>                   <C>
         Fiscal 2003
         -----------
         First quarter.............................  $  14.20          $ 12.20                $  .125
         Second quarter............................     13.78            12.69                   .125
         Third quarter.............................     16.39            13.00                   .125
         Fourth quarter............................     17.50            15.32                   .125

         Fiscal 2002
         -----------
         First quarter.............................  $  10.250         $  9.251              $   .125
         Second quarter............................     10.549            9.350                  .125
         Third quarter.............................     13.450           10.250                  .125
         Fourth quarter............................     13.200           11.640                  .125

</TABLE>

     The stated high and low bid prices  reflect  inter-dealer  prices,  without
retail  mark-up,   mark-down  or  commission,   and  may  not  represent  actual
transactions.

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

BCSB Bankcorp, Inc...........................................................(i)
Market Information...........................................................(i)
Letter to Stockholders........................................................1
Selected Consolidated Financial and Other Data................................2
Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................................4
Consolidated Financial Statements...........................................F-1
Corporate Information..........................................Inside Back Cover

<PAGE>
                        [BCSB BANKCORP, INC. LETTERHEAD]

                                December 1, 2003

Dear Fellow Stockholders, Depositors, and Friends:

     Historically  low interest  rates were the main story behind our  financial
results in the fiscal year ended September 30, 2003.  Those of you borrowing for
any reason in the last twelve months were happy, yet those of you saving for the
future  wanted  to see  higher  rates.  While the bank  would  like to make both
constituencies  happy,  our financial  performance is based on the interest rate
difference between borrowers and depositors.

     The low rates kept our spread at or near all time lows  throughout the year
(and into the new year starting in October). Yields on loans were under downward
pressure  throughout  the year as evidenced by a record  amount of  refinancing.
Long-term  loan  originations  increased  52% over the prior year's  production,
although the loan portfolio  decreased by $31.5 million.  This was partly caused
by selling to the secondary market long-term  mortgages to mitigate the interest
rate risk of holding  these  loans.  Assets  continue  to rise,  increasing  $81
million  during the year.  Investments   and mortgage   backed  securities  were
purchased with all these funds.

     As rates leveled off and moved upward  slightly in the summer,  the bank is
well  positioned for a rising rate market.  Many of our loans,  mortgage  backed
securities and  investments  are considered  short term. As payments are made or
securities mature, the proceeds will re-price at a faster pace than if the terms
had been longer.  We took advantage of prevailing  interest rates and raised $10
million in capital  through the issuance of trust  preferred  securities  on the
last day of the fiscal year.  These funds are  available  for general  corporate
purposes.

     Several  other  significant  events  occurred  during the year. In November
2002, the data processing  operations of the former  Heritage  Savings Bank loan
and deposit accounts combined with our existing systems.  This was the last step
in the merger  announced  in early 2002 and settled on June 24,  2002.  In March
2003, we announced plans to open our 17th office in the Honeygo Village Shopping
Center.  We expect to break ground in early 2004 and plan to open in the summer.
Throughout the year we implemented  changes to our new loan and deposit  account
procedures  to comply with the various  requirements  of the Patriot  Act, a law
passed to help the government track terrorists and their funding.

     You will read about the financial  performance of your company on the pages
that follow.  A profitable,  safe and sound financial  condition is the goal for
which we strive.  By  achieving  that,  we assure the  ability to make loans and
competitive  deposit  accounts  available to our customers.  This will make your
investment in the bank successful.

                                            Very truly yours,

                                            /s/ Gary C. Loraditch

                                            Gary C. Loraditch
                                            President


<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
--------------------------------------------------------------------------------


SELECTED CONSOLIDATED FINANCIAL CONDITION DATA
<TABLE>
<CAPTION>

                                                                              At September 30,
-------------------------------------------------------------------------------------------------------------------
                                                              2003       2002         2001      2000         1999
                                                           ---------- ----------   ---------  --------- ----------
<S>                                                             <C>      <C>          <C>        <C>      <C>
                                                                                   (In thousands)

Total assets........................................      $ 668,198  $587,065     $390,883    $325,879  $298,302
Loans receivable, net...............................        365,055   396,617      268,010     241,520   215,383
Cash................................................         11,032     6,468        4,056       6,571     5,977
Interest-bearing deposits in other banks............         11,288    15,808        7,953       5,256     8,651
Federal funds sold..................................            988     3,527        3,313         455       449

Investment securities:
    Available for sale..............................        121,290    45,083       23,969          --        --
    Held to maturity................................          2,500     4,496       18,494      41,158    35,232
Mortgage-backed securities:
    Available for sale..............................        116,204    60,411       11,442          --        --
    Held to maturity................................         18,394    33,691       41,655      19,824    23,500
FHLB stock..........................................          3,305     3,940        1,834       1,834     1,650
Deposits............................................        551,929   498,785      325,786     268,882   233,365
FHLB advances.......................................         32,268    26,968       17,800       9,500    16,000
Trust Preferred Securities..........................         22,500    12,500           --          --        --
Stockholders' equity - substantially restricted.....         44,768    45,306       42,730      43,343    45,280

</TABLE>
<TABLE>
<CAPTION>

SELECTED CONSOLIDATED OPERATIONS DATA
                                                                              At September 30,
-------------------------------------------------------------------------------------------------------------------
                                                              2003       2002         2001      2000         1999
                                                           ---------- ----------   ---------- ---------  ----------
<S>                                                             <C>     <C>           <C>         <C>       <C>
                                                                                   (In thousands)

Interest income.....................................      $  33,167   $ 28,480     $ 24,348     $21,480   $19,396
Interest expense....................................         16,107     14,946       14,240      11,757     9,780
                                                          ---------   --------     --------       ------  -------
Net interest income before
   provision for loan losses........................         17,060     13,534       10,108       9,723     9,616
Provision for loan losses...........................          1,359        509          332         162       339
                                                          ---------   --------     --------       -----   -------

Net interest income.................................         15,701     13,025        9,776       9,561     9,277
Other income........................................          1,587      1,053          738         530       547
Non-interest expense................................         15,336     11,363       10,330       8,967     7,482
                                                          ---------   --------     --------       -----   -------
Income before income taxes..........................          1,952      2,715          184       1,124     2,342
Income tax provision................................            655        984           79         437       957
                                                          ---------   --------     --------       -----   -------
Net income..........................................          1,297   $  1,731     $    105     $   687   $ 1,384
                                                          ----------  ========     ========     =======   =======
</TABLE>

                                       2
<PAGE>



KEY OPERATING RATIOS:
<TABLE>
<CAPTION>
                                                                              At or for the Year
                                                                              Ended September 30,
-------------------------------------------------------------------------------------------------------------------
                                                              2003       2002         2001      2000         1999
                                                           ---------- ----------   --------- ---------- ----------
                                                                                (In thousands)
<S>                                                             <C>      <C>          <C>       <C>         <C>
PERFORMANCE RATIOS:
   Return on average assets (net income
      divided by average total assets)                        .21%      .37%       .03%         .22%      .49%
   Return on average equity (net income
      divided by average equity)........................     2.94      4.01        .25         1.58      3.03
   Interest rate spread (combined
      weighted average interest rate
      earned less combined weighted
      average interest rate cost).......................     2.81      2.94       2.58         2.77      2.94
   Net interest margin (net interest
      income divided by average
      interest-earning assets)..........................     2.90      3.15       2.99         3.26      3.51
   Ratio of average interest-earning assets
      to average interest-bearing liabilities...........   103.38    105.92     109.70       112.46    116.05
   Ratio of non-interest expense to
      average total assets..............................     2.46      2.46       2.90         2.86      2.63
   Dividend payout ratio (dividends declared per share
       divided by net income per share).................   217.39    161.29   2,500.00       416.66    208.33


ASSET QUALITY RATIOS:
   Nonperforming assets to total assets at
      end of period.....................................      .09       .28        .08          .16       .39
   Nonperforming loans to gross loans at
      end of period.....................................      .08       .33        .08          .15       .46
   Allowance for loan losses to gross loans
      at end of period..................................      .70       .55        .55          .55       .57
   Allowance for loan losses to nonperforming
      loans at end of period............................   899.33    158.09     653.97       366.32    124.20
   Provision for loan losses to gross loans ............      .12       .12        .12          .06       .15
   Net charge-offs to average loans
      outstanding.......................................      .22       .09        .07          .01       .05

CAPITAL RATIOS:
   Equity to total assets at end of period..............     6.70      7.72      10.91        13.30     15.18
   Average equity to average assets.....................     7.09      8.61      12.04        13.83     16.07

</TABLE>
                                       3
<PAGE>



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


GENERAL

     The  Company  was  formed in June 1998 by the Bank to  become  the  holding
company for the Bank following the Bank's reorganization into the mutual holding
company  form  of   organization   (the   "Reorganization").   As  part  of  the
Reorganization,  the Company became a majority-owned  subsidiary of the MHC. The
Reorganization  was  consummated  on July 8, 1998. All references to the Company
prior to July 8, 1998, except where otherwise indicated, are to the Bank.

     The Company's net income is dependent primarily on its net interest income,
which is the difference  between interest income earned on its loan,  investment
securities  and  mortgage-backed  securities  portfolio  and  interest  paid  on
interest-bearing  liabilities.  Net  interest  income is  determined  by (i) the
difference  between yields earned on  interest-earning  assets and rates paid on
interest-bearing  liabilities  ("interest  rate  spread")  and (ii) the relative
amounts  of  interest-earning  assets  and  interest-bearing   liabilities.  The
Company's  interest  rate  spread  is  affected  by  regulatory,   economic  and
competitive  factors  that  influence  interest  rates,  loan demand and deposit
flows.  To a lesser  extent,  the  Company's  net income also is affected by the
level of other income,  which primarily consists of fees and charges, and levels
of non-interest expenses such as salaries and related expenses.

     The  operations  of the Company are  significantly  affected by  prevailing
economic  conditions,  competition  and  the  monetary,  fiscal  and  regulatory
policies of  governmental  agencies.  Lending  activities  are influenced by the
demand  for and  supply of  housing,  competition  among  lenders,  the level of
interest rates and the  availability of funds.  Deposit flows and costs of funds
are  influenced by prevailing  market rates of interest,  primarily on competing
investments, account maturities and the levels of personal income and savings in
the Company's market area.

FORWARD-LOOKING STATEMENTS

     When used in this Annual Report, the words or phrases "will likely result,"
"are expected to," "will continue," "is anticipated,"  "estimate,"  "project" or
similar expressions are intended to identify "forward-looking statements" within
the  meaning of the  Private  Securities  Litigation  Reform  Act of 1995.  Such
statements are subject to certain risks and  uncertainties  including changes in
economic  conditions  in the  Company's  market  area,  changes in  policies  by
regulatory  agencies,  fluctuations in interest  rates,  demand for loans in the
Company's  market area,  competition  and  information  provided by  third-party
vendors that could cause actual  results to differ  materially  from  historical
earnings and those  presently  anticipated  or projected.  The Company wishes to
caution  readers  not  to  place  undue  reliance  on any  such  forward-looking
statements,  which speak only as of the date made.  The Company wishes to advise
readers  that the factors  listed  above could  affect the  Company's  financial
performance  and could cause the Company's  actual results for future periods to
differ  materially  from any opinions or  statements  expressed  with respect to
future periods in any current statements.

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

ASSET/LIABILITY MANAGEMENT

     The Company  strives to achieve  consistent net interest  income and reduce
its exposure to adverse  changes in interest  rates by  attempting  to match the
terms to re-pricing of its  interest-sensitive  assets and liabilities.  Factors
beyond the Bank's control,  such as market interest rates and  competition,  may
also have an impact on the Bank's interest income and interest expense.

     In the absence of any other factors, the overall yield or return associated
with the Bank's earning assets generally will increase from existing levels when
interest rates rise over an extended  period of time,  and  conversely

                                       4
<PAGE>

interest income will decrease when interest rates decrease. In general, interest
expense will increase when interest rates rise over an extended  period of time,
and conversely  interest expense will decrease when interest rates decrease.  By
controlling  the  increases  and  decreases in its interest  income and interest
expense which are brought about by changes in market  interest  rates,  the Bank
can significantly influence its net interest income.

     The  senior  officers  of the Bank meet on a weekly  basis to  monitor  the
Bank's  interest  rate risk  position and to set prices on loans and deposits to
manage  interest rate risk within the  parameters set by the Board of Directors.
The  President of the Bank reports to the Board of Directors on a regular  basis
on interest rate risk and trends,  as well as liquidity  and capital  ratios and
requirements. The Board of Directors reviews the maturities of the Bank's assets
and liabilities and establishes policies and strategies designed to regulate the
Bank's flow of funds and to  coordinate  the  sources,  uses and pricing of such
funds.  The first  priority in  structuring  and  pricing the Bank's  assets and
liabilities is to maintain an acceptable interest rate spread while reducing the
net effects of changes in interest rates.  The Bank's  management is responsible
for administering the policies and determinations of the Board of Directors with
respect to the Bank's asset and liability goals and strategies.

     The Bank's  principal  strategy in managing  interest rate risk has been to
emphasize the  acquisition  of short- and  intermediate-term  assets,  including
locally  originated short term (15-years or less) fixed-rate  mortgage loans and
consumer loans,  particularly  automobile  loans.  In addition,  in managing its
portfolio of investment securities and mortgage-backed  securities,  the Bank in
recent  periods has purchased  investment  securities so as to reduce the Bank's
exposure to  fluctuations  in interest  rates.  To further manage  interest rate
risk, the Bank will sell loans into the secondary  market,  while  retaining the
servicing  of said loans.  Beginning  in 2002 the Bank  implemented  a policy of
selling  fixed rate loans with terms of 15 years or more where the interest rate
risk to the portfolio was significant  relative to current market conditions and
historical analysis.

     In addition to shortening the average  repricing period of its assets,  the
Bank has sought to lengthen the average  maturity of its liabilities by adopting
a tiered pricing program for its certificates of deposit,  which provides higher
rates of  interest  on its  longer  term  certificates  in  order  to  encourage
depositors to invest in certificates with longer maturities.

MARKET RISK

     Management  measures the Bank's  interest rate risk by computing  estimated
changes in the net  portfolio  value  ("NPV")  of its cash  flows  from  assets,
liabilities  and  off-balance  sheet  items in the  event of a range of  assumed
changes in market interest  rates.  NPV represents the market value of portfolio
equity and is the difference between incoming and outgoing discounted cash flows
from assets and liabilities,  with adjustments made for off-balance sheet items.
These computations estimate the effect on the Bank's NPV of sudden and sustained
increases and decreases in market interest rates.  The Bank's Board of Directors
has adopted an interest rate risk policy which establishes  maximum decreases in
the  Bank's  estimated  NPV in the  event of 1%, 2% and 3%  increases  in market
interest rates, and in the event of a 1%, decrease in market interest rates. The
following table presents the Bank's projected change in NPV for the various rate
shock  levels  at  September  30,  2003.  All  changes  meet the  Bank's  policy
requirements.


                                       5
<PAGE>
<TABLE>
<CAPTION>

                                       Net Portfolio Value                             NPV as % of PV of Assets
                      -----------------------------------------------------            ----------------------------
 Change
in Rates               $ Amount            $ Change (1)        % Change (2)             NPV Ratio (3)   Change (4)
--------              ---------            -----------         ------------             -------------   ----------
                                                  (Dollars in thousands)
<S>                     <C>                   <C>                  <C>                     <C>                <C>
+300 bp                     $  28,133            $ (39,678)            (59)%          4.58%               (555) bp
+200 bp                        42,051              (25,761)            (38)           6.65                (348) bp
+100 bp                        55,234              (12,578)            (19)           8.49                (165) bp
   0 bp                        67,811                                                10.13
-100 bp                        73,896                6,085               9           10.84                  71  bp
</TABLE>

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

***Risk Measures: 200 bp rate shock***
<TABLE>
<CAPTION>
                                                                       At               At
                                                                 September 30,     September 30,
                                                                    2003               2002
                                                              ----------------  ------------------
<S>                                                                     <C>          <C>
Pre-Shock NPV Ratio: NPV as % of PV of Assets...............      10.13%            11.58%
Exposure Measure: Post Shock NPV Ratio......................       6.65              8.20
Sensitivity Measure: Change in NPV Ratio....................     348 bp            338 bp
</TABLE>

     The above table  indicates  that at  September  30,  2003,  in the event of
sudden and sustained  increases in prevailing  market interest rates, the Bank's
NPV  would  be  expected  to  decrease,  and that in the  event of a sudden  and
sustained  decrease in prevailing market interest rates, the Bank's NPV would be
expected to increase, by a much smaller amount then if there were an increase in
interest  rates.  The Bank's Board of Directors  reviews the Bank's NPV position
quarterly,  and,  if  estimated  changes  in NPV  are  not  within  the  targets
established  by the Board,  the Board may direct  management to adjust its asset
and liability mix to bring interest rate risk within Board approved targets.  At
September 30, 2003, the Bank's estimated  changes in NPV were within the targets
established by the Board of Directors.

     NPV is calculated by the OTS by using information provided by the Bank. The
calculation is based on the net present value of discounted cash flows utilizing
market prepayment assumptions and market rates of interest provided by Bloomberg
quotations and surveys  performed  during the quarter ended  September 30, 2003,
with  adjustments  made to reflect the shift in the Treasury yield curve between
the survey date and the quarter-end date.

     Computations of prospective  effects of hypothetical  interest rate changes
are based on numerous assumptions,  including relative levels of market interest
rates,  loan  prepayments  and deposit  decay,  and should not be relied upon as
indicative of actual results.  Further,  the computations do not contemplate any
actions the Bank may undertake in response to changes in interest rates.

     Certain  shortcomings  are inherent in the method of analysis  presented in
the  computation  of NPV.  Actual values may differ from those  projections  set
forth in the table,  should market  conditions vary from assumptions used in the
preparation of the table. Additionally,  certain assets, such as adjustable-rate
loans,  have features which  restrict  changes in interest rates on a short-term
basis  and  over  the  life  of  the  asset.  In  addition,  the  proportion  of
adjustable-rate  loans in the Bank's  portfolio could decrease in future periods
if market  interest  rates  remain at or decrease  below  current  levels due to
refinance  activity.  Further,  in the  event of a  change  in  interest  rates,
prepayment and early withdrawal levels would likely deviate  significantly  from
those  assumed in the tables.  Finally,  the ability of many  borrowers to repay
their  adjustable-rate  debt  may  decrease  in the  event of an  interest  rate
increase.


                                       6
<PAGE>

AVERAGE BALANCE, INTEREST AND AVERAGE YIELDS AND RATES

     The  following  table  sets  forth  certain  information  relating  to  the
Company's  average  balance  sheet and reflects the average  yield on assets and
cost of liabilities for the periods  indicated and the average yields earned and
rates paid.  Such yield and costs are  derived by dividing  income or expense by
the average daily balance of assets or liabilities,  respectively, for the years
ended  September 30, 2003 and September 30, 2002.  For the year ended  September
30, 2001, average balances were computed using month-end balances. Total average
assets are computed using month-end balances.

     The table also presents  information for the periods indicated with respect
to the differences between the average yield earned on  interest-earning  assets
and  average  rate  paid on  interest-bearing  liabilities,  or  "interest  rate
spread," which banks have  traditionally  used as an indicator of profitability.
Another  indicator of net interest income is "net interest margin," which is its
net interest income divided by the average balance of interest-earning assets.
<TABLE>
<CAPTION>

                                                                          Year Ended September 30,
                                          ------------------------------------------------------------------------------------------
                                                     2003                          2002                            2001
                                          -----------------------------  ---------------------------  ------------------------------
                                                                Average                       Average                        Average
                                            Average              Yield/     Average           Yield/   Average                Yield/
                                            Balance    Interest  Cost       Balance  Interest  Cost    Balance   Interest     Cost
                                          ----------  --------- -------     -------- -------- -------  -------   --------    -------
                                                                              (Dollars in thousands)
<S>                                             <C>      <C>     <C>           <C>     <C>      <C>      <C>      <C>           <C>
Interest-earning assets:
  Loans receivable (1).................    $ 384,219   $25,949     6.75%    $ 295,694 $21,816  7.38% $ 248,035   $18,938      7.64%
  Mortgage backed securities...........       97,510     4,020     4.12        68,897   3,638  5.28     32,598     1,948      5.98
  Investment securities and FHLB stock.       84,162     2,896     3.44        55,506   2,811  5.06     43,384     2,751      6.34
  Other interest-earning assets........       22,131       302     1.36         9,844     215  2.18     13,948       711      5.10
                                           ---------   -------              --------- -------        ---------   -------
      Total interest-earning assets ...      588,022    33,167     5.64       429,941  28,480  6.62    337,965    24,348      7.20
Non-interest-earning assets............       35,195                           32,490                   17,801
                                           ---------                        ---------                ---------
      Total assets.....................    $ 623,217                        $ 462,431                 $355,766
                                           =========                        =========                =========

Interest-bearing liabilities:
  Deposits.............................    $ 530,021   $14,223     2.68%    $ 382,729 $13,984  3.65%  $297,732    13,785      4.63
  FHLB advances........................       24,588     1,224     4.98        18,142     773  4.26      8,725       451      5.17
  Trust Preferred Securities...........       12,527       659     5.26         3,262     187  5.73         --        --        --
  Other liabilities....................        1,648         1      .06         1,775       2   .11      1,618         4       .25
                                           ---------   -------              --------- -------        ---------   -------
      Total interest-bearing liabilities     568,784    16,107     2.83       405,908  14,946  3.68    308,075    14,240      4.62
                                                       -------   ------               -------  ----              -------     -----
Non-interest-bearing liabilities.......       10,244                           13,331                    4,852
                                           ---------                        ---------                ---------
      Total liabilities................      579,028                          419,239                  312,927
Stockholders' equity...................       44,189                           43,192                   42,839
                                           ---------                        ---------                ---------
      Total liabilities and stockholders'
         equity........................    $ 623,217                        $ 462,431                $ 355,766
                                           =========                        =========                =========
 Net interest income...................                $17,060                        $13,534                    $10,108
                                                       =======                        =======                    =======
Interest rate spread...................                            2.81%                       2.94%                          2.58%
                                                                  =====                        ====                          =====
Net interest margin (2)................                            2.90%                       3.15%                          2.99%
                                                                  =====                        ====                          =====
Ratio of average interest-earning assets
   to average interest-bearing liabilities                       103.38%                     105.92%                        109.70%
                                                                 ======                      ======                         ======
</TABLE>
--------------------
(1)  Includes nonaccrual loans.
(2)  Represents  net  interest   income  divided  by  the  average   balance  of
     interest-earning assets.

                                       7
<PAGE>



RATE/VOLUME ANALYSIS

     The table  below  sets  forth  certain  information  regarding  changes  in
interest income and interest expense of the Bank for the periods indicated.  For
each  category  of  interest-earning   asset  and  interest-bearing   liability,
information  is  provided  on changes  attributable  to:  (i)  changes in volume
(changes in volume  multiplied  by old rate);  (ii) changes in rates  (change in
rate  multiplied by old volume);  and (iii) changes in  rate/volume  (changes in
rate multiplied by the changes in volume).
<TABLE>
<CAPTION>

                                                               Year  Ended    September 30,
                                                -------------------------------------------------------------------
                                                   2003      vs.      2002           2002       vs.       2001
                                                -------------------------------------------------------------------
                                                                         Increase (Decrease)
                                                                                Due to
                                                                  Rate/                             Rate/
                                                Volume     Rate   Volume   Total     Volume   Rate   Volume    Total
                                                ------    ------  -----    -----     ------   ----- -------    -----
                                                                              (In thousands)
<S>                                             <C>        <C>     <C>      <C>      <C>       <C>    <C>       <C>
Interest income:
  Loans receivable..........................    $ 6,554   $(1,863) $(558) $4,133    $3,639   $ (638)  $ (123)  $ 2,878
  Mortgage-backed securities................      1,513      (799)  (332)    382     2,169     (227)    (252)    1,690
  Investment securities and
      FHLB stock............................      1,448      (899)  (464)     85       769     (554)    (155)       60
  Other interest-earning assets.............        269       (81)  (101)     87      (208)    (408)     120      (496)
                                                --------  -------  -----  ------    ------   ------   ------   -------
    Total interest-earning assets...........      9,784    (3,642)(1,455)  4,687     6,369   (1,827)    (410)    4,132

Interest expense:
  Deposits..................................      5,382    (3,714)(1,429)    239     3,936   (2,907)    (830)      199
  FHLB advances.............................        275       130     46     451       487      (79)     (86)      322
  Trust Preferred Securities................        531       (15)   (44)    472         0        0      187       187
  Other liabilities.........................          0        (1)     0      (1)        0       (2)       0        (2)
                                                -------   ------- ------  ------    ------   ------   ------   -------
     Total interest-bearing
       liabilities..........................      6,188    (3,600)(1,427)  1,161     4,423   (2,988)    (729)      706
                                                -------   -------- ------  -----     -----   ------   ------   -------

Change in net interest income...............    $ 3,596   $   (42) $ (28) $3,526   $ 1,946   $1,161   $  319   $ 3,426
                                                =======   =======  =====   =====   ======    ======   ======   =======
</TABLE>

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2003 AND 2002

     During the twelve  months ended  September 30, 2003,  the Company's  assets
increased by $81.1  million,  or 13.8% from $587.1 million at September 30, 2002
to $668.2  million at September  30, 2003.  Loans  receivable,  net decreased by
$31.5  million,  or 8.0%,  from $396.6  million at September  30, 2002 to $365.1
million  at  September  30,  2003.  The  Company's  mortgage-backed   securities
available for sale increased by $55.8 million,  or 92.4%,  from $60.4 million at
September  30, 2002 to $116.2  million at  September  30,  2003.  The  Company's
mortgage-backed  securities held to maturity decreased by $15.3 million or 45.4%
from $33.7 million at September 30, 2002 to $18.4 million at September 30, 2003.
The Company's investment portfolio available for sale increased $76.2 million or
169.0%,  from $45.1 million at September 30, 2002 to $121.3 million at September
30, 2003. The Company's  investment portfolio held to maturity decreased by $2.0
million or 44.4% from $4.5  million at  September  30,  2002 to $2.5  million at
September  30,  2003.  The  preceding  was  accomplished  in an effort to reduce
interest  rate risk in the balance  sheet.  The Bank was  reluctant to make long
term low rate loans in the low interest rate  environment  that prevailed during
the twelve month period ended  September 30, 2003. In recent years,  the Company
has placed  emphasis on short term loans such as automobile  loans,  home equity
loans and short term mortgages.  The Company increased  automobile loans by $5.0
million,  or 5.4% from $93.2  million at September  30, 2002 to $98.2 million at
September 30, 2003.

     Deposits  increased  by $53.1  million,  or 10.6%,  from $498.8  million at
September  30, 2002 to $551.9  million at September  30,  2003.  The increase in
deposits was achieved through normal marketing  efforts.  The growth in deposits
helped to fund security  purchases.  The security purchases have been short term
balloon type products and adjustable mortgage products.

                                       8
<PAGE>

     Stockholders' equity decreased by $538,000,  or 1.2%, from $45.3 million at
September 30, 2002 to $44.8  million at September 30, 2003,  which was partially
attributable to the decrease in accumulated other  comprehensive  income of $1.4
million from $665,000 at September 30, 2002 to $(771,000) at September 30, 2003.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2002 AND 2001

     Total assets increased by $196.2 million,  or 50.2%, from $390.9 million at
September  30, 2001 to $587.1  million at September  30,  2002.  The increase in
assets during fiscal year 2002 was partially attributable to the merger with WHG
Bancshares. The merger increased assets by $157.5 million. Loans receivable, net
increased by $128.6 million, or 48.0%, from $268.0 million at September 30, 2001
to $396.6 million at September 30, 2002, of which $116.8 million was a result of
the merger with WHG Bancshares.  Mortgage backed  securities  increased by $41.0
million,  or 77.2%, from $53.1 million at September 30, 2001 to $94.1 million at
September 30, 2002.  The merger  increased  mortgage-backed  securities by $18.0
million.  There  was also a $7.1  million,  or  16.7%,  increase  in  investment
securities  from  $42.5  million  at  September  30,  2001 to $49.6  million  at
September 30, 2002. The WHG Bancshares  merger caused $766,000 of this increase.
Interest-bearing deposits increased by $7.8 million, or 97.5%, from $8.0 million
at September 30, 2001 to $15.8  million at September  30, 2002.  The merger with
WHG Bancshares increased interest-bearing deposits by $15.8 million, but part of
this increase was offset by calls of investment securities.

     In recent years,  the Company has emphasized the  origination of automobile
loans  because of the higher rates and shorter terms to maturity of those loans.
The Company  increased  automobile loans by $20.4 million,  or 28.0%, from $72.8
million at September 30, 2001 to $93.2  million at September  30, 2002.  Most of
the  remaining  increase  in  the  loan  portfolio   reflected  an  increase  in
single-family  residential  mortgage loans, which increased by $55.1 million, or
33.4%,  from $165.0 million at September 30, 2001 to $220.1 million at September
30, 2002,  reflecting  increased  loan demand and the addition of new  customers
from the new branch offices acquired in the WHG Bancshares  merger.  The Company
also placed an emphasis on the origination of commercial real estate loans in an
effort to diversify the loan  portfolio and increase  yield.  Through the merger
and loan  originations  the commercial  real estate loan portfolio  increased by
$43.0  million,  of 286.7%  from $15.1  million at  September  30, 2001 to $58.1
million at September 30, 2002.

     The  Company's  loan growth was funded with  deposits,  which  increased by
$173.0  million,  or 53.1%,  from $325.8 million at September 30, 2001 to $498.8
million at September 30, 2002. The Bank increased it deposits as a result of the
merger by $118.2 million, and through increased marketing efforts.

     Stockholders' equity increased by $2.6 million, or 6.1%, from $42.7 million
at September 30, 2001 to $45.3  million at September 30, 2002.  The increase was
the result of a $1.2 million reclassification of the Rabbi-Trust obligation, and
net income offset by dividends paid. The Company  established the Rabbi-Trust to
hold shares of Company Common Stock in connection with the Company's  obligation
to pay deferred  compensation  under the Directors'  Retirement  Plan. The Rabbi
Trust was reclassified as an equity account following stockholder approval on an
amendment to the  Directors'  Retirement  Plan  requiring  that  obligations  to
participants be settled with shares of Common Stock.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002

     Net Income:  Net income  decreased by  $434,000,  from $1.7 million for the
year ended  September 30, 2002 to $1.3 million for the year ended  September 30,
2003. The decrease was due primarily to an $850,000,  or 167.0%  increase in the
provision  for loans  losses due to a large  commercial  loan charge off, and an
increase in non interest  expenses of $4.0 million,  or 35.0% from $11.4 million
at September 30, 2002 to $15.3 million at September 30, 2003.  This decrease was
partially offset by an increase in net interest income of $3.5 million, or 26.1%
from $13.5 million at September 30, 2002 to $17.0 million at September 30, 2003.

     Net Interest Income: Net interest income increased by $3.5 million or 26.1%
from $13.5  million for the year ended  September  30, 2002 to $17.0 million for
the year ended September 30, 2003. The increase in net interest income primarily
was the result of  increases  in the volume of  interest-earning  assets.  These
increases  allowed the Company to improve net interest income despite a 13 basis
point  decrease  in  interest  rate  spread.  The  Company's  ratio  of  average
interest-earning assets to average  interest-bearing  liabilities decreased from
105.9%  for the year  ended  September  30,  2002 to 103.4%  for the year


                                       9
<PAGE>

ended September 30, 2003. Interest rate spread decreased from 2.94% at September
30, 2002,  to 2.81% at September  30, 2003 due to  declining  interest  rates as
assets re-priced more rapidly than deposits.

     Interest Income:  Interest income increased by $4.7 million, or 16.5%, from
$28.5  million for the year ended  September  30, 2002 to $33.2  million for the
year ended  September  30, 2003.  Interest  and fees on loans  increased by $4.1
million,  or 18.9% from $21.8  million at September 30, 2002 to $25.9 million at
September  30,  2003.  This  increase  was due  primarily  to an increase in the
average  balance of loans of $88 million,  from $295.7  million at September 30,
2002 to $384.2 million at September 30, 2003.  Which more than offset a decrease
in the average yield on loans of 63 basis points from 7.38% for the period ended
September  30,  2002 to 6.75% for the  period  ended  September  30,  2003.  The
increase  in the  average  balance of loans was  primarily  attributable  to the
merger  with  WHG  Bancshares   which  consisted  of  $116.8  million  in  loans
receivable.  Also  contributing to the increase in interest income was $382,000,
or 10.5% increase in interest on mortgage  backed  securities,  which  increased
primarily  due  to an  increase  in  the  average  balance  of  mortgage  backed
securities  from  $68.9  million  at  September  30,  2002 to $97.5  million  at
September  30,  2003.  Interest  and  dividends on  investment  securities  also
increased $85,000,  or 3.0%. Other interest income increased by $87,000 of 40.5%
from $215,000 at September 30, 2002 to $302,000 at September 30, 2003.

     Interest  Expense:  Interest expense increased by $1.2 million or 7.8% from
$14.9  million for the year ended  September  30, 2002 to $16.1  million for the
year ended  September  30,  2003.  This  increase  was due to an increase in the
average  volume of deposits,  which are the largest  component of the  Company's
interest-bearing  liabilities.  The  average  balance of deposits  increased  by
$147.3  million,  or 38.5%,  from $382.7 million at September 30, 2002 to $530.0
million at  September  30,  2003.  The Company was able to increase its deposits
through  its use of  advertising  and the  acquisition  of WHG  Bancshares.  The
increase in  interest  expense  was  partially  offset by a decrease of 97 basis
points in the  average  yield  paid on  deposits,  from 3.65% for the year ended
September  30,  2002 to 2.68%  for the  year  ended  September  30,  2003.  Also
contributing  to the  increase in  interest  expense was an increase in interest
paid on short-term  borrowings of $42,000 from $119,000 at September 30, 2002 to
$161,000 at September 30, 2003, and interest on long-term  borrowings  increased
by $410,000.  This  increase was primarily due to an increase of $6.4 million in
Federal Home Loan Bank of Atlanta average advances.  With the acquisition of WHG
Bancshares the bank acquired longer term higher rate advances. Interest on trust
preferred securities also contributed to increased interest expense. Interest on
the Trust Preferred Securities increased $470,000 from $189,000 at September 30,
2002 to $659,000 at September 30, 2003,  primarily due to a full years  interest
expense on $12.5  million for the year ended  September  30, 2003  compared to a
partial year for the year ended  September 30, 2002.  Interest  expense was only
slightly impacted by the $10.0 million issuance of trust preferred securities on
September 29, 2003.  However it is expected to result in approximately  $458,000
of interest expense in the next year.

     Provision for Loan Losses: The Company's  significant  accounting  policies
are set forth in Note 1 of Notes to Consolidated Financial Statements.  Of these
significant  accounting policies, the Company considers its policy regarding the
allowance for loan losses to be its most critical accounting policy,  because it
requires  management's  most  subjective  and complex  judgments.  In  addition,
changes in economic  conditions  can have a significant  impact on the allowance
for loan  losses and  therefore  the  provision  for loan  losses and results of
operations.  The Company has developed  appropriate  policies and procedures for
assessing the adequacy of the allowance for loan losses,  recognizing  that this
process  requires a number of assumptions and estimates with respect to its loan
portfolio.  The  Company's  assessments  may be  impacted  in future  periods by
changes in economic conditions,  the impact of regulatory examinations,  and the
discovery  of  information  with  respect  to  borrowers  that is not  known  to
management at the time of the issuance of the consolidated financial statements.

     Provisions  for loan losses are  charged to earnings to maintain  the total
allowance  for loan  losses at a level  considered  adequate  by  management  to
provide for probable loan losses, based on prior experience,  volume and type of
lending conducted by the Company,  industry  standards and past due loans in the
Company's loan portfolio.  The Company established provisions for loan losses of
$1.4  million  and  $509,000  for the years ended  September  30, 2003 and 2002,
respectively.  In  establishing  such  provisions,   management  considered  the
delinquency of its loan portfolio as well as a review of classified  assets. The
$1.4 million in provisions  for loan losses  included the  replenishment  of the
allowance due to the charge off of $569,000 for a commercial  loan. In addition,
management  considered the level of the Company's  non-performing  loans,  which
were  $300,000 and  $1,391,000  at  September  30, 2003 and  September  30, 2002
respectively.

                                       10
<PAGE>

     Other  Income:  Other  income  increased  by  $534,000,  or 50.7% from $1.1
million for the year ended September 30, 2002 to $1.6 million for the year ended
September 30, 2003. The increase in other income for the year ended September 30
2003 was  partially  attributable  to gains on the sale of loans of $344,000 for
the year ended  September  30,  2003  compared  to  $230,000  for the year ended
September  30,  2002.  There  was  also a gain on the sale of  Mortgaged  Backed
Securities of $230,000 for the year ended September 30, 2003, compared to a gain
of $2,000 for the year ended  September  30,  2002.  These  gains were  achieved
through the  Company's  implementation  of a strategy to mitigate  interest rate
risk.  These gains may not be achieved in the future  should  market  conditions
change.  Fees on transaction  accounts increased by $128,000 due to the increase
in the volume of transaction  accounts.  Servicing fee income decreased  $57,000
from $13,000 for the year ended  September  30, 2002 to  $(44,000)  for the year
ended  September  30,  2003.  This  decrease  was  attributable  to  accelerated
amortization of the servicing premium on loans sold due to payoffs.

     Non-interest  Expenses:  Total  non-interest  expenses  increased  by  $4.0
million,  or 35.0%,  from $11.4 million for the year ended September 30, 2002 to
$15.3  million  for  the  year  ended   September  30,  2003.  The  increase  in
non-interest  expenses was due to increases in salaries and related  expenses of
$2.3  million,  or 38.2%.  The  increase in salaries  was  partially  due to the
increased  personnel due to the merger with WHG  Bancshares  and increased  loan
personnel as the Company  attempts to diversify into the commercial loan market.
The increase in  non-interest  expenses also was due in part to the absence of a
credit to compensation expense of $169,000 for the year ended September 30, 2002
for the directors retirement plan due to the decline of value of the shares held
in the  Rabbi-Trust.  The Company  established the Rabbi-Trust to hold shares of
Company Common Stock in connection with the Company's obligation to pay deferred
compensation  under  the  Directors'   Retirement  Plan.  The  related  deferred
compensation  obligation  was  classified  as a liability  and  adjusted  with a
corresponding  charge (or credit) to compensation cost by multiplying the number
of shares  owned by the Rabbi  Trust by the change in the fair  market  value of
each share,  to reflect  changes of the amount owed to the directors.  No future
adjustments to compensation expense for the Rabbi-Trust are required as a result
of stockholder approval of an amendment to the Directors' Retirement Plan at the
2002 annual meeting of stockholders.

     The  Company  also  experienced  increases  of  $533,000,  or 55.6% in data
processing  expenses,  from  $958,000 at  September  30, 2002 to $1.5 million at
September 30, 2003.  This  increase was primarily due to an increased  number of
transaction  accounts due to the merger with WHG Bancshares and a rate increase.
Occupancy  expense increased by $391,000 or 31.3% from $1.2 million at September
30, 2002 to $1.6 million at September  30,  2003.  The Company also  experienced
increases  of  $335,000,  or 35.1% in  property  and  equipment  expense  and an
increase of $165,000, or 36.1% in telephone,  postage and office supplies. These
increases were due to the cost of the additional  branch offices acquired in the
WHG Bancshares merger.

     Income Taxes:  The  Company's  income tax expense was $655,000 and $984,000
for the years ended September 30, 2003 and September 30, 2002 respectively.  The
Company's  effective tax rate was 33.6% and 36.2% for the years ended  September
30, 2003 and 2002 respectively.  The reduction in the effective tax rate for the
year ended  September  30,  2003 was due to an increase in interest on state tax
exempt securities.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001

     Net Income:  Net income  increased by $1.6  million,  from $105,000 for the
year ended  September 30, 2001 to $1.7 million for the year ended  September 30,
2002. The increase was due primarily to a $3.4 million, or 33.7% increase in net
interest income which was partially offset by a $1.0 million,  or 10.0% increase
in non-interest expenses and a $905,000 increase in the income tax provision.

     Net Interest Income: Net interest income increased by $3.4 million or 33.7%
from $10.1  million for the year ended  September  30, 2001 to $13.5 million for
the year ended September 30, 2002. The increase in net interest income primarily
was the result of  increases  in the volume of  interest-earning  assets.  These
increases  allowed the Company to improve net interest income despite a 58 basis
point decrease in the yield on  interest-earning  assets. The Company's ratio of
average   interest-earning  assets  to  average   interest-bearing   liabilities
decreased  from 109.7% for the year ended  September  30, 2001 to 105.9% for the
year ended  September  30,  2002.  The Company was able to increase the interest
rate spread from 2.58% at September 30, 2001, to 2.94% at September 30, 2002 due
to declining interest rates and the re-pricing of deposits.



                                       11
<PAGE>

     Interest Income:  Interest income increased by $4.2 million, or 17.3%, from
$24.3  million for the year ended  September  30, 2001 to $28.5  million for the
year ended September 30, 2002. This increase was due primarily to an increase in
interest and fees on loans,  which  reflected an increase in the average balance
of loans  from  $248.0  million  at  September  30,  2001 to $295.7  million  at
September  30, 2002.  The increase in the average  balance of loans was achieved
primarily through increases in residential mortgage loans,  commercial loans and
automobile  loans. Also contributing to the increase in interest income was $1.7
million,  or 86.8%  increase in interest on mortgage  backed  securities,  which
increased primarily due to an increase in the average balance of mortgage backed
securities  from  $32.6  million  at  September  30,  2001 to $68.9  million  at
September 30, 2002.  Dividends on investment  securities also increased $61,000,
or 2.2%. These increases helped to offset the decrease of $496,000,  or 69.8% in
other  interest  income.  Other  interest  income  primarily  decreased due to a
decrease of 292 basis points in the average yield on  interest-bearing  deposits
and Federal funds sold, and a decrease of $4.1 million,  or 29.5% in the average
balance of  interest-bearing  deposits and Federal funds sold from $13.9 million
at September 30, 2001 to $9.8 million at September 30, 2002.

     Interest  Expense:  Interest  expense  increased by $706,000 or 5.0%,  from
$14.2  million for the year ended  September  30, 2001 to $14.9  million for the
year ended  September  30,  2002.  This  increase  was due to an increase in the
average  volume of deposits,  which are the largest  component of the  Company's
interest-bearing liabilities. The average balance of deposits increased by $85.0
million,  or 28.5%,  from $297.7 million at September 30, 2001 to $382.7 million
at September 30, 2002. The Company was able to increase its deposits through its
use of  advertising  and the  acquisition  of WHG  Bancshares.  The  increase in
interest  expense was  partially  offset by a decrease of 98 basis points in the
average yield paid on deposits, from 4.63% for the year ended September 30, 2001
to 3.65%  for the year  ended  September  30,  2002.  Also  contributing  to the
increase in interest  expense was an increase in interest  paid on FHLB advances
of $324,000,  from  $450,000 at September  30, 2001 to $774,000 at September 30,
2002.  This increase was  partially due to an increase in the average  volume of
FHLB advances of $9.4 million, or 107.9% from $8.7 million at September 30, 2001
to $18.1 million at September 30, 2002. The WHG Bancshares merger resulted in an
increase in FHLB advances of $19.2 million.  This increase was partially  offset
by a decrease of 91 basis points in the average  yield,  from 5.17% at September
30, 2001 to 4.26% at September 30, 2002.  Also  contributing  to the increase in
interest  expense  was  interest  on the Trust  Preferred  Securities  which was
$187,000  for the year ended  September  30,  2002,  compared to $0 for the year
ended September 30, 2001.

     Provision for Loan Losses: The Company's  significant  accounting  policies
are set forth in Note 1 of Notes to Consolidated Financial Statements.  Of these
significant  accounting policies, the Company considers its policy regarding the
allowance for loan losses to be its most critical accounting policy,  because it
requires  management's  most  subjective  and complex  judgments.  In  addition,
changes in economic  conditions  can have a significant  impact on the allowance
for loan  losses and  therefore  the  provision  for loan  losses and results of
operations.  The Company has developed  appropriate  policies and procedures for
assessing the adequacy of the allowance for loan losses,  recognizing  that this
process  requires a number of assumptions and estimates with respect to its loan
portfolio.  The  Company's  assessments  may be  impacted  in future  periods by
changes in economic conditions,  the impact of regulatory examinations,  and the
discovery  of  information  with  respect  to  borrowers  that is not  known  to
management at the time of the issuance of the consolidated financial statements.

     Provisions  for loan  losses are charged to the  earnings  to maintain  the
total allowance for loan losses at a level considered  adequate by management to
provide for probable loan losses, based on prior experience,  volume and type of
lending conducted by the Company,  industry  standards and past due loans in the
Company's loan portfolio.  The Company established provisions for loan losses of
$509,000  and  $332,000  for the  years  ended  September  30,  2002  and  2001,
respectively.  In  establishing  such  provisions,   management  considered  the
delinquency of its loan portfolio as well as a review of classified  assets.  In
addition, management considered the level of the Company's non-performing loans,
which were  $1,391,000 and $239,000 at September 30, 2002 and September 30, 2001
respectively.

     Other  Income:  Total other income  increased by $316,000,  or 42.8%,  from
$738,000  for the year ended  September  30,  2001 to $1.1  million for the year
ended September 30, 2002. This increase was primarily due to the gain on sale of
loans  which  increased  $205,000,  or 820.0%  from,  $25,000 for the year ended
September 30, 2001 to $230,000 for the year ended  September 30, 2002.  The gain
on sale of loans was achieved through the Company's implementation of a strategy
to sell long-term low rate loans to Fannie Mae in an effort to mitigate interest
rate risk.  These  gains may not be  achieved  to the same  degree in the future
should market conditions change.

                                       12
<PAGE>

     Non-Interest  Expense:   Total  non-interest  expenses  increased  by  $1.1
million,  or 10.7%,  from $10.3 million for the year ended September 30, 2001 to
$11.4  million  for  the  year  ended   September  30,  2002.  The  increase  in
non-interest  expenses was due to increases in salaries and related  expenses of
$278,000,  or 4.8%,  which was  offset in part by a  reduction  of  $170,000  of
compensation  expense for the  directors  retirement  plan due to the decline of
value  of the  shares  held in the  Rabbi-Trust.  The  Company  established  the
Rabbi-Trust  to hold  shares of  Company  Common  Stock in  connection  with the
Company's   obligation  to  pay  deferred   compensation  under  the  Directors'
Retirement Plan. The related deferred compensation  obligation was classified as
a liability and adjusted with a corresponding charge (or credit) to compensation
cost by multiplying  the number of shares owned by the Rabbi Trust by the change
in the fair market value of each share, to reflect changes of the amount owed to
the directors.  No adjustments to compensation  expense for the Rabbi Trust will
be  required  for  future  periods  as a result of  stockholder  approval  of an
amendment  to  the  Directors'   Retirement  Plan.  See  Note  12  of  Notes  to
Consolidated  Financial  Statements.  The Company also experienced  increases of
$131,000,  or 11.7%, in occupancy expense,  $256,000 or 36.5% in data processing
expense,  $77,000,  or 8.8% in property plant and equipment expense and $253,000
or 99.2% in other expenses.  These increases were partially offset by a decrease
of $43,000 or 5.3% in  advertising  expenses.  During the quarter ended December
31, 2001,  the Company wrote off,  against a previously  established  allowance,
$51,000 of EPIC loans included in foreclosed real estate. EPIC loans represented
the balance due on an investment in a pool of mortgages  which was foreclosed by
the trustees for the holders of the security interest due to nonperformance.  An
allowance for losses was  established  based upon the original  foreclosure  and
analysis of the  collectibility  of the loans  granted to the  purchasers of the
foreclosed property.

     Income Taxes: The Company's income tax expense was $984,000 and $79,000 for
the years ended  September  30, 2002 and September  30, 2001  respectively.  The
Company's  effective tax rate was 36.2% and 43.1% for the years ended  September
30, 2002 and 2001 respectively.  The reduction in the effective tax rate for the
year  ended  September  30,  2002 was due to an  increase  in state  tax  exempt
securities.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has no business  other than that of the Bank and  investing the
net stock  issuance  proceeds  retained  by it.  The Bank is  subject to certain
regulatory limitations with respect to the payment of dividends to the Company.

     At September 30, 2003,  the Bank exceeded all  regulatory  minimum  capital
requirements. For information regarding the Bank's retained earnings as reported
in its financial  statements  at September  30, 2003 to its  tangible,  core and
risk-based   capital   levels  and  compares  such  totals  to  the   regulatory
requirements, see Note 16 of Notes to Consolidated Financial Statements.

     On June 27, 2002, the Company  established a business trust subsidiary (the
"Business Trust"),  which issued and sold to private investors 12,500 securities
with a liquidation  amount of $1,000 per security,  for a total of $12.5 million
of preferred securities.  The Company funded the Business Trust with $387,000 in
exchange for 100% of the Business Trust's common securities.  The Business Trust
used the proceeds from these  transactions  to purchase  $12,887,000 of floating
rate  subordinated  debentures  from the  Company.  The Company  makes  periodic
interest payments on the debentures to the Trust, and the Business Trust in turn
makes  interest  payments  on the  trust  preferred  securities  to the  private
investors.

     The trust preferred securities and subordinated debentures are due June 30,
2032.  The rate is 3.65% per annum  over the  three-month  LIBOR rate and resets
quarterly.  The rate at September  30, 2002 was 5.51%.  The junior  subordinated
debentures  are the sole assets of the Business  Trust.  The  subordinated  debt
securities,  unsecured,  rank junior and are  subordinate in right of payment of
all senior debt of the Company,  and the Company has guaranteed repayment on the
trust preferred  securities  issued by the Business Trust.  The Company used the
proceeds from these  transactions to increase the capital of the Bank. The $12.5
million  of  subordinated  debt  securities  are  includable  as  part of Tier 1
regulatory  capital for the Bank. In 2003,  the Company had an annual expense of
$659,000 related to the trust preferred securities.

     Payments to be made by the Business Trust on the trust preferred securities
are dependent on payments that the Company has undertaken to make,  particularly
the payment to be made by the Company on the  debentures.  Distributions  on the
trust  preferred  securities are payable  quarterly at a rate of 3.65% per annum
over the  three-


                                       13
<PAGE>

month LIBOR rate. The  distributions are funded by interest payments received on
the  debentures  and are subject to deferral for up to five years under  certain
conditions.  Distributions  are  included in interest  expense.  The Company may
redeem the  debentures,  in whole or in part, at par at any time after September
30, 2007, or under certain conditions in whole but not in part, at any time at a
redemption  price equal to 103% of the principal  amount plus any accrued unpaid
interest.

     On September 29, 2003,  the Company  established a second  statutory  trust
subsidiary (the "Statutory  Trust"),  which issued and sold to private investors
10,000 securities with a liquidation amount of $1,000 per security,  for a total
of $10.0 million of preferred securities. The Company funded the Statutory Trust
with $310,000 in exchange for 100% of the Statutory  Trust's common  securities.
The  Statutory  Trust used the  proceeds  from these  transactions  to  purchase
$10,310,000  of floating  rate  subordinated  debentures  from the Company.  The
Company makes periodic interest payments on the debentures to the Trust, and the
Statutory  Trust  in  turn  makes  interest  payments  on  the  trust  preferred
securities to the private investors.

     The trust preferred securities and subordinated  debentures are due October
7, 2033. The rate is 3.00% per annum over the three-month  LIBOR rate and resets
quarterly.  The rate at September  30, 2003 was 4.16%.  The junior  subordinated
debentures are the sole assets of the Statutory  Trust.  The  subordinated  debt
securities,  unsecured,  rank junior and are  subordinate in right of payment of
all senior debt of the Company,  and the Company has guaranteed repayment on the
trust preferred  securities  issued by the Statutory Trust. The Company used the
proceeds from these  transactions to increase the capital of the Bank. The $10.3
million  of  subordinated  debt  securities  are  includable  as  part of Tier 1
regulatory capital for the Bank.

     Payments  to be  made  by  the  Statutory  Trust  on  the  trust  preferred
securities  are dependent on payments  that the Company has  undertaken to make,
particularly  the  payment  to  be  made  by  the  Company  on  the  debentures.
Distributions on the trust preferred  securities are payable quarterly at a rate
of 3.00% per annum over the three-month LIBOR rate. The distributions are funded
by interest  payments received on the debentures and are subject to deferral for
up to five  years  under  certain  conditions.  Distributions  are  included  in
interest expense. The Company may redeem the debentures, in whole or in part, at
par at any time after October 7, 2008, or under certain  conditions in whole but
not in part,  at any time at a redemption  price equal to 103% of the  principal
amount plus any accrued  unpaid  interest.  Interest  expense for the year ended
September 30, 2004 is expected to be approximately $458,000. The Company expects
to have sufficient liquidity to meet the interest payments.

     The  Company's  primary  sources of funds are deposits  and  proceeds  from
maturing investment securities and mortgage-backed  securities and principal and
interest  payments on loans.  While  maturities  and scheduled  amortization  of
mortgage-backed  securities and loans are a predictable source of funds, deposit
flows and mortgage prepayments are greatly influenced by general interest rates,
economic conditions, competition and other factors.

     The primary investing  activity of the Company are the origination of loans
and the purchase of investment securities and mortgage-backed securities. During
the years ended September 30, 2003,  2002, and 2001 the Bank had $159.2 million,
$129.2 million and 95.3 million respectively,  of loan originations.  During the
years ended September 30, 2003, 2002 and 2001, the Company purchased  investment
securities  in the amounts of $161.1  million,  $72.8  million and 55.6  million
respectively,  and mortgage-backed  securities in the amounts of $108.8 million,
$52.8 million, and 48.6 million respectively.  The primary financing activity of
the Company is the attraction of savings deposits.

     The Company has other  sources of  liquidity  if there is a need for funds.
The Bank has the  ability  to  obtain  advances  from  the FHLB of  Atlanta.  In
addition, the Company maintains a portion of its investments in interest-bearing
deposits at other financial institutions that will be available, if needed.

     The Bank's  average daily  liquidity  ratio for the month of September 2003
was approximately 24.3%. Management seeks to maintain a relatively high level of
liquidity in order to retain  flexibility  in terms of investment  opportunities
and deposit pricing.  Because liquid assets generally provide for lower rates of
return,  the Bank's relatively high liquidity will, to a certain extent,  result
in lower rates of return on assets.

     The  Company's  most liquid assets are cash,  interest-bearing  deposits in
other  banks and  federal  funds  sold,  which  are  short-term,  highly  liquid
investments with original  maturities of less than three months that are readily


                                       14
<PAGE>

convertible  to known amounts of cash.  The levels of these assets are dependent
on the Company's operating,  financing and investing activities during any given
period.  At September 30, 2003, cash,  interest-bearing  deposits in other banks
and federal  funds sold  totaled  $11.0  million,  $11.3  million and  $988,000,
respectively.

     The Company  anticipates  that it will have  sufficient  funds available to
meet its current  commitments.  Certificates  of deposit  which are scheduled to
mature in less than one year at September 30, 2003 totaled $191.3 million. Based
on past  experience,  management  believes  that a  significant  portion of such
deposits will remain with the Bank. The Bank is a party to financial instruments
with  off-balance-sheet  risk made in the normal  course of business to meet the
financing  needs of its  customers.  These  financial  instruments  are  standby
letters of credit,  lines of credit and  commitments  to fund mortgage loans and
involve  to  varying  degrees  elements  of credit  risk in excess of the amount
recognized in the statement of financial position. The contract amounts of those
instruments  express  the  extent of  involvement  the Bank has in this class of
financial  instruments  and represents  the Bank's  exposure to credit loss from
nonperformance  by the other party.  The Bank generally  requires  collateral or
other security to support financial  instruments with  off-balance-sheet  credit
risk. At September 30, 2003, the Bank had  commitments  under standby letters of
credit, lines of credit and commitments to originate mortgage loans of $419,000,
$20.4  million  and  $10.6  million,  respectively.  See  Note  3  of  Notes  to
Consolidated Financial Statements.

     The Company  announced a repurchase  program on February  14,  2001.  As of
September 30, 2002 an additional  740 shares had been  purchased at an aggregate
cost of $9,376,  and as of September 30, 2003 an additional  864 shares had been
purchased at an aggregate cost of $14,395.

     In keeping with the  Company's  stated  policy,  quarterly  dividends  were
declared on  December  18,  2002,  March 26, May 30, and  September  15, 2003 of
12.5(cent) each. In keeping with Federal  regulations,  Baltimore County Savings
Bank, M.H.C. (the "MHC") applied for, and elected to waive receipt of, dividends
from the Company as to its shares,  which  amounted  to  3,754,960  shares as of
December 1, 2003, or 63.8% of all  outstanding  shares of the  Company's  common
stock.  The dividend rate is based in part on the Bank's strong capital position
(see Note 15 of Notes to Consolidated  Financial Statements) and the flexibility
of the  mutual  holding  company  structure  whereby  the MHC,  with  regulatory
approval,  has waived  dividends  otherwise  payable to it. This has enabled the
Bank to reward its  public  shareholders  with a strong  dividend  stream  while
retaining sufficient capital to support Company operations,  earnings growth and
the Bank's branch expansion business plan.

IMPACT OF INFLATION AND CHANGING PRICES

     The Consolidated  Financial  Statements and Notes thereto  presented herein
have been prepared in accordance with accounting  principles  generally accepted
in the United  States of America,  which  require the  measurement  of financial
position  and  operating   results  in  terms  of  historical   dollars  without
considering the change in the relative  purchasing  power of money over time and
due to inflation.  The impact of inflation is reflected in the increased cost of
the  Company's  operations.  Unlike most  industrial  companies,  nearly all the
assets and  liabilities  of the  Company are  monetary  in nature.  As a result,
interest  rates have a greater impact on the Company's  performance  than do the
effects of general levels of inflation.  Interest rates do not necessarily  move
in the same direction or to the same extent as the price of goods and services.

OFF-BALANCE SHEET ARRANGEMENTS

     As of the  date of this  Annual  Report,  the  Company  does  not  have any
off-balance  sheet  arrangements  that have or are  reasonably  likely to have a
current  or  future  effect  on the  Company's  financial  condition,  change in
financial  condition,  revenues or expenses,  results of operations,  liquidity,
capital expenditures or capital resources that are material to investors, except
for the  guarantees  made by the  Company  with  respect to the trust  preferred
securities  issued by each of the Business Trust and the Statutory Trust,  which
are discussed in the "Liquidity and Capital Resources" subsection of this Annual
Report  and  in  footnote  9 to  the  audited  financial  statements.  The  term
"off-balance sheet arrangement" generally means any transaction,  agreement,  or
other contractual arrangement to which an entity unconsolidated with the Company
is a party  under  which the  Company  has (i) any  obligation  arising  under a
guarantee  contract,  derivative  instrument  or  variable  interest;  or (ii) a
retained or contingent  interest in assets transferred to such entity or similar
arrangement  that serves as credit,  liquidity  or market risk  support for such
assets.  Additionally,  the Bank does have commitments to originate loans in the
ordinary course of business, as disclosed herein.


                                       15

<PAGE>

CRITICAL ACCOUNTING POLICIES

     Management's  discussion and analysis of the Company's  financial condition
is based  on the  consolidated  financial  statements,  which  are  prepared  in
accordance with accounting principles generally accepted in the United States of
America.  The preparation of such financial  statements  requires  management to
make  estimates  and  assumptions  that affect the  reported  amounts of assets,
liabilities,  revenues and expenses and related  disclosure of contingent assets
and  liabilities.  On an ongoing  basis,  management  evaluates  its  estimates,
including those related to the allowance for loan losses.

     Management  believes the allowance for loan losses is a critical accounting
policy that required the most significant  estimates and assumptions used in the
preparation of the  consolidated  financial  statements.  The allowance for loan
losses  is based  on  management's  evaluation  of the  level  of the  allowance
required in  relation  to the  estimated  loss  exposure in the loan  portfolio.
Management  believes the allowance  for loan losses is a  significant  estimated
loss  and  therefore   regularly  evaluates  it  for  adequacy  by  taking  into
consideration factors such as prior loan loss experience, the character and size
of the  loan  portfolio,  business  and  economic  conditions  and  management's
estimation  of losses.  The use of  different  estimates  or  assumptions  could
produce  different  provisions  for  loan  losses.  Refer to the  discussion  of
Allowance for Loan Losses in Note 3 to the Consolidated Financial Statements for
a detailed  description  of  management's  estimation  process  and  methodology
related to the allowance for loan losses.

IMPACT OF NEW ACCOUNTING STANDARDS

     In April 2003,  FASB issued SFAS No. 149,  "Amendment  of Statement  133 on
Derivative   Instruments  and  Hedging   Activities."  This  Statement  improves
financial reporting by requiring that contracts with comparable  characteristics
be accounted for similarly.  In particular,  this Statement (1) clarifies  under
what  circumstances  a  contract  with  an  initial  net  investment  meets  the
characteristics  of a derivative  discussed in paragraph  6(b) of Statement 133,
(2) clarifies when a derivative contains a financing  component,  (3) amends the
definition   of  an   underlying   to  conform  it  to  language  used  in  FASB
Interpretation No. 45, "Guarantor's  Accounting and Disclosure  Requirements for
Guarantees,  Including Indirect  Guarantees of Indebtedness of Others",  and (4)
amends  certain other  existing  pronouncements.  Those  changes  result in more
consistent  reporting on contracts as either derivatives or hybrid  instruments.
This Statement is effective for contracts and hedging relationships entered into
or modified after June 30, 2003.

     In May 2003,  FASB issued SFAS No. 150  "Accounting  for Certain  Financial
Instruments with Characteristics of both Liabilities and Equity." This Statement
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances).  This Statement is effective
for financial instruments entered into or modified after May 31, 2003.

     The above accounting  pronouncements  did not have a material impact on the
consolidated financial statements.


                                       16
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
BCSB Bankcorp, Inc.
Baltimore, Maryland

     We have audited the consolidated  statements of financial condition of BCSB
Bankcorp,  Inc. and Subsidiaries as of September 30, 2003 and September 30, 2002
and the related consolidated statements of operations,  stockholders' equity and
cash flows for each of the years in the three year period  ended  September  30,
2003. 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  auditing  standards  generally
accepted in the United States of America.  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 BCSB
Bankcorp,  Inc.  and  Subsidiaries  as of September  30, 2003 and 2002,  and the
consolidated  results of its operations and its cash flows for each of the years
in the three year period ended September 30, 2003, in conformity with accounting
principles generally accepted in the United States of America.

                                                /s/ Anderson Associates, LLP


December 5, 2003
Baltimore, Maryland

                                      F-1
<PAGE>



                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 ----------------------------------------------
<TABLE>
<CAPTION>


                                                                                           September 30,
                                                                       -----------------------------------------
                                                                              2003                    2002
                                                                       ------------------      -----------------
               Assets
<S>                                                                             <C>                  <C>
Cash                                                                   $   11,032,415          $    6,467,598
Interest bearing deposits in other banks                                   11,288,223              15,808,342
Federal funds sold                                                            987,636               3,527,387
Investment securities, available for sale (Note 2)                        121,289,555              45,083,287
Investment securities, held to maturity (Note 2)                            2,500,000               4,495,986
Loans receivable, net (Note 3)                                            365,054,645             396,616,729
Loans held for sale                                                           247,600                      --
Mortgage backed securities, available for sale (Note 4)                   116,204,401              60,411,132
Mortgage backed securities, held to maturity (Note 4)                      18,394,439              33,691,430
Premises and equipment, net (Note 5)                                        9,226,887               8,630,812
Federal Home Loan Bank of Atlanta stock, at cost                            3,304,900               3,939,700
Accrued interest receivable  - loans                                        1,078,484               1,421,418
                             - investments                                    536,895                 294,897
                             - mortgage backed securities                     499,230                 474,143
Prepaid and deferred income taxes (Note 16)                                 1,752,582               1,268,370
Goodwill                                                                    2,294,327               2,294,327
Core deposit intangible (Note 6)                                              421,000                 542,000
Other assets                                                                2,084,630               2,097,791
                                                                        -------------           -------------
Total assets                                                           $  668,197,849          $  587,065,349
                                                                        =============           =============

                 Liabilities and Stockholders' Equity
Liabilities
   Checks outstanding in excess of bank balance                        $           --          $      390,799
   Deposits (Note 7)                                                      551,928,619             498,785,268
   Federal Home Loan Bank of Atlanta advances (Note 8)                     32,267,861              26,968,099
   Trust Preferred Securities (Note 9)                                     22,500,000              12,500,000
   Advance payments by borrowers for taxes and insurance                      854,694               1,194,371
   Income taxes payable (Note 16)                                             193,051                  58,226
   Payables to disbursing agents                                              136,352                 221,345
    Accounts payable Trade Date Securities                                 13,998,307                      --
   Dividends payable                                                          266,329                 264,891
   Other liabilities                                                        1,284,720               1,376,787
                                                                       --------------            ------------
Total liabilities                                                         623,429,933             541,759,786

Commitments and contingencies (Notes 3, 5, 8, 9, 10, 11, 12 ,13
 and 14)

Stockholders' Equity (Notes 11, 12, 13, 14, and 15 )
   Common stock (par value
   $.01 - 13,500,000 authorized,
    5,885,593 and 5,874,082 shares issued and outstanding
    at September 30, 2003 and 2002, respectively)                              58,856                  58,741
   Additional paid-in capital                                              20,652,137              20,302,518
   Obligation under Rabbi Trust                                             1,243,469               1,156,870
   Retained earnings (substantially restricted)                            25,556,888              25,279,752
   Accumulated other comprehensive (loss) income (net of taxes)              (770,874)                664,554
                                                                       --------------           -------------
                                                                           46,740,476              47,462,435
   Employee Stock Ownership Plan                                             (776,060)               (960,372)
   Stock held by Rabbi Trust                                               (1,196,500)             (1,196,500)
                                                                       --------------          --------------
Total stockholders' equity                                                 44,767,916              45,305,563
                                                                       --------------          --------------
Total liabilities and stockholders' equity                             $  668,197,849          $  587,065,349
                                                                       ==============          ==============

</TABLE>

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

                                      F-2
<PAGE>

                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland
                      ------------------------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------
<TABLE>
<CAPTION>
                                                                                 For Years Ended
                                                                                  September 30,
                                                        --------------------------------------------------------
                                                                 2003                2002               2001
                                                        -----------------     ----------------   ---------------
<S>                                                             <C>                     <C>             <C>
Interest and fees on loans (Note 3)                        25,948,388         $ 21,815,907       $ 18,938,731
Interest on mortgage backed securities                      4,019,889            3,637,876          1,947,638
Interest and dividends on investment securities             2,896,384            2,811,536          2,750,922
Other interest income                                         302,291              214,952            711,169
                                                        --------------        ------------       ------------
Total interest income                                      33,166,952           28,480,271         24,348,460

Interest on deposits (Note 7)                              14,222,623           13,983,646         13,785,205
Interest on borrowings - short term                           160,680              118,824            132,499
Interest on borrowings - long term                          1,064,245              654,684            317,900
Other interest expense                                        659,095              189,111              4,266
                                                        -------------         ------------       ------------
Total interest expense                                     16,106,643           14,946,265         14,239,870
                                                         ------------         ------------       ------------

Net interest income                                        17,060,309           13,534,006         10,108,590
Provision for losses on loans (Note 3)                      1,359,077              509,290            332,341
                                                          -----------         ------------       ------------

Net interest income after provision for losses on loans    15,701,232           13,024,716          9,776,249

Other Income
   Gain (loss) on sale of foreclosed real estate                   --               (5,569)            15,751
   Gain on sale of loans                                      344,358              229,906             25,220
   Servicing fee income                                       (44,188)              12,576             14,249
   Fees and charges on loans                                  225,564              177,463            150,467
   Fees on transaction accounts                               541,309              413,328            322,459
   Rental income                                              125,778               98,839            106,761
   Gain from sale of investments                               51,859               91,837                 --
   Gain from sale of mortgage backed securities               231,892                2,221                 --
   Loss on disposal of fixed assets                                --              (14,090)                --
   Miscellaneous income                                       110,576               46,969            102,672
                                                        -------------          -----------       ------------
Net other income                                            1,587,148            1,053,480            737,579

Non-Interest Expenses
   Salaries and related expense                             8,439,377            6,106,076          5,827,819
   Occupancy expense                                        1,641,785            1,250,776          1,120,279
   Deposit insurance premiums                                 205,606              167,997            126,759
   Data processing expense                                  1,490,403              957,860            701,689
   Property and equipment expense                           1,287,822              952,882            876,188
   Professional fees                                          293,972              199,494            186,964
   Advertising                                                733,742              762,864            806,020
   Telephone, postage and office supplies                     622,867              457,565            428,937
   Other expenses                                             620,822              507,732            255,118
                                                        -------------         ------------       ------------
Total non-interest expenses                                15,336,396           11,363,246         10,329,773
                                                         ------------         ------------       ------------

Income before tax provision                                 1,951,984            2,714,950            184,055
Income tax provision (Note 16)                                654,953              983,976             79,290
                                                        -------------         ------------       ------------
Net income                                              $   1,297,031         $  1,730,974       $    104,765
                                                        =============         ============       ============

Net Income Per Share of Common Stock (Note 1)
   Basic                                                $       0.23          $       0.31       $       0.02
                                                        ============          ============       ============

   Diluted                                              $       0.22          $       0.30       $       0.02
                                                        ============          ============       ============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.
                                      F-3
<PAGE>
                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                                Baltimore, Maryland
                               --------------------

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              ------------------------------------------------------
              FOR THE YEARS ENDED SEPTEMBER 30, 2003, 2002 AND 2001
              ------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                        Accumlated
                                                                                            Other      Employee
                                                  Additional    Obligation              Comprehensive    Stock      Stock
                                        Common     Paid-in         Under     Retained   Income (loss)  Ownership   Held by
                                         Stock     Capital      Rabbi Trust  Earnings   Net of Taxes      Plan   Rabbi Trust
                                        ------   ------------  ------------  ---------  -------------  --------- -----------
<S>                                     <C>         <C>          <C>        <C>            <C>          <C>       <C>

Balance - October 1, 2000               $58,871   $20,214,611  $      --  $25,447,089  $      --   $(1,326,228) $(1,051,526)

Compensation under stock based
 benefit plans                               --        67,103         --           --         --       182,928           --
Acquisition of stock for Rabbi Trust         --            --         --           --         --            --      (87,974)
Treasury stock purchased                   (198)     (165,247)        --           --         --            --           --
Cash dividends declared ($.50 per share)     --            --         --     (995,728)        --            --           --
Comprehensive income
   Net income for the year ended
    September 30, 2001                       --            --         --      104,765
   Net change in unrealized gains on
     investment securities and mortgage
     backed securities,
     net of tax of $177,385                  --            --         --           --     281,924            --           --
Comprehensive income                         --            --         --           --          --            --           --
                                        -------   -----------  ---------  -----------  ----------  ------------  -----------
Balance - September 30, 2001             58,673    20,116,467         --   24,556,126     281,924    (1,143,300)  (1,139,500)

Compensation under stock based
 benefit plans                               --       135,495         --           --          --       182,928           --
Exercised options                            75        59,925         --           --          --            --           --
Rabbi Trust Liability                        --            --  1,156,870           --          --            --           --
Acquisition of stock for Rabbi Trust         --            --         --           --          --            --      (57,000)
Treasury stock purchased                     (7)       (9,369)        --           --          --            --           --
Cash dividends declared ($.50 per share)     --            --         --   (1,007,348)         --            --           --
Comprehensive income
   Net income for the year ended
    September 30, 2002                       --            --         --    1,730,974          --            --           --
   Net change in unrealized gains on
    investment securities and mortgage
    backed securities, net of tax of
    $274,929                                 --            --         --           --     442,508            --           --
   Reclassification adjustment for
    gains included in net income on
    available for sale securities,
     net of tax of $34,180                   --            --         --           --     (59,878)           --           --
Comprehensive income                         --            --         --           --          --            --           --
                                        -------   -----------  ---------  -----------  ----------  ------------  -----------

Balance - September 30, 2002             58,741    20,302,518  1,156,870   25,279,752     664,554      (960,372)  (1,196,500)

Compensation under stock based
 benefit plans                               --       262,175         --           --          --       184,312           --
Exercised options                           124       101,830         --           --          --            --           --
Rabbi Trust Liability                        --            --     86,599           --          --            --           --
Treasury stock purchased                     (9)      (14,386)        --           --          --            --           --
Cash dividends declared ($.50 per share)     --            --         --   (1,019,895)         --            --           --
   Net income for the year ended
    September 30, 2003                       --            --         --    1,297,031          --            --           --
   Net change in unrealized gains (loss)
    on investment securities and mortgage
    backed securities,
    net of tax of $903,164                   --            --         --           --  (1,261,262)           --           --
   Reclassification adjustment for gains
    included in net income on available
    for sale securities, net of tax
    of $109,585                              --            --         --           --    (174,166)           --           --
Comprehensive loss                           --            --         --           --          --            --           --
                                        -------   -----------  ---------  -----------  ----------  ------------  -----------

Balance - September 30, 2003            $58,856  $ 20,652,137 $1,243,469  $25,556,888   $(770,874) $   (776,060) $(1,196,500)
                                        =======   ===========  =========  ===========  ==========  ============  ===========


<CAPTION>

                                           Total
                                        Stockholders'
                                           Equity
                                        -------------
<S>                                         <C>

Balance - October 1, 2000               $43,342,817

Compensation under stock based
 benefit plans                              250,031
Acquisition of stock for Rabbi Trust        (87,974)
Treasury stock purchased                   (165,445)
Cash dividends declared ($.50 per share)   (995,728)
Comprehensive income
   Net income for the year ended
    September 30, 2001
   Net change in unrealized gains on
     investment securities and mortgage
     backed securities,
     net of tax of $177,385
Comprehensive income                        386,689
                                        -----------
Balance - September 30, 2001             42,730,390

Compensation under stock based
 benefit plans                              318,423
Exercised options                            60,000
Rabbi Trust Liability                     1,156,870
Acquisition of stock for Rabbi Trust        (57,000)
Treasury stock purchased                     (9,376)
Cash dividends declared ($.50 per share) (1,007,348)
Comprehensive income
   Net income for the year ended
    September 30, 2002                           --
   Net change in unrealized gains on
    investment securities and mortgage
    backed securities, net of tax of
    $274,929                                     --
   Reclassification adjustment for
    gains included in net income on
    available for sale securities,
     net of tax of $34,180                       --
Comprehensive income                      2,113,604
                                        -----------

Balance - September 30, 2002             45,305,563

Compensation under stock based
 benefit plans                              446,487
Exercised options                           101,954
Rabbi Trust Liability                        86,599
Treasury stock purchased                    (14,395)
Cash dividends declared ($.50 per share) (1,019,895)
   Net income for the year ended
    September 30, 2003                           --
   Net change in unrealized gains (loss)
    on investment securities and mortgag
    backed securities,
    net of tax of $903,164                       --
   Reclassification adjustment for gains
    included in net income on available
    for sale securities, net of tax
    of $109,585                                  --
Comprehensive loss                         (138,397)
                                        -----------
Balance - September 30, 2003            $44,767,916
                                        ===========
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.
                                      F-4
<PAGE>

                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               BALTIMORE, MARYLAND
                      ------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

<TABLE>
<CAPTION>

                                                                                     For Years Ended
                                                                                        September 30,
                                                                       --------------------------------------------
                                                                           2003           2002            2001
                                                                       ------------   ------------- ---------------
<S>                                                                        <C>           <C>               <C>
Operating Activities
     Net income                                                        $ 1,297,031     $1,730,974   $     104,765
     Adjustments to Reconcile Net Income to Net
      Cash Provided by Operating Activities
     ------------------------------------------------
         Accretion and amortization of discount and premiums
            on investments, net                                            (91,846)       (15,643)          2,778
         Dividends on investment securities                               (979,172)      (931,495)       (250,539)
         Gain on sale of investments                                       (51,859)       (91,837)             --
         Loans originated for sale                                     (12,227,172)   (10,182,800)     (2,880,566)
         Proceeds from loans sold                                       12,323,930     10,412,706       2,855,346
         Gain on loans sold                                               (344,358)      (229,906)        (25,220)
         Loan fees and costs deferred, net                                 446,920        166,414          22,860
         Amortization of deferred loan fees, net                          (678,920)      (237,860)        (94,973)
         Provision for losses on loans                                   1,359,077        509,290         332,341
         Non-cash compensation under Stock-Based
          Benefit Plan                                                     446,487        318,423         250,031
         Amortization of premium on mortgage backed
          securities                                                       586,766        274,382          97,854
         Amortization of Purchase Premiums and
          Discounts, net                                                  (295,687)      (151,710)             --
         Gain on sale of mortgage backed securities                       (231,892)        (2,221)             --
         Provision for depreciation                                        986,088        816,086         749,061
         Loss on disposal of fixed assets                                       --         14,090              --
         Loss (gain) on sale of real estate owned                               --          5,569         (15,751)
         Decrease (increase) in accrued interest receivable on loans       342,934        (26,981)        (67,137)
         Increase (decrease) in accrued interest receivable on
           investments                                                    (241,998)       323,314         121,022
         Increase in accrued interest receivable
           on mortgage backed securities                                   (25,087)       (84,272)       (183,006)
         Decrease (increase) in prepaid and deferred income taxes          417,317         81,275        (115,349)
         Decrease (increase) in other assets                                13,161       (860,459)       (533,213)
         Decrease in accrued interest payable on deposits                  (27,944)      (417,893)       (357,978)
         Increase (decrease) in income taxes payable                       134,825         52,325         (19,631)
         Increase in accounts payable Trade Date Securities             13,998,307             --              --
         (Decrease) increase in other liabilities and payables
           to disbursing agents                                           (177,060)      (754,265)        477,119
          Increase in obligation  under Rabbi Trust                         86,599             --              --
                                                                       -----------      ---------        --------
              Net cash provided by operating activities                 17,066,447        717,506         469,814
</TABLE>



                                      F-5
<PAGE>
                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland
                      ------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

<TABLE>
<CAPTION>

                                                                                           For Years Ended
                                                                                               September 30,
                                                                       --------------------------------------------

                                                                            2003          2002           2001
                                                                       ------------  -------------   --------------
<S>                                                                        <C>           <C>            <C>

Cash Flows from Investing Activities
     Proceeds from maturing interest bearing deposits                  $        --   $  2,253,000    $  2,759,000
     Purchase of interest bearing deposits                                      --             --        (792,000)
     Purchase of WHG Corporation, net of cash acquired                          --     (4,318,428)             --
     Purchases of investment securities - available for sale          (160,646,031)   (70,344,403)    (24,493,199)
     Proceeds from maturities of investment securities -
       available for sale                                               69,800,019     16,612,000       1,155,656
     Proceeds from sale of investment securities - available for sale   15,087,859     34,360,997              --
     Purchases of investment securities - held to maturity                (500,000)    (2,495,937)    (31,140,000)
     Proceeds from maturities of investment securities -
      held to maturity                                                   2,500,000     16,500,000      53,800,000
     Longer term loans originated                                      (81,058,102)   (53,326,464)    (39,947,775)
     Principal collected on longer term loans                          113,282,263     82,877,756      21,432,869
     Net increase in short-term loans                                   (2,459,676)   (42,277,864)     (7,879,826)
     Loans purchased                                                            --             --        (414,712)
     Purchase of mortgage backed securities - available for sale      (105,531,314)   (45,235,370)    (12,233,045)
     Principal collected on mortgage backed securities -
      available for sale                                                29,607,231     11,908,292         871,005
     Proceeds from sale of mortgage backed securities -
      available for sale                                                18,092,768      2,934,451              --
     Purchase of mortgage backed securities - held to maturity          (3,255,225)    (7,589,623)    (36,353,304)
     Principal collected on mortgage backed securities -
       held to maturity                                                 18,405,194     15,387,327      14,424,563
     Proceeds from sales of foreclosed real estate                              --         75,000          94,603
     Investment in premises and equipment                               (1,582,163)      (515,050)     (1,014,281)
       Redemption of Federal Home Loan Bank of Atlanta Stock                    --       (655,300)
     Purchase of Federal Home Loan Bank of Atlanta stock                   634,800             --              --
                                                                       -----------    -----------     -----------
              Net cash used by investing activities                    (87,622,377)   (43,849,616)    (59,730,446)

Cash Flows from Financing Activities
     (Decrease ) increase in checks written in excess of Bank Balance     (390,799)       390,799              --
     Net increase in demand deposits, money market,
      passbook accounts and advances by borrowers
      for taxes and insurance                                           18,955,592     22,734,854       6,457,281
     Net increase in certificates of deposit                            34,926,982     32,553,664      50,761,695
     Increases in Federal Home Loan Bank of Atlanta advances            14,000,000      6,900,000      16,400,000
     Repayment of Federal Home Loan Bank of Atlanta advances            (8,500,000)   (18,200,000)     (8,100,000)
     Acquisition of stock for Rabbi Trust                                       --        (57,000)        (87,974)
     Proceeds from Trust Preferred Securities Issued                    10,000,000     12,500,000              --
     Treasury stock purchase                                               (14,395)        (9,376)       (165,445)
     Exercised Stock Options                                               101,954         60,000              --
     Increase (decrease) in dividends payable                                1,438            846          (1,909)
     Dividends on stock                                                 (1,019,895)    (1,007,348)       (995,728)
                                                                       -----------  -------------    ------------
              Net cash provided by financing activities                 68,060,877     55,866,439      64,267,920
                                                                       -----------   ------------    ------------
</TABLE>

                                      F-6
<PAGE>




                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland
                      ------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
<TABLE>
<CAPTION>

                                                                                          For Years Ended
                                                                                             September 30,
                                                                       -------------------------------------------------
                                                                              2003        2002            2001
                                                                       ------------   -----------   -------------
<S>                                                                        <C>            <C>            <C>
(Decrease) increase in cash and cash equivalents                       $ (2,495,053)  $12,734,329    $  5,007,288
Cash and cash equivalents at beginning of period                         25,703,327    12,968,998       7,961,710
                                                                       ------------    ----------     -----------
Cash and cash equivalents at end of period                             $ 23,208,274   $25,703,327     $12,968,998

The following is a summary of cash and cash equivalents:
     Cash                                                              $ 11,032,415   $ 6,467,598    $  4,055,985
     Interest bearing deposits in other banks                            11,288,223    15,808,342       7,952,621
     Federal funds sold                                                     987,636     3,527,387       3,313,392
                                                                       ------------   -----------     -----------
     Balance of cash items reflected on Statement of
      Financial Condition                                                23,308,274    25,803,327      15,321,998

         Less - certificate of deposit with a maturity
                     of more than three months                              100,000       100,000       2,353,000
                                                                       ------------   -----------    ------------

Cash and cash equivalents reflected on the
  Statement of Cash Flows                                              $23,208,274    $25,703,327     $12,968,998
                                                                       ===========    ===========     ===========

Supplemental Disclosures of Cash Flows Information:
--------------------------------------------------
   Cash paid during the period for:

      Interest                                                         $16,157,373    $15,223,526     $14,575,316
                                                                       ===========    ===========     ===========
      Income taxes                                                     $ 1,619,900    $   990,000     $   122,866
                                                                       ===========    ===========     ===========

   Transfer from loans to real estate acquired
     through foreclosure                                               $        --    $        --     $   109,421
                                                                       ===========    ===========     ===========

</TABLE>

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

                                      F-7
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

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

     A.   Principles of Consolidation - BCSB Bankcorp, Inc. (the "Company") owns
          100% of the  voting  stock of BCSB  Bankcorp  Capital  Trust  I,  BCSB
          Bankcorp Capital Trust II, and Baltimore  County Savings Bank,  F.S.B.
          (the  "Bank").   The  Bank  owns  100%  of  Baltimore  County  Service
          Corporation  and Ebenezer  Road,  Inc. The  accompanying  consolidated
          financial  statements  include the accounts and  transactions of these
          companies  on a  consolidated  basis  since date of  acquisition.  All
          intercompany  transactions  have been  eliminated in the  consolidated
          financial statements. Ebenezer Road, Inc. sells insurance products.

     B.   Business - The Company's primary purpose is ownership of the Bank. The
          Bank's  primary  business  activity is the acceptance of deposits from
          the general  public in their  market area 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 accounting principles
          generally  accepted in the United States of America.  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 and real estate development.

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

     E.   Investments and Mortgage Backed Securities - Investment  securities in
          equity mutual funds,  certain federal agency notes and mortgage backed
          securities  may be held for an  indefinite  period  of time.  However,
          management  may sell them in response to changes in interest  rates or
          other similar  factors and,  accordingly,  carries them at fair value.
          Other  investment  securities  consisting of federal  agency notes and
          bonds and  mortgage  backed  securities  are  carried  at cost,  since
          management  has the ability and  intention  to hold them to  maturity.
          Amortization of related  premiums and discounts are computed using the
          level yield method over the life of the security.  Gains and losses on
          all investments and mortgage  backed  securities are determined  using
          the specific identification method.

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

          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.

          Unearned  interest on consumer  loans is  amortized to income over the
          terms of the related loans on the level yield method.

                                      F-8
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

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

     G.   Loans Held for Sale - Loans held for sale are carried at lower of cost
          or market value in the aggregate. Net unrealized losses are recognized
          through a valuation allowance by charges to income.

     H.   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.  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.

          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 or when payment of principal
          and interest has become ninety days past due unless the  obligation is
          well  secured  and in the  process  of  collection.  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  recognized by the interest  method over the  contractual
          life of the related loan as an adjustment of yield.

     I.   Foreclosed Real Estate - Real estate acquired  through  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 above in
          Allowance  for Loan  Losses.  In the  event of a  subsequent  decline,
          management  provides  an  additional  allowance  to reduce real estate
          acquired through foreclosure to its fair value less estimated disposal
          cost.  Costs relating to holding such real estate are charged  against
          income in the current  period while costs  relating to improving  such
          real estate are capitalized until a saleable condition is reached. The
          allowance  for  losses  on  foreclosed  real  estate  was  $50,822  at
          September 30, 2001.  There was no provision for loan losses during the
          years ended September 30, 2003, 2002, and 2001.

     J.   Loan Servicing - The cost of mortgage servicing rights is amortized in
          proportion  to,  and over  the  period  of,  estimated  net  servicing
          revenues. Impairment of mortgage servicing rights is assessed based on
          the  fair  value  of  those  rights.  Fair  values  are  estimated  by
          calculating  the net present values of the interest  payments over the
          life of the loans.  Impairment  is determined on a loan by loan basis.
          The amount of  impairment  recognized,  if any, is the amount by which
          the capitalized  mortgage  servicing rights for a loan exceed its fair
          value.

     K.   Premises and  Equipment - Premises and equipment are recorded at cost.
          Depreciation  is computed on the  straight-line  method,  based on the
          useful lives of the respective assets.

                                      F-9
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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


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

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

     M.   Earnings  Per  Share  -  The  Bank  computes  earnings  per  share  in
          accordance with Statement of Financial  Accounting  Standards No. 128.
          This  Statement  requires  dual  presentation  of  basic  and  diluted
          earnings per share ("EPS") with a reconciliation  of the numerator and
          denominator of the EPS computations. Basic per share amounts are based
          on the weighted  average shares of common stock  outstanding.  Diluted
          earnings per share assume the conversion,  exercise or issuance of all
          potential  common  stock  instruments  such as options,  warrants  and
          convertible  securities,  unless  the  effect  is to  reduce a loss or
          increase  earnings per share.  No adjustments  were made to net income
          (numerator). The basic and diluted weighted average shares outstanding
          for the years ended September 30, 2003, 2002 and 2001 are as follows:
<TABLE>
<CAPTION>
                                                                                  2003
                                                              ----------------------------------------------
                                                              Income               Shares       Per Share
                                                              (Numerator)       (Denominator)     Amount
                                                              ------------      --------------  ----------
                <S>                                              <C>                  <C>          <C>
                Basic EPS
                   Income available to share holders          $  1,297,031         5,731,209       $   0.23
                                                                                                   ========

                Diluted EPS
                   Effect of dilutive shares                            --            42,176              --
                                                              ------------      ------------       ---------
                    Income available to shareholders
                    plus assumed conversions                  $  1,297,031         5,773,385       $    0.22
                                                              ============      ============       =========

                                                                                    2002
                                                              ----------------------------------------------
                Basic EPS
                   Income available to share holders          $  1,730,974         5,646,894       $   0.31
                                                                                                   ========

                Diluted EPS
                   Effect of dilutive shares                            --            69,106
                                                              ------------      ------------
                   Income available to shareholders
                    plus assumed conversions                  $  1,730,974         5,716,000       $   0.30
                                                              ============      ============       ========


                                                                                     2001
                                                              ----------------------------------------------
                Basic EPS
                   Income available to share holders          $    104,765         5,555,939       $   0.02
                                                                                                   ========

                Diluted EPS
                   Effect of dilutive shares                            --           120,635
                                                              ------------      ------------
                   Income available to shareholders
                    plus assumed conversions                  $    104,765         5,676,574       $   0.02
                                                              ============      ============       ========

</TABLE>

                                     F-10
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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


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

     N.   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 and Federal Home
          Loan Bank of Atlanta time deposits with an original maturity date less
          than ninety days.

     O.   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)

     P.   All advertising costs are expensed as incurred.

     Q.   Merger  Agreement  - On  July  24,  2002,  the  Company  acquired  WHG
          Bancshares Corporation, the holding company for Heritage Savings Bank,
          a federally  chartered savings bank.  Holders of outstanding shares of
          WHG Bancshares received $14.25 in cash.

          The  combination  was  accounted  for  under  the  purchase  method of
          accounting,  and  accordingly,  the net assets were  recorded at their
          estimated fair values at the date of  acquisition,  July 24, 2002. The
          Company  recorded net premiums of $2,779,968 on assets and  $2,981,701
          on  liabilities.  A core  deposit  intangible  of  $630,000  was  also
          recorded.  Fair  value  adjustments  on  the  assets  and  liabilities
          purchased are being  amortized over the estimated lives of the related
          assets and liabilities. The net effect of the amortization of premiums
          on net income  before  taxes for fiscal 2003 and 2002 was $295,687 and
          $151,710,   respectively.  The  excess  of  purchase  price  over  the
          estimated  fair value of the  underlying  net assets of $2,294,327 was
          allocated  to  goodwill.  Goodwill is assessed  for  impairment  on an
          annual basis.

          The following  unaudited pro forma  condensed  consolidated  financial
          information  reflects the results of operations of the Company for the
          years  ended  September  30, 2002 and 2001 as if the  transaction  had
          occurred at the  beginning  of the period  presented.  These pro forma
          results are not necessarily  indicative of what the Company's  results
          of operations would have been had the acquisition actually taken place
          at the beginning of each period presented.
<TABLE>
<CAPTION>


                                                                       Year Ended September 30,
                                                              ------------------------------------------
                                                                   2002                     2001
                                                              -------------          ----------------
                   <S>                                                  <C>                <C>
                   Net interest income                        $  16,825,132          $   14,377,234
                   Net income                                     2,954,550               1,202,004
                   Diluted net income per share                        0.52                    0.21
</TABLE>


     R.   Core  Deposit  Intangible  - The  Company  recognized  a core  deposit
          intangible as described above as a result of the merger.  This deposit
          base  is  assumed  to  decay  over  time as  funds  are  withdrawn  by
          customers.  In this regard the Company  utilizes an  approximate  nine
          year life.  Amortization is calculated using algebraic formulas taking
          into account current  portfolio costs and the current short term LIBOR
          rate.


                                      F-11


<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

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

     S:   Stock-Based Employee  Compensation- At September 30, 2003 and 2002 the
          company has four stock-based  employee  compensation  plans, which are
          described more fully in Notes 11, 12, 13, and 14. The company accounts
          for those plans under the recognition  and  measurement  principles of
          APB Opinion No. 25,  Accounting  for Stock  Issued to  Employees,  and
          related  Interpretations.  No compensation cost is reflected in income
          for the granted  options as all granted  options had an exercise price
          equal to the market value of the  underlying  common stock on the date
          of grant. The following table illustrates the effect on net income and
          earnings  per  share  if  the  Company  had  applied  the  fair  value
          recognition  provisions  of FASB  Statement  No. 123,  Accounting  for
          Stock-Based Compensation, to stock-based employee compensation.

<TABLE>
<CAPTION>

                                                                     Year Ended September 30,
                                                              2003              2002             2001
                                                              ----              ----             ----
<S>                                                             <C>             <C>              <C>
                Net Income, as reported                $ 1,297,031        $ 1,730,974         $ 104,765
                Add: Stock-based Compenstation
                   Included in the determination of
                   Net income as reported, net of tax      317,300            261,874           438,042
                Deduct: Total stock-based compensation
                   Expense determined under fair value
                   Method for all awards, net of tax      (370,091)          (281,761)        (457,927)
                                                          --------           --------         --------
                Pro forma net income                      1,244,240         1,711,087            84,880
                                                          =========         =========            ======

                Earnings per share:

                Basic-as reported                               .23               .31               .02
                                                                ===               ===               ===
                Basic-pro forma                                 .22               .30               .02
                                                                ===               ===               ===
                Diluted-as reported                             .22               .30               .02
                                                                ===               ===               ===
                Diluted-proforma                                .22               .30               .01
                                                                ===               ===               ===
</TABLE>

     T:   Reclassification  and  Restatement - Certain prior years' amounts have
          been   reclassified  to  conform  to  the  current  year's  method  of
          presentation.


                                      F-12
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 2 - Investment Securities
         ---------------------

          The  amortized  cost and fair values of investment  securities  are as
     follows as of September 30, 2003 and 2002.
<TABLE>
<CAPTION>

                                                                         Gross             Gross
                                                   Amortized          Unrealized       Unrealized         Fair
                                                      Cost               Gains            Losses         Value
                                                   ------------      ------------      ----------      ---------
                <S>                                     <C>             <C>              <C>                <C>
    Available for Sale:

    September 30, 2003
      U.S. Government and Agency
       obligations, available for sale            $  90,011,858      $     389,529    $   (380,086)  $   90,021,301
      Equity investments in Mutual
       funds, available for sale                     31,622,832              3,526        (358,104)      31,268,254
                                                  -------------      -------------    -------------  --------------
                                                  $ 121,634,690      $     393,055    $   (769,190)  $  121,289,555
                                                  =============      =============    =============  ==============

    Held to Maturity:

    September 30, 2003
      U.S. Government and Agency
       obligations, held to maturity              $   2,500,000      $      52,898    $     (2,185)  $    2,550,713
                                                  =============      =============    =============  ==============

                                                                         Gross             Gross
                                                   Amortized          Unrealized       Unrealized         Fair
                                                      Cost               Gains            Losses         Value
                                                   ----------         ----------       -----------     ----------
   Available for Sale:

    September 30, 2002
      U.S. Government and Agency
       obligations, available for sale            $  19,084,503      $     295,706    $    (20,224)  $   19,359,985
      Equity investments in Mutual
       funds, available for sale                     25,675,170             48,132              --       25,723,302
                                                  -------------      -------------    ------------   --------------
                                                  $  44,759,673      $     343,848    $    (20,224)  $   45,083,287
                                                  =============      =============    ============   ==============

    Held to Maturity:

    September 30, 2002
      U.S. Government and Agency
       obligations, held to maturity              $   4,495,986      $     125,346    $         --   $    4,621,332
                                                  =============      =============    ============   ==============
</TABLE>





                                      F-13


<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 2 - Investment Securities - Continued
         ---------------------

          The following is a summary of investment securities:


<TABLE>
<CAPTION>


                                                           September 30, 2003                 September 30, 2002
                                                     ----------------------------       -------------------------------
                                                       Amortized          Fair            Amortized            Fair
                                                          Cost            Value              Cost              Value
                                                     -----------        ----------      -----------          ---------
<S>                                                     <C>                 <C>            <C>                   <C>
       Available for Sale:

       U.S. Government and Agency Obligations
          Due within 12 months                       $          --     $          --    $          --    $           --
          Due beyond 12 months but
           within five years                            50,092,965        50,245,452        3,599,390         3,675,198
          Due beyond five years but
           within ten years                             37,421,241        37,270,407       12,986,568        13,138,433
          Due beyond ten years                           2,497,652         2,505,442        2,498,545         2,546,354
          Equity investments in
            mutual funds                                31,622,832        31,268,254       25,675,170        25,723,302
                                                     -------------     -------------    -------------    --------------

                                                     $ 121,634,690     $ 121,289,555    $  44,759,673    $   45,083,287
                                                     =============     =============    =============    ==============

                                                           September 30, 2003                 September 30, 2002
                                                     ----------------------------       -------------------------------
                                                       Amortized          Fair            Amortized            Fair
                                                          Cost            Value              Cost              Value
                                                     -----------        ----------      -----------          ---------
       Held to Maturity:

       U.S. Government and Agency Obligations
          Due within 12 months                       $     500,000     $     516,450    $          --    $           --
          Due beyond 12 months but
           within five years                             1,500,000         1,518,835        3,499,062         3,608,673
          Due beyond five years but
           within ten years                                500,000           515,428          996,924         1,012,659
          Due beyond ten years                                  --                --               --                --
                                                     -------------     -------------    -------------    --------------

                                                     $   2,500,000     $   2,550,713    $   4,495,986    $    4,621,332
                                                     =============     =============    =============    ==============
</TABLE>

          Proceeds from  maturities  and sales of available for sale  securities
     during  the year  ended  September  30,  2003  were  $84,887,878  Net gains
     amounted to $51,859 for the year ended  September 30, 2003.  This consisted
     of gross gains of $51,859 and gross losses of $0.

          Proceeds from  maturities  and sales of available for sale  securities
     during  the year  ended  September  30,  2002 were  $50,972,997.  Net gains
     amounted to $91,837 for the year ended  September 30, 2002.  This consisted
     of gross gains of $115,207 and gross losses of $23,370.

          Proceeds from  maturities  and sales of available for sale  securities
     during the year ended  September  30, 2001 were  $1,155,656.  There were no
     gross gains or losses realized for the year ended September 30, 2001.



                                      F-14
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 2 - Investment Securities - Continued
         ---------------------

          Proceeds  from   maturities  of  held  to  maturity   securities  were
     $2,500,000,  $16,500,000  and $53,800,000 for the years ended September 30,
     2003,  2002 and 2001,  respectively.  There  were no gross  gains or losses
     realized for the years ended September 30, 2003, 2002 and 2001.

Note 3 - Loans Receivable
         ----------------

          Loans  receivable  at  September  30,  2003  and 2002  consist  of the
     following:
<TABLE>
<CAPTION>

                                                                                          September 30,
                                                                       ------------------------------------------
                                                                              2003                    2002
                                                                       ------------------      ----------------
                        <S>                                                  <C>                      <C>
              Single-family residential mortgages                      $  179,304,383          $  221,062,154
              Single-family rental property loans                          14,347,781               8,306,509
              Commercial real estate loans                                 53,674,988              57,356,553
              Construction loans                                           16,411,592              11,733,663
              Commercial loans secured                                        133,276               1,595,117
              Commercial loans unsecured                                      678,080                      --
              Commercial lease loans                                          820,116               1,170,210
              Commercial lines of credit                                    6,409,790               4,207,625
              Automobile loans                                             98,167,734              93,160,735
              Home equity loans                                            13,943,377              13,864,092
              Other consumer loans                                          3,474,142               3,896,598
                                                                       --------------          --------------
                                                                          387,365,259             416,353,256

                    Add    - Purchase Accounting Premiums, net              1,319,714               1,990,236
                    Less   - undisbursed portion of loans in process       (7,752,851)             (4,902,134)
                           - unearned interest                            (12,750,180)            (13,964,290)
                           - deferred loan origination fees and costs        (428,891)               (660,891)
                           - allowance for loan losses                     (2,698,406)             (2,199,448)
                                                                       ---------------         --------------

                                                                       $  365,054,645          $  396,616,729
                                                                       ==============          ==============
</TABLE>

<TABLE>
<CAPTION>

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

                                                                                        September 30,
                                                           ------------------------------------------------------
                                                                 2003                2002               2001
                                                           ---------------    -----------------  -----------------
                <S>                                             <C>                 <C>                   <C>
              Balance - beginning of year                  $  2,199,448       $  1,562,995       $  1,402,911
              Provision for losses on loans                   1,359,077            509,290            332,341
              Allowance assumed in acquisition                       --            386,594                 --
              Charge-offs                                    (1,238,765)          (688,742)          (344,014)
              Recoveries                                        378,646            429,311            171,757
                                                           ------------       ------------       ------------

              Balance - end of year                        $  2,698,406       $  2,199,448       $  1,562,995
                                                           ============       ============       ============
</TABLE>

          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

                                      F-15
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 3 - Loans Receivable - Continued
         ----------------

          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.

               A significant portion 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.  Automobile  loans are secured by
          vehicles and home equity loans are secured by subordinated real estate
          properties.  Repayments of automobile  loans and home equity loans are
          expected primarily from the cash flows of the borrowers.

               Non-accrual  loans for which  interest has been  reduced  totaled
          approximately  $299,386 and  $1,390,585  and $238,942 at September 30,
          2003,  2002 and 2001,  respectively.  There were no impaired  loans as
          defined by SFAS No. 114 at September  30, 2003,  2002 and 2001.  There
          was no interest  income  recognized  on impaired  loans  during  these
          periods.  The Bank was not  committed  to fund  additional  amounts on
          these loans.

               Interest  income that would have been recorded under the original
          terms of non-accrual  loans and the interest  actually  recognized for
          the years ended September 30, are summarized below:
<TABLE>
<CAPTION>

                                                                                    September 30,
                                                                     ----------------------------------------
                                                                          2003          2002         2001
                                                                       ----------  ------------  ------------
                <S>                                                       <C>          <C>            <C>

              Interest income that would have been recognized         $   22,597   $  33,122     $  20,415
              Interest income recognized                                   6,644       8,483         9,591
                                                                     ------------  ---------     ---------

                 Interest income not recognized                       $   15,953   $  24,639     $  10,824
                                                                       =========   =========     =========
</TABLE>


               The  following  table set forth the  amount and  activity  of the
          loans  outstanding to officers and directors at September 30, 2003 and
          2002.
<TABLE>
<CAPTION>

                                                                                     September 30,
                                                                            2003                    2002
                                                                       --------------          ---------------
<S>                                                                          <C>                  <C>
              Beginning balance                                        $   926,746             $   701,086
              New loans                                                    366,453                 329,482
              Loan repayments                                             (283,745)               (103,822)
                                                                       ------------            -----------

              Ending balance                                           $ 1,009,454             $   926,746
                                                                       ===========             ===========
</TABLE>



                                      F-16
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 3 - Loans Receivable - Continued
         ----------------

          The Bank services loans for others.  The amount of such loans serviced
          at  September  30,  2003  and 2002 was  $22,194,681  and  $12,306,345,
          respectively.  At  September  30, 2003 and 2002,  the balance of loans
          sold by the Bank with  recourse  amounted  to $172,828  and  $275,996,
          respectively.

               Custodial  escrow  balances  maintained  in  connection  with the
          foregoing loan  servicings were  approximately  $86,951 and $73,843 at
          September 30, 2003 and 2002, respectively.

               The   Bank   is   a   party   to   financial   instruments   with
          off-balance-sheet  risk made in the normal  course of business to meet
          the financing needs of its customers.  These financial instruments are
          standby  letters of credit,  lines of credit and  commitments  to fund
          mortgage loans and involve to varying degrees  elements of credit risk
          in excess of the  amount  recognized  in the  statement  of  financial
          position. The contract amounts of those instruments express the extent
          of involvement the Bank has in this class of financial instruments and
          represents the Bank's exposure to credit loss from  nonperformance  by
          the other party.

               Unless noted otherwise,  the Bank does not require  collateral or
          other security to support financial instruments with off-balance-sheet
          credit risk.
<TABLE>
<CAPTION>
                                                                                        Contract Amount At
           Financial Instruments Whose Contract                        --------------------------------------------
             Amounts Represent Credit Risk                             September 30, 2003        September 30, 2002
           -----------------------------------------                   ------------------        ------------------
                <S>                                                             <C>                      <C>
              Standby letters of credit                                  $     419,023             $     430,537
              Commercial lines of credit                                 $   1,065,227             $   4,645,461
              Home equity lines of credit                                $  19,344,327             $  16,163,331
              Loan commitments, fixed rate                               $   9,911,900             $  10,101,613
              Loan commitments, variable rate                            $     700,000             $   2,755,000
</TABLE>

               Standby letters of credit are conditional  commitments  issued by
          the Bank  guaranteeing  performance  by a customer  to a third  party.
          Those  guarantees are issued  primarily to support  private  borrowing
          arrangements,  generally limited to real estate  transactions.  Unless
          otherwise noted, the standby letters of credit are not collateralized.
          The credit risk involved in issuing  letters of credit is  essentially
          the same as that involved in extending loan facilities to customers.

               Home equity and commercial  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.

               Rates on mortgage  loan  commitments  for fixed rate loans ranged
          from  4.25% to 6.375%  and 5.38% to 7.25% at  September  30,  2003 and
          2002,  respectively.  There  were no  mortgage  loan  commitments  for
          variable  rate loans at  September  30,  2003 and 2002.  Rates on home
          equity loan commitments for fixed rate loans ranged from 4.5% to 6.25%
          and 5.5% to 6.5% at September 30, 2003 and 2002,  respectively.  Rates
          on home equity loan  commitments for variable rate loans were at prime
          at September 30, 2003.

               Rates on commercial loan  commitments for fixed rate loans ranged
          from 6.25% to 7.25% at September 30, 2003.  Rates on  commercial  loan
          commitments  for  variable  rate loans  ranged from .50% over prime to
          1.0% over  prime at  September  30,  2003.  Rates on  commercial  loan
          commitments for

                                      F-17


                                       13
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 3 - Loans Receivable - Continued
         ----------------

          fixed rate loans ranged from 7.0% to 8.5% at September 30, 2002. Rates
          on  commercial  loan  commitments  for variable rate loans ranged from
          0.50% over prime to 2.0% over prime at September 30, 2002.

          No amount was  recognized  in the  statement of financial  position at
     September  30,  2003 and 2002,  as  liability  for credit  loss nor was any
     liability recognized for fees received for standby letters of credit

               The Bank grants loans to customers, substantially all of whom are
          residents of the Metropolitan Baltimore and Harford County areas.

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

               The amortized cost and fair values of mortgage backed  securities
          are as follows as of September 30, 2003 and 2002:
<TABLE>
<CAPTION>
                                                                         Gross             Gross
                                                   Amortized          Unrealized       Unrealized         Fair
                                                      Cost               Gains            Losses         Value
                                                  ------------       -------------    -------------    ---------
<S>                                                     <C>               <C>                <C>           <C>
    Available for Sale:

    September 30, 2003
       GNMA certificates                          $  23,367,753      $      87,439    $    (99,976)  $   23,355,216
       FNMA certificates                             60,472,267            137,310        (672,523)      59,937,054
       FHLMC participating certificates              33,275,150            125,676        (488,695)      32,912,131
                                                  -------------      -------------    -------------  --------------
                                                  $ 117,115,170      $     350,425    $ (1,261,194)  $  116,204,401
                                                  =============      =============    =============  ==============

    September 30, 2002
       GNMA certificates                          $  28,191,758      $     264,472    $     (1,436)  $   28,454,794
       FNMA certificates                          $  19,015,492      $     258,358    $     (3,141)  $   19,270,709
       FHLMC participating certificates              12,448,442            237,187              --       12,685,629
                                                  -------------      -------------    ------------   --------------
                                                  $  59,655,692      $     760,017    $     (4,577)  $   60,411,132
                                                  =============      =============    ============   ==============

    Held to Maturity:

    September 30, 2003
       GNMA certificates                          $   5,799,850      $     227,875    $       (493)  $    6,027,232
       FNMA certificates                              8,674,844            219,028          (4,073)       8,889,799
       FHLMC participating certificates               3,919,745            149,500          (3,008)       4,066,237
                                                  -------------      -------------    -------------  --------------
                                                  $  18,394,439      $     596,403    $     (7,574)  $   18,983,268
                                                  =============      =============    =============  ==============

    September 30, 2002
       GNMA certificates                          $  11,067,019      $     562,778    $     (6,758)  $   11,623,039
       FNMA certificates                             12,555,877            366,135          (5,866)      12,916,146
       FHLMC participating certificates              10,068,534            402,058              --       10,470,592
                                                  -------------      -------------    ------------   --------------
                                                  $  33,691,430      $   1,330,971    $    (12,624)  $   35,009,777
                                                  =============      =============    ============   ==============
</TABLE>


                                      F-18
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

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

     Proceeds from sales of available for sale mortgage backed securities during
the year ended  September  30,  2003 were  $18,092,768.  Net gains  amounted  to
$231,892 for the year ended September 30, 2003. This consisted of gross gains of
$231,892  and gross  losses of $0.  Proceeds  from sales of  available  for sale
mortgage  backed  securities  during  the year  ended  September  30,  2002 were
$2,934,451.  Net gains amounted to $2,221 for the year ended September 30, 2002.
This consisted of gross gains of $3,921 and gross losses of $1,700.  No gains or
losses were realized during the year ended September 30, 2001.


Note 5 - Premises and Equipment
         ----------------------

               Premises  and  equipment  at  September  30,  2003  and  2002 are
          summarized by major classification as follows:
<TABLE>
<CAPTION>

                                                                               September 30,
                                                              -------------------------------------------
                                                                    2003              2002          Life
                                                                ------------      -----------      ------
<S>                                                                     <C>          <C>             <C>
              Office building                                 $   6,442,660     $   5,859,884       50 Years
              Leasehold improvements                              1,136,196         1,123,517     7-31 Years
              Furniture, fixtures and equipment                   6,509,469         5,526,688       10 Years
                                                              -------------     -------------
                                                                 14,088,325        12,510,089
                   Accumulated depreciation                       4,861,438         3,879,277
                                                              -------------     -------------
                                                              $   9,226,887     $   8,630,812
                                                              =============     =============
</TABLE>

               The Bank has entered into long-term  leases for the land on which
          the main  office is located and the  premises  of its branch  offices.
          Rental expense under long-term leases for property for the years ended
          September 30, 2003, 2002 and 2001 was $810,889, $649,691 and $641,512,
          respectively.  At September 30, 2003, minimum rental commitments under
          noncancellable leases are as follows:
<TABLE>
<CAPTION>

                   Years Ended September 30,                                             Amount
                   -------------------------                                        ----------------
                        <S>                                                             <C>
                          2004                                                      $     885,632
                          2005                                                          1,002,465
                          2006                                                            959,010
                          2007                                                            916,447
                          2008                                                            815,913
                       After 2008                                                       6,154,453
                                                                                    -------------
                                                                                    $  10,733,920
                                                                                    =============
</TABLE>

                                      F-19
<PAGE>
                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 6 - Core Deposit Intangible
         -----------------------
<TABLE>
<CAPTION>

                                                                                  As of             As of
                                                                              September 30,     September 30,
                                                                                  2003               2002
                                                                              -------------     ---------------
<S>                                                                                     <C>         <C>

                   Core Deposit Intangible                                    $    630,000       $     630,000
                   Accumulated Amortization                                        209,000              88,000
                                                                              ------------       -------------
                   Net balance                                                $    421,000       $     542,000
                                                                              ============       =============

                   Aggregate Amortization Expense

                        For the year ended September 30, 2003                 $    121,000
                        For the year ended September 30, 2002                 $     88,000

                   Estimated Amortization Expense

                        For the year ended September 30, 2004                 $     59,000
                        For the year ended September 30, 2005                       62,000
                        For the year ended September 30, 2006                       57,000
                        For the year ended September 30, 2007                       59,000
                        For the year ended September 30, 2008                       46,000
</TABLE>

Note 7 - Deposits
         ---------

               Deposits  are  summarized  as follows at  September  30, 2003 and
          2002:
<TABLE>
<CAPTION>

                                                                    2003                         2002
                                                   --------------------------         --------------------------
                                                        Amount          %                  Amount           %
                                                        ------         ---                 ------          ---
<S>                                                     <C>           <C>                    <C>            <C>
       Type of Account
          Deposits
             NOW                                   $    32,627,888      5.90          $    31,849,467      6.39%
             Non-interest bearing NOW                   17,929,246      3.25               13,977,091      2.80
             Money market                               15,539,432      2.82               18,909,446      3.79
             Passbook savings                          110,236,039     19.97               92,301,331     18.50
             Certificates                              375,196,296     67.99              340,269,314     68.22
             Purchase Accounting
                 Premiums, net                             340,964       .06                1,391,921       .28
                                                   ---------------    ------          ---------------    ------
                                                       551,869,865     99.99              498,698,570     99.98
             Accrued interest payable                       58,754       .01                   86,698     .02
                                                   ---------------    ------          ---------------    ------
                                                   $   551,928,619    100.00%         $   498,785,268    100.00%
                                                   ===============    ======          ===============    ======
</TABLE>
               The  aggregate  amount of jumbo  certificates  of deposit  with a
          minimum  denomination of $100,000 was  approximately  $102,517,808 and
          $73,742,000 at September 30, 2003 and 2002, respectively.  Deposits in
          excess  of  $100,000  are  not  insured  by  the  Savings  Association
          Insurance Fund.

                                      F-20
<PAGE>


                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 7 - Deposits - Continued
         --------

               At September 30, 2003,  scheduled  maturities of  certificates of
          deposit are as follows:
<TABLE>
<CAPTION>
                         <S>                                                         <C>
                         2004                                                   $  191,259,020
                         2005                                                       79,017,830
                         2006                                                       27,970,229
                         2007                                                       26,112,491
                         2008                                                       50,835,651
                         2009 and thereafter                                             1,075
                                                                                --------------
                                                                                $  375,196,296
                                                                                ==============
</TABLE>

               Interest  expense on deposits for the years ended  September  30,
          2003, 2002 and 2001 is as follows:
<TABLE>
<CAPTION>

                                                      2003                    2002                 2001
                                                      ----                    ----                 ----
                <S>                                     <C>                  <C>                     <C>
              NOW                                 $     265,521        $     434,916      $      339,812
              Money market                              161,203              172,697             176,425
              Passbooks savings                       2,129,159            2,275,939           1,486,437
              Certificates                           11,666,740           11,100,094          11,782,531
                                                  -------------        -------------      --------------
                                                  $  14,222,623        $  13,983,646      $   13,785,205
                                                  =============        =============      ==============
</TABLE>

Note 8 - Federal Home Loan Bank of Atlanta Advances
         ------------------------------------------

               The Bank has the  following  outstanding  Federal  Home Loan Bank
          advances as of September 30:
<TABLE>
<CAPTION>

                                                             2003                                    2002
                                           ---------------------------------      --------------------------------
                   Due                        Rate                Total               Rate              Total
                   ---                        ----                -----               ----              -----
                <S>                             <C>                 <C>                 <C>               <C>
             Less than one year            1.30%-7.48%        $  12,250,000       2.17% - 6.41%    $   4,500,000
             One to two years              6.60%-6.60%            1,000,000       5.00% - 7.48%        2,250,000
             Beyond two years              4.89%-6.33%           18,000,000       4.89% - 6.60%       19,000,000
             Purchase Accounting Premiums                         1,017,961                            1,218,099
             Total borrowings                                 $  32,267,861                        $  26,968,099
                                                              =============                        =============
</TABLE>

               The Bank has a $10,000,000 variable rate advance bearing interest
          at 1.3% and  fixed  rate  advances  totaling  $21,250,000  with  rates
          ranging from 4.89% to 7.48%.

               The Bank has a line of credit with the Federal  Home Loan Bank of
          Atlanta  equal to 11% of the  Bank's  assets at  September  30,  2003,
          secured by a blanket floating lien on mortgage loans  receivable.  The
          line of credit requires no compensating balances.

Note 9 - Trust Preferred Securities
         --------------------------

               Company-obligated    preferred   securities   ("trust   preferred
          securities") consist of 12,500 securities with a liquidation amount of
          $1,000 per security.  The trust  preferred  securities  were issued in
          June 2002 by a statutory business trust; BCSB Bankcorp Capital Trust I
          ("the  Business  Trust").   The  Business  Trust  is  a  wholly  owned
          subsidiary of the Company. The Business Trust used the proceeds of the
          trust   preferred   securities  to  purchase  at  par  $12,887,000  of
          adjustable rate junior subordinated debentures of the Company that are
          due June 30,  2032.  The rate is 3.65% per annum over the three-


                                      F-21
<PAGE>
                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 9 -  Trust Preferred Securities - Continued
          --------------------------

          month LIBOR rate and resets quarterly.  The rate at September 30, 2003
          and 2002 was 4.76% and 5.425%,  respectively.  The junior subordinated
          debentures are the sole assets of the Trust.

               Payments to be made by the Business Trust on the trust  preferred
          securities  are dependent on payments that the Company has  undertaken
          to make,  particularly  the  payment to be made by the  Company on the
          debentures.  Considered  together,  the  obligations  of  the  Company
          constitute a full and unconditional  guarantee of the Business Trust's
          obligations under the trust preferred securities.

               Distributions  on the  trust  preferred  securities  are  payable
          quarterly  at a rate of 3.65% per  annum  over the  three-month  LIBOR
          rate. The  distributions  are funded by interest  payments received on
          the  debentures and are subject to deferral for up to five years under
          certain  conditions.  Distributions  are included in interest expense.
          The Company may redeem the debentures,  in whole or in part, at par at
          any time after June 30, 2007, or under certain conditions in whole but
          not in part,  at any time at a  redemption  price equal to 103% of the
          principal amount plus any accrued unpaid interest.

               The Company  established a second statutory trust subsidiary (the
          "Statutory Trust"),  which issued and sold to private investors 10,000
          securities  with a liquidation  amount of $1,000 per  security,  for a
          total of $10.0 million of preferred securities. The Company funded the
          Statutory  Trust with  $310,000 in exchange for 100% of the  Statutory
          Trust's common securities.  The Statutory Trust used the proceeds from
          these   transactions   to  purchase   $10,310,000   of  floating  rate
          subordinated  debentures from the Company.  The Company makes periodic
          interest  payments on the  debentures to the Trust,  and the Statutory
          Trust  in  turn  makes  interest   payments  on  the  trust  preferred
          securities to the private investors.

               The trust preferred  securities and  subordinated  debentures are
          due October 7, 2033. The rate is 3.00% per annum over the  three-month
          LIBOR rate and resets  quarterly.  The rate at September  30, 2003 was
          4.16%. The junior  subordinated  debentures are the sole assets of the
          Statutory  Trust. The subordinated  debt securities,  unsecured,  rank
          junior and are  subordinate  in right of payment of all senior debt of
          the  Company,  and the Company has  guaranteed  repayment on the trust
          preferred  securities  issued by the Statutory Trust. The Company used
          the proceeds  from these  transactions  to increase the capital of the
          Bank. The $10.3 million of subordinated debt securities are includable
          as part of Tier 1 regulatory capital for the Bank.

               Payments to be made by the Statutory Trust on the trust preferred
          securities  are dependent on payments that the Company has  undertaken
          to make,  particularly  the  payment to be made by the  Company on the
          debentures.  Distributions  on  the  trust  preferred  securities  are
          payable  quarterly  at a rate of 3.00% per annum over the  three-month
          LIBOR rate. The distributions are funded by interest payments received
          on the  debentures  and are subject to  deferral  for up to five years
          under  certain  conditions.  Distributions  are  included  in interest
          expense.  The Company may redeem the debentures,  in whole or in part,
          at par at any time after October 7, 2008, or under certain  conditions
          in whole but not in part,  at any time at a redemption  price equal to
          103% of the principal amount plus any accrued unpaid interest.

                                      F-22



<PAGE>
                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 10 - Pension Plan
          ------------

               The Bank has a 401(k)  Retirement  Savings  Plan.  Employees  may
          contribute a percentage of their salary up to a maximum of $12,000 for
          2003.  The Bank is  obligated  to  contribute  100% of the  employee's
          contribution,  not to exceed 6% of the employee's  annual salary.  All
          employees  who have  completed  one year of service  with the Bank are
          eligible to participate. The Bank's contribution to this plan amounted
          to $305,507,  $257,635 and $267,800 for the years ended  September 30,
          2003, 2002 and 2001, respectively.

Note 11- Directors Retirement Plan
         -------------------------

               The  Director's  Retirement  Plan consisted of a Rabbi Trust that
          was invested  primarily in the Company's  stock.  The related deferred
          compensation  obligation was classified as a liability adjusted with a
          corresponding  charge (or credit) to compensation costs by multiplying
          the  number of shares  owned by the Rabbi  Trust by the  change in the
          fair  market of each share,  to reflect  changes of the amount owed to
          the  Directors.  The plan was amended in fiscal 2002. The amended plan
          divided  the then  existing  Plan into two  plans.  Under one plan the
          directors  are  credited  with a  specific  number  of  shares  of the
          Company's stock, and will be paid out by delivering only Company stock
          to the  participants.  Under the other plan directors  compensation is
          invested  primarily in one-year  certificates  of deposit.  Due to the
          change,  any increase or decrease in the market value of shares in the
          Plan  will no  longer  be  recognized  as  compensation  expense  or a
          reduction of compensation  expense, in addition the obligation related
          to the  stock  plan  is now  included  in the  equity  section  of the
          statement of financial condition.  Compensation expense was reduced by
          $170,315 for the year ended September 30, 2002, principally because of
          a decline in value of shares  held in the Rabbi Trust up to the change
          in the plan.  Compensation  expense was  increased by $431,827 for the
          year ended September 30, 2001,  principally because of the increase in
          the value of shares held in the Rabbi Trust.

Note 12- Common Stock
         ------------

               In 1998, the Bank reorganized  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,  BCSB Bankcorp,  Inc. Also  simultaneously,  a mutual holding
          company  was  formed,   Baltimore  County  Savings  Bank,   M.H.C.  In
          connection  with the  reorganization,  the  Company  issued  6,116,562
          shares of its  common  stock.  A  majority  of that  stock  (3,754,960
          shares)  was issued to  Baltimore  County  Savings  Bank,  M.H.C.  The
          remainder was issued to the general public. Also, the Bank established
          the  Baltimore  County  Savings  Bank,  F.S.B.  Foundation  through  a
          contribution of 75,000 shares of its common stock.

               At the same time as the  reorganization,  the Bank established an
          Employee Stock  Ownership Plan ("ESOP") for its employees.  On July 8,
          1998 the ESOP acquired 182,928 shares of the Company's common stock in
          connection with the Bank's  Reorganization to a mutual holding company
          form of  organization.  The ESOP holds the common stock in a trust for
          allocation among participating

                                      F-23


<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 12- Common Stock - Continued
         ------------

          employees,  in trust or allocated to the participants' accounts and an
          annual contribution from the Bank to the ESOP and earnings thereon.

               All  employees  of the Bank who attain the age of 21 and complete
          one year of service with the Bank will be eligible to  participate  in
          the ESOP.  Participants  must be employed at least 500 hours in a plan
          year in order to  receive an  allocation.  Each  participant's  vested
          interest  under  the ESOP is  determined  according  to the  following
          schedule:  0% for less than 2 years of service with the Company or the
          Bank, 20% for 2 years of service,  40% for 3 years of service, 60% for
          4 years of service,  80% for 5 years of service,  and 100% for 6 years
          of service.  For vesting  purposes,  a year of service  means any plan
          year in which an  employee  completes  at least 1,000 hours of service
          (whether  before or after the ESOP's January 1, 1998 effective  date).
          Vesting accelerates to 100% upon a participant's attainment of age 65,
          death or disability.

               The ESOP will be funded by contributions made by the Bank in cash
          or common  stock and  dividends  on the shares held in the Trust.  The
          Bank will recognize  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 the
          debt service. The compensation costs for the years ended September 30,
          2003,   2002  and  2001  were   $263,744  ,  $211,228  and   $159,858,
          respectively.

               The ESOP shares were as follows as of September 30:
<TABLE>
<CAPTION>

                                                                                2003             2002
                                                                                ----             ----
                <S>                                                             <C>              <C>
             Shares released and allocated                                  105,324              86,893
             Unearned shares                                                 77,606              96,037
                                                                       ------------       -------------
                                                                            182,930             182,930
                                                                       ============       =============

             Fair value of unearned shares                             $  1,263,340       $   1,200,463
                                                                       ============       =============
</TABLE>


Note 13- Management Recognition Plan
         ---------------------------

               On July 15, 1999, the Bank  established a Management  Recognition
          Plan  ("MRP") to retain  personnel  of  experience  and ability in key
          positions of  responsibility.  Members of the Board of  Directors  and
          certain executive  officers may be awarded a total of 91,464 shares of
          stock,  which will be held in a separate  trust that  manages the MRP.
          The Bank  funded the MRP during the year ended  September  30, 1999 by
          purchasing  87,000  shares of common stock in the open market.  During
          the year ended  September 30, 2000,  the  remaining  4,464 shares were
          purchased. The Bank initially awarded an aggregate of 45,600 shares of
          common  stock.  During  the year  ended  September  30,  2002 the Bank
          awarded an  additional  25,750  shares,  and  intends  to reserve  the
          remaining 20,114 shares for possible future awards.  Shares awarded to
          the  participants  in the MRP  vest at a rate of 25% per  year on each
          anniversary  of the effective  date of the MRP award.  As of September
          30, 2003,  52,038  shares have  vested.  If a  participant  terminates
          employment for reasons other than death, disability, change in control
          or  retirement  he or she  forfeits  all  rights to  unvested  shares.
          Compensation  expense  in the amount of the fair  market  value of the
          Common  Stock at the date of the  grant is  recognized  on a  pro-rata
          basis over the years during which the shares are earned.  Compensation
          expense of $127,230,  $98,224 and $89,780 was  recognized  for the MRP
          for the years ended September 30, 2003,  2002 and 2001,  respectively.

                                      F-24
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 14- Stock Option Plan
         -----------------

               The Company has a Stock Option Plan (the "Plan")  whereby 228,660
          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
          four 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. There were 76,500 options granted during the year ended
          September  30, 2002.  No options  were  granted  during the year ended
          September 30, 2003 and 2001.

               The following  table  summarizes the status of and changes in the
          Company's stock option plan during the past three years.
<TABLE>
<CAPTION>

                                                                                   Weighted Average
                                                                Shares               Exercise Price
                                                                --------           -----------------
                <S>                                               <C>                     <C>
             Outstanding at October 1, 2000 and
                  September 30, 2001                               80,000              $8.00

             Options exercised                                    (7,500)               8.00
             Granted                                               76,500              11.375
                                                                ---------              ------
             Outstanding at September 30, 2002                    149,000              $9.71

             Options exercised                                    (12,375)              8.24
             Granted                                                    0                .00
                                                                ---------              -----
             Outstanding at September 30, 2003                    136,625            $  9.87
                                                                =========            =======

             Exercisable at September 30, 2001                     40,000              $8.00
                                                                =========

             Exercisable at September 30, 2002                     52,500              $8.00
                                                                =========

             Exercisable at September 30, 2003                     79,250             $ 8.77
                                                                =========
</TABLE>

               SFAS No. 123, "Accounting for Stock-Based Compensation", requires
          the Company to make certain disclosures as if the fair value method of
          accounting had been applied to the Company's  stock option grants made
          subsequent to 1994. Accordingly,  the Company estimated the grant date
          fair  value  of  each   option   awarded  in  fiscal  1999  using  the
          Black-Scholes   Option-Pricing   model  with  the  following  relevant
          assumptions: dividend yield of 6.25%, risk-free interest rate of 5.72%
          and expected lives of 10 years. The assumption for expected volatility
          was 31.55%. The estimated fair value of each option granted was $1.62.

               The  Company  estimated  the grant date fair value of each option
          awarded in fiscal 2002 using the  Black-Scholes  Option-Pricing  model
          with the  following  relevant  assumptions:  dividend  yield of 4.08%,
          risk-free  interest rate of 4.49% and expected lives of 10 years.  The
          assumption  for expected  volatility  was 32.63%.  The estimated  fair
          value of each option granted was $2.80.



                                      F-25
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 15- 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, 2003,  that the Bank meets all capital
          adequacy requirements to which it is subject.

               As of September 30, 2003, 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.

               The following table presents the Bank's capital position based on
          the  September  30  financial   statements  and  the  current  capital
          requirements.

<TABLE>
<CAPTION>


                                                                                                    To Be Well
                                                                                                Capitalized Under
                                                                              For Capital       Prompt Corrective
                                                      Actual              Adequacy Purposes     Action Provisions
                                             ----------------------     -------------------   ---------------------
                                               Amount         Ratio       Amount      Ratio    Amount      Ratio
                                              --------        -----      --------    -------   ------      ------
        <S>                                     <C>           <C>          <C>         <C>      <C>           <C>
       September 30, 2003
       Tangible (1)                          $  52,170,469     7.96%    $ 9,831,847    1.5%   $   N/A        N/A%
       Tier I capital (2)                       52,170,469    15.61             N/A    N/A     20,053,560    6.0
       Core (1)                                 52,170,469     7.96      26,218,260    4.0     32,772,825    5.0
       Risk-weighted (2)                        54,226,285    16.22      26,738,080    8.0     34,222,600   10.0

       September 30, 2002
       Tangible (1)                          $  46,635,461     8.09%    $ 8,650,374    1.5%   $   N/A        N/A%
       Tier I capital (2)                       46,635,461    13.77             N/A    N/A     20,323,889    6.0
       Core (1)                                 46,635,461     8.09      23,067,663    4.0     28,834,579    5.0
       Risk-weighted (2)                        48,761,922    14.40      27,098,519    8.0     33,873,148   10.0
</TABLE>

(1) To adjusted total assets.
(2) To risk-weighted assets.



                                      F-26

<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 15- Retained Earnings - Continued
         -----------------

               The OTS has adopted an interest rate risk component of regulatory
          capital  requirements  effective  January 1, 1994.  The rule  requires
          additional  capital to be maintained if the Bank's  interest rate risk
          exposure,  measured by the  decline in the market  value of the Bank's
          net portfolio  value,  exceeds 2% of assets as a result of a 200 basis
          point shift in interest  rates.  As of September 30, 2003, the Bank is
          not subject to the interest rate risk requirement.

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

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

Note 16- Income Taxes
         ------------

               The current tax provision consists of the following for the years
          ended September 30, 2003, 2002 and 2001:

<TABLE>
<CAPTION>

                                                        2003               2002                2001
                                                        ----               ----                ----
<S>                                                     <C>                     <C>            <C>
             Current expense                         $ 656,611         $  1,026,926       $     335,037
             Deferred benefit                           (1,658)             (42,950)           (255,747)
                                                     ----------        ------------       -------------
                Total tax expense                    $ 654,953         $    983,976       $      79,290
                                                     =========         ============       =============
</TABLE>



                                      F-27


<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 16- Income Taxes - Continued
         ------------

               The tax  effects  to  temporary  differences  that  give  rise to
          significant  portions  of the  deferred  tax assets and  deferred  tax
          liabilities at September 30, 2003, and 2002 are as follows:
<TABLE>
<CAPTION>

                                                                                   2003                 2002
                                                                                   ----                 ----
<S>                                                                             <C>                      <C>
              Deferred Tax Assets:
                ESOP and MRP                                                  $      44,338        $    44,338
                Deferred compensation                                               317,417             87,564
                Allowance for loan losses                                         1,042,124            700,124
                Allowance for uncollected interest                                    5,314              5,477
                Deferred loan fees                                                       --            207,115
                Unrealized holding losses                                           485,030                 --
                                                                              -------------        -----------
                      Total gross deferred tax assets                             1,894,223          1,044,618

             Deferred Tax Liabilities:
                Federal Home Loan Bank of Atlanta
                   stock dividends                                                 (208,892)          (208,892)
                   Depreciation                                                    (607,257)          (286,579)
                Unrealized holding gains                                                 --           (415,083)
                Market value change in Rabbi Trust assets                           (69,268)           (19,544)
                Purchase Accounting Premiums, net                                    (8,698)           (16,183)
                                                                              -------------        -----------
                         Total gross deferred tax liabilities                      (894,115)          (946,281)
                                                                              -------------        -----------
                Net Deferred Tax Assets                                       $   1,000,108        $    98,337
                                                                              =============        ===========

</TABLE>


               The amount computed by applying the statutory  federal income tax
          rate to income before taxes and extraordinary item is greater than the
          taxes provided for the following reasons:

<TABLE>
<CAPTION>
                                                                For the Years Ended September 30,
                                                  ---------------------------------------------------------------------
                                                              2003                    2002                2001
                                                  --------------------    -------------------    ----------------------
                                                             Percent                  Percent                  Percent
                                                            of Pretax                of Pretax                 of Pretax
                                                  Amount     Income        Amount      Income     Amount       Income
                                                  ------    --------       ------    ---------    ------      --------
                <S>                                 <C>      <C>             <C>      <C>           <C>           <C>

              Statutory federal income tax rate $  663,675   34.00%      $  923,083   34.00%    $    62,579    34.00%
              Increases Resulting From
                 State income tax net of
                  federal income tax benefit        46,727    2.39           56,768    2.09           7,187     3.90
                 Other                             (55,449)  (2.84)           4,125    0.15           9,524     5.17
                                                ----------   -----       ----------   -----     -----------    -----
                                                $  654,953   33.55%      $  983,976   36.24%    $    79,290    43.07%
                                                ==========   =====       ===========  =====     ===========    =====
</TABLE>


                                      F-28
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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


Note 16- Income Taxes - Continued
         ------------

               The Company and its subsidiaries  file a consolidated  income tax
          return on a fiscal year basis.  The returns  have been  audited by the
          Internal Revenue Service through the year ended September 30, 1994.

               Qualified  thrift  lenders  such as the Bank are not  required to
          provide  a  deferred  tax  liability  for bad  debt  reserves  for tax
          purposes  that arose in fiscal  years  beginning  before  December 31,
          1987.  Such bad debt  reserve for the Bank  amounted to  approximately
          $6,249,261  with an income tax effect of  approximately  $2,413,997 at
          September  30,  2003.  This bad debt reserve  would become  taxable if
          certain conditions are met by the Bank.

Note 17- Related Party Transactions
         --------------------------

               Director  Michael  J. Klein is a member  holding a 30%  ownership
          interest in Colgate Investments, LLC, a limited liability company that
          owns real property that the Bank leases for a branch office site.  The
          Bank paid $57,000 in rent to Colgate Investments,  LLC during the year
          ended September 30, 2003 and expects to pay the same amount during the
          year  ended   September  30,  2004.   The  remaining  70%  of  Colgate
          Investments, LLC is owned by Mr. Klein's siblings.

Note 18- Disclosures About Fair Value of Financial Instruments
         -----------------------------------------------------

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

               The carrying  amount is a  reasonable  estimate of fair value for
          cash, federal funds and interest-bearing deposits in other banks. 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.  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.
          Preferred  Trust  Securities are  considered to be at fair value.  The
          fair value of  fixed-maturity  certificates  of  deposit is  estimated
          using the rates  currently  offered on deposits  of similar  remaining
          maturities.  The fair  value of  Federal  Home Loan Bank  advances  is
          estimated  using  rates  currently  offered  on  advances  of  similar
          remaining maturities.


                                      F-29


<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 18- Disclosures About Fair Value of Financial Instruments - Continued
         -----------------------------------------------------

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

<TABLE>
<CAPTION>

                                                          September 30, 2003               September 30, 2002
                                                     ----------------------------   ----------------------------
                                                     Carrying        Estimated      Carrying         Estimated
                                                      Amount         Fair Value      Amount          Fair Value
                                                     --------        ----------     --------         ----------
<S>                                                     <C>            <C>           <C>                  <C>
                                                                     (Amounts in Thousands)
    Financial Assets
    ----------------
    Cash                                             $   11,032      $  11,032      $      6,468     $     6,468
    Interest bearing deposits in other banks             11,288         11,288            15,808          15,808
    Federal funds sold                                      988            988             3,527           3,527
    Investment securities - available for sale          121,290        121,290            45,083          45,083
    Investment securities - held to maturity              2,500          2,551             4,496           4,621




    Loans Receivable
    ----------------
        Mortgage loans                               $  277,355      $ 270,107      $    325,264     $   339,983
        Share loans                                       1,152          1,152             1,332           1,332
        Consumer loans                                   86,548         86,634            71,353          71,353
    Mortgage backed securities - available for sale     116,204        116,204            60,411          60,411
    Mortgage backed securities - held
     to maturity                                         18,394         18,983            33,691          35,010
Federal Home Loan Bank of Atlanta stock                   3,305          3,305             3,940           3,940
</TABLE>

<TABLE>
<CAPTION>

                                                          September 30, 2003               September 30, 2002
                                                     ----------------------------   ----------------------------
                                                     Carrying        Estimated      Carrying         Estimated
                                                      Amount         Fair Value      Amount          Fair Value
                                                     --------        ----------     ---------        -----------
<S>                                                     <C>            <C>            <C>              <C>
                                                                     (Amounts in Thousands)
    Financial Liabilities
    ---------------------
    Deposits                                         $  551,929      $ 556,982      $    498,785     $   500,902
    Federal Home Loan Bank of Atlanta
      advances                                           32,268         32,392            26,968          26,982
    Mortgage loan commitments                                --         10,611                --          12,857
    Trust Preferred securities                           22,500         20,500            12,500          12,500
</TABLE>


                                      F-30
<PAGE>


                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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


Note 19- Condensed Financial Information (Parent Company Only)
         -------------------------------

          Information  as to the  financial  position  of  BCSB  Bankcorp  as of
     September  30, and the results of  operations  and cash flows for the years
     ended September 30 are summarized below.

<TABLE>
<CAPTION>

                                                                       September 30,           September 30,
                                                                              2003                    2002
                                                                       ------------------      ------------------
<S>                                                                             <C>                   <C>
Statement of Financial Condition

               Assets
               ------
Cash                                                                   $      527,537          $      115,162
Interest bearing deposits in other banks                                    6,055,930               1,182,507
Investment securities - available for sale                                  3,176,829               3,115,576
Investment securities, held to maturity                                     2,000,000               3,495,986
Employee Stock Ownership Plan loan                                            913,256               1,097,568
Accrued interest receivable                                                    65,420                  75,645
Investment in Subsidiaries                                                 53,581,623              47,775,863
Prepaid income taxes                                                          188,419                  25,359
Other assets                                                                  698,074                 488,871
                                                                       --------------          --------------
Total assets                                                           $   67,207,088          $   57,372,537
                                                                       ==============          ==============

                        Liabilities and Stockholders' Equity

Liabilities
   Long-Term Sub-debentures                                                23,197,000              12,887,000
   Accrued taxes payable                                                      188,960                  54,135
   Dividends payable                                                          266,329                 264,891
   Other liabilities                                                           30,352                  17,818
                                                                       --------------          --------------
                                                                           23,682,641              13,223,844
                                                                       ==============          ==============
Stockholders' Equity
   Common Stock (5,885,593 and 5,874,082 shares issued
        and outstanding, respectively)                                         58,856                  58,741
   Paid-in Capital                                                         20,652,137              20,302,518
   Retained earnings (substantially restricted)                            25,556,888              25,279,752
                                                                       --------------          --------------
                                                                           46,267,881              45,641,011
   Employee Stock Ownership Plan                                             (776,060)               (960,372)
   Stock held by Rabbi Trust                                               (1,196,500)             (1,196,500)
   Accumulated other comprehensive income (net of tax)                       (770,874)                664,554
                                                                       --------------          --------------
Total stockholders' equity                                                 43,524,447              44,148,693
                                                                       --------------          --------------
Total liabilities and stockholders' equity                             $   67,207,088          $   57,372,537
                                                                       ==============          ==============
</TABLE>

                                      F-31
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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

Note 19- Condensed Financial Information (Parent Company Only) - Continued
         -------------------------------
<TABLE>
<CAPTION>
                                                            September 30,       September 30,     September 30,
                                                                   2003                2002              2001
                                                            ---------------     ---------------  -------------------
<S>                                                                <C>                <C>                <C>
Statements of Operations
   Interest and fees on loans                               $      42,757       $     70,333      $    50,452
   Interest and dividends on investment securities                199,443            287,635          309,121
   Other interest income                                           39,085             33,179          147,701
                                                            -------------       ------------      -----------

Total interest income                                             281,285            391,147          507,274
   Interest on borrowings                                         659,095            187,380               --
                                                            -------------       ------------      -----------

Net interest income                                              (377,810)           203,767          507,274

Non interest expense
   Professional fees                                               71,042             74,654           71,806
   Other expenses                                                 165,278             88,647           65,200
                                                            -------------       ------------      -----------

Total non-interest expense                                        236,320            163,301          137,006
                                                            -------------       ------------      -----------

Net (loss) income before tax provision                           (614,130)            40,466          370,268

Income tax (benefit) provision                                   (208,804)            15,628          142,997
(Loss) Income before equity in net income of subsidiary          (405,326)            24,838          227,271
Equity in net income of subsidiary                              1,702,357          1,706,136         (122,506)
                                                            -------------       ------------      -----------

Net income                                                      1,297,031          1,730,974          104,765
                                                            =============       ============      ===========

Statement of Cash Flows

Net income                                                      1,297,031          1,730,974          104,765
Adjustments to reconcile Net Income to Net Cash Provided
   By Operating Activities
   Accretion of discount on investments                            (4,014)              (272)          (1,502)
   Equity in net (income) loss of subsidiary                   (1,702,357)        (1,706,136)         122,505
   Decrease in accrued interest receivable                         10,225             72,228           84,512
   Increase in prepaid taxes                                     (153,361)           (25,359)              --
   Increase in receivable from subsidiary                          93,697            (93,697)              --
   Increase in other assets                                      (209,203)          (378,475)         (34,448)
   Increase (decrease) in income taxes payable                    134,825             50,911          (21,644)
   Decrease in other liabilities                                   12,534           (133,468)        (111,455)
   Noncash compensation under stock-based benefit plan            141,980            101,920           83,025
                                                            -------------       ------------      -----------
        Net cash (used by) provided by operating activities      (378,643)          (381,374)         225,758

</TABLE>

                                      F-32
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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


Note 19- Condensed Financial Information (Parent Company Only) - Continued
         -------------------------------
<TABLE>
<CAPTION>

                                                             September 30,      September 30,    September 30,
                                                                   2003                2002          2001
                                                             ------------------ ---------------  -------------
<S>                                                             <C>                  <C>              <C>
Cash Flows from Investing Activities
   Additional investment in subsidiaries                    $  (5,310,000)     $(12,887,000)     $         --
   Proceeds from maturing interest bearing deposits                    --            495,000               --
   Purchase of interest bearing deposits                               --                 --         (495,000)
   Proceeds from maturities of investment securities -
       held to maturity                                         2,000,000          4,000,000        6,250,000
   Proceeds from sale of investment securities -
      available for sale                                               --            819,936               --
   Purchase of investment securities - available for sale         (88,973)        (3,929,247)              --
   Purchase of investment securities - held to maturity          (500,000)        (2,495,937)      (4,000,000)
   Principal collected on longer term loans                       184,312            182,928          182,928
                                                            -------------       ------------     ------------
         Net cash (used by) provided by investing activities   (3,714,661)       (13,814,320)       1,937,928

Cash Flows from Financing Activities
   Increase in Long-Term Sub-debentures                        10,310,000         12,887,000               --
   Treasury Stock repurchase                                      (14,395)            (9,376)        (165,445)
   Exercised options                                              101,954             60,000               --
   Dividends on stock                                          (1,019,895)        (1,007,348)        (995,728)
   Increase (decrease) in dividends payable                         1,438                846           (1,909)
                                                            -------------       ------------     ------------
         Net cash provided (used by) financing activities       9,379,102         11,931,122       (1,163,082)

Increase (Decrease) in cash and cash equivalents                5,285,798         (2,264,572)       1,000,604
Cash and cash equivalents at beginning of period                1,297,669          3,562,241        2,561,637
                                                            -------------       ------------     ------------
Cash and cash equivalents at end of period                      6,583,467          1,297,669        3,562,241
                                                            =============       ============     ============

The following is a summary of cash and cash equivalents
   Cash                                                           527,537            115,162        1,406,140
   Interest bearing deposits in other banks                     6,055,930          1,182,507        2,651,101
                                                            -------------       ------------     ------------

   Balance of cash items reflected on Statement of Financial
        Condition                                               6,583,467          1,297,669        4,057,241
         Less - certificates of deposit with an original
                  maturity of more than three months                   --                 --          495,000
                                                            -------------       ------------     ------------

Cash and cash equivalents reflected on the
   Statement of Cash Flows                                  $   6,583,467       $  1,297,669     $  3,562,241
                                                            =============       ============     ============
</TABLE>

                                      F-33
<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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


Note 20- Recent Accounting Pronouncements
         --------------------------------

          In April 2003,  FASB issued SFAS No. 149,  "Amendment of Statement 133
     on Derivative  Instruments and Hedging Activities." This Statement improves
     financial   reporting  by  requiring   that   contracts   with   comparable
     characteristics be accounted for similarly.  In particular,  this Statement
     (1)  clarifies  under what  circumstances  a contract  with an initial  net
     investment meets the characteristics of a derivative discussed in paragraph
     6(b) of Statement 133, (2) clarifies when a derivative contains a financing
     component,  (3) amends the  definition  of an  underlying  to conform it to
     language used in FASB  Interpretation No. 45,  "Guarantor's  Accounting and
     Disclosure  Requirements for Guarantees,  Including Indirect  Guarantees of
     Indebtedness   of  Others",   and  (4)  amends   certain   other   existing
     pronouncements.  Those  changes  result  in more  consistent  reporting  on
     contracts as either  derivatives or hybrid  instruments.  This Statement is
     effective for contracts and hedging  relationships entered into or modified
     after June 30, 2003.

          In May  2003,  FASB  issued  SFAS  No.  150  "Accounting  for  Certain
     Financial Instruments with Characteristics of both Liabilities and Equity."
     This Statement requires that an issuer classify a financial instrument that
     is within  its scope as a  liability  (or an asset in some  circumstances).
     This  Statement  is effective  for  financial  instruments  entered into or
     modified after May 31, 2003.

          The above accounting  pronouncements did not have a material impact on
     the consolidated financial statements.

Note 21- Quarterly Financial Date (Unaudited)
         ------------------------

               Summarized  unaudited quarterly financial data for the year ended
          September 30, 2003 is as follows:

<TABLE>
<CAPTION>

Operating Summary:                           First            Second            Third            Fourth
                                            Quarter           Quarter           Quarter          Quarter

<S>                                             <C>               <C>            <C>              <C>
         Interest Income                    $8,681,989        $8,654,416        $8,192,950       $7,637,597
         Interest Expense                    4,186,237         4,044,790         3,994,914        3,880,702
                                             ---------         ---------         ---------      -----------
                  Net Interest Income        4,495,752         4,609,626         4,198,036        3,756,895
         Provision for Loan Losses             281,998           130,367           786,348          160,364
                                             ---------         ---------         ---------      -----------

                  Net Interest Income
                  after provision for
                  loan losses                4,213,754         4,479,259         3,411,688        3,596,531
              Other Income                     425,754           526,056           392,491          242,847
              Other Expense                  3,907,781         3,747,140         3,771,334        3,910,141
                                             ---------         ---------         ---------      -----------

                 Interest income before
                   income tax expense          731,727         1,258,175            32,845          (70,763)
              Income Taxes                     279,218           479,592            11,000         (114,857)
                                             ---------         ---------         ---------      -----------
                 Net Income                    452,509           778,583            21,845           44,094
                                             =========         =========         =========      ===========


             Per share date:
                     Earnings -basic               .08               .14               .00              .01
                     Earnings -diluted             .08               .14               .00              .01
</TABLE>



                                      F-34


<PAGE>

                               BCSB BANKCORP, INC.
                               -------------------
                                AND SUBSIDIARIES
                               -------------------
                               Baltimore, Maryland
                               -------------------

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


Note 21- Quarterly Financial Date (Unaudited)- Continued
         -----------------------------------------------

               Summarized  unaudited quarterly financial data for the year ended
          September 30, 2002 is as follows:
<TABLE>
<CAPTION>

Operating Summary:                          First             Second            Third            Fourth
                                            Quarter           Quarter           Quarter          Quarter
        <S>                                     <C>            <C>               <C>                <C>
         Interest Income                    $6,662,556        $6,616,609        $6,864,620       $8,336,486
         Interest Expense                    3,826,097         3,527,847         3,571,351        4,020,970
                                            ----------        ----------        ----------       ----------
              Net Interest Income            2,836,459         3,088,762         3,293,269        4,315,516
         Provision for Loan Losses              63,862             5,508           139,881          300,039
                                            ----------        ----------        ----------       ----------

              Net Interest Income
              after provision for loan
              losses                         2,772,597         3,083,254         3,153,388        4,015,477
          Other Income                         146,759           314,263           260,065          332,393
          Other Expense                      2,718,713         2,710,704         2,630,165        3,303,664
                                            ----------        ----------        ----------       ----------

                 Interest income before
                   income tax expense          200,643           686,813           783,288        1,044,206
          Income Taxes                          77,467           266,472           303,120          336,917
                                            ----------        ----------        ----------       ----------
                 Net Income                    123,176           420,341           480,168          707,289
                                            ==========        ==========        ==========       ==========

          Per share date:
                 Earnings -basic                   .02               .08               .09              .13
                 Earnings -diluted                 .02               .07               .08              .12

</TABLE>


                                      F-35
<PAGE>

                               BOARD OF DIRECTORS
<TABLE>
<CAPTION>
<S>                                             <C>                                     <C>
HENRY V. KAHL                            GARY C. LORADITCH                        JOHN J. PANZER, JR.
Chairman of the Board                    President and Chief Executive Officer    Self Employed Builder
                                         of the Company and the Bank

H. ADRIAN COX
Vice Chairman of the Board               WILLIAM M. LOUGHRAN                      P. LOUIS ROHE, JR.
Insurance Agent for Rohe and Rohe        Senior Vice President of the Company     Retired
Associates, Baltimore, Maryland          and the Bank

                                         MICHAEL J. KLEIN                         WILLIAM J. KAPPAUF, JR.
                                         Vice President, Klein's                  Director of Cash Management for
                                          Super Markets                           Baltimore Gas & Electric Co.
                                                                                  Baltimore, Maryland


                               EXECUTIVE OFFICERS

GARY C. LORADITCH                         WILLIAM M. LOUGHRAN                     BONNIE M. KLEIN
President and Chief Executive Officer     Senior Vice President                   Vice President and Treasurer
                                           Chief Lending Officer                   Chief Financial Officer

DAVID M. MEADOWS                          KELLIE T. RYCHWALSKI
Vice President, Secretary and General     Vice President
Counsel                                    Retail Banking Officer


                                OFFICE LOCATIONS

4111 E. Joppa Road, Suite 300             4208 Ebenezer Road                      563 Bel Air Plaza
Baltimore, Maryland  21236                Perry Hall, Maryland 21128              Bel Air, Maryland 21014

1736 Merritt Blvd.                        2165 York Road                          712 N. Rolling Road
Dundalk, Maryland 21222                   Timmonium, Maryland 21093               Catonsville, Maryland 21228

515 Eastern Avenue                        5340 Campbell Boulevard                 2128 N. Fountain Green Road
Baltimore, Maryland  21221                Baltimore, Maryland 21236               Bel Air, Maryland  21015

2105 Rock Spring Road                     402 Constant Friendship Boulevard       9613 Harford Road
Forest Hill, Maryland 21050               Abingdon, Maryland 21009                Baltimore, MD 21234

1505 York Road                            8767 K Philadelphia Road                4228 Harford Road
Lutherville, Maryland 21093               Baltimore, Maryland 21237               Baltimore, Maryland 21214

2101 Gwynn Oak Road                       9416 Baltimore National Pike
Baltimore, Maryland 21207                 Ellicott City, Maryland 21042
</TABLE>



<PAGE>



                              CORPORATE INFORMATION
<TABLE>
<CAPTION>
<S>                                             <C>                                     <C>
                                                                                   ANNUAL REPORT ON FORM 10-K
INDEPENDENT CERTIFIED PUBLIC             SPECIAL COUNSEL
ACCOUNTANTS                              Stradley Ronon Stevens & Young, LLP
Anderson Associates, LLP                 1220 19th Street, N.W., Suite 600         A copy of the Company's Annual
7621 Fitch Lane                          Washington, D.C.  20036                   Report on Form 10-K for the fiscal
Baltimore, Maryland 21236                                                          year ended September 30, 2003 as
                                         ANNUAL MEETING                            filed with the Securities and
GENERAL COUNSEL                          The 2004 Annual Meeting of Stockholders   Exchange Commission, will be
Moore, Carney, Ryan & Lattanzi, LLC      will be held on February 11, 2004 at      furnished without charge to
4111 E. Joppa Road, Suite 201            4:00 p.m. at the Bank's Perry Hall        stockholders as of the record date
Baltimore, Maryland 21236                office located at 4208 Ebenezer Road,     for the 2004 Annual Meeting upon
                                         Baltimore, Maryland                       written request to Corporate
TRANSFER AGENT AND REGISTRAR                                                       Secretary, BCSB Bankcorp, Inc.,
American Stock and Transfer Co.                                                    4111 E. Joppa Road, Suite 300,
6201 15th  Avenue                                                                  Baltimore, Maryland  21236.
Brooklyn, New York  11212

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