EXHIBIT 13

<PAGE>

                               WSB Holding Company

Corporate Profile

         WSB Holding  Company  (the  "Company")  is a  Pennsylvania  corporation
organized  in June 1997 at the  direction  of  Workingmens  Bank (the "Bank") to
acquire all of the capital stock that the Bank issued in its conversion from the
mutual to stock  form of  ownership  (the  "Conversion").  On August  27,  1997,
Workingmens  Savings Bank,  FSB completed  the  Conversion,  changed its name to
Workingmens  Bank and  became a wholly  owned  subsidiary  of the  Company.  The
Company is a unitary  savings and loan holding  company  which,  under  existing
laws,  generally is not restricted in the types of business  activities in which
it may engage provided that the Bank retains a specified amount of its assets in
housing-related  investments.  The Company  conducts no significant  business or
operations  of its own other than  holding all of the  outstanding  stock of the
Bank and  investing the  Company's  portion of the net proceeds  obtained in the
Conversion.

         Workingmens Bank began  operations in 1881 under the name  "Workingmens
Premium and Loan Association of Allegheny County," and is a federally  chartered
stock  savings  bank  headquartered  in  Pittsburgh,  Pennsylvania.  The Bank is
subject to  examination  and  comprehensive  regulation  by the Office of Thrift
Supervision  and its deposits are federally  insured by the Savings  Association
Insurance  Fund.  The Bank is a member of and owns capital  stock in the Federal
Home Loan Bank ("FHLB") of Pittsburgh,  which is one of the 12 regional banks in
the  FHLB  System.  The Bank  operates  a  traditional  savings  bank  business,
attracting  deposit  accounts from the general public and using those  deposits,
together with other funds, primarily to originate and invest in loans secured by
single-family residential real estate.

Stock Market Information

         The  Company's  common stock has been traded on the OTC Bulletin  Board
under the trading  symbol of "WSBH" since it  commenced  trading in August 1997.
The  following  table  reflects  high and low bid  quotations  as  published  by
Bloomberg,  L.P. The  quotations  reflect  inter-dealer  prices,  without retail
mark-up, mark-down, or commission, and may not represent actual transactions.

                                                                      Dividends
            Date                           High ($)    Low ($)       Declared($)
            ----                           --------    -------       -----------
August 27, 1997 to September 30, 1997       14.25       10.00               -
October 1, 1997 to December 31, 1997        14.25       13.75               -
January 1, 1998 to March 31, 1998           16.38       14.25               -
April 1, 1998 to June 30, 1998              17.00       14.88               -
July 1, 1998 to September 30, 1998          14.88       13.50               -
October 1, 1998 to December 31, 1998        14.00        9.88             .04
January 1, 1999 to March 31, 1999           12.75       10.00               -
April 1, 1999 to June 30, 1999              11.25        9.00               -
July 1, 1999 to August 31, 1999             10.88       10.00             .08

         The number of  shareholders  of record of common stock as of the record
date of August 31, 1999, was approximately 244. This does not reflect the number
of persons or  entities  who held stock in  nominee  or  "street"  name  through
various  brokerage  firms.  At  August  31,  1999,  there  were  303,434  shares
outstanding. The Company's ability to pay dividends to stockholders is dependent
upon the dividends it


<PAGE>


receives  from the Bank.  The Bank may not declare or pay a cash dividend on any
of its stock if the effect thereof would cause the Bank's regulatory  capital to
be reduced below (1) the amount required for the liquidation account established
in connection with the Conversion,  or (2) the regulatory  capital  requirements
imposed by the OTS.

Selected Financial Ratios and Other Data


                                                             For the Years Ended
                                                                   June 30,
                                                             -------------------
                                                               1999       1998
                                                             --------   --------
Return on average assets
  (net income divided by average total assets)............      .31%        .32%

Return on average equity
  (net income divided by average equity)..................     2.56%       2.70%

Average equity to average assets ratio
  (average equity divided by average total assets)........    12.03%      11.83%

Equity to assets at period end............................    11.57%      12.54%

Dividend payout ratio
  (dividends declared per share divided by net income
   per share).............................................     9.76%        --

Net interest rate spread..................................     2.25%       2.61%

Net yield on average interest-earnings assets.............     2.96%       3.25%

Non-performing loans to total assets......................       --         .79%

Non-performing loans to total loans.......................       --        1.82%

Allowance for loan losses to non-performing assets........       --       65.91%

Book value per share......................................   $15.29      $14.54



<PAGE>

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


The  Private  Securities  Litigation  Reform Act of 1995  contains  safe  harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words  "believes",  "anticipates",  "contemplates",  "expects",  and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties  which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest  rates,  risks  associated with the ability to control costs
and expenses,  and general  economic  conditions.  We undertake no obligation to
publicly  release  the  results  of  any  revisions  to  those  forward  looking
statements which may be made to reflect events or  circumstances  after the date
hereof or to reflect the occurrence of unanticipated events.

References in this  discussion to "we," "us," and "our," refer  collectively  to
WSB Holding Company and Workingmens Bank.

Overview

Our results of operations  are primarily  dependent on our net interest  income,
which is the  difference  between the interest  earned on our assets,  primarily
loans and investments,  and the interest  expense on our liabilities,  primarily
deposits and borrowings.  Net interest income may be affected  significantly  by
general economic and competitive conditions and policies of regulatory agencies,
particularly  those  with  respect  to market  interest  rates.  The  results of
operations  are also  significantly  influenced  by the  level  of  non-interest
expenses, such as compensation and employee benefits,  non-interest income, such
as service  charges on deposit  related  services,  and our  provision  for loan
losses.

Asset and Liability Management

Our  objective  in our  asset  and  liability  management  program  is to manage
liquidity  and interest rate risk, in order to maximize net income and return on
equity in a changing  interest  rate  environment.  The ability to maximize  net
interest  income is largely  dependent upon  achieving a positive  interest rate
spread that can be sustained during  fluctuations in prevailing  interest rates.
We are  subject  to  interest  rate  risk as a result of the  difference  in the
maturity   of   interest-bearing    liabilities    (including    deposits)   and
interest-earning  assets (including loans) and the volatility of interest rates.
Because most deposit accounts, given their shorter terms to maturity, react more
quickly to market  interest rate movements than do traditional  mortgage  loans,
increases in interest rates may have an adverse effect on our earnings.

We attempt to manage the interest  rate we pay on deposits  while  maintaining a
stable deposit base and providing  quality  services to our  customers.  We have
continued to rely primarily upon deposits as our source of funds.  To the extent
we are unable to invest these funds in loans  originated  in our market area, we
will continue to purchase (i)  mortgage-backed  securities and (ii) high quality
investment securities.

Net Portfolio Value

We measure our interest rate risk by computing  amounts by which the net present
value of our cash flow from  assets,  liabilities  and off  balance  sheet items
("NPV")  would  change  in the  event of a range of  assumed  changes  in market
interest  rates.  These  computations  estimate  the  effect  on  our  NPV  from
instantaneous  and  permanent 1% to 3% (100 to 300 basis  points)  increases and
decreases in market interest rates.  Based upon the Office of Thrift Supervision
("OTS") assumptions, the following table presents our NPV at June 30, 1999.


<PAGE>



                          Changes in Net Portfolio Value
     ----------------------------------------------------------------------
     Changes in Market                                          Changes in
      Interest Rates               NPV Ratio(1)                NPV Ratio(2)
     -----------------             ------------                ------------

     +300bp                         -61.9%                        -568bp
     +200bp                         -41.9%                        -373bp
     +100bp                         -21.2%                        -184bp
        0bp                             0                            0bp
     -100bp                           4.1%                          28bp
     -200bp                          -1.4%                          -5bp
     -300bp                          -2.1%                         -44bp
-------------
(1)  Calculated as the estimated NPV divided by present value of total assets.
(2)  Calculated  as the  excess  (deficiency)  of the  NPV  ratio  assuming  the
     indicated change in interest rates over the estimated NPV ratio assuming no
     change in interest rates.

These calculations indicate that our NPV could not only be adversely affected by
increases in interest rates but also could be adversely affected by a 200 or 300
basis point decrease in interest  rates.  In addition,  we may be deemed to have
more than a normal  level of  interest  rate risk  under  applicable  regulatory
capital requirements.

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

Financial Condition

Total consolidated  assets increased by approximately $3.2 million,  or 8.4%, to
$41.4 at June 30,  1999 from $38.2  million at June 30,  1998.  The  increase in
total assets  primarily  reflects a $3.4  million  increase in  investments  and
mortgage-backed  securities  offset by a $1.7 million  decrease in cash and cash
equivalents.  Such  funds were used to  purchase  insurance  for a  supplemental
retirement  plan for our  executive  officers and  directors.  See Note H to our
Consolidated Statements of Financial Condition.


<PAGE>


Deposits  increased  $3.4 million,  or 10.7%,  to $35.3 million at June 30, 1999
from $31.9 million at June 30, 1998, primarily due to a $2.4 million increase in
certificates of deposit.  The increase in  certificates of deposit  accounts are
primarily attributable to the $1.8 million increase from our new certificates of
deposit account products, which allow our customers to withdraw funds seven days
after deposit without incurring an early withdrawal penalty.  Other increases in
certificates of deposit accounts resulted from providing our customers with more
favorable rates than our peers and in influx of deposits from customers  seeking
to avoid the service  charges  usually  associated  with the larger banks in our
market area.

Average Balance Sheet

The following  table sets forth a summary of our average  balances of assets and
liabilities as well as average yield and cost information.  Average balances are
derived from monthly balances,  however,  we do not believe the use of month-end
balances has caused any material differences in the information presented. There
has been no tax equivalent adjustments made to yields.


<PAGE>

<TABLE>
<CAPTION>

                                                                   For the Year Ended June 30,
                                     -------------------------------------------------------------------------------------
                                                        1999                                         1998
                                     -------------------------------------------  ----------------------------------------
                                        Average                       Average       Average                       Average
                                        Balance       Interest      Yield/Cost      Balance       Interest      Yield/Cost
                                        -------       --------      ----------      -------       --------      ----------
                                                                     (Dollars in Thousands)
<S>                                   <C>            <C>        <C>           <C>             <C>            <C>
Interest-earning assets:
  Loans receivable..................   $ 16,762       $ 1,323       7.89%         $ 15,507        $ 1,308        8.44%
  Investment securities.............     16,391         1,033       6.30            14,840            999        6.73
  Other interest-earning assets.....      4,511           301       6.67             4,185            283        6.77
                                         ------         -----       ----            ------          -----        ----
Total interest-earning assets.......     37,664         2,657       7.06            34,532          2,590        7.50
Non-interest-earning assets.........      1,891                                      1,735
                                         ------                                     ------
Total assets........................   $ 39,555                                   $ 36,267
                                         ======                                     ======
Interest-bearing liabilities:
  Passbook and club accounts........   $ 10,360       $   330       3.18%         $ 10,364        $   320        3.09%
  Certificates of deposit...........     20,401         1,135       5.56            17,913          1,049        5.86
  Other liabilities.................      1,000            62       6.17             1,708             97        5.69
                                         ------         -----       ----            ------          -----        ----
Total interest-bearing liabilities..     31,761         1,527       4.81            29,985          1,466        4.89
Non-interest-bearing liabilities....      3,020                                      2,001
                                         ------                                     ------
Total liabilities...................     34,781                                     31,986
                                         ------                                     ------
Stockholders' equity................      4,774                                      4,281
                                         ------                                     ------
Total liabilities and
  stockholders' equity..............   $ 39,555                                   $ 36,267
                                         ======                                     ======
  Net interest income...............                  $ 1,130                                     $ 1,124
                                                        =====                                       =====
Interest rate spread................                                2.25%                                        2.61%
                                                                    ====                                         ====
Net yield on interest-earning
  assets............................                                2.96%                                        3.25%
                                                                    ====                                         ====
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities .....                              118.59%                                      115.16%
                                                                  ======                                       ======

</TABLE>

Rate/Volume Analysis

The table  below  sets  forth  information  regarding  our  interest  income and
interest expenses for the years ended June 30, 1999 and 1998. For each category,
Interest-earning  assets  and  interest-bearing   liabilities,   information  is
provided on changes  attributable  to: (i) changes in volume  (changes in volume
multiplied by old rate); (ii) changes in rate (changes in rate multiplied by old
volume);  (iii) changes in rate-volume (changes in rate multiplied by the change
in volume).

<PAGE>

                                                  Year Ended June 30,
                                         ---------------------------------------
                                                    1999 vs. 1998
                                         ---------------------------------------
                                                  Increase (Decrease)
                                                        Due to
                                         ---------------------------------------
                                                               Rate
                                         Volume     Rate      Volume      Net
                                         ------     ----      ------      ---
                                                   (In Thousands)
Interest income:
  Loans receivable                       $  106   $   (85)   $   (7)    $    14
  Investment securities                     105       (63)       (7)         35
  Other interest-earning assets              22        (5)        -          17
                                            ---      ----       ---        ----
Total interest-earning assets            $  233   $  (153)   $  (14)    $    66
                                            ===      ====       ===        ====
Interest expense:
  Passbook and club accounts             $    -   $    10    $    -     $    10
  Certificates of deposit                   145       (52)       (7)         86
  Other liabilities                         (40)        8        (4)        (36)
                                            ---      ----       ---        ----
Total interest-bearing liabilities       $  105   $   (34)   $  (11)    $    60
                                            ===      ====       ===        ====
Change in net interest income            $  128   $  (119)   $   (3)    $     6
                                            ===      ====       ===        ====

Operating Results

Net Income.  Net income increased $7,000 or 6.1%, to $122,000 for the year ended
June 30, 1999 as compared to  $115,000  for the year ended June 30,  1998.  This
increase  resulted  primarily  from a decrease of $32,000 in provision  for loan
losses, an increase in non-interest  income of $96,000, a decrease in income tax
expense of $12,000, offset by an increase in non-interest expense of $139,000.

Net Interest Income.  Net interest income is the most  significant  component of
our income  from  operations.  Net  interest  income is the  difference  between
interest we receive on our interest-earning  assets (primarily loans, investment
and  mortgage-backed  securities)  and  interest we pay on our  interest-bearing
liabilities (primarily deposits and borrowed funds). Net interest income depends
on the volume of and rates earned on  interest-earning  assets and the volume of
and rates paid on interest-bearing liabilities.

Although our average  interest-earning  assets  increased  $3,132,000  in fiscal
1999,  our net interest  income  increased  slightly to $1,130,000  for the year
ended June 30, 1999 as compared to $1,124,000  for the year ended June 30, 1998.
This modest  increase  was  primarily  due to a 36 basis  point  decrease in our
interest rate spread. The decrease in our net interest rate spread was primarily
due to our modest  increase  in our average  loan  originations  coupled  with a
decrease in our average yield rates for such loans.


<PAGE>


Provision  for Loan Losses.  There was no provision for loan losses for the year
ended June 30, 1999 as compared to $32,000 for the year ended June 30, 1998.  At
June 30, 1999, we had no non-performing loans in our loan portfolio.

Historically,  we have  emphasized  our loss  experience  over other  factors in
establishing  the  provision  for loan losses.  We review the allowance for loan
losses in relation to (i) our past loan loss experience, (ii) known and inherent
risks in our portfolio,  (iii) adverse situations that may affect the borrower's
ability to repay, (iv) the estimated value of any underlying collateral, and (v)
current economic  conditions.  Management believes the allowance for loan losses
is at level that is considered  to be adequate to provide for estimated  losses;
however,  there can be no assurance  that further  additions will not be made to
the allowance and that such losses will not exceed the estimated amount.

Non-Interest  Income.  Non-interest  income  consists  substantially  of service
charges  and fees on  deposit  accounts  and net gains or losses  from  sales of
securities and foreclosed real estate. Non-interest income increased $95,500, or
85.3%,  to $207,500 for the year ended June 30, 1999 from  $112,000 for the year
ended June 30, 1998. In fiscal 1999,  service charges and fees increased $21,000
primarily  attributable to a one-time life insurance dividend.  Net gain on sale
of securities  increased  $48,000in fiscal 1999. In order to manage our interest
rate risk, we sold some of our available for sale securities. In fiscal 1999, we
sold several foreclosed properties which resulted in a net gain on sale of these
properties of $26,000.  There were no gains on sale of foreclosed real estate in
fiscal 1998.

Non-Interest  Expense. Our non-interest expense increased $138,000, or 13.2%, to
$1,180,000  for the year ended June 30, 1999 from  $1,042,000 for the year ended
June 30, 1998. Compensation and benefits expense increased $55,000 primarily due
to our  employee  stock  option  plan  and our  restricted  stock  plan.  Legal,
accounting and other fees increased $47,000 due to activities  relating to being
a public  company.  The  remainder of the increase in  non-interest  expense was
primarily  due  to our  in-house  computer  upgrades  and  from  our  Year  2000
compliance plan.

Income Tax Expense.  Our income tax expense for the year ended June 30, 1999 was
$35,000  compared to an $47,000 for the year ended June 30,  1998.  The decrease
was mainly  attributable  to tax-free  increases to cash values and dividends on
life insurance policies.

Liquidity and Capital Resources

Our primary sources of funds include  deposits,  loan repayments and prepayment,
cash flow from  operations  and  borrowings  from the Federal  Home Loan Bank of
Pittsburgh.  We use our capital resources principally to fund loan originations,
repay maturing borrowings, purchase investments, and for our short and long-term
liquidity  needs.  We  expect to be able to fund , on a timely  basis,  our loan
commitments.  At June 30, 1999, our  commitments to fund loans totaled  $750,000
and we had unused lines of credit of $477,000.

Net cash provided by our operating  activities (the cash effects of transactions
that  enter  into  our  determination  of net  income  - e.g.,  non-cash  items,
amortization and  depreciation,  provision for loan losses,  net gains on sales)
for the year ended June 30, 1999 was  $65,000 as  compared  to $335,000  for the
year ended June 30, 1998.

Net cash used in our investing  activities (i.e., cash receipts,  primarily from
our investment securities and mortgage-backed securities portfolios and our loan
portfolio) for the year ended June 30, 1999 totaled  $4,805,000,  an increase of
$2,642,000  from  $2,163,000  for June 30,  1998.  The  increase  was  primarily
attributable  to use of  $3,189,000  to fund  the  net  increase  in  investment
securities  and  $1,150,000  to  purchase  life  insurance  for  a  supplemental
retirement plan for the executive officers and directors, offset by a decline in
net loan originations of $1,283,000.


<PAGE>


Net cash provided by our financing  activities  (i.e.,  cash receipts  primarily
from net increases in deposits) for the year ended June 30, 1999 was $2,995,000,
a decline of  $1,186,000  from  $4,180,000  for June 30, 1998.  The decrease was
primarily  attributable  to the  $3,042,000  received from the issuance of stock
during the year ended June 30, 1998,  offset by a net decrease of  $2,000,000 in
Federal Home Loan Bank advances.

Our  liquidity  may  be  adversely  affected  by  unexpected  deposit  outflows,
excessive  interest rate paid by our  competitors  and economic  conditions.  We
monitor our projected  liquidity  needs and determine our desired level based on
our  commitment  to make loans and our  ability to generate  funds.  We are also
subject to federal regulations that impose certain minimum capital requirements.

Year 2000 Readiness Disclosure

In July 1998, we adopted a Year 2000 compliance plan and established a Year 2000
compliance  committee.  The  objectives  of the plan and the  committee  were to
prepare for the Year 2000. The plan encompassed the following phases: awareness,
assessment  ,  renovation,  validation  and  implementation.  We  completed  the
implementation  phase of our plan on June 30, 1999.  These phases  enabled us to
identify risks,  develop an action plan,  perform  adequate testing and complete
certification that the processing systems were Year 2000 ready.

Prioritization of the most critical applications has been addressed,  along with
contract and service agreements.  Our primary operating software is provided and
maintained by an external  service bureau.  We have  maintained  ongoing contact
with our external  service  bureau to ensure that testing and  monitoring of the
system is  progressing.  In March 1999,  we  completed  final  testing  with our
external service bureau and the results of the testing showed that there were no
problems in  submitting  information  on  transactions  from us to our  external
service  bureau using January 2000 dates for all  transactions  tested.  We also
contacted our material vendors and suppliers as well all material  customers and
non-information  technology suppliers regarding their Year 2000 readiness.  Each
of these third parties has delivered  written  assurances to us that they expect
to be Year 2000 compliant prior to the Year 2000.

Costs have been and will be incurred due to enhancements  made to  non-compliant
teller software and fees incurred from our external  service  bureau.  We do not
anticipate  that the related  overall costs will be material in any single year.
We estimated that our cost for compliance will amount to approximately  $15, 000
over the two year period from  1998-1999,  of which  substantially  all has been
incurred as of June 30, 1999.

A  Contingency  and Business  Resumption  Plan was approved by the Board in June
1999. This plan addresses perceived risks associated with the year 2000 problem.
These activities include remediation  contingency  planning intended to mitigate
any risks associated with unforeseen system glitches, system failure,  increased
demands for cash,  or processes  outside of our control.  The  remainder of 1999
will be used to further validate the plan.

While this plan was designed to  significantly  address our year 2000  problems,
the occurrence of the following could negatively impact us:

  (a)     utility  service  companies  may be unable to  provide  the  necessary
          service to implement our data systems or provide  sufficient  sanitary
          conditions for our offices;

  (b)     our external  service  bureau could have a major  malfunction in their
          system  or their  service  could  be  disrupted  due to their  utility
          providers, or some combination of the two; or

  (c)     we may have to transact our business manually.


<PAGE>


Successful  and timely  completion of our Year 2000  readiness is based upon our
best  estimates  derived from  various  assumptions  of future  events which are
inherently uncertain, including the progress and results of our external service
bureau, testing plans, and all vendors, suppliers and customer readiness.

Despite our best efforts to address our Year 2000 readiness,  the vast number of
external entities that have direct and indirect business  relationships with us,
such as,  customers,  vendors,  payment  system  providers  and other  financial
institutions,  make it impossible to assure that a failure to achieve compliance
by one or more of these entities would not have a material adverse impact on our
business or on our consolidated financial statements.


<PAGE>
                                                             [LOGO]
                                                     Stokes Kelly & Hinds, LLC
                                                    Certified Public Accountants
                                                       & Business Advisors


                                                          Members:
                                            American and Pennsylvania Institutes
                                               of Certified Public Accountants

                                                  Division for CPA Firms:
                                                     SEC Practice Section

                          INDEPENDENT AUDITOR'S REPORT



The Board of Directors and Shareholders
WSB Holding Company


We have audited the accompanying  consolidated statements of financial condition
of WSB Holding Company and subsidiaries  (the "Company") as of June 30, 1999 and
1998, and the related consolidated  statements of income,  stockholders' equity,
and cash flows for the years then ended. These consolidated financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of WSB Holding Company
and  subsidiaries  as of June  30,  1999  and  1998,  and the  results  of their
operations  and their cash flows for the years  then  ended in  conformity  with
generally accepted accounting principles.



/s/Stokes Kelly & Hinds, LLC


Pittsburgh, Pennsylvania
July 30, 1999


                                                           9401 McKnight Road
                                                        Pittsburgh, Pennsylvania
                                                               15237-6000
                                                              Phone 412-364-0590
                                                         Voice Mail 412-364-6070
                                                                Fax 412-364-6176

<PAGE>


                      WSB HOLDING COMPANY AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             June 30, 1999 and 1998

<TABLE>
<CAPTION>
                                     ASSETS

                                                                                         1999            1998
                                                                                    ------------    ------------
<S>                                                                                <C>             <C>
Cash and cash equivalents:
   Interest bearing                                                                 $  3,161,518    $  4,750,915
   Non-interest bearing                                                                  250,666         406,629
Securities held-to-maturity (estimated fair
   value of $13,959,821 and $11,701,996 in 1999 and 1998)                             14,373,813      11,667,658
Securities available-for-sale, at fair value                                           3,909,755       3,245,015
Loans and real estate, net                                                            16,989,946      16,620,321
Cash value of life insurance                                                           1,162,749            --
Federal Home Loan Bank stock, at cost                                                    153,300         153,300
Accrued interest receivable                                                              303,415         228,175
Premises and equipment, net                                                              986,468       1,017,168
Other assets                                                                              64,927         106,431
Income taxes receivable                                                                     --             9,859
Deferred income taxes                                                                       --             3,001
                                                                                    ------------    ------------

         TOTAL ASSETS                                                               $ 41,356,557    $ 38,208,472
                                                                                    ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                                            $ 35,250,627    $ 31,867,605
Federal Home Loan Bank advances                                                        1,000,000       1,000,000
Advances from borrowers for taxes and insurance                                          227,241         223,848
Accrued expenses and other liabilities                                                    79,665         327,473
Accrued income tax payable                                                                10,690            --
Deferred income taxes                                                                      4,006            --
                                                                                    ------------    ------------

         TOTAL LIABILITIES                                                            36,572,229      33,418,926
                                                                                    ------------    ------------

Commitments and contingencies

Stockholders' equity:
   Preferred stock ($.10 par value, 1,000,000 shares
         authorized, none outstanding)                                                      --              --
   Common stock ($.10 par value, 4,000,000 shares
         authorized; 330,600 shares issued)                                               33,060          33,060
   Additional paid-in capital                                                          2,994,026       2,989,212
   Retained earnings, substantially restricted                                         2,287,772       2,179,378
   Unearned Employee Stock Ownership Plan (ESOP) shares                                 (215,988)       (242,438)
   Unearned compensation - Restricted Stock Plan (RSP)                                  (139,679)       (197,864)
   Treasury stock, at cost; 17,666 shares and 1,165 shares                              (204,792)        (19,431)
    Accumulated other comprehensive income,
         net of applicable income taxes of $12,826 and $17,360                            29,929          47,629
                                                                                    ------------    ------------

         TOTAL STOCKHOLDERS' EQUITY                                                    4,784,328       4,789,546
                                                                                    ------------    ------------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $ 41,356,557    $ 38,208,472
                                                                                    ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                       Years Ended June 30, 1999 and 1998


                                                          1999         1998
                                                       ----------   ----------

INTEREST AND DIVIDEND INCOME
   Loans                                               $1,322,470   $1,308,118
   Investments                                          1,033,343      998,625
   Other interest earning assets                          300,701      283,488
                                                       ----------   ----------

                  TOTAL INTEREST AND DIVIDEND INCOME    2,656,514    2,590,231
                                                       ----------   ----------

INTEREST EXPENSE
   Deposits                                             1,464,853    1,368,937
   Advances from FHLB                                      61,723       97,047
                                                       ----------   ----------

                  TOTAL INTEREST EXPENSE                1,526,576    1,465,984
                                                       ----------   ----------

                  NET INTEREST INCOME                   1,129,938    1,124,247

PROVISION FOR LOAN LOSSES                                    --         32,113
                                                       ----------   ----------

                  NET INTEREST INCOME AFTER
                    PROVISION FOR LOAN LOSSES           1,129,938    1,092,134
                                                       ----------   ----------

NONINTEREST INCOME
   Service charges and other fees                         104,382       83,401
   Net gain on sales of
         securities available-for-sale                     71,787       24,245
   Gain on sale of foreclosed real estate                  25,555         --
   Income from real estate rental                           5,790        4,325
                                                       ----------   ----------

                  TOTAL NONINTEREST INCOME                207,514      111,971
                                                       ----------   ----------

NONINTEREST EXPENSE
   Compensation and benefits                              567,592      513,032
   Occupancy and equipment expense                        166,757      142,619
   Federal insurance premiums                              31,451       29,883
   Other                                                  414,340      356,013
                                                       ----------   ----------

                  TOTAL NONINTEREST EXPENSE             1,180,140    1,041,547
                                                       ----------   ----------

                  INCOME BEFORE INCOME TAXES              157,312      162,558

INCOME TAX EXPENSE                                         35,000       47,170
                                                       ----------   ----------

                  NET INCOME                           $  122,312   $  115,388
                                                       ==========   ==========


Earnings per common share-BASIC (since inception)      $      .41   $      .28
                                                       ==========   ==========
Earnings per common share-DILUTED (since inception)    $      .41   $      .28
                                                       ==========   ==========


See accompanying notes to consolidated financial statements.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                                           Accumulated
                                                                     Unearned      Unearned                 Other
                               Common      Paid-In      Retained       ESOP      Compensation  Treasury   Comprehensive
                               Stock       Capital      Earnings      Shares       - RSP       Stock        Income        Total
                               -----       -------      --------      ------       -----       -----        ------        -----
<S>                           <C>        <C>          <C>           <C>          <C>          <C>          <C>         <C>

BALANCE AT JULY 1, 1997        $   --     $     --     $2,063,990    $    --      $    --      $    --      $(20,195)   $2,043,795

COMPREHENSIVE INCOME
Net Income                         --           --        115,388         --           --           --          --         115,388
Other comprehensive
  income, net of tax:
  Unrealized gains on
   securities of
   $83,826, net of
   reclassification
   adjustment for gains
   included in net
   income of $(16,002)             --           --           --           --           --           --        67,824        67,824
                                                                                                                         ---------
TOTAL COMPREHENSIVE INCOME                                                                                                 183,212

Proceeds from
   sale of common stock
   net of issuance costs         33,060    2,979,475         --       (264,480)        --           --          --       2,748,055
ESOP shares allocated              --          9,737         --         22,042         --           --          --          31,779
Award of shares under
   restricted stock plan           --           --           --           --       (208,278)        --          --        (208,278)
Amortization of
  restricted stock plan            --           --           --           --         10,414         --          --          10,414
Purchase of treasury stock         --           --           --           --           --        (19,431)       --         (19,431)
                               --------   ----------   ----------    ---------    ---------    ---------    --------     ---------
BALANCE AT JUNE 30, 1998         33,060    2,989,212    2,179,378     (242,438)    (197,864)     (19,431)     47,629     4,789,546

COMPREHENSIVE INCOME
Net Income                         --           --        122,312         --           --           --          --         122,312
Other comprehensive
  income, net of tax:
  Unrealized gains
   on securities
   of $29,679, net
   of reclassification
   adjustment for
   gains included in net
   income of $(47,379)             --           --           --           --           --           --       (17,700)      (17,700)
                                                                                                                         ---------
TOTAL COMPREHENSIVE INCOME                                                                                                 104,612

ESOP shares allocated              --          4,814         --         26,450         --           --          --          31,264
Amortization of
  restricted stock plan            --           --           --           --         58,185         --          --          58,185
Purchase of treasury stock         --           --           --           --           --       (185,361)       --        (185,361)
Dividends on common stock at
 .04 per share                     --           --        (13,918)        --           --           --          --         (13,918)
                               --------   ----------   ----------    ---------    ---------    ---------    --------    ----------
BALANCE AT JUNE 30, 1999       $ 33,060   $2,994,026   $2,287,772    $(215,988)   $(139,679)   $(204,792)   $ 29,929    $4,784,328
                               ========   ==========   ==========    =========    =========    =========    ========    ==========
</TABLE>


See accompanying notes to consolidated financial statements.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
                                                                  1999            1998
                                                             ------------    ------------
<S>                                                         <C>             <C>
OPERATING ACTIVITIES
   Net income                                                $    122,312    $    115,388
   Adjustments to reconcile
       net income to net cash provided
       by operating activities:
       Amortization of:
           Deferred loan origination fees                          (2,676)         (3,730)
           Premiums and discounts on investment securities        (39,046)         (9,758)
           Unearned ESOP shares                                    31,264          31,779
           Compensation expense related to RSP                     41,655          10,414
        Provision for loan losses                                    --            32,113
       Net gain on sales of securities
           available-for-sale                                     (71,787)        (24,245)
       Gain on sale of real estate owned                          (25,555)           --
       Depreciation of premises and equipment                      62,000          52,940
       (Increase) decrease in:
               Accrued interest receivable                        (75,240)         71,294
               Other assets                                        41,504          40,072
               Income taxes receivable                             20,549          (9,859)
               Deferred income taxes                               11,541          22,941
               Cash value of life insurance                       (12,749)           --
       Increase (decrease) in:
               Accrued expenses and other liabilities             (39,099)          5,923
                                                             ------------    ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                          64,673         335,272
                                                             ------------    ------------

INVESTING ACTIVITIES
   Purchases of securities held-to-maturity                   (15,143,656)    (13,650,000)
   Proceeds from maturities of and principal
       repayments on securities held-to-maturity               12,437,311      14,000,056
   Purchases of securities available-for-sale                  (6,736,933)     (1,276,813)
   Proceeds from maturities of and principal repayments
       on securities available-for-sale                         4,841,654         580,890
   Proceeds from sales of securities available-for-sale         1,319,329         253,000
   Proceeds from sale of real estate owned                        432,831            --
   Net loan originations and principal
       repayments on loans                                       (774,225)     (2,057,708)
   Purchase of life insurance                                  (1,150,000)           --
   Purchases of premises and equipment                            (31,300)        (12,441)
                                                             ------------    ------------

NET CASH USED BY INVESTING ACTIVITIES                          (4,804,989)     (2,163,016)
                                                             ------------    ------------
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>

                                                                1999           1998
                                                            -----------    -----------
<S>                                                        <C>            <C>
FINANCING ACTIVITIES
   Net increase in deposits                                 $ 3,383,022    $ 3,461,830
   Net decrease in FHLB advances                                   --       (2,000,000)
   Purchase of treasury stock                                  (185,361)       (19,431)
   Purchase of stock for RSP                                   (192,180)          --
   Proceeds from issuance of common stock                          --        3,041,520
   Payments of conversion costs                                    --         (293,465)
   Payment of dividends                                         (13,918)          --
   Net increase (decrease) in advances from
       borrowers for taxes and insurance                          3,393         (9,970)
                                                            -----------    -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                     2,994,956      4,180,484
                                                            -----------    -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS         (1,745,360)     2,352,740

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                5,157,544      2,804,804
                                                            -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                    $ 3,412,184    $ 5,157,544
                                                            ===========    ===========


SUPPLEMENTAL DISCLOSURES Cash paid during the period for:
   Interest on deposits, advances,
       and other borrowings                                 $ 1,571,980    $ 1,496,794
   Income taxes                                             $     2,400    $    25,000

Noncash investing and financing activities:

       Transfer from loans to real estate owned             $   103,626    $   319,073

       Total (decrease) increase in unrealized
           gain (loss) on securities
           available-for-sale                               $   (22,234)   $    94,308

       Less: income tax (benefit) expense                        (4,534)        26,484
                                                            -----------    -----------

       Net (decrease) increase in unrealized
           gain (loss) on securities
           available-for-sale                               $   (17,700)   $    67,824
                                                            ===========    ===========

       Award of shares under restricted stock plan          $      --      $   208,278
                                                            ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

WSB Holding  Company  (the  "Company")  was  incorporated  under the laws of the
Commonwealth of Pennsylvania  for the purpose of becoming the holding company of
Workingmens  Bank (the "Bank") in connection  with the Bank's  conversion from a
federally  chartered mutual savings bank to a federally  chartered stock savings
bank,  pursuant to its Plan of Conversion.  The Company commenced  operations on
August 27, 1997, the date of a Subscription Offering of its shares in connection
with the conversion of the Savings Bank (the "Conversion").

The Company  conducts  its  business  from its two  locations  in the North Side
section of the City of  Pittsburgh  and South Hills  suburb of  Pittsburgh.  The
Bank's  principal  sources of revenue  emanate from its portfolio of residential
real estate  mortgage loans and  investment  securities.  The Company  primarily
competes  with  other  financial  institutions  in its  market  area,  which  it
considers to be metropolitan Pittsburgh.

The Bank is  subject  to  regulation  and  supervision  by the  Federal  Deposit
Insurance Corporation (FDIC) and the Office of Thrift Supervision (OTS).

The accounting and reporting policies of the Company and the methods of applying
those  policies  conform with  generally  accepted  accounting  principles.  The
accounting  and reporting  policies and the methods of applying  those  policies
which significantly  affect the determination of financial position,  results of
operations, and cash flows are summarized below.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Material  estimates that are  particularly  susceptible  to  significant  change
relate to the determination of the allowance for loan losses. In connection with
the  determination  of  the  allowance  for  loan  losses,   management  obtains
independent appraisals for significant properties.

A majority of the Company's loan portfolio consists of single-family residential
loans in the  Pittsburgh  area.  The regional  economy is  currently  stable and
consists of various  types of  industry.  Real estate  prices in this market are
also stable,  however,  the ultimate  collectibility of a substantial portion of
the  Company's  loan  portfolio  are  susceptible  to  changes  in local  market
conditions.

While  management  uses available  information to recognize  losses on loans and
foreclosed real estate,  further reductions in the carrying amounts of loans and
foreclosed   assets  may  be  necessary  based  on  changes  in  local  economic
conditions.  In  addition,  regulatory  agencies,  as an integral  part of their
examination  process,  periodically,  review the  estimated  losses on loans and
foreclosed  real  estate.  Such  agencies  may require the Company to  recognize
additional losses based on their judgments about  information  available to them
at the time of their  examination.  Because of these  factors,  it is reasonably
possible  that the  estimated  losses on loans and  foreclosed  real  estate may
change  materially in the near term.  However,  the amount of the change that is
reasonably possible cannot be estimated.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Principles of Consolidation

The accompanying  consolidated  financial statements include the accounts of the
Company,  the Bank and the Bank's wholly owned subsidiary,  Workingmens  Service
Corporation (WSC). The impact of WSC on the consolidated financial statements is
not material. All intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers
cash on hand and  deposits  in other  financial  institutions  with an  original
maturity of ninety (90) days or less to be cash and cash equivalents.

Investment and Mortgage-Backed Securities

The  Company  follows  the  provisions  of  Statement  of  Financial  Accounting
Standards  ("SFAS") No. 115,  "Accounting  for Certain  Investments  in Debt and
Equity   Securities".   Accordingly,   management   determines  the  appropriate
classification  of  securities  at the time of  purchase  and  reevaluates  such
designation  as of each balance sheet date.  Debt  securities  are classified as
held-to-maturity  when the Company has the  positive  intent and ability to hold
the securities to maturity.  Held-to-maturity securities are stated at amortized
cost. At present, the Company does not invest in any derivative  investments for
trading, investing, hedging or other purposes.

Debt   securities   not  classified  as   held-to-maturity   are  classified  as
available-for-sale. Available-for-sale securities are stated at fair value, with
the unrealized gains and losses, net of tax, reported as a separate component of
stockholders' equity.

The  amortized  cost  of  debt  securities  classified  as  held-to-maturity  or
available-for-sale  is adjusted for  amortization  of premiums and  accretion of
discounts to maturity,  or in the case of mortgage-backed  securities,  over the
estimated  life of the  security  using a  method  approximating  the  effective
interest method. For mortgage-backed securities, such amortization and accretion
is  determined  taking into  consideration  assumed  prepayment  patterns.  Such
amortization  is included in interest  income  from  investments.  Interest  and
dividends are recognized when earned. Realized gains and losses, and declines in
value judged to be  other-than-temporary  are included in gain (loss) on sale of
investments. The cost of securities sold is based on the specific identification
method.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Loans Receivable

Loans receivable are stated at unpaid principal balances, less the allowance for
loan losses and net deferred loan-origination fees.

Loan origination fees, as well as certain direct origination costs, are deferred
and  amortized as a yield  adjustment  over the lives of the related loans using
the interest method.

Uncollected  interest  on  loans  is  periodically  reviewed.  An  allowance  is
established  based on  management's  periodic  evaluation  for  interest  deemed
uncollectible. The allowance is established by a charge to interest income equal
to all interest previously accrued,  and income is subsequently  recognized only
to the extent cash payments are received until, in  management's  judgment,  the
borrower  is  able  to make  periodic  interest  and  principal  repayments,  as
scheduled, in which case the loan is returned to accrual status.

The  Company  extends  credit to  customers  throughout  its  market  area which
includes  Metropolitan  Pittsburgh.  Most of the Company's  loans are secured by
real  estate  in  Metropolitan  Pittsburgh  and a  substantial  portion  of  its
borrowers'  ability  to repay such loans is  dependent  upon the  economy in the
Company's market area.

The allowance for loan losses is increased by charges to income and decreased by
charge-offs  (net  of  recoveries).  Management's  periodic  evaluation  of  the
adequacy of the allowance is based on the Company's  past loan loss  experience,
known and inherent risks in the portfolio,  adverse  situations  that may affect
the  borrower's  ability  to  repay,  the  estimated  value  of  any  underlying
collateral,  and current economic conditions.  Allowances for impaired loans are
generally  determined  based  on  collateral  values  or the  present  value  of
estimated cash flows.  While  management  believes it uses the best  information
available to make  evaluations,  future  adjustments  to the  allowances  may be
necessary if  circumstances  differ  substantially  from the assumptions used in
making the evaluations.

Impaired loans are measured  based on the present value of expected  future cash
flows,  discounted  at the  loan's  effective  interest  rate,  or at the loan's
observable  market  price,  or the fair value of the  collateral  if the loan is
collateral  dependent.  Loans  that are  determined  to be  impaired  require  a
valuation  allowance  equivalent  to the  amount of  impairment.  The  valuation
allowance is to be established by a charge to the provision for loan losses.

A loan is considered  impaired when, based on current information and events, it
is probable that the Company will be unable to collect all amounts due according
to the contractual terms of the note agreement.  Cash receipts on impaired loans
which are  accruing  interest are applied to  principal  and interest  under the
contractual  terms of the loan  agreement.  Cash receipts on impaired  loans for
which the accrual of interest  has been  discontinued  are applied to reduce the
principal amount of such loans until all required contractual principal payments
have been made and are recognized as interest income thereafter.

Management  has  determined  that first  mortgage  loans on  one- to four-family
properties, home equity, second mortgage loans, and all consumer loans are large
groups  of  smaller-balance  homogenous  loans  which  are  to  be  collectively
evaluated.  Accordingly,  such loans are outside the scope of Statement Nos. 114
and 118.

Management  considers an insignificant  delay, which is determined as 90 days by
the Company,  will not cause a loan to be classified as impaired.  A loan is not
impaired  during a period of delay in payment if the Company  expects to collect
all amounts due including interest accrued at the contractual  interest rate for
the  period  of  delay.   All  loans   identified   as  impaired  are  evaluated
independently by management.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Real Estate Owned

Real estate  acquired by foreclosure or voluntary deed in lieu of foreclosure is
initially  carried at the lower of fair value minus estimated  disposal costs or
the balance of the loan on the property at the date of  acquisition.  Fair value
is determined on the basis of current  appraisals,  comparable  sales, and other
estimates  of  value  obtained   principally  from  independent   sources.   Any
write-downs  based on the asset's fair value at date of acquisition  are charged
to the  allowance  for loan losses.  Subsequent  costs  directly  related to the
development  or  improvement  of real  estate are  capitalized.  Other  costs of
maintaining real estate ($0 in fiscal years 1999 and 1998) are charged to income
as incurred and are reported in "Other Noninterest Expense." Gains recognized on
the disposition of the properties are recorded in noninterest income.

Federal Home Loan Bank Stock

Investment  in stock of a Federal  Home Loan  Bank is  required  by law of every
federally insured savings and loan or savings bank. The investment is carried at
cost. No ready market exists for the stock, and it has no quoted market value.

Premises and Equipment

Premises  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation  is recorded on a  straight-line  basis over the  estimated  useful
lives of the related assets which are from five to thirty-five years.

Advertising Costs

The Company  follows the policy of charging the costs of  advertising to expense
as incurred.

Income Taxes

Income taxes are accounted for under the asset and  liability  method.  Deferred
tax  assets  and  liabilities   are  recognized  for  future  tax   consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and liabilities  and their  respective tax bases.  Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment  date. The Company and its  subsidiaries  file a consolidated  federal
income tax return.

Earnings per Share

During  fiscal  1998,  the  Company  adopted  the  provisions  of the  Financial
Accounting  Standards  Board ("FASB") issued  Statement of Financial  Accounting
Standards  ("SFAS")  No.  128,  "Earnings  Per Share".  SFAS No. 128  supersedes
Accounting  Principles Board Opinion No. 15, "Earnings Per Share", and specifies
the  computation,  presentation,  and disclosure  requirements  for earnings per
share (EPS).  SFAS No. 128 replaces  the  presentation  of primary EPS and fully
diluted EPS with a presentation of basic EPS and diluted EPS, respectively. SFAS
No. 128 also requires dual  presentation of basic and diluted EPS on the face of
the income statement for all entities with complex capital structures. All prior
period EPS data is required to be restated to confirm with SFAS No. 128.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basic  EPS  excludes  dilution  and  is  computed  by  dividing  net  income  by
weighted-average  shares  outstanding.  Diluted EPS is computed by dividing  net
income by  weighted-average  shares  outstanding  plus  potential  common  stock
resulting  from dilutive  stock options and  Restricted  Stock Plan (RSP) shares
that have not yet vested.

For  purposes of  computing  weighted-average  shares  outstanding,  unallocated
shares under the Company's  employee  stock  ownership  plan are not  considered
outstanding until they are committed to be released for allocation.

EPS for fiscal  1998 has been  computed  based upon net income per share for the
post conversion period from August 27, 1997 to June 30, 1998.

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted EPS computations for income from continuing operations for the
year ended June 30, 1999:

                                  Income        Shares        Per-Share
                               (Numerator)   (Denominator)    Amount
                               -----------   -------------    ------

Basic EPS                       $122,312        296,964       $   .41
Effect of dilutive securities       --             --
                                --------       --------

Diluted EPS                     $122,312        296,964       $   .41
                                ========       ========       =======

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted EPS computations for income from continuing operations for the
year ended June 30, 1998:

                                   Income          Shares       Per-Share
                                 (Numerator)    (Denominator)    Amount
                                 -----------    -------------    ------

   Basic EPS                       $85,384          305,363      $.28
   Effect of dilutive securities    -               -
                                   -------          -------

   Diluted EPS                     $85,384          305,363      $.28
                                   =======          =======      ====


Conversion to Stock Form of Ownership

The Company was incorporated  under  Pennsylvania law in May 1997 to acquire and
hold  all the  outstanding  common  stock  of the  Bank,  as part of the  Bank's
conversion  from a  federally  chartered  mutual  savings  bank  to a  federally
chartered  stock  savings bank. In  connection  with the  conversion,  which was
consummated  on August 27, 1997,  the Company  issued and sold 330,600 shares of
common stock at a price of $10.00 per share for total net proceeds of $3,012,535
after conversion  expenses of $293,465.  The Company retained  $1,123,055 of the
proceeds and used the  remaining  proceeds to purchase the newly issued  capital
stock  of the  Bank  in the  amount  of  $1,625,000  and a loan  to the  ESOP of
$264,480.

The Bank may not  declare or pay a cash  dividend  if the effect  thereof  would
cause its net worth to be reduced  below  either the  amounts  required  for the
liquidation  account  discussed  below or the  regulatory  capital  requirements
imposed by federal and state regulations.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

At the time of  conversion,  the Bank  established a  liquidation  account in an
amount  equal to its retained  income as  reflected  in the latest  consolidated
balance sheet used in the final conversion  prospectus.  The liquidation account
is  maintained  for the benefit of  eligible  account  holders  who  continue to
maintain their deposit accounts in the Bank after conversion.  In the event of a
complete  liquidation  of the  Bank  (and  only  in  such  an  event),  eligible
depositors  who  continue  to maintain  accounts  shall be entitled to receive a
distribution  from the  liquidation  account before any  liquidation may be made
with respect to common stock.

Pension Plan

The Company has a pension plan covering  substantially all employees.  It is the
policy of the  Company  to fund the  maximum  amount  that can be  deducted  for
federal  income tax  purposes  but in amounts not less than the minimum  amounts
required by law.

Fair Values of Financial Instruments

Statement of Financial  Accounting  Standards No. 107,  "Disclosures  about Fair
Value of Financial  Instruments",  requires disclosure of fair value information
about  financial  instruments,  whether or not  recognized  in the  statement of
financial condition. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly  affected by the assumptions used,  including
the  discount  rate and  estimates  of future cash flows.  In that  regard,  the
derived  fair  value  estimates   cannot  be   substantiated  by  comparison  to
independent  markets  and,  in many cases,  could not be  realized in  immediate
settlement  of the  instruments.  Statement No. 107 excludes  certain  financial
instruments and all nonfinancial  instruments from its disclosure  requirements.
Accordingly,  the  aggregate  fair value  amounts  present do not  represent the
underlying value of the Company.

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

Cash and cash  equivalents:  The carrying  amounts reported in the statements of
financial condition for cash and cash equivalents approximate those assets' fair
values.

Investment  and  mortgage-backed  securities:  Fair values for  investments  and
mortgage-backed  securities are based on quoted market prices,  where available.
If quoted  market  prices  are not  available,  fair  values are based on quoted
market prices of comparable instruments.

Loans:  The fair  values  for loans are  estimated  using  discounted  cash flow
analysis, based on interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality.  Loan fair value estimates include
judgments  regarding  future expected loss experience and risk  characteristics.
Fair values for impaired loans are estimated using discounted cash flow analysis
or  underlying  collateral  values,  where  applicable.  The carrying  amount of
accrued interest receivable approximates its fair value.

Cash value life insurance:  The carrying  amounts  reported in the statements of
financial  condition for cash value life insurance  approximate the asset's fair
value.

Federal Home Loan Bank (FHLB)  Stock:  No ready market exists for this stock and
it  has  no  quoted  market  value.  However,   redemption  of  this  stock  has
historically been at par value. Accordingly, the carrying amount is deemed to be
a reasonable estimate of fair value.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deposits:  The fair values  disclosed for demand  deposits  are, by  definition,
equal to the amount  payable  on demand at the  reporting  date (that is,  their
carrying  amounts).  Fair  values for  fixed-rate  certificates  of deposit  are
estimated using a discounted cash flow  calculation  that applies interest rates
currently  offered on certificates to a schedule of aggregated  expected monthly
maturities on time deposits.  The carrying  amount of accrued  interest  payable
approximates fair value.

Federal  Home Loan Bank  (FHLB)  advances:  Fair  values  of FHLB  advances  are
estimated  using  discounted  cash flow analyses based on the Company's  current
incremental borrowing rates for similar types of borrowing arrangements.

Advances from borrowers for taxes and insurance: The carrying amount of advances
from borrowers for taxes and insurance approximate fair value.

Off-Balance sheet items: Fair value of these items approximate their contractual
amounts.

Segment Reporting

The Company's primary business  activities include attracting  deposits from the
general public and originating one-to-four family residential property loans and
also  multi-family,  nonresidential  and  construction  real estate loans in its
market area. The Company also makes consumer  loans.  Operations are managed and
financial  performance is evaluated at the bank level.  Accordingly,  all of the
Company's banking operations are considered by management to be generated in one
reportable operating segment.

Comprehensive Income

On July 1,  1998 the  Company  adopted  SFAS No.  130,  Reporting  Comprehensive
Income.  This  statement  establishes  standards for  reporting  and  displaying
comprehensive  income  and  its  components  in a full  set of  general  purpose
financial  statements.  SFAS No. 130  requires all items that are required to be
recognized under accounting  standards as components of comprehensive  income be
reported in a financial statement that is displayed in equal prominence with the
other  financial  statements.  The term  "comprehensive  income"  is used in the
statement  to  describe  the total of all  components  of  comprehensive  income
including net income. "Other comprehensive income" refers to revenues, expenses,
gains,  and losses that are included in  comprehensive  income but excluded from
earnings under current accounting  standards.  Currently,  "other  comprehensive
income" for the Company consists of items previously recorded directly in equity
under  SFAS No.  115,  Accounting  for  Certain  Investments  in Debt and Equity
Securities.  The  adoption  of SFAS No. 130 had no effect on the  Company's  net
income or stockholders' equity.

New Accounting Standard

The Financial  Accounting  Standards Board issued statement No. 133, "Accounting
for Derivative Instruments and Hedging Activities," in June 1998. The Company is
required to adopt the  statement on July 1, 2001.  The adoption of the statement
is not  expected  to have any impact on the  financial  condition  or results of
operations of the Company.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE B - INVESTMENT SECURITIES

The amortized cost and estimated fair values of securities  held-to-maturity  as
of June 30, are as follows:
<TABLE>
<CAPTION>

                                                      1999
                          -----------------------------------------------------------
                                                             GROSS           GROSS
                            AMORTIZED       UNREALIZED     UNREALIZED        FAIR
                              COST            GAINS          LOSSES          VALUE
                              ----            -----          ------          -----
<S>                      <C>            <C>             <C>             <C>
U.S. Government and
   government agency
   obligations            $ 13,879,012   $       --      $   (406,583)   $ 13,472,429


Collateralized mortgage
   obligations                 395,801             10          (7,419)        388,392


Certificates of deposit         99,000           --              --      $     99,000
                          ------------   ------------    ------------    ------------

                          $ 14,373,813   $         10    $   (414,002)   $ 13,959,821
                          ============   ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                                                      1998
                          -----------------------------------------------------------
                                                             GROSS           GROSS
                            AMORTIZED       UNREALIZED     UNREALIZED        FAIR
                              COST            GAINS          LOSSES          VALUE
                              ----            -----          ------          -----
<S>                      <C>            <C>             <C>             <C>
U.S. Government and
   government agency
   obligations            $ 11,569,585   $     37,039    $     (1,377)   $ 11,605,247


Collateralized mortgage
   obligations                  98,073           --            (1,324)         96,749
                          ------------   ------------    ------------    ------------


                          $ 11,667,658   $     37,039    $     (2,701)   $ 11,701,996
                          ============   ============    ============    ============
</TABLE>


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE B - INVESTMENT SECURITIES (CONTINUED)


The amortized cost and estimated fair values of securities available-for-sale as
of June 30, are as follows:

<TABLE>
<CAPTION>
                                                        1999
                                ---------------------------------------------------------
                                                                GROSS           GROSS
                                  AMORTIZED    UNREALIZED     UNREALIZED        FAIR
                                    COST         GAINS          LOSSES          VALUE
                                    ----         -----          ------          -----
<S>                            <C>           <C>            <C>            <C>
Mortgage-backed securities:
   Federal Home Loan Mortgage
     Corporation                $    53,684   $     1,160    $      --      $    54,844

   Government National
     Mortgage Association         1,072,996         8,794         (2,206)     1,079,584

   Federal National
   Mortgage Association             264,129          --           (5,421)       258,708

FHLMC Preferred Stock                82,699         4,301           --           87,000

FNMA Stock                          100,789         1,582           --          102,371

Corporate notes                     299,573            62         (1,829)       297,806

Equity securities                 1,021,022        98,370           --        1,119,392

Collateralized mortgage
   obligations                       23,409          --           (4,448)        18,961

Municipal bonds                     948,699          --          (57,610)       891,089
                                -----------   -----------    -----------    -----------

                                $ 3,867,000   $   114,269    $   (71,514)   $ 3,909,755
                                ===========   ===========    ===========    ===========
</TABLE>


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE B - INVESTMENT SECURITIES (CONTINUED)

<TABLE>
<CAPTION>
                                                         1998
                               ----------------------------------------------------------
                                                  GROSS         GROSS
                                   AMORTIZED    UNREALIZED    UNREALIZED       FAIR
                                     COST         GAINS         LOSSES         VALUE
                                     ----         -----         ------         -----
<S>                            <C>           <C>            <C>            <C>
Mortgage-backed securities:
   Federal Home Loan Mortgage
     Corporation                $    73,070   $     1,718    $      --      $    74,788

   Government National
     Mortgage Association         1,049,175        13,475         (5,644)     1,057,006

   Federal National
     Mortgage Association           449,026         3,511           --          452,537

FHLMC Preferred Stock               118,125          --             (469)       117,656

Corporate notes                     499,352          --           (2,479)       496,873

Equity securities                   949,605        64,044           --        1,013,649

Collateralized mortgage
   obligations                       41,674          --           (9,168)        32,506
                                -----------   -----------    -----------    -----------

                                $ 3,180,027   $    82,748    $   (17,760)   $ 3,245,015
                                ===========   ===========    ===========    ===========
</TABLE>


The amortized cost and  approximate  fair values of securities  held-to-maturity
and  available-for-sale  as of June 30, 1999, by contractual  maturity are shown
below.

<TABLE>
<CAPTION>
                                     SECURITIES             SECURITIES AVAILABLE
                                  HELD TO MATURITY               FOR SALE
                             --------------------------- --------------------------
                               AMORTIZED       FAIR        AMORTIZED       FAIR
                                 COST          VALUE         COST          VALUE
                                 ----          -----         ----          -----

<S>                          <C>           <C>           <C>           <C>
Due within one year          $    99,000   $    99,000   $   100,000   $   100,064
Due from one to five years     2,099,231     2,067,580       199,571       197,742
Due from five to ten years     4,870,267     4,755,891          --            --
Due after ten years            7,305,315     7,037,350     3,567,429     3,611,949
                             -----------   -----------   -----------   -----------

                             $14,373,813   $13,959,821   $ 3,867,000   $ 3,909,755
                             ===========   ===========   ===========   ===========

</TABLE>


<PAGE>

                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998


NOTE C - LOANS AND REAL ESTATE

Loans and real estate at June 30, are summarized as follows:

                                              1999            1998
                                         ------------    ------------
First mortgage loans:
   Secured by 1-to-4 family residences   $ 10,570,391    $ 11,032,985
   Secured by over 4 family units           2,483,369       1,636,997
   Commercial                               1,297,790       1,085,968
Home equity and second mortgage loans       1,694,438       1,441,620
Share loans                                   429,091         449,801
Consumer loans                                683,663         858,036
Real estate owned                                --           319,073
                                         ------------    ------------

                                           17,158,742      16,824,480
Allowance for loan losses                    (165,482)       (198,168)
Deferred loan origination fees                 (3,314)         (5,991)
                                         ------------    ------------

                                         $ 16,989,946    $ 16,620,321
                                         ============    ============


The Company  conducts its business  through two offices  located in  Pittsburgh,
Pennsylvania.  As of June 30, 1999, the majority of the Company's loan portfolio
was secured by properties  located in this region.  The Company  evaluates  each
customer's credit worthiness on a case-by-case  basis.  Collateral held includes
mortgages on residential and income-producing  properties.  The Company does not
believe  it has  significant  concentration  of credit  risk to any one group of
borrowers given its underwriting and collateral requirements.

In accordance  with SFAS No. 114,  "Accounting  by Creditors for Impairment of a
Loan", no loans in non- homogenous groups were determined to be impaired for the
year ended or as of June 30, 1999 and 1998. Commercial real estate, multi-family
residential and participation loans are included in the non-homogenous group.

First mortgage loans which are contractually  past due ninety days or more total
approximately  $17,000 at June 30, 1999. The amount the Company will  ultimately
realize  from these loans could  differ  materially  from their  carrying  value
because of unanticipated future developments affecting the underlying collateral
or the  borrower's  ability  to repay  the  loans.  If  collection  efforts  are
unsuccessful,  these  loans will be subject to  foreclosure  proceedings  in the
ordinary course of business.  Management  believes that the Company has adequate
collateral on these loans and additional losses are not expected to occur in the
event of foreclosure.

At June 30,  1999 and  1998,  the  Company  had $0 and  approximately  $301,000,
respectively,  of nonaccrual  loans  primarily  consisting of residential  first
mortgage loans.








<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE B - INVESTMENT SECURITIES (CONTINUED)

Activity in the allowance for loan losses at June 30, is summarized as follows:

                                                        1999         1998
                                                     ---------    ---------

Beginning balance                                    $ 198,168    $ 208,791
Provision for loan losses                                 --         32,113
Charge-offs                                            (32,686)     (42,736)
Recoveries                                                --           --
                                                     ---------    ---------

Ending balance                                       $ 165,482    $ 198,168
                                                     =========    =========


In the ordinary  course of business,  the Company has and expects to continue to
have transactions, including borrowings, with its officers, directors, and their
affiliates   (totaling   $84,558  and  $  6,000  at  June  30,  1999  and  1998,
respectively).   In  the  opinion  of  management,  such  transactions  were  on
substantially the same terms, including interest rates and collateral,  as those
prevailing at the time of comparable transactions with other persons and did not
involve  more  than a  normal  risk  of  collectibility  or  present  any  other
unfavorable features to the Company.

NOTE D - ACCRUED INTEREST RECEIVABLE

Accrued interest receivable consists of the following at June 30:

                                                        1999         1998
                                                     ---------    ---------

Loans                                                $  78,608    $  73,932
Investments                                            226,158      180,917
                                                     ---------    ---------

                                                       304,766      254,849
Allowance for uncollectible interest                    (1,351)     (26,674)
                                                     ---------    ---------

                                                     $ 303,415    $ 228,175
                                                     =========    =========

NOTE E - PREMISES AND EQUIPMENT

Premises and equipment at June 30, are summarized as follows:

                                                       1999           1998
                                                   -----------    -----------

Land                                               $   121,027    $   121,027
Buildings and improvements                             995,487        993,265
Furniture, fixtures, and equipment                     434,932        405,855
                                                   -----------    -----------

                                                     1,551,446      1,520,146
Accumulated depreciation                              (564,978)      (502,978)
                                                   -----------    -----------

                                                   $   986,468    $ 1,017,168
                                                   ===========    ===========

<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE F - DEPOSITS

Deposits at June 30, are summarized as follows:

<TABLE>
<CAPTION>

                                            1999                                     1998
                               ------------------------------       -------------------------------
                                 WEIGHTED                             WEIGHTED
                                 AVERAGE                              AVERAGE
                                  RATE                AMOUNT            RATE              AMOUNT
                                  ----                ------            ----              ------

<S>                                <C>          <C>                      <C>         <C>
NOW accounts                        0.00%        $  3,052,472             0.00 %      $  2,476,029
Passbook savings                    3.16           10,835,383             3.16          10,378,217
                               ---------         ------------       ----------         -----------

                                    2.47           13,887,855             2.55          12,854,246
                               ---------         ------------       ----------         -----------
Certificates of deposit:
   3.00% to 3.99%                   3.96               58,432             -                -
   4.00% to 4.99%                   4.41            6,911,509             4.93           1,812,885
   5.00% to 5.99%                   5.52            7,765,369             5.52           9,987,486
   6.00% to 6.99%                   6.18            6,200,306             6.18           6,788,251
   7.00% to 7.99%                   7.04              427,156             7.04             424,737
                               ---------         ------------       ----------         -----------

                                    5.38           21,362,772             5.73          19,013,359
                               ---------         ------------       ----------         -----------

                                    4.23%         $35,250,627             4.45%        $31,867,605
                               ---------          ===========       ----------         ===========

</TABLE>

At June 30, 1999, the aggregate  maturities of certificates of deposit in fiscal
years 2000 through 2004 is $9,720,669,  $5,452,558,  $1,737,781,  $3,230,384 and
$1,221,380  respectively.  The aggregate amount of certificates in denominations
of $100,000 or more totaled $1,856,595.

Deposits  in excess of  $100,000  are not  insured  by the  Savings  Association
Insurance Fund (SAIF).

At June 30, 1999 and 1998, the Bank had deposits from its officers and directors
totaling approximately $364,609 and $207,000, respectively.

Interest  expense and accrued  interest  payable on  deposits  consisted  of the
following at June 30:

<TABLE>
<CAPTION>

                                ACCRUED INTEREST PAYABLE      INTEREST EXPENSE
                                ------------------------  -----------------------

                                   1999         1998         1999         1998
                                ----------   ----------   ----------   ----------

<S>                            <C>          <C>          <C>          <C>
Passbook savings                $     --     $    1,475   $  329,639   $  320,046

Certificate accounts                 2,887       41,042    1,135,214    1,048,891
                                ----------   ----------   ----------   ----------

   Total interest on deposits   $    2,887   $   42,517   $1,464,853   $1,368,937
                                ==========   ==========   ==========   ==========
</TABLE>



<PAGE>

                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE G - FEDERAL HOME LOAN BANK ADVANCES

At June 30, 1999,  the Company had the following line of credit from the Federal
Home Loan Bank (FHLB):

        ISSUE      MATURITY     INTEREST     AVAILABLE        AMOUNT
         DATE      DATE           RATE        AMOUNT        OUTSTANDING
         ----      ----           ----        ------        -----------

       5/14/99     3/15/00      5.17%      $1,000,000       $        -

At June 30, 1999 and 1998,  the Company had the  following  outstanding  advance
from the Federal Home Loan Bank (FHLB):

              ISSUE         MATURITY     INTEREST
               DATE           DATE         RATE            AMOUNT
               ----           ----         ----            ------

              10/25/96      10/25/01       5.78%        $1,000,000
                                                         ----------

                                                        $1,000,000
                                                        ==========

Certain mortgage loans are pledged as collateral on the outstanding advances.

NOTE H - BENEFIT PLANS

Pension Plan

The  Bank has a  qualified,  noncontributory  defined  benefit  retirement  plan
covering  substantially  all of its  employees.  The  benefits are based on each
employee's  years of service up to a maximum of 25 years, and the average of the
highest  five  consecutive  annual  salaries  excluding  the four years prior to
retirement.  The benefits are reduced by a specified percentage for each year of
participation  less  than 25  years.  An  employee  becomes  fully  vested  upon
completion of six years of qualifying service.

The plan's funded status at June 30, follows:

                                                    1999         1998
                                                 ---------    ---------

Vested accumulated benefit obligation            $ 428,087    $ 341,130
Nonvested accumulated benefit obligation             2,978        4,055
                                                 ---------    ---------

Accumulated benefit obligation                     431,065      345,185
Effect of projected salary increases               157,753      113,774
                                                 ---------    ---------

Projected benefit obligation                       588,818      458,959
Fair value of plan assets                          474,418      391,058
                                                 ---------    ---------

Plan assets in excess of project benefit
   obligation (unfunded projected benefit
   obligation)                                    (114,400)     (67,901)
Unrecognized net (gain) loss                       115,143       71,711
Unrecognized net obligation                          1,066        1,188
                                                 ---------    ---------

Prepaid pension cost (pension liability)         $  (1,809)   $  (4,998)
                                                 =========    =========



<PAGE>

                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE H - BENEFIT PLANS (CONTINUED)

The  following  table  represents  certain   significant   assumptions  used  in
determining the actuarial present value of the projected benefit obligations and
the net periodic pension costs at June 30, 1999 and 1998:

                                                   1999         1998
                                                 --------     --------

Weighted average discount rate used to
   calculate benefit obligations                     7.00%        7.00%
Assumed rate of future compensation
   increases                                         4.00%        4.00%
Expected long-term rate of return of
   plan assets                                       7.50%        7.50%

Components of net pension cost are as follows:

                                                   1999         1998
                                                 --------     --------

Service cost                                     $ 43,145     $ 28,942
Interest cost                                      41,146       28,237
Actual return on plan assets                      (25,675)     (22,919)
Net amortization on deferrals                       2,258          886
                                                 --------     --------

Net periodic pension cost                        $ 60,874     $ 35,146
                                                 ========     ========


Employee Stock Ownership Plan (ESOP)

As part of the conversion  discussed in Note A, an Employee Stock Ownership Plan
(ESOP) was  established for all employees who have completed one year of service
and have attained the age of 21. The ESOP borrowed $264,480 from the Company and
used the funds to purchase  26,448 shares of common stock of the Company  issued
in the  offering.  The  loan  will be  repaid  principally  from  the  Company's
contributions  to the ESOP over a period of 10 years. On June 30, 1999, the loan
had an  outstanding  balance of $218,192 and an interest rate of 8.5%.  The loan
obligation  of the  ESOP is  considered  unearned  compensation  and,  as  such,
recorded as a reduction of the  Company's  stockholders'  equity.  Both the loan
obligation  and the unearned  compensation  are reduced by an amount of the loan
repayments made by the ESOP. Shares purchased with the loan proceeds are held in
a suspense  account for  allocation  among  participants  as the loan is repaid.
Contributions  to the ESOP and shares  released  from the  suspense  account are
allocated  among  participants  on the  basis  of  compensation  in the  year of
allocation.  Benefits  become  fully vested at the end of seven years of service
under the terms of the ESOP  Plan.  Benefits  may be  payable  upon  retirement,
death,  disability,  or  separation  from service.  Since the  Company's  annual
contributions  are  discretionary,  benefits  payable  under the ESOP  cannot be
estimated.

At June 30, 1999,  4,841 ESOP shares have been  allocated  to the  participating
employees.  For purposes of computing net income per share, the remaining 21,607
unallocated   shares   are   not   considered   outstanding   until   they   are
committed-to-be-released   for   allocation.   The  Company  is  recognizing  as
compensation  expense  the fair  market  value  of the  Company's  common  stock
allocated to participating  employees.  Compensation  expense  recognized by the
Company  during the year ended June 30, 1999 and 1998 was  $31,264 and  $31,779,
respectively.



<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE H - BENEFIT PLANS (CONTINUED)

Stock Option Plan

In March 1998,  the Company  approved a stock  option plan (the  "Option  Plan")
whereby 33,060  authorized  shares are reserved for issuance by the Company upon
exercise of stock options granted to officers,  directors,  and employees of the
Company from time to time.  Options  constitute both incentive stock options and
nonqualified  stock options.  Options  awarded are  exercisable at a rate of 20%
annually with the first 20% exercisable on the one-year  anniversary of the date
of  grant.  Any  shares  subject  to an award  which  expires  or is  terminated
unexercised will again be available for issuance.  The Option Plan has a term of
ten years,  unless  sooner  terminated.  The exercise  price for the purchase of
shares subject to an incentive  stock option may not be less than 100 percent of
the fair market  value of the common  stock on the date of grant of such option.
The exercise price per share for  nonqualified  stock options shall be the price
as determined by an option committee, but not less than the fair market value of
the common stock on the date of grant.

Stock option activity is as follows:

                                                  Year ended
                                                 June 30, 1999
                                                 -------------

Options outstanding at beginning
   of year                                          33,060
Options granted                                       --
Options exercised                                     --
Options canceled                                      --
                                                    ------

Options outstanding at end of year                  33,060
                                                    ======

Options exercisable at end of year                   6,612
                                                    ======

Weighted-average option prices per share:
   Options outstanding at beginning
      of year                                       $15.75
   Options granted during                             --
      the year
   Options exercised during                           --
      the year
   Options canceled during                            --
      the year
   Options outstanding at                           $15.75
      end of year

The  options  outstanding  at June 30, 1999 had a  weighted-average  contractual
maturity of 8.7 years and exercise price of $15.75.

The per share  weighted-average  fair  value of stock  options  granted  with an
exercise  price  equal to market for the year  ended June 30,  1999 and 1998 was
$1.45 and $2.85,  respectively,  using the Black Scholes  option-  pricing model
with the following weighted-average assumptions for 1999 and 1998: expected life
of 8.75 and 7 years,  expected annual  dividend rate of .8% and 2.0%,  risk-free
interest  rate of 5.45% and 4.80%,  and an expected  volatility of 15%, for both
years, respectively.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE H - BENEFIT PLANS (CONTINUED)

The Company applies Accounting Principles Board Opinion No. 25 in accounting for
stock options.  Had the Company  determined  compensation cost based on the fair
value at the grant date for its stock  options under SFAS No. 123, the Company's
net income would have been reduced to the pro forma amounts indicated below:

                                                              Year Ended
                                                             June 30, 1999
                                                             -------------
   Net income:
      As reported                                               $122,312
      Pro forma                                                  107,661
   Net income per share:
      As reported:
          Basic                                                      .41
          Diluted                                                    .41
      Pro forma:
          Basic                                                      .36
          Diluted                                                    .36

Restricted Stock Plan

In March 1998, the Company  established a Restricted  Stock Plan ("RSP").  Under
the terms of the RSP, a total of 13,224 shares of the Company's  common stock is
available for the granting of awards to officers, directors and employees during
a period of twenty-one years, unless sooner terminated.  Stock awarded is earned
at a rate of 20% annually with the first 20% awarded on the one-year anniversary
of the date of grant.  The market value of the common stock at the date of award
is included as a reduction of stockholders'  equity in the consolidated  balance
sheet and is recorded as  compensation  expense using the  straight-line  method
over the vesting period of the awards.  The awards vest pro rata over five years
at each  anniversary  of the  award.  On March 16,  1998,  13,224  shares of the
Company's  common stock was awarded  under the RSP. The fair market value of the
Company's stock on March 16, 1998 was $15.75 per share.  Aggregate  compensation
expense  with  respect to the  foregoing  awards was $41,655 and $10,414 for the
years ended June 30, 1999 and 1998,  respectively.  Unvested  RSP shares are not
reflected in the June 30, 1999 and 1998 EPS calculation  because their effect is
antidilutive.

Summary  information  regarding  outstanding  RSP  awards  at June  30,  1999 is
presented below:

          Period in which          Market value        Shares        Vesting
           awards granted         at award date        awarded       period
           --------------         -------------        -------       ------

Year ended June 30, 1998             $208,278          13,224        5 years



<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE H - BENEFIT PLANS (CONTINUED)

Supplemental Retirement Plan

On March 23,  1999,  the Company  established  a  nonqualified  indexed  defined
contribution  supplemental  retirement plan (SRP) for its current  directors and
key employees.  The present value of estimated supplemental  retirement benefits
is charged to operations.  No set  retirement  benefit amount is promised to the
participants,   and  no  deferral  of  salary  or  income  is  required  by  the
participants.  Rather, the Company has agreed to place a certain amount of funds
into an  insurance  policy on behalf of the  participants.  Each year,  whatever
income the policy generates above and beyond the Company's  predetermined  index
rate will be accrued into a retirement account that has been established for the
participant.

NOTE I - INCOME TAXES

Income tax expense for the years ended June 30, is summarized as follows:

                            1999               1998
                           -------            -------
Federal:
       Current             $27,704            $24,206
   Deferred                  7,296             22,964
                           -------            -------

                           $35,000            $47,170
                           =======            =======

   State:
       Current             $  --              $  --
                           =======            =======

   Totals:
       Current             $27,704            $24,206
       Deferred              7,296             22,964
                           -------            -------

                           $35,000            $47,170
                           =======            =======

The  Company has not  incurred  state  income  taxes due to net  operating  loss
carryforwards.

The  differences  between  actual income tax expense and the amount  computed by
applying the federal  statutory  income tax rate of 34% to income  before income
taxes for the years ended June 30, are reconciled as follows:

                                      1999         1998
                                    --------     --------

Computed income tax expense         $ 53,486     $ 55,270
Increase (decrease) resulting in:
   Tax-exempt income                 (13,564)      (2,774)
   Other, net                         (4,922)      (5,326)
                                    --------     --------

Actual income tax
   expense                          $ 35,000     $ 47,170
                                    ========     ========

Effective tax rate                     22.25%       29.02%
                                    ========     ========


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE I - INCOME TAXES (CONTINUED)

The  components  of net deferred tax assets and  liabilities  at June 30, are as
follows:

                                                   1999        1998
                                                 --------    --------

Deferred tax assets:
   Loan origination fees, net                    $    530    $  1,600
   Allowance for loan losses                       26,403      52,935
   Accrued pension expense                          2,068       3,462
   State net operating loss carryforward           34,672      27,200
   Restricted Stock Plan accrual                    6,629       2,782
   ESOP accrual                                      --         2,601
                                                 --------    --------

                                                   70,302      90,580
                                                 --------    --------


Deferred tax liabilities:
   Premises and equipment                         (14,268)    (15,664)
   Accrued interest receivable                    (12,542)    (27,355)
   Unrealized gain on securities
      available-for-sale                          (12,826)    (17,360)
                                                 --------    --------

                                                  (39,636)    (60,379)
                                                 --------    --------

                                                   30,666      30,201

Valuation allowance                               (34,672)    (27,200)
                                                 --------    --------

Net deferred (liability) asset                   $ (4,006)   $  3,001
                                                 ========    ========


The  Company's  annual  addition to its reserve for bad debts  allowed under the
Internal  Revenue Code may differ  significantly  from the bad debt expense used
for  financial  statement  purposes.  Such bad debt  deductions  for  income tax
purposes  are  included  in taxable  income of later  years only if the bad debt
reserves are used for purposes  other than to absorb bad debt losses.  Since the
Company  does not intend to use the  reserve for  purposes  other than to absorb
losses,  no deferred  income taxes have been  provided on the amount of bad debt
reserves for tax purposes that arose in tax years beginning  before December 31,
1987, in accordance with SFAS No. 109. Therefore,  retained earnings at June 30,
1999 and  1998,  includes  approximately  $143,000,  representing  such bad debt
deductions for which no deferred income taxes have been provided.

The Company has available  Pennsylvania  net  operating  loss  carryforwards  of
$301,493.  This  carryforward can be utilized in fiscal years 2000 through 2001.
The deferred tax benefit associated with this loss carryforward is $34,672. This
benefit has been fully reserved.



<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE J - INTEREST AND DIVIDEND INCOME ON INVESTMENTS

Interest and dividend  income on investments  consisted of the following at June
30:

                                                  1999                1998
                                               ----------           --------

   Taxable interest income                     $1,019,786           $983,516
   Nontaxable interest income                      12,749             14,737
   Dividends                                          808                372
                                               ----------           --------

                                               $1,033,343           $998,625
                                               ==========           ========

NOTE K - COMMITMENTS AND CONTINGENCIES

In  the  normal  course  of  business,   the  Company  has  various  outstanding
commitments   and  contingent   liabilities   that  are  not  reflected  in  the
accompanying consolidated financial statements. The financial commitments of the
Company are as follows:

The Company has outstanding commitments to originate loans as follows:

                                                 1999              1998
                                              -----------       -----------

First mortgage loans                             $665,000           $131,000
Secured consumer (unused
  lines of credit) loans                         $477,077           $391,395
Commercial loans                                 $ 85,000           $      -

NOTE L - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company is a party to financial instruments with  off-balance-sheet  risk in
the normal  course of business  to meet the  financing  needs of its  customers.
These  financial   instruments  include  commitments  to  extend  credit.  These
instruments  involve,  to varying degrees,  elements of credit and interest rate
risk  in  excess  of the  amounts  recognized  in the  statements  of  financial
condition.

The  Company's  exposure  to credit loss in the event of  nonperformance  by the
other party to the financial  instruments  for  commitments  to extend credit is
represented by the contractual  notional amount of those  instruments  (See Note
K).  The  Company  uses the same  credit  policies  in  making  commitments  and
conditional obligations as it does for on-balance-sheet instruments.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent  future cash  requirements.  The  Company  evaluates  each  customer's
creditworthiness  on a  case-by-case  basis.  The amount and type of  collateral
obtained,  upon extension of credit,  varies and is based on management's credit
evaluation of the counterparty.


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE M - FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of the Company's financial  instruments as of June 30,
are as follows:

<TABLE>
<CAPTION>
                                                    1999                           1998
                                        ----------------------------    ----------------------------
                                            CARRYING        FAIR          CARRYING          FAIR
                                             AMOUNT        VALUE           AMOUNT           VALUE
                                             ------        -----           ------           -----
<S>                                       <C>           <C>             <C>              <C>
Financial assets:
   Cash and cash
   equivalents                             $3,412,184    $3,412,184      $5,157,544       $5,157,544

   Investment and mortgage-
     backed securities                     18,283,568    17,869,576      14,912,673       14,947,011

   Loans                                   16,989,946    17,315,681      16,620,321       17,447,788

   Cash value life insurance                1,162,749     1,162,749         -                -

   FHLB stock                                 153,300       153,300         153,300          153,300

   Accrued interest
     receivable                               303,415       303,415         228,175          228,175

Financial liabilities:
   Deposits                                35,250,627    35,521,863      31,867,605       32,016,399

   FHLB advances                            1,000,000       989,605       1,000,000        1,000,000

   Advances from borrowers
     for taxes and
     insurance                                227,241       227,241         223,848          223,848

</TABLE>


<PAGE>
                      WSB HOLDING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1999 and 1998

NOTE N - REGULATORY MATTERS

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum  amounts and ratios of:  total  risk-based
capital  and  Tier  I  capital  to  risk-weighted  assets  (as  defined  in  the
regulations), Tier I capital to adjusted total assets (as defined), and tangible
capital to adjusted total assets (as defined).  Management believes,  as of June
30, 1999, that the Bank meets all capital  adequacy  requirements to which it is
subject.

As of June 30,  1999,  the most  recent  notification  from the Office of Thrift
Supervision  categorized  the  Bank as well  capitalized  under  the  regulatory
framework for prompt  corrective  action. To be categorized as well capitalized,
the Bank must maintain  minimum total  risk-based,  Tier I risk-based and Tier I
leverage  ratios as set forth in the table.  There are no  conditions  or events
since those  notifications  that  management  believes  have  changed the Bank's
capital category.

<TABLE>
<CAPTION>
                                                                                                     To Be Well
                                                                                                   Capitalized Under
                                                                              For Capital          Prompt Corrective
                                                     Actual               Adequacy Purposes        Action Provision
                                                 ---------------          -----------------        ----------------
                                                 Amount   Ratio           Amount    Ratio           Amount    Ratio
                                                 ------   -----           ------    -----           ------    -----
                                                                           (In thousands)
<S>                                             <C>       <C>            <C>      <C>              <C>        <C>
As of June 30, 1999:
   Total Capital
     (to Risk-Weighted Assets)                   $3,985    22.2%          $1,436   >8%              $1,795     >10%
                                                                                   -                           -

   Tier I Capital
     (to Risk-Weighted Assets)                    3,819    21.3               718  >4                1,077     >6
                                                                                   -                           -
   Tier I Capital
     (to average assets)                          3,819    10.1             1,549  >4                2,323     >5
                                                                                   -                           -
As of June 30, 1998:
   Total Capital
     (to Risk-Weighted Assets)                   $4,008    25.3%           $1,269  >8%              $1,586     >10%
                                                                                   -                           -
   Tier I Capital
     (to Risk-Weighted Assets)                    3,815    24.1               634  >4                  952     >6
                                                                                   -                           -
   Tier I Capital
     (to average assets)                          3,815    10.5             1,447  >4                2,179     >5
                                                                                   -                           -
</TABLE>