UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                              --------------------

                                    FORM 10-K

      FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
For the fiscal year ended September 30, 2003

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from                to
                               --------------    ---------

                           Commission File No. 0-24589

                               BCSB BANKCORP, INC.
                ------------------------------------------------
                (Name of Registrant as Specified in its Charter)

      UNITED STATES                                       52-2108333
---------------------------------                  -------------------------
(State or Other Jurisdiction                           (I.R.S. Employer
of Incorporation or Organization)                      Identification No.)

4111 E. JOPPA ROAD, SUITE 300, BALTIMORE, MARYLAND              21236
---------------------------------------------------     --------------------
(Address of Principal Executive Offices)                   (Zip Code)

         Issuer's telephone number, including area code: (410) 256-5000

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

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

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                     --------------------------------------
                                (Title of Class)

     Indicate  by check  mark  whether  the  registrant:  (1) filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X  No
                                             ---   ---

     Indicate  by check  mark if there is no  disclosure  of  delinquent  filers
pursuant to Item 405 of  Regulation  S-K is not  contained in this form,  and no
disclosure  will  be  contained,  to the  best  of  registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes    No X
                                        ---   ---

     The aggregate  market value of voting and common  non-voting  common equity
held by non-affiliates  was approximately  $25,493,309  computed by reference to
the closing sale price for the  registrant's  common stock on September 30, 2003
as reported on The Nasdaq National Market. For purposes of this calculation,  it
is assumed that directors, executive officers and beneficial owners of more than
5% of the registrant's outstanding voting stock are affiliates.

Number of shares of Common Stock outstanding as of December 1, 2003: 5,885,593

                       DOCUMENTS INCORPORATED BY REFERENCE

     The following lists the documents incorporated by reference and the Part of
the Form 10-K into which the document is incorporated:

     1.   Portions of the  registrant's  Annual Report to  Stockholders  for the
          Fiscal Year ended September 30, 2003. (Parts II and III)
     2.   Portions of Proxy  Statement for  registrant's  2004 Annual Meeting of
          Stockholders. (Part III)


<PAGE>
                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS
---------------------------------

GENERAL

     BCSB  Bankcorp,  Inc. BCSB  Bankcorp,  Inc. (the  "Company")  serves as the
holding  company for its wholly owned  subsidiaries,  Baltimore  County  Savings
Bank,  F.S.B.  (the  "Bank"),  BCSB  Bankcorp  Capital Trust I and BCSB Bankcorp
Capital Trust II. Baltimore County Savings Bank,  M.H.C.  (the "MHC"), a federal
mutual holding company,  owns 63.8% of the Company's  outstanding  common stock.
The Company's  assets consist of its investment in the Bank and its portfolio of
investment  securities.  The  Company is  primarily  engaged in the  business of
directing, planning and coordinating the business activities of the Bank.

     The  Company's  most  significant  asset  is its  investment  in the  Bank.
Accordingly,  the  information  set forth in this  report,  including  financial
statements and related data,  relates primarily to the Bank. In the future,  the
Company may become an operating  company or acquire or organize other  operating
subsidiaries,  including other financial  institutions.  Currently,  the Company
does not maintain  offices separate from those of the Bank or employ any persons
other than  officers  of the Bank who are not  separately  compensated  for such
service.  At September 30, 2003, the Company had total assets of $668.2 million,
total deposits of $551.9 million and stockholders' equity of $44.8 million.

     The Company's and the Bank's executive offices are located at 4111 E. Joppa
Road,  Suite 300,  Baltimore,  Maryland 21236,  and its main telephone number is
(410) 256-5000.

     Baltimore  County Savings Bank,  F.S.B.  The Bank is a federally  chartered
stock  savings  bank  operating  through  sixteen  banking  offices  serving the
Baltimore  metropolitan area. The Bank was chartered by the State of Maryland in
1955 under the name Baltimore  County  Building and Loan  Association.  The Bank
received  federal  insurance  of its  deposit  accounts  in 1985 and  received a
federal  charter in 1987, at which time it adopted its present name of Baltimore
County Savings Bank, F.S.B.

     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 AREA

     The Bank's  market area  consists of the  Baltimore  metropolitan  area. At
September 30, 2003,  management estimates that more than 95% of deposits and 95%
of all lending came from its market area.

     The  economy  of the  Bank's  market  area  is  diversified,  with a mix of
services,   manufacturing,   wholesale/retail   trade,  and  federal  and  local
government.  Once  the  backbone  of the  regional  economy,  the  manufacturing
industry  is  relatively  stable  after  almost  two  decades  of  decline.  The
manufacturing  section of Baltimore County received a further boost with General
Motors'  completion of its construction of a new Allison  Transmission  Plant in
the White Marsh growth  area,  and pending  Route 43  extension.  The  Baltimore
Metropolitan  area,  which consists of Baltimore City, Anne Arundel,  Baltimore,
Carroll,  Harford and Howard Counties has an estimated population,  according to
the 2000 census, of 2,512,943 which equals approximately 47% of Maryland's total
population.  Baltimore County has the largest  population at 754,292 followed by
Baltimore  City at 651,154,  Anne Arundel  County at 489,000,  Howard  County at
247,842 and Harford County at 218,000.  Located adjacent to major transportation
corridors  and  Washington,  DC,  the  Baltimore  metropolitan  area  provides a
diversified  broad economic base.  According to Baltimore  County  Department of
Economic Development  seventy-seven percent of Baltimore County's employees work
in the private  sector with  approximately  9% in  manufacturing,  20% in trade,
transportation  and  utilities,  13.8%  professional  business  services,  13.8%
education and health  services,  and 8% in


                                       2
<PAGE>

leisure and  hospitality.  Government  provides 17.5% of the County's jobs, with
self-employed providing the remaining employment.

     Harford  County  continues  to  experience  strong  economic  growth  while
maintaining a strong government presence of approximately 11,484 employed in the
Aberdeen  Proving  Grounds both in the military  and in civilian  capacity.  The
Maryland Department of Labor and Licensing  Regulation  estimates 54,727 work in
Harford County's private sector with 30% working in retail trade, 33% in service
and 19% in construction and manufacturing.

LENDING ACTIVITIES

     General.  The  Bank's  gross  loan  portfolio  totaled  $365.3  million  at
September  30,  2003,  representing  54.7%  of total  assets  at that  date.  At
September 30, 2003, $179.5 million, or 46.3% of the Bank's gross loan portfolio,
consisted of single-family,  residential  mortgage loans. Other loans secured by
real estate  include  construction  loans,  single-family  rental  property  and
commercial real estate loans, which amounted to $16.4 million,  $14.3million and
$53.7  million,  respectively,  or 4.2%,  3.7% and 13.8%,  respectively,  of the
Bank's  gross loan  portfolio at September  30, 2003.  The Bank also  originates
consumer loans,  consisting  primarily of automobile loans and home equity lines
of credit, which totaled $98.2 million and $13.9 million, respectively, or 25.3%
and 3.6% respectively, of the Bank's gross loan portfolio.


                                       3
<PAGE>

     Loan Portfolio  Composition.  The following  table sets forth selected data
relating to the  composition of the Bank's loan portfolio by type of loan at the
dates indicated.  At September 30, 2003, the Bank had no concentrations of loans
exceeding 10% of gross loans other than as disclosed below.

<TABLE>
<CAPTION>

                                                                                At September 30,
                                           -------------------------------------------------------------------------------------
                                                2003               2002             2001              2000             1999
                                           ---------------   ----------------   --------------   --------------   --------------
                                           Amount      %     Amount       %     Amount     %     Amount     %     Amount     %
                                           ------    -----   ------     -----   ------   -----   ------   -----   ------   -----
<S>                                          <C>     <C>    <C>        <C>      <C>     <C>    <C>       <C>    <C>       <C>
                                                                               (In thousands)
Real estate loans:
  Single-family residential (1)...........$ 179,552  46.32% $221,062   53.09%  $165,028  57.94% $152,469  59.42% $146,868  65.20%
  Single-family rental property loans.....   14,348   3.70     8,306    2.00      7,581   2.66     5,080   1.98     4,832   2.15
  Commercial..............................   53,675  13.85    57,356   13.77     15,068   5.29    13,649   5.32    10,216   4.54
  Construction (2)........................   16,411   4.23    11,734    2.82      8,709   3.06     5,905   2.30     5,592   2.48
Commercial lines of credit................    6,410   1.65     4,208    1.01        400    .14        44    .02        50    .02
Commercial leases.........................      820    .21     1,170     .28      1,308    .46        --     --        --     --
Commercial loans secured..................      133    .03     1,595     .38      2,588    .91     1,475    .57     1,081    .48
Commercial loans unsecured................      678    .17        --      --         --     --        --     --        --     --

Consumer loans:
  Automobile..............................   98,168  25.33    93,161   22.38     72,822  25.57    67,852  26.44    46,753  20.75
  Home equity lines of credit.............   13,943   3.60    13,864    3.33      8,935   3.13     8,147   3.18     7,963   3.54
  Other...................................    3,474    .90     3,897     .94      2,395    .84     1,976    .77     1,908    .84
                                          --------- ------  --------  ------   -------- ------  -------- ------  -------- ------
                                            387,612 100.00%  416,353  100.00%   284,834 100.00%  256,597 100.00%  225,263 100.00%
                                                    ======            ======            ======           ======           ======

Add:
  Purchase accounting premium (net).......    1,320            1,990                 --               --               --
Less:
  Undisbursed portion of loans in process.    7,753            4,902              4,434            3,850            2,579
  Deferred loan origination fees..........      429              661                143              214               80
  Unearned interest.......................   12,750           13,964             10,684            9,610            5,948
  Allowance for loan losses...............    2,698            2,199              1,563            1,403            1,273
                                          ---------         --------           --------         --------         --------
    Total.................................$ 365,302         $396,617           $268,010         $241,520         $215,383
                                          =========         ========           ========         ========         ========
</TABLE>
--------------
(1) Includes fixed-rate second mortgage loans.
(2) Includes acquisition and development loans.

                                       4
<PAGE>

     Loan Maturity Schedules. The following table sets forth certain information
at  September  30, 2003  regarding  the dollar  amount of loans  maturing in the
Bank's  portfolio  based  on their  contractual  terms  to  maturity,  including
scheduled repayments of principal. Demand loans, loans having no stated schedule
of repayments and no stated maturity,  and overdrafts are reported as due in one
year or less.  The table does not include  any  estimate  of  prepayments  which
significantly  shorten  the  average  life of  mortgage  loans and may cause the
Bank's repayment experience to differ from that shown below.
<TABLE>
<CAPTION>

                                                                Due
                                       Due during             1 through                  Due
                                     the year ending        5 years after           5 years after
                                   September 30, 2004    September 30, 2004      September 30, 2004         Total
                                   ------------------    ------------------      ------------------         -----
                                                                  (In thousands)
<S>                                       <C>                  <C>                     <C>                    <C>
Real estate loans:
  Single-family residential.........  $       747             $    14,270             $   164,535         $  179,552
  Single-family rental property.....           --                   1,048                  13,300             14,348
  Commercial........................        3,029                   9,289                  41,357             53,675
  Construction......................       12,055                     278                   4,078             16,411
Commercial lines of credit..........        5,481                     929                      --              6,410
Commercial leases...................           --                     714                      --                820
Commercial loans secured............           --                     133                      --                133
Commercial loans unsecured..............       --                      --                     678                678

Consumer:
  Automobile........................        1,340                  96,569                     259             98,168
  Home equity lines of credit.......          244                   5,094                   8,605             13,943
  Other.............................          563                   1,304                   1,607              3,474
                                      -----------             -----------             -----------         ----------
     Total..........................  $    23,565             $   129,628             $   234,419         $  387,612
                                      ===========             ===========             ===========         ==========
</TABLE>

     The following  table sets forth at September 30, 2003, the dollar amount of
all loans due one year or more after September 30, 2003 which have predetermined
interest rates and have floating or adjustable interest rates.
<TABLE>
<CAPTION>

                                                                     Predetermined              Floating or
                                                                         Rate                Adjustable Rates
                                                                    ---------------          -----------------
                                                                                   (In thousands)
                        <S>                                             <C>                             <C>
                  Real estate loans:
                     Single-family residential......................$    169,936                 $   8,869
                     Single-family rental property...................      6,295                     8,053
                     Commercial......................................     28,951                    21,695
                     Construction....................................      4,356                        --
                  Commercial lines of credit.........................        929                        --
                  Commercial leases..................................        714                        --
                  Commercial loans secured...........................        133                        --
                  Commercial loans unsecured.........................        678                        --
                  Consumer:
                     Automobiles.....................................     96,828                        --
                     Home equity lines of credit.....................         --                    13,699
                     Other...........................................      2,911                        --
                                                                     -----------                 ---------
                          Total......................................$   311,731                 $  52,316
                                                                     ===========                 =========
</TABLE>

     Scheduled  contractual  principal  repayments  of loans do not  reflect the
actual life of such assets. The average life of loans is substantially less than
their contractual terms because of prepayments. In addition, due-on-sale clauses
on loans generally give the Bank the right to declare a loan immediately due and
payable in the event,  among  other  things,  that the  borrower  sells the real
property subject to the mortgage and the loan is not repaid. The average life of
mortgage  loans tends to increase  when current  mortgage  loan market rates are
substantially  higher than rates on

                                       5
<PAGE>

existing  mortgage loans and,  conversely,  decrease when current  mortgage loan
market rates are substantially lower than rates on existing mortgage loans.

     Originations,  Purchases  and  Sales  of  Loans.  The  Bank  generally  has
authority  to  originate  and  purchase  loans  secured by real  estate  located
throughout  the  United  States.   Consistent  with  its  emphasis  on  being  a
community-oriented  financial  institution,  the Bank  concentrates  its lending
activities in its market area.

     The  following  table sets forth  certain  information  with respect to the
Bank's loan origination, purchase and sale activity for the periods indicated.
<TABLE>
<CAPTION>
                                                                  Year Ended September 30,
                                                     ---------------------------------------------
                                                        2003               2002             2001
                                                     ----------        ----------         --------
                                                                      (In thousands)
<S>                                                     <C>               <C>               <C>
Loans originated:
  Real estate loans:
    Single-family residential......................  $  55,896         $  39,589        $  33,457
    Single-family rental property loans............      7,021             2,686            3,270
    Commercial.....................................     21,021            10,002            3,030
    Construction...................................      2,209             1,708            3,071
Commercial lines of credit.........................        605             3,014              980
Commercial loans secured...........................        994             2,584            1,185
Commercial leases..................................        154               518            1,414
Consumer loans:
    Automobiles....................................     60,789            62,456           44,350
    Home equity lines of credit....................      9,269             5,102            2,957
    Other..........................................      1,290             1,573            1,563
                                                     ---------         ---------        ---------
       Total loans originated......................  $ 159,248         $ 129,232        $  95,277
                                                     =========         =========        =========
Loans purchased:
  Real estate loans................................  $      --         $      --        $   1,500
                                                     ---------         ---------        ---------
Total loans purchased..............................  $      --         $      --        $   1,500
                                                     =========         =========        =========
Loans sold:
  Whole loans......................................  $  11,995         $  10,183        $   2,805
                                                     ---------         ---------         --------
Total loans sold...................................  $  11,995         $  10,183        $   2,805
                                                     =========         =========        =========
</TABLE>

     The  Bank's  loan  originations  are  derived  from a  number  of  sources,
including referrals by realtors or automobile dealers,  depositors and borrowers
and advertising,  as well as walk-in customers. The Bank's solicitation programs
consist  of   advertisements   in  local  media,   in  addition  to   occasional
participation in various community  organizations and events.  Real estate loans
are originated by the Bank's loan personnel.  Automobile loans may be originated
on an indirect  basis  through a limited  number of approved  dealers,  and loan
applications are accepted at the Bank's offices.

     Loan Underwriting  Policies.  The Bank's lending  activities are subject to
the  Bank's  written,  non-discriminatory  underwriting  standards  and to  loan
origination  procedures  prescribed  by the Bank's  Board of  Directors  and its
management.  Detailed loan applications are obtained to determine the borrower's
ability  to repay,  and the more  significant  items on these  applications  are
verified   through  the  use  of  credit  reports,   financial   statements  and
confirmations.  Real estate  loans up to  $500,000,  as well as all requests for
lines of credit up to  $250,000,  may be approved by the Bank's Loan  Committee,
which  consists of the Bank's  President,  Senior Vice  President of Lending and
Treasurer  and  meets  weekly.  All loans in  excess  of these  amounts  must be
approved by the full Board of  Directors.  Individual  officers of the Bank have
been granted  authority by the Board of Directors to approve loans up to varying
specified dollar amounts,  depending upon the type of loan. Automobile loans are
approved by the Bank's car loan manager or assistant manager and reviewed by the
Bank's Sr. Vice President who supervises lending operations.

     Applications for single-family real estate loans generally are underwritten
and closed in  accordance  with the  standards of the Federal Home Loan Mortgage
Corporation, ("FHLMC") and the Federal National Mortgage

                                       6
<PAGE>

Association,  ("FNMA").  Upon receipt of a loan  application  from a prospective
borrower,  a credit  report and  verifications  are  ordered to verify  specific
information  relating  to the loan  applicant's  employment,  income  and credit
standing.  If a proposed loan is to be secured by a mortgage on real estate,  an
appraisal of the real estate is undertaken by an appraiser  approved by the Bank
and licensed by the State of Maryland. In the case of single-family  residential
mortgage  loans,  except when the Bank  becomes  aware of a  particular  risk of
environmental  contamination,  the  Bank  generally  does  not  obtain  a formal
environmental  report on the real  estate  at the time a loan is made.  A formal
environmental  report may be required in connection  with commercial real estate
loans, and the Bank obtains a Phase I environmental study in connection with its
underwriting of acquisition and development loans.

     It is the Bank's policy to record a lien on the real estate securing a loan
and to obtain title insurance or an attorney's  certification which ensures that
the property is free of prior  encumbrances  and other  possible  title defects.
Borrowers must also obtain hazard insurance  policies prior to closing and, when
the property is in a flood plain as designated by Federal  Emergency  Management
Agency, pay flood insurance policy premiums.

     With respect to single-family  residential mortgage loans, the Bank makes a
loan  commitment  of  between  30 and 60 days for  each  loan  approved.  If the
borrower  desires a longer  commitment,  the commitment may be extended for good
cause and upon  written  approval.  No fees are charged in  connection  with the
issuance of a commitment letter. The interest rate is guaranteed until closing.

     The Bank is  permitted  to lend up to 97% of the  lesser  of the  appraised
value or the  purchase  price of the real  property  securing a  mortgage  loan.
However,  if the amount of a residential  loan originated or refinanced  exceeds
80% of the  appraised  value,  the Bank's policy is to obtain  private  mortgage
insurance at the  borrower's  expense on the principal  amount of the loan.  The
Bank does provide a first time home buyers loan program in conjunction  with the
Federal  Home Loan Bank of Atlanta  where 100% of the loan amount will be funded
for qualified buyers.  The Bank will make a single-family  residential  mortgage
loan  with up to a 97%  loan-to-value  ratio if the  required  private  mortgage
insurance is obtained.  The Bank  generally  limits the  loan-to-value  ratio on
commercial real estate mortgage loans to 80%, although the  loan-to-value  ratio
on  commercial  real estate loans in limited  circumstances  has been as high as
90%. The Bank limits the  loan-to-value  ratio on single-family  rental property
loans to 80%.  Home equity  loans are made in amounts  which,  when added to any
senior indebtedness, do not exceed 80% of the value of the property.

     Under applicable law, with certain limited exceptions, loans and extensions
of credit by a savings institution to a person outstanding at one time shall not
exceed  15% of the  institution's  unimpaired  capital  and  surplus.  Loans and
extensions of credit fully secured by readily marketable collateral may comprise
an additional  10% of unimpaired  capital and surplus.  Under these limits,  the
Bank's loans to one borrower were limited to $8.1 million at September 30, 2003.
Applicable law additionally authorizes savings institutions to make loans to one
borrower,  for any purpose,  in an amount not to exceed $500,000 or in an amount
not to exceed the lesser of $30,000,000 or 30% of unimpaired capital and surplus
to  develop  residential  housing,  provided:  (i) the  purchase  price  of each
single-family  dwelling in the development  does not exceed  $500,000;  (ii) the
savings  institution  is  and  continues  to be in  compliance  with  its  fully
phased-in  regulatory  capital   requirements;   (iii)  the  loans  comply  with
applicable loan-to-value  requirements;  (iv) the aggregate amount of loans made
under this authority does not exceed 150% of unimpaired capital and surplus; and
(v) the  Director of OTS, by order,  permits  the savings  institution  to avail
itself of this higher  limit.  At September  30,  2003,  the Bank had no lending
relationships  in excess of the  loans-to-one-borrower  limit.  At September 30,
2003,  the  Bank's  largest  loan  customer  was  a  $6.5  million  relationship
consisting of a medical  office  building and other  residential  and commercial
investment  properties.  At  September  30,  2003,  the loans were  current  and
performing in accordance with their terms.

     Interest  rates  charged by the Bank on loans are affected  principally  by
competitive factors, the demand for such loans and the supply of funds available
for lending purposes.  These factors are, in turn,  affected by general economic
conditions,  monetary policies of the federal government,  including the Federal
Reserve Board, legislative tax policies and government budgetary matters.

     Single-Family  Residential Real Estate Lending.  The Bank  historically has
been and continues to be an originator of single-family, residential real estate
loans in its market area.  At September  30,  2003,  single-family,  residential
mortgage loans,  excluding  single-family  rental property loans and home equity
loans, totaled $179.5 million, or 46.3% of the Bank's gross loan portfolio.

                                       7
<PAGE>

     The Bank  originates  fixed-rate  mortgage  loans at  competitive  interest
rates.  At  September  30,  2003,  the Bank had  $169.9  million  of  fixed-rate
single-family  mortgage loans, which amounted to 95% of the Bank's single-family
mortgage loans. The Bank emphasizes the origination of fixed-rate  single-family
residential  mortgage loans with maturities of 15 years or less by offering more
competitive  rates on  these  loans  as  compared  to the  rates  it  offers  on
fixed-rate mortgage loans with terms in excess of 15 years.

     The Bank also offers  adjustable-rate,  single-family  residential mortgage
loans.  As of  September  30,  2003,  $16.9  million,  or  4.4%  of  the  Bank's
single-family  mortgage loans carried  adjustable rates. After the initial term,
the rate adjustments on the Bank's  adjustable-rate  loans are indexed to a rate
which  adjusts  annually  based  upon  changes  in an index  based on the weekly
average  yield on U.S.  Treasury  securities  adjusted to a constant  comparable
maturity of one year,  as made  available  by the  Federal  Reserve  Board.  The
interest rates on most of the Bank's adjustable-rate mortgage loans are adjusted
once a year, and the Bank offers loans that have an initial adjustment period of
one, three or five years.  The maximum  adjustment is 2% per  adjustment  period
with a maximum  aggregate  adjustment of 6% over the life of the loan.  The Bank
offers adjustable-rate mortgage loans that provide for initial rates of interest
below the rates that would prevail when the index used for repricing is applied,
i.e., "teaser" rates. All of the Bank's  adjustable-rate  loans require that any
payment adjustment resulting from a change in the interest rate be sufficient to
result in full  amortization  of the loan by the end of the loan term and, thus,
do not permit any of the increased  payment to be added to the principal  amount
of the loan, known as "negative amortization."

     The retention of adjustable-rate loans in the Bank's portfolio helps reduce
the Bank's exposure to increases in prevailing  market interest rates.  However,
there are  unquantifiable  credit risks  resulting from  potential  increases in
costs to borrowers in the event of upward repricing of adjustable-rate loans. It
is possible that during periods of rising interest rates, the risk of default on
adjustable-rate  loans  may  increase  due to  increases  in  interest  costs to
borrowers.  Further,  although  adjustable-rate loans allow the Bank to increase
the sensitivity of its interest-earning assets to changes in interest rates, the
extent of this interest  sensitivity is limited by the initial fixed-rate period
before  the  first   adjustment  and  the  lifetime   interest  rate  adjustment
limitations.  Accordingly,  there can be no assurance  that yields on the Bank's
adjustable-rate  loans will fully  adjust to  compensate  for  increases  in the
Bank's  cost of  funds.  Finally,  adjustable-rate  loans  increase  the  Bank's
exposure to decreases in prevailing market interest rates, although decreases in
the Bank's cost of funds tend to offset this effect.

     Single-family  Rental  Property Loans.  The Bank also offers  single-family
residential mortgage loans secured by properties that are not owner-occupied. As
of  September  30, 2003,  single-family  rental  property  loans  totaled  $14.3
million,  or  3.7%,  of  the  Bank's  gross  loan  portfolio.   Originations  of
single-family  rental  property  loans were $7.0 million,  $2.7 million and $3.3
million for the years ended  September  30, 2003,  2002 and 2001,  respectively.
Single-family residential mortgage loans secured by nonowner-occupied properties
are made on a fixed-rate or an  adjustable-rate  basis and carry  interest rates
generally  from .5% to 1.0% above the rates charged on comparable  loans secured
by owner-occupied properties. The maximum term on such loans is 30 years.

     Construction  Lending.  A  substantial  portion of the Bank's  construction
loans are  originated  for the  construction  of  owner-occupied,  single-family
dwellings in the Bank's primary market area. Residential  construction loans are
offered primarily to individuals  building their primary or secondary residence,
as well as to  selected  local  developers  to  build  single-family  dwellings.
Generally,  loans to  owner/occupants  for the  construction of  owner-occupied,
single-family  residential  properties  are  originated in  connection  with the
permanent loan on the property and have a construction  term of up to 12 months.
Such loans are offered on a fixed-rate or adjustable-rate  basis. Interest rates
on residential construction loans made to the owner/occupant have interest rates
during the  construction  period  equal to the same rate on the  permanent  loan
selected by the customer.  Interest rates on residential  construction  loans to
builders  are set at the  prime  rate  plus a margin  of  between  .0% and 1.5%.
Interest rates on commercial construction loans are based on the prime rate plus
a  negotiated  margin  of  between  .0%  and  1.5%  and  adjust  monthly,   with
construction  terms  generally not  exceeding 18 months.  Advances are made on a
percentage of completion  basis. At September 30, 2003, $16.4 million,  or 4.2%,
of the Bank's gross loan portfolio  consisted of commercial  construction loans,
acquisition  and  development  loans,  and  construction  loans on single family
residences.

     Prior to making a  commitment  to fund a loan,  the Bank  requires  both an
appraisal of the property by appraisers approved by the Board of Directors and a
study of projected  construction  costs. The Bank also reviews and inspects each
project at the commencement of construction and as needed prior to disbursements
during the term of the construction loan.


                                       8
<PAGE>

     Consolidation in the building  industry and the increasing  presence in the
Bank's  market of large  builders  that are not locally  based have  limited the
Bank's  ability  to  compete  for some  loans to  builders  because  the  Bank's
loans-to-one-borrower   limitation   limits  its  ability  to  meet  the  volume
requirements of the large builders.  The Bank's construction loans totaled $16.4
million,  $11.7  million,  $8.7  million,  at September  30, 2003,  2002,  2001,
respectively, and construction loan originations were $2.2 million, $1.7 million
and $3.1  million  during the years ended  September  30,  2003,  2002 and 2001,
respectively.

     On occasion,  the Bank makes  acquisition  and  development  loans to local
developers  to acquire and develop land for sale to builders who will  construct
single-family   residences.   Acquisition  and  development   loans,  which  are
considered by the Bank to be construction loans, are made at a rate that adjusts
monthly,  based on the prime rate plus a negotiated  margin,  for terms of up to
three  years.  Interest  only is paid  during  the  term  of the  loan,  and the
principal  balance  of the  loan is paid  down as  developed  lots  are  sold to
builders.  Generally,  in connection with acquisition and development loans, the
Bank  issues a letter of credit to secure the  developer's  obligation  to local
governments  to complete  certain work.  If the developer  fails to complete the
required  work,  the Bank would be required to fund the cost of  completing  the
work up to the amount of the letter of credit.  Letters of credit  generate  fee
income for the Bank but create  additional risk. At September 30, 2003, the Bank
had five such  facilities  outstanding  totaling  $419,000.  All acquisition and
development loans were performing in accordance with their terms at such date.

     Construction  financing  generally is considered to involve a higher degree
of risk of loss than long-term financing on improved, occupied real estate. Risk
of loss on a  construction  loan is  dependent  largely upon the accuracy of the
initial  estimate of the  property's  value at  completion  of  construction  or
development and the estimated cost (including interest) of construction.  During
the  construction  phase,  a number of factors  could  result in delays and cost
overruns.  If the estimate of construction costs proves to be inaccurate and the
borrower  is unable to meet the Bank's  requirements  of  putting up  additional
funds to cover extra costs or change orders,  then the Bank will demand that the
loan be paid  off and,  if  necessary,  institute  foreclosure  proceedings,  or
refinance the loan. If the estimate of value proves to be  inaccurate,  the Bank
may be  confronted,  at or prior to the  maturity of the loan,  with  collateral
having a value  which is  insufficient  to assure full  repayment.  The Bank has
sought to  minimize  this risk by  limiting  construction  lending to  qualified
borrowers (i.e.,  borrowers who satisfy all credit  requirements and whose loans
satisfy  all  other  underwriting  standards  which  would  apply to the  Bank's
permanent mortgage loan financing for the subject property) in the Bank's market
area. On loans to builders, the Bank works only with selected builders with whom
it has experience and carefully monitors the creditworthiness of the builders.

     Commercial  Real Estate  Lending.  The Bank's  commercial  real estate loan
portfolio  includes loans to finance the acquisition of small office  buildings,
churches, medical condominiums,  small shopping centers and small commercial and
industrial  buildings.  Such loans  generally  range in size from $100,000 to $5
million,  with the  largest  having an  outstanding  principal  balance  of $4.4
million at September 30, 2003. At September 30, 2003, the Bank had $53.7 million
of  commercial  real estate loans,  which  amounted to 13.8% of the Bank's gross
loan  portfolio.  Commercial real estate loans are originated on a fixed-rate or
adjustable-rate basis with terms of up to 25 years at a rate that is at least 1%
above the rate charged by the Bank on single-family  residential  mortgage loans
having comparable terms and interest rate adjustment periods.

     Commercial  real estate lending  entails  significant  additional  risks as
compared with single-family residential property lending. Commercial real estate
loans  typically  involve larger loan balances to single  borrowers or groups of
related  borrowers.  The payment experience on such loans typically is dependent
on the successful operation of the real estate project,  retail establishment or
business.  These  risks  can be  significantly  impacted  by supply  and  demand
conditions  in the  market for office  and  retail  space and,  as such,  may be
subject to a greater extent to adverse conditions in the economy  generally.  To
minimize these risks,  the Bank generally limits itself to its market area or to
borrowers with which it has prior  experience or who are otherwise  known to the
Bank. It is the Bank's policy generally to obtain annual financial statements of
the  business of the  borrower or the project for which  commercial  real estate
loans are made. In addition, in the case of commercial real estate loans made to
a legal entity, the Bank seeks, whenever possible, to obtain personal guarantees
and annual financial statements of the principals of the legal entity.

     Commercial Lines of Credit. The Bank provides commercial lines of credit to
businesses  within the Bank's  market area.  These loans are secured by business
assets,  including real property,  equipment,  automobiles and consumer  leases.
Generally,  all loans are  further  personally  guaranteed  by the owners of the
business.  The

                                       9

<PAGE>

commercial  lines have adjustable  interest rates tied to the prime rate and are
offered at rates from prime plus 0% to prime plus 3 1/2%.  As of  September  30,
2003, the Bank had $6.4 million of such loans outstanding.

     Consumer Lending. The consumer loans currently in the Bank's loan portfolio
consist of  automobile  loans,  home equity lines of credit and loans secured by
savings deposit.

     Automobile loans totaled $98.2 million,  or 25.3%, of the Bank's gross loan
portfolio,  at September 30, 2003.  Automobile loans are secured by both new and
used cars and, depending on the  creditworthiness  of the borrower,  may be made
for up to 100% of the "sticker price" or purchase price, whichever is lower, or,
with  respect to used  automobiles,  the loan values as published by a wholesale
value listing  utilized by the automobile  industry.  Automobile  loans are made
directly to the borrower-owner or indirectly, where the financing is arranged by
the car dealer.  Management  of the Bank  estimates  that  approximately  80% of
automobile loans are originated on an indirect basis through various dealerships
located in its market area. Automobile loans originated on an indirect basis are
considered to entail greater credit risk than automobile  loans  originated on a
direct  basis.  New and  relatively  new cars (less than two years old or 20,000
miles or less) are  financed for a period  generally  of up to six years,  while
used cars are  financed  for a period  generally  of up to five years,  or less,
depending  on the  age of the  car.  Collision  insurance  is  required  for all
automobile loans. The Bank also maintains a blanket  collision  insurance policy
that provides insurance for any borrower who allows his insurance to lapse.

     The Bank originates  second mortgage loans and home equity lines of credit.
As of September 30, 2003, home equity lines of credit totaled $13.9 million,  or
3.6% of the Bank's gross loan portfolio. Second mortgage loans are made at fixed
rates and for terms of up to 15 years and totaled $11.7 million, or 3.0%, of the
Bank's gross loans at September 30, 2003.

     The Bank's home equity lines of credit  currently have adjustable  interest
rates  tied to the prime  rate and can be  offered  anywhere  from as low as the
prime rate less .25% up to the prime rate. The interest rate may not adjust to a
rate higher than 18%. The home equity lines of credit require  monthly  payments
until the loan is paid in full,  with a loan  term not to  exceed 20 years.  The
minimum  monthly  payment is 1.5% of the  outstanding  principal  balance.  Home
equity lines of credit are secured by subordinate liens against residential real
property.  The Bank requires that fire and extended coverage casualty  insurance
(and,  if  appropriate,  flood  insurance)  be  maintained in an amount at least
sufficient to cover its loan.

     The Bank  makes  savings  account  loans  for up to 90% of the  depositor's
savings account balance.  The interest rate is normally 2.0% above the rate paid
on the related savings account, and the account must be pledged as collateral to
secure the loan. Interest generally is billed on a quarterly basis. At September
30, 2003,  savings account loans accounts totaled $1.2 million,  or .31%, of the
Bank's gross loan portfolio.

     As part of the Bank's loan strategy,  the Bank has  diversified its lending
portfolio  to afford  the Bank the  opportunity  to earn  higher  yields  and to
provide a fuller range of banking  services.  These products have generally been
in the consumer area and include  surgical  loans,  boat loans and loans for the
purchase of recreational vehicles.  Such loans totaled $2.3 million at September
30, 2003.

     Consumer  lending  affords the Bank the  opportunity  to earn yields higher
than those obtainable on single-family  residential lending.  However,  consumer
loans entail greater risk than do residential  mortgage  loans,  particularly in
the case of loans which are unsecured or secured by rapidly  depreciable assets.
Repossessed collateral for a defaulted consumer loan may not provide an adequate
source of repayment of the  outstanding  loan balance as a result of the greater
likelihood of damage, loss or depreciation.  The remaining deficiency often does
not warrant further  substantial  collection  efforts  against the borrower.  In
addition,  consumer loan collections are dependent on the borrower's  continuing
financial stability, and thus are more likely to be adversely affected by events
such as job loss, divorce, illness or personal bankruptcy.

     Loan Fees and  Servicing.  The Bank receives  fees in connection  with late
payments  and for  miscellaneous  services  related to its loans.  The Bank also
charges fees in connection with loan  originations  typically from 0 to 3 points
(one point being equal to 1% of the loan amount) on  residential  and commercial
loan  originations.  The Bank services  loans sold to FHLMC and FNMA,.  The Bank
also services participation loans originated and sold by the Bank with servicing
retained, and earns minimal income from this activity.


                                       10
<PAGE>

     Nonperforming  Loans and Other Problem Assets. It is management's policy to
continually  monitor its loan portfolio to anticipate and address  potential and
actual  delinquencies.  When a borrower  fails to make a payment on a loan,  the
Bank takes immediate  steps to have the delinquency  cured and the loan restored
to current  status.  Loans  which are past due 15 days incur a late fee of 5% of
principal  and  interest  due. As a matter of policy,  the Bank will send a late
notice to the borrower  after the loan has been past due 15 days and again after
30 days. If payment is not promptly  received,  the borrower is contacted again,
and efforts are made to formulate an affirmative  plan to cure the  delinquency.
Generally,  after  any  loan  is  delinquent  90  days  or  more,  formal  legal
proceedings  are  commenced to collect  amounts  owed. In the case of automobile
loans,  late  notices  are sent  after  loans are ten days  delinquent,  and the
collateral  is  seized  after a loan is  delinquent  60 days.  Repossessed  cars
subsequently are sold at auction.

     Loans  generally are placed on  nonaccrual  status if the loan becomes past
due more than 90 days, except in instances where in management's  judgment there
is no doubt as to full  collectibility of principal and interest,  or management
concludes  that  payment in full is not  likely.  Consumer  loans are  generally
charged off, or any expected loss is reserved  for,  after they become more than
120 days past due.  All other loans are charged  off when  management  concludes
that they are uncollectible. See Note 3 of Notes to Financial Statements.

     Real estate  acquired by the Bank as a result of  foreclosure is classified
as real estate acquired through  foreclosure until such time as it is sold. When
such  property is  acquired,  it is  initially  recorded at the lower of cost or
estimated fair value and  subsequently  at the lower of book value or fair value
less  estimated  costs to sell.  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.  Any
required  write-down of the loan to its fair value less estimated  selling costs
upon foreclosure is charged against the allowance for loan losses. See Note 1 of
Notes to Financial Statements.


                                       11
<PAGE>

     The  following  table sets  forth  information  with  respect to the Bank's
nonperforming assets at the dates indicated.
<TABLE>
<CAPTION>

                                                                           At September 30,
                                                    -------------------------------------------------------------
                                                       2003           2002         2001         2000        1999
                                                    ----------       ------       ------       ------      ------
  <S>                                                   <C>           <C>         <C>           <C>         <C>
                                                                             (In thousands)
Loans accounted for on  a nonaccrual basis: (1)
  Real estate:
    Single-family residential....................   $     59      $     291     $    239     $    383     $     840
    Single-family rental property................         --             --           --           --            --
    Commercial...................................        166             --           --           --           185
    Construction.................................         --             --           --           --            --
  Commercial lines of credit.....................         --             --           --           --            --
  Commercial loans secured.......................         --          1,100           --           --            --
  Consumer.......................................         75             --           --           --            --
                                                    --------      ---------     --------     --------     ---------
    Total........................................   $    300      $   1,391     $    239     $    383     $   1,025
                                                    ========      =========     ========     ========     =========

Accruing loans which are contractually past due
 90 days or more:

Real estate:
    Single-family residential....................   $     --      $      --     $     --     $     --     $      --
    Single-family rental property................         --             --           --           --            --
    Commercial...................................         --             --           --           --            --
    Construction.................................         --             --           --           --            --
  Commercial lines of credit.....................         --             --           --           --            --
  Commercial loans secured.......................         --             --           --           --            --
  Consumer.......................................         --             --           --           --            --
                                                    --------      ---------     --------     --------     ---------
    Total........................................   $     --      $      --     $     --     $     --     $      --
                                                    ========      =========     ========     ========     =========
    Total non-performing loans...................   $    300      $   1,391     $    239     $    383     $   1,025
                                                    ========      =========     ========     ========     =========
Percentage of gross loans........................        .08%           .33%         .09%         .15%          .45%
                                                    ========      =========     ========     ========     =========
Percentage of total assets.......................        .04%           .24%         .06%         .12%          .34%
                                                    ========      =========     ========     ========     =========
Other non-performing assets (2)..................   $    283      $     229     $    134     $    126     $     132
                                                    ========      =========     ========     ========     =========
Loans modified in troubled debt  restructuring...   $     --      $      --     $     --     $     --     $      --
                                                    ========      =========     ========     ========     =========
</TABLE>
-------------------

(1)  Non-accrual  status  denotes loans on which,  in the opinion of management,
     the collection of additional  interest is unlikely.  Payments received on a
     non-accrual loan are either applied to the outstanding principal balance or
     recorded as interest  income,  depending on management's  assessment of the
     collectibility of the loan.
(2)  Other  nonperforming  assets  include the Bank's  inventory of  repossessed
     cars.


     During the year ended September 30, 2003, gross interest income of $22,597,
would have been  recorded on loans  accounted  for on a nonaccrual  basis if the
loans had been current  throughout the year.  Interest on such loans included in
income during the year ended September 30, 2003 amounted to $6,644.

     At September 30, 2003,  the Bank had no loans which were not  classified as
non-accrual,  90 days past due or restructured but where known information about
possible credit problems of borrowers caused management to have serious concerns
as to the ability of the borrowers to comply with present loan  repayment  terms
and may result in disclosure as nonaccrual, 90 days past due or restructured.

     At September  30, 2003,  nonaccrual  loans  consisted of two  single-family
residential mortgage loans aggregating $59,000, and a $166,000 commercial loan.

     Real estate acquired through foreclosure is initially recorded at the lower
of cost or estimated fair value and  subsequently  at the lower of book value or
fair value less estimated  costs to sell. Fair value is defined as the amount in
cash or cash-equivalent  value of other  consideration that a real estate parcel
would yield in a current sale between a willing buyer and a willing  seller,  as
measured by market  transactions.  If a market does not exist, fair value of the
item is estimated based on selling prices of similar items in active markets or,
if there are no active markets for similar  items,  by discounting a forecast of
expected cash flows at a rate commensurate with the risk involved. Fair value is
generally  determined through an appraisal at the time of foreclosure.  The Bank
records a  valuation  allowance  for


                                       12
<PAGE>

estimated  selling  costs  of  the  property   immediately  after   foreclosure.
Subsequent  to  foreclosure,   real  estate  acquired  through   foreclosure  is
periodically evaluated by management and an allowance for loss is established if
the  estimated  fair  value  of the  property,  less  estimated  costs  to sell,
declines. At September 30, 2003, the Bank had no real estate owned. The Bank had
$283,000 of other nonperforming  assets, which consisted of the Bank's inventory
of repossessed cars.

     Federal regulations  require savings  institutions to classify their assets
on the  basis  of  quality  on a  regular  basis.  An asset  meeting  one of the
classification  definitions  set forth  below may be  classified  and still be a
performing loan. An asset is classified as substandard if it is determined to be
inadequately  protected by the current retained  earnings and paying capacity of
the obligor or of the  collateral  pledged,  if any. An asset is  classified  as
doubtful if full collection is highly  questionable  or improbable.  An asset is
classified as loss if it is considered uncollectible, even if a partial recovery
could be expected  in the future.  The  regulations  also  provide for a special
mention designation, described as assets which do not currently expose a savings
institution  to a  sufficient  degree of risk to warrant  classification  but do
possess credit deficiencies or potential weaknesses deserving management's close
attention.  Such assets designated as special mention may include  nonperforming
loans consistent with the above definition.  Assets classified as substandard or
doubtful require a savings  institution to establish general allowances for loan
losses. If an asset or portion thereof is classified loss, a savings institution
must either establish a specific allowance for loss in the amount of the portion
of the asset classified loss, or charge off such amount.  Federal  examiners may
disagree with a savings institution's classifications.  If a savings institution
does not agree with an examiner's classification of an asset, it may appeal this
determination  to the OTS  Regional  Director.  The Bank  regularly  reviews its
assets   to   determine   whether   any   assets   require   classification   or
re-classification.  At  September  30,  2003,  the  Bank  had  $1.3  million  in
classified  assets  consisting  of $1.2 million in assets  classified as special
mention,  $225,000 in assets classified as substandard,  no assets classified as
doubtful and no assets  classified as loss.  Special mention assets consisted of
$1.0 million  single-family  residential mortgage loans 60 to 89 days delinquent
at  September  30,  2003,  $100,000  in land loans 60 to 89 days  delinquent  at
September  30, 2003 and  $143,000  consumer  loans 60 to 89 days  delinquent  at
September  30,  2003  and  substandard  assets  consisted  of  the  $225,000  in
nonaccrual loans described above.

     Allowance for Loan Losses.  In originating  loans, the Bank recognizes that
credit  losses  will be  experienced  and that the risk of loss will vary  with,
among other things,  the type of loan being made,  the  creditworthiness  of the
borrower over the term of the loan, general economic conditions and, in the case
of a secured loan, the quality of the security for the loan. It is  management's
policy to maintain an adequate  allowance  for loan losses based on, among other
things,  the  Bank's  and  the  industry's   historical  loan  loss  experience,
evaluation of economic  conditions,  regular reviews of  delinquencies  and loan
portfolio quality and evolving standards imposed by federal bank examiners.  The
Bank  increases its allowance  for loan losses by charging  provisions  for loan
losses against the Bank's income.

     Management  will continue to actively  monitor the Bank's asset quality and
allowance  for loan  losses.  Management  will  charge off loans and  properties
acquired in settlement of loans against the  allowances for losses on such loans
and such properties when  appropriate and will provide  specific loss allowances
when  necessary.  Although  management  believes  it uses the  best  information
available to make  determinations  with respect to the allowances for losses and
believes such  allowances are adequate,  future  adjustments may be necessary if
economic  conditions differ  substantially  from the economic  conditions in the
assumptions used in making the initial determinations.

     The Bank's methodology for establishing the allowance for loan losses takes
into consideration  probable losses that have been identified in connection with
specific  assets as well as  losses  that  have not been  identified  but can be
expected to occur.  Management conducts regular reviews of the Bank's assets and
evaluates  the  need to  establish  allowances  on the  basis  of  this  review.
Allowances are established by the Board of Directors on a monthly basis based on
an  assessment  of risk in the  Bank's  assets  taking  into  consideration  the
composition and quality of the portfolio, delinquency trends, current charge-off
and loss experience,  loan concentrations,  the state of the real estate market,
regulatory reviews conducted in the regulatory  examination process and economic
conditions  generally.  Additional  provisions  for  losses on loans are made in
order to bring the allowance to a level deemed adequate.  Specific reserves will
be  provided  for  individual  assets,  or  portions  of assets,  when  ultimate
collection is considered  improbable by management  based on the current payment
status  of the  assets  and the  fair  value  of the  security.  At the  date of
foreclosure or other repossession,  the Bank would transfer the property to real
estate  acquired  in  settlement  of  loans  initially  at the  lower of cost or
estimated fair value and  subsequently  at the lower of book value or fair value
less estimated  selling costs.  Any portion of the  outstanding  loan balance in
excess of fair value less  estimated  selling costs


                                       13
<PAGE>

would be charged off against the  allowance  for loan losses.  If, upon ultimate
disposition of the property, net sales proceeds exceed the net carrying value of
the property, a gain on sale of real estate would be recorded.

     The following table sets forth an analysis of the Bank's allowance for loan
losses for the periods indicated.
<TABLE>
<CAPTION>

                                                                          Year Ended September 30,
                                                    -------------------------------------------------------------
                                                     2003          2002            2001        2000         1999
                                                    ------         -----          ------      ------       ------
                                                                             (In thousands)
<S>                                                  <C>           <C>             <C>         <C>          <C>
Balance at beginning of period...................   $  2,199      $   1,563     $  1,403     $  1,273     $   1,034
                                                    --------      ---------     --------     --------     ---------

Loans charged-off:
  Real estate mortgage:
    Single-family residential....................         --             --           20            7            --
    Multi-family residential.....................         --             --           --           --            --
    Commercial...................................         --             --           --           --            --
    Construction.................................         --             --           --           --           (15)
  Commercial loans secured.......................         --            159           --           --            --
  Consumer.......................................      1,239            530          324          201          (217)
                                                    --------      ---------     --------     --------     ---------
Total charge-offs................................      1,239            689          344          208          (232)

Recoveries:
  Real estate mortgage:
    Single-family residential....................         --             --           --           --            --
    Multi-family residential.....................         --             --           --           --            --
    Commercial...................................         --             --           --           --            --
    Construction.................................         --             --           --           --            --
  Commercial loans secured.......................         --             --           --           --            --
  Consumer.......................................        379            429          172          176           132
                                                    --------      ---------     --------     --------     ---------
Total recoveries.................................        379            429          172          176           132
Net loans charged off............................       (860)          (260)        (172)         (32)         (100)
Provision for loan  losses.......................      1,359            509          332          162           339
Allowance assumed in the provision...............         --            387           --           --            --
                                                    --------      ---------     --------     --------     ---------
Balance at end of period.........................   $  2,698      $   2,199     $  1,563     $  1,403     $   1,273
                                                    ========      =========     ========     ========     =========


Ratio of net charge-offs to average
  loans outstanding during the period............        .22%           .09%         .07%         .01%         0.05%
                                                    ========      =========     ========     ========     =========
</TABLE>
     Of the $1.2 million  charge-offs during the fiscal year ended September 30,
2003,  $569,000  was  related to a non  accrual  commercial  loan.  The Bank has
obtained  judgments in the amount of $706,000 in  connection  with this loan see
"Item 3- Legal Proceedings."




                                       14
<PAGE>

     The  following  table  allocates  the  allowance  for loan  losses  by loan
category  at the  dates  indicated.  The  allocation  of the  allowance  to each
category is not  necessarily  indicative  of future losses and does not restrict
the use of the allowance to absorb losses in any category.
<TABLE>
<CAPTION>


                                                                            At September 30,
                                    ------------------------------------------------------------------------------------------------
                                          2003              2002                 2001             2000                   1999
                                    ----------------- ------------------  ------------------  -----------------   ------------------
                                           Percent of         Percent of           Percent of         Percent of         Percent of
                                            Loans in           Loans in             Loans in           Loans in           Loans in
                                          Category to        Category to         Category to         Category to         Category to
                                    Amount Total Loans Amount Total Loans  Amount Total Loans  Amount Total Loans Amount Total Loans
                                    ------ ----------- ------ -----------  ------ -----------  ------ ----------- ------ -----------
                                                                          (Dollars in thousands)
<S>                                  <C>     <C>       <C>        <C>      <C>      <C>         <C>     <C>        <C>     <C>
Real estate:
  Single-family residential.........$  539    46.32%   $  760    53.09%    $  587    57.94%    $  421   59.42%    $  452    65.20%
  Single-family rental property.....    22     3.70        17     2.00         15     2.66         10    1.98         10     2.15
  Commercial........................   396    13.85       314    13.77        151     5.29        136    5.32        118     4.54
  Construction......................   107     4.23        70     2.82         40     3.06         70    2.30         75     2.48
Commercial lines of credit..........    16     1.65        46     1.01         --      .14         --     .02         --      .02
Commercial leases...................    --       --        --      .28         --      .46         --      --         --       --
Commercial loans secured............    --      .21        --      .38         --      .91         --     .57         --      .48
Commercial loans unsecured..........   569      .03        --       --         --       --         --      --         --       --
Consumer............................ 1,049    29.83       992    26.65        770    29.54        766   30.39        618    25.13
                                    ------   ------    ------   ------     ------   ------     ------  ------     ------   ------
    Total allowance for loan losses.$2,698   100.00%   $2,199   100.00%    $1,563   100.00%    $1,403  100.00%    $1,273   100.00%
                                    ======   ======    ======   ======     ======   ======     ======  ======     ======   ======

</TABLE>


                                       15
<PAGE>

INVESTMENT ACTIVITIES

     General.   The  Bank  is  permitted  under  federal  law  to  make  certain
investments,  including  investments  in  securities  issued by various  federal
agencies and state and municipal  governments,  deposits at the FHLB of Atlanta,
certificates  of deposit in federally  insured  institutions,  certain  bankers'
acceptances  and  federal  funds.  It  may  also  invest,   subject  to  certain
limitations,  in  commercial  paper rated in one of the two  highest  investment
rating categories of a nationally  recognized credit rating agency,  and certain
other types of corporate debt securities and mutual funds.  Federal  regulations
require the Bank to maintain an investment in FHLB stock and a minimum amount of
liquid assets which may be invested in cash and specified securities.  From time
to time, the OTS adjusts the percentage of liquid assets which savings banks are
required to maintain.  See " -- Regulation -- Depository  Institution Regulation
-- Liquidity Requirements."

     The Bank makes investments in order to maintain the levels of liquid assets
required by regulatory  authorities and manage cash flow,  diversify its assets,
obtain yield and to satisfy  certain  requirements  for favorable tax treatment.
The  investment  activities  of the Bank  consist  primarily of  investments  in
mortgage-backed securities and other investment securities, consisting primarily
of securities  issued or guaranteed by the U.S.  government or agencies thereof.
Typical investments include federally sponsored agency mortgage pass-through and
federally  sponsored  agency and  mortgage-related  securities.  Investment  and
aggregate investment  limitations and credit quality parameters of each class of
investment are  prescribed in the Bank's  investment  policy.  The Bank performs
analyses on  mortgage-related  securities  prior to  purchase  and on an ongoing
basis to  determine  the impact on  earnings  and  market  value  under  various
interest rate and prepayment  conditions.  Under the Bank's  current  investment
policy,  securities  purchases  are made by the  Bank's  President.  The  Bank's
President and Treasurer have authority to sell investment  securities subject to
the Bank's designation as available for sale and purchase comparable  investment
securities  with similar  characteristics.  The Board of  Directors  reviews all
securities transactions on a monthly basis.

     Securities designated as "held to maturity" are those assets which the Bank
has the ability and intent to hold to maturity. Upon acquisition, securities are
classified  as to the Bank's  intent,  and a sale would only be effected  due to
deteriorating  investment quality.  The held to maturity investment portfolio is
not used for speculative purposes and is carried at amortized cost. In the event
the Bank sells  securities  from this  portfolio  for other than credit  quality
reasons,   all  securities   within  the  investment   portfolio  with  matching
characteristics  may be  reclassified as assets  available for sale.  Securities
designated as "available  for sale" are those assets which the Bank may not hold
to  maturity  and thus are  carried  at market  value with  unrealized  gains or
losses,  net of tax effect,  recognized in retained  earnings.  At September 30,
2003 the Bank's  securities  portfolio  consists of both  available for sale and
held to maturity securities.

     Mortgage-Backed   and  Related   Securities.   Mortgage-backed   securities
represent a participation  interest in a pool of  single-family  or multi-family
mortgages,  the  principal  and  interest  payments on which are passed from the
mortgage  originators  through   intermediaries  that  pool  and  repackage  the
participation  interest in the form of securities to investors such as the Bank.
Such intermediaries may include quasi-governmental  agencies such as FHLMC, FNMA
and GNMA which  guarantee  the payment of principal  and interest to  investors.
Mortgage-backed  securities  generally increase the quality of the Bank's assets
by virtue of the  guarantees  that back them,  are more liquid  than  individual
mortgage loans and may be used to collateralize  borrowings or other obligations
of the Bank.

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

     The actual maturity of a mortgage-backed security varies, depending on when
the  mortgagors  prepay or repay the  underlying  mortgages.  Prepayments of the
underlying  mortgages may shorten the life of the investment,  thereby adversely
affecting   its  yield  to  maturity  and  the  related   market  value  of  the
mortgage-backed  security.  The yield is based upon the interest  income and the
amortization  of the  premium  or  accretion  of  the  discount  related  to


                                       16
<PAGE>

the  mortgage-backed   security.   Premiums  and  discounts  on  mortgage-backed
securities are amortized or accredited over the estimated term of the securities
using a level yield method.  The  prepayment  assumptions  used to determine the
amortization  period for premiums and  discounts  can  significantly  affect the
yield of the  mortgage-backed  security,  and  these  assumptions  are  reviewed
periodically  to reflect the actual  prepayment.  The actual  prepayments of the
underlying mortgages depend on many factors, including the type of mortgage, the
coupon  rate,  the  age of  the  mortgages,  the  geographical  location  of the
underlying  real estate  collateralizing  the  mortgages  and general  levels of
market  interest  rates.  The  difference  between  the  interest  rates  on the
underlying  mortgages and the prevailing mortgage interest rates is an important
determinant  in the rate of  prepayments.  During  periods of  falling  mortgage
interest rates, prepayments generally increase, and, conversely,  during periods
of rising mortgage interest rates, prepayments generally decrease. If the coupon
rate of the underlying  mortgage  significantly  exceeds the  prevailing  market
interest rates offered for mortgage loans,  refinancing  generally increases and
accelerates the prepayment of the underlying mortgages. Prepayment experience is
more difficult to estimate for adjustable-rate mortgage-backed securities.

     Mortgage-related   securities,   which  include   collateralized   mortgage
obligations  ("CMOs"),  are typically issued by a special purpose entity,  which
may be organized in a variety of legal forms,  such as a trust, a corporation or
a partnership. The entity aggregates pools of pass-through securities, which are
used to collateralize the mortgage-related  securities.  Once combined, the cash
flows can be divided into  "tranches"  or "classes"  of  individual  securities,
thereby  creating  more  predictable  average  lives for each  security than the
underlying pass-through pools.  Accordingly,  under this security structure, all
principal   paydowns  from  the  various  mortgage  pools  are  allocated  to  a
mortgage-related  securities' class or classes structured to have priority until
it has been paid off. These securities generally have fixed interest rates, and,
as a result,  changes in interest rates  generally would affect the market value
and possibly the prepayment rates of such securities.

     Some  mortgage-related  securities  instruments are like  traditional  debt
instruments  due to their stated  principal  amounts and  traditionally  defined
interest rate terms.  Purchasers of certain  other  mortgage-related  securities
instruments  are  entitled to the excess,  if any, of the  issuer's  cash flows.
These mortgage-related securities instruments may include instruments designated
as residual  interest and are riskier in that they could result in the loss of a
portion of the original investment.  Cash flows from residual interests are very
sensitive to prepayments and, thus, contain a high degree of interest rate risk.
The Bank does not purchase residual interests in mortgage-related securities.

     The Bank's  mortgage-backed  securities  portfolio  consists  primarily  of
seasoned  fixed-rate and adjustable rate  mortgage-backed  securities.  The Bank
makes such investments in order to manage cash flow,  diversify  assets,  obtain
yield,  to satisfy  certain  requirements  for  favorable  tax  treatment and to
satisfy  the  qualified  thrift  lender  test.  See  "Regulation  --  Depository
Institution Regulation -- Qualified Thrift Lender Test."

     At September 30, 2003, mortgage-backed securities with an amortized cost of
$18.4 million were  classified as held to maturity.  At September 30, 2003,  the
Bank's held to maturity mortgage-backed  securities had a weighted average yield
of 5.75%.

     At September 30, 2003, mortgage-backed securities with an amortized cost of
$116.2million  were classified as available for sale. At September 30, 2003, the
Bank's  available for sale  mortgage-backed  securities  had a weighted  average
yield of 3.97%.

     At  September  30,  2003,  the Bank did not have any CMOs,  and the  Bank's
investment  policy does not permit  investments in individual  issues of CMOs or
Real Estate Mortgage Investment Conduits ("REMICs").



                                       17
<PAGE>

     The following table sets forth the carrying value of the Bank's investments
at the dates indicated.

<TABLE>
<CAPTION>
                                                                          At September 30,
                                                               -------------------------------------
                                                                 2003           2002          2001
                                                               --------      ----------    ---------
                                                                       (Dollars in thousands)

<S>                                                             <C>            <C>           <C>
Securities available for sale:
   U.S. government and agency securities....................  $  90,021      $ 19,360      $  14,757
    Mortgage Backed securities..............................    116,204        60,411         11,442
    Equity Investment in Mutual Funds.......................     31,268        25,723          9,212
                                                              ---------      --------      ---------
      Total Available for Sale..............................    237,493      $105,494      $  35,411
                                                              ---------      --------      ---------


 Securities held to maturity:
   U.S. government and agency
       securities...........................................  $   2,500      $  4,496      $  18,494
   Mortgage-backed securities...............................     18,394        33,691         41,655
   FHLB stock...............................................      3,305         3,940          1,834
                                                              ---------      --------      ---------
      Total Held to Maturity................................  $  24,199      $ 42,127      $  61,983


Total    ...................................................  $ 261,692      $147,621      $  97,394
                                                              =========      ========      =========
</TABLE>


                                       18
<PAGE>

     The following  table sets forth  information  in the scheduled  maturities,
amortized  cost,  market  values and  average  yields for the Bank's  investment
portfolio at September 30, 2003.
<TABLE>
<CAPTION>

                                                                                                More                Total
                                  One Year or Less  One to Five Years   Five to Ten Years   than Ten Years   Investment Portfolio
                                 ------------------ ----------------- -------------------- ---------------  -----------------------
                                 Carrying   Average Carrying  Average Carrying   Average   Carrying Average Carrying Market Average
                                   Value     Yield   Value     Yield    Value     Yield      Value   Yield    Value  Value   Yield
                                 --------   ------- --------  ------- --------   -------   -------- ------- -------- ------ -------
                                                                           (Dollars in thousands)
<S>                                <C>        <C>     <C>      <C>     <C>        <C>        <C>     <C>       <C>     <C>    <C>
Securities available for sale:
   U.S. government and  agency
      obligations................$     --      --%  $ 50,245   2.45%  $ 37,271    3.18%    $  2,505  4.41%  $ 90,021 $ 90,021  2.80%
   Mortgage-backed securities....      --      --      5,026   3.39     28,284    3.94       82,894  4.02    116,204  116,204  3.97
   Equity Investment in Mutual
     Funds ......................  31,268    2.97         --                --                   --           31,268   31,268  2.97
                                 --------           --------          --------             --------         -------- --------
      Total available for sale...  31,268             55,271            65,555               85,399          237,493  237,493
                                 --------           --------          --------             --------         -------- --------
</TABLE>

<TABLE>
<CAPTION>

                                                                                                More                Total
                                  One Year or Less  One to Five Years   Five to Ten Years   than Ten Years   Investment Portfolio
                                 ------------------ ----------------- -------------------- ---------------  -----------------------
                                 Carrying   Average Carrying  Average Carrying   Average   Carrying Average Carrying Market Average
                                   Value     Yield   Value     Yield    Value     Yield      Value   Yield    Value  Value   Yield
                                 --------   ------- --------  ------- --------   -------   -------- ------- -------- ------ -------
                                                                           (Dollars in thousands)
<S>                                <C>        <C>     <C>      <C>     <C>        <C>        <C>     <C>       <C>     <C>    <C>

Securities held to maturity:
   U.S. government and  agency
      obligations................$    500    6.00%   $ 1,500   3.72%  $   500    6.30%    $     --     --% $  2,500 $  2,551  4.69%
   Mortgage-backed securities....      14    7.03        313   6.45     1,538    6.40       16,529   5.77    18,394   18,983  5.84
   FHLB stock ...................      --                 --               --                3,305   4.21     3,305    3,305  4.21
                                 --------            -------          -------              -------          ------- --------
      Total held to maturity.....     514              1,813            2,038               19,834           24,199   24,839
                                 --------            -------          -------              -------          ------- --------
Total ...........................  31,782             57,084           67,593              105,233          261,692  262,332
                                 ========            =======          =======             ========         ======== ========
</TABLE>

                                       19
<PAGE>

DEPOSIT ACTIVITY AND OTHER SOURCES OF FUNDS

     General.  Deposits are the primary  source of the Bank's funds for lending,
investment activities and general operational purposes. In addition to deposits,
the Bank derives funds from loan principal and interest  repayments,  maturities
of investment  securities and  mortgage-backed  securities and interest payments
thereon.  Although  loan  repayments  are a relatively  stable  source of funds,
deposit inflows and outflows are  significantly  influenced by general  interest
rates and money market conditions.  Borrowings may be used on a short-term basis
to compensate for reductions in the  availability  of funds, or on a longer term
basis for general operational  purposes.  The Bank has access to borrow from the
FHLB of Atlanta.

     Deposits.  The Bank attracts  deposits  principally  from within its market
area by offering a variety of deposit instruments,  including checking accounts,
money market  accounts,  statement  and passbook  savings  accounts,  Individual
Retirement  Accounts,  and  certificates of deposit which range in maturity from
seven days to five years.  Deposit terms vary  according to the minimum  balance
required,  the length of time the funds must remain on deposit and the  interest
rate.  Maturities,  terms, service fees and withdrawal penalties for its deposit
accounts are established by the Bank on a periodic  basis.  The Bank reviews its
deposit mix and pricing on a weekly basis. In determining the characteristics of
its  deposit  accounts,  the Bank  considers  the  rates  offered  by  competing
institutions,  lending  and  liquidity  requirements,  growth  goals and federal
regulations.  Management  believes it prices its  deposits  comparably  to rates
offered by its competitors. The Bank does not accept brokered deposits.

     The Bank  attempts to compete for deposits with other  institutions  in its
market  area by  offering  competitively  priced  deposit  instruments  that are
tailored  to the needs of its  customers.  Additionally,  the Bank seeks to meet
customers'  needs by providing  convenient  customer  service to the  community,
efficient staff and convenient hours of service. Substantially all of the Bank's
depositors are Maryland residents. To provide additional  convenience,  the Bank
participates  in the STAR Automated  Teller Machine ("ATM") network at locations
throughout  the  mid-Atlantic  and the South  and the  CIRRUS  Automated  Teller
Machine  network at  locations  throughout  the  United  States,  through  which
customers can gain access to their  accounts at any time. The Bank currently has
ATM  machines in all of its sixteen  offices.  The Bank also has a remote ATM at
the Forest Hill Lanes in Forest  Hill,  Maryland  and remote ATM's at three area
community college's,  Dundalk Community College,  Catonsville  Community College
and Essex Community College.  The Bank also has an Internet based banking system
to provide additional customer convenience.


                                       20
<PAGE>

     Savings  deposits in the Bank at September 30, 2003 were represented by the
various types of savings programs described below.


<TABLE>
<CAPTION>
Interest*      Minimum                                                    Minimum         Balances     Percentage of
  Rate           Term                     Category                         Amount      (In thousands)  Total Savings
---------      -------                    --------                        -------      --------------  -------------
 <S>            <C>                          <C>                           <C>            <C>              <C>
                                    Demand deposits:
    .34 %      None                   NOW and Super NOW accounts          $     250        50,556          9.16%
    .70        None                   Money market                              250        15,540          2.81
                                                                                         --------       -------
                                    Total demand deposits                                  66,096         11.97
                                    Passbook savings deposits:
   1.00        None                   Regular passbook                           25        77,080         13.96
   1.04        None                   Money market passbook                  10,000        33,156          6.01
                                                                                         --------       -------
                                    Total passbook savings deposits                       110,236         19.97


                                    Certificates of Deposit

     .85         3 months or less   Fixed-term, fixed-rate                    1,000        12,095          2.19
    2.67         6 months           Fixed-term, fixed-rate                    1,000        22,113          4.01
    1.98       12 months            Fixed-term, fixed-rate                      100        70,123         12.73
    2.47       18 months            Fixed-term, fixed-rate                      100        17,392          3.15
    2.89       24  months           Fixed-term, fixed-rate                      100        43,859          7.94
    2.98       30 months            Fixed-term, fixed-rate                      100         5,358           .97
    4.00       36 months            Fixed-term, fixed-rate                      100        14,018          2.54
    3.41       42 months            Fixed-term, fixed-rate                      100            21           .01
    5.25       48 months            Fixed-term, fixed-rate                      100         4,538           .82
    5.01       60 months            Fixed-term, fixed-rate                      100        83,161         15.06
    5.77       $100,000 and over    Fixed-term, fixed-rate                      N/A       102,518         18.57
                                                                                         --------       -------
                                    Total certificates of deposit                         375,196         67.99
               Purchase accounting premiums, net                                              341           .06
                                    Accrued interest payable                                   59           .01
                                                                                         --------       -------
                                            Total deposits                                551,928        100.00%
                                                                                         ========       =======
</TABLE>
---------------
*       Represents weighted average interest rate.



                                       21
<PAGE>

     The  following  table sets forth the change in dollar amount of deposits in
the various types of accounts offered by the Bank between the dates indicated.

<TABLE>
<CAPTION>

                                         Balance at                            Balance at                         Balance
                                         September      % of       Increase    September     % of     Increase   September   % of
                                          30, 2003    Deposits    (Decrease)    30, 2002    Deposits (Decrease)  30, 2001   Deposits
                                         ---------    --------   -----------   ----------   -------- ----------  --------   --------
                                                                                (Dollars in thousands)
<S>                                          <C>        <C>          <C>         <C>           <C>       <C>        <C>       <C>
NOW ...................................  $   50,557     9.15%      $   4,729   $   45,827     9.19%   $  11,788  $  34,039   10.45%
Money market deposit...................      15,540     2.82          (3,369)      18,909     3.79       12,255      6,654    2.04
Passbook savings deposits..............     110,236    19.97          17,935       92,301    18.50       31,357     60,944   18.71
Certificates of deposit................     272,678    49.42           6,328      266,527    53.44       88,855    177,672   54.54
Certificates of deposit $100,000
   and over............................     102,518    18.57          28,776       73,742    14.78       27,470     46,272   14.20
Purchase accounting premiums, net......         341      .06          (1,051)       1,392      .28        1,392         --      --
Accrued interests payable..............          59      .01             (28)          87      .02         (118)       205     .06
                                         ----------   ------       ---------   ----------   ------    ---------  ---------  ------
                                         $  551,929   100.00%      $  53,320   $  498,785   100.00%   $ 172,999  $ 325,786  100.00%
                                         ==========   ======       =========   ==========   ======    =========  =========  ======
</TABLE>



                                       22
<PAGE>

     The following  tables set forth the average  balances and average  interest
rates based on month-end  balances for various types of deposits as of the dates
indicated.
<TABLE>
<CAPTION>

                                                                          Year Ended September 30,
                                 ---------------------------------------------------------------------------------------------------
                                               2003                               2002                             2001
                                 ---------------------------------  ---------------------------------  -----------------------------
                                  Average              Average          Average            Average      Average            Average
                                  Balance              Rate (1)         Balance              Rate       Balance              Rate
                                 ----------           ---------        ---------          ---------     -------            -------
<S>                                  <C>                <C>              <C>                <C>            <C>               <C>
                                                                          (Dollars in thousands)

NOW...........................   $  43,579               .61%          $  25,423            1.71%       $  21,663            1.57%
Money market deposits.........      15,628              1.03               9,920            1.74            7,005            2.52
Passbook savings deposits.....     100,160              2.13              72,364            3.15           57,809            2.57
Non-interest-bearing demand
   deposits...................      16,305                --              12,583              --           10,671              --
Certificates of deposit.......     354,349              3.29             262,439            4.23          200,584            5.87
                                 ---------                             ---------                        ---------
    Total.....................   $ 530,021              2.68           $ 382,729            3.65        $ 297,732            4.63
                                 =========                             =========                        =========
</TABLE>
--------
(1) Annualized.

<TABLE>
<CAPTION>

     The following  table sets forth the time deposits in the Bank classified by
rates at the dates indicated.


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

1.76 - 2%.................................................  $   84,309     $  16,369     $      --
2.01 - 4%.................................................     172,828       167,206        23,525
4.01 - 6%.................................................      70,523        80,228        90,699
6.01 - 8%.................................................      47,536        76,466       109,720
                                                            ----------     ---------     ---------
                                                             $ 375,196     $ 340,269     $ 223,944
                                                            ==========     =========     =========
</TABLE>


     The following  table sets forth the amount and  maturities of time deposits
at September 30, 2003.
<TABLE>
<CAPTION>

                                                             Amount Due
                                  -------------------------------------------------------------------------
                                  Less Than                                          After
Rate                              One Year        1-2 Years        2-3 Years        3 Years         Total
----                              --------        ---------        ---------        -------        -------
<S>                                   <C>           <C>              <C>            <C>             <C>
                                                                    (In thousands)

 1.76 - 2%....................    $  77,871       $   5,486      $     915        $     37      $   84,309
 2.01 - 4%....................       91,062          38,615         11,463          31,688         172,828
 4.01 - 6%....................       16,957           2,470          6,196          44,900          70,523
 6.01 - 8%....................        5,366          32,449          9,398             323          47,536
                                  ---------       ---------      ---------        --------      ----------
                                  $ 191,256       $  79,020      $  27,972        $ 76,948      $  375,196
                                  =========       =========      =========        ========      ==========
</TABLE>





                                       23
<PAGE>


     The  following  table  indicates the amount of the Bank's  certificates  of
deposit of $100,000 or more by time remaining until maturity as of September 30,
2003. At such date, such deposits represented 19.26% of total deposits and had a
weighted average rate of 5.77%.
<TABLE>
<CAPTION>

                                                                         Certificates
                            Maturity Period                               of Deposit
                            ---------------                              ------------
                                                                        (In thousands)
                            <S>                                               <C>
                            Three months or less.........................  $  14,403
                            Over three through six months................     13,585
                            Over six through 12 months...................     12,765
                            Over 12 months...............................     61,765
                                                                           ---------
                                  Total..................................  $ 102,518
                                                                           =========
</TABLE>


     The following  table sets forth the savings  activities of the Bank for the
periods indicated.


<TABLE>
<CAPTION>
                                                                       Year Ended September 30,
                                                             -------------------------------------------
                                                                  2003          2002          2001
                                                               ----------    ----------    -----------
<S>                                                               <C>           <C>           <C>
                                                                          (In thousands)

Deposits.................................................... $ 998,644      $ 682,641         $  653,749
Increase from WHG merger....................................        --        118,218                 --
Withdrawals.................................................  (959,547)      (641,844)          (610,630)
                                                             ---------      ---------         ----------
Net increase before interest  credited......................    39,097        159,015             43,119
Interest credited...........................................    14,223         13,984             13,785
                                                             ---------      ---------         ----------
    Net increase in savings  deposits....................... $  53,320      $ 172,999         $   56,904
                                                             =========      =========         ==========
</TABLE>


     In the unlikely event the Bank is liquidated,  depositors  will be entitled
to full payment of their deposit accounts prior to any payment being made to the
sole stockholder of the Bank.

     Borrowings.  Savings deposits  historically have been the primary source of
funds for the Bank's lending,  investments and general operating activities. The
Bank is  authorized,  however,  to use  advances  from  the FHLB of  Atlanta  to
supplement  its  supply  of  lendable  funds  and  to  meet  deposit  withdrawal
requirements.  The FHLB of Atlanta functions as a central reserve bank providing
credit for savings institutions and certain other member financial institutions.
As a member of the FHLB System, the Bank is required to own stock in the FHLB of
Atlanta  and is  authorized  to apply for  advances.  Advances  are  pursuant to
several different programs, each of which has its own interest rate and range of
maturities.  The Bank has a Blanket  Agreement  for advances with the FHLB under
which the Bank may borrow up to 11% of assets  subject to normal  collateral and
underwriting requirements.  Advances from the FHLB of Atlanta are secured by the
Bank's stock in the FHLB of Atlanta and other eligible assets.  At September 30,
2003, the Bank had $32.3 million in outstanding FHLB advances.

     On June 27,  2002,  the  Company  established  a  Delaware  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 Business
Trust,  and the  Business  Trust in turn makes  interest  payments  on the trust
preferred securities to the private investors.

     The  trust  preferred  securities  issued  by the  Business  Trust  and the
subordinated  debentures  held by the Business  Trust 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, 2003 was 4.76%. The junior subordinated debentures are
the sole  assets  of the


                                       24
<PAGE>

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  proceeds  from  the
subordinated debt securities are includable as part of Tier 1 regulatory capital
for the Bank. In 2003, the Company had an annual expense of $658,000  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-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.

     On September 29, 2003, the Company  established a second Delaware 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
Statutory 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 proceeds from the 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.

SUBSIDIARY ACTIVITIES

     As a federally  chartered  savings bank, the Bank is permitted to invest an
amount equal to 2% of its assets in subsidiaries,  with an additional investment
of 1% of assets where such investment serves primarily community, inner-city and
community  development  purposes.  Under such  limitations,  as of September 30,
2003, the Bank was authorized to invest up to approximately $20.0 million in the
stock of or loans to  subsidiaries,  including the  additional 1% investment for
community inner-city and community  development  purposes.  Institutions meeting
their applicable minimum regulatory capital requirements may invest up to 50% of
their  regulatory  capital in conforming first mortgage loans to subsidiaries in
which they own 10% or more of the capital stock.

     The Bank has two subsidiary service corporations,  Baltimore County Service
Corp.  ("BCSC") and Ebenezer Road, Inc. ("Ebenezer Road").  Further,  BCSC has a
wholly owned subsidiary,  Route 543, Incorporated ("Route 543"). BCSC was formed
in the mid 1970's for the purpose of  participating  in joint  ventures  for the
development of real estate.  The last  development  project was completed during
the year ended  September 30, 1996,  and at September 30, 2003,  BCSC  conducted
immaterial  activities.  Route 543 currently is inactive. At September 30, 2003,
BCSC had  substantially  no assets or  liabilities.  The Bank does not intend to
conduct real estate  development  activities in the future.  Ebenezer Road is an
insurance  agency that sells primarily  vendor's  single


                                       25
<PAGE>

interest  insurance on automobile loans, as well as annuity  products.  The fees
from the activities of its  subsidiaries  were immaterial  during the year ended
September 30, 2003.

COMPETITION

     The Bank faces  strong  competition  both in  originating  real  estate and
consumer loans and in attracting deposits. The Bank competes for real estate and
other loans  principally on the basis of interest  rates,  the types of loans it
originates,  the  deposit  products  it offers and the  quality of  services  it
provides to  borrowers.  The Bank also competes by offering  products  which are
tailored to the local  community.  Its  competition in  originating  real estate
loans comes  primarily  from other savings  institutions,  commercial  banks and
mortgage bankers.  Commercial banks, credit unions and finance companies provide
vigorous  competition in consumer lending.  Competition may increase as a result
of the continuing  reduction of  restrictions  on the  interstate  operations of
financial institutions.

     The Bank attracts its deposits through its offices primarily from the local
community.  Consequently,  competition  for deposits is  principally  from other
savings  institutions,  commercial banks, credit unions and brokers in the local
community. The Bank competes for deposits and loans by offering what it believes
to be a variety of deposit accounts at competitive  rates,  convenient  business
hours, a commitment to outstanding  customer  service and a well-trained  staff.
The Bank believes it has developed strong  relationships with local realtors and
the community in general.

     Management  considers  its market area for  gathering  deposits  and making
loans to be the Baltimore metropolitan area in Maryland. The Bank estimates that
it competes with numerous banks and savings and loan  associations  for deposits
and  loans.  Based  on data  provided  by a  private  marketing  firm,  the Bank
estimates that at September 30, 2003, it had approximately 2.8% of deposits held
by all banks and savings institutions in the Baltimore Metropolitan Area.

EMPLOYEES

     As of September  30, 2003,  the Company had 164  full-time and 21 part-time
employees,  none of whom were represented by a collective  bargaining agreement.
Management considers the Bank's relationships with its employees to be good.

DEPOSITORY INSTITUTION REGULATION

     General. The Bank is a federally chartered savings institution, is a member
of the FHLB of Atlanta  and its  deposits  are  insured by the  Federal  Deposit
Insurance  Corporation  ("FDIC") through the Savings Association  Insurance Fund
("SAIF").  As a federal savings  institution,  the Bank is subject to regulation
and supervision by the Office of Thrift Supervision  ("OTS") and the FDIC and to
OTS  regulations   governing  such  matters  as  capital   standards,   mergers,
establishment  of branch  offices,  subsidiary  investments  and  activities and
general  investment  authority.  The OTS  periodically  examines  the  Bank  for
compliance  with  various  regulatory   requirements  and  for  safe  and  sound
operations.  The FDIC also has the authority to conduct special  examinations of
the Bank  because  its  deposits  are  insured  by the SAIF.  The Bank must file
reports with the OTS describing its activities and financial  condition and must
obtain the approval of the OTS prior to entering into certain transactions, such
as mergers with or acquisitions of other depository institutions.

     Regulatory  Capital  Requirements.   Under  the  OTS's  regulatory  capital
requirements,  savings  associations must maintain  "tangible"  capital equal to
1.5% of adjusted total assets, "core" capital equal to at least 4.0% or 3.0% (if
the  institution is rated  composite 1 CAMELS under the OTS  examination  rating
system) of adjusted  total assets and "total"  capital (a  combination of "core"
and "supplementary" capital) equal to 8.0% of risk-weighted assets. In addition,
the OTS has adopted  regulations  which impose certain  restrictions  on savings
associations that have a total risk-based  capital ratio that is less than 8.0%,
a ratio of Tier 1 capital to  risk-weighted  assets of less than 4.0% or a ratio
of Tier 1 capital  to  adjusted  total  assets of less than 4.0% (or 3.0% if the
institution  is  rated  composite  1 CAMELS  under  the OTS  examination  rating
system).  For  purposes  of  these  regulations,  Tier 1  capital  has the  same
definitions as core capital. See "--Prompt Corrective Regulatory Action."

     Core capital is defined as common  stockholders' equity (including retained
earnings), noncumulative perpetual preferred stock and related surplus, minority
interests in the equity  accounts of fully  consolidated


                                       26
<PAGE>

subsidiaries,   certain  nonwithdrawable   accounts  and  pledged  deposits  and
"qualifying  supervisory  goodwill."  Core capital is  generally  reduced by the
amount  of the  savings  association's  intangible  assets  for  which no market
exists.  Limited  exceptions to the deduction of intangible  assets are provided
for purchased  mortgage  servicing rights and qualifying  supervisory  goodwill.
Tangible  capital  is given the same  definition  as core  capital  but does not
include an exception for qualifying  supervisory  goodwill and is reduced by the
amount of all the savings  association's  intangible  assets with only a limited
exception  for  purchased  mortgage  servicing  rights.  Both core and  tangible
capital are further reduced by an amount equal to a savings  institution's  debt
and equity investments in subsidiaries  engaged in activities not permissible to
national  banks (other than  subsidiaries  engaged in  activities  undertaken as
agent for customers or in mortgage banking activities and subsidiary  depository
institutions  or their  holding  companies).  Investments  in and  extensions of
credit to such subsidiaries are required to be fully netted against tangible and
core capital. At September 30, 2003, the Bank had no such investments.

     Adjusted  total  assets  are  a  savings   association's  total  assets  as
determined under accounting  principles  generally accepted in the United States
of America  increased by certain  goodwill amounts and by a pro rated portion of
the  assets of  unconsolidated  includable  subsidiaries  in which  the  savings
association holds a minority interest.  Adjusted total assets are reduced by the
amount of assets that have been deducted  from  capital,  the portion of savings
association's  investments in unconsolidated  includable subsidiaries,  and, for
purpose of the core capital requirement,  qualifying  supervisory  goodwill.  At
September  30, 2003,  the Bank's  adjusted  total assets for the purposes of the
core and tangible capital requirements were approximately $655.5 million.

     In  determining  compliance  with the  risk-based  capital  requirement,  a
savings  association  is allowed to include both core capital and  supplementary
capital  in its total  capital  provided  the  amount of  supplementary  capital
included does not exceed the savings  association's core capital.  Supplementary
capital is defined to include certain  preferred  stock issues,  nonwithdrawable
accounts  and  pledged  deposits  that do not qualify as core  capital,  certain
approved subordinated debt, certain other capital instruments,  a portion of the
savings  association's general loss allowances and up to 45% of unrealized gains
on equity  securities.  Total core and supplementary  capital are reduced by the
amount of capital instruments held by other depository  institutions pursuant to
reciprocal  arrangements,  all  equity  investments  and  that  portion  of  the
institution's land loans and non-residential construction loans in excess of 80%
loan-to-value  ratio.  As of September 30, 2003, the Bank had no high ratio land
or  non-residential  construction  loans and no equity investments for which OTS
regulations require a deduction from total capital.

     The risk-based capital requirement is measured against risk-weighted assets
which  equal  the sum of each  asset  and the  credit-equivalent  amount of each
off-balance sheet item after being multiplied by an assigned risk weight.  Under
the OTS risk-weighting system,  one-to-four family first mortgages not more than
90 days  past  due  with  loan-to-value  ratios  under  80% and  average  annual
occupancy  rates  of  at  least  80%  and  certain   qualifying  loans  for  the
construction of  one-to-four-family  residences  pre-sold to home purchasers are
assigned a risk weight of 50%. Consumer and residential  construction  loans are
assigned a risk  weight of 100%.  Mortgage-backed  securities  issued,  or fully
guaranteed  as to principal and interest by the FNMA or FHLMC are assigned a 20%
risk weight.  Cash and U.S.  Government  securities backed by the full faith and
credit of the U.S.  Government  (such as  mortgage-backed  securities  issued by
GNMA) are given a 0% risk weight.

     For information  with respect to the Bank's  compliance with its regulatory
capital requirements at September 30, 2003, see Note 15 of Notes to Consolidated
Financial Statements.

     The risk-based  capital  requirements  of the OTS also require that savings
institutions  with more than a "normal"  level of interest rate risk to maintain
additional total capital. A savings institution's interest rate risk is measured
in terms of the sensitivity of its "net portfolio  value" to changes in interest
rates.  Net  portfolio  value is defined,  generally,  as the  present  value of
expected cash inflows from existing assets and off-balance  sheet contracts less
the present value of expected cash outflows from existing liabilities. A savings
institution  is  considered  to have a  "normal"  level of  interest  rate  risk
exposure if the decline in its net portfolio  value after an immediate 200 basis
point increase or decrease in market  interest rates  (whichever  results in the
greater  decline)  is less than two percent of the  current  estimated  economic
value of its assets.  A savings  institution with a greater than normal interest
rate risk will be  required  to deduct  from  total  capital,  for  purposes  of
calculating its risk-based  capital  requirement,  an amount (the "interest rate
risk  component")  equal to one-half the  difference  between the  institution's
measured  interest  rate  risk and the  normal  level  of  interest  rate  risk,
multiplied by the economic value of its total assets.


                                       27

<PAGE>


     The OTS calculates the sensitivity of a savings institution's net portfolio
value based on data submitted by the  institution in a schedule to its quarterly
Thrift  Financial  Report and using the  interest  rate risk  measurement  model
adopted by the OTS. The amount of the interest rate risk  component,  if any, to
be  deducted  from  a  savings  institution's  total  capital  is  based  on the
institution's  Thrift Financial Report filed two quarters earlier.  The interest
rate risk rule did not have a material effect on the Bank's  risk-based  capital
at September 30, 2003.

     In addition to requiring generally applicable capital standards for savings
institutions,  the OTS is  authorized  to establish the minimum level of capital
for a savings  institution at such amount or at such ratio of  capital-to-assets
as the OTS  determines to be necessary or  appropriate  for such  institution in
light of the particular  circumstances  of the institution.  Such  circumstances
would include a high degree of exposure to interest rate risk,  concentration of
credit risk and certain risks arising from non-traditional activity. The OTS may
treat the failure of any  savings  institution  to maintain  capital at or above
such level as an unsafe or unsound practice and may issue a directive  requiring
any savings  institution which fails to maintain capital at or above the minimum
level required by the OTS to submit and adhere to a plan for increasing capital.
Such an order may be enforced in the same manner as an order issued by the FDIC.

     Qualified Thrift Lender Test. A savings  institution that does not meet the
Qualified  Thrift Lender  ("QTL") test must either  convert to a bank charter or
comply with the following  restrictions on its  operations:  (i) the institution
may not  engage in any new  activity  or make any new  investment,  directly  or
indirectly,  unless  such  activity  or  investment  is  permissible  for both a
national  bank and a  savings  institution;  (ii) the  branching  powers  of the
institution  shall  be  restricted  to  those  of a  national  bank;  (iii)  the
institution shall not be eligible to obtain any advances from its FHLB; and (iv)
payment of dividends by the institution  shall be subject to the rules regarding
payment of dividends by a national bank. In addition,  any company that controls
a  savings  institution  that  fails to  qualify  as a QTL will be  required  to
register  as, and to be deemed,  a bank  holding  company  subject to all of the
provisions  of the Bank  Holding  Company  Act of 1956  (the  "BHCA")  and other
statutes  applicable  to bank holding  companies.  Upon the  expiration of three
years  from the date the  institution  ceases  to be a QTL,  it must  cease  any
activity and not retain any investment not permissible for a national bank and a
savings institution and immediately repay any outstanding FHLB advances (subject
to safety and soundness considerations).

     To meet the QTL test, an institution's  "Qualified Thrift Investments" must
total at least  65% of  "portfolio  assets."  Under OTS  regulations,  portfolio
assets are defined as total assets less intangibles,  property used by a savings
institution in its business and liquidity investments in an amount not exceeding
20% of  assets.  Qualified  Thrift  Investments  consist  of (i)  loans,  equity
positions  or  securities  related  to  domestic,  residential  real  estate  or
manufactured  housing,  (ii) 50% of the dollar  amount of  residential  mortgage
loans  subject to sale under certain  conditions,  and (iii) stock in an FHLB or
the FHLMC or FNMA.  In  addition,  subject to a 20% of portfolio  assets  limit,
savings  institutions are able to treat as Qualified Thrift  Investments 200% of
their   investments  in  loans  to  finance   "starter   homes"  and  loans  for
construction,  development  or  improvement  of housing  and  community  service
facilities or for financing small businesses in  "credit-needy"  areas. In order
to maintain QTL status,  the savings  institution must maintain a weekly average
percentage of Qualified Thrift Investments to portfolio assets equal to 65% on a
monthly average basis in nine out of 12 months. A savings institution that fails
to maintain QTL status will be permitted to requalify  once, and if it fails the
QTL test a second time, it will become  immediately  subject to all penalties as
if all time limits on such penalties had expired.

     At September  30,  2003,  the  percentage  of the Bank's  portfolio  assets
invested  in  Qualified  Thrift  Investments  was in  excess  of the  percentage
required to qualify the Bank under the QTL test.

     Dividend  Limitations.  Under the OTS prompt corrective action regulations,
the Bank would be  prohibited  from making any capital  distributions  if, after
making the distribution,  it would have: (i) a total risk-based capital ratio of
less than 8.0%;  (ii) a Tier 1 risk-based  capital  ratio of less than 4.0%;  or
(iii) a Tier 1  leverage  ratio  of  less  than  4.0%.  See  "Prompt  Corrective
Regulatory  Action." The OTS, after  consultation  with the FDIC,  however,  may
permit an otherwise  prohibited  stock repurchase if made in connection with the
issuance of additional  shares in an equivalent  amount and the repurchase  will
reduce  the  institution's   financial  obligations  or  otherwise  improve  the
institution's  financial  condition.  Under  OTS  regulations,  the  Bank is not
permitted to pay dividends on its capital stock if its regulatory  capital would
thereby be reduced  below the amount then required for the  liquidation  account
established for the benefit of certain depositors of the Bank at the time of its
conversion to stock form.


                                       28

<PAGE>


     Savings  institutions  must  submit  notice  to the OTS  prior to  making a
capital  distribution  if (a)  they  would  not be  well-capitalized  after  the
distribution,  (b) the distribution would result in the retirement of any of the
institution's  common  or  preferred  stock or debt  counted  as its  regulatory
capital,  or (c) the institution is a subsidiary of a holding company. A savings
institution  must make  application to the OTS to pay a capital  distribution if
(x)  the  institution  would  not  be  adequately   capitalized   following  the
distribution,  (y) the institution's  total  distributions for the calendar year
exceeds the  institution's net income for the calendar year to date plus its net
income (less distributions) for the preceding two years, or (z) the distribution
would  otherwise  violate  applicable  law or regulation or an agreement with or
condition imposed by the OTS.

     In addition to the foregoing, earnings of the Bank appropriated to bad debt
reserves  and deducted for federal  income tax  purposes are not  available  for
payment of cash dividends or other  distributions to the Company without payment
of taxes at the then  current  tax rate by the Bank on the  amount  of  earnings
removed from the reserves for such  distributions.  See  "Taxation." The Company
intends to make full use of this  favorable tax  treatment  afforded to the Bank
and the Company and does not  contemplate  use of any  earnings of the Bank in a
manner  which would limit  either  institution's  bad debt  deduction  or create
federal tax liabilities.

     Deposit  Insurance.  FDICIA  required  the FDIC to  establish a  risk-based
assessment  system for insured  depository  associations that takes into account
the risks attributable to different  categories and concentrations of assets and
liabilities.  Under the rule,  the FDIC assigns an  association  to one of three
capital  categories   consisting  of  (i)  well  capitalized,   (ii)  adequately
capitalized,   or  (iii)   undercapitalized,   and  one  of  three   supervisory
subcategories.  The supervisory  subgroup to which an association is assigned is
based on a  supervisory  evaluation  provided  to the FDIC by the  association's
primary  federal  regulator  and  information  which the FDIC  determines  to be
relevant  to the  association's  financial  condition  and the risk posed to the
deposit insurance funds (which may include, if applicable,  information provided
by the association's state supervisor). An association's assessment rate depends
on the capital category and supervisory category to which it is assigned.  There
are nine assessment risk classifications  (i.e.,  combinations of capital groups
and  supervisory  subgroups) to which  different  assessment  rates are applied.
Assessment  rates range from zero basis points for an association in the highest
category  (i.e.,  well-capitalized  and  healthy)  to 27  basis  points  for  an
association in the lowest  category (i.e.,  undercapitalized  and of substantial
supervisory concern.)

     Federal  Home Loan Bank  System.  The Bank is a member of the FHLB  System,
which consists of 12 district Federal Home Loan Banks subject to supervision and
regulation by the Federal Housing Finance Board ("FHFB").  The Federal Home Loan
Banks provide a central credit facility primarily for member institutions.  As a
member of the FHLB of  Atlanta,  the Bank is required to acquire and hold shares
of capital stock in the FHLB of Atlanta in an amount at least equal to 1% of the
aggregate unpaid principal of its home mortgage loans, home purchase  contracts,
and similar  obligations  at the beginning of each year, or 1/20 of its advances
(borrowings)  from the FHLB of Atlanta,  whichever  is greater.  The Bank was in
compliance  with this  requirement  with  investment in FHLB of Atlanta stock at
September 30, 2003, of $3.3 million.  The FHLB of Atlanta serves as a reserve or
central bank for its member  institutions  within its assigned  district.  It is
funded primarily from proceeds derived from the sale of consolidated obligations
of the FHLB System.  It offers  advances to members in accordance  with policies
and procedures established by the FHFB and the Board of Directors of the FHLB of
Atlanta.  Long-term advances may only be made for the purpose of providing funds
for  residential  housing  finance.  At September  30, 2003,  the Bank had $31.2
million in advances outstanding from the FHLB of Atlanta.

     Federal  Reserve  System.  Pursuant to regulations  of the Federal  Reserve
Board,  all  FDIC-insured  depository  institutions  must maintain average daily
reserves  equal to 3% on  transaction  accounts  from $6.0  million  up to $42.8
million,  plus 10% on the amount over $42.8 million.  These reserve requirements
are  subject to  adjustment  by the  Federal  Reserve  Board.  Because  required
reserves  must be  maintained  in the  form of vault  cash or in a  non-interest
bearing account at a Federal Reserve Bank, the effect of the reserve requirement
is to reduce  the amount of the  institution's  interest-earning  assets.  As of
September 30, 2003, the Bank met its reserve requirements.

     Prompt  Corrective  Regulatory  Action.  Under FDICIA,  the federal banking
regulators  are  required  to  take  prompt  corrective  action  if  an  insured
depository  institution  fails to satisfy certain minimum capital  requirements,
including a leverage  limit,  a risk-based  capital  requirement,  and any other
measure deemed  appropriate by the federal banking  regulators for measuring the
capital  adequacy  of  an  insured  depository  institution.  All  institutions,
regardless  of their  capital  levels,  are  restricted  from making any capital
distribution or paying any management fees if the institution  would  thereafter
fail to satisfy  the  minimum  levels for any of its  capital  requirements.  An


                                       29
<PAGE>

institution  that  fails to meet the  minimum  level  for any  relevant  capital
measure (an  "undercapitalized  institution")  may be: (i) subject to  increased
monitoring by the appropriate federal banking regulator; (ii) required to submit
an acceptable  capital  restoration  plan within 45 days; (iii) subject to asset
growth  limits;  and (iv)  required  to obtain  prior  regulatory  approval  for
acquisitions,  branching and new lines of  businesses.  The capital  restoration
plan must  include a guarantee  by the  institution's  holding  company that the
institution  will comply with the plan until it has been adequately  capitalized
on average for four consecutive quarters,  under which the holding company would
be liable up to the lesser of 5% of the institution's total assets or the amount
necessary to bring the  institution  into capital  compliance  as of the date it
failed  to  comply  with  its  capital   restoration   plan.  A   "significantly
undercapitalized"  institution, as well as any undercapitalized institution that
does not  submit an  acceptable  capital  restoration  plan,  may be  subject to
regulatory demands for recapitalization,  broader application of restrictions on
transactions  with  affiliates,  limitations on interest rates paid on deposits,
asset  growth  and other  activities,  possible  replacement  of  directors  and
officers,  and restrictions on capital distributions by any bank holding company
controlling the institution. Any company controlling the institution may also be
required  to divest the  institution  or the  institution  could be  required to
divest   subsidiaries.   The  senior  executive   officers  of  a  significantly
undercapitalized   institution   may  not  receive   bonuses  or   increases  in
compensation  without prior  approval and the  institution  is  prohibited  from
making  payments of principal  or interest on its  subordinated  debt.  In their
discretion,  the  federal  banking  regulators  may also  impose  the  foregoing
sanctions on an  undercapitalized  institution if the regulators  determine that
such actions are  necessary  to carry out the purposes of the prompt  corrective
provisions.  If an institution's ratio of tangible capital to total assets falls
below the  "critical  capital  level"  established  by the  appropriate  federal
banking  regulator,  the  institution  will be  subject  to  conservatorship  or
receivership within specified time periods.

     Under  the  implementing  regulations,   the  federal  banking  regulators,
including the OTS,  generally  measure an institution's  capital adequacy on the
basis of its total  risk-based  capital ratio (the ratio of its total capital to
risk-weighted  assets),  Tier 1 risk-based  capital ratio (the ratio of its core
capital  to  risk-weighted  assets)  and  leverage  ratio (the ratio of its core
capital to adjusted total assets).  The following table shows the capital ratios
required for the various prompt corrective action categories.
<TABLE>
<CAPTION>

                                                     Adequately                                   Significantly
                           Well Capitalized          Capitalized         Undercapitalized        Undercapitalized
                           ----------------          ------------        ----------------        ----------------
<S>                              <C>                     <C>                   <C>                     <C>
Total risk-based
    capital ratio           10.0% or more            8.0% or more        Less than 8.0%          Less than 6.0%
Tier 1 risk-based
    capital ratio            6.0% or more            4.0% or more        Less than 4.0%          Less than 3.0%
Leverage ratio               5.0% or more            4.0% or more *      Less than 4.0% *        Less than 3.0%

</TABLE>

-----------
*  3.0% if institution has a composite 1 CAMELS rating.

A "critically undercapitalized" savings institution is defined as an institution
that  has a ratio of  "tangible  equity"  to total  assets  of less  than  2.0%.
Tangible equity is defined as core capital plus cumulative  perpetual  preferred
stock  (and  related  surplus)  less  all  intangibles   other  than  qualifying
supervisory  goodwill and certain purchased  mortgage  servicing rights. The OTS
may reclassify a well capitalized savings institution as adequately  capitalized
and may require an adequately  capitalized  or  undercapitalized  institution to
comply with the supervisory actions applicable to institutions in the next lower
capital  category  (but  may not  reclassify  a  significantly  undercapitalized
institution as critically  undercapitalized) if the OTS determines, after notice
and an opportunity for a hearing,  that the savings  institution is in an unsafe
or unsound  condition or that the  institution  has received and not corrected a
less-than-satisfactory rating for any CAMELS rating category.

     Safety and  Soundness  Standards.  Under  FDICIA,  as amended by the Riegle
Community  Development and Regulatory  Improvement Act of 1994 (the "CDRI Act"),
each  Federal  banking  agency was required to  establish  safety and  soundness
standards for  institutions  under its authority.  On July 10, 1995, the Federal
banking   agencies,   including  the  OTS,   released   Interagency   Guidelines
Establishing  Standards  for Safety and  Soundness  and  published  a final rule
establishing  deadlines  for  submission  and  review  of safety  and  soundness
compliance  plans.  The  guidelines  require  savings  institutions  to maintain
internal  controls and  information  systems and internal audit systems that are
appropriate for the size,  nature and scope of the institution's  business.  The
guidelines also establish certain basic standards for loan documentation, credit
underwriting,  interest rate risk  exposure,  and asset growth.  The  guidelines
further provide that savings  institutions should maintain safeguards to prevent
the payment of


                                       30
<PAGE>

compensation,  fees  and  benefits  that are  excessive  or that  could  lead to
material financial loss, and should take into account factors such as comparable
compensation practices at comparable institutions.  If the OTS determines that a
savings  institution  is  not  in  compliance  with  the  safety  and  soundness
guidelines,  it may  require the  institution  to submit an  acceptable  plan to
achieve  compliance with the guidelines.  A savings  institution  must submit an
acceptable compliance plan to the OTS within 30 days of receipt of a request for
such a plan.  Failure to submit or implement a  compliance  plan may subject the
institution to regulatory sanctions. Under the guidelines, a savings institution
should maintain systems,  commensurate with its size and the nature and scope of
its operations,  to identify  problem assets and prevent  deterioration in those
assets as well as to evaluate and monitor  earnings and ensure that earnings are
sufficient to maintain adequate capital and reserves.  Management  believes that
these regulatory standards do not materially affect the Bank's operations.

     Lending Limits.  Savings institutions  generally are subject to the lending
limits  applicable  to national  banks.  With certain  limited  exceptions,  the
maximum  amount that a savings  institution  or a national  bank may lend to any
borrower  outstanding  at one time and not fully secured by collateral  having a
market  value at least  equal to the amount of the loan or  extension  of credit
(including certain related entities of the borrower) outstanding at one time and
not fully  secured by  collateral  having a market  value at least  equal to the
amount of the loan or extension  of credit may not exceed 15% of the  unimpaired
capital and surplus of the  institution.  Loans and  extensions  of credit fully
secured by readily  marketable  collateral  may  comprise an  additional  10% of
unimpaired capital and surplus. Savings institutions are additionally authorized
to make loans to one borrower,  for any purpose:  (i) in an amount not to exceed
$500,000,  or (ii) by order of the  Director  of OTS, in an amount not to exceed
the lesser of  $30,000,000  or 30% of unimpaired  capital and surplus to develop
residential  housing,  provided:  (a) the purchase  price of each  single-family
dwelling  in  the  development  does  not  exceed  $500,000;   (b)  the  savings
institution  is and  continues  to be in  compliance  with its  fully  phased-in
capital  requirements;  (c)  the  loans  comply  with  applicable  loan-to-value
requirements,  and; (d) the aggregate  amount of loans made under this authority
does not exceed  150% of  unimpaired  capital  and  surplus,  or (iii)  loans to
finance the sale of real property  acquired in satisfaction of debts  previously
contracted in good faith, not to exceed 50% of unimpaired capital and surplus of
the institution.

     At September 30, 2003,  the maximum  amount that the Bank could have loaned
to any one borrower  without prior OTS approval was  $8.1 million. At such date,
the largest  aggregate  amount of loans that the Bank had outstanding to any one
borrower was $6.5 million.

     Uniform Lending Standards. Under OTS regulations, savings institutions must
adopt and  maintain  written  policies  that  establish  appropriate  limits and
standards  for  extensions  of credit that are secured by liens or  interests in
real estate or are made for the purpose of financing  permanent  improvements to
real estate.  These  policies  must  establish  loan  portfolio  diversification
standards, prudent underwriting standards,  including loan-to-value limits, that
are clear and  measurable,  loan  administration  procedures and  documentation,
approval and  reporting  requirements.  The real estate  lending  policies  must
reflect  consideration  of the  Interagency  Guidelines  for Real Estate Lending
Policies (the  "Interagency  Guidelines")  that have been adopted by the federal
bank regulators.

     The  Interagency  Guidelines,  among  other  things,  call upon  depository
institutions to establish  internal  loan-to-value  limits for real estate loans
that are not in  excess  of the  following  supervisory  limits:  (i) for  loans
secured by raw land, the supervisory  loan-to-value limit is 65% of the value of
the collateral;  (ii) for land development loans (i.e., loans for the purpose of
improving  unimproved  property  prior  to  the  erection  of  structures),  the
supervisory  limit is 75%; (iii) for loans for the  construction  of commercial,
multifamily or other nonresidential property, the supervisory limit is 80%; (iv)
for loans for the construction of one-to-four family properties, the supervisory
limit is 85%;  and (v) for  loans  secured  by other  improved  property  (e.g.,
farmland,  completed  commercial  property and other  income-producing  property
including  non-owner-occupied,  one-to-four family property),  the limit is 85%.
Although  no  supervisory   loan-to-value   limit  has  been   established   for
owner-occupied,  one-to-four  family  and home  equity  loans,  the  Interagency
Guidelines  state that for any such loan with a loan-to-value  ratio that equals
or exceeds 90% at origination,  an institution should require appropriate credit
enhancement  in the form of either  mortgage  insurance  or  readily  marketable
collateral.

     The Interagency  Guidelines  state that it may be appropriate in individual
cases to originate or purchase loans with loan-to-value  ratios in excess of the
supervisory  loan-to-value limits, based on the support provided by other credit
factors.   The  aggregate   amount  of  loans  in  excess  of  the   supervisory
loan-to-value limits,  however,  should not exceed 100% of total capital and the
total of such loans secured by commercial,  agricultural,  multifamily and other
non-one-to-four  family  residential  properties  should not exceed 30% of total
capital. The supervisory


                                       31
<PAGE>

loan-to-value limits do not apply to certain categories of loans including loans
insured or guaranteed by the U.S.  government and its agencies or by financially
capable state, local or municipal  governments or agencies,  loans backed by the
full faith and credit of a state government,  loans that are to be sold promptly
after origination  without recourse to a financially  responsible  party,  loans
that are renewed,  refinanced or  restructured  without the  advancement  of new
funds,  loans that are renewed,  refinanced or restructured in connection with a
workout, loans to facilitate sales of real estate acquired by the institution in
the ordinary course of collecting a debt  previously  contracted and loans where
the real estate is not the primary collateral.

     Management believes that the Bank's current lending policies conform to the
Interagency Guidelines.

     Transactions  with  Related  Parties.  Generally,  transactions  between  a
savings  bank  or its  subsidiaries  and its  affiliates  must  be on  terms  as
favorable to the Bank as transactions with non-affiliates.  In addition, certain
of these  transactions  are  restricted to a percentage  of the Bank's  capital.
Affiliates of the Bank include the Company,  the MHC, BCSB Bancorp Capital Trust
I, BCSB Capital  Trust II and any company  which would be under  common  control
with the Bank.

     The Bank's authority to extend credit to executive  officers,  trustees and
10%  shareholders,  as well as entities under such persons control are currently
governed by Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O
promulgated by the Federal Reserve Board. Among other things,  these regulations
require such loans to be made on terms substantially similar to those offered to
unaffiliated individuals,  place limits on the amount of loans the Bank may make
to such persons  based,  in part, on the Bank's  capital  position,  and require
certain approval procedures to be followed.

     Financial Modernization Legislation.  The Gramm-Leach-Bliley ("G-L-B") Act,
which was enacted in November 1999,  authorizes  affiliations  between  banking,
securities  and  insurance  firms and  authorizes  bank  holding  companies  and
national banks to engage in a variety of new financial activities. Among the new
activities  that will be permitted to bank holding  companies are securities and
insurance  brokerage,   securities  underwriting,   insurance  underwriting  and
merchant banking.  The Federal Reserve Board, in consultation with the Secretary
of the Treasury,  may approve additional  financial  activities.  The G-L-B Act,
however,  prohibits  future  acquisitions  of existing  unitary savings and loan
holding  companies,  like the Company,  by firms which are engaged in commercial
activities and limits the permissible  activities of unitary  holding  companies
formed after May 4, 1999.

     The G-L-B Act imposes  new  requirements  on  financial  institutions  with
respect to customer  privacy.  The G-L-B Act generally  prohibits  disclosure of
customer  information  to  non-affiliated  third parties unless the customer has
been given the  opportunity  to object and has not objected to such  disclosure.
Financial  institutions  are further required to disclose their privacy policies
to customers  annually.  Financial  institutions,  however,  will be required to
comply  with state law if it is more  protective  of customer  privacy  than the
G-L-B Act.

     The G-L-B Act contains significant  revisions to the FHLB System. The G-L-B
Act imposes new capital  requirements  on the FHLBs and authorizes them to issue
two classes of stock with differing dividend rates and redemption  requirements.
The G-L-B Act deletes the current requirement that the FHLBs annually contribute
$300 million to pay interest on certain government obligations in favor of a 20%
of net  earnings  formula.  The G-L-B Act expands the  permissible  uses of FHLB
advances by community  financial  institutions (under $500 million in assets) to
include   funding   loans  to  small   businesses,   small   farms   and   small
agri-businesses.  The G-L-B  Act  makes  membership  in the FHLB  voluntary  for
federal savings associations.

     The  G-L-B  Act  contains  a  variety  of  other  provisions   including  a
prohibition  against ATM surcharges  unless the customer has first been provided
notice of the  imposition  and  amount of the fee.  The  G-L-B Act  reduces  the
frequency of Community  Reinvestment Act  examinations for smaller  institutions
and imposes certain reporting requirements on depository  institutions that make
payments  to   non-governmental   entities  in  connection  with  the  Community
Reinvestment  Act.  The  G-L-B  Act  eliminates  the SAIF  special  reserve  and
authorizes a federal  savings  association  that converts to a national or state
bank charter to continue to use the term "federal" in its name and to retain any
interstate branches.

     The  Company  is  unable  to  predict  the  impact  of the G-L-B Act on its
operations  at this time.  Although the G-L-B Act reduces the range of companies
with which may acquire  control of the Company,  it may facilitate  affiliations
with companies in the financial services industry.


                                       32

<PAGE>

REGULATION OF THE COMPANY

     The Company is a savings  and loan  holding  company  within the meaning of
Section 10 of the HOLA and, as such,  the Company is subject to OTS  regulation,
examination  and  supervision.  In  addition,  because the Bank's  deposits  are
insured  by the SAIF  maintained  by the FDIC,  the Bank is  subject  to certain
restrictions in dealing with the Company and with other persons  affiliated with
the Bank.

     As a condition to OTS approval of the Bank's reorganization into the mutual
holding  company  structure,  the  Company  must  operate  under the  activities
restrictions applicable to multiple savings and loan holding companies. The HOLA
limits the  activities  of a multiple  savings and loan holding  company and its
non-insured  institution   subsidiaries  primarily  to  activities  specifically
permissible  by statute for multiple  savings and loan holding  companies and to
activities of bank holding  companies which the Federal Reserve Board has deemed
permissible by regulation under Section 4(c)(8) of the Bank Holding Company Act,
as amended the  ("BHCA"),  subject to prior  approval  of the OTS,  and to other
activities  authorized by OTS  regulation.  In addition,  under the terms of the
Company's federal stock charter,  the purpose of the Company is to pursue any or
all of the lawful objectives of a federal mutual holding company.

     The Company is permitted to, among other things: (i) invest in the stock of
a savings  institution;  (ii) acquire a mutual institution through the merger of
such  institution into a savings  institution  subsidiary of such mutual holding
company or an interim savings institution of such mutual holding company;  (iii)
merge with or acquire another mutual holding company,  one of whose subsidiaries
is a savings institution;  (iv) acquire  non-controlling amounts of the stock of
savings  institutions  and savings  institution  holding  companies,  subject to
certain restrictions;  (v) invest in a corporation the capital stock of which is
available for purchase by a savings  institution  under Federal law or under the
law of any state where the subsidiary  savings  institution or institutions have
their home offices;  (vi) furnish or perform  management  services for a savings
institution  subsidiary of such company;  (vi) hold, manage, or liquidate assets
owned or acquired from a savings institution subsidiary of such company;  (viii)
hold or manage properties used or occupied by a savings  institution  subsidiary
of such company; and (ix) acting as a trustee under deed or trust.

     The HOLA prohibits a savings and loan holding company, such as the Company,
directly or  indirectly,  from (1)  acquiring  control (as defined) of a savings
institution  (or  holding  company  thereof)  without  prior OTS  approval,  (2)
acquiring more than 5% of the voting shares of a savings institution (or holding
company  thereof)  which is not a  subsidiary,  subject to  certain  exceptions,
without prior OTS approval,  or (3) acquiring  through merger,  consolidation or
purchase of assets,  another savings institution (or holding company thereof) or
acquiring all or substbantially all of the assets,  another savings  institution
(or holding  company  thereof)  without  prior OTS  approval,  or (4)  acquiring
control of an uninsured institution.  A savings and loan holding company may not
acquire as a separate  subsidiary a savings  institution which has its principal
offices  outside of the state  where the  principal  offices  of its  subsidiary
institution is located, except (i) in the case of certain emergency acquisitions
approved by the FDIC, (ii) if the holding  company  controlled (as defined) such
savings  institution  as of March 5,  1987,  (iii) when the laws of the state in
which the savings institution to be acquired is located  specifically  authorize
such an  acquisition.  No  director  or  officer of a savings  and loan  holding
company or person owning or controlling more than 25% of such holding  company's
voting shares may, except with the prior approval of the OTS, acquire control of
any savings institution which is not a subsidiary of such holding company.

     Transactions with Affiliates. Transactions between savings institutions and
any  affiliate  are governed by Sections 23A and 23B of the Federal  Reserve Act
and Regulation W promulgated  thereunder.  An affiliate of a savings institution
is any company or entity which  controls,  is  controlled  by or is under common
control with the savings  institution.  In a holding company context, the parent
holding company of a savings institution (such as the Company) and any companies
which are  controlled  by such  parent  holding  company are  affiliates  of the
savings  institution.  Generally,  Sections  23A and 23B (i) limit the extent to
which the  savings  institution  or its  subsidiaries  may  engage  in  "covered
transactions"  with  any  one  affiliate  to an  amount  equal  to 10%  of  such
institution's  capital stock and surplus,  and contain an aggregate limit on all
such  transactions with all affiliates to an amount equal to 20% of such capital
stock and  surplus,  and (ii)  require  that all such  transactions  be on terms
substantially  the  same,  or at  least  as  favorable,  to the  institution  or
subsidiary as those provided to a non-affiliate.  The term "covered transaction"
includes the making of loans,  purchase of assets,  issuance of a guarantee  and
similar other types of transactions.  In addition to the restrictions imposed by
Sections 23A and 23B, no savings institution may (i) loan or


                                       33
<PAGE>

otherwise extend credit to an affiliate,  except for any affiliate which engages
only in activities  which are  permissible for bank holding  companies,  or (ii)
purchase  or  invest  in  any  stocks,  bonds,  debentures,   notes  or  similar
obligations of any affiliate,  except for affiliates  which are  subsidiaries of
the savings institution. Savings associations are also subject to the anti-tying
provisions  of Section  106(b) of the Bank Holding  Company Act of 1956 ("BHCA")
which prohibits a depository  institution  from extending  credit to or offering
any other services, or fixing or varying the consideration for such extension of
credit or service,  on the condition  that the customer  obtain some  additional
service from the institution or certain of its affiliates or not obtain services
of a competitor of the institution, subject to certain exceptions.

     Savings  institutions  are also  subject to the  restrictions  contained in
Section  22(h)  of the  Federal  Reserve  Act on loans  to  executive  officers,
directors and principal stockholders. Under Section 22(h), loans to an executive
officer and to a greater  than 10%  stockholder  of a savings  institution,  and
certain affiliated  entities of either, may not exceed,  together with all other
outstanding loans to such person and affiliated  entities the institution's loan
to one borrower limit  (generally equal to 15% of the  institution's  unimpaired
capital and surplus and an additional  10% of such capital and surplus for loans
fully secured by certain  readily  marketable  collateral) and all loans to such
persons  may not exceed the  institution's  unimpaired  capital  and  unimpaired
surplus unless the  institution  has less than $100 million in deposits in which
case the aggregate  limit may be increased to no more than two times  unimpaired
capital  and  surplus.   Section  22(h)  also  prohibits  loans,  above  amounts
prescribed by the appropriate  federal banking agency,  to directors,  executive
officers and greater than 10% stockholders of a savings  institution,  and their
respective affiliates,  unless such loan is approved in advance by a majority of
the board of directors of the  institution  with any  "interested"  director not
participating  in the voting.  The Federal Reserve Board has prescribed the loan
amount (which includes all other outstanding loans to such person),  as to which
such prior  board of  director  approval  is  required,  as being the greater of
$25,000 or 5% of capital  and  surplus (up to  $500,000).  Further,  the Federal
Reserve  Board  pursuant  to Section  22(h)  requires  that loans to  directors,
executive officers and principal stockholders be made on terms substantially the
same as offered in comparable  transactions  to other persons unless the loan is
made  pursuant to a benefit or  compensation  plan that is widely  available  to
other  employees and does not give  preference  to insiders.  Section 22(h) also
generally  prohibits a depository  institution from paying the overdrafts of any
of its executive officers or directors.

     Savings  institutions are also subject to the requirements and restrictions
of Section 22(g) of the Federal Reserve Act and Regulation on loans to executive
officers  and the  restrictions  of 12  U.S.C.  Section  1972 on  certain  tying
arrangements and extensions of credit by correspondent  banks.  Section 22(g) of
the Federal Reserve Act requires that loans to executive  officers of depository
institutions  not be made on terms more  favorable  than those afforded to other
borrowers,  requires  approval  for such  extensions  of  credit by the board of
directors  of the  institution,  and  imposes  reporting  requirements  for  and
additional  restrictions  on the  type,  amount  and  terms of  credits  to such
officers.  Section 1972  prohibits (i) a depository  institution  from extending
credit to or offering any other services, or fixing or varying the consideration
for such  extension  of credit or service,  on the  condition  that the customer
obtain some additional service from the institution or certain of its affiliates
or not obtain  services of a competitor of the  institution,  subject to certain
exceptions, and (ii) extensions of credit to executive officers,  directors, and
greater  than  10%  stockholders  of  a  depository  institution  by  any  other
institution which has a correspondent banking relationship with the institution,
unless  such  extension  of credit is on  substantially  the same terms as those
prevailing at the time for comparable  transactions  with other persons and does
not involve more than the normal risk of repayment or present other  unfavorable
features.

     Sarbanes-Oxley  Act of 2002. On July 30, 2002,  the  Sarbanes-Oxley  Act of
2002 ("SOX") was signed into law which mandated a variety of reforms intended to
address corporate and accounting fraud. SOX contains  provisions which amend the
Securities  Exchange Act of 1934,  as amended (the "Act") and  provisions  which
directed the Securities and Exchange Commission (the "SEC") to promulgate rules.
The Act  provides  for the  establishment  of a new  Public  Company  Accounting
Oversight  Board  ("PCAOB"),  which will enforce  auditing,  quality control and
independence  standards for firms that audit public reporting companies and will
be funded by fees from all public  reporting  companies.  The Act imposes higher
standards  for  auditor  independence  and  restricts  provision  of  consulting
services by auditing firms to companies they audit. Any non-audit services being
provided to an audit  client will require  preapproval  by the  Company's  audit
committee  members.  In  addition,   certain  audit  partners  must  be  rotated
periodically.  The Act requires  chief  executive  officers and chief  financial
officers,  or their  equivalent,  to certify to the accuracy of periodic reports
filed with the SEC, subject to civil and criminal penalties if they knowingly or
willfully violate this certification  requirement.  In addition,  under the Act,
counsel  will be required  to report  evidence  of a material  violation  of the
securities  laws or a  breach  of  fiduciary  duty  by a  company


                                       34
<PAGE>

to its chief executive officer or its chief legal officer,  and, if such officer
does not appropriately  respond,  to report such evidence to the audit committee
or other similar committee of the board of directors or the board itself.

     Longer  prison  terms  will also be  applied to  corporate  executives  who
violate federal  securities laws, the period during which certain types of suits
can be brought against a company or its officers has been extended,  and bonuses
issued  to  top  executives  prior  to  restatement  of  a  company's  financial
statements  are now  subject  to  disgorgement  if such  restatement  was due to
corporate  misconduct.  Executives  are  also  prohibited  from  trading  during
retirement  plan  "blackout"  periods,  and  loans  to  company  executives  are
restricted.  In addition, a provision directs that civil penalties levied by the
SEC as a result  of any  judicial  or  administrative  action  under  the Act be
deposited in a fund for the benefit of harmed investors. Directors and executive
officers  must also  report  most  changes  in their  ownership  of a  company's
securities  within two business  days of the change,  and as of the end of June,
2003, all ownership reports must be electronically filed.

     The Act also  increases the oversight and authority of audit  committees of
publicly traded  companies.  Audit committee members must be independent and are
barred from accepting  consulting,  advisory or other compensatory fees from the
issuer. In addition, all SEC-reporting  companies must disclose whether at least
one member of the committee is an "audit  committee  financial  expert" (as such
term is  defined  by the SEC rules) and if not,  why not.  Audit  committees  of
publicly  traded  companies  will have authority to retain their own counsel and
other advisors funded by the company. Audit committees must establish procedures
for the receipt,  retention and treatment of complaints regarding accounting and
auditing  matters and  procedures  for  confidential,  anonymous  submission  of
employee concerns regarding  questionable  accounting or auditing matters. It is
the  responsibility  of  the  audit  committee  to  hire,  oversee  and  resolve
disagreements with the Company's independent auditor.

     Beginning  six months  after the SEC  determines  that the PCAOB is able to
carry  out its  functions,  it will be  unlawful  for any  person  that is not a
registered public accounting firm ("RPAF") to audit a public reporting  company.
Under the Act, a RPAF is prohibited from performing  statutorily  mandated audit
services  for a  company  if  such  company's  chief  executive  officer,  chief
financial officer,  comptroller,  chief accounting officer or any person serving
in equivalent  positions has been employed by such firm and  participated in the
audit of such company during the one-year period  preceding the audit initiation
date.  The Act also  prohibits any officer or director of a company or any other
person  acting  under their  direction  from  taking any action to  fraudulently
influence,  coerce,  manipulate or mislead any  independent  public or certified
accountant  engaged in the audit of the Company's  financial  statements for the
purpose of rendering the financial statement's  materially  misleading.  The Act
also  requires the SEC to  prescribe  rules  requiring  inclusion of an internal
control   report  and   assessment   by  management  in  the  annual  report  to
shareholders.  The Act  requires the RPAF that issues the audit report to attest
to and report on management's  assessment of the Company's internal controls. In
addition, the Act requires that each financial report required to be prepared in
accordance with (or reconciled to) generally accepted accounting  principles and
filed  with  the SEC  reflect  all  material  correcting  adjustments  that  are
identified by a RPAF in accordance with generally accepted accounting principles
and the rules and regulations of the SEC.

     Although  the  Company  anticipates  it will  incur  additional  expense in
complying with the provisions of the Act and the related rules,  management does
not expect that such  compliance  will have a material  impact on the  Company's
financial condition or results of operations.

TAXATION

     General.  The Company and the Bank, together with the Bank's  subsidiaries,
file a  consolidated  federal  income tax return  based on a fiscal  year ending
September 30. Consolidated  returns have the effect of deferring gain or loss on
intercompany   transactions   and  allowing   companies   included   within  the
consolidated return to offset income against losses under certain circumstances.

     Federal Income Taxation.  Thrift institutions are subject to the provisions
of the  Internal  Revenue  Code of 1986,  as  amended  (the  "Code") in the same
general manner as other  corporations.  However,  institutions  such as the Bank
which met certain definitional tests and other conditions prescribed by the Code
benefited from certain  favorable  provisions  regarding  their  deductions from
taxable income for annual  additions to their bad debt reserve.  For purposes of
the bad debt reserve  deduction,  loans were  separated  into  "qualifying  real
property  loans," which generally are loans secured by interests in certain real
property,  and  nonqualifying  loans,  which are all other  loans.  The bad debt
reserve  deduction with respect to nonqualifying  loans was based on actual loss
experience,  however,


                                       35
<PAGE>

the amount of the bad debt reserve  deduction  with respect to  qualifying  real
property  loans  could be based upon  actual loss  experience  (the  "experience
method") or a percentage of taxable  income  determined  without  regard to such
deduction  (the  "percentage of taxable income  method").  Legislation  recently
signed by the  President  repealed the  percentage  of taxable  income method of
calculating the bad debt reserve.  The Bank  historically has elected to use the
percentage method.

     Earnings appropriated to an institution's bad debt reserve and claimed as a
tax  deduction  were not  available  for the  payment of cash  dividends  or for
distribution to  shareholders  (including  distributions  made on dissolution or
liquidation),  unless such amount was included in taxable income, along with the
amount deemed necessary to pay the resulting federal income tax.

     Beginning  with the first taxable year  beginning  after December 31, 1995,
savings  institutions,  such as the Bank, will be treated the same as commercial
banks.  Associations  with $500  million or more in assets  will only be able to
take a tax deduction when a loan is actually charged off. Associations with less
than $500 million in assets will still be permitted to make  deductible bad debt
additions to reserves, but only using the experience method.

     The Bank's tax returns were last audited for the year ended  September  30,
1994.

     Under provisions of the Revenue Reconciliation Act of 1993 ("RRA"), enacted
on August 10, 1993, the maximum federal  corporate income tax rate was increased
from 34% to 35% for taxable income over $10.0 million,  with a 3% surtax imposed
on taxable income over $15.0 million.  Also under  provisions of RRA, a separate
depreciation calculation requirement has been eliminated in the determination of
adjusted  current  earnings  for  purposes of  determining  alternative  minimum
taxable income,  rules relating to payment of estimated  corporate  income taxes
were  revised,  and certain  acquired  intangible  assets  such as goodwill  and
customer-based intangibles were allowed a 15-year amortization period. Beginning
with tax years  ending on or after  January  1,  1993,  RRA also  provides  that
securities  dealers must use  mark-to-market  accounting  and generally  reflect
changes in value  during the year or upon sale as taxable  gains or losses.  The
IRS has indicated that  financial  institutions  which  originate and sell loans
will be subject to the rule.

     State  Income  Taxation.  The State of  Maryland  imposes  an income tax of
approximately 7% on income measured  substantially the same as federally taxable
income.  Until  December  2000,  Maryland  imposed a franchise tax, at a rate of
0.013% of the total  withdrawal  value of the  deposits  that a savings and loan
association  held in Maryland  at  December 31 each year.  The State of Maryland
currently assesses a personal property tax for December 2000 and forward.

     For  additional  information  regarding  taxation,  see Note 16 of Notes to
Financial Statements.

ITEM 2.   PROPERTIES
--------------------

     The  following  table  sets  forth  the  location  and  certain  additional
information regarding the Bank's offices at September 30, 2003.
<TABLE>
<CAPTION>

                                                                     Book Value at      Approximate    Deposits at
                         Year       Owned or       Expiration Date   September 30,        Square     September 30,
                        Opened       Leased        (If Leased) (1)       2003             Footage         2003
                        ------       ------        ---------------      ------            -------        ------
 <S>                     <C>          <C>              <C>              <C>                <C>            <C>
                                                                                                      (Deposits in
                                                                                                       thousands)
MAIN OFFICE:
     Perry Hall          1955       Leased (2)      November 2018    $   215,068          8,000         $   138,741

BRANCH OFFICES:
     Bel Air             1975       Leased          June 2008                 --          2,000              47,920
     Dundalk (3)         1976       Leased          June 2006                 --          1,700              48,216
     Timonium            1978       Leased          July 2008                 --          1,250              73,630
     Catonsville         2003       Leased          April 2011                --          3,550              41,722
     Catonsville (4)     1981       Leased          February 2006             --          1,750                  --
     Abingdon            1999       Leased (2)      October 2008         448,656          1,800              12,898


                                       36
<PAGE>
     Forest Hill         1999       Leased (2)   July 2019               390,109          1,800              20,842
     Essex               1999       Leased       November 2004                --          3,200              11,629
     Hickory             2000       Leased (2)   January 2020            448,723          1,800               9,771
     White Marsh         2000       Leased (2)   January 2015            503,503          1,800              23,558
     Carney              2001       Leased       July 2011                    --          2,100              18,995
     Lutherville (5)     2002       Owned                                601,529          7,440              29,298
     Golden Ring (5)     2002       Leased       May 2006                     --                             27,406
     Hamilton (5)        2002       Owned                                117,606          1,500               8,695
     Woodlawn (5)        2002       Leased       July 2004                    --                             12,421
     Ellicott City (5)   2002       Leased       August 2020                  --                             26,188

ADMINISTRATIVE OFFICE:
     4111 E. Joppa Road  1994       Owned                              1,268,392         18,000
     Warehouse           1998       Leased       September 2004               --          4,800
      4117 E. Joppa Road  2003      Owned                                                 2,616

</TABLE>

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

(1)  All  leases  have  at  least  one  five-year  renewal  option,  except  for
     Catonsville, Woodlawn, Ellicott City and Golden Ring locations.
(2)  Building is owned, but land is leased.
(3)  The  Bank  also is  leasing  a kiosk  and  drive-in  ATM  facility  at this
     location.
(4)  This location is not currently used as a branch office.
(5)  Branch acquired in WHG Bancshares acquisition.


     The book value of the Bank's  investment in premises and equipment  totaled
$9.2 million at September 30, 2003. See Note 6 of Notes to Financial Statements.

ITEM 3. LEGAL PROCEEDINGS.
--------------------------

     From  time to time,  the MHC,  the  Company  and/or  the Bank is a party to
various legal proceedings  incident to its business.  Except as set forth below,
at September  30, 2003,  there were no legal  proceedings  to which the MHC, the
Company or the Bank was a party,  or to which any of their property was subject,
which were  expected by  management to result in a material loss to the MHC, the
Company or the Bank.  There are no pending  regulatory  proceedings to which the
MHC, the Company,  the Bank or their  subsidiaries is a party or to which any of
their properties is subject which are currently expected to result in a material
loss.

     The Bank  obtained  judgments  on June 5, 2002 in the amount of  $1,500,000
against Key Leasing & Rental,  Inc. and related parties before the Circuit Court
of Baltimore  County,  and filed similar claims  against the same  Defendants in
pending  bankruptcy  cases in the U.S.  Bankruptcy  Court  for the  District  of
Maryland  (Baltimore)  on  October  21,  2002  in the  case  of  the  individual
defendants and on November 1, 2002 in the case of Key Leasing & Rental, Inc. The
judgments and bankruptcy filing seek to secure the Bank's interest in automobile
leases pledged as collateral to Baltimore County Savings Bank and to recover any
deficiency balances remaining after the disposal of the collateral. The Bank has
foreclosed upon the collateral  pursuant to a consent  agreement reached between
the Bank and the US Bankruptcy Trustee on November 22, 2002.

     The  Bank  obtained  judgments  on  September  17,  2003 in the  amount  of
$705,785.88  against ATG Sales,  LLC T/A Auto  Gallery and Robert P and Karen R.
King before the Circuit Court of Baltimore County.  The judgments seek to secure
the Bank's  interest in connection  with a delinquent  commercial  loan and over
advance  liability  of the  defendants.  The bank has  foreclosed  upon  certain
collateral  and entered into a  forbearance  and  repayment  agreement  with the
Defendant.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
-----------------------------------------------------------

         Not applicable.


                                       37

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
------------------------------------------------------------------------------

     The information contained under the sections captioned "Market Information"
in the  Company's  Annual  Report to  Stockholders  for the  Fiscal  Year  Ended
September  30,  2003  (the  "Annual  Report")  filed as  Exhibit  13  hereto  is
incorporated herein by reference.

ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------

     The information  contained under the section captioned  "Selected Financial
Data" on page 2 in the Annual Report is incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
--------------------------------------------------------------------------------

     The information contained in the section captioned "Management's Discussion
and  Analysis  of  Financial  Condition  and Results of  Operations"  on pages 4
through 16 in the Annual Report is incorporated herein by reference.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
---------------------------------------------------------------------

     The information contained under the section captioned "Market Risk" on page
5 in the Annual Report is incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

     The  Consolidated  Financial  Statements,  Notes to Consolidated  Financial
Statements,  Independent  Auditor's Report and Selected  Consolidated  Financial
Data  in the  Annual  Report,  which  are  listed  under  Item  14  herein,  are
incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
------------------------------------------------------------------------

         Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES
--------------------------------

     As of the end of the  period  covered  by this  report,  management  of the
Company  carried  out  an  evaluation,   under  the  supervision  and  with  the
participation  of  the  Company's  principal  executive  officer  and  principal
financial officer, of the effectiveness of the Company's disclosure controls and
procedures.  Based on this evaluation, the Company's principal executive officer
and principal financial officer concluded that the Company's disclosure controls
and  procedures  are  effective  in  ensuring  that  information  required to be
disclosed  by the  Company  in  reports  that it  files  or  submits  under  the
Securities Exchange Act of 1934, as amended, is recorded, processed,  summarized
and reported,  within the time periods  specified in the Securities and Exchange
Commission's rules and forms.

     In addition,  there have been no changes in the Company's  internal control
over financial  reporting (to the extent that elements of internal  control over
financial  reporting are subsumed  within  disclosure  controls and  procedures)
identified in connection  with the evaluation  described in the above  paragraph
that occurred  during the Company's  last fiscal  quarter,  that has  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.


                                       38
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT
---------------------------------------------------------

     The  information  contained  under the  sections  captioned  "Proposal I --
Election  of  Directors"  and  "Section  16(a)  Beneficial  Ownership  Reporting
Compliance" in the Company's  definitive  proxy statement for the Company's 2004
Annual Meeting of Stockholders (the "Proxy Statement") is incorporated herein by
reference.

     The  Company  and its  subsidiaries  have  adopted a code of  ethics  which
applies to all of their  directors,  officers and  employees and thus applies to
the Company's  principal  executive  officer,  principal  financial  officer and
principal  accounting  officer.  The code of ethics is filed herewith as Exhibit
14.

ITEM 11. EXECUTIVE COMPENSATION
-------------------------------

     The  information  contained  under the  sections  captioned  "Proposal I --
Election of Directors -- Executive  Compensation," " -- Director  Compensation,"
"--  Compensation  Committee  Report on Executive  Compensation,"--"Compensation
Committee  Interlocks  and Insider  Participation,"  and "--  Comparative  Stock
Performance Graph" in the Proxy Statement is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
----------------------------------------------------------------------------

     (a) and (b) Security  Ownership of Certain  Beneficial Owners and Security
                 Ownership of Management

                 Information  required  by this  item  is incorporated herein by
                 reference  to  the  section  captioned  "Voting  Securities and
                 Security Ownership" in the Proxy Statement.

     (c)         Changes in Control

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

     Item 201(d) Equity Compensation Plans

          The following table sets forth certain information with respect to the
     Company's equity compensation plans as of September 30, 2003.
<TABLE>
<CAPTION>

                                                                                                Number of securities remaining
                                     Number of securities to be                                 available for future issuance
                                      issued upon exercise of       Weighted-average exercise     under equity compensation
                                        outstanding options,          price of outstanding       plans (excluding securities
                                        warrants and rights       options, warrants and rights     reflected in column (a))
                                        -------------------       ----------------------------     ------------------------
                                                (a)                             (b)                             (c)
<S>                                             <C>                             <C>                          <C>
Equity compensation plans
  approved by security holders                136,625                         9.87                          91,524

Equity compensation plans not
  approved by security holders                     --                           --                              --

       Total                                  136,625                         9.87                          91,524
</TABLE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

     The information  required by this item is incorporated  herein by reference
to the section  captioned  "Proposal I -- Election of Directors --  Transactions
with Management" in the Proxy Statement.


                                       39
<PAGE>

ITEM 14. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
------------------------------------------------

         (a)      LIST OF DOCUMENTS FILED AS PART OF THIS REPORT
                  ----------------------------------------------

         (1)  Financial  Statements.   The  following   consolidated  financial
statements  are  incorporated  by reference from Item 7 hereof (see Exhibit 13):

                  Independent Auditors' Report
                  Consolidated Statement of Financial Condition as of September
                   30, 2003 and 2002
                  Consolidated Statements of Operations for the Years Ended
                   September 30, 2003, 2002 and 2001
                  Consolidated Statements of Stockholders' Equity for the Years
                   Ended September 30, 2003, 2002 and 2001
                  Consolidated Statements of Cash Flows for the Years Ended
                   September 30, 2003, 2002 and 2001
                  Notes to Consolidated Financial Statements

          (2) Financial Statement  Schedules.  All schedules for which provision
is  made  in  the  applicable  accounting  regulations  of  the  Securities and
Exchange  Commission are omitted because of  the  absence  of  conditions under
which  they  are required  or because the  required  information is included in
the consolidated  financial  statements and related notes thereto.

          (3)  Exhibits.  The  following is a list of exhibits  filed as part of
this Annual Report on Form 10-K and is also the Exhibit Index.

      No.         Description
      ---         -----------
*     3.1         Charter of BCSB Bankcorp, Inc.
*     3.2         Bylaws of BCSB Bankcorp, Inc.
**    4.1         Form of Common Stock Certificate of BCSB Bankcorp, Inc.
      4.2         Indenture between BCSB Bancorp, Inc. and Wells Fargo, N.A.
                   dated June 30, 2002
      4.3         Form of Floating Rate Junior Subordinated Deferrable Interest
                   Debenture (Exhibit A to Exhibit 4.2)
      4.4         Indenture between BCSB Bancorp, Inc. and Wells Fargo N.A.
                   dated September 30, 2003
      4.5         Form of Junior Subordinated Debt Securities (Exhibit A to
                   Exhibit 4.4)
***   10.1        BCSB Bankcorp, Inc. 1999 Stock Option Plan
***   10.2        BCSB Bankcorp, Inc. Management Recognition Plan and Trust
                   Agreement
*     10.3        Amended and Restated Form of  Change-in-Control  Severance
                   Agreements  between Baltimore County Savings Bank, F.S.B.
                   and Gary C. Loraditch and William M. Loughran
****  10.4        Baltimore County Savings Bank, F.S.B. Deferred Compensation
                   Plan, as amended
*     10.5        Baltimore County Savings Bank, F.S.B. Incentive Compensation
                   Plan
****  10.6        Form of  Change-in-Control  Severance  Agreements  between
                   Baltimore County Savings Bank, F.S.B. and David M. Meadows
                   and Bonnie M. Klein
****  10.7        Baltimore County Savings Bank, F.S.B. Cash Deferred
                   Compensation Plan
      10.8        Trust Preferred Securities Guarantee Agreement by and between
                   BCSB Bancorp, Inc. and Wells Fargo dated June 30, 2002
      10.9        Guarantee Agreement by and between BCSB Bancorp, Inc. and
                   Wells Fargo, N.A. dated September 30, 2003
      13          2003 Annual Report to Stockholders
      14          Code of Ethics
      21          Subsidiaries of the Registrant
      23          Consent of Anderson Associates, LLP
      31.1        Rule 13a-14(a) Certification of President
      31.2        Rule 13a-14(a) Certification of Vice President and Treasurer
      32          Section 1350 Certification
--------------

* Incorporated herein by reference from the Company's Registration Statement on
  Form SB-2 (File No. 333-44831).

                                       40
<PAGE>

**   Incorporated herein by reference from the Company's Registration Statement
     on Form 8-A.
***  Incorporated herein by reference from the Company's Annual Report on Form
     10-KSB for the year ended September 30, 1999.
**** Incorporated herein by reference from the Company's Annual Report for the
     year ended September 30, 2002.



                                       41
<PAGE>
                                   SIGNATURES

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

                                       BCSB BANKCORP, INC.

December 29, 2003
                                       By: /s/ Gary C. Loraditch
                                           -------------------------------------
                                           Gary C. Loraditch
                                           President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


/s/ Gary C. Loraditch                                         December 29, 2003
-----------------------------------------------
Gary C. Loraditch
President, Chief Executive Officer and Director
(Principal Executive Officer)


/s/ Bonnie M. Klein                                           December 29, 2003
-----------------------------------------------
Bonnie M. Klein
Vice President and Treasurer
(Principal Financial and Accounting Officer)


/s/ Henry V. Kahl                                             December 29, 2003
-----------------------------------------------
Henry V. Kahl
Chairman of the Board


/s/ H. Adrian Cox                                             December 29, 2003
-----------------------------------------------
H. Adrian Cox
Vice Chairman of the Board


/s/ William J. Kappauf, Jr.                                   December 29, 2003
-----------------------------------------------
William J. Kappauf, Jr.
Director


/s/ William M. Loughran                                       December 29, 2003
-----------------------------------------------
William M. Loughran
Vice President and Director


/s/ John J. Panzer, Jr.                                       December 29, 2003
-----------------------------------------------
John J. Panzer, Jr.
Director


/s/ P. Louis Rohe, Jr.                                        December 29, 2003
-----------------------------------------------
P. Louis Rohe, Jr.
Director


/s/ Michael J. Klein                                          December 29, 2003
-----------------------------------------------
Michael J. Klein
Director